plex live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. dollar stores,n two of the biggest players in the industry are bidding -- in a bidding war for family dollar. >> and mark zuckerberg is just one of the big names to take the ice bucket challenge. >> and sticker shock. the real cost of raising your kids. good monday morning, everybody. this is "market makers" on bloomberg television. i'm erik schatzker.

>> and i'm alix steel in for stephanie ruhle. we will have video of the ice bucket challenge later. was a cold? >> that is what happens. >> a lot of video this morning. a little twist to buy family dollar. dollar general is offering a larger bid after it already bid froma lower another rival, family dollar tree. joining us is howard from chairman -- howard, the chairman of divisiveness and associates. what do you think about this? >> it's crazy, because now they will have to pay a $305 million breakup fee, and it's even crazier that walmart is not buying this company. walmart has been screwing around with small stores for 20 years. they were ground level zero.

everybody wants convenience. walmart, once again, sleep at the switch. i don't understand that. as is what is going on. -- but this is what is going on. >> will there be a third player entering this bidding war at some point? >> that is why the shares are trading, because many hope walmart will jump in. dollar general could have had this asset month ago, and not pay the three under $5 million termination fee, but also a lower share fee. you wonder what dollar tree will do next. >> what do they do next? >> considering they only found out about it a couple of hours ago our, i'm not sure they are. dollar general has medically that they will sell up to 700 stores, maybe more. it almost reminds me of what happened with the cable companies a little while ago when comcast was number-one and charter was number two and number three tried to buy number

two. >> i've seen estimates as high as a billion dollars for the synergies to be accomplished for the combination of dollar general and family dollar. which is to say, the amount of money dollar general could save by limiting overlapping costs, operating should -- operations, etc.. do you buy that number? >> i think it will be much more significant because the products are almost identical. whereas dollar tree's products .re very different there will be strong sourcing efficiencies, distribution and transportation optimization. a lot of savings. also, the presentations. the power in the marketplace will be much more. i think it could be close to a billion. for the antitrust problems, the stores are identical. will be a cost. but over the next couple of years, that will be huge money

savings. if you are you thinking are family dollar today? >> if i'm family dollar, i will be on the phone with walmart. . don't understand whole thing if i'm a family dollar stock, family dollar has been failing in a very successful area of retailing. they are the only ones in the tank. their performance has been terrible. they are closing stores. they're pricing was off. they're mixing was off. i think they've got to get out of this business. they were not capable of managing their own business. just look for the highest price. bottom blame them. >> jeff, howard talks about the possibility of walmart coming in and spoiling the possibility for dollar general, and dollar tree. but i'm looking at walmart acquisition history. if walmart were to do this, it will be a real break with, at least tradition, if not the company's philosophy about acquisitions. they have historically used

acquisitions to move into new markets overseas, like ass-market in south africa couple of years ago. they never spent money on anything like this -- this much money on anything like this domestically. >> you've got sales down six great quarters. -- straight quarters. >> i'm not questioning at all be point that you are making. i'm destroying jeff into the conversation about what it departure. we do agree that if doug macmillan, the ceo of walmart, were to do a deal like this for zero lead for $10 billion or more, it would represent a significant break with the past action of walmart. -- it wouldpresent be a significant break, but that is why he is the new ceo. there better be a lot of significant breaks. >> they have been a conservative money in spending money in this way in the past. if they bid, it would not be

surprising if you saw a support that. >> furthermore, money they do not have. this is almost entirely debt. this is a gift from the federal reserve, if you will. if we lived in a normal interest rate environment, is there any way dollar general could lay down a bit of $9.7 billion? >> it has all been an ongoing gift for the mnj committee -- to me -- the m&a community. they don't know how long the financing will be this cheap. >> i have to bring up the elephant in the room, carl icahn of course. he is a holder in family dollar. he wanted dollar general to buy the company. it didn't work out. you got the feeling dollar general didn't make it off earlier because carl icahn was involved. where does this leave carl icahn in these negotiations? >> he is by and large out of the picture. yes sold off most of his holdings, from what i understand. the issue was the ceo of dollar general wanted to retire next

year. he was trying to get out early next year. now that his hand has been forced the dollar tree jumping in, he has decided he will stay on for another year to keep the companies put together. >> one of the reasons it appears that dollar general decided to do this, or in the very least can do this, is that it is so much a better business that walmart is. walmart is doing something wrong, clearly. dollar general is doing something right. what is it that this company is doing right to generate the kind of numbers in terms of same-store sales growth, revenue tda margin and stock margin that walmart does not have yet complex that is a tremendous question. they have added a category, and that includes frozen. they're pricing has been excellent. particularly compared to family dollar. the biggest difference between

that and walmart is convenience. it's huge. the customer today wants convenience. they are easy to get to. you walk down the street, they are there. a walmart supercenter could be 15 miles out of town because of all the acreage it takes to build one. convenience is more and more of a driver of the retail customer. by the way, one of the top executives of walmart said that last week. the consumer wants convenience. that is one reason dollar general is doing so well. >> a final word for you, jeff. what do you think it looks like in the next couple of weeks echoed >> i would be -- the next couple of weeks? >> i would be surprised if dollar tree came back. if based that back and said, $305 million, and we don't have to go back to our shareholders,

and we can get money out of this deal. >> is there another potential acquirer out there? >> not that we have picked up on. >> target is a little bit out there. >> they have a world of problems of their own. when we have asked people, nothing else has come up. >> at the house has fallen out of the tree. >> thank you both. coming up, a setback for rebels in iraq. they have now lost in jewel of a key part of the country's infrastructure. >> and it's not just the rich and famous taking part in the ice bucket challenge to fight als. wait until you see well scott involved. ♪

>> this is "market makers" here on bloomberg. i'm asked -- erik schatzker with alix steel. kurds have taken control in iraq of the countries largest dam with the eight of airstrikes. -- with the help of airstrikes. willem marx joins us. this piece of interceptor has as important. explain why it is so critical.

is a primary source of water for this entire region, northern iraq. the idea that this could hit -- fall into the hands of the wrong people is pretty terrifying. in fact, some of the parish murder forces and kurdish fighters that have reached the area this morning did find a series of explosives lined up against some of the walls of the dam that had not been detonated. one of the concerns is that the dam would breach and that could be very devastating for those in the region. >> given the fact that the islamic state that militants had taken control, albeit somewhat briefly, of the stamp. it is -- is it surprising that they had not gone ahead and try to damage part of it? i am no engineering expert, but i imagine this kind of scale is quite, quite difficult to just blow it up like that. you have to make sure they are in the right place at the right

time and the explosives that you have at your disposal will do what you want them to do. in terms of the rest of the infrastructure in this part of the country, they have taken over about seven oil fields, but in theory, the price for that oil would earn them $6 million to $8 million per day. i think the oil fields will be the next front for the fighting. >> as we know, they are selling the oil, but i rapidly --counted prices and making at rapidly discounted prices and making a lot less money than that. what will be the price to retake the oil fields for the iraqis and kurds? >> at think they will continue with the airstrikes from u.s. forces. this was the first time over this weekend that they really went on the offensive. it was no longer a humanitarian mission to protect refugees. it was no longer just about protecting u.s. personnel here in erbil. they really wanted to push them back from the place i'm standing

today. iraqis.as also the the defense minister spoke on national tv saying, we, the rockies have taken back the stamp. -- the iraqis have taken back this dam. the kurds have said that they were not that heavily involved, but we will take all of the help we can get. for a time, they were getting a silly nothing for the baghdad government, and that his hope that that is something they hope changes. >> given -- and that is something that they hope changes. >> given the protection of americans and the involvement, is that something that you see dissipationhe but -- the participation of the u.s., happening auto -- on a smaller scale yet complex i'm not entirely sure. britain and france have definitely said they would get involved.

weapon from france are here within the hour. i don't know how significant the u.s. role will be. >> willem marx, in iraq, on the near the misrule dam that has been read -- the m been retaken has by kurdish forces. >> if you take a couple years back, looking at foreign direct investment at $1.6 billion into a rock, very appealing to a lot of companies. veryaq,he rock appealing to a lot of companies. how does it look now? have seen some pullback as they have pulled people out, but at the same time, critical function and battling isis is

still going on. you see the concerns from the turks regarding their own current account and trading with the rock has sort of halted -- with iraq has sort of halted. >> if you are in investor in a , you understand these things will be a risk. , atquestion then becomes what point does this continue for so long at such a level of intensity that you begin to grow concerned that it is not what you bargained for. -- what you bargained for? >> again, you see like what we have talked about before. it has been a very slow process. credit to gdp, low debt to gdp.

as people are coming in, it's going very slowly. it will be slow because the opportunity is small, but as the developing economy develops more, you will get these things playing out either in the real estate sector, services, all of those are the parts of the economy. >> but when it comes jewel in particular, because there are so much infrastructure damage as well as production issues, does oil need to beat a certain price to make these kinds of investments economical? >> there is something about chris danette sets it apart from dan other -- about curtis apart.stan that sets it oil is relatively easy to find and cheap to produce. the risk has always been a political issue they've had with baghdad. as you step back over the last four years, you see a with baghdadn

originally not allowing the urds to issue these licenses to explore or drill. as you step back, you have seen a transformation. that momentum at this point is largely perverse a bowl, particular -- largely able to be with the recent action for the kurds. is there a risk premium that you would demand iraqi investment? and then what it takes for that premium to go up or down? >> that is the $64,000 question. in general, we always try to book investments on a relative basis. what we have seen with the development of curtis dan give us a pretty clear -- of kurdistan have given us a pretty clear picture. you need a strong stomach and a little bit of patience. >>

because you believe you will be rewarded. for sure. there will be a comfort cushion in terms of the way the assets are currently priced in the market, that even under the most drastic of circumstances, the companies can fund their own oil production. >> oil is different in that they tend to look decades, not just five to 10 years. other sectors like real estate investment or foreign banks getting into the country, we've seen a lot of that, but they have a very different time rising. >> the foreign sector and the banking space within iraq and an, you have very -- your legacy positions like hsbc looking to get out. as it grows, people will see it as an opportunity because the

credit ratios in the market and the savings and wealth that are in the economy have not been activated and put into force. in the same thing with real estate. you cannot build projects without some sort of stability and confidence that the area will be safe. l, you've already seen it. some turkish developers have been very active. >> and for foreign companies -- for some foreign companies, they get to own the real estate. that is very different from other places. >> like saudi arabia, for example. >> right. about -- i mean, this is an economy that was largely state-controlled under saddam hussein until 2000-04. if you look at any economy building up in the first 10 years, you'll have growing pains, service issues, getting

normal things done takes a lot of time. as the money comes in to finance that, you will see some opportunities. but in the meantime, it's slow. little time for that scale to build up. >> thank you so much. anthony from greylock capital management joining us on iraq. we will be back in just a few minutes. stay with us. ♪

>> coming up, you can find everything else online. why not fine art worth millions of dollars? would you rather have a huge client list where they are paying $50,000 a pop, or small clients that pay $50 million a pop? >> that is a good question. it is the -- it depends on where

you do business. gallery, thator a is the question. , the cost isg kids going up. why i'm only having one. we will be right back. ♪

>> live, from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. i'm erik schatzker. good morning, once again. >> and i'm alix steel in for stephanie ruhle. the morning, everybody. would you spend $5 million online for a warhol? how about $50,000 for what you have not seen in person? auction houses like christie's said record sales -- set record sales in the first half of the season. and that fever has spread to the internet. online market places have popped up all over the place. there are tons of them out

there. business models to all of these guys have? >> let's start with art space. lastly, leon black through his publishing company -- last week, leon black through his publishing company bought up art space. they sell things up to $50,000. they're very much focused on prints, photographs, multiples, so not the $10 million blue-chip stuff you will find at christie's or sotheby's. it is a very well respected site. they work with galleries. black know that leon works with moma and has paid $120 million on works before. inre is a similar overlap clients. the kind of people that will spend $200 on these coffee-table trophy books are also the kind of people that might be in the market for a $2000 photograph.

art space is now in competition with the -- with an increasing number of competition companies. and on the other side, the auction houses. >> is there anything competing at the christie's, sotheby's level? market and a primary the virtual market. , and theyies exist are not exactly indirect op -- direct competition with the auction houses. it is still very much sotheby's versus christie's. sotheby's is teaming up with ebay to get a broader platform. i'm christie's has spent $50 million to build up their own back-office, their own e-commerce site and set up christie's.com. they are not just trying to sell the $10 million things, but $10hes and things for

million and less, the collectible market. >> why is it that nobody wants to take on christie's and sotheby's at the high end of the secondary market? >> that is a good question. ,addle eight is a new startup which has some incredible backers. it is actually going after that market, but only up to $50,000. smart money behind all of these ventures, we should say. black, andleon paddle eight, which i don't know if you have heard about it or not, it is an option only site. only site. that is how it is like christie's ends of the beatles of the they do not have the physical presence, so they have stripped out that cost. ericke i was saying to before the break, what is more valuable to these guys get or do you want to have a huge by list paying in the thousands -- huge client list pane in the thousands, or a small client list pane in the millions?

fund ofrivate equity the chanel family, they are backing paddle eight. is backing paddle eight. in 2008, they have done more online only sales than christie's has done online only. >> so the market is expanding echo -- expanding? new entrants are not necessarily taking from established players? >> good question. paddle eight is up to $50,000, really. sotheby's and christie's, their sweet spot is still above that. they are trying to get into the lower end, which is an interesting moment right now. the whole online market is being disrupted. do you still need to own a gallery? gallery sales are now done at art fairs where collectors can go, see all the work, compare it, and see their

decision. like art fossil. to see everything aggregated and go online and see everything together and do comparison shopping. >> it is fascinating. i have about 14,000 more questions, but unfortunately, we have to leave it there. up, mark zuckerberg is just one of those not backing down from the ice bucket challenge. guess who else? >> i will say you. >> it could be me. >> you got a little cold this weekend. ♪

>> that was me this weekend getting doused for the ice bucket challenge. have a nice bucket full of water

dumped on yourself, or if you decline, donate at least $100 for a charity for als. this, i hope you know, already, is the devastating neurological disorder known as lou gehrig's disease. the campaign has been extraordinarily successful, including a massive ice bucket dumped by 1508 -- 1500 jpmorgan employees this morning. hasals association says it raised about $15 million this past week by the same time last year at just $1.8 million. such a this been success? you cannot get more memorable than that. you will certainly talk about it. like that is for sure. but and what is most interesting is that it was co-opted by als.

it was a mean for a couple of months before hand, and he co-opted it. you could not have a more convincing spokesperson. the ice bucket feels a little bit like the neurological disorder that it is addressing. but from there, tasking your friends to do it or give $100 -- hopefully, people are doing a bit of both. >> i did both and i encourage others to do both. organization -- this is something that the organization seeing theate, but suffers of the cause, that is where gets it motivation. >> it's great that we are talking about and they have raised all this money, but if it does not make a difference next year, who cares? >> and the reality is, most of them won't. we are in an era that we as fundraisers -- i used to do a lot of fundraising -- have to

accept that. but they are caught -- they are talking about close to 250 thousand new donors. that is contact that you have. you can give reason for those people to come back. within acquisition campaign like this, you cannot really expect the vast majority to come back. but if you can get even 10% of that, $25,000 to a new cause, that is a good thing. >> i will not call it irony, because it is probably not really irony, but one of the issues here is whether this is what the folks who think about funding medical research want to see happen. ats is dr. ezekiel emanuel university of pennsylvania, the chairman of health at -- ethics this morning. today, i consider myself -- and i >> the national institutes $13 millionnsider

-- consider 13 billion dollars a year. $13 million is 0.5 percent of that investment. i see people dumping ice buckets on them, but do they really know what the disease is about? will this be another case where just disappears after a few weeks and everyone has had their ice bucket moment on facebook? it is hard to sustain. right, thatmanuel the real risk is that it is totally ephemeral bull -- ephemeral? it is whether they know what they are doing at all, or they just get swept up in the craziness and the fun of it all and they lose sight of the purpose. there is a real charity and people who are truly afflicted and suffering. >> 30,000 or so people suffering

from a really hellish disorder. yes, i think he's absolutely right. in the grand scheme of things, million make a different? >> there is no question that 15.6 million dollars versus $1.8 million last year is a great deal better. i will presume that the money is going to the right things. >> but it does raise the question on what als association can do to market after this, to take this momentum and push it forward, right? >> you learn a lot about the people giving right now. and then you can begin to engage them using social media and the analogy and all the things we graspone in the past to future campaigns. will any take off like this echo probably not. it is a fundraising dream to have the chance to have a very acquiring of free -- of donors.

>> it seems this took off because, for lack of a better term, it was organic. someone had the idea and it caught on and went viral. this could not have happened on social media 10 years ago. but it is not like another charity could co-opt this idea and make it necessarily work as well. >> the biggest lesson is not to force it. one of the private campaign that i work with that did well was to help and teenage bullying. my friend, dan savage, did a one-time video, and then suddenly the president and hillary clinton and everybody was doing one. >> we will be getting calls from organizations who want to tap into something like this. and in reality, it started with a guy named pete, who was suffering with als, and he wanted to make this mean and

turn it into a fundraiser. that kind of authentic and -- me and turn it into a fundraiser. that kind of authentic action. >> what is the lesson? >> tots to have actual -- have actual people struggling with the disease, to have a real situation. not to get it says with the numbers. you will not raise $15 million each time or be on every newscast. but you need to have that kind of engagement with supporters day in and day out. smaller doses of enthusiasm can really change your fundraising. >> and social media, too. >> that is how you make all of this happen. to be able to go and spot the opportunities and then pull your supporters around it. that makes sense. >> achy for share your insight.

-- thank you for your insight. a critical part of the ice bucket challenge is the challenge part. you need to challenge somebody else to have a bucket of ice dumped over himself, or donate at least $100 to a charity associated with als. i have been thinking this morning who i am going to pick. at least one of them was a no-brainer. do you know who i'm talking about? surely, you have wanted to challenge him your self. tom keene of bloomberg surveillance. on i thought, why not pick someone who is incredibly philanthropic already and do this with open arms, bill ackman. who unless he is not watching does not know i'm challenging them. i will get in touch with him later. and donate foret

lf -- for als. >> coming up, we will look at the cost of raising children. ♪

>> from diapers to college, raising kids cost a lot of money. the total cost reaches into the hundreds of thousands per child. but the good news for me and other expectant parents out there is that the cost curve seems to be bending. our guests are expecting parents in their own right, and they join us with this story. give us a breakdown. i am due in about six weeks and i want the lowest number possible for how much this kid will cost. >> i'm sorry, the number is $245,000. but the good news is, i guess, it is spread over almost 18 years. >> and the bad news, alex, is that the 200 $45,000 is a

national average. if you are living in new york city and trying to do with childcare costs as well, that number could rise very much, as much as half a million reasons to show your center dot or that you love them over the next 18 years. there is a big regional variation. >> this 1.8% jump that we are seeing, it is slowing a bit more. the velocity is not as fast as we have seen in previous years. why is that? >> it is mainly because of health care costs. they don't write as fast as they used to in the past. but also, the economy is notoving, but inflation is as high. that can translate into the slower growth of the cost of raising a child. >> what is the larger cost -- the largest expense out there? what do i have to be most afraid of? >> the biggest expense, and it has been since the survey

started in 1916, housing. level,ng on your income childcare versus food. if you're at a higher income level, you're probably paying more for education and childcare, everything from daycare to summer camp for your children. where if you are lower income, they are likely to have a parent childcarehich cuts cost. but food becomes a bigger portion of your budget. >> when you look at the percentage of childcare costs in general, who is it worse for? lower middle -- lower income, middle income, or higher income? is interesting to take a look at that. if you are dealing with childcare, it's not just spending money for child care. what sort of quality of childcare are you getting? at the upper income level, you see more of the disposable income being available for childcare. the lower end of that bifurcated economy may have some issues. also due in october.

what age are you most afraid of? what age is the most expensive for parent? >> the thing i'm most concerned about his childcare costs. because at some point, i would like to come back to work, but i would also like my child to speak foreign languages, maybe learn to music. this is where we will spend a lot of money. childrenst of raising -- does any of this suggest that the cost of raising children has become a disincentive? has that affected the birthrate in this country? >> a lot of it depends on what you want out of life. certainly, childcare has become a very challenging portion of this. as far as birth rates themselves, we see analysts that think that with the slowing of inflation, maybe that will ease pressure on some parents and allow them to have families, which maybe they were not doing so much during the financial crisis. >> i got to say, i'm only having one, and part of that is money related.

thank you so much. >> keeping your children well fed is one of the biggest cost of raising kids. and of course, it all starts at the breakfast table. maybe now with cheerios, though. u.s. cold cereal sales are down 4%. bloomberg businessweek's eric tammy has been crunching the granola and the data. >> like that. there was a pun there. >> if not cheerios or other cold cereals, what are americans eating her breakfast? >> the prices are going up, despite the fact that they keep missing on earnings and the sales are not there. people do not want cold cereal anymore. they want everything else. they want packaged goods, deli meat, breakfast sausages, frozen waffles, french toast. morefast is going up, and people think it is the most important meal of the day. that number is higher now than it has ever been. they are getting more serious about breakfast, which means they are cutting out the sugary

stuff, the fraud -- the unhealthy stuff. >> i don't know. pancakes and waffles? >> there are two groups of people. there are those who are just eating on the run, yogurt bars, cereal bars, granola bars, stuff they can eat in the car. and then there are those who are so serious about it that they are cooking hot cereal, cooking waffles, cooking pancakes. they are either spending no time a breakfast or more time on breakfast. but they are getting away from cold cereal. >> how does a company like general mills respond to this trend? respond to these products. calcium is down, vitamins are down, fiber is down. remember all of those commercials with those buzzwords -- buzzwords in them? now it's all about proteins. there's a lot of protein in the cereal. protein. you can have they keep saying the same

buzzword over and over again, hoping you'll buy it. >> remember energy bar? >> fiber was much more interesting years ago. >> is there a different type of snacks during the day? >> yes, they are trying to encourage people to have the snacks in the afternoon, the middle of the night. they find that a lot of video gamers like to eat cereal while they play video games. they are sponsoring videogame competitions. cereal whileu eat gaming? >> just to snack on. it's like chips, effectively. >> what did you eat for breakfast echo >> i had a piece of chicken today. >> chicken? >> leftovers from dinner. protein, it's what it's all about. >> i actually had cereal. i'm clearly the outlier. >> kids will make you want to have cereal. >> thank you so much. makers will beet

back in just a few minutes. we are focusing in on what americans are eating. ♪ . .

>> live from bloomberg world headquarters in new york, this is "market makers" with erik shatzker and stephanie ruhle. >> crisis investing -- war and rising tensions around the world are not deterring investors, they are still stepping up u.s. stocks. >> this could be the ultimate jersey for the sports fan -- imagine a shirt that lets you experience what the pro-athlete feels during a game. >> and bon appétit -- what says gourmet better than flour made from roasted crickets? >> it's all about insect protein. you are watching "market makers

." i'm erik schatzker. >> i'm stephanie -- i'm alix steel in for stephanie ruhle. i'm excited to try it later. maybe. >> right now, it's time for the news feed. the bidding war for family dollar stores -- dollar general offered $9.7 billion. family dollar had already accepted and $8.5 billion offer from dollar tree. state's financial regulators have fined price waterhouse coopers 25 million dollars. they are accused of watering down report about one of the world's largest banks, bank of tokyo mitsubishi. agreed to the fine and a sidelining of its consulting unit. the governor of missouri is calling the national guard to restore order in ferguson. there was another night of

violence in ferguson a little more than one week after officers shot an unarmed lack teenager. police and demonstrators threw gasoline bombs. >> it seems like the world is coming apart at it seen -- at its seams. but investors don't really seem to care. , all three up indexes holding onto gains for the year. robert kaiser is vice president .f global markets intelligence what's the relationship between these geopolitical risks and stock markets? >> the stock market trades very well. occasionaltore the injection of anxiety -- ukraine, russia, iraq, but the downside is extremely omitted. the market seems to levitate on a fourat will stop

to 12 months earnings basis, the historicallyading a very modest valuation and at the same time, the u.s. economy looks to be picking up steam a little bit. more importantly, ford earnings expectations are rising. the improvement in the overall fundamental position does seem to be offsetting these short-term geopolitical stresses at the moment. are financialnts markets most vulnerable to geopolitical risk? >> markets are always vulnerable when expectations get ahead of the fundamentals will stop the valuations right now are very modest and the geopolitical tensions are keeping u.s. the ten-years, treasury this morning trading at a 235 yield.

the question of valuation, a sound economy, sound valuations , the path ofmarket least resistance seems to be higher and not lower. you say the valuations are modest in the s&p 500 is trading at 17.5 times earnings. to what some close people call the long-term average, but two years ago, the s&p 500 was trading at 14 times earnings. >> at 13 or 14 times earnings, the economy was at a price for recession. sequestration,f, not a lot of consumer confidence. we are in a different position because the economy is looking like it's improving and earnings

expectations going forward, we use our s&p capital iq numbers and we have the multiple at 15 .5 times, which is modest, historically. we were recently above 16 times forward earnings when we had lower forward earnings. so we've seen a correction in terms of valuation, but not much. these valuations are not stretched and as long as the fed is perceived to be on hold for , there'smediate term not a lot of reason to expect significant corrections. investors are stepping in and buying the dips. >> that's part of what i was getting at -- the idea that the presence of the fed with its unconventional monetary policy, although quantitative easing is slowly becoming a thing of the past, the fed has a huge balance sheet.

if they were not in the market, would asset prices be more susceptible to geopolitical risk? >> quantitative easing and the next rarely easy monetary policy does underpin risk-taking. the risk friendliness of the stock market in the intermediate term. increasingly, as people become more and more aware that the economy is showing self sustaining growth to jack drees, you will start to see -- self-sustaining growth trajectories, the more people start to think the fed will have to normalize rates at some point and you'll start to see that have an influence and take away the hand that is underpinning the stock market for the past couple of years. >> one of the questions that comes up is topline growth -- how do you grow revenue? at some point, you could argue

they wind up crimping demand -- we heard that from cisco. revenue from russia was down 30%. take for thatit to trickle down? >> revenue growth drives off it growth. the story is one of improvement. >> how sustainable is that when we keep on getting geopolitical crises around the world? >> domestically, the 60 plus percentage of geographic josh of gdp growth comes domestically. as long as you have that, you will see domestic economic growth. to 2.5%something close to 3%.

europe is an entirely different picture. nobody anticipated seeing negative gdp growth at this time s&p 500 earnings come from non-u.s. to mistake sources, that's going to make the earnings expectations a little more difficult. the prospectg at of a double or triple dip recession or is europe going to get by and have a flat quarter and look more like the u.s. as the u.s. -- as the u.s. completes the second half of this recovery cycle. european economy the benefit of the doubt, we expect to see some version of quantitative easing after willer of this year, which underpin profit growth. the beginning of this year, very few people were looking for the prospects of ongoing recession

in europe. europe was supposed to be well into their own recovery cycle and it's not happening. >> is there anything you see in the conflict over gaza or the standoff between the ukraine and russian backed rebels and what's happening in iraq that you could catalystforming into a for something akin to a selloff? >> european consumer confidence could be influenced by it ends close to their borders. we are not insulated from russia, ukraine or any of these tensions going on right now, but in europe, it's a very different story. as we get to the end of the summer, you'll see europe worried about rising energy prices coming out of this conflict with russia. it could affect european

consumers as they start to get nervous about what their energy cost could be approaching did winter. ask tank you very much. we appreciate your take. them weirdp, call wearables -- leave the gps at home. we will show you a jacket that will tell you where to go. >> less maybe this is the next trendy food everyone has to have -- we are talking about flower making crickets. i'm determined to be an adult about this that and try it later in the show. we are all digital. see our stories on bloomberg.com and on your tablet, streaming on apple tv and amazon fire. ♪

>> it's time for some "bloomberg west" top tech news. the new mario brothers game is

coming to the rescue for nintendo. they are counting on them to boost demand for the latest console.f its wii u the box office winner for the second weekend in a row is "teenage mutant ninja turtles." fairmount's revival took in $28 million. "tardynd place, disney's -- of the dallek the." galaxy." jackthe dorsey has been tweeting from protest in new jersey. he's a native of st. louis and said the decision to impose a curfew was a missed opportunity to trust our people. here's a question -- how do you stand out in the wearables market? the world of markets, strap on and jackets measuring steps to body temperature two calories.

one new company has decided the way is fashion forward. garman has equipped technology that you can see, only field. really white house is here to show us and explain why her wearables art different. what have you got here? >> i have the alert shirt. this is a shirt that we created so you can feel what players are feeling alive as it happens during the game. >> what does that mean? i've been thinking about several morning. if they are scared, do you feel scared? >> we build an entire language around the game. someone takes a big impact, they take an impact. >> it's not as if you get knocked across the room. a shirt can so much do. >> exactly. we have only so much we can do around the body. that's why would somebody want something like that?

>> what we are trying to achieve is ubiquitous communication. it's taking away our attention from being with people, so this is a way of experiencing the game. >> not to be facetious, but if you want to experience it, the thing is to go to the stadium. >> i totally agree and that's part of it. >> is this for sale? >> at a moment, it's a promotional campaign. we did 4500 units. anyone a manufacturing will tell you it's almost impossible. we almost managed to achieve it. >> are you selling it in the stores? >> that's part of it. >> is there a demand or are you trying to create demand? >> there's a demand for a fourth dimension of entertainment. they have not taught about how

to attack someone from a different point of view. this is about a sensory experience. shirtried a biometric that did effectively what this does. it actually went to be on-the-job own and took body temperatures and analyzed reading. was aeems like it solution to a real problem. there's only so much something on your wrist can do and if you put it on, it's going to do a data ofob of creating your body response. this is a different approach. is this trying to solve? >> at the moment, it's trying to solve the problem of the addiction to the screen. just experiencing something from different point of view. >> the people don't seem to have a problem being addicted to the

screen. there happily addicted to the screen without the alert shirt. >> i think they know there are opportunities now. they are excited about experiencing things in a new way. like taming, this is an extension of that. >> what you get to a point where this is commercially available, how much is going to cost? >> i'm not allowed to discuss at the moment. we commercialize that for other people, so it would be up to the sports company. bread box,han a small reasonable flagon? >> the technology changes every three months. >> hundreds of dollars? >> it is not my liberty to say. >> i think the point he's getting at is how much do you expect people to pay up for something like this? you could say it's an ancillary experience to actually watching the game. >> i think it should be the same price as a fan jersey. >> so we are talking $100?

i think that is a relevant question because going back to the bio sensing shirt, they were talking about charging $200 will stop they are on the cusp of going commercial and that seems reasonable. drop $150 compared to on a bracelet or running watch, when they be prepared to drop $200 on a shirt that sends lou tooth signals to your iphone. it's not for everybody. who is this for? of the 10 people who might these sitting around on the sofa watching the football game, how many of those do you figure will take the step? they won't all go out and buy a fan jersey. there's a subset who will go and buy it. >> i think it is for real fans

who really want to connect with an individual team. it is really about the emotional experience. >> you could argue it be a relatively smaller demographic of the sports fan world. would you try to diversify your things to appeal to fans like me? >> i think you are absolutely part of the clientele we are interested in. maybe you don't want to go to a sports bar every friday night or every thursday night. maybe if you want to have that communicated without it being sent by twitter or an e-mail. >> tell us about the product you don't have -- the navigator. >> i'm wearing it. >> that's not just a good-looking white jacket. >> what does it do? >> it uses applications. you upload where you want to go and that sends bluetooth

messages to the jacket and that tells you where to turn right -- >> is there a screen on your arm. as you just internally shock you question my >> it's not a shock. it's a subtle vibration and we built the same language. soft left is very different to a hard left or veer left. there's a full communication around it. >> who is that product for? >> etiquettes for the urban navigator. think it's for the urban navigator. it's for people wandering around the streets like this. i've had people run into me all stop in the city, everybody is looking at their phones the entire time. >> is that commercially available? >> not yet. what's important is having the timing perfect. >> what does a timeline look like? >> it could be ready tomorrow. but i have to make sure people who want that to mutation wanted. billie holiday here -- billy

white house. not only holiday. wearable experiments, a new approach to wearables. distinctive for sure. >> and shocking. we will be right back in just a second. ♪

>> we are approaching 26 minutes after the hour and it's time for bloomberg's on the market. we're going to start by looking at the fight for family dollar. dollar tree offered $8.5 billion and dollar general just today offered $9.7 billion. the investment community loves the idea of dollar general and family dollar combining.

they see more opportunity for synergies -- illuminating overlapping costs, even if you factor in the greater than $300 million breakup the dollar general would have to pay the offer of $8.5 billion. our guest was convinced that walmart needs to do something here because they need to boost sales in the u.s.. >> it would be one way for the new ceo of walmart to draw a sharp distinction between the mcmillan era in the past because walmart has never ever made an acquisition of that size or scale in america. only overseas. >> i'm also looking at airlines because they are up today. i'm just going to point out that oil prices have actually been falling and we have increased surprised -- increased supply humming from libya and we may see some ports opening in the

region because that would be huge. lower oil prices, lower fuel prices, better for airlines. >> coming up, we will talk about the politics of protest. what is at stake for the president as the violence rages on in ferguson, missouri? ♪

>> live from bloomberg world headquarters in new york, this is "market makers" with erik shatzker and stephanie ruhle. >> it is 11: 30 here in new york city. >> i'm alix steel in for stephanie ruhle. "money clip" with adam johnson is coming up in 30 minutes. he's here with a preview -- part of that issue you flying and f-16. that was pretty exciting. >> it was one week ago today. i was down in atlantic city and we were buzzing atlantic city at 500 miles an hour. i was in the number seven aircraft. they can go up to 1500 miles an hour. we did not go that fast but i

wanted to figure out what it took to get the thunderbirds back and hereafter sequestration. about one third of the air force lost its funding and they were shut down for about six months. it was hard to get the money and get back up in the air but they have done it and it is phenomenal to see them in action. ask why is it important for the air force to have the dead birds flying? >> to go around doing airshows and it is a recruiting tool, but you remember top gun, which is the navy, but the miramar air station in california is where they work on dogfighting. it's a very specific gill -- specific skills you have to stay current on. what they do is integrate the latest moves needed in combat. so they are literally trying new combinations in the thunderbirds will stop -- in the thunderbirds. >> you mentioned six months they were out of the air and they are

getting them retrained all stop what is the longer term? >> longer-term, they are having to adjust budgets and figure out how to up prioritize. and f-16 costs about $30 million. the new generation bomber is $550 million. think of that. it's like 15 times more. the f-16 is antique technology. the aircraft i was in was about 25 years old. the secretary of the airport told me we need to spend this money. >> eide said you need to spend 550 million dollars per aircraft that she said absolutely we do. that is what it requires all stop -- that is what it requires. we will be doing a lot of that in the upcoming our. >> was it fun? >> it was fun. >> was a terrifying? >> i did not eat breakfast, i -- we pulledunch nine geez. you pass out at 10. which is intense.

>> good for you. >> adam johnson will be back at 12:00 for "money clip." >> coming up, treading lightly around the violence in missouri. we will talk about the politics of ferguson with bloomberg's al hunt, after the break. [applause] ♪

>> the stakes are rising in ferguson, missouri. the st. louis suburb rocked by almost nightly protests by the an unarmedpolice of black teenager. the governor has called in the national guard. -- cannt obama has president obama help calm the

situation? we are putting the question to al hunt. let's begin by asking this -- you have seen race riots in this country before -- rodney king, for example, detroit how chicago in the 60's. what do you make of the pictures we see coming out of ferguson? >> they are deeply disturbing for several reasons. this isirst of all, nine days after michael brown was killed, so the violence is escalating. some of its said seemed planned. this is not a particularly competent police force. the fear is it could spread elsewhere. it's bad enough in ferguson. >> it is becoming more intense in ferguson. call it sympathy protests if you will, elsewhere in the country. -- we canitics describe them in national terms,

but in practice, it tends to be a local thing. what would it take for what is happening in ferguson to transmogrify into something truly national and national on a violent scale? >> let's hope that it doesn't. some of the same symptoms present in ferguson are evident in many other communities around the country. what happened in ferguson was simple in this sense -- 20 years ago, it was three quarters white and today it's two thirds black. none of the power structure has changed. the mayor, school board, 95% of these cool -- of the police force is white. that has created some tensions. depends their revenue on law enforcement citations -- traffic and the like. that puts added pressure on bike cops to harass lack citizens and that's a bad system. >> taking a look at the landscape of what president obama has to confront dealing with a situation like ferguson, what has been his response so

far and the response to his response? thehey say they have justice department intensively involved with this and they are going to do another autopsy. they have sent fbi agents out there. the president is meeting with the attorney general to talk about it. he is on vacation in martha's vineyard. what else could he do? i suppose he could go to ferguson and preach calm. he could federalize the national guard. i'm not sure how effective that would be and it certainly entails risk. >> he could also talk about the victim if he wanted to. president obama made comments directly about trayvon martin after he was killed but he has not spoken directly to the murder -- i will call it murder -- that's wrong. to the killing of michael brown. >> we don't know the facts. this is a terrible, terrible incident -- >> pardon me for interrupting, in did we know all the fact

the trayvon martin and george zimmerman the case? >> i'm not sure if we did there. , was there awas deadly assault here? the former new york city examiner said this kid was shot six times. twice in the head. there's at least one eyewitness account i've seen on television that said he was not treading the police officer. the police put out the word that he was. we don't know the facts yet. i think there's a problem for the president to get deeply involved in the facts before we are fully aware of them. >> but this is one more crisis president obama has to deal with with a potential backlash in the u.s. the >> sure does. what a year and has been for him. every place you look around the globe, there's violence and disorder. then to have it happen in one of our own communities just compounds a very difficult year. let's see how this plays out and let's see what more the fbi

does. let's see what eric holder does -- we know this police force is incompetent. we can't not mean judge that police officer guilty at this stage. we know something terrible happened but the problem is that it should not have happened that night that so far, information has been very scarce all stop >> perhaps the president has learned his lesson. he came under fire for making the comment after trayvon martin was killed come a saying that could have been my son. in 2009 when fire he commented directly on the arrest of henry louis gates. he said the cops acted stupidly and he came under fire for that. known,ll the facts are maybe it's far better for the president to reserve judgment. >> it's why it is difficult to take other action, like knowing out there. there are people out there doing a good job.

the impression one gets, at least me accounts that i have read and watched, the fellow from missouri, the national guard has been empathetic. i think the police force is totally incompetent. but there are other people and i'm not sure what else you can do right now. >> before we let you go, i would like to ask your opinion on the issue that has been raised in the context of what happened in policen and the way the have addressed the riots. in a militaristic fashion. what is your opinion on the militarization of america's police forces? >> i think it has gone too far. there are some areas where you can certainly help the local police force with more effective weapons and machinery and more effective technology. but i think it has leaked onto far. when you look at those pictures -- we ought to say as bad as this issue is in ferguson and in a lot of other places, there are

areas in this country where we really have had much under police community relations and community policing, some very sensitive police chiefs have done a much better job. it can be done, but it is hard and takes time. hunt, columnist for "bloomberg view." >> it may look like a normal kitchen, but the big difference is that chef is cooking with cricket flower. i'm going to taste it, coming up next. ♪

>> the next food craze can be this -- it is flour made from slow roasted crickets. but will consumers bite question mark let's ask the founder of the company that makes and sells this buggy blend. i'm really going to try to be an adult about this and need a cookie and not me with doubt.

why'd you pick crickets? >> crickets are a close analog to crabs, lobsters and other foods americans eat. but they are extremely sustainable. they can be raised from egg to adult in six weeks and use hardly any water at all. >> we have a couple of bags of cookies made with this cricket flour. how many crickets go into one cookie? >> are probably about 25 crickets in each cookie. they are very high in protein. >> that raises the question for me -- i like to cook and i do some baking. all-purpose flour is typically somewhere between 10% and 12% protein. it's mostly starch. ur is higher, which raises questions about how easy it is to bake with. >> we have developed an all purpose flour based on cricket

flour, but it also contains the starches you need to make baked goods. if you used pure cricket powder, you get 70% of the vote -- of the protein but not the baking powder. is significantly higher than any other flour out there. thatet sustainable protein you can use to make your cookies or muffins or whatever. is to point here andately sell the flour the cookie as what? a protein alternative to meet or soy? is it something else? is it just a great tasting cookie? >> we are creating a range of food roddick's all enhanced with this sustainable protein -- range of food products all enhanced with a sustainable protein. we are looking at a future where

meat is going to be more expensive. we are trying to harness a new kind of protein and bring it into the food system so we can help feed millions of people who may not have access to available from team all the time -- available protein all the time. ask a bag of flour from you would cost about $20 as opposed to the white flour i would get at my grocery store. youris a going to take for company to come in line? >> hour cost will come down as the market for edible insects scales will stop it is not a real comparison with regular flour. this will be on par with the price of soy in a couple of years and a better comparison would be to compare crickets to soy, which is another alternative source of protein. about 280y takes gallons of water to grow one pound of soy and it takes one gallon of water to grow one pound of crickets.

as more farmers start growing crickets we can use our food production, the price will come way down. alix knows i don't have an issue with insect protein. where -- when i was in brazil, -- we are showing a picture of me eating a black cricket. dry.not live, it is how do you get the rest of america and for that matter, the rest of the world that doesn't already consume insect proteins -- there are populations, in mexico for example, where crickets are a staple part of the diet. how you get everybody else on board with the idea of insect protein? >> right now, about 80% of the world's cultures eat insects. it's really only the western world like the u.s. and western europe that the holdout. that's why we started turning them into a powder. this allows us to incorporate them into familiar foods americans are used to eating

like cookies. at the end of today, we are not a cookie company, but cookies are an interesting talking point and they are shareable and they are something people can start with to taste this new protein in a way that's not scary. it's not a flavor that's the problem. the insects are quite tasty. but you need to get away from the foreign factor and take away the creepy crawley factor. >> people are prepared to eat shrimp or crabs, for example, why wouldn't eat crickets? >> i'm the one who is really creeped out about this. he's like whatever. >> we're about to try the chocolate chip cookie. >> with 28 crickets in one of these cookies. you first. >> i'm in. >> they smell good. oh, god. >> taste like a chocolate chip cookie. you have done well. >> they are tasty. >> i'm having psychologically a

hard time. i'm looking to see if i can find any -- >> we have run out of time. we will have to continue the conversation off-line, perhaps ona future date will stop -- a future date. there are 28 crickets in this cookie. >> and i'm eating it. ♪

>> that wraps it up for "market makers." i ate a cricket cookie.

>> tomorrow, we're moving on from insect protein and talking about the revolution in education with the former president of yale university. >> i'm looking forward to that. for now, it is approaching 56 past the hour, that means bloomberg television is on the markets. scarlet fu has more. dive straight into derivatives. it's time for today's options inside will stop joining us is the founder of market taker mentoring. dow, and nasdaq are all rallying. it's the broadest advance about a month. what is your take on the action? >> this is a little bit of a wait and see attitude. that's not to say there are not important factors at play. traders areing watching our overseas tensions. the russia-ukraine situation is getting a little better, and that's why the market is up a little bit today.

traders are watching for more information from the fed. we are going to get some visibility with the fed minutes on wednesday and then we have janet yellen speaking in jackson hole on friday. >> so it peaks at the end of the week. below 12.5, down from more than 17, what are you seeing in options activity. what suggests that it will stay at these lower levels? >> it has elevated somewhat off its low levels because of the investors are hedging using options and that's driving up the price right now. wait and see what happens with world events. >> we also have a lot of housing data coming out -- we have housing starts tomorrow and

existing home sales later this week. do you expect that to be a factor, given it's a risk the federal reserve has cited? >> that is one of the things traders are watching. compared to the other factors we've talked about, it is somewhat tertiary. if we have a real out of line number coming out, that could cause some price swings. >> waistcoat straight to individual stocks. you have an apple options trade for us. this looks at something expiring fairly soon. this uses weekly options. the trade is in the august 22 expiration that expires at the end of this week. apple 98, 100,e 100 to call butterfly for $.62 or better. >> why would you want to make a short call as opposed to going out longer-term?

>> it has to do with the time horizon on my forecast. there's a great deal of interest at the 100 strike. if you look at a chart of apple, we've seen higher highs and higher lows. it seems to be on its way to 100 and we have a good chance of getting there by the end of the week. riskends up being a low trade. to $1.40 ae up contract, so it's a highly leveraged low risk short-term trade. >> if we could pull the chart up that shows where the profit be made, you are talking about a trade that benefits from apple thing between $98 and $102. >> the ideal situation is that at $100 ats right expiration, but i will take anywhere close. >> think you for joining us this morning. he's the founder of market taker

mentoring with the latest on our options inside. looking at how the broad markets are trading, a broad rally with the s&p 500 gaining 15 points and the dow industrials gaining 160 points. the nasdaq is up by .9%. this is a global advance with european stocks only on last weeks 1.5% gain. we have a lot of federal reserve news due out later this week, including the fed minutes numbing out in addition to jackson hole. we will keep an eye on all of that and be back on the markets once again in 30 minutes. "money clip" is up next. ♪

welcome to "money clip." where we tie together the best stories, videos, and news. companies. war, dollar general is making things interesting in the pursuit of family dollar. that is me in an f-16 fighter jet. today's wildcard, the ice bucket challenge arises to the richest, most influential people on the planet. we dip into motors and then we climb