>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> the big moment tim cook has been waiting for. he is unveiling a new iphone, a new payevice, and system. >> power players -- from warren buffett to carl icahn. the 50 most influential people in business. >> commissioner on a hot sea. the question about the future of roger goodell after a video

sparks debate about domestic abuse. >> much to talk about. let's get the news feed. >> the world. trump entertainment resorts has filed for bankruptcy again. trump owns two atlantic city casinos. neither has anything to do with the donald. americans are not loving mcdonald's. sales fell for the fourth month in a row globally. down almost 4% in august. the rankings of colleges is out. princeton is number one. yale was third. the top school on the list, the university of california at berkeley coming in at 20th. >> we hope tim cook got a good

nights sleep. today, it might be the biggest day of his career. he will be unveiling the most important new apple product since he took the helm at l -- to the helm at apple three years ago. we are expecting a bigger iphone, and iwatch, and do some sort of software to revolutionize mobile payments. corey got a good nights sleep. he had to wake up early for the big day. what is the news? >> i am always up early for the big days. we know a lot about this, which is unusual for an apple event. we know there will be two , if not an announcement the release of a wearable device. we are even reporting about a payment plan. at appleevents is interesting. and this is the building where they will be showing off the

products. white structure they have built here in the plaza. about three stories tall, about 100 feet long. a cube. calling it qubes are usually square on all sides, this one is not. it is showmanship. cook doingave tim this in steve jobs fashion. they are the company with products he has overseen and left with every passing moment, this is a big deal for the company. >> this is the biggest apple -- since when?ve the ipad in 2010? i would go further back. the new devices of the iphone and the ipad, i would go back to

when steve jobs was trying to the product line and consolidate with new mac send imax. that was a seminal moment for the company when they were saying here is what our future is. this is a big deal. it is also a big deal because in ways that apple has never done in decades past, they are tied to the carriers on the way the carriers sell things. there is a big upgrade cycle about to be unleashed because so many cell phone users are at a point in their contract where they can get a new phone. apple, with these phones, will have a much more welcome audience. it is already a huge business. they are doing over 150 million units in the last fiscal year. over $90 billion in revenue for the iphone alone. it is a giant business, getting bigger, potential for tremendous

growth. >> that is saying something, from where you are standing, this could be bigger, not just them the ipad in 2010, but the iphone in 2007. mentioned $91 billion. 91 billion dollars for one fiscal year for one product category. that is crazy. there has never been a product that has sold as well as the iphone. you can argue about a cultural influence and influence on business, the way it has changed the way companies buy things, i think it is just a giant it is a big deal.

we will be paying attention to what goes on here today. invite a couple of people into our conversation. the chief research officer via skype. of the things we expect from apple today, a new iphone, two -- let'ses, and iwatch call it that because it is easy, which has the potential to be the biggest business for apple? >> near-term, right out of the gate, the biggest business will 4.7 or 4.9 inch phone. .hat will hit the sweet spot

they want bigger phones. it will probably not be the five inch foam. that will be the asia play. i think the 4.7 inch product will be the biggest product in the near term. longer term, apple has a network. when they put technology potentially in and iwatch, that could change the way we pay for things over the next five years. it could involve visa, mastercard, that will take time to play out. that could be massive in a long-term. >> what surprises can we see n investment standpoint?

>> apple has gone up $200 million this year already. >> i see him gloating. >> the scale of the numbers is amazing. in one fourth quarter alone, apple incremented its cash flow by $9 billion. that was one fourth quarter the multiple -- the value went up $90 billion. what is important here is that apple has about $57 billion of cash flow. the cash flowre goes up. apple cannot spend it. there is going to be mounds of cash coming back to the shareholders. one reason the share is up is because the board has been responsible at distributing cash. you look at this company and companies of its ilk. cash rich consumer product

companies. apple's generating capability, the brand that are -- the brand of value is better than these companies. it sells at a lower value. this is more of the same. upgrade cycle is going to give me more because they are in the sweet spot. >> when is apple not in the sweetheart -- in the sweet spot? into theuck you ecosystem and you cannot get out. i am more or less married to my iphone and ipad. life and improved my business proficiency. i'm going to upgrade as soon as my contract is out. i think i am in the center of the fairway in terms of consumers. they have me.

>> the payment system, the economics of that, which they might not tell us today, that is the biggest delta. ae iphone business will be much bigger business. the delta and what could be a , add to that the payment possibility, we see more and more merchants using the ipad is a cash register. the notion that that ecosystem goes in a business to business format where you have the credit card processors going through the ipad being used by the merchant, the iphone being used by users. an nfc payment system, depending on apple's take, if they can lower cost to the merchants, that could be a big and growing business over time. >> crawford, you do you want to

weigh in? >> what is interesting is this is the power of the platform. let's not rule out a scenario here. about five years ago, apple bought the fingerprint reading company. see a potential multifactor authentication where you use and iwatch, you log in with your finger, you light up the nfc to make a payment on your iwatch. two cori's point, it is the triple play. you have someone buying an getting thee payment and sharing that with the senate merchant. when apple and mocks the power of this platforming gives you those technologies, that is potentially very powerful. analogy tothe best draw? payments are to apple as what is to what? what is a good corporate analogy? boy, there are many.

fortitude tires, general motors is two tires. this is something they could be very tied together. it is an item that keeps on giving over time. that is one off the top of my head. thing is what key was discussed -- the fingerprint application. my password book is seven pages long. if apple can tie in the payment system, the 700 million credit card users, the 150 million people in the sweet fingerprinthe technology that guarantees security, what has been in the news the past couple of weeks? home depot, jpmorgan -- a breach. fingerprint technology should cure the breach problem and put these cyber criminals out of business.

evenit comes to market, with the market price of the stock as high as it is, it could be a 40% move in the stock. >> 40% to 50%? what do you say to that? as thee is to payments nfl is to television broadcast. level rightnother there. >> this is a whole different level of experience. you can touch it in ways you would never use it. you are basically expanding into a new market that you are not serving before. it is exponentially larger than what you are using today. how many times do you call outcast as -- how may times do you pull out cash as opposed to your phone? >> how is it google did not finish this out before -- figure

this out before apple? they have the google wallet, they have more phones out there thean apple. >> the opportunity is so obvious. what crawford is saying about fingerprint identification, what if apple goes to the merchants and say we will take the risk if you let us use your connections with the merchants and banks, we will take the risk over if you will be willing to charge me merchants 25 to 50 basis points less. because apple has the fingerprint authentication and multifaceted authentication, they can have lower risk because of those devices and have less risk. the potential is there to use technology to sell the platform to make this happen rapidly. they are in a strong position to

do this and that might be the way the whole thing works out. >> the last word goes to cory johnson, out in cupertino for the big event at 1:00 p.m. >> 40% to 50%. you for the nice metaphors. great conversation. live will have the coverage of tim cook's big announcement on a special edition of "bloomberg west" at 1:00 p.m. eastern today. you can follow on twitter. they will be live tweeting the entire event. all cheerios for general mills. they are buying and a britain that -- they are buying an organic food maker -- you know annie's. take them over goldfish any day. >> i don't like either one,

actually. >> we will be talking about ceo's on social media. are they getting the hang of twitter and facebook? ♪

>> i am hungry. general mills sees a big future in organic crackers. the packaged food company will spend $820 million to buy annie's. our correspondent, and i am guessing a big consumer of annie's products, julie hyman is here. >> i am a buyer, i am not the prime consumer. all of these are popular products and it has been growing. general mills is acquiring growth. we are seeing a lot of the packaged food companies. campbell soup cut its forecast.

sales growth is not a blockbuster and it is hotter when you look at a natural foods group. annie's sales were predicted to grow 18% by analysts. it is obvious what you're talking about in terms of buying this growth. the price on it, some were saying it is a little bit pricey. 37% premium. 46 bucks a share. some analysts are saying that annas, a growth of premium like that does make sense. >> annie's is more than just cheddar bunnies. they are taking on established roderick and creating an organic version. you have kraft mac & cheese, annie's mac & cheese. >> goldfish, the cheddar bunnies. popular been a strategy, not just with annie's, but across the natural food

product line. if you look at the global organic food market size, it has been outpacing what we have seen in terms of traditional food. you have the chart of what we have seen going back nearly 10 years. haveis globally what we seen in terms of growth. >> growth is remarkable. i am amazed the organic food market is worth only -- --you are talking about it talking about organics. many of these fallen to the basket of natural foods. >> what is the difference? both kind of taste like sawdust. >> no. it is certified organic by the usda or whatever global regulator you are talking about. if you are talking about animal would haveverything to be an organic ingredient. natural usually means without preservatives. natural is less quantifiable or

certifiable by any regulator. >> some people think organic is bunk, too. it ends up being a meaningless designation. >> when i am a grocery store and between kraftice macaroni and cheese and annie's, i am going with annie's. >> general mills does not make a lot of acquisitions. many years ago, it was by far, the biggest, but beyond that -- >> i am surprised to see it owns larabar. >> they taste terrible. >> i like them. >> you do? >> they are getting better. what i am curious about -- when you look at an acquisition like this, you see

consumer-products giants of buying these small, natural food companies. owned by clorox. you wonder how annie's, founded by this one woman, annie, healthier, wanted which she said mac & cheese for people. she had her phone number on the boxes so people could call her. you wonder how it is going to fit into the larger. >> that explains the timing of acquisitions. large food companies wait until there is brand recognition and market share. there is some inertia there that people do not know, that the next buyer of annie's mac & cheese does not know it is owned by general mills. >> one exception you have seen is ben & jerry's and unilever. the tension there has been interesting. and in jerry's has been lobbying for gmo labeling.

unilever has been lobbying against it. >> but they coexist. tension that these mission-driven or natural food companies acquired by bigger competitors. >> unilever has one of the most outspoken ceo's out there. >> the most influential people in the business world. who are they? this is a question our friends at bloomberg markets stopped to answer. the list came out today. ,mong the names, leon cooperman and carl icahn. no surprise there. there are some corporate titans, too. money managers, larry think, jack vogel also qualified, as did janet yellen.

>> a few more stats. 10 of the 50 are women. nine -- this is what is most interesting. hailed from the asia-pacific region and 30 of the 50 on the list are on the list for the very first time. you can find the entire list on bloomberg.com. we are seeing 30 of the 51st timers. power shift. we started reading off the list -- leon cooperman, carl icahn, those are all the people that are repeat people on the list. >> it is hard to take jimm buffett off the list. it is a bummer that there are only 10 minute.

-- 10 women. at 26 minutest past the hour. a little "on the markets." we're going to look at apple. trading higher than it has. almost at $100. still about four dollars away from its all-time high. a 600 billionut dollar company ahead of this announcement coming this afternoon from cupertino, involving we believe, two new iphones, a payment system, it will allow you to waive your iphone at a merchant to pay for something, and that the iwatch and the software kit. >> it is not all living large. we will speak to one member of the group who says it is officially time for corporate responsibility. >> ray rice has gone from pro .ootball, at least, for now

the nfl is not off the hook. today, we will be speaking with treasury secretary jack lew and transportation secretary anthony foxx. that is at 4:00 p.m. eastern. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. i am erik schatzker. >> i am stephanie ruhle. we are going to talk about a -- yet to we have let find a solution for. the rich are getting richer. the wealthiest americans income rose 10% while everyone else fell behind. who is to blame for the widening wealth gap? the cofounder of cleaning and products seven --

personal health care products, seventh generation. you run extremists -- successful companies, what are you doing about it? >> as the chairman of the sustainable business council, which represents 400,000 medium and small sized businesses, we are active in lobbying on a bunch of issues. those issues include raising taxes on the wealthy. i should be paying more taxes. we need a flat corporate tax. >> what does wealthy mean? makeshat mean someone who 300,000 dollars or someone who makes $3 million a year? small business owners cannot necessarily afford that. >> we are not talking about owners.siness that is a misnomer that people rely on.

talking -- you're talking about me 1%. >> they do not have a lot of small business owners. 1%,ou talk about 1/10 of less controversial, we need to raise taxes on them. we need to have a wealth tax. 1% of wealth, if people are assets,% or 10% on they can afford 1% a year. i am a small business person, these tax increases will not hurt small business. those assetsdeploy in a constructive way. we have to make sure more americans are owners of the companies they work for. moneyimpossible to save as an employee.

the only way you can make money is if you own part of the company work for. they are successful and you generate assets because of that. meantime, you are probably a charitable guy. over 5% of my income away every year. >> you have a good accountant. you find yourself in the same position as mitt romney? potentially a source of debate that while you qualify, you do not come close to paying those taxes. >> that is a moral quandary. something like second home mortgage deductions. i do not need a deduction on my loan for my second home. do i take it? yes. i take it. the should be taken off books as a perk for wealthy people. if you have a second home.

you do not need a tax deduction. yet, we have institutionalized all kinds of ways that perpetuate the wealthy being is,thier and the truth think about something we will not disagree on. one point 6 million homeless children in the united states. 1.6 million kids living under overpasses, in cars. sign of a society that has lost its moral compass. >> do you have confidence that politicians -- for the time being, they are the people who need to make the decision -- can resolve the issue through tax reform, or in the meantime, while we wait, it is better to do things like raise the minimum wage? >> we must raise the minimum wage as soon as possible. very concerned about the gridlock in washington. until we get money out of politics, until we stop having

politicians beholden to the people, i am not sure we are going to get rid of -- >> at is not going to happen. >> as far as the supreme court is concerned, that will not happen. >> i am a business owner. i can do things today to deal with this. salary -- i cap my salary at 10 times the lowest paid person. tie your salaries what they make. if i want to make more money, i have to make sure they make more money. minimum wageo employees? >> absolutely not. a living wage, which is $15 to $16 an hour. owner.ery employee and make sure everyone that owns -- that works for you owns part of your company. pay 100% of their health insurance.

we can do all of those things awaye give 10% of profits to women's reproductive health care. average fortune 500 company is below 1%. ceos whoo say to the say they cannot afford to do that. were have seen and you mentioning someone like paul. we need more visionary leaders who will stand up and say we are in dangerous territory. we have gotten carried away with our own grade and gotten carried away and lost our moral compass. we need to reestablish fundamental principles. if we continue down this path, the 1% will not have anything to sell to the 99% because they will not be able to buy a. >> we applaud paul pullman for

.peaking out luxury of being a private businessman. paul pullman is walking a fine line between doing what he andks is the right thing satisfyingly short-term minded shareholders. thosere are too many of and his policies do not deliver performance, they will kick him out. we have to take -- change the way we tax capital gains. short term should not be a year. if you go longer than a year, that should not be long-term. we need a staggered tax. you want to hold an investment, you should get a tax benefit. if you hold investment for a year, that is not long enough.

in some ways, we have incentivized people to do the wrong thing. we have made it so people get rewarded financially for acting in the short-term. when we listen to earnings calls, you do not hear analyst asking about moral compass. what is a ceo to do? how can they walk the line? >> you have to be a good seo. you have to be innovative and creative. you have to find a way. why was running seventh generation, we were selling recycled tissue paper. the government was funding the tissue industry with $1 billion a year. they were increasing the price -- i'm sorry, lowering the price and i had to sell against that. you have to be smart and be innovative. there are companies that are

doing it. it is possible to do. you start out with the mindset that it is not one or the other. -- the never accept question is, how can i do both the best at the same time. >> when folks here you talk world, more equitable sustainability, they lump you into a group of people who are big government supporters as opposed to smaller government supporters. where do you fit on that spectrum? can you be for equity and sustainability and for a smaller, more efficient government at the same time? >> it is a misnomer. bestvernment therefore the

interest of american citizens or re to enrich a handful of people? the truth is, they have stopped acting in the best interest of everybody and act in the best interest of a few. is watching me and i want to diminish my well families less to her, but she knows it is the right thing to do. up this battle. we cannot give up this battle. >> thank you so much for joining us today. you have to come back soon. and a foundertain of seventh generation. back, the raye rice scandal raises question about nfl leadership. ♪

hitting his then-fiancé, knocking her out in an elevator at the casino in atlantic city. it is the same incident that prompted the league to suspend rice for just two games. all of this was before the video we saw yesterday. now, everything is different. for the fans, league, and especially for roger goodell. andy, i have to ask you, we saw the video, you saw the video. when you saw it, what went through your mind? look.s is not a good not a good look for the nfl, for ray rice. we had a face to it, we had a picture of it.

we had a striking by one of the stronger people in the country. you have that out there. the question becomes who knew what? thisolve this -- who solve -- who saw this? byn if it had not been seen the nfl, the ravens, we know what we saw in the post-elevator video that came out months ago. the questions had to be asked then -- how was this woman on the floor, what happened, what did the police report say? what did they see, when did they see it, and if they did not see it -- which again, strains a bit of credulity, did they not know enough then that this might have happened? >> assuming they did not see it until tmz had a, could it cost roger goodell his job?

that they did not do a better investigation? >> that is a stretch. the owners, who employ roger goodell, would have to make that determination. the owner ofners, the baltimore ravens, was either complicit in this, or agreed with it. let me say this -- i have been to some of these investigations. they marshal huge resources, league security, team security, local law enforcement, federal law enforcement. investigationsse take months. >> if all you had to do is get a security camera, isn't someone in this organization to blame? >> it is curious. >> isn't curious an understatement? isn't saying this is not a good look and understatement?

we saw a woman punched in the face, knocked out, and drag out of an elevator. it was a crime of passion. it looks like a bad friday night was not uncommon for him. the only explanation that is going to come out of this or has to come out of this is that ray rice, and maybe his the nfl and the ravens. in other words, without the tape we saw yesterday, they told them something that -- not exonerated ray rice, but was worthy of a two game penalty and nothing more. something about an altercation, about who is the aggressor and instigator, alcohol, whatever. that is the only explanation. what we need is open and honest communication from the commissioner, much more from the ravens. we have credibility at stake.

this is not a case of let's hide it. connedas that ray rice the commissioner and the owner of the ravens into believing something that was different than what was on the second tape, let's hear it. this is the credibility issue. >> it is more than the credibility issue. it is a credulity issue. there is a lot of circumstantial evidence. many people, including roger goodell and others at the nfl and in law this tapet had seen or another version of it. they knew what went on inside the elevator, regardless of what ray rice and his then-fiancée said. my question is different. nba doe we seen the the right thing in the case of , andlippers, react swiftly the nfl drag its feet for months

? not only did roger goodell impose a two game penalty, but thesed the rules such that penalties of domestic violence are still not as severe as they could before substance abuse. smoking a joint -- that seems ridiculous. >> no biggie. >> on the joint thing -- i am not excusing it but those are collectively bargained between the teams in the union. one thing we have to not understate is the ravens. rice and it was unqualified. they accompanied him to the meeting with the commissioner. they had the press conference which was a disaster. to ray rice on their website.

the ravens upper management vouched for him and a swaddle of support. the ravens are equally complicit as the nfl in whatever happened here. they not only did not impose penalties, which the nfl did, but they were unqualified in their support for him. as to what happens next, i come back to -- we have had a public that is upset and angry and does not believe the nfl. out.ave to come roger goodell has to talk. he has to say we were wrong. not retroactively apply anything to ray rice. we need to hear about ray rice specifically, not domestic violence in general. >> we need all of the facts. we will be talking about this in

the future. andy brandt is an analyst at espn. thank you very much. >> a story of old dogs, new tricks. ♪

>> sociability matters when you have something to sell. versee really does this murdering their brands on twitter or facebook? know john leger likes twitter. of fortuneiew -- 68% 500 ceos have no social presence on any major social network. that is the same proportion as the previous year. the same number of people are

not engaging with customers. for those who are, linkedin is a clear favorite. one quarter of fortune 500 ceos have a profile on linkedin. is the social media presence for business. has its merits as well. when you want to get information out quickly -- that was the network that saw the fastest growth. that has a lot more traction that people have noticed. what was also interesting -- instagram has more people on that platform than google plus. 2.6 percent of fortune 500 ceos on instagram. >> who has the most followers? >> take a guess.

mark zuckerberg is the only ceo to be on all five networks. >> that is his business. >> warren buffett has the most followers. what is incredible -- he has only tweeted five times. his last tweet was on february 24. his first tweet was "warren is in the house." people want to be part of his circle. does not clog up your twitter feed. meg whitman lost 3100 followers in the past year. she has 200 36,000 followers, but she only tweeted 799 times. october 2011.

>> no wonder they are not following her. ♪

live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> global strongmen. yes, we are talking about the u.s. dollar. we have not seen it writing this time in years. >> ceos worried about cyberattacks have this guy on speed dial. former homeland security secretary michael chertoff, you will hear from him. >> the money behind the models. fashion week reason hundreds of millions of dollars.

welcome back to the second hour of "market makers." i am stephanie ruhle. >> i am erik schatzker. >> time to take you to the newsfeed, business stories around the world. bank of england governor mark carney signals that interest rates will probably rise next spring. he tells a union conference that they should be repaired for them to rise from record lows. the market value of facebook has now cracked -- ready for this number? -- $200 billion. it is just ahead of toyota. investors are betting that facebook will capitalize on the future of mobile advertising. jurors of are up over 43% this year. the former sac capital portfolio manager matthew mark, has been sentenced to nine years in prison. it is one of the stiffest sentences you in what prosecutors called the most

british insider trading -- most lucrative insider trading scheme ever. as the last raw and the investigation of steve:. : was never actually charged. cohan was never actually charged. >> the greenback is ascended once again. the dollar disclosed to a majorear high against 6 currencies. can anything stop the dollar from getting stronger? gary shilling is our favorite contrarian. he is a columnist for bloomberg review. -- bloomberg view. beekeety keepe -- and a per. >> best year ever for honey. doesn't feel like a contrarian traded to me right now. with the ecb easing and probably

easing more, the bank of england stuck where it is, 10 the dollar go anywhere but up? >> back in april we forecast that the ecb would try to trash the euro. i don't think that was received doctrine. the ecb is very concerned. and worry about deflation they see the earlier strength in the euro basically reduced. in euro terms from import prices were falling and anybody who competed with imports had to reduce their prices in order to stay in his this. that drag the -- crackdown the whole -- dragged down the whole eurozone. why they had subsequently sent out to trash the euro. they don't say that is what they are doing. >> we have not seen any impact of the strengthening dollar. when will that be a problem?

>> i think we will see it in a couple of ways. prices,t in import which will go down. it is deflationary for the u.s. we see it in currency translation losses for earnings of multinationals. they will be worth less in dollars with the weaker earnings are brought -- weaker earnings abroad translated into dollars. the euro was lapsed recently. we have also seen the weakness in the end. the japanese -- prime minister abe, they are trying to trash the yen. and sterling, up until mark he hass statement, backed away from the idea of an early increase in rates there. you have had all major currencies decline. movements are the

product in large part of central-bank policy and can also become self reinforcing, and to the degree that happens here in america, how much of a threat as it posted economic recovery? >> it is a minor part. we don't have huge exposure. 12-14% of gdp. it does have an effect. when you have slow growth to begin with, when you are growing 2% real gdp, it is a lot different than if you were growing -- >> what about other economies that have to purchase commodities in dollars? >> well, sure, this makes a big difference. when you say crude is below $100, but not in a weak currency like the euro, it does make a difference. china is in this vote as well. they manipulate their currency.

they are not letting it collapsed by any strengthened the imagination. but he does have an effect on that. slow growth is a bigger album for commodity producers than currencies at the moment. >> how is action from the ecb affecting the dollar? >> they have a concerted policy to trash the yen. they cut overnight interest rates twice, now the 10 basis points. they put in this negative deposit rate, 20 basis points. thanks have to pay the east -- banks have to pay the ecb to leave money with them. a form of quantitative easing where they are pumping money out to the banks into the economy. a lot of it is symbolic -- >> of what? >> symbolic in the sense that they are telling the markets we want a weaker euro. the euro down to 120 a couple

times since the great depression. if we crack 120, is look out below. full disclosure, we are short the euro in our portfolios. >> a lot of people say that quantitative easing has been distorted to financial markets have clouded or extrude what should be happening with stock prices or bond prices were even some of these currency movements. what is going to happen? >> you are right. our september newsletter, the title of the lead article is "central banks still reign." >> where the action is. >> when the employment numbers came out, what happened? you saw stocks go up. >> wouldn't stocks go up no matter what -- >> a weaker economy, weaker

profits, stocks go down -- >> what everybody is trying to figure out is how long that continues. if all we see is central bankers around the world taking steps and eventually -- taking steps individually to devalue their currency or boost their economy or whatever the argument is, is that just an argument for higher risk asset prices ad infinitum? >> it is a sophisticated form of competitive devaluation. but who are they ultimately devaluing against? they are devaluing against the u.s. dollar. we are the world currency. >> but they did pump liquidity into the global system. >> oh, sure, and we are providing that liquidity. there is an argument that if you don't have a huge deficit you wouldn't have the liquidity to the rest of the world. if everybody wants to run

surpluses, somebody has to run a deficit. for thethe policemen world and that was cheaper than having troops stationed around. we were supporting a lot of economies, same thing. in the 19th century, that is what the british did. they were the guys who supported the rest of the world. if you are the dominant force, that is your job. that is your responsibility. whether the obama administration wants to admit it or not, that is their job. >> what is the stronger dollar mean for investors? >> be long the dollar against foreign currency, it says you are to be worried multinational profits because they will be translated into fewer dollars and it will be a depressing effect, and anybody who is in the export business, price-sensitive export, they are going to be negatively affected. on the other hand, somebody who

imports, things are going to be cheaper. they will be able to pick up profit margins because they don't have to pass on the weakness in foreign currencies and lower prices of things they sell. it has affects both ways. alternately it is not a huge, huge difference for the u.s. economy. it is more individual areas that matter. >> gary, you have said that the rally we have seen in equities and other risk asset like corporate bonds since the financial crisis is a rally inside a speculative bear market since 2000. do you still say that? >> i think it is. it is a central-bank-driven rally. i call it the grand disconnect. you have an economy growing slow, 2% gdp. there is virtually no major economy in the world that is growing any faster. a lot of them are even slower. and yet you have soaring equity markets in particular. it has really been the largess

of central-bank. and that is what they wanted to do. they did not get to all the way they wanted to go. we will pump money out there to come -- push asset prices and people feel wealthier and they spend more and invest more and that will create more jobs -- >> except isn't feeling wealthier a problem? >> he didn't really work because of 2 problems. one, it is a small effect. two, the people who made money on the stocks -- their habits don't change that much in relation to their incomes. that isook at stocks one thing. housing is different. housing rises have not increased anything like stock prices. bear in mind of monetary policy is a very blunt instrument. >> we will leave it there, gary. gary shilling, columnist for the

eevie -- for bloomberg anvi andw our favorite contrarian. >> former homeland security chief michael chertoff, we will be speaking to him next. >> we look at the business of new york fashion week on "market makers." ♪

>> is jpmorgan and home depot can get hacked, is any company safe from cyber criminals? apple is about to enter the payments business. when ceos want to know how to protect themselves, they hire the cultured off. he is the former -- they hire michael chertoff, former secretary of homeland security. >> good to be here, erik. >> the ceos you work with, their

companies, are they ready for today's cyber threat? >> people are more aware of the now than they were two or three years ago. a lot of people feel paralyzed. they are looking for a magic solution -- >> there is no such thing as a magic solution or silver bullet in this case. >> that's right. there is a saying that there are two types of enterprises, those that know they have been hacked and those that don't. >> and that is true. >> is not about avoiding it altogether. it is about managing and minimizing the risk. >> that is a way of thinking about it that most people have not come around. let me give you the best example of what i mean. the human body does not keep all bacteria and viruses out. it keeps some of them out but in get ss ande

they are killed by white blood cells. >> that is a great analogy. i have to assume that you are not surprised to see a bank like jpmorgan, which spends hundreds of millions of dollars a year and customers data data and employee data, caget hacked. >> every institution faces the possibility of hacking. the issue is how long does the hack occur, how damaging is the information that is obtained, the disruption that occurs, and how resilient are you. realistic space to approach cyber security. >> doesn't matter what kind of company you are and as a result, who is trying to break in? with jpmorgan, it is an open question and you have an idea of what constituted state-sponsored separate terrorism. >> it absolutely does matter

what kind of company you are. some companies are attractive to criminals because of financial benefit. certain types of infrastructure could be of interest to a nationstate. go back to estonia in 2007, georgia in 2008. you have to tell your particular cyber security to the valuable assets of your enterprise grade it is not one-size-fits-all. >> that is for certain. if we could describe cyber preparedness as a spectrum from zero to 100%, where is corporate america right now? >> i think it varies. the financial community is advanced and sophisticated. electric utilities are fairly sophisticated. i think some of the retail establishments perhaps didn't think they were prime targets. that has changed. we are working with retailers now in terms of upgrading their security. the key is to recognize that it is multiple layers of defense. there is not going to be some

magic trick that gets you out of the target zone. it is evaluating your vulnerabilities and dealing with them. >> whatever the ceo is trying to figure out is not just will i be hacked and when, but how much is that going to cost him how much will it eat into my profit margins. is america not spending enough money on this yet? >> the issue of whether or not we are willing to spend money -- there is a direct impact on the bottom line. if you look at the target issue, it is not just the cost of the remediation of the credit, it is the reputational damage and the damage to the brand, and that has become much more appreciated now. it is a challenge of how much is enough. what we do is help people baseline so they get a realistic sense of what they should do without being overwhelmed by the infinite possibility of things you might do. >> if you were a ceo today, michael, what should you be most afraid of, or more afraid of,

russia, china, o the islamic state? >> in terms of cyber security i am more worried about russia and china than the islamic state. the islamic state poses a threat on the status. as we had with al qaeda -- almost as great as they h we had with al qaeda and perhaps worse, because they have trained andetting further radicalized and those people of western passports and they're going to come back home, and some of them will be a danger. >> how long before we see that happen? >> we already see in europe. one of the individuals was charged with the bombing of synagogue in brussels turns out to have fought there. in london they are finding a lot of radicals coming back. it is only a matter of time. >> is there enough information sharing yet? this is something you confronted

as secretary of homeland security. is there enough information sharing between the corporate sector and the federal government? if not, what is in the way? >> i think it is uneven. part of it is the classification. so much is classified that they use clearances to get a lot of the data and the government has not been energetic in getting those clearances out to the private sector. contractors get clearances. i would like to get appearances to people who operate critical infrastructure. it is as important that they have access to this information as it is that contractors -- >> do you believe the government is compared to take that step? >> i think they're moving in that direction. the president talked about doing this. and now we have to make it work and that hasn't happened yet. >> us just say it's not easy. good to see you. former chertoff, secretary of homeland security and now chairman of the journal -- chertoff group.

apple with a big announcement at 1:00 p.m. stick around. ♪

>> we're are approaching 26 minutes past the hour and time for "on the markets." >> the mom in me talking about annie being bought by general mills. shareholders will receive 37% above the closing price yesterday. it is to disclose later this year and will pay annie's products with general mills existing organic foods. you are seeing women everywhere

in kitchens try to create the next annie's right now. >> 37% above the closing price, let alone the 20-, 30-day average. i want to show you what is happening with apple shares. anticipation is building for the bigger screen iphones, the iwatch, and the mobile payment system that apple is scheduled to unveil at 1:00 this afternoon. it is not a big day for apple in terms of share price movement. i could easily pick up speed. stephanie, it was just a few days ago after apple said its all-time closing high that 125 million shares traded hands. if apple surprises in any way today, i think you could easily see that surpass. >> if you have apple fever you want to june into "bloomberg west" today. it will be all about apple. >> coming up, makeover for new york's fashion week.

a whole different look. >> it brings in big, big dollars here in new york city. >> have you heard of acrylic glass? there is something that could be even stronger. ♪

accordsfrom bloomberg in new york, this is "market makers." >> welcome back. new york fashion week started more than 70 years ago and it is still going strong, stronger than ever. over 800 $50 million in revenue to the city each year, topping other events like the u.s. open and the new york city marathon. here is a look at the money behind the curtain. 300 shows this week. it is all new york city.

how have you given fashion week the makeover? >> when i came on board, we did a comprehensive study of the industry and we talk to everyone designers tom producers and retailers and took stock of what they wanted to see happen and where we were lacking. so we did a complete venue overhaul and redesign some really fearful spaces and gave the -- and we designed some really dutiful spaces and gave the designers what they wanted. it is a huge business. restaurants, it is $233 million every season. >> who are the influencers right now? >> we are in lincoln center right now, $40 million there alone in retail and restaurants. >> who is actually your most important client?

is it the designers? the magazines? the buyers? great partners with the designers, not just during show season, but around the year. >> it seems very elite, very small. explosion of social media, it has become mass-market. >> i think there is room for everybody. be seen andent to those with it will find their way, find a place. >> but are there too many ways? at 11:30 today, instead of there being one show, there are four shows going on. hasn't gotten too big? has it lost its exclusivity? >> it is exhausting for the people who want to see as much stuff as i can and we are joined to help in ways that we can. we work very closely with the cf ca to manage the calendar as best we can.

wayse also offering new for designers to view it digitally, creating original digital content to display throughout our site instead of having a physical show or presentation. >> for emerging designers, has it gotten us competitive because there are more platforms? >> yes. it is a great time to be an emerging designer right now. there are a lot of supportive programs being implemented to support and facilitate businesses for emerging designers. one this season is the dhl global export program. >> what is that? logistics partner in mercedes-benz fashion week. it is helping take established designers in their home market and helping them expand internationally into other international markets. >> why does this work for mercedes-benz? looking at burberry's finest doesn't make me want to buy a mercedes.

why does that make them partner with you? >> we are the largest media event in new york throughout the year. we have over 100,000 people come through our town over the course of the week. we have 1600 registered media. it is a big business. >> the fact that this is a time to be an emerging designer, what does this mean for the old establishment? there are those who controlled it all and kept it small i did not let the new guys in. >> it is kind of inspiring everybody and i think you will see the more established brands embracing social media now, instagram and twitter, and maybe ways they would not have thought necessary a few years ago. >> really? i would guess there is negative impact for the sitting in the front row for decades and now they are sitting alongside 23-year-old bloggers who have as much of an instagram following orthe likes of a "vogue" "elle" magazine.

>> there is room for everybody. it is end of the day, about buying clothes, selling clothes, selling collections. every day, people get up and get dressed. this is a business that is not going away. >> this is the biggest you have done to date. >> it is our flagship here in new york and it is our largest event. >> what is your headache? >> everybody wants to go. everybody has a sister or cousin that wants to sit on the front row. there is great adrenaline and it is exciting and it is exhausting and you work around the clock, but it is all worth at the moment you see the first address come down. >> what was your favorite show? >> so hard. thank you so much for joining us. >> thank you.

>> we will be more with "market makers" in just a few. jack lew warns that we are running out of time. fix our roads and bridges, he says, or get ready to lose jobs. ♪

>> the treasury and transportation departments are holding a summit right now. these departments are looking for the private sector to play more of a role. will have an exclusive interview at 4:00 p.m. this afternoon with secretary jack lew and transportation secretary anthony foxx. peter is taking a look ahead right now. what are these two secretaries prepared to offer? >> they will offer a couple of

things. they will come up with specific recommendations for president obama in mid-november. but it's clear that they can offer a solid return in investment, less red tape, and the support of the federal government in general. it hasn't always been easy to do business with the government. they are claiming they can make this process easier. jack lew is opening comments to participants. we are talking folks from blackrock, kkr, other institutional investors committed to investing in the space. his messages, listen, if we don't invest in infrastructure, it will do harm to the u.s. economy and the government can't and shouldn't do it alone. >> unless we reverse this trend, the consequences of failing to provide and maintain our infrastructure will be severe. the price will be paid if your jobs created and some lost. a rising prices for goods and services that will cut into worker paychecks. times, higher

greenhouse gas emissions, and a lower quality-of-life, from traffic jams, airport delays, water main breaks, and potholes. >> the reality here is, the reason they are looking into the private sector in part is, the government cannot get its act together with a stalemate the summer. they're looking to the private sector to step up. there is plenty of opportunity. as 2% of highway funding projects in the last six years had public-private partnerships behind them. there is a lot of room here and they think there is a lot of opportunity to get the private money headed in the right direction when it comes to infrastructure. >> the federal government can only do so much because there is a lot of the nation's infrastructure that is controlled by states and these -- and cities. while the government can put the private sector in the right mood, it may not be able to offer the same kind of checks breaks and cutting -- kind of tax breaks and cutting a red tape. >> that is absolutely right.

it is a public unit process and these projects take a long time even when you get through some of the red tape. a bridgeted at that was streamlined. that,re making the case again, this is critical to the u.s. economy going forward. and he can be done better. but they need money and it is still -- how do you fund this? if it is not an increase in the gas tax, the obama administration gets his idea of matching with corporate funds. republicans have had some of the same ideas but they are not on the same page yet. that is one of the things that we want to talk to secretary lew and secretary fox about this afternoon. >> do you have a sense how much appetite there is in the private sector for those proposals to

twin infrastructure investments with corporate tax reform to create an incentive for companies to get behind it, to lobby, for example, their congressmen or senators in the hope of raking the logjam in congress and getting a deal done? >> you talk to business groups here in washington and a lot of them say on the surface they love that idea, but they want to sue the -- they want to see the details. they want to see how the companies will be affected by the details of the proposal. it is different from what you hear from republicans versus the president. it does matter to those corporate interest groups. but they very much like this idea but they want to see the details. we will see if it is something that can happen with a new congress maybe even next year. >> we all know how does. by all means, corporate tax reform, close those loopholes, just don't close my. -- close mine. classic joint interview with the secretary's

transportation and the treasury department. >> a groundbreaking new screen. we will tell you all about that when we return. ♪

>> against the back or up of the ray rice scandal, it looks like the buffalo bills are staying put. -- kerrykim hubbell a pagula, the price tag is about $1 billion for the buffalo bills. there is a big difference

between miami and buffalo. the buffalo bills are staying put in buffalo. a billion dollar price tag. trumps outbidding donald and a group that included jon bon jovi. nfl on thes from the same day that we are questioning the league's conduct in the way that it handled ray rice. >> the other thing we are talking about today is apple. how much would you pay for a scratch-proof, crack-resistant iphone? it is a new feature that can be unbowed today and the secret is sapphire, stronger than glass and tough like a diamond. aboutwe are not talking shiny, lose, semiprecious stone. i need tough and waterproof. you never scratch your iphone

ever? >> i note it up with water every chance i get. >> we are not talking out bling. this is synthetic sapphire. it is made in a furnace. it takes about 30 days to make this. you cut it with a diamond cutter and use it for anything. it is scratch proof. the question is is it crack proof? you could make the argument that it will not crack. it can hold a lot more weight than last. but if it does break, it y.atters completel patents looking at some to strengthen up sapphire. >> sapphire is the same stuff used in high-end watches. >> yes, in led lights, like the

blue christmas lights you see. it is used in the camera for most phones and as well as the fingerprint technology for apple. but apple has an agreement with gts technologies to source their own sapphire. that is a pretty big investment to make if you are just going to use it for cameras and you're just going to use it for and i watch -- for an iwatch. >> how much does it cost to us? >> that is the question. i have heard estimates from $13 to $100. that is a wide range. it depends how much you use for it. for a 4.5 inch display screen, you are looking at 18 square inches, which could be relatively expensive if they can actually get the yield up in the factories. development, which is a term in france, thinks that it will be $16 to start.

one production can ramp up and then get more stuff out of each furnace. it will be around $13. >> this almost seems like a good example -- >> when you think about how important your cell phone is, it seems pretty cheap, doesn't it? >> $13 extra not to have to take it back to apple with a shattered screen? >> think about how valuable our phones have become to us. >> it depends if you can scale up production enough. virtue used to be owned by nokia and that cost $6,000 to $12,000. there are actual diamonds on that cell phone, so it is much sapphire. then there is a chinese company that makes under $2000. die, iy battery didn't wouldn't care if my phone looked like a brick. there you go. [laughter] >> enough said. >> amazon fire phone are you at

$.99 now. >> there you go. if you have apple fever, make sure to tune in to live coverage of apple product live event only on bloomberg west. >> you can follow along on twitter. they will be live tweeting the whole thing.

>> we covered a lot of ground in the last two makers but for now "market makers" is signing off.

is zache, with this pozen. sterns has more. we are unfortunately or fortunately diving straight into derivatives because it is time for today's options. james.rning, overall, the equity markets a little lower yesterday. the s&p 500 saw its biggest drop. what have you seen on the options for? seeing order flows slow down a little bit in the equity options market. we have some very clear support at 19.90. verye continuing to see low levels of implied volatility.

we are looking at a vix trading below 13. even if i believe there could be that, geoatalyst to political situations overseas, or any other macro data that can sell up this market, i can get that protection very easily. >> apple expected to release its latest iphone. we are looking for the iphone-six and potentially a wearable gadget. there is also some unusual activity in the options market. what are you seeing around apple? >> this is very interesting price action in apple. saw a lot of weakness in the stock, which is a typical of how it trades going into the release of a new phone. the options market is telling us this will be the most anticipated release in a long time because they are pricing in a what -- pricing and quite a bit of movement. market makers are pricing in about four dollars a movement, up or down, by this friday's

expiration on apple, which is more than a 4% move, something we don't generally see on the release of a phone. investors are watching this one very closely. are bettingraders we will see something that will shake the stock about 4%, apple. you also have a trade about another brand i like, which is lululemon, head of their earnings report. >> lulu has been one of the worst performing stocks on the year. however, if we look at how it performs historically on earnings day, it is a relatively strong day. it has rallied the last eight quarters. it moves a lot. expectations are generally low going into the earnings report. lululemoneport out of should send the stock higher here. they are implying a target just south of $42 per share by this friday's expiration. i will be looking to get long lululemon.

41-42 callthe spreads for this weekend's expirations. it is a great risk set up for me. >> that is a move. overall analyst sentiment and it is pretty cautious. two thirds still have a hold call on lulu. you areteresting that expecting it to rally. why is that the time horizon? why not play it further out? >> i like to play earnings on a one-week that an implied volatility gets priced into options. after the event comes out, it is a lot a premium decaying away that is hard to fight any long-term position. i want to be out of the. trade if i am wrong. .. and i have a very defined downside risk with a great upside potential. seeing the we are

three main benchmarks in the red right now. the ascent the trading below 2000. -- the snp trading below 2000. the nasdaq in the red also by about a third of 1%. bracing on the iphone event. bloombergtv will have full coverage. that does it for "on the markets."

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