>> live from bloomberg headquarters in new york, this is "market makers." revenue more than doubles. revenue beats estimates and the stock is soaring already today. cashing in on obamacare. insurance companies find they are controlled in the affordable care act. and uncle ross. the hip-hop mogul is doing a set -- different sort of artist search. looking for visual artist and trying to make them stars. i am stephanie ruhle. erik schatzker is out today. we had to dig deep to find hit this other treasure.

brendan spend the weekend in l.a.. >> becoming that about my body -- feeling bad about my body. i have no secrets. at this point i am just smug about how out of shape i am. rex we will talk about joining across the gym later and how it did not work. cheers are soaring after ceo apparently convinced wall street as found a way to grow customer base and add advertisement revenue. >> i am a twitter consumer and user as well. do not know if it is the ceo convincing people. you have people who price place mars -- smartly priced stock

options. former goldman sachs banker and internet analyst back in the bubbly days of yore, hocker of things like webby and, now cfo of twitter in managed to price the stock options before the quarter reported. he has seen the quarter of the -- benefit of the quarter. a lot of really positive net gains. really hard to find anything. not only was it not better but better than the last quarter. you can see a turnaround in user growth. user growth growing at a faster pace. >> wasn't that tied to the world cup? >> the previous quarter you saw an acceleration. you saw a lot of other number so the user growth rate is what i am talking about. 2.3%. so the curve is showing an increase.

go >>t are they doing cap it is unclear. a lot of it's international growth. it is what is going on in terms of revenue per year he -- per user. they are finding way to get avatars -- revenue to pay more. a twitter value of user has increased. ,ook at the revenue per user per 1000 page views, a year ago 20%. are not talking all-time highs. getting back to where we were in april. >> the stock is doing better. a stocknot look at trading 20 times sales and say that is a great investment. i am not an investor, i am a business analyst. i look at the business and see how it is doing. >> the internal question is it

is about form. they go there and spend advertisement dollars. >> i think it is a little bit of both. market makers is fine. it is no bloomberg west. >> we have no more time for this segment. you see the way twitter is being used. many are making this out of fear. a defensive move of saying i guess i have to get on that twitter but they cannot quantify the results. theyother program said

were not advertising on twitter because they were not getting results. it now in getting great results. changed in the way twitter works. when advertisers are spending money, they are not doing it out of fear. they have lots of choices out there. >> compare it to facebook. >> a pimple in the tush. >> we do not talk that way here on "market makers." massive, profitable free cash flow freaking machine and turning the firewall and everyg more profitable day. >> they are getting acquisitions because they know people move on over time. >> one of the most amazing turns in american business i have ever is this adoption of mobile. they have completely changed the business. twitter was born on mobile.

moster adopted it to where of the revenue comes from opal and generating more revenue than ever before. >> it is probably focused on health care and medicaid. i would like you to stick around as a consumer if nothing else. we need to turn our attention from tech to help care. big insurance companies are reporting this week. aetna, humana. near year two of the obamacare insurance exchanges, i want to bring in jeff jonas, per folio manager at the firm helped and wellness trust fund and shannon pettypiece who covers the industry. let's start with you. carried there is strong results but expectations were high going in so investors are focusing a little bit on the negative and they have been selling off a little bit yesterday and today. >> because they have the new customers.

what happens if they are sick and need lots of services? >> it is still early on. right now it looks like they priced the products correctly. they do expect them to be older and sicker. i think they have accounted for that correctly. so far seems to be going well. aspects, one two is getting people into the system. that is great for insurers. the other part was slowly trying experiments to control cost over time. any sense now for how successful they have been? >> costs have slowed. more financial crisis. it is already a little bit inflationary because relatively generous benefits and low co-pays for preventative medicine and things like that. >> does that change the forward look. does that mean they will not grow at the pace they have been

growing? >> that is a concern, but the whole health care sector will be slowing down. we also want to control costs. but, if we as a nation are going to start granting back on health care costs, that has been a big driver of the economy. health care has been job growth and job creation. if we are cutting medicare payments and payments to doctors, hospitals will have to cut staff. that is a real concern. what we're waiting for. premiums are next year. there are a whole different variety of indications. if the population who signed up for obamacare turns out to be a lot sicker and expected, and the early indications are they're not that bad, but it costs are going up because of the economy or because we have a lot of sick people, that will be passed onto the consumer.

will be passed onto all of us. >> we know hospitals are consolidating. from the insurer's perspective, ? are we this drive cost worried about monopolization within local hospitals driving that up? >> definitely concerned about that. we see it in some cities like massachusetts where high-profile hospitals are expensive. we are hoping to coordinate care that the large organizations will communicate with each other. the different doctors will really work together to keep the patients healthier in control cost that way. >> the biggest concern by insurers is one of the biggest concerns is drug prices number one. two, hospital consolidation. california, pennsylvania where you will have a one-stop shop in town and that one town hospital will control everything. >> i think it is interesting

insurers are driving transparency. we have the lobby working toward transparency. humana doing this right. >> they are. for years insurers have been blamed for the cost but they are now trying to drive the cost control. maybe even more so than the government. because the less to spend on health care the bigger the profit for insurers. when you go to the doctor, that cost the insurer money. you pay the $300 per month premium you do not go to the doctor, that is all profit. they want to keep costs down, particularly drug prices going up and up. until they deny your claim. >> is there a sense they are happy with obama caret? they got what they wanted. .> a have been very responsive they have lobbied a lot. i think the administration has been relatively responsive to

what they need. that is actually a criticism. >> that reason barring obamacare subsidies. i think it is very unlikely. first of all, going to the full appeals court, and then it would potentially be heard by the supreme court. we really will not know for two more years. i think the expectation is that it probably gets appealed. >> in the meantime, more uncertainty and that means more risk. a lot of people i have talked to said unlikely that will stand. now you have the possibility out there you are gone to lose the new customers. if it did stand, with the exchanges collapsed? >> i think it would create a lot of uncertainty. >> we are not looking at a closed system. there is no pressure on the state -- there is now pressure

to start accepting medicaid subsidies in building their own markets because they see how they are working in kentucky. next two years is not a vacuum. there will be political pressure at the state level to make the subsidy problem irrelevant. you can sell someone the insurance that was once $300 is now 800 dollars. i'm not a political analyst. >> when you look, who is your favorite? >> ballpoints and united health. >> what about the other two? >> humana is riskier because almost all tied to the government. we have a small position in humana but it is riskier. >> wellpoint and united health care. number one and number two. shannon pettypiece in jeff jonas of cavalli funds. because medicaid is on his mind.

stick around. coming up, argentina on the brink. the company about to default -- country about to default for the second time in 13 years. slamdunk butte a microsoft -- microsoft former ceo may be the new owner of the l.a. clippers by next month. we are digital. see our stories an interview at tvomberg.com and bloomberg plus and tablet. we are streaming on apple tv and amazon fire. ♪

could officially default on the debt by the end of the day as negotiations continue with creditors owed 1.5 billion on that aiding back to 2001. a federal judge will not let

argentina pay other bondholders their interest payments unless they also pay out creditors. that would trigger a default as early as 5:00 eastern time today. newsing in the bloomberg reporter covering this story. clearly this is on everyone's mind. what do you think? do not really know. there have been a lot of the turn of events. there have been several meetings between argentine officials and court appointed mediator in new york over the past couple of weeks. yesterday at the final hour the economy minister showed up. 12 hours of talks and people are feeling very optimistic. >> the federal judge in new york is because that is where the bombs were initially issued? >> does argentina have the option of defaulting on just this debt? because there is cross

default. it would not be defaulting on local law bonds that are separate, not from the restructuring. it would be across the default. not just the $539 million coupon payment lost. toinvestors choose accelerate, you're talking about 30 billion dollars. investors have a choice. >> what has been argentina's rationale of not wanting to pay? seems like they're saying i do not want to pay the sophisticated investors. >> for a long time the rhetoric was we're never going to pay these guys, they are trying to cheat us and our vaulters and they wanted better deal than anybody else. that was the rhetoric for a long time. it was like posturing. recently it turned into something more complicated. you have sympathy for the double. >> hate the game, not the

player. whether we are talking about holsinger, kyle bass or any other hedge fund manager, they're living within the confines of the rule. if the government does not like the rule, change them. >> the player is the game. you cannot write a law, a bond structure that will prevent someone like paul singer from deciding he does not feel like accepting a default. there is a moral hazard on the part of the creditor, too. we have a money with hot money flowing into money around the world, going into sovereign bonds. if people do not feel like they have to be careful, then they will not because they can always haul it back out. >> paul singer took a risk investing in the bonds. >> you can write a contract to be what you want it to be. since 1964.d they do not really exist anymore. that is the argument from moody's and other experts that say this is a really particular

situation. have the particularities of the attitude of argentina. very specific to the argentine government. the fact that they have restructured twice and refuse to improve the deal and the fact that they put the obstacles in the restructuring that would prevent people from being able to get a better deal, there is a thing called the lock law, which if you do not going to restructuring right now, you will never get paid. a problem, argentina is not the most sympathetic. >> precisely. ims, multilateral organizations or countries that have come to the defense of argentina, they have all been like we have a problem with the ruling that argentina is not the most sympathetic. lex so what happens if they default? >> -- >> what happens

if they default? >> almost no one knows how the mechanics will work at this point because there is a possibility the deadline comes and goes but argentina figures out a settlement in like 48 hours. trigger or notl trigger. in terms of how long for argentina to come to a settlement and figure it out, that is a telltale sign or how deep the effect of the economy will be. >> my question to you, do you feel like this is why credit derivatives give the name weapons of mass destruction. you feel that is not real investing? >> real investing or not real investing, i just want the people making the investing to feel the sting of the risk. the german banks heavily invested were bailed out by the irish taxpayers.

german savers do not feel any obligation whatsoever to accept the loss, given they just think money in spain and greece. >> that is not a guarantee you will get bailed out. >> exactly. there's a difference in the structure of a bond contract and hauling any out when things go bad. are in have bonds that various jurisdictions. again bonds technically would be in default within an hour. when argentina needed money and they issued debt, they did a road show. they went to see investors around the world. >> 1999. >> who cares ago what does it matter it was in 1999? argentina got themselves into the situation. they did a roadshow and put themselves out there. >> qualified institutional buyers. not to my granny.

>> there are a lot of grannies who got the debt. not just holdouts. >> grannies and italians. italian grannies. >> no cost of for you, stephanie ruhle. >> you are going to work overtime. giving us the latest on argentina. she will be with us throughout the day. up, the federal reserve has been cutting back on stimulus. we will find out in a few hours if another one is in stores. ♪

>> coming up, waiting on the fed. we will see if the fed cuts back on the bond buying once again. he has made a fortune on hip-hop

and fashion. now branching out to another form of art. stay with us. ♪

>> welcome back. we have breaking news. snapchat, one of your favorite apps, they are said to be in funding talks with alibaba and valuing the company at $10 billion. extraordinary. a ceo under the age of 27. you take pictures with the sole purpose to delete them within the next 10 seconds. >> they have 30 employees. market cap would shoot through the roof of

anything we have seen so far. beeep thinking this has to it. then it is not. 10 billion from alibaba. >> we are in a revolutionary time. we have not seen disruption like this. does it take you back to 1999? >> i feel like it was an interesting idea about making communications disappear instantly. facebook has gotten slightly more snapchat. innovation, not a platform and innovations can be stolen. >> we will cover this throughout the day. we have just seen this headline cross. alibaba come a we know they are not shy when it comes to things may have interest in. better-than-expected news on the economy. second quarter gdp rose at an annual rate of four percent. the government revised the first-quarter figure saying he was not as bad as the first estimate. all this coming a few hours before we hear from federal reserve policy makers. with us to break this down,

michael mckee. the global head of fixed income strategy at jpmorgan, magma claim -- made mcclellan. -- meg. >> we did have a great quarter. looked really good. another thing we watched is the inflationthe fed measure. we will knock at the excitement of a press conference. or the dot plot. where the fed tells us where they think the economic indicators are going and where the rate hikes will be. we will watch that statement very closely. in the statement we are looking for things like recognition of better economic growth. maybe a comment on inflation. also, maybe a reference to housing. housing was weaker than expected. theyow part of the reason keep the number down is to keep the housing sector going.

?> remember george h bush i will respond by saying not going to do it. they will not say anything they have not said before. .aybe get an edge description of housing slightly weaker. go on trading however you will trade. august 20 well we will get the new minute. we will talk about the exit strategy and perhaps the timing. it really will not say anything today. if they do, a big mistake. >> feels frustrating we have done this much time focusing on what the fed says because i think it is an indicator that the only thing happening is monetary policy. there is no fiscal policy. what the wayactly

we feel as investors. frustrating to not look at market fundamentals and have the anchor of expectations for 10 year yield. instead, technical. of foreignlot central bank buying in the u.s. market. with not going to be prudent. i love that skit. i think one thing we could see today is fisher dissenting. he has been very vocal. that is something i think he might do. >> they are on track at this point. pay for another 10 billion to be done in october. >> we have known how we felt about this for a while. he has been pretty clear. are you worried about a depression and long-term growth? attribute it to this. a lower participation rate. is this something that keeps you awake at night?

>> not necessarily keeps me awake at night. to go down.ends we have been through the industrial revolution and big urbanization of population that happens. massive growth spurts. tech a logical innovation. maybe not snapchat in this case. it will drive productivity and growth but nothing like the time of industrialization's. that is natural for a developed economy. snapchathat -- >> not good news for the economy. how many kids worked their? >> 30. like comedy work at gm or ford? you look at the s&p 500 and if you rank them by number of employees, 180 nine or something like that is facebook. everyone else has hundreds of thousands. if this is the future, it will leave a lot of people on the

sidelines. >> i have to think this ends in tears for snapchat. b&b and uber, air these are real people investing. >> now we are living in a virtual society. you do not necessarily need to have something you touch and feel. words a lot of people five years ago saying what do people use facebook ford? >> i can still devote a lot of time to stalking ex boyfriends. >> you may want to put money into snapchat. i think it is insane to say we world. a virtual i ride a real train. i think it is exciting that we have valuations for airbnb. an actual dooren and go into an actual house. >> i agree with that. a much morer has

significant role in my life and facebook does. >> i am ordering tickets online. i am using amazon prime to order a lot more pantry goods in things for my house. definitely the way we are living and interacting with that technology is changing. >> two thoughts come to mind about this. i do not know how you put virtual valuation on a virtual product but alibaba suggest you can also include the billion people in china as potential customers. most of the virtual products are not being sold in china amid their being copied by the chinese. remember these guys turned down 3 billion from google. what a great deal that was. turning point is so different. they do copy services that are implemented completely differently. one thing i have been

interesting to see is whether these chinese companies are a trade barrier. i do not know whether they will be able to grow outside of china. perhaps snapchat is an acquisition. some networks outside of china that artie has a foothold. >> you run fixed income. given the enthusiasm, the glee, what does it mean in fixed income? >> i think yellen had comments around social media. the stocks went up so we will leave that one alone. i do not look at equities versus bonds because they own them for different reasons. matching, pension funds, foreign central banks for foreign exchange reasons. individual investors. 90% is retail money. half of that is retirement accounts. any look at fixed income, people do not own that for bonds versus stocks but diversification or income or asset liability

matching. when you step back and look at the overall bond market, the heavy central-bank invention takes you away from fundamentals and looking more at technicals. get lowmer when you trading volume and sense of complacency and low volatility, if you see high-yield outflows, you will get times of intermittent volatile spread widening. that may be an opportunity to thebecause we do not see low yield environment dramatically changing. economy we see investors from asia and investors thing u.s. seller assets that looked relatively cheap. >> yields really cheap right now ? not even close. cheap.tively fundamentals are still there. technicals driving spread widening. to have you on as

always. a favorite here. favorite, our own michael mckee. he will be back for live coverage of the fed decision on bottom line. stay here. ♪

>> the l.a. clippers drama is nearing an end. thatweek a judge ruled donald sterling no longer has any authority over the team and his estranged wife has the power to finalize a deal to sell the team to sell the team for a whopping $2 billion. what did he have to say >> i think he has relieved. i think a lot of people are relieved. the community is thrilled and excited.

he talked about having the potential to be the american team. you think of how people around the country have rallied in support of the clippers, there is a lot of fans out there and potential new fans. ,ex $2 billion for this team will this change the price point in all teams out there? >> artie has. this is troublesome for adam silver. these prices.ify is a small market. they need a new holding. there is not much buzz in milwaukee. hard to get free agents there. >> why would a guy i lies rate who clearly understands pricing pay that number? >> i wonder what would happen to cousin was only a week after he announced he made the bid that the clippers came on the market.

we should have waited had we known the clippers were coming up. what they pony up the money, we do not know. however, the chance to get an l.a. ranch eyes, big difference. >> this is huge. something we are seeing in european soccer as well. shakes by hang second and third tier teams in the hopes they can crank money and turn them into a premier league team. the club is limited. they are limited in -- here by law because they have an monopoly. there are only so many storied clubs that can be bought. by second division, pour money into it, get promoted and then share the riches. the question, can see ballmer turn this into something that will make money or simply a vanity plate? a lot of people very enthusiastic.

his commitment never really waiver to the team. he thinks he can really do serious investment. >> he cannot wait to get approved and take ownership of the team and really start to participate in a way that an owner can. i did not think he would disappear before we got to this point. rex he is there now. he has some deep pockets. >> what i would like to see, what did he do with the basketball on the business side? that's not forget when steve ballmer went after a team for seattle, he had phil jackson humming and to run the basketball operations. who will he bring in on the business side that go will he do it himself? a business guy? we don't know. plenty of owners tried. he will not comment until it is closed. he is not going to say anything. topwho is steve vollmer's

petition? is that the lakers? >> the star is amazing. the fact that we have another team in the town that does not have that kind of star power, could they hurt the lakers? >> i will tell you how they view the .ompetition it is the monster truck pull. any piece of insmed -- entertainment can go toward, that is the competition. >> there the weather is so great they do not need to go to a game. >> absolutely. it is not good enough to be a good team in miami. you have to have a star. day i can't believe. >> you know you're going to get called out. >> i do like the fact that he gave himself lots of options to go somewhere else in the very near future if things do not go his way.

>> congratulations. sharing the full interview on street smart. watch the full interview today at 3:00. our own bloomberg news coming up. searching fors america's next big artist. stay here. ♪

media mogul russell simmons made his mark in hip-hop and now looking for a different artist. launching a nationwide search for the next big name and visual art. i sat down earlier with russell and senior brand manager victoria perez to talk about the artisan series. i asked him why he is getting involved in this type of artform aside from music. take a listen. been doing this forever. my older brother and artist. he became my showcasing artist.

showcased the work in that jam offices. then we started the rush philanthropic foundation. >> this program is five years old. >> i will tell you a story. >> the brand immediately gain traction. ever since then we have been so ingrained in that community and to whot is so important we are and development of society overall. >> so for you a five-year journey. from the beginning of the series until today, what has been created? have these big events. the culmination of the event that happens during the art basel series. in miami at the scope series. artists from all over the country, and compete.

chosen. we have had a lot of success stories. rex really an effort to bring up up-and-coming artist and the next generation and give them a national space to showcase work. this is a competition where artists across the nation can submit our work and then get the opportunity to travel to there with us and we take the winner to scope new york next march. program, wee of the have had over 10,000 submissions. furthermore, people can vote on the different our work. this gives us an opportunity to show cake -- showcase work. we have over 100,000 people who vote every year. artistre than being an and businessman, you clearly have a commitment to celebrating culture in the arts.

why is that? >> i think schools are like prisons if you cannot cultivate creativity. today we have all the information on our fingertips, ms. of -- memorizing a bunch of information is almost useless. it is problem solving and the creative process that matters. and you can have the information at the tip of your sunglasses, the question is, what do you do with it? math and science and some of the information we have in our youns are not useful unless can be created and figure out what to do with the information. creative to exercise muscle. we forget society needs creative people. if you are not innovating, you do not get a chance to figure your way out of the struggle. that is an important thing to life.through in the creative process is key to anyone survival and any society

survival and any individual's happiness. >> what is the business case for bombay sapphire wanting to be involved? >> art is an inter-culprit to the development of communities. a form of self expression. when we connect with people on things they love like art, film, design, it helps us to elevate our brand and have a bridge of communication gap with people. >> do you think today there is more opportunity for young people to explore the arts? is actually are lot less. we had art programs in schools when i was younger. as one of the parts of our curriculum and now we don't. it is very important. the next generation has to be problem solvers. the whole education process has to be rethought. certainly the arts and creative

expression has to be cultivated. do for what we have to the next generation if we want to survive. >> that was my conversation with russell simmons. pedroia perez, senior brand integer for bombay sapphire. you got to say, russell simmons, if there is one person who has changed the face of hip-hop, truly developed into an icon, philanthropist -- across industries, has to be on gold russ.- uncle >> i think that kind of premium liquor used to sell itself. what you are thing now is the rise of craft spirits and they have a problem, which means they need to sell themselves as a high-quality gin and have distillery's competing with it. but i think this is a fantastic way to seem generous and awesome. >> having the corporate social

responsibility matters. you do not just want to be high end but reach out to everyone. we will be back into. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> digital diplomacy -- how the government plans to win the future by encouraging innovation. another $10 billion startup. the next one may be sn apchat, which makes an effort disappearing photo messages. republicansd want to take big money out of the political game. welcome to "market makers." i am stephanie ruhle. my partner erik schatzker is off today so we have been in greeley

with us -- brendan greeley with us this money. are you a snapshochat user? >> i am not. my abs right here -- >> there is nothing in the world i'm positive i want to delete in 10 seconds, unless -- >> they say there is a use for other things. worth be those things are $10 billion. we have another great guest here for the hour. he worked for hillary clinton in turk --e department and help her combined diplomacy and digital media. now he is at columbia university. we have a lot to cover in the hour, but i am old and cranky -- >> you are not old. old and 20 -- >> slightly younger but

crankier. >> do you think is going to change diplomacy? >> if you look back over hundreds of years, it is usually white guys wearing pinstriped suits and red ties talking to other white guys in white shirts and pinstriped shir -- white suits and pinstriped shirts behind closed doors cutting deals. we know longer live in a world -- no longer live in a world where three or four white men behind closed doors can set the course of a nation. citizens have more power at the expense of the traditional hierarchy of the government, and if we are not engaging the outlook -- if we are not engaging the public, we end up absent of influence. >> isn't there a reason those meanings are behind closed doors? the delicacy behind diplomacy. how are you going to navigate that in 140 characters to the masses? >> we are not replacing the

necessarily quiet, discreet meetings behind closed doors. we are saying we are going to tweet our way to a bilateral or multilateral agreement. it is one more tool in the toolbox of diplomats. it is important to take a non-utopian role -- in view of these five forms. they amplify the existing sociologies on the ground. they help give voices to people who otherwise don't have them. it helps with mythbusting and other such things but you cannot take a techno-deterministic role about this. you cannot tweak your way to democracy and freedom. in iraq is like isis using social media really well to drive the conversation and a clumsy. >> there are a lot of actors doing this well, people with white hats, black hats, gray hats. terrorists tend to be pretty good at this, because they often unnuancedvocative,

language and images to incite action. one thing i've seen is that a lot of european governments, smaller countries that are not as constrained by nuance, a little bit less risk-averse and a little bit more entrepreneurial, have gotten out there and been quite effective. >> like who? is the president of estonia getting into a twitter fight with paul krugman? fighton't know if that moves the ball forward. let's think about one of his neighbors, the foreign minister in sweden. sweden is not a powerful country on the global stage, but the foreign minister has made its standing and influence on things to facespean affairs as far away as indonesia. >> but isn't that the argument that it could take you back a few steps? when a political leader in estonia gets into a fight on twitter with paul krugman, that does not seem like a positive. it seems like it would take you back. >> it is positive for him

because he is trying to convince people that krugman is wrong. >> but is that something you want state leaders doing, getting in tweet-offs? >> if we go back to the arab spring, you say we were not as active in north africa as we should have been. we have a chance over the last three years and say, number one, how did we do, and 2, is it worth trying to keep up with the events moving way past our ability to control them on social media? >> the key is not to follow events. and startto have wearing to the mets in front of their computer screens saying, "ooh, this hashtag is trending, we better get on it!" what it is is you have got to recognize that these massive youth demographics who are propelling the change for both good and ill throughout the middle east, they are getting their content from satellite television and social media. forall of article matts --

all of our diplomats to only be engaging with the lea -- engaging with elites completely isolates us from the powerful youth segment. >> you see the value in president obama is tweeting at k aty perry? grabbing for followers. >> that has nothing to do with what i just said. -- it is something entirely different than something election-related in the united states. surgically surgically identify to the fence sitting youth, age 13-35. >> how are we confident we can do this well? russia is in complete command internally and parts of ukraine of social media message. they call them the $.50 army, sitting there for $.50 a day hammering out responses for web forums.

how do we compete with that with without making. ourselves? or 5 have done this for 4 years now and it has not done badly. bustingook at the myth that our diplomats have done around the world, from dialing back the rhetoric about what it means for an american to adopt a child in russia to did we overthrow leader x and country y, it is pretty effective. it is an inherently messy space and there are lots of gotcha opportunities and it does not lend itself to the kind of control that hierarchical figures like in this space, but you have got to get in the game or go home. diplomats ifwer they are not getting in a space that is truly informing tomorrow's politics. >> the breaking news we brought

you in with, the bloomberg exclusive that snapchat is in talks with alibaba for a new round of financing that could value the little start up at $10 billion, according to people with knowledge of the situation. let's bring back "bloomberg west" editor-at-large cory johnson. >> a big number for a company with no revenues. this is a valuation equivalent of electronic arts or burger king. it is a huge number in terms of valuation. you are asking me to make sense of this, why is this justified? first of all, the deal isn't done yet but there are 2 interesting components. the first is snapchat the business. a former morgan stanley analyst does this great internet trends report every year and she talks about messaging. whatsapp is -- doing, according to her, 50

billion messages a day. snapchat is doing 1.2 billion messages a day -- >> ok, but that is volume. does volume translate into revenue? ali baba and the rest of the world theoretically see the value there? >> we are going from technology to connect everyone to technology that is only nice to people in the phone book. it could be a platform for the revenues -- and not saying there should be an investment like this but when people look at this -- that is why folks are so excited about this. so many people are connecting on this platform. sending pictures of all kinds of junk. >> is that why they are excited or are they excited because other companies will be valued -- >> the social spaces in china and the u.s. are so different. is there going to be a problem with a chinese company -- i am not even talking about regulation -- just in terms of

culture, acquiring a u.s. based social media platform? >> that is based entirely on the degree to which they dig into how the organization is being managed. if they stay relatively hands-off, i don't think it will be a problem. track once to run snapchat the same way he runs ali baba -- >> in terms of global politics, chinese companies are able to do things in china that u.s. companies are not. google is not in china, facebook is not very much in china. start tohead chinese-based companies that don't have to compete with the likes of amazon, facebook, snapchat becomes a messaging cut from the can be used legally in china, suddenly they have a massive global market that competitors cannot get into. it is more valuable to alibaba

than anyone else. >> thank you for breaking this down come a cory johnson. now we take you to argentina am aware the government says it is one step away from solving its debt problem and many investors are saying "i don't think so." just hours from now, they could be defaulting for the second time in 13 years. the government's economic policies that impacted buenos aries businesses in surprising ways. the family has successfully sold luxury cars in argentina through crisis after economic crisis. but recently, even their sales figures have had a serious slump. last year, a dealer like this kara a sell about one day, 365 cars a year. right now, our business like this. luckily, they sell seven cars a month. >> until recently, buenos aires

residents treated car dealerships like this one as virtual currency exchange is. by dollars,ay to with four wheels. >> restrictions meant consumers needed new spots to safely parked there pesos. on hand youve pesos are losing money every month because of inflation. the way to pursue that money is -- preserveury car that money is to buy a luxury car. the unitsa 10th of were luxury vehicles. buying cars became an asset class. >> exactly. it was a clear sign of the successful way of getting asset that preserved its value after a correction in the exchange rates. >> a new government tax at the start of this year put an end to dealershipsd lead

like this one in buenos aires to close at stars fo -- close its doors for good. just before that came into effect, one businessman spent $35,000 on this mercedes. he never drove it, leaving it untouched for the herreras to sell in confinement. seven months later, their asking price is $85,000. and it is not just the luxury market that is backfiring. auto sales across the board have $88,500 in june of last year to $53,000 12 month later. realize what are the consequences of their short-term decisions that they made. >> this patchwork approach to economic policy has forced businesses to apply the brakes. while they wait to find out what is around the next corner. he joins us from buenos

aires. i know some expert mary percentage of $100 bills are actually in circulation in argentina. did you find anybody with big chunks of dollar bills under their mattresses? >> i don't know about under their mattresses, brendan , but standing on the street corners, the exchange rate is eight aces to the dollar and they are selling it at 13 pesos to the dollar. you will hear these men shouting bia," and thatam is how these argentines are getting access to the blue market of u.s. dollars. joiningwn willem marx us from argentina. when we come back, silicon valley heads to washington. plus, changing the way we elect our leaders. we're speaking with a law professor who plans to get big money out of elections. ♪

>> welcome back to "market makers." i am stephanie ruhle. social andnton's digital media group at the state department, and we want to look at the issues that companies are facing in washington. michael beckerman is also here. michael, welcome. >> thanks for having me. >> what are you most focused on? >> the number one issue people are talking about is net neutrality, the ability for internet users to access open internet, whatever website they want without gatekeepers stopping them from visiting websites they want. immigration is another huge issue facing our company as well. >> i noticed internet association has backed off from advocating for title ii treatment of internet carriers,

which would force them to become common carriers. that seems to be the most efficient regulatory solution. i am curious as to why you aren't advocating it wholesale. >> not totally accurate. our position is that the fcc should use all the authority they have. we are focusing on at this stage that the user experience is an open internet. >> but 2 court cases have said they don't have the authority unless they use title two. >> they have a lot of different pieces of authority they can use and we are saying to use all of it. the rule that got struck down did not apply to mobile. in today's managed users -- today's day and age users except the same expense on your mobile device as well as under desktop. michael, did the fcc chairman tom wheeler get out in front of the president on this? i remember president obama come when i was running technology back ina for him his first residential campaign said -- i was there --" i will

take a back seat to nobody," pumping his fist, in commitment to net neutrality. he appointed the fcc chairman. two on the same page? as his views evolved on this? >> what we have seen on paper doesn't match that and we are vocal to make sure that the user experience on the internet is what we have come to know and love to allow the internet to flourish. one of the things i find interesting on this topic is that the internet experience in the u.s. is so fundamentally different from most other felt countries -- other developed countries. is this something that commerce is aware of, that the way our market is structured is driving speeds down and costs up? that is clearly something congress is paying attention to but this is the future of our economy here. >> do they understand that our

market is exceptional in some ways? >> it is hard to make apples to apples comparison. some european countries are the size of new jersey. the fundamental point is that internet users should be able to access whatever legal content they want on the internet without deep take -- without gatekeepers slowing down traffic. >> do the phone companies and cable company's just flat out own congress? >> oh, my god. there you go, live tv. >> do the phone companies and cable companies own congress? >> i like the side we are on because we are on the side of voters and internet users and that will be out whatever kind of lobbying -- >> ooh, ooh, i have an answer! yes, they do, and that is the problem. one of the problems we are seeing -- congress is so what is the-- obeys

phone companies want and have for so long. we are seeing a shift in congress and they are very surprised at the leverage internet corporations have, particularly over the sopa legislation. >> i was there and i saw the thing blew up in my face and was remarkable from where it started and where it ended. >> why? >> because there was a citizen-centered movement that had nothing to do with lobbyists that literally flooded anybody with any influence in washington, d.c. i was in the west wing of the white house at one time and i was in the office of the secretary of state and people have significant influence said, "alec, what in the hell is this sopa thing? my granddaughter called me from college." it was 17-, 18-, and a 19-year-olds calling their parents and friends and

inhibiting a significant amount of hands-on efficacy and took something and flipped it. >> members of congress at the same time said the same thing to their staff, "we are never going to get caught on the wrong side of this again." did that change what you are doing in d.c.? >> i think that is certainly changed washington's perception of the power of internet companies and users and this is something we're here from the grand and grandsons and children of older members of congress and regulators because that is the side they are on. forcing this issue in front of the fcc and not congress. but usc over one million people filed at -- you have seen over one million people file at the fcc, outpouring of support in favor of open internet. >> you have to be the bad guy because we all agree on this. >> fine, fine. uber, companies like hoover, what is most important to them? >> open-market. the challenge these companies some communities

have regulations on the books since 1970's and 1980's, pre-internet, and they have to work on these revelations that are clearly outdated. in other communities you have new regulations coming in from entrenched interests trying to block them from accessing the market and competing. >> is this surprising that we are seeing republicans like grover norquist and newt gingrich coming out and saying that democrats are blocking innovation? >> it doesn't surprise me. unfortunately for grover and newt, their party has gone so completely far to the right that they will never be able to politically capture this community until they move on social issues that have nothing to do with their business models. but newt and grover are right in that this present the political opportunity for republicans but much more importantly present an economic opportunity for americans. there are a lot of apartments in queens, in the bronx, in

brooklyn, where people have to work 2 jobs and they are getting indispensable income because they are ready to take that spare room and get a couple hundred dollars a night for a printmaking that co -- night for it. with local comport relations is not easy. and others uber going to have to do to meet the right nation's halfway? it is a little disingenuous to say that we are not a website and we don't have to do with this. >> they should be treated like a hotel or -- >> why not? that is what they are serving. that is what airbnb is -- welcome, this is the stephanie ruhle inn. >> you cannot fit a hotel regulation -- >> technology platform or technicality that they have to get around? >> i wouldn't call it a technicality. of airbnb users are

able to stay in their home because i used the service and you have 2 communities in the united states, some that shun technology are left behind and others that say, airbnb, open for business, come to our community. >> i am with you on the value and virtue of these platforms but i think that making the argument that they are not providing transportation services, that they are providing lodging, is not going to hold up -- >> i am making document that they should not be treated the same thing as a taxi company or hotel -- >> but they say they are going to replace taxi companies and hotels. we would be per raft of regulation altogether. -- bereft of a regression altogether. >> no, it is a saying not to put that round hole, that square peg in there. >> google, netflix, paypal, do they all agree on net neutrality? >> we represent some of the largest internet companies you

mention and a number of small committees and it is important michaelrybody -- >> beckerman, head of the internet association. we will take a break. stay here.

>> live for from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> i am stephanie ruhle. my partner, erik schatzker him is off today, so lucky you, lucky me, brendan greeley is with us, as well as alec ross, hillary clinton's technology group at the state department. a political action committee has found an answer to the money in politics -- spend even more money. the recently formed group kicked off a $12 million advertising campaign to help elect lawmakers who support proposals to

diminish the influence of big donors. one of the men behind the movement is harvard law professor lawrence lessig. professor lessig, tell us about this initiative. >> the idea is to convince people in washington of something that they say is actually not true, that americans care about corruption they see the government suffering under. we wanted to prove that first and 2014 by running an election in 5 cycles that would demonstrate in these 5 districts why people will vote on the basis of this issue and they will take people -- kick people out on the basis of this issue. if that is successful we want to come back in a very big way so that we can win in congress minute to funnel model reform by 2016. >> larry, it is alec ross here. i understand you have partnered with a well-known republican, mark mckinnon, here.

are you committed to making this a bipartisan effort and not just something to eat act progressive democrat -- to elect progressive democrats? >> absolutely. there is no way we can win on this issue in congress unless it is across partisan issue. mckinnon for with many years on this issue but our objective is to bring people from both sides in. we announced this week the first to 2 races we are going to be in. one is a republican primary in new hampshire. the other is a democrat where we are supporting in iowa, the iowa 3 district. we are fiercely committed to the idea of talking about this issue in a way that appeals to republicans and democrats alike, because reform is not a liberal issue. reform is as important to conservative republicans to get what they want as it is to democrats to get what they want. >> professor, as part of this you need to find the money but

you also need to find candidates. how are you going to find candidates and have you found a couple that you support? >> that is actually very hard because when candidates get to be competitive, the political experts descend upon their campaign and they tell them this one thing, don't talk about money in politics because people don't care about it. we have got to come back at them and show them the data and show the responsiveness of the people to this issue to convince them to talk about what they really want to talk about. one of the first races we announced here in new hampshire, republican primary, is for a two-term state senator from new entrepreneur, businessman, conservative republican but literally the only republican running for the united states senate who has openly endorsed the idea of changing the way we fund elections. he is rare. part of the reason he got away with that is that he was such a longshot that people weren't really paying attention to him. but now that we have focused on this campaign, i think we need

to demonstrate why when we talk issue, when candidates talk about this issue, the public will react and respond in a way that gives candidates a reason to try to make this the issue they find out. have raised over $10 million so far. have you raised that from a handful of people or from everyday people who have been compelled by what you are trying to build here? >> ok, so that was the softball. i appreciate that. [laughter] 50,000 people who have contributed to this. we have a handful of large contributors. we did this in a number of stages. the first stage was $1 million and we did that and 13 days. that was matched by 16 people. then we launched a $5 million project, the contingent commitment to raising $5 million by july 4, which we did by 9:00 eastern time. i am in the process of securing the final matches for that. that will be another handful of

people to match that. we have an extraordinary number of people, literally more than 5000 people who have given less than $100 -- i'm sorry, less than $20 to support this campaign. the average contribution missing is just about $100. -- do average contribution we have seen is just about $100. this is a broad-based campaign. -- in at successful successful election year you get 10 members of congress committed to this. how do you go from those 10 to the rest of the 500-on, is 500-odd, a huge leap? >> we need to be hugely round,ful in the next 2016, to get to 218 in the house and 60 in the senate. we think that is a plausible number, given the calculations we have commissioned over the years to study this district is

this -- district by district. the first step is to convince americans in the beltway in washington that this is an issue. then 2016 will be more plausible to people and we will give the next president, whether hillary clinton or randy paul, a congress they can work with because it is focused on getting the right answers as opposed to raising the money to get reelected. >> thank you so much for joining us, harvard law professor lawrence lessig. it looks like you are somewhere far more beautiful than us, professor. have a great day. in a moment, who is really interesting innovation. -- embracing innovation.

>> alec ross is still with us, former state department innovation advisor and senior fellow at columbia university.

welcome back. >> thank you. biaswill betray my own here but i don't think snapchat is worth $10 billion because i don't feel like it is innovation. can you take me outside silicon valley? where should we be looking for innovation? >> outside communications technologies. there is a wave of relatively small industries that will grow far larger the next five years. robotics and machine learning, the commercialization of genomics, the data and deep analytics, cyber, things like the future of currency payments and finance. these are all going to be billion-dollar industries in very short order. >> do you think it is one of the reasons so many big-time investors have gotten behind bitcoin? not that they believe in bitcoin specific but that that is right for innovation?

is isthing with bitcoin at lycos search engines from the 1990's? webcrawler?a vista, all those got blown away but the category of search endured. i believe the category will endure because there is so much demand for relatively frictionless transaction into high-cost markets like africa could the category of cryptocurrency endures. bitcoin defenders say is that it is good for micro-payments in the developing world and that frustrates me because what they think works is already working. where do you see that going? i know there is trouble extending to other markets beyond tenure, but we still believe that is going to help

you to make micro-payments. user in -- the average kenya has seen his household income go-between five and 20%. huge deal!a economist would say is a statistically significant number. it isms of using bitcoin possible because it has infinite visibility, but there is a cultural problem. are you going to sell somebody a cup of coffee for one one millionth? the flaws are so difficult to work with could while it might work in the mind of a mathematician, someone selling cups of coffee in nigeria, it it will be a while. >> what has to happen for that model so successful in kenya to work in pakistan -- the rollouts have not been as successful as

they have been in kenya. >> part of what has to happen is there has to be big old-fashioned anchor tenants, whether they are central banks to provide a level of insurance and transparency and accountability around the capital flows, there has to be some securitization, there has to be a big strong healthy telecom behind it. you cannot have a bunch of smart buter kids -- it helps, the old industrial companies getting behind innovation, that is what will help it endure. >> do you see this here in the mobile space? >> i do. europe is way ahead of the united states in terms of mobile payments. >> why? >> we have a series of retail banks. if you walk out the front door at number you can get to chase bank or bank of america really

quickly, but they are not building those branches anymore? in countries where there is our city of retail -- there's spars ity of retail banking they have more. if you talk to everybody under 40 they do their banking almost entirely electronically, all through their mobile phone. i am 42 years old and i bank differently than my interns. they are the ones who are going to take over the bank in this country. >> you mentioned the data as a way to focus on innovation but is there a problem that there is so much data now that it is about cure rat -- curating it to be valuable data? >> that is where the businesses are. nobody knows how to extract any meaning out of it. the obama campaign in 2012, one inthe greatest innovations

the world in terms of taking notions of data and making something actionable. if they wanted to get data about what people watched and thought and learned and got them to pull the lever for a guy named barack obama in a tuesday in a november, now they're business is being built on getting people to purchase more intelligently and other such things get it is chapter one, page 14 big data, there is a lot of -- it is chapter one, page one for data, but there is a lot of big things out of it. >> you mentioned the campaign of barack obama. so much out of that campaign -- net neutrality, transparency. has he fallen short? >> governing is far different from cap ending on these issues and he learned that the hard way. i have not crawled into the fetal position. we have not given up. blew up in his

administration so it is not the tech utopia presidency that we were hoping for but it has not been bad, either. >> governing is always harder than campaigning. >> he set expectations high. >> every new president is a transparency resident. -- transparency president. >> "market makers" will be right back.

>> alec ross is still with us. we have time for a final thought . is there an example in the u.s., a u.s. company who has embraced social media and you think, bam, they are making it happen? >> 2 examples. you may have noticed in the news that a whole lot of leaders of cartels in mexico are being arrested, because of her program we set up working with private sector partners in the u.s. so that the average grandmother on the street can anonymously report through an encrypted sms where the cartel leaders are.

this program has taken down more cartel leaders -- >> that's awesome! >> you had me at "grandmas." >> they are taking these really bad, scary guys down in the dozens. number two, the last project i did walking out of the state department, we have people surgically assassinated by the assad regime and by a collaboration between the syrian intelligence service and verizon, they were working together to use the gps on people's mobile phones to do a surgical assassination, to be able to throw in a mortar round. whichm working overtly, is why i can talk about it on tv now, created a solution with public and private sector partners that we put into digital bloodstream in lebanon sot obscure people's gps

that instead of saying "he is on the sixth floor of the bloomberg building facing the north "used somewhere northeast." >> you heard him say that the oreo ads on twitter were good during the super bowl -- >> is not public diplomacy. >> i never said -- i did public diplomacy. digital diplomacy is harnessing technology to enhance foreign-policy interests. >> that is digital policy. >> diplomacy involves a lot of different things. sometimes clumsy, defense, and of him and worked as a coherent -- sometimes diplomacy, the fence, and deployment work as a coherent whole. >> awesome. alec, thank you so much for joining us today. what a special day we had on "market makers," not just because alec is here, but

brendan greeley. tomorrow, my partner, erik schatzker, will be back, and he will be jealous because it was so good. we will send you to the newsroom. actually, we are not going to do that. we will take a break. stay with us.

>> we had such a good show i got

distracted earlier. now it is officially time for "market makers" to say goodbye. tomorrow, the t-mobile ceo joins us on the company's earnings. he is good for a tweet or 2. blockshort seller carson accused of chinese mobile security company of overstating revenue, and now it seems to be a takeover target and the stock is searching. we will have that and more tomorrow but now it is 56 past the hour and a bloomberg television is taking you "on the markets." scarlet fu has more. scarlet, i am just losing my mind over twitter performance today. >> we will get to that momentarily but treasury prices are down and stocks were rising tanks to this morning's stronger than estimated read, gdp up 4% for the period. the s&p and dow have given up early gains as traders turned their attention to the spread decision. joining me now, equity

derivatives strategist at a crest partners. lost steam inve the cash market. are we seeing something similar in the options market? >> yes, and we expected this. buy this week's volatility and sell the previous week volatility, so this trade is working out fine. forink everybody is waiting the fomc decision but there is also jobs numbers. expecting volatility as it goes up, vix trading a little bit under 14. >> if the volatility going to come today or friday or after this big data comes out? is find you will see volatility settle but it will not come off dramatically, but obviously, next week you are

going to see a big selloff in volatility unless we see some news that checks the market. -- check mark it. > -- shakes the market. >> one company we are watching his twitter, shares up to 4685 thanks to better-than-expected second quarter results. you are seeing a lot of activity in the options market on twitter. >> mainly the september 15 line in august 50 line -- >> why 50? >> 50 is a big psychological level. it is trading up after it was up as much as 30%. towas were people reached either hedge or plate momentum, rallying the stock. people are playing it both ways. some people want to capture the because the calls that

were worth almost nothing go up in value quite dramatically. 2-way flow. >> and of course the shares continue to move higher. you have a trade for us. this is a chinese company that consolidates hotel and airline tickets. it is kind of like priceline or travelocity. >> yeah, you can say that, and it is basically on the growth of ,he chinese travel industry business, train and plane tickets. they are doing a good job in terms of penetrating all parts of the travel industry. they started out in hotels and now it is train tickets and long-haul bus tickets. i am bullish, but given that the stock is going up, i want to buy calls, $1.50 or so

given the way it is trading. it is slightly more bullish than what you would expect but pricing on the upside in the earnings. >> you see that with the profit potential much higher, but you mentioned there is caution given how much it has rallied in the last couple weeks. >> around 40% since last earnings. >> thank you so much. we are back "on the markets" again in 30 minutes. "money clip" is up next with adam johnson. . .

>> welcome to "money clip," where we tie together these stories, or videos, and interviews in business news. i am adam johnson. the car business is one that has a lot to lose. the arsons shows as his labeled for the l.a. clippers -- get our sense shows us his playbook for the l.a. clippers. a bloomberg exclusive. and an investor shows us how to take care of business in venture capital. and finally -- a bird, a plane?