>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> pay up in ukraine. the flight went down, victims bodies still have not been recovered and the victims rebels are blocking the site. >> crumbling infrastructure. you can get from midtown manhattan to laguardia faster on a bicycle than on the subway.

probably still have to carry your luggage. what must be done to upgrade the mass transit? >> hillary's headache. she has earned $12 million since leaving the state department. that puts her in the 0.01%. do the clintons still feel your pain headed into 2015? you are watching "market makers." i am erik schatzker. >> and i am stephanie ruhle. how was your weekend? >> great. and how was yours? a little beach time for both of us. let's get the top business stories from around the world. ol operated by barclays has seen trading numbers plunge. volume fell almost 80%. the high frequency traders played a role on that exchange. rupert murdoch may soon raid his

bid for time warner. he may 1 have to raise the cash. he may sell off his assets for europe's pay-tv to do so. could be worth more than $13 billion. that would allow him to offer more cash to time warner shareholders. in the battle in gaza is intensifying efforts to negotiate a peace fire. dozens of palestinians and 13 israelis died in the conflict's bloodiest day so far. john kerry is in egypt to draw them toward a truce. benjamin says the offensive will netanyahu- benjamin says the offensive will continue. >> more bodies are being retrieved on the crash site in ukraine near the russian border. the recovery effort has been chaotic and the government says

the rebels have given investigators limited access to the site. our abc news correspondent was there over the weekend. now he is in the city of danyetz sk. what did you see at the crash site? >> we arrived for the first time on friday evening. it was very hard to get there. very difficult road to drive on. the smell hits you before you even see it, what this novel combination between jet fuel and death. when you got there, it was a very grim site. wreckage was still smoldering more than 24 hours later and nurturthere were charred bodies everywhere. almost two days after the crash, the bodies were still there. they were finally picked up on saturday. the hopeful news is that they have been kept for the past 24 hours or so in a refrigerated rail car not far from the crash site.

the hope is that eventually, and hopefully soon, they will be transported out of. reunited with families. >> is it realistic for a full investigation to take place, given how grim the situation is and the limited access? >> even if there had been, i think that we are now four days after the crash. there were significant concern that that crime scene has been contaminated. all of the evidence has been sitting out in the elements and may have and moved as they try to get the bodies. it has been moved since they were getting the bodies. the rebels were accused by the united states and other governments of being behind the attack. they have been securing the site and may have tampered with any evidence to prove who did this. the big concern is that they do not have the investigators there. the longer this goes on, the harder it will be to put the investigation together. >> we understand that the dutch government is growing increasingly anxious and frustrated over the lack of

access to victim's bodies. i'm sure other governments feel the same way. from what you have seen and heard yourself, reported on the ground, does it seem that the are trying to contaminate the crash site? are they using the bodies and lack box as a bargaining chip? >> the self-declared prime awayster of this break city says they are not willing to turn over the bodies until international experts come here to check them. they do not trust anybody else m and say they will be framed for the attack. the hopeful news was that, just today, a small team of dutch experts were able to finally reach the site. they were able to see the bodies and go to the wreckage. they hope that this will pave the way for them to be able to move the bodies on the rail cars to somewhere safer.

they can eventually be moved onto kiev. also, this could pave the way for international investigators to come in. all of that is very much up in the air. we do not have a date or time for when they would be able to travel or where they would go. now?at is putin's calculus if you backed into a corner? >> everyone has been saying that the russians are the ones who hold the cards with regard to the rebels. last night, shortly after midnight, president putin came out on russian television and gave a statement. this was after marathon phone calls with world leaders. clearly, a lot of pressure on him. he went a little bit further, calling for violence to end and for an investigation. there are two things he did not say that everyone has been calling for. he did not call on the rebels to turn over the bodies and he did

not call on them to preserve the crash site. >> ukrainian government released an audio recording that allegedly proves these rebels had shot down flight 17. the u.s. department, government, has accused the rebels of shooting down this plane with a missile. have you seen any evidence to prove that that is what happened? >> i think it would be very difficult for me with my untrained eye to prove anything on the ground here. you look at the pieces of the and youage nuc see things and wonder if it could be shrapnel. that is why you need to have trained investigators. it will be at least five days tomorrow. will he evidence be in by the time investigators get here? >> thank you for giving us the latest. >> that is what it looks like up

close. now for a financial point of view, we welcome back peter, managing director of dragon capital, ukraine's biggest investment bank. he is live from kiev. there is a bit of the delay, so work with us as best you can. mentioned that vladimir putin is being blamed for this tragedy. he risks becoming an international pariah. what does that do for ukraine? hi.eah, well, i would actually concur onh what kieren said earlier in terms of a monumental amount of pressure being put on putin's shoulders now. it is actually very crucial for ukraine to see how the next few days would play out. there are a couple of events that one should focus on.

obviously, tomorrow's meeting will be crucial. i would also highlight an event in the hague -- this case will be up for judgment. this is $140 billion. that may serve as a template for ukraine to give a little bit of crimean lame that they are building up now. this is something that we will be watching quite closely. the united nations security council its meeting tomorrow. >> from your perspective, what can the ukrainian government do right now? the fighting has flared near donetsk and they are disavowing any involvement there. weekve been talking last about who has and does not have leverage in the situation.

from an economic point of view and a financial point of view, what cards does the ukrainian government have to play? putin's hadsay that the most influence and control over the truth and the events in the east of the country. it does look like the president onht now is trying to focus the momentum and push his advantage in donetsk. we are you look at it, looking at the prospect of an ur ban military operation. that cannot be done without a significant amount of human loss. this is something that the president is very mindful about and is trying to avoid at all costs. >> does the crash and the heightened tension affects the

way you are running dragon capital? >> um, no. the capital is extremely quiet. there is definitely a sense of shock and sadness. i have driven next to the dutch embassy and it is completely, being laidowers are down and the emotion is definitely very present. >> peter -- of the crisis is focused on the east of the country now. >> i was asking about dragon capital. does this news affect your business and how you are running your company now? >> ah, yes. sorry, the line was quite bad. in terms of business for our company, there is definitely a fair amount of attention being focused on this country. the bond segment is actually

quite active. the yield have been quite resilient. yields are around 8-9%. for ukraine, that is not bad. corporate yields are also quite high. on the bond side, there is quite a bit of tension and declines. in the equity segment, it is tricky or. ukraine does not have a tradition of being an equity market, as much as a bond market. nonetheless, we are seeing quite a lot of tension on this. >> peter, thank you very much. managing director of dragon capital, ukraine's biggest investment bank. how should investors positioned themselves with all of this political turmoil? >> and, subprime is back. this time, it is not mortgages. it is car loans. ♪

>> the president of the united states is scheduled to deliver remarks on ukraine. south lawne from the of the white house at 10:15. and now, let's ask this question. tanks are rolling into gaza. siteis 50 miles from the where the malaysian airlines flight crashed last week. as we speak, stocks are trading down. the dow is rallying and stocks are close to their lowest level in years. james is here. they are catering to wealthy families. jim, thank you for joining us. what are you telling your clients and what should their posture be at a time like this? >> geopolitical events usually do not affect the stock market unless they get out of control. do not react to it.

in general, the market is not cheap? it is in the zone of ok. you generally want to have a conservative quality posture. not because of the geopolitical events, but because of where stocks are selling. >> we don't want to wait until things are out of control. by then, the market will have reacted. what are you looking for to determine for yourself what constitutes out-of-control? >> out-of-control will be sanctions. they got so serious that they caused a default of the financial institution in russia, which backed into europe and the united states. >> we are a long way from there. >> that is how it would happen. we would continue to punish them. in gaza, it would be of hezbollah decided to join the fray. it would be a regional conflict that has the potential to affect

the price and the flow of oil. those are the two negative scenarios. i do not think either of them will happen. it is unlikely that they will happen. it is possible, but unlikely. these events could be an excuse to sell off. this is a very important earnings week. i think earnings will be ok. if there is a selloff, i do not think it will be a sustained one. stocks are not cheap. >> even if we do not see a market dip, could we see more investors, especially private law clients, put more money in cash? there's been a lack of confidence in the market and this cannot make people feel more confident. could we see more people sitting in cash? >> this market has caused worry. that is what the bulls say. the individual investor may be permanently impaired. they have the financial crisis in 2007. they had the tech crisis in 2009. they may put less in stocks than

they would have historically. institutional investors are tremendously complacent. they have tremendous speculation in certain aspects of the market. sum is small technology stocks. the speculation of the fixed income market is as bad as it was in 2007. >> isn't as bad given that there is less leverage in the market? >> there is leverage in areas that we do not know. the reach for yield is back. this is a big debate. the fed has forced people to take on risk to boost up the economy. there are those who say that it is creating risk that we will experience in those situations. >> do you believe that that constitutes a bubble? if so, what will happen if it bursts? >> a bubble is hard to find. there is no asset class that is cheap. stocks are relatively cheap.

what the fed has done is made everything expensive. commercial real estate, real estate in europe, junk bonds, european bonds, low-quality stocks. there is no asset class that is compellingly cheap. so, the jury is out on the long-term implications of what the fed did. we're telling investors that you can stay in because the economy is growing and multiples are ok. absolutely upgrader quality in the fixed income and stocks. >> even if that means lower yield? >> absolutely. i would take a lower yield in income to preserve my capital. someday this party will be over. with the kind of move that you have, it could be a non-comfortable kind of move. >> you don't want to be the last one at a party ever. >> always have fear when others have great and great when others have fear. >> there you go. >> we will be back a couple of

minutes here on market makers. >> greed and fear makes me think you need to be watching it 2:45. i will be speaking with bill ackman. ♪

>> welcome back. >> we're approaching 26 minutes past the hour. temper on the markets. topic of conversation, herbal life. >> it has been the topic of conversation for the last year and a half. bill ackman is for me aback, front and center. he is presenting. short.he is it could beld -- his moment for an epic takedown. we have been waiting for that

for almost 1.5 years. >> just a few days ago, herbal life called his campaign against the company "propaganda." you are right. the onus is on bill to prove that it is something other than propaganda. all of these other events that he has staged, apart from the initial presentation -- it was pretty compelling, even if the investigation has not proved every accusation correct. these events that he has staged have not materialized into epic takedowns. >> he has had a number of massive investors on the other side. out of them have closed their positions, whether you are talking about demo -- dan loeb. you have not seen another investor side with bill ackman. the regulators have gotten involved. bloomberg did a piece recently about herbalife people who

claimed they were victims. other organizations who said they looked at individuals who worked with herbalife and got the wool pulled out from under them. >> there will always be disgruntled employees. what bill gates to prove is that this is a ponzi scheme. and, unless something happens tomorrow, we are a fairways away from proving that it is a ponzi scheme. >> in the meantime, all of his eggs are not in that basket. he is partnering up with valley and. i will speak with him at 2:45. we will talk about allergan and his big presentation tomorrow. >> junking your junk bonds. we are witnessing the late to safety in the market, with investors selling off high yield and high risk or it >> plus, the road to ruin.

why america is shortchanging its future. the controversy, still ahead here. stay with us. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> you are watching "market makers." now, we minutes from are scheduled to hear from the president himself. for barack obama will deliver remarks from the south lawn of the white house on ukraine. haveis an advisory we received from his administration and we will bring that to you live. >> let's take a close look at the markets. bond investors are getting nervous. after the plane crashed in ukraine and the invasion of will

gaza, money poured into treasuries. i would like to welcome the head of u.s. credit training at tcw, which manages over $140 billion in assets. good morning, jeremy. with all of this risk cap and income are you taking money out of high yields and investment and moving them into treasury? toi think it is important think about the backdrop of the marketplace as we think about high yield. we should ensure that the macro risks have increased. will he think about financial risk, that is what the market has been focused on. look at the marketplace, you think about the risks that is taking place in the market. it is more a factor of prospective returns and where yields are today. less about the geopolitical concerns in the marketplace. spillover this would into a broader macro selloff.

you don't think that is the case, you think it is contained? >> we think there are a number of risks in the marketplace. geopolitical is the forefront today. we see other factors at play. a lot of those factors relate to policy and what is going on with central banks globally. they remain accommodating in riskier assets. to us, as we think about moving out or upgrading the portfolio away from the riskier parts, they are focused less on the geopolitical concerns and more on where the spreads far and the compensation you are receiving. in that upgrading process, what are you selling it what are you buying? say that when we

think about the market as a whole, we think about the backdrop like this. you think about central-bank policy and what has been going on, we have heard time and time again. we would agree that the initial response from the central bank and the fed certainly was correct. as we think about what is going on and the effect of that policy, it has waned. increasingre in a dramatic way. when they compare at zero, corporate bonds actually look attractive. we would take the other side of that and say that it is time to move out of and under waste. what are we selling today? we're moving under waste in triple c's. we're moving out of the riskier parts of the market.

we think about asset light companies. >> i just want to interrupt you. let's break it down. credit is not necessarily a normal asset class. where do you want to be or worry do not want to be? >> we want to be focused on scenarios where we have downside protection. when we think about downside protection, we think about companies that have hard and tangible assets. where do we not want to be? riskier credits. we do not want to be an asset light company. when we think about where the marketplaces today, we think that the reward is asymmetric. when we think about yields of bullets they are, we look to protect our portfolio. we're moving into higher-quality portions of the marketplace. >> money still seems to be going into those assets light companies, the lower quality

credits. how do you explain the willingness of so many other investors to take risk at a time like this? >> i think, as we look at the market, there are not many reasons to point to, other than extremely low rates. if you think about what the central bank and the fed is communicating, they are telling you that the rates will remain low for an extended period of time. that gives investors comfort. when you stare at cash that is earning you zero, your pro spective return on a chapel c bond might look attractive. if you introduce any kind of normalized default expectations into the back end, you quickly get to a zero or negative return in any medium term horizon. the market is very difficult to time when these defaults or

volatility increases. you're supposed to move your portfolio and prepare for that. we have been dollar cost averaging into a more higher-quality position. >> compare how your trading and feeling right now. you have been trading for north of 15 years. how are you positioned today compared to where you were in 2008? when we think about the marketplace today, i would say that we are as -- we're probably almost as risk-averse as we were back in 2007. what we see is an increase in risk, and increase in lower quality issues. there has been a significant increase in loan issue, which we can touch on a little bit. in the face of all of that, what you see is higher dollar prices and lower yields.

we are probably as risk-averse as we have been since 2007. >> if you, sorry -- >> go ahead. >> if you are bulking on some of these issues that are covenant light, who is in there fighting for lower allocations -- for allocations? when we talk to smart investors, you're saying i am not laying. -- playing. >> there are plenty of investors who are judged on a month to month basis. there are plenty of investors an index replication strategy that need to be investigated sas well. 20 of investors have a different take and think the fall rates low, so they take comfort in buying back into the marketplace and think they will be able to get out in

anticipation of an increase in volatility and pick up in default. i think we have a different approach and a different opinion. certainly, we will not play the timing game if we think the value proposition is not there. >> do you think we could see quite a few hedge funds get burned in the next year if we have to offer monthly, weekly liquidity? could we see them get hurt? think you'll see an increase in volatility. seen over time, if in fact you run a leopard position -- levered position and have higher grosses, when volatility increases, the market tends to run from these gross notional. the long side of the portfolio may not act as you thought they would in a normal scenario. we think there will be an increase in volatility. that will most likely hurt some

returns. especially in leopard strategies. -- leverage strategies. >> thank you for joining us. jerry cudzil is the head of credit-rating at tcw. >> still to come, the shaky bridge to the future. why shortchanging the infrastructure is shortsighted. that is next. ♪

>> this is bloomberg television. is the fastest way to a

guardia airport from midtown manhattan? public transit. a three to be by can get you there faster. trains are rumbling over infrastructure that is decades old and showing its age everywhere you look. not just in new york, but everywhere across the nation. here tone wilder is tell us why infrastructure is so critical if we want to remain competitive. lay out your case. >> a good example is what you just mentioned in terms of access to the airport. in the rest of the world, global cities almost inevitably have a fast train to the airport. in new york, where the fast rail was originally developed at lockheed martin on long island, we do not have one. we are far away from getting one. we really have a disadvantage when it comes to maintaining our

position as number one in the global economy. >> joe biden called laguardia a third world airport. >> do you agree with that? >> we can't. we have a major investment to upgrade it. we need the federal government to take leadership on upgrading. we have a 1960's radar traffic control system. developed world is using satellite systems that are far more efficient. this is a $22 billion investment nationwide. it could be shared between the airlines and the private sector and the public sector. we need leadership from washington. >> how many jobs could it create? >> tens of thousands, hundreds of thousands. the president announced last week a $2 trillion infrastructure backlog in this country. so, how many people could that put to work? >> what do you mean backlog? lanza should get done? >> and streets and roads that

have to be redeveloped. in new york city alone, we have almost $54 billion in infrastructure requirements to upgrade our infrastructure, so that we can continue to get around it be accessible. we do not have that. the president announced last week and initiative were the government is going to create a one-stop shop. there is no money attached to that. because congress cannot get out of its own way. they have managed to extend the national highway trust. what do we love more than highways? just until may. then, once again, we have no money. there is no long-term plan. money also goes to the subway system. moreover, we have not increased the fuel tax -- the pace, since 1993. we have had 21 years at 18.4

cents per gallon. rather than investing in something that will create jobs and make our cities mark and additive. -- more competitive. we have to pay attention. >> people out there hear you say that words like government, congress, federal -- they say we cannot afford to spend taxpayer money on everything. let's say they agree with you that this is important. what is not as important? what do we have to give up to spend money on infrastructure? >> much of the concept on the national level is generating private money and user fees and really spreading around the burden. is theional tax base only one broad enough to support this kind of infrastructure investment. in passing it down to the states in the cities, that is what is going on now. they are raising local sales taxes and tolls.

we have many examples in new five yearsr example, ago, to fund the subway system, we put on an employer payroll tax. that has lost many members of the state legislature their jobs. pushing this down to the state and local level is not a solution. we have to figure out a plan. >> should we privatize infrastructure projects? >> we need private public partnerships. that is how the bridges getting renovated. it has a long from washington that will be paid back through tolls. it also has private investment and state investment. we have to put those together. it does not mean privatizing the bridge. it will be managed. the construction has been orchestrated. construction of public works is often very unnecessarily expensive and delayed. there's an opportunity to shift that risk to the private sector.

that is what these partnerships are about. so, you get the discipline of the business community, they still have a public amenity. >> one problem that some people see is that private investors want to make a profit. what is a reasonable return for a private investor? >> well, there is no precise return. but, absolutely. if you have a project like that bridge, where risk is shared, you can get a return. interest inot of long-term investors wanting to invest in public infrastructure. we can figure out how to do that. leaving it up to the states and cities will not work. the president's announcement was america builds infrastructure investment initiatives. he talks about the federal government stepping in to try to build the state and city partnerships.

it is a shame that we are not in a position where the government is stepping up to provide leadership across the nation. cities and states have much more political vulnerability and much smaller tax base. >> lots of people talk about the need to spend money on infrastructure. they do not want to be responsible for making the decision to spend money. >> we passed the payroll tax five years ago in new york. we have a new five-year capital plan for the subways. toneed another $30 billion maintain it and continue our project. we are struggling to figure out where the money will come from from new york state. a partnership with the private sector and government would be a big part of the solution. >> where will the money come from? $30 billion is an unimaginable number. >> some has to come from cost savings. we have to figure out how to build the infrastructure faster,

cheaper, better. partnerships can do that. the idea that this is privatizing is not the case. that is an ideological position. it is possible to work together and get things done on a cheaper, faster, better basis. part will be through savings. part through increased fares and user fees. the people using it have to contribute. part has to come from a larger national tax base, for which new york city is the driver of that economy. they cannot be all local support. infrastructure is a national resource. we have to work together as a nation. >> how would you characterize -- new york city in comparison to the rest of the country? >> i would characterize it as most important, of course. the 100 largest metro areas, new york is the largest with 15.5 million

people. $1.6 trillion economy. we drive this nation's economic health and growth. we are going to generate far more taxes for the federal government that we already do if we have modern, up-to-date infrastructure. >> thank you so much. lde is president and ceo of the partnership for new york city. >> coming up, president obama will be speaking about ukraine from the white house. that is any moment and we will be taking a live. stay with us. ♪

>> president obama is due to make remarks on the south lawn of the white house any minute on the situation in ukraine. president,ait the let's bring in our chief washington correspondent, peter cook red the president spoke on ukraine on friday. he disappointed some people by

not taking a stronger position. is that what we expect from today? whatt entirely clear message he my car about. , from what wesay heard the secretary of state say, tougher language than we have heard previously. we can expect of her language from the president as well. i would not expect him to talk specifically about the crash site himself. they're having trouble getting to the crash site and the treatment of those who died in the crash. there are real questions about what the separatists are doing and whether or not there are international lines of conduct crossed. >> peter, if all the president does is talk about what a -- more than a tragedy, what in the unspeakable act of injustice this might be for rebels to prevent access to bodies in the crash site --

if that is all he does, that is a bit of a risky maneuver, don't you think? he would expose himself to accusations that he is grandstanding. the rebels are not listening to the president of the united states. >> international world's attention is on this. he will discuss russia as well and the growing pressure from not just the united dates, but the international community, to do more. to take more responsibility. that will be the central message. this administration is pretty clear that public opinion is running against the russians here. they want to paint vladimir putin into a corner. they want to let that happen on its own, rather than have the u.s. have to play too much of a role here. we will see exactly what the president has to say here today. you sell to afford from the prime minister of the u.k. a short time ago. i expect more of the same. >> the president should be out

any minute now and we will take you there live. ♪

>> live from bloomberg headquarters in new york, this with erikmakers" schatzker and stephanie ruhle. >> good morning. i of erik schatzker. so much for the sober -- summer doldrums. last week has been anything but quiet of this week promises to bring even more headlines. let's bring back peter cook waiting for president obama to make further remarks about ukraine's. both struggling with how to react and deal with the tragic lane crash and the aftermath. cory johnson is following

earnings. big tech companies reporting over the next few days. michael mckee here heaving his eye on the housing market. more data out this week. peter, why don't we begin with -- withclear in ukraine. >> it is proving to be a challenge for them. button issues are ukraine and the middle east you situate -- middle east situation. the fighting going on his way to cairo. hoping to achieve a cease-fire, working with the egyptian and other players. the u.n. secretary general. for thet challenge

administration. syria, iraq, afghanistan. play rightlot on the now, juggling them to the best they can. they said the u.s. is engaged in all of the issues and that is what is important here. >> help me out. the white house, administration juggling at the best they can. yet the president headed west this week for yet another gunner -- yet again another fundraiser. >> multiple fundraisers. the life of the president goes on. not the first to go on fundraisers in an election year. it will strike some as unseemly that he is out west schmoozing raisinglywood types and money. the only thing worse than the president being embarrassed by fund raising is if democrats lose them some fear might happen in the midterm election.

>> our cameras are trained on the microphone of the south lawn of the white house because we are awaiting the president himself speaking about ukraine's. you as soon back to as he is done. cory johnson at san francisco. west coast editor at large. thinking about earnings. what is on your mind? >> this whole notion we can have general takeaway on these companies like netflix will tell us something about instruments or electronic arts from apple. these companies zero interest-rate -- interesting and different. we do a ton of them coming this week. texas instruments coming as well as a lot of others. i think there is really interesting things going on with these companies. is always an interesting report because it is a company dancing on the edge of

the live financially. the number i always look for is a number they do not put on the ballot she bought one we all think about. what is the next house of cards or oranges the new black? what will that cost? netflix does not record those costs on the income statement. the commitments and contingencies from netflix going forward have gone up and up, even though it is not on the ballot sheet. last quarter went down just a little bit. having toed netflix pull commitments and movies off of the service because they cannot afford a long-term cost of that in making the decisions now. i will look to see whether they are making smart cuts like that for the quarter they will report today. >> what will you how your ion specifically as it relates to apple? >> apple and samsung are not exactly coupled. fourth quarter is still so

important but really about product release. we know we're getting closer and closer to new devices in the fall for a new iphone. as a result you will not see on yearngs on a year basis. we look at the number of iphones slowing down. we expect the sales to slow down a little bit, but how much will be the number. >> as you mentioned, a bunch of butr stocks we cannot help think about and look ahead to. microsoft and facebook. absorbedople as they nokia. between microsoft and facebook, to behas the potential more interesting and more influential? >> microsoft is a company that because of the way they recognize revenue, you do not surprises, even

number surprises in the results. i think one of the things to look at is the surface, the surface device is quietly getting a little bit better, gaining market share and will be an important focus. it is one thing to advertise but a whole other to put up the numbers. relates to facebook, facebook, we talk about the move to mobile quite a bit. quietly there has been a enormous success growing the revenue per user and the revenue per advertisement. advertising rates are picking up substantially. numbers that are almost unsustainable. the growing number of users. can they continue to accelerate the growth? that can vote very well for facebook. >> cory johnson, thank you. a lot of work to do this week. michael mckee's turn, giving us a quick look at

housing. give us the word. >> a conundrum. when sure is over, this is supposed to be good. last week in the midst of the geopolitical stuff, the news got -- numbers got lost the homebuilders confidence numbers went way up. the next day new home sales were way down. why are they not putting the money where the confidence is? that it's real question. we get a lot of data that may help answer that. existing home sales supposed to be up. right now appears builders are only building to the level of new home sales rather than specs come a which suggests the use -- they think things will get better. why is that? >> confidence, we hope, is a forward-looking indicator. starts are backward. what wesuggest that have seen play out elsewhere is playing out in housing? very slow start to the year

picking up in the second quarter with things like employment gains and the signs of wage growth, maybe giving homebuilders a reason to be more optimistic. >> hoping they will get that way. we will find out more next week. more thursday. we will be looking to them to explain what they think the business will be. at this point they are not adding to the supply of housing. the excuse of the past as we are not seeing household formation. more people moving out as jobs get better. we also do not see a need for new homes because we have a lot of existing home sales still -- existing home still on the market. we should be at the inflection point and should see it start to rise in both cases. >> there is an argument being structural changes have taken place that are going to prevent the housing market

from returning to what we saw prior to 2008. for example, student debt. they are out of the housing market for 10 years or more. >> a couple of studies have shown that to be not a problem. most students have very low debt. the amount they have to pay to repay the debt has not changed in the past 30 years. people going for doctorates or medical degrees or legal degrees may have more student debt. what we have had is a decline in a number of people forming households and the reluctance of people to get into the housing market. so many people got in and got so badly burned in 2008 that people are renting apartments, which is why we have seen apartment construction be so strong. back at thet level level was in 2006 in 2006 and 2008. >> could that be a positive?

>> think about the people in the early to thousand that maybe should have been living in apartment. they're saying we are living in a barney frank era. maybe we're better off not having the people buy homes. >> is is a discussion. the problem for the overall economy is it does not add to growth the way housing does. part of the reason we saw first-quarter contraction is housing subtracted from growth. we are still a million jobs short in the construction industry from where we are at the peak and that hurts us all. >> thank you for giving us the latest. coming up, we will -- you thought michael mckee would be the most important person we would hear from today. maybe. president obama speaking live. running 20 minutes late. we will take you there as soon as he comes out.

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battle for time warner is a reminder sports content is king according to sean mcmanus. this fall the new home of thursday night football. withrlichman caught up him. what did he have to say? >> really getting the word out about football. thursday powerful night lineup. i started with getting his reaction. the ceo reaction when they got the rights to thursday night football. >> i remember when we finally got the call. what he said was now the real work begins and he is right because it is a lot of work launching a new franchise. we still.

it has been about 85% of my job on wednesday night football. new graphics, new technical facilities. we are using more equipment on each thursday night game other than the super bowl. it is a huge commitment for the network. numbers, thef thursday night game on the nfl network last year was somewhere between 6 million and 8 million. thursday night cbs generally falling and much archer audiences. you have an expectation for how many people may tune into thursday night football? >> i do not want to get into specifics for ratings. we have divisional matchup. i think we will do healthy numbers. so much of the ratings depend on how good the game is. if you have a competitive game at 11:00 the rating sustains and

growth. if you have a blowout, it does not. >> thursday night or cbs is a one-year deal. lex we have been waiting for the president. here he is on the south lawn of the white house. >> good morning, everybody. i want to make a brief statement about the tragedy in the ukraine. before i do, i want to know secretary kerry has departed from the middle east. to defend the right itself against rockets and attacks from hamas. doneresult it has significant damage to the infrastructure in gaza. i have also said we have serious concerns about the rising number of palestinian deaths and the loss of israeli life. be --s why it now have to has to be our focus and the focus of the international

community to bring about a cease-fire that ends the fighting and ends the death of innocent civilians. so secretary kerry meet with allies and partners. i have instructed him to push for immediate cessation of hostilities based upon the return of the november 2000 12 cease-fire agreement between israel and hamas in gaza. the work will not be easy. obviously there aren't even warm his passions involved in this and they're difficult strategic issues involved. nevertheless, i have asked john to do everything he can to help a cessation to hostilities. we do not want to see any more civilians being killed. with respect to ukraine have it has now been four days since shotsian air flight 17 was

down over territory controlled by russian backed separatist in the ukraine. days am past several our hearts have been absolutely broken as we have learned more about the extraordinary and beautiful lives lost. children andnd infants who were killed so suddenly and senselessly. our thoughts and prayers continue to be with their families around the world who were going through unimaginable grief. i have had the opportunity to speak to a number of leaders around the world whose citizens were lost on the flight and all of them remained in the state of shock, but frankly in a state of outrage. our immediate focus is on recovering those lost. investigating exactly what happened and putting together the fact is. we have to make sure the truth

is out, and that accountability exists. international investigators are on the ground. .hey have been organized i have sent teams, other countries have sent teams. they are prepared and organized to conduct the kinds of protocols and scouring and collecting of evidence that should follow any international incident like this. what they need is immediate and full access to the crash site. they need to be able to condone -- conduct a prompt and full and impedance -- and prudent investigation. the president has declared the areh site and teams

prepared to conduct the investigation and recover the remains of those who have been lost. unfortunately the russian backed separatist who controlled the area continued to block the investigation. they have repeatedly prevented international investigators from gaining full access to the wreckage. as investigators approached, they fired shots into the air. fromare removing evidence the crash site which begs the question, what are they trying to hide? >> moreover, the russian backed separatist are removing bodies from the crash site. times without the care we would normally expect from a tragedy like this. this is an insult to those who have lost loved ones. this is the kind of behavior that has no place in the community of nations. extraordinarys

influence over the separatist. no one denies that. them on,s urged trained them, are and them and military equipment and weapons including antiaircraft. key separatist leaders are russian citizens. so given the direct influence and the separatist, russia president putin in particular has direct responsibility to compel them to cooperate with the investigation. that is the least that they can do. the president does he support a full and fair investigation and i appreciate the words but they have to be supported by actions. the burden now is on russia to insist the separatist stop tampering with evidence, grant investigators who are already on the ground immediate, full and unimpeded access to the crash site. the separatist and the russian

sponsors are responsible for the safety of the investigators doing the work. along with our allies and partners we will work this issue at the united nations today. more broadly, as i have said throughout the crisis in the ukraine crisis generally, and i said this directly to the president, as well as publicly, might present -- preference continues to be finding a diplomatic resolution within the ukraine. i believe that can still happen. it is my preference today and will continue to be my preference. but if russia continues to violate the sovereignty and the separatist become more and more dangerous and now our risks not simply two people inside the ukraine at the broader international immunity, then russia will only further isolate itself and the costs for russia's behavior will only continue to increase. now is the time for president away and russia to pivot

from the strategy they have been taking. and get serious about trying to resolve hostilities within ukraine in a way that respects the sovereignty and respects the right of the ukrainian people to make decisions about their own lives. time is of the essence. our friends and allies need to be able to recover those who were lost. that is the least that we can do. families deserve to be able to lay their loved ones to rest with dignity. the world deserves to know exactly what happened and the people of ukraine deserve to be able to determine their own future. thanks. speaking on obama the south lawn of the white house, making remarks. first addressing the situation with i guessisrael

you would have to call it an attack, moving tanks and over the weekend and then making extended remarks. let's bring peter cook.. took the president a little while, but by the end of that brief address to the news media he did at -- did make a very concrete threat to russia, warning if there is not cooperation and some kind of that the medic said so it -- solution, the cost would rise. presumably talking about harsher insurance. >> absolutely. not the only one saying the same thing. we heard it from david cameron this morning. his own remarks. ratcheting up the record against the russians and try and further to isolate vladimir putin. so far willing to pursue. not all that different from friday.

>> what have we been hearing from leaders in europe? i know david cameron spoke earlier today. what has the message been? it seems pretty clear while there has been apprehension to step up sanctions that may be for the incident has started to break down resistance. we heard over the weekend maybe italians coming around. have heard cameron or officials pushing for sanctions on the russian defense sector. that would obviously be significant. the president threatening

further u.s. sanctions by europeans will carry the weight. the dutch have been aggressive as well. so in the europeans court of the president trying to offer a helping hand with rhetoric today. a huge issue for the dutch. the 190 or so dutch that died on the plane. 10 britons as well. topeter cook ringing us up date with the perspective on the president's remarks. >> when we come back, why are so many students with degrees from for-profit colleges defaulting on the loans? closer look at for-profit education. >> we will hear from the ceo of valiant, mike pearson u.s. teamed up with bill ackman to make a hostile offer for the drugmaker allergan. ♪

> live from bloomberg headquarters in new york, this makers" with erik schatzker and stephanie ruhle. >> the critics say it is long overdue, a federal crackdown on for-profit education. earlier this month the onernment put the squeeze the business. now the administration wants to limit federal aid for all for-profit programs. telling us what this means. cofounder of the claim christian institute for destructive innovation with us from boston. christian institute.

let's begin with something more is for-profit education? a lot of people will tell you it is a bracket. are they right? >> it has a long history in the country dating back to the 1800s with career colleges that popped up to serve discrete means. and think they play an important role for the government has become the government has become their customer and incentivize them to do a lot of things on we have realized is not always what we want colleges to provide. what is that important role they play? what they're really good at doing is attracting capital to the markets of higher education and scaling to expand access for students. if we set up the right

incentives, remarkably good at and deliveringis a focused education. good aticularly research and other things nonprofits are good at. >> why does it seem there are some many bad actors? look at the example of corinthian, a big company unable to provide the company with to provide-- unable the government with evidence the programs were working? a classic example of what the set of incentives we have set up over thee government past several decades where we have prioritized access at any cost regardless of quality itself. thes it fair to blame

government? we have not incentivized people to break the rules. we have not incentivized people to ask kids and families to pony up tens or more thousands of dollars to end up with a degree, a piece of paper that is effectively worthless in the job market. >> it is partially. the reason is the incentives made it appear free on the front end. students made lots of bad decisions. it is that by following incentives, which we are not breaking any rules. they were following the rules or often than we'd like to admit in retrospect. >> why would anyone think a private universities education is free? >> i totally agree.

you have a very big loan from the federal government. the return is seen far off in the future. colleges were very good at telling students you will get the job on the other side and be able to pay this back. i am the potential student. own't i responsible for my finances and plans and i cannot say if i go to the school i will be guaranteed a job and make the money in the future? that is not a responsible way. talking about people who are 18 and older. all. disagreement at this is the point the fault is due on all ends of this. these colleges have played a role as well. they followed incentives that were not good in some cases for students in the boulevard -- delivered a product that was not always the best.

the point is to say not all for-profit universities are bad actorsre have been bad and we need better regulations to incentivize the behaviors we want. >> why more regulation? why not leave for-profit education to its own devices and let the market decide what the future of the industry will be. let him or his family pay for it out of its own pocket. the federal aid goes to the institutions of let the for-profit institution swim or sink on their own merit? >> i would love that idea. why? for-profit institutions are putting money into shareholders pockets.

why should money be flowing into my pocket that indirectly comes from student loans? that does not seem right. why this explain happened historically. historically speaking the federal government was interested in how to expand access to more and more students to higher education, almost regardless of the cost. some terrible community colleges and nonprofit universities that deliver terrible education with graduation rates far lower than anything the university of phoenix or university of devry ever offered. they're very good at attracting capital and expanding access rapidly. that is the upside. the challenge is what you alluded to. by financing the behavior across the reality is the

federal government is not interested in rolling back access to the students. out a way togure balance and make it responsive to the market actual polity signals that help lead students to good options and we do not have those in the market right now. >> if the solution is a combination of venture -- better incentives, why not improve them on the for-profit side by taking several -- federal funding out focus theation and regulatory effort on the bad stuff going on in the non-for profit world? >> the reality is the approach does not work. all you have to look -- do is look at the city community college of san francisco were the accrediting agency has attempted to crack round on very bad practices there. carey has detailed

lawmakers and others have stepped in to prevent the college from being closed. there has been an inability to crack down on the public actors. >> i think you and i both wish answers would come easier. the institute for disruptive innovation with us. >> when we come back, hillary's payday. she made $12ound million in 16 months. will the money making make it harder for her to relate to the six pack. that and more when the return. ♪ >> the democratic hearty

crusade against income inequality gets a little complicated when you start to look closely at hillary

clinton's wealth. she considers a run for the white house in 2016. she has earned $12 million in the 16 months and she left the state department. about how hillary clinton was able to amass so much income and such just sort that short space of time. x most of the money coming from to pockets. roughly $6has gotten million. a couple of million more that will come in based on how the advance is structured. of money isg pocket her speaking career. sinces given 100 speeches weaving the state department last february. she gets on average $200,000 per speech. you can tell by doing the quick math that a lot of the speeches

she did for free or the money into the foundation. >> why not? why would we not say good on her, american dream believers. she has the right to do that and make an income. it was legal and fair. >> no one is saying she did anything illegal. she certainly has not an following a long tradition of public officials going out on a speaking circuit making money after leaving government. the issues she faces is she is now inking about running for president and looking like she is running for president and a time where her base is focused on the issue of income inequality. her wealth by no means are lifted her from becoming the democratic party nominee but something she will have to finesse. mes she do so in a way that -- makes her seem relatable?

does she do so in a way that convinces democratic voters she still cares about income inequality even though she has been making money. >> those who would be critical would say she should have charged less for the speaking engagement? it is a free market, that has her value. >> what they would say is she should not have spent her time taking speeches at private equity firms and wall street banks. bikes but why not? about reality, about perception. -- >> but why not? >> does she like the idea of hillary clinton making speeches to financial industry fat cats. isi think part of the issue republicans are trying to leverage some of the same attacks against mitt romney in the past election. to leverage tried against mitt romney.

when was the last time she drove a car or went grocery shopping? does she understand the issues most are facing even though she herself does not have to deal with it on a regular basis? i think part of the problem is how she handles the questions when she has been asked about her wealth, how she handled it. she said she was dead broke. the seemed tone deaf given type of economic situation most are in right now. >> we will probably see this issue bubble up long before hillary clinton ever gets, provided she does, the nomination. this is material other democrats can attacker within the primaries, right? >> yes. i think it will fuel by mary challengers. does not seem like there is anyone that can mount a superstrong candidacy against

her but will certainly give them fuel to attack her. those attacks could be repeated in the general election depending on who the opponent ends up being. long time to has a recover, long way out from the election. more about setting a narrative and the kind of narrative she will set. >> if you were chairman of the republican national committee, how would you think about scripting and they get a chance -- negative ad on this issue? >> we are are ready seeing negative attacks. there is a super pack founded who are really focused on attacking wealth. they are painting her as out of touch. questionslso asking about her taxes, where the money is coming from. similar to the attacks against mitt romney in 2012. questioning what she did to make

the money. she said she did not make anything, did not own a company, just marketed or sell. i think that is the a kind of attacks we are seeing at this point. rex the same people who backed mitt romney are going to be criticizing hillary clinton for the money she made. ofringing us the story hillary clinton and $12 million. >> when we come back, valiant chairman and ceo joins us. ♪

>> alergean playing defense. the botox maker cutting 1500 jobs as a part of an effort to fend off a takeover attack from varmint -- from the pharmaceutical company. joining us on the phone from toronto, colorado. -- toronto.

what does this leave you with? i think the restructuring plan is an endorsement of the operating model. they're trying to reduce cost. short.s way we have an experienced team. two companies coming together. synergy levels are a little higher. we think it helps us in terms of our pursuit. >> just to reiterate the say it validates your operating model, but maybe that is just the effect of an exchange of ideas in the capital markets. say thateople look and is enough? that is enough rationalization, job cut, and we think that

company have stronger prospects on its own than it does as part of the company? yes, i agree with you that we could ask shareholders, and that is why we are calling a special meeting to we can address the standalone land. the fact that we have overlapping areas in the pharmaceutical areas, one company. the value creation potential from the companies far exceeds the plan they put on the table. >> what if they want more? anything else you can offer them beyond what you put on the table we would be happy to do so. >> have you had any success? i know you are trying to meet with management and they said take a hike.

have you had any success at this point? >> no, we have not. >> i have a question for you. what happens if things do not go your way? what happens if the shareholders do not come around to your point of view and bill ackman's point of view? havein pershing square taken most of the risk in the financial offer. >>n't you free to walk away? absolutely. we are free to walk away at any time. we bear no financial risk. we will continue to execute on the strategy. >> you will continue doing what you do, you have made that very clear. i would like to know from your perspective, where would that leave bill ackman? if your offer is taken off the table -- for that offer to succeed, valeant

has to be a part of it. and creating a company you believe is a substantially greater value, that if they walk away, the offer disappears, what happens? remains a nine .7% shareholder and would argue a very unhappy shareholder. happy shareholder, why? >> i said unhappy. we have heardy -- they are mowing over possible acquisitions. is there an acquisition that would make you say this is no longer of value to me? >> absolutely. at minimum way would modify the offer.

it might force us to walk. >> like what? . >> they spend a lot of money on a company with very little revenue. and made of that 10 years from now. that is not the type of company we are interested in. >> can i go back to the comments about bill being very unhappy in that chain of events. i would imagine he would be very unhappy if they were to decide it would no longer be worth pursuing. has he tried to build in any kind of protection on the downside? if the premium goes away, and it would go away if the offer were taken off the table, bill would stand to lose a lot of money, at least a lot of money from where he is today. there is a big mark to market

profit on this decision. to his credit, he has not asked for anything. i have to protect our shareholders. we're quite confident that once against to a shareholder vote, they will vote for the deal. if they choose not to, we will go will wipe. >> understood. thank you for joining us this morning. pierson and ceo, mike joining us over the phone. do not miss my interview today. pershing square founder, bill ackman. thank you. guest hosts and the 11:00 hour. that is going to be a lot of fun. >> we are going to sign off because it is 56 past the hour. that means bloombergtv is going on at the markets. olivia sterns has more.

>> stocks falling this morning. the main benchmark index off by half a percent or less. geopoliticalg as tensions way on the market. joining me for the options inside is the derivatives strategist at nk m holdings. good morning. thank you for coming in. vixhursday with all the pickup of it but then corrected friday. >> the resilience of financial is absolutely impressive. the vix last week on the malaysia air downing, up above 14 for the first time since april. the same time the s&p 500 down more than one percent. lex 14 still historically low level. >> right.

the point is up -- implied volatility may revert. once you get back above the 14 level what you are looking for is a move higher. that is what we have not seen. that is the longest time volatility has been suppressed since january 2013. shaket would it take to the markets? battle investors or the central bank with unprecedented era of forward guidance pin it down to abnormal lows? >> keep in mind, in the long term we're in a low volatility environment and will probably stay that way for years. shorter term we could and should see volatility cycle higher. is tough it take? that to know. we are talking to clients about putting hedges on. not jump in the bunker mentality everything years but put the heads on, relatively low axonal

pullback we have seen. by some insurance. time warner, rupert murdoch making a $75 billion bid. what is your strategy? >> the bid is $85. expectation is that they will come back and bid higher. we want to go out to october. relatively high probability trade. >> lunch money coming up after the break. ♪

welcome to money clips where we tie together the best stories, interviews and internet and business news. here is the run up, the deadliest day of fighting thus far in gaza. the nation, secretary of defense outlines his vision for possible u.s. role in the middle east and elsewhere. but the ceo of time warner walk away with more than $79 million? wildcard, nothing to do. we speak the man behind the john paul mitchell products. we will see if food of the