>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> bill ackman in the ring promising a knockout punch to herbalife after more than a year of glancing blows. >> which big companies offer the best retirement savings plans. our exclusivity survey reveals a surprising winner and loser in the benefit game. kobe bryant is meeting up with the titans of industry, we will tell you what the superstar is shooting for next.

good morning, it is tuesday here in new york city, you're watching market makers. >> ever since kobe bryant got to have that training session with me the staples center, he realized that he was the future of business. >> we have a lot to talk about. we will begin the show with breaking news. michael mckee has the headlines. >> it is good news for the real sixte or, a two point percent increase. this is much better than analysts had anticipated. this is an eight-month high for housing and we see the number of homes for sale hold steady 5.4 months. it looks like the existing site at least, we are doing much better, we will made for new home sales thursday. >> thank you very much, that is michael mckee out in the newsroom with some positive economic data. >> of course, it is time for the

story of the day, the man himself, bill ackman. right now, he is starting what he calls the biggest presentation of his investing career. that is a giant claim. the mother of all takedowns. bill ackman says he will present evidence, audio and video documents that will demonstrate once and for all that herbalife is the product. here's what he told us. >> the best frauds are really really good. the only clue i will give you for tomorrow is that enron, if you remember, had a fake trading room. they were touring people around the campus. i member, it was an auditor or whatever to talk about the workstations, had people look like they were trading. that is my biggest clue. >> his biggest most epic presentation of all time except

guess what, i have been part of this broken record. we have been here before time and again. let's take a trip down memory lane. >> for year-and-a-half, bill ackman has been presenting one piece of evidence that herbalife is a pyramid scheme. where are we? herbalife is telling more of his traditional supplements and ever. no court has labored a pyramid scheme or a fraud, no one has stepped in to shut the company down. it is want to say we are pointing out the obvious. this is an about the billion dollars at stake. this is now about reputation. that is what is on the line. >> it is too bad that captain lou is dead. this isn't about herbalife anymore. think of the ackman as vince mcmahon or don king. >> we are going to be monitoring

his presentation very closely, looking for the smoking gun that he has promised and you can do the same thing if you like. >> i want to bring in our expert panel who is a business school dean at the college in new jersey and an authority on government schemes and a former hedge fund manager who is now a professor at columbia business school and in fact if we are going down memory lane, yes he tried to become a distributor? websites that my $30 and got the package. down, didreak this you help on a presentation a but, walk us through, what you have learned since bill started this. >> what we have learned is that herbalife is focusing a lot on internal consumption. that will not protect them, in they wereis year,

found to be a pyramid scheme and it was a company that had almost entirely internal consumption. the notion that internal consumption is there savior is a mistake on their part and it is something that regulators will look at. >> why has it taken so long? grande agot to have cup honing his. bill has been ringing this for a year and nothing is happening. regulators were not looking at the situation. the regulators like to think they are referees, they don't like to think that they are playing a role for one team or another. at the same time, this is a grossly underrated industry. >> that does not necessarily give no ackman the license to do

what he has done in the public arena, does it? to publicly announce that he is taking a billion dollars short position, to make presentation after demonstration, none of which has the maturity that herbalife is a fraud. this is a pyramid scheme, a fraud. >> the internal consumption angle is extremely important. one from management has refuted the attacks. >> i know they don't need to respond to a predatory guys questions but if you were herbalife and he was pointing a gun at you, why wouldn't you

come out and poke holes in all of this? >> these two things are not necessarily predatory. let's go with bill was saying about the internal consumption -- consumption. they must close their windows, 24y must the cap hidden hours a day. its is shifting and at worse is a cult. at best, you have a fixed retail store selling food but you don't want to it admitted and you don't want to be covered under it. so much of the stuff is going on. what other people would call this is a store. you want to sell food in an unlicensed fashion. this is dodgy to have the cornerstone of your business be something that you cannot even

hang a sign outside. bill has got a point. does that in and of itself not prove a pyramid scheme. >> this will be compensation to participants, that comes primarily from recruitment. we know there is a lot of recruitment. they may say that they have a lot of distributors but 80% of them will be gone quickly. >> after a year and a half, bill ackman is the only guy ringing his bell. >> in this industry, it is. i look at that map of queens, and when i see on one square block six herbalife stores, i say, jesus, bill ackman is right, why have we not seen one single notable big-time investor get on his side of the train? thet is not as if information that he has compiled is in accessible.

bill has invested over half of his net worth on this investment. whydoesn't make sense to me if bill has an epic takedown, if he is so right, not a single other investor at a time when hedge funds are desperate for trade ideas, nobody is on his side. >> because even hedge funds look at risk and returns. is a regulatory issue. look at the stock. the compound annual growth rate is over 20%. the pe is 60% of the s and p. at 20%. making profit if this is legal, this is a money machine. if it is illegal, it is zero. >> why not just spend the 50 50 million bu--

the boxes full of documents and just handed over to the sec and the sec and the justice department and say, guys, get to work. i am waiting for you when you are ready. -- ead, it has been >> he is showing the video to the world before the regulators. why? >> the one thing regulators do not want to do is they do not want to appear as if an investor can come to them, put something on their desk, and get them to move in 60 days. >> that is what they want. it.ell, he can't have >> he can have it if the senator from somewhere in the standard region turns and says, hey, we

want you to look into this. ,f he can get political power the street. >> he is sparing no expense. where is tim kaine us in this? bill ackman said compare this to enron. jim chanos, no stranger when it comes to shortselling, why hasn't he opined? >> did opine that he thought the fundamentals were sound. bills fundamentals were sound. look at the time it took built to take down nba. rodeo. not his first these companies fight back tooth and nail. i think what is helping to do is to get to the front of the line. not otherhen investors on the side of the trade. >> it was a dirt cheap stock if it went in the other direction.

down,once it starts to go the funding start to dry up, that has been down there and the actual fundamentals have been backwards. -- upwards. perspective, what would bill ackman need to today to put herbalife in the pantheon of fraud? >> today's trading doesn't matter much. the stock is down quite a bit in the last week or so. there is a very crowded short. 35% of the float is short. they actually tell the stories

from the dark side. it did not look like it at the time for a lot of people. there are a lot of defenders in that company. it was quite a stock for a while. wheres a weird business there is a lot of activity going on. the question is how much of it is self-dealing. ackman brings back this wonderful story of enron creating a fake war, filling it with actors, and showing it off to analysts and saying look at all of these busy people. quietly, and ron did the same -- enron did the same thing. meethad a private jet to the chief operating officer of enron to show off his fantastic data center. they walked behind all of the machines in the data center and

none of them were plugged in. enron was a very elaborate buildout of a fraud that they hope that their business might grow into it some day. of course, the clock ran out of it on them. at fraud andok identify them as such looking in the rearview mirror. they are all very least, most of it is the bill ackman short position. i don't know if there are that many short sellers out there. there positions are miniscule. this is sure to come in a quickie. he could have had something derivative for him. there are suggestions that he has done that. it might not just be in clear straight equity. >> there are six thousands options traded in the one-year puts.

there is a lot of stuff going on far far out in the stock. there has been something made of the fact that these options are expiring in january and that the fire, so to speak is under bills behind. if you cannot prove the case, he will have to re-up, it will cost them more money to go to short. >> everyone squeezes, the end of a large put position is to have a happy hunting ground. remember, there are hedges on the other side of this. initially, in rolling it out of the actual cash short. squeezed gains.

this is off solidly for the year. they are just coming into the money. >> we talk about ethics for a moment, when we are criticizing herbalife, obviously a pyramid schemes, there are huge ethical issues. what bill is doing in this short position. what about this elaborate circus? the amount of information, the amount of pr firms involved. what herbalife does, what do you think of all of this? i turn to bill. >> i think it is fair. those have watched the ftc kickoff sort of easy targets. abouthose we are talking the multi-your cases.

we take someone who hasn't inside voice, someone from the outside who have the resources to take on a big -- the sec has not taken on a large mlm is 1979. we have an industry that has real problems. >> do you consider bill ackman a champion here, really helping the american people? >> i believe he will save some money. he will save a lot of people some money by heightening awareness about these problems. about theu are saying three ring circus. this is one of the reasons why short sellers keep their positions secret. evaluation of the business.

this is one of the reasons why bill ackman, public position is so rare. be bill ackman is going to save people a lot of money, maybe he is going to make them aware. this herbalife is a sleazy company. i am sure there are people that have coco knives and eric arrived and mary kay cosmetics that they can never sell but that is not mean it is illegal. >> but it sometimes is. of sec has done a good job the successful cases. >> how fine a line is there between a multilevel marketing company and a pyramid scheme? what it is a cap we need to fill with data. for the casual observer, you cannot tell the difference. >> is it possible for the

regulators, the sec, or anyone else to examine the data and one would hope through their own efforts and come to the conclusion that what lcs as a pyramid scheme isn't in the eyes of the regulator a pyramid .cheme >> that is a very interesting question. then it comes down to judgment. it is not a black and white situation. >> well, you're talking about if he delivers with him the data that they are used to seeing and they see it differently than he does, then they will come to a different conclusion. i presume he has done his homework on all of the cases that have led up to where we are now including up through june of this year. with enron.racts it enron was a cut and dry fraud.

if at the end of the day it is not black-and-white. it is a matter of regulatory judgment. >> the data could go the other way. it is an position to be in. >> i would be shocked to get the trading floor, the data services that are not hooked up to anything. >> bob jo, that is what will promised us. >> what you will see his fake retail. >> i'm going to get the number but it is over 5000 nutrition clubs in the u.s.. most of them will be out of business quickly. you think they are a scam? >> yes. hashe new distributors signed up, over 1.3 will be

enacted within 120 days. >> well, that is real, brother. continuation -- >> what if herbalife has in the contract that they signed, we are not liable. they might not realize. >> it is much a matter of distributor liability although the lounge case suggests that there is some liability there and they do not have policies they and first -- they enforce. join toistributor receive rewards for recruiting others and is said the engine of this company? now, different companies can be structured but in this case, in this company, that is what makes them tick. >> in the words of a great financial genius come he

actually opined on herbalife. they have desperate dreams that this will lead them to million-dollar paydays. >> is that they were talking about when they describe it. >> this sleazy company. at worst, a legitimate scam. that is really the best they can argue for is that this company looks pretty filthy. if the sec were to issue a letter saying, no harm, no foul, we are done with this, this is a clean company, the stock will double. >> you are still with us in san francisco? >> one of the things important about the story, good to focus on details, but this does happen over and over again. there were chinese reverse mortgage companies that were public.

people were walking through the factory. you will see up bunch of wall street guys standing in the gallery that would walk into the next room and see the same guys as though they were working. the factories were fake, the stock were fake, it is good for us to take the lessons. >> that remains a possibility. it could be a fraud, it could be a pyramid scheme, it has been a year and a half that nobody has validated the claim. is so much. we will be monitoring the headlines all morning. >> who wash that live has the best 401(k) plan in the u.s. and u.s. the worst? we conducted an exclusive investigation. we will bring you the results.

>> live from bloomberg headquarters in new york, this is "market" with erik schatzker and stephanie ruhle. >> you are watching "market on bloomberg. >> a court ruling that could undermine the law which threatens to be a major setback for the president and of course his legacy, health care being his signature achievement. let's take you to our white house correspondent. of 2-1, a u.s. court of appeals in the d c federalvoted that the

government cannot provide subsidies for the affordable care act, for insurance buyers. this is a major deal and potentially devastating to the law. state exchanges are at the center of the law but a number of states haven't implemented exchanges or their exchanges have gone wrong making the federal government exchanges really kind of the bigger areion of how people planning to get insurance through the affordable care act. what this court ruling, it challenge that the federal government did not have the right to provide the subsidies. according to the ruling that says that we conclude that the affordable care act unambiguously restricts subsidies to insurance purchasers on exchanges established by the state, therefore they are reversing the idea that the federal government can provide this. this is very very big. this will be appealed. it could eventually end up in supreme court. this is as big of a setback as we've ever seen with the law. >> is there a loophole in the

language that was used to write the law in the first place? is that what they are focusing on? is this all the way to the supreme court? >> i think almost certainly. there will be a couple of steps before that but you will not see the obama administration stop and get anything like this. this would not the law as it is being made. we're talking about a trillion plus dollars worth of subsidies. they really cannot operate this without the federal exchange in place. believe, thehey administration believes the language was ambiguous enough in the law, that the federal changes had a law, were allowed, everything was in place. i think they felt very solid. i think this finding is pretty jarring and they are taking the language as i pointed out reading the ruling, they are taking the language of the law, this is really problematic.

the d c circuit court, the rule on this is considered a more conservative friendly court. this is a big deal and i think that the administration will have to build up to try to fight back something that i don't think that they were inking of having to deal with. but thank you so much. the latest on a very big court ruling over obamacare. let's turn our attention back to the plot esther bit announced last week. has turned a nice chilly newspaper publisher into one of the world's biggest media companies. the question is, what would it take to get the ceo to say yes and how much is murdoch prepared to spend? let's ask him unless stakes in both companies. ,is holdings include viacom at&t, directv, cbs, the list of media investments goes on.

with a stake in the proceedings on both sides, what do you want to see happen? >> well, we are holding both of our time warner and foxx. this will go higher. assured of that. foxx has responded, probably overreacted to the bid. the behemoth company, a lot of synergies, a lot of power. but it is a matter of price. >> up until what point are you $85 or it wast is at the time of the announcement, i think it is a little bit less now because foxx shares have dropped a bit, but call it $85, which should murdoch be prepared to spend. the street is thinking hundred dollars. kyle i don't think we have a particular number in mind but you could finance with cash flow but something like $40 a share and you could put in other forms of security site referred for additional stock.

limit on the amount of stock that he puts into the transaction is how deluded does he want the deal to be. >> so, you own every media stock there is, what are you looking for? >>, we would like to see more consolidations. witharted last year consolidation on the distribution side with charter going after twc and then you saw directv and at&t and we knew that was going to spur consolidation on the content side. murdoch, who has never been shy about deals has gone for the jugular, he is gone for the big one. we are trying to pin you down. does this combination makes sense? >> they are dressing the same market which is a rising global middle class. disposableore income. whether it is sports, analog,

however you want to do it. this really fills out both companies cupboards. more sportsrth content into news, fill out foxx sports, >> is that to say you like it? >> oh, there are clearly synergies. this is not a surly murdoch going for -- there is a strategic rationale. >> what is it worth? >> time warner? they are probably worth by himself this year probably about where it is trading. skinny down the company into its core parts, they generate a lot of cash flow. they can execute and i would perhaps expect them to announce. all by itself. it was worth 73. >> that is what the market said. we are talking about intrinsic value, i've it market value.

so, that is not far off. >> obviously, these asset values are not static, they are growing . time warner has an opportunity to put a lot of leverage on the balance sheet. understand jeff bucher is, he seems more like a ceo.r than he does a since he got that seed, every move he makes is about tearing down, selling off, and that seems the opposite of what every other ceo wants to do which is to beef up their team. >> jeff came of age as an executive. he had a front row seat. he had a front-row seat to what happened and i think that that has left him deeply skeptical of the ability to execute mergers. he has been a better seller then he has been a buyer. he hasn't bought anything, if you think about it. >> doesn't that seem opposite from everyone else that has been

in his role? .> well, you have other people obviously, foxx has been a buyer murdoch is been a buyer of assets. if you have other companies that have skinny down. thatis is the first time you found yourself a shares on both sides of an offer. how difficult is it to reconcile those positions? >> 70% of the shareholder. >> these are great. some of those have been sold. >> these are great assets, recurring revenue, great secular growth. there are a lot of ways to dissipate. in fact, there are two or three. you talk about time warner, foxx, disney will stop and then you would add discovery, viacom, cbs and others. let's given the fact that this is on the table and likely to get higher, what would you like

to see jeff dukas do? would you like them to put more leverage on the balance sheet and do a buyback? would you like to see him say, well, i have no choice but to be a buyer myself and make an offer ? he is following the x's and o's of the m and a game. they will call a meeting. defensive for foxx. to make it difficult for foxx. maybe he just does not want the x stock. >> that ultimately should be for show holders to decide. >> i agree. it question is, what is truly worth the relative to time

warner and what are the governance procedures? when you are taking fox paper, you are probably signing up for control by the rest of the murdoch family. >> is an issue for you who was at the helm of the company, whether it is rupert or someone else? >> you have to invest in controlled companies. we are comfortable with that. murdoch, what he has to together is amazing. he is overstretched on a few occasions for sure. will see what happens. >> great to see you. thank you. a cook reminder, he is got fog's shares and it goes without sharing, let's check herbalife shares. takedown, ite epic

is time for bill ackman to roll out the surprise. the shares are surging. anythingt yet revealed too big but we are only 30 minutes into it. it is expected to be a three-hour is impatient. it is not a complete surprise that the shares are surging. hold your breath. he has something up his sleeve. >> they are surging but they have not recovered yesterday's losses that he promised this enron like takedown. >> he is not revealed the video yet. thevideo is supposedly smoking gun. >> fringe benefits, who has the best 401(k) plan in the country?

on one kenerous four

plan and essential work benefit? it depends on the company you work for. with traditional defined benefit pension plans, 401(k)s have taken over as the default way for workers to save. scarlet fu is here to show us who has the best nus got the worst. >> we mean a plan in which your company at least matches your contribution because there are plenty of those where there is no contribution made. our colleagues come play a bass compiled a ranking, the first ever of the 41 k plan. bloombergot measure it is hard to come by because companies are barely secretive about the details of their lands. they offer this through filings and you have to sift through all of that, who comes out on top? a lot of energy and bio companies. conoco phillips is at the top of the list.

amgen, we don't get the actual numbers because there are so many variables at play. you can check it out at the rankings. >> one of the most company -- hated companies out there is the top? where is apple, where is facebook? worst,ou look at the they are at the bottom. is a perkownership that people look at. a benefit that people look at as opposed to a 401(k) plan. facebook did make some changes. although they are young company, we take a comprehensive approach to benefits that we offer our people. if you make a contribution let's say of one dollar, they will match $.50 to a maximum of three and a half percent. >> do these companies ask their employees what they're looking

for. maybe facebook employees, if you're most interested, they might say 401(k) doesn't mean anything. >> increasingly, as you are trying to attract and retain talent, this is something that as a mature company start to look at. ,> if facebook is on the bottom no 401(k) match whatsoever, how generous can they get on the top end? >> conoco phillips, they have a matching formula but i think it a -- e like they gave an example. if you started off at age 25, a starting salary of $75,000 a year, you got a four percent raise every year, when you retire, you would have $3.8 million in savings. >> that is assuming a raise of only four percent a year. , you are staying

there, you're working hard. and you could retire at age 60. >> push your kids, conoco phillips. >> you don't want me to be a petroleum engineer, that would be up bad idea. the best 401(k) and the worst. if you want to see the whole list, check out bloomberg.com. >> jon erlichman with my black mamba, kobe bryant. that and more, stay with us.

fans, it isrs showtime for kobe bryant. he is preparing for a film. it focuses on inspirations who

as it turns out includes apple's jonny i've. all, did he give you a pair of the sneakers? >> he is got a closet full. you know him well. he plays for the lakers, does not really see himself as a hollywood guy. he is got to talk to the hollywood press. inspirations,to this comes out of the showtime film. he likes to talk to industry leaders. the phone, calls them, find out what makes them tick, how they become successful. yes, in may, he called jonny ve and ended up going to

cupertino. >> once you have the passionate, the thing you are passionate about, you can look at other people, other entities or other things. you can drop things from that to help you be better at what you do by looking for those common denominator's. , how do youpare response isme, my how he builds products. there is the end result, there are so many little things that go into the massive entities or device. you start with where you want your game to be, what would make her game most unstoppable or hard to deal with and now you work backwards from there and you start building one piece at a time, one move at a time, one

counter at a time. there are a lot of similarities. for so, he is been a laker 17 years. johnson is anagic idol. what does he want to do next? kobe inc.e launched in bodyan investment armor. he hired a gatorade executive who worked at nike. as you know from speaking to him in the nike context, the kind of feels like an executive. i don't know that he is fully figured out the one he wants kobe inc. to be but he has made clear as we get to the end of his career that he does not necessarily want to be a coach or a general manager or have a small stake in a team. this of players do that,

guy is thinking big about business and that is one of the reasons why he picks up the phone and asks people, how do you run your business? i think he has got a few things figured out. thank you so much. jon erlichman. we approach 26 minutes past the are, it is time for on the markets. today, our focus is on credit millionosting a 700 swiss loss and more portly, exiting some of its businesses. talkingbrady dougan about what credit suisse is doing. >> the regulatory involvement involves. we now some changes in our macro business. and changes to our fx businesses to make us more effective in serving our clients but also to allow us to drive high returns for our shareholders. i think the whole industry has farther to go in terms of

adapting to the regulatory and the market environment. here's a change to have an ounce, how much longer can they keep the job, they haven't found their groove, they built this business, now they are selling it. it's teams goldman will be the only one in this thing. >> i was a regards between a rock and a hard place. regulations are getting tougher or these have been made tougher and all of the things continue to respond, the people that came before him oversaw this tax evasion a betting that many swiss banks have been involved in. >> i think a lot of guys are between a rock and a hard place right now. to a criminaly charge, this is the fallout, for this helps theat company to serve clients. >> what do you think that bankers, traders, staff people

are feeling? >> we will be back in two minutes. more coming on herbal life. stay tuned. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> welcome back to an awesome day. i am stephanie ruhle. >> i am erik schatzker. >> i want to bring in our guest host, the ceo of reputation.com. i had the chance of meeting him on a dance floor, so clearly a good hour. i want to take you to what bill ackman called the most important presentation of his career. so far, not working well for him. he promised to reveal enron fraud -- enron-like fraud at

herbalife. his reservations are long. so far, no smoking gun. shares are surging after this selloff yesterday. it is expected to go on for two hours. still lots of time. julie hyman is at the presentation. what has he said so far? >> i would not be surprised if he goes longer. as you know, he has a history of that. he is focusing on the nutrition clubs. he said his team investigated 240 in various countries -- the u.s., puerto rico, colombia, -- and saidrazil he thinks nutrition clubs may be the smoking gun, the missing piece in this big puzzle. if, as ackerman alleges, herbalife is a pyramid scheme, there must be product somewhere.

saleompany is saying every is tied to product. when people move up the distribution line, it is tied to selling product. if people were getting in this just for being a distributor, there would have to be product somewhere. it sounds like where bill ackman nutrition clubs exist not really to move product, it solely as a recruitment tool. that would be a missing piece to this puzzle. as an example, they did intensive study of something called club 100, one of the training programs people have to go through to open one of these nutrition clubs. it costs a lot of money and a lot of time to do this. the estimate, according to ackman and his team, is $3000. one thing you have to do is practice making 100 shakes as part of your training process. these shakes are essentially scoops of powder and some water, not that complicated a process. not only that -- you have to find someone to buy those 100

shakes. you recruit your friends and family to purchase those shakes. that is part of the money you are spending. that is the case he is still in the process of laying out. again,ese clubs are, just a recruitment tool, and that is it. thef we judge bill's for invasion by stock price reaction, i have to call it disappointing. otherwise, herbalife shares would not be up almost 8%. have you seen anything that approaches smoking gun quality? >> nothing that he said thus far what would be considered illegal. the threshold is that the company would be getting more of its revenue from recruiting than it does from selling product. he has not drawn those lines, connected those dots yet. this is a lengthy presentation that has been going on. we might have to get further into it to get there.

we have not gotten there yet. >> may be if they served you one of those 100 shakes it would perk you up for the next few hours. we are going to send you back to the room to wait for that gun. i want to bring back our expert panel. school keefe is business dean at the college of new jersey and an expert on pyramid schemes. former hedge by a fund manager and now a professor at colombia business school. we have duane stamford, our colleague in atlanta, who covers herbalife. and the ceo of reputation.com is with us. let me ask you -- as it makes analyze thisus through the reputational lands. what bill ackman has done the past year and a half, the public campaign against herbalife, does it make sense to you? >> it makes sense for bill ackman. unless it turns out to be a bust for him financially, this is good for his profile.

you do not want to be on the other side of the table from bill ackman, spending all your corporate energy. >> maybe you do if you are carl icahn. >> but not if you are the company. herbalife'sfrom perspective is, this is a sprawling organization. is it possible that some parts of the organization, it is a legit operation, and in some parts, because it is distributed , it is operating like a pyramid scheme? is it possible that carl icahn, george soros, and bill ackman could be partially correct? >> what a smarty drew -- a smarty. good question. >> i am a smarty, thank you. good question. the lines operate somewhat differently from each other. at the same time, the corporation, either tacitly or in a positive, supportive way, talks about certain activities and support certain activities.

it is those activities that will be of interest to regulators. >> i want to bring in brian stanford from atlanta. you have been covering the -- i want to bring in duane stanford from atlanta. you have been covering bill ackman when he was talking about china, talking about latino employees who were wronged. what came of those presentations? >> it has been interesting, watching this two year process and the way the stock acts like a big casino. with a lack of information in terms of what the ftc is going to do, investors are constantly trying to figure out what to 's cases.ckman you saw him a gay case about china, independent investigators looking at that business. stocks reacted badly. before it was clear the ftc was investigating, the stock was up. you had a number of these presentations were people

selloff going into it, and then the stock reacts once they see the presentation and feel like, i don't really see a smoking gun. it still comes back to, what is the ftc going to decide here? >> the presentation has been going for an hour or more already. we are going to be monitoring the next couple of hours. for the time being, why don't we give you what we have got? this is an excerpt, bill ackman talking about why he believes herbalife is a pyramid scheme. >> retailers do not grow exponentially. growth decelerates over time as they become larger. schemes accelerate and become exponential as they become larger. the problem is, how can you possibly make money, if you are a poor person in a nutrition fund? i want to talk for a minute about bill ackman's style. no one is disputing this guy is a great investor, but i want a hiser understanding of

activist work. it feels like he is a showman. i hate to say it, but i am comparing what is going on to the >> of a wwf-- the likes of a wwf promoter, not the >> of -- the likes of a george soros or david tucker. >> if it is just about the money, this is a dirt cheap white powder, through a sales force that loses money to work for you. this will be a license to print money until it collapses and you cannot find another hundred people to come by as you practice making your shakes. it is layer upon layer of sleeves, and you see that, and i do not think anyone denies it. it is an absolute moneymaking situation. gets aspects -- the odor higher and higher. he is exposing odor. >> does that make him a white night, or is he -- a white knight, or is he playing

marketing tactics like herbalife? >> i think he is pointing out these are bad guys. i think he is pointing out that this is -- that the firm itself in itsemely shady positioning. stores that you have to keep the windows closed. you have to make 100 shakes to learn how to make a shake. and you have to bring in 100 people to drink your shakes simultaneously. >> he has a bit of a don king thing going on. he is involved in civil rights groups. he may have paid people to march with him and protest. i like your analogy. i think it is powerful. >> he may also believe this. despite this -- >> but do his investors believe it? this is not carl icahn, who says, go fish, this is my money. to sticknvestors going with him through this? >> i think they have done very well. when you look at the other ofngs he has got going, 34%

his stock is short. this stock is short. when you go public, there is an entire industry. wall street is about buying stocks. there are few analysts with a huge rush to short stocks. still does not happen to the degree it should. >> of shorts expire in january? >> they do. the clock is-- ticking. he has to go all in. >> the smoking gun he has to find, when 34% is already short -- it is harder and harder. >> i think one way to contrast this is to look at what david einhorn did. he is the one who started this 2.5 years ago by getting on a conference call and asking a couple of somewhat innocuous , whichns, but well-timed tapped into investor fears. he never said whether he was short or not, and ended up getting out of the stock, presumably with a good hall

after the stock took a 20% dive. bill ackman has come out with a public case from the get-go, catalyzing his own shorts on the stock. it is a completely different approach. it will be interesting to see which of those wins out in the end. einhorn seems to have made the smart move. >> one guy who has not been involved in the drama, but has been long in a big way, is bill .teers what has he had to say? >> bill uses the shakes and is a huge believer in protein powder, so he comes at it from a different perspective. in his former life, he helped -- was with a company that helped create protein solids. he believes in it, from that perspective. he also is very much against the new activism he sees, the activism. he says bill ackman is trying to

take down a company and he does not feel like it is his place to do that. i think he has got some emotional ties to the case for those reasons. thinks the company is legitimate. >> it is good to bring up david einhorn. david einhorn was one of the bigt guys to sort of go with one of these storied shorts, allied capital. it took him years and years. he wrote a book about it, "fooling some of the people all of the time," which demonstrates it can take years. it took years for him to get to the conclusion. that present a problem, doesn't it? because, as michael pointed out, to expire indue january. the clock is ticking. it may take years to prove the thesis on herbalife. >> the clock is ticking on the regulators, too. out there, demanding

that regulators need to rule on bill?ife, besides >> no one is demanding it, but the regulators are on the spot. they have to make some sort of moved to indicate their view of this business model. they just had a major when at the appellate court -- major win at the appellate court level. they have to decide whether this is time to show publicly how they feel. >> why was that other case so important? >> it tested this notion of recruitment, and dismissed the importance of consumption. the end, if compensation is coming from recruitment, that is what we care about as a court. that is what the law talks about. >> he called on herbalife to release its numbers. the proof is going to be in the pudding. there is going to be revenue from this source versus that source. let it come out with its numbers.

it is not going to put it at a competitive disadvantage. why have they not done that? >> they quoted a former economist at the federal trade commission, which does not necessarily has experience with pure midteens. with consumernce goods. a hired gun -- >> by herbal life. alle is saying, i looked at the data. they are clean. four years ago, a professor from new york university wrote a six page report that said herbalife is not a pyramid scheme, who they hired, that is filled with holes. why after a year and a half of public conversation, herbalife is not willing to have their data talked about publicly require knowing what you all know -- you have done a lot of research. nobody knows pyramid schemes better than you do. how do you think this is going to play out? december 31, we are all sitting here. what do you think we are going to be saying?

>> i think regulators will act before december against herbalife. kman isink axman -- ac morally right. i think financially he is wrong, and it will go the other direction. >> he is not done. this is not his last act, his last punch. watch for him to come out swinging. >> but will herbalife keep on swinging? x yes. they have to. >> they were described as three thatuous questions, einhorn asked. you know what? einhorn asked, how many of these sales occur outside your network? how many are legitimate end-users, versus internal guys? the incentive for a supervisor to sign up a so-called distributor? what do these guys get paid? answer the questions. they have described them as

either self-users, small businesses, and distributors. suddenly, they stopped even breaking people out into that category, and gave less information. asked,stions i'm hard now years ago, are still unanswered. step up to the plate. you are a publicly traded company. answer the question. >> thus far, stock is only going up. decent amount of enemies on wall street, justified or not. a lot of big guys cannot stand him. could you forecast a bunch of ahn-type guys, just for fun, saying, i am going long, just because they can? >> too risky. you have to do quarterly letters, explain herbalife. because it is such a binary outcome -- it is the most binary stock that exists. this is going way down if the ftc steps in. if not, it is a money machine. >> it could be the most american story. billionaire hedge fund

manager identifies company that preys upon the weak and the poor , predatory at the least, possibly morally reprehensible. puts a billion dollars on the line. his worst enemies go after him in the market, and potentially he ends up losing. >> it has racial elements to it, because he is -- >> these -- the hispanic community has backed him. >> when carl icahn is your white night, you have issues. >> thank you very much. the professor at columbia university. bill keep. from the college of new jersey. >> my home state, the most important thing, new jersey. you not mess it up. terrific panel. >> i hope you will tune in at 3:00. i will be sitting down with the ceo of herbalife. >> we have the russian ambassador to the eu coming up. not possibly say the fun

continues, but stick around. ♪

>> i am erik schatzker with stephanie ruhle. round two ofoff tech earnings with a bang. the company doubled profit and now has 50 million subscribers. later in the way, what facebook and amazon have to say. later today, apple and microsoft set to report. follows bothan companies closely, with us from los angeles. are joined by the ceo and founder of reputation.com. what is important in apple and microsoft? >> the big picture is, this is what we might call an ecosystem battle.

companies are fighting for the time, attention, and investments of customers across many different devices, different services. apple has been the leader in this regard, securing tremendous loyalty from their customers. microsoft has traditionally done businesses, and less well with the sort of emerging world of tablets and smartphones, where they are struggling. bomb.ya nadella is the i think you should not bet against him. jeff bezos is a fool. the iron law is always going basis -- go with bezos. >> do you disagree that it is not about loyalty? think about it. microsoft has done so much over the years to arroyo anyone's loyalty to the company. you are not with microsoft because you want to be. you are with microsoft because you are handcuffed to windows.

>> they missed the beat on mobile, cloud, personal computing, tablets. real deal.la is the he is leading with humility, with urgency and immediacy. he is cutting 18,000 jobs at the wrong part of the company. the right part to cut them, rather. he is moving ahead. i am with them on the future. >> is satya nadella the anti-steve ballmer? >> i do not know if that is true or not. he is bringing a completely different outlook and perspective to the company, to the extent that any outsider can see it. you can see new energy being injected, although probably not to the former people from the nokia side of the house. he seems to have lit a fire under the entire company to say, we are not just talking about the new world of mobility. we need to be real, and deliver compelling experiences to our

customers. i agree about -- >> who should those customers be? i have heard many people say, for years already, that microsoft needs to stop worrying about the consumer business. yet out of the surface tablet business, spin off xbox, stop trying to make music devices, phones that nobody buys. focus on your strengths, the enterprise. >> or the small business. from where i sit, the line is blurring between consumers and small businesses. small business owners buy the way consumers buy. has dominance in enterprise, but the reason microsoft is microsoft comes down to xl. -- excel. there are a million macros that have been built for excel. that is their wheelhouse.

i think they will go back to business utility. they will kill it. aret an open platform, or you locked into it? he is like from the future. life is enterprise the only business you care about? >> i was in business utility. mom and dad, very small business, all the way to global. >> what do you say? >> i think enterprise has to be their primary focus, but they cannot neglect the consumer business. if you look at the growth in the way smart phones and tablets are being used in small business, in enterprise, it is all driven from consumers making choices about the devices they want to use and the services attached to them. what apple just did with ibm. that is a pure, unadulterated arrow at the heart of the enterprise, to consummate consumer-driven desire for devices with enterprise-quality applications and services. >> there is one difference. say, whaters, let's

apple products. they want their employees -- they either want their employees to be able to use the ipad or the iphone, or their employees want to use the ipad or iphone, and as a result the company has to adapt. that is not what you see happening with microsoft. it would be the reverse. we know employees are not clamoring to use the surface. he could not stand the -- they could not stand the zune. no place in enterprise. it is not like consumers love word or powerpoint. they cannot stand them. >> look at michael, taking you to school. >> bring the room together. >> i think your observations are both very strong. if you focus on the surfaces element, not the hardware, that might be where the mojo is. is bringing its technology much closer to the microsoft

office platform. that is a signal that consumers and people inside the enterprise want technologies like box. they know their bread is buttered on the side with microsoft. bring them together not necessarily through the surface but through services. >> i agree with that. the surface and the nokia windows phone, etc. -- these are all platforms for entry into microsoft services. actuallyhere microsoft wants to engage with customers, with cloud services. get them to invest information as well as dollars with the company. if they can do that through other devices, whether they are apple devices or google devices, so much the better. but if that is the case, they are failing, because people are not buying those phones, and people are not buying those surface tablets. text that is true. they are also now, finally, waking up to the reality of

where customers want to engage, potentially, with them. namely, on ipad, iphone. you have the office suite available on ipad. they are finally putting the applications into devices customers want to use. >> what do you use? are you device in different? do you require people go apple or microsoft? >> we are device in different. i use apple products. but i use microsoft software. >> i have to imagine you use everything, charles. >> i do use everything, but i am what you would probably call an apple loyalist. i use a mac, iphone, ipad, but also use everything else. >> how about these beats headphones? >> those are for younger people. [laughter] >> we look forward to our next , withsation with charles

us from los angeles. chilcote, ourn colleague in europe, is in brussels, or eu foreign ministers have just wrapped up a meeting about russia and ukraine. he is standing by with a very important interview with the russian ambassador to the eu. >> the eu just need -- just completed their discussions and decided they would draw some proposals for imposing sanctions on russia by thursday. they discussed a lot of things, including restricting russian access to capital markets here in the european union. toy restricted access financial markets for a bit more than four russian companies, the united states did, and now we might see the same thing out of the european union. at this point, it's just a proposal. they also discussed a ban on selling weapons to russia. russia'swith

ambassador to the european union since the meeting broke up today. thank you very much for joining us. some tough words from the eu foreign ministers today, what is your reaction? discussions today's took place against the of a massive feeling fate of almosthe 300 passengers and crew on board the malaysian airliner. believe such moments should unite people rather than the opposite. such cases, such incidents should not be used for political gains. for whatever the words anyone

might have regarding russia or any other country, this should the course of the investigation which is ongoing tantamountly not be to spelling out the results of the investigation which is not finished. >> going into this meeting, we heard some tough language from various european leaders, including the british prime minister. many of them talking about the need to impose economic sanctions. we got no sanctions announced today. what do you make of that? >> i was always hoping that common sense would prevail in the european union. >> do you think that's what's happening today? >> i hope so. perhaps therek

won't be sanctions? >> i think the rule of sanctions doesn't lead anywhere. in order to see a solution to the ukrainian crisis and i think everyone agrees at this point it can only be a political solution, the rule to that solution is through dialogue. let me remind you back in april, the foreign ministers of russia, ukraine and european union countries provided for an inclusive dialogue which is nowhere to be seen in the ukraine. >> let me ask about two specific ideas discussed today. is discussing access to european capital markets like we saw in the united states in relation to four different russian companies. the idea these companies may not be able to raise runs in the european union.

what would russia's response -- will would be the consequence of the european union restricting russian companies access to european capital markets? the impact on european business, the banking be less thanl not that on the russian business. >> because russia would retaliate? >> no him a because the eu countries and their business communities will suffer from their own sanctions. this is a message i am getting from major european countries. >> one of the things discussed was that the french should not sell you two warships as they are hoping to. what do you think about the idea of france not going forward with warships or asse

the french president indicated, not going forward with the sale of at least one of the two? >> at this point, it is hypothetical. i know the french government is concerned that the delivery of the first vessel will be on time, that is in october of this year. what about the second one? i hope that will be completed as otherwise that might be biting on the french economy. >> two quick questions. first off, the russian president today hosted a meeting of the security council. when you listen to his comments, it sounds lawful alike we are in the cold war. are we in the cold war? >> certainly, we are not. let's remember what the cold war was. it was an ideological

confrontation with two very different ideologies. plane down?the was it the separatist? >> i think we should leave that to the international independent investigation. i would refrain from public comment until then and i would advise everybody, including government officials, ministers, heads of state and government to do the same. >> thank you very much for your time. the very first reaction from russia's ambassador to the european union following the eu meeting today. eu officials said they would meet later in the week and they are expect in more proposals, more initiatives with the intent of imposing more sanctions against russia, if russia does not comply with what the european union thinks it should be doing. >> thank you very much. an important interview -- ryan

chilcote speaking to the russian ambassador to the eu and concluding with one of the most important questions, who shot the missile? the ambassador declining to answer the question other than saying the investigation continues. we will be back in just a moment. our guest is still with us and we have much more on this show. ♪

>> live from bloomberg headquarters in new york, this is market makers with eric shatner and stephanie rule. >> welcome back to a rather exciting day here on market makers. i'm stephanie rule. >> i'm eric shatner. >> we are all used to writing things -- but what happens when a company rates yelp? or uber? welcome to the reputation economy where your reputation is

everything. founder and ceo of reputation.com and he knows a lot about this topic. is that about me keeping my kids seatbelt on, no food or lollipop ? >> reputation economy is the name of my new book and it's all about this topic where we have reputations that will yet us or forswear us gains in our professionals and personal lives. they all experiment in this reputation economy were not only is the driver getting rated for the passenger is getting rated. tenant can rate the landlord, but the landlord can also rate the tenant. ask so if i'm having a triple x freak fest in the apartment i read for we get, you better watch out? >> you're going to get a bad

rating. you might not get the right rate on the apartment. conversely, if someone is having a nice time at the apartment, they may have a no obligation to pay department. in all of this is getting a transferable reputation. ebay has had the longest held application in the internet for a long time. but it's not really transferable. if you're a good babysitter come he might be allowed -- lousy brain surgeon. so coming up with these analyses, that is the holy grail , that's what the market making of the future is going to be. >> so interesting. >> reputational ratings have existed prior to opentable. how important is it that uber,

opentable and others have taken to it and added execution question mark >> in terms of the growth of their companies, enormously important. >> you cannot book on yelp, for example. >> the reputation would not be valuable if you did not have a large data set. encouraged not only the liquidity from the demand side but liquidity from the supply-side you as the ordon -- as the tenant landlord have some control and if you have analysis as to who gets what kind of rate in your apartment, you are that much more willing to post your asset and inventory on airbnb. >> will there be a way to commercialize my reputation? they know me, they don't not going to show up late. they know what i want to eat and i'm going to come back time and again. never try new restaurants. >> people should be bidding on your business.

opentable orgh through e-mail analysis, people should be bidding. should they be able to see it? >> they should be able to know your score. i don't -- i'm not sure you should be able to know the guts of the score. a really good store -- a good score coming up have enough secret sauce available so people can have a good chance of improving their score but also enough that it preserves the integrity. sensitive --d be they should be incentivized to provide better storage -- to provide better service. >> today tipped well, do they show up on time? >> let's say i think on the service,pretty decent but maybe not so great, that 15% is inadequate tip.

the waiter expects 20 and he has the restaurants backing there. i like to tip 20 or more but if the service doesn't get there, we feel the same way. >> the failure only comes when there are a very small number of eventuallyl stop that waiter is going to have a reputation -- >> that is a great question. >> but i don't know that heeding me. -- that he dinged >> will what happens when you go to rome on your vacation? he should have bids as soon as you show up. will love it because of your behavior in new york and we will give you a great table. >> i would pay for that. when i show up at a place like iceland, i have to sell myself

to the concierge and say this is who i am and this is what i like. would you like a table? system keepsof everyone's game tight. you know you are on your best behavior. forf i'm going to show late the restaurant, i frantically call and say i'm going to show up late. >> it signals that every day is a special occasion and you will behave. spotstaurants, hotels or a once you are business, everyone is going to want your business and she will be snowed with unsolicited offers. >> unsubscribe is my favorite word. if you are going to iceland, you don't know. groupon sent a bunch of stuff that was valuable -- use of a very useful

technology. there's a difference between that kind of send me the offer and send me the offer that's well tailored and curated. what groupon did not do well is reward people for their behavior. they sent a lot of people during deep discounts to be single, one-time customers and that turned out to be bad for small businesses. but if you have a profile on aephanie or you and you have kia customer that behaves well, that's the kind of customer the vendor wants and will pay to get. >> you are saying a lifestyle concierge? >> it's not just lifestyle, it is professional services. are you a lawyer? there's a whole preponderance of data from lots of feedback, reviews and how your cases succeed or fail. whole reputation score

that gives people a picture of are you worth the money you are charging more are you worth even more question mark >> this is an absolutely awesome topic of conversation. i'm buying it. >> i can see it being really popular in the world of retail. if all you do is i discounts, you are not necessarily somebody j.crew wants. but if you buy a full price, they might come to you and say i'm offering you a discount because you are a customer i love and then you love them that much more. >> very transferable. if you want to try the new hot hotel property or the new hot clothing line, that is the kind of arson -- you are the taste maker. >> if you are going to buy the new hot clothing line, you better stay in her seat. when we come back, we will be speaking to the man who dresses the nba elite. eric is not the only stylish guy on this set. stay with us.

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>> this is my day -- this next section is a good one. he's making sure elite athletes make a slamdunk out off the court and in the flash -- in the fashion world. the man who dresses the nba could be dressing you with his new clothing line. here to talk about his new venture is warrior boswell. he joins us from l.a.. explain this to us. how did this high-fashion phenomenon come to be? caddo from basketball shorts and hightops to could tour at the end of the game? it,hen you think about there are 82 games, whether it's basketball or hockey eight of 41 home, 41 away. depending on the team and depending on how good they are seeingyou could end up

your favorite star 21 times a year. 31 times. if they go to the playoffs, that increases as well. it and have the body for financial means, a hookup with guys like me and other designers and it just happens. it was literally a cottage industry that spiraled. >> why basketball? we look at baseball players, they are pretty honky-tonk looking. >> it's interesting because i work with a lot of baseball players as well. sebastian, there are a lot of guys who make their mark. the thing that's interesting about baseball players is that they are unassuming. a lot of them are from very rural areas. could be worth millions of dollars and drive a pickup truck whereas a basketball player, they are pronounced in their size and presence.

dressed,re very well you draw the type of attention you want to draw and you look well. >> i think you're business is awesome and i love the close your making, when you get a star, which the process -- what is the process to make sure that particular star is working for that person? as you expand your business, how will you replicate that for the noncelebrity but still important customer who wants to distinguish himself in his own style? how do you make that scale? part,answer the first even the person who feels they don't have tremendous style, they do because they have a visual point of reference. a guy may want to have the swagger of leo dicaprio or ryan gosling. or a guy might want to be very conservative like george clooney.

you take those elements and apply them to the client. takeing custom business, i 88 measurements, so it's pretty thorough and intense. take those, we do a muslim and you put that on the client and you see if they have full range of motion and all that, itstop from comes down to the colors, what they want to do to distinguish themselves from the pack. in reference to the more scalable business, their are three initiatives going on. grover by warrior boswell will be sold exclusively in the u.s. and we are forming up with the european retail partner and asian partner. what that will do for us is allow -- i'm talking about allow usd i, that will to make good products and we have to sell it. it puts the power in our hands.

>> we've got 30 seconds left. who is your target customer and how can you be sure you're reaching the person? -- arerget consumer is you talking about the custom or the retail? >> can you repeat that again? >> am talking about they custom and/or retail end? >> retail. >> on the retail end, it's 6'2" or taller. that's a tall athletic male. >> so i don't clear the bar? fax actually, you do because in that spectrum, you have accessories. , it's a cul-de-sac where you come back and do stuff for all men, but you have to have a value proposition. what i do better than everybody else's i make stuff for tall and athletic man.

not big and tall. >> what is the most important male accessory right now? >> it's their brain. >> i would just say something that's very well fitting. >> thank you very much for joining us. a huge thank you to our guest host of the day from reputation.com. >> we've got much more coming. interview another coming up. >> we will be following bill ackman's herbalife presentation. i will be eating a live reaction from the company's cfo. >> we tell you what in-store tomorrow -- shark attack. if you were a fan of shark nato, you probably can't wait for shark nato to. bring him back, you

got something special. past the hour.s bloomberg tv is taking you on the market. scarlet who is up next. >> let's get straight to today's market will stop -- j's market. reports showing an increase in u.s. consumer prices. as we look at that, we bring in our options and site guest today with a look at where things may be headed from here. were clearly rattled last week by geopolitical events but they have since recovered and found their footing again. we see the vicks humming back down. >> another geopolitical crisis and the move last week was way overdone. we see that today, big bit higher in the futures but corporate earnings have been good.

we knew that was going to be the driver of the next leg higher and if that continues to happen, we will continue to see new all-time highs will stop this market has been relentless in its move higher and with the vicks back below 12, any buddy concerned about it being stretched at this point can buy cheap hotel low volatility levels. >> that good contacts. we have boeing reporting results tomorrow before the open. you have a trade on boeing, what is it? >> i am looking to get long going via call spreads. a strong stock on earnings and i can risk $60 to make a potential $140. six of the past eight quarters, i like knowing for a move higher. >> and your breakeven is that what? 100 3060, which is just above

the resistance. i think the stocks can really move strongly through that level. >> we will be raking boeing earnings when they do come out on that level. thank you so much. we should also note apple will be reporting earnings after the bell tomorrow. we will be back on the markets once again in 30 minutes. "money clip" is next with adam johnson. ♪

>> welcome to "money clip" where we tie together the best interviews and videos. here's the rundown today -- earnings palouse a from comcast. harley davidson, consumer spending is up. the credit suisse ceo speaks to bloomberg about the firm's biggest loss in -- since 2008. and where are the jobs, you ask? we've got the map that we will show you. in sports, kobe bryant tells us where he finds inspiration and it turns out that it off the court with entrepreneurs. rolls-royce