based on buybacks. >> we will see how it turns out. for now, the buybacks are doing better than the general market. mike regan with the latest on equity markets. bloomberg is back "on the markets" in 30 minutes. "market makers" is up next. ♪ >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. scotland's biggest decision in more than three centuries. voters are deciding whether to stay united with great britain or go at it alone. billions of dollars at stake. >> eric holder is looking for a few good men and women. the attorney general once more while streeters to blow the whistle on wrongdoing. >> and will donald trump go all in again? may i up the busted atlantic city casinos he once owned. welcome to "market makers." i am a very excited stephanie ruhle. why?

because my dear friend olivia sterns is in the house. if you've not already seen it, erik is on assignment in the big d, detroit. i feel like things are going to go so well with you, olivia. >> i thought i was going to get the new jersey cable kids. of thebe at the inn show. we are testing our chemistry. >> time now for newsfeed, top business stories from around the world. a surprise drop in housing stops last month. beginning home construction fell more than 14%, coming a month after housing starts hit in almost seven-month high. and the german conglomerate bayer will spin off its plastics unit. that will let the company focus on its more profitable life-sciences businesses, pharmaceuticals, chemicals, and seeds. of one of the nfl's biggest sponsors and says that she is confident commissioner roger goodell will do the right thing.

says therendra nooyi is no middle ground when it comes to child abuse and domestic violence. goodel has been criticized. >>l olivia, domestic abuse and violence is a huge issue every day, and it is tragic that we pay this much attention when it is billions of dollars. >> or when a video gets late. >> correct. erik schatzker is in detroit for a very special day and he has interviewed some of the biggest names in business and finance. erik, you crush it. what an honor. what a treat. theen buffett, governor of state of michigan, lloyd blank fine, and our own mike bloomberg. how was it, buddy? >> it was pretty extra ordinary, stephanie. i likened it to sitting next to and gazing up at a modern mount rushmore. as you said, warren buffett, lloyd blankfein, mike bloomberg,

governor rick snyder. we were here to congratulate the first class in detroit of goldman sachs' 10,000 small businesses, a $500 million program around the world that is designed to encourage entrepreneurship, to educate small business owners, and to spur job growth. what place on the planet needs it more than detroit? city that went bankrupt, the city that has lost 500,000 of its inhabitants over the past few decades, so it is important to put 10,000 small businesses in the context of what we see here in detroit, and the city has a long way to go, which is why i put the question to warren buffett -- as an investor, is there a more sage and wise investor than warren buffett? i challenge you to find the one. as an investor, how do you look at detroit? what is it now? is it a distressed investment,

is it a deep value play, is it something else you go here is what warren buffett had to say. >> detroit is getting to clean the slate, and it is important that they get through the bankruptcy in a relatively prompt order, and it looks like they are doing that to me. they need a fresh slate financially, and they are getting it. is tos really important have vibrant headquarters companies, and now developing a small business -- who knows what comes out of that? we bought three businesses that were started with less than $10,000 at work sure and we pay people in the billions for it. that is where the jobs come from. that is where austerity generally come from. last night, we went to mcclure's pickles, and joe and bob mcclure had taken the business plan that they had worked out with 10,000 small businesses, they went to the bank and borrowed $500,000, and they will be adding people and they will be adding customers, and they will do it right here in detroit. and my friend, dan gilbert, who is committed to detroit, with tocken loans, he is going

add thousands and thousands of employees over the next 10 years. you cannot stop him. you have got some great headquarters companies here, so detroit is going to do fine. warren buffett says detroit is going to be fine. lloyd blankfein, ceo of goldman sachs, says if he could, now detroit the time to buy futures, so these guys are really optimistic about the prospects for the city. they say that the best analogy to draw is between detroit today and new york city of the 1970's. remember the headline -- dropdead? new york was on the verge of bankrupt the itself, and look where it is now. >> hold on, though, you are in detroit. do you believe that? what to do the streets look like? >> i want to believe that, and that is important. he wants to believe, the hope, the optimism is what is going to carry detroit future. detroit forward.

if everyone had given up on new york city, it would not be where it is. whether it is the small businesses, whether it is the kind of philanthropy that mike bloomberg doesn't cities, or whether it is the take charge, let's forget about the federal government attitude that the governor rick snyder has come of a share that optimism, and i have to say being here -- it is not hard to feel it, too. quite the right, erik, we while a lot more of that interview. we will see you again at 11:00 a.m. eastern. we will have more that huge sitdown with one more time, mike bloomberg, warren buffett, lloyd blankfein, and governor rick snyder. if you do not know, his twitter hnerd. is @onetoug >> i do not know, i have not heard of any of the rest. speaking of accents, we are going over to scotland. millions of scott headed to the polls to make one of the biggest decisions in the long history of the u.k. it has been a 307-year union.

should they split off to an independent country? , whaterg's anna edwards is the mood like on the ground? >> braving the mist, olivia, it is kind of moody here, isn't it? the is a nice metaphor for entity that has been forged here. both british and scottish, behind me, cd monument to a famous scottish philosopher, a big name and scottish enlightenment, just out of our shop, there is another monument to the naval hero that led britain to victory. both of those identities reflected on this one hill at the heart of edinburgh, the capital scotland. that is essentially what people are voting on today. for 4.3 million people going to the polls today, 97% of the potential electorate voting to have their say as to whether

scotland should remain part of that united kingdom or go it alone. --you are living in the u.k. if you are living in scotland, over 16nd you are come if you are from britain or the commonwealth, you are able to vote in this election. people as young as 16 are able to vote. that is unprecedented and british history certainly. we will not get the result of this boat until about 2:00 in the morning local time, about 9:00 in the evening, thursday evening if you are in new york. we will get to see the first results coming in from some of the smaller island communities, and in those numbers will trickle in over the next three or four hours. back to you. much.a, thanks so things for braving the weather. on a clear day, you can see the north sea behind anna, but it is scotland. by the way, she mentioned that 16-year-olds can vote. do you know why?

david cameron, prime and mr. of the u.k., said that for the referendum he wanted to extend the age. all the 16-year-olds and 17-year-olds, you can imagine. >> we are going to see. but let's the back to the u.k. we go back to london to speak with our very own mark gilbert, and "bloomberg view" columnist. this vote will change the u.k. forever. >> it will be changed forever. more ability to control how house spending has gone. it has already been thomas to scotland, some of it has been promised to wales. the region of yorkshire started to make more noise you have bay, too, would like to have more control over their own destinies. this referendum, whatever the outcome, has changed the nature of british politics. it has an franchise the regions in a way we have never seen before. one of the things about the u.k. is it is very centralized. london controls most of the

spending and makes all of the decisions. that has changed. >> what does this mean for other movements in europe? boosting forively them. the catalonia's had a demonstration in spain. 100 in thisommend demonstration. catalonian bonds have been hurt on speculation a debit my get their own way. they want a referendum. the government said it is illegal and they will ban it. but this movement towards your own destiny being fed by your own people -- it looks fairly unstoppable at the moment. ask you know, mark, there has been a lot of criticism of david's coalition government that they did not see this coming soon enough, they put alistair darling out as the front man. if they do lose scotland, they will strengthen the tories because they lose all of the liberals who are in scotland. no matter what, could you say

this has weakened the cameron government? >> picture the scene. you are david cameron, the prime minister of england, you have to go to queen elizabeth and tell her you lost to scotland. that is not a comfortable meeting no matter how you slice and dice that. none of the parties come out well from this. the tories do not come out well because they left it to labor. labor did not come out well because they did not get on the stone, they did not knock on the doors. minister of scotland and the engineer of all of this has played a blinder in terms of strategy, in terms of picking the right points that have really motivated people to have a proper debate in a scotland about this. westminster does not come out of this looking good at all. >> mark, david cameron worrying about responding to the queen. columnistberg view" mark gilbert, thank you so much. up, attorney general eric holder once you.

we will see of dropping the dime on your boss is worth the cost. wife and we talked to the founder of one of the most successful hedge funds on the street. ♪

>> welcome back to "market makers." i am stephanie ruhle with olivia sterns. bankers beware -- attorney general eric holder wants to persuade more wall street whistleblowers to come forward to expose financial crimes. in a speech in new york yesterday, holder said "there is that iscial fraud case prosecutable unless we have sufficient evidence and intent. we should seek to better equip investigators to obtain this often elusive evidence. this means thinking creatively for a way to incentivize cooperation." a former goldman

sachs trader. welcome. >> it is good to be here. >> currently whistleblowers can get a grand total of $1.6 million, which does sound like a lot of money, but if we're talking about massive financial fraud inside these institutions, shunted it be a lot more money to incentivize them? these guys make more money than that. >> this is aimed at exec we what wall street is about, which is a risk-benefit analysis. folks on wall street who want to engage in a trade, they think well, what is it going to cost, what is the risk? what the doj is trying to do is increase the potential benefit for someone to come forward. i think it is a good play. x how much money do we need to get them talking? >> it is important to keep in mind are two categories to people who might have witness testimony. there is a whistleblower, someone who i might call a water cooler witness, not involved in the crime but here's about iran the office. they are not really someone

inside the crime. they are an observer. the second category is a ooperator, and the incentive for them is less jail time. someone who sees what is going on but has to make the calculation, if i come forward, there may be stigma, i may lose my job. there are often internal -- inside these big banks -- that they are supposed to report inside the company, so to go to doj, their job is at risk. he is trying to change the analysis any minds of these folks to make it more likely they will get paid. it fair when we criticize the department of justice for not going after more wall street ers? when you think about it, you have these regulators to going to banks, guys with round polyester suits and little clip boards going up against financial giants, financial engineers, gurus who can run circles around it. a guy makes $59 can out wit one

guy who -- who makes $5 million can outwit one guy who makes $92,000. doi know a lot of people who not make a lot of money who are there he smart. >> or they go and become tolerant accountants for the fbi. >> that goes to a larger political points, which is -- i have read the speech that attorney general holder gave, and it is part and apology for why they have not done more. it is an answer to the critics. part of that explanation is we did not have the tools. they couldhether have been more forceful in the past. part of what they want to say is give us some more tools, and on this particular point, he does have a point. >> do you think this could turn it page and we could start to see more insiders who are more stakeholders become whistleblowers? >> at the margin at least yes. i think there are some folks who if there is an enticement that i

am aware of, a multibillion dollar fraud, and i blow the whistle, that i can participate eight or nine figures -- not nine figures, but a pretty good amounts, you will see more of them. i do not know that it will be the cure-all, but i think it is a step in the right direction. >> why the you think holder is doing this? obviously there is a lot of criticism that individuals are not held accountable. is this just a political response? >> i think it is part political, but as a former prosecutor, it is so vital to have someone in the room for two reasons. one is to help the prosecutor figure up the who, what, where, when and why ferments i come help with leads. secondly, to put him on the stand in front of a jury instead aren fbi agent saying here the phone records. he of someone in the room who says the person at the defense table did this and did that. it is very powerful evidence. >> were talking about how the banks are arming themselves to the teeth with corporate

compliance officers, but is still perhaps is not going to work in less pay the whistleblowers more money. what should the company be doing internally? >> there has been a major step forward to bulk up internal compliance. i used to be a compliance lawyer. i am now on the defense side and representing companies. what i see is there is a lot more emphasis on internal controls. expensive and bad business to have bad things happen in your company, so from my resident position, i actually is ahem trying, but fraud growth business. >> hold on -- do banks need to change how they compensate their employees or who has the power? 10 more risk managers, but at the end of the day, if the guys at the trading desks have all the power and make all the money, the guys in risk management are still in the ghetto. >> i think it is about empowering risk management.

i think that is happening. you trust your highly paid people, but you have to verify. you have to crosscheck what they are doing. what i hear are complaints that there has been in an overcorrection on this and obviously some folks are still skeptical about that. issue onis narrow tried to get people to come forward, i think it is a good impact, and you have to see, you have to get it through congress. on wall streetg is a bipartisan matter, so we will see. there isnfident that at the fbi someone who will be doing this policing? >> i think they are terrific. i think the manhattan da's office is one of the finest prosecutors in the country, and i know him very well. his heart and head or in the right place. i'm a veteran of the office. it is the sovereign district of new york. they are terrific there. i will take a little issue here. i was curious that there has been so much effort put into

insider trading. i mean, talk about all these prosecutions, and that is bad stuff if it is done, but i was thinking to myself well, you know, that had nothing to do with the great recession, and why aren't we doing more on that? ma hadht, martone it ha nothing to do with the recession. >> i agree. >> veterans administration, health care -- the think congress and has veterans of administration -- >> but they pick on wall street, but we need more people there there, wit -- more people maybe we need more whistleblowers elsewhere. >> it helps in that area. a law that has been in places the civil war allow someone to come in and say hey, the government is getting ripped off on his contract, and that is a very successful law, and he is now trying to transplant that into the criminal arena and i think that is a good likelihood

it will help. >> we spent all year talking about these multimillion dollar i watering finds that the banks have been paying out. what carries more weight? a $9 billion fine for a bank or the individual going to the jail? >> the latter. we made history because we insisted that the board of directors of directors pay personally. the analysis is this -- wall street folks act and think about the risk benefits. if the analysis is -- if i do this, my bank is going to get sued is one thing. if i do this and i go to jail, it is another one. sean, thank you so much, sean coffey, a partner at kramer levin. ♪

>> is still to, on "market

makers -- still to come on "market makers," we will hear from a hedge fund manager doing six times better than his average p or. >> plus, atlantic city. who would want to run a casino there now? maybe the guy who put her on the map, donald trump. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back weird i'm stephanie ruhle. -- welcome back. i'm stephanie ruhle. >> we have a much bigger guest right now. the search for steady returns and portfolio protection is sending investors back to hedge fund spirit investors are on track to handover the most cash hedge funds -- to hedge funds

since 2007. even as the biggest pension funds say they're taking their money out of hedge funds. one of the guys pulling inside -- pulling a sizable sum is neil chriss. average of his peers. he has been able to double his this year.s you are having asked for in your year. how are you doing? we've beenoing what doing every are. we have equity but macro and quantitative. we keep an even allocation on all the strategies. we try to not lose a lot of money -- that has continued to work this year. >> how are you keeping all your teams intact? because your strategy is working so well, we are seeing so many

other funds try to change the way they are operating and build these individual port photos. how do you keep your teams and recruit more teams without this being a zero-sum game of teams going from one fund to another fund? >> it's a very competitive environment. we are aware of that. we are attempting to keep our people happy. we create a great oppo environment. we are aware that the competition is out there. momentre at this funny in the markets right now. the punch bowl has been out for three years now. been taking its away. where do you want to be? >> we like being in everything and never over alitalia getting to anything. -- never over allocating 20 thing. macro has been a tough ride. we have seen the returns of many funds and it's been tough for us. we try to take less risk and be

patient because i'm a when you look ahead, specifically in rates, there has been low volatility. hasfront end of the curve been pinned down because of that activity and quantitative reasoning -- easing and so forth. how it will look, we don't know. when things change, often times people are making a good opportunity. one attractive area to start thinking about entering where we would like to expand is in rates. >> really? aen though macro has had such tough ride. we are seeing hedge fund investors pull out of cta or macro. you are saying i'm going to lean in? >> we're going to lean in judiciously and slowly. we are coming to the end of quantitative easing. that is clear. eventually, sometime in 2015, rates will start to rise in the u.s. at the same time among we have

not seen a rate hike in the west since june of 2006. whole generation of fixed-income traders has come through that time. if you look back to the last makingu had a trader markets swaps or government bonds, there is not much in the rate cycle. have a different generation of traders were -- were conditioned to look at things one way. you start to see volatility and opportunities when things go the other way. >> he called at the end of the bond rally. mario draghi putting his foot further down on the pedal. why is he wrong? >> i'm not betting against him. i'm saying it's going to get interesting. >> if we are talking hedge funds , the criticism about the structure. they said that they are not going to invest in hedge funds anymore. what does this mean for you?

>> when the west largest pension fund holds -- pulls outcome its front-page news. a little over 1% of their assets. not big enough to move the needle for them. -- bignough to require enough to require real research. they were either going to take it to zero are protein decoy. we are aware that there are many blue-chip pension funds and institutions that rely on hedge funds as a differentiator for returns. that will continue to be the place. hedge funds continue to show that they can offer a differentiated set of returns from the overall oh asset allocation plan. >> do you worry this will cause some knee hedge funds and endowments to get on the horn and say i don't want to pay two and 20 and more>? >> we have to continue to do our job and continue to operate

returns that are worth paying for and continue to offer differentiated returns. >> will there be more hedge fund consolidation? while you are putting up 11%, so many others aren't. >> i don't know. >> was it a mistake to do it? >> they are a great engine plan. plan.sion each manager has their own issues and concerns. it's impossible for me to say. >> when you are sitting at your desk managing your team and your investors are calling, what is the one thing they are most concerned about? is it said -- the fed or asset bubbles? >> the question i get asked more than any other this year is, what are the challenges in this low volatility environment? it's a tricky environment because all is not as it seems. the market is relentlessly grinding higher. the strategies we run on cedarcrest returns. -- cedarcrest returns.

-- see depressed returns. we have to assume that everyone is running at a bit higher leverage than they otherwise would be. because returns are otherwise is a low. , when thingsnce change, when the environment alters, that will unwind and create a great deal of downside movement. on. style and so >> you've got your fingers and all the different pots. you see any bubbles out there in the market? >> we don't think in terms of bubbles at the fund. we see that many valuations are stretched and that concerns us. we don't expect that if there is an unwind, it will be gradual and slow. it will look more like march of 2000 when the nasdaq burst or

when lehman went under we need to be prepared for something like that. >> do you see ourselves ever supplying and offering a recalled product at some point? a big part of thank you ours business is to a retail investor -- and you are -- if your investors are investing across asset classes, they don't get to pick only credits for equities, our investor starting to demand anything else? >> we say, look, we have one fund and we are very happy. congratulations. thank you so much for joining us today. neil chriss. we want to get right out to breaking news. some news on alibaba. >> at least six big institutional investors have put in orders for alibaba's ipo. fidelity, blackrock.

over $1 billion from each of these large funds. those are the big names. we have heard that putnam, wellington and -- have put in orders as well. alibaba doesn't announce a pricing of the ipo until after the market closes this afternoon. somewhere after 4:00 p.m. the last indication we did get was that the company would price between 56-50 eight dollars a .hare we will see how this all plays out. we do know at least six big institutional investors have put in orders for ali baba's ipo. >> that ipo should start trading right here on "market makers" tomorrow morning. the gaming industry looks for its next frontier. where do you build casinos now that ac is going under? ♪

>> welcome back. renewed interest from potential buyers. if the atlantic casino was at one point worth $2.4 billion, it is now entertaining bids around $90 million. what is it really worth? an industry insider and developer and advisor to steve when.

, $90i look at this bid million, it feels tragic. has neverperty that made any money. how do you assign a dollar value? >> you consider that it has 14 rooms -- 1400 rooms and cost over $2 billion. they're looking at offers that are less than $100 million. there are people who buy apartment in new york city for $100 million. you have to be careful not to paint the whole atlantic city experience with one brush. carl icahn makes some money at tropicana. --borgata makes a lot of money. they have to go in there and repurpose those buildings as gaming is starting to shrink in atlantic city, they have to replace it with other attractions. they are not going to ac. you can have 1400 rooms or 100

million rooms, what does atlantic city need to do to get bodies there? is very aware of what's going on. governor christie has taken charge of the situation. there was a difficult political environment in atlantic city. he has new energy -- the new has energy. a real estate developer who is very savvy -- it is not going to be a quick fix. i completely understand your question. it's not a matter of one answer or flipping a switch. they need to reinvent themselves. the whole gaming industry has changed from a monopoly to a duopoly in the east. you have casinos all over. atlantic city is going critical time. -- going through a difficult time. it's been counted out before,

but atlantic city will survive. it will come back in a different way. >> another one threatening to come back has been donald trump. even though he has been congratulating himself for leaving ac, he is now thinking about dipping his toes back in. is he serious? is that a smart move? >> is hard to predict what donald will say or do. he has made a lot of money in atlantic city. 20 or 30 years ago. his brand was big. it was nothing like what it is today. at the trump brand is extremely right. atlantic city can certainly use some buzz. if he wants to come back into the market, i don't think anyone will turn him away. says big trump always things like this. the really think he's going to get back into atlantic city -- do you really think he's going to get back into atlantic city? >> i have not heard him say

specifically that he's going back to atlantic city were not. everyone is looking at atlantic city today and try to figure out, is there a move or a play? you mentioned earlier that carl icahn has made money on tropicana. carl could take a run for revel? >> there are more rumors about atlantic city than any other place. is blackberry in an iphone 6 world. it needs to be something else. carl icahn is a savvy guy. people were saying that he was andg to buy revel rebrand the tropicana. there are so many rumors and so much discussion about what's going on. until someone serious steps up -- it will happen. there will be an evolution here. we will see some positive changes. there are places like the

resort, the borgata does well. we can't put a dagger in atlantic city. now, there is going to be additional competition from new york because there are 16 applicants for four casino licenses in new york. governor christie will have to carry with some sort of move. we will have to see how this plays out. >> the underlying question is, the problem with ac that there has been too much supply. we have seen for major casinos close. has ac hit bottom? is now the time to buy back in it or is there never coming back? every time somebody says atlantic city has hit bottom, it looks like there is more bad news. i don't think atlantic city -- you can't really pick a bottom. at some point, there will be a

leveling off and you will see a new environment in atlantic city. it will happen. oceantural resources, the and the great boardwalk and a lot of people still like to go to atlantic city. there are still people today that called me and say, where should i stay in atlantic city? it's iconic. it will survive. the whole industry has changed from what it was to a very different type of business. >> i try never to pick bottom. should we be be buying into this idea that new york could be the next big place for casinos? people here aren't rushing to atlantic city. why will they buy into new york? >> in certain areas, particularly in the northeast, steve wynn was just granted the right to develop a casino in the suburb of boston. that's a very fertile market. he's an amazing guy. i no longer work directly with steve, but we worked together

for 15 years. he's the guy that can go into a revolving door behind you and somehow comes out ahead of you. >> what is so great about massachusetts? >> the market is great. one casino in the boston area -- that's the issue. if you get into these places where you have one casino and it does very well and then they decide, let's build another one and another one and suddenly you have a bunch of casinos that are doing well. -- that aren't doing well. that sounds like the billions of dollars being dropped and macau. >> you see that everywhere. not just in the gaming industry. somebody builds an office building and it is successful so three more developers decide i will build a big office building.

it's not just something you can point to the gaming industry and say that it's the only one that has had too much expansion. very uniqueat is about it is it's one of the only industries that is expanding and contracting at the same time. it's going to look very different than it did before. >> what about the threat of the internet? billion will hit $5.6 given the fact that there is so much more supply coming on and thene gambling is -- is now time to be buying these big-box casinos? >> i'm a person that doesn't think there is direct competition from online. it's like the movies, when they first came out with television, everybody said that is the end of the movie business. it doesn't work that way. it's a very different experience . gambling at home on your computer is very different than going to a resort and interacting with the people that are there.

shopping online is also interesting, but shopping online is not going to replace retail stores. is, in thefference online space, you have to have the legal right to do it. with the politics, as fractured as they are, it's going to be difficult to get them to say -- we can't agree on anything, but let's agree to put gambling in every living room in america. i don't think you will see a vast expansion quickly in the online space. thank you so much for joining us. the ceo of -- a true insider when it comes to the gambling industry. for more of our coverage on the gaming industry, today into street smart. of one talk to the ceo of las vegas's premier hotels, the cosmopolitan. "market makers" will be back in just a moment. all the big hitters.

stay with us. ♪

>> it is approaching 56 ascii art. it's time for bloomberg to go on the markets. the hour. right aid shares plunging 50%, falling -- following its biggest cut of the year. lower advertisement rates from insurers and higher costs for drugs are hurting the bottom line. investors were much more concerned about their forecast. right aid shares taking a bath. >> stay with us. "market makers " will be back in just a moment. you will hear from the all-star panel. ,arren buffett, lloyd blankfein the rick snyder and mike bloomberg.

♪

>> live from bloomberg headquarters in new york, this is "market makers." >> detroit's big hitters. ,arren buffett, lloyd blankfein rick snyder and mike bloomberg all on stage. >> he made a fortune selling his company to yahoo! now come and he has come up with a new way to bring you the news. >> the many faces of alibaba. the company that may become the worlds's biggest ipo is more than one business. welcome back to the second hour of "market makers." i'm stephanie ruhle. >> and i'm olivia sterns.

eric is standing by with a few big shots you may or may have heard of. as you mentioned, just a moment ago, i was here to see were in buffet -- warren buffett, lloyd blankfein, rick snyder and our boss, mike bloomberg. they were here talking about what small business can do for the economy and what big business can do to help small business. it was a wide-ranging conversation, but inevitably, we got down to talking about government. how much better things could be and how much faster the economy could grow if the government could just get out of its own way. what kinds of policies would help the american economy create more jobs, spur more

entrepreneurship. the kinds of things goldman sachs 10,000 small businesses is focused on peer it i want you to sit back and listen to this conversation unfold. it begins with lloyd blankfein. >> we just came through an incredible trauma. we are in a position to talk about accelerating growth, but it is not a foregone conclusion that we would've had growth again if people had gone off the rail. people in government acted courageously in that they interpreted their responsibility very, very broadly. a lot of the regulations and a lot of the things that were impediments to some extent were in demand by people who got hurt in the trauma and what to make sure that it did not happen again. not shockingly, the pendulum has probably gone a little too far and has to readjust. it is easy to take shots. from this point forward, get rid of redundant regulation.

we still have to continue making the adjustment, heal the economy. you give all of that to the fed, you definitely have to get yourself into a situation where you can actually legislate. pick three great areas of legislation to support the economy. infrastructure spending, immigration are the right things to do. >> warren, is lloyd right? has the pendulum swung too far? to which side? >> what you've seen since the third quarter of 2009 is you have seen the economy come back from a wound it has not suffered since any time in my adult lifetime. people talk about the previous recession, they came back and such and such. this was not like that. you had 50 million people in the united states with mortgages on their houses and probably 30 million underwater. that is a different experience than any recession we have had.

american people were scared, and we have come back. compare us to europe. compare us to the rest of the world. america always comes back, and it is coming back this time. >> and it came back from two people from goldman, hank paulson and bob steel, and a bunch of others who came to washington and people were trying to revive history. they saved america. people with no confidence, falling apart, it was like jpmorgan were on the floor of the stock exchange and buy 100 shares of every -- 100 shares do not mean anything. it was the fact that he was willing to do it and we stood up and we defended them. detroit was one of the beneficiaries. the automobile industry was like the mortgage business and the banks in big trouble, and we did what we should have done. we come, suck it up, don't look to the past. what can we do for the future? >> how does the state of the economy feel right now? the fed just yesterday ratcheted back its expectations for 2016.

>> i think the economy is in very good shape. there is a lot of optimism. the danger is overheating and low interest rates tend to inflate the value of physical assets and stocks and create the dichotomy in the economy that is not tolerable. we have to do something about that. in the end, low interest rates i do not think create that many jobs. it is the confidence that comes out of seeing other things go on, but it is the 10,000 small businesses. and the other mistake we are making is we think everything is high-tech. it is all alibaba and facebook and twitter -- that is just a tiny part of our economy. yes, we are going to use technology in everything, but the small businesses are creating to serve the people. >> pickles. >> did you have pickles with your potato chips? >> i had pickles in every pocket inside my jacket.

>> it is talking to your customers. what businesses are forgetting. they are using technology to do that. you cannot do that. if you want to be successful, you have got to pick up the phone, call them up, say -- what can i do to help you? are we doing a good job? can i stop by and buy you a cup of coffee? if we try to say oh, well, competition from overseas or this or that -- it is still the same old thing. the traditional values -- the more you have technology, the more reading, writing, arithmetic, working collaboratively and collectively are the skills that you have to learn in school. >> just last week, we had the its, the intelligent transport system world congress right here in detroit, which is all about the autonomous and connected vehicle world, world of the future for mobility in transportation. 10,000 people, 60 countries represented to show that the center of that is here in terms of opportunities.

it gets back to manufacturing, making products, but then making them smarter with great engineering -- if you want to look at the highest applications of i.t. going on out there, go to a vehicle. people underestimate that. one thing we need to encourage is young people to recognize that making things is still a good thing. you could be at the forefront of the most exciting technologies in the world, and that is a great employment opportunity for engineers also be skilled trade. if you are on the production floor today, you are a skilled tradesperson, and we have a shortage in this country. i view that as a top priority moving forward in the future is to lead the country and helping make the skilled trades grow in michigan because it will be a competitive economic advantage. >> just a matter of adding water and it grows. at the end of the day, somebody will have to listen to the story, do an analysis, give them money, and hope you get it back. take a risk in other words, and some people you say yes to and some people you say no to, and sometimes you bite your

fingernails to the nub and it all works out. that is also what the financial system does because this all sounds great, but everything sounds great. not everything warrants financing. you have to make those decisions, and guess what? sometimes you get it right and sometimes you get it wrong. >> warren, do you share mike's concern for the distorted impact of -- you are famously cautious when it comes to high-tech, but there is so much faith in the promise of technology. some might even say blind faith. >> we are going to sell almost 17 million cars this year. that was down at nine and a fraction. that is enormous. multiply that by $35,000 -- that is a lot of money. america will come back. it has always come back. i frankly think it has done

better than i might have expected for all of 2009. the country was paralyzed for a couple of months. we were having a meltdown. yet, because of the actions of a few, i would add bernanke, too. they got the country moving again. they got the locomotive back on the tracks. it started from a dead start, but it has moved a long way and it continues to move. >> if you look back at the historical record, what would you liken this time to in american history? the post-depression era? what could we be on the cusp of? >> we are on the cusp of continuous growth. we've had 60 months of growth and it will keep going. >> i got out of graduate school in 1978. big malaise in the country. high unemployment, high inflation at the same time. we were soul-searching. iraq, iran, the russians invade

afghanistan, real malaise, and everybody is writing off the united states, and we ride on the threshold in the bull market and nobody even knew it. >> the germans and japanese will totally eat our lunch and all we will do is have hair cuts and eat our hamburgers. [laughter] >> the same thing is true. people worry about china. china has got its own problems. china is a great market for us to sell to. we want them to give us products that we cannot manufacture or prices we cannot compete with. that is great. but china is not going to own the world. the only enemy we have is ourselves. we just have to go out there and do it and not worry about others. there are always competitors, and you have to use technology, and every industry has a disruptive technology coming along with that, but to sit there and say that america is over and our best days are past us just is not realistic. >> warren, is it something that

you want to continue to enjoy in your position at berkshire hathaway? mike here just came back to run his company on a day-to-day basis. lloyd, goldman sachs -- >> neither goldman or sachs is coming back. [laughter] >> that is fair. do you see a day when you are no longer doing the day-to-day thing at berkshire? >> i cannot see that day. i'm having more fun in my job than i ever have before. i get to do what i love everyday with people i love. it gets more interesting all the time. tomorrow is going to be exciting. >> look at this guy on the left. he obviously likes the job, and that is why he is so good at it. that is why he is enthusiastic. he looks at the bright side. the past is history. you cannot do anything about it. but if the rest of this country had governors as good as the governor of michigan, we would be a lot better off, and the same thing i think will be true for the mayor of detroit. he looks like he has got his act together and he understands what

is needed. when i talked to him, he could not be more optimistic and you walk away saying hey, maybe he can actually do it. everybody has written off detroit, and we cannot do that. >> i would say two things. the first comment seems as though warren buffett is not going anywhere. but people like that -- when you put together a group of people like that, you get perspective. the encouraging thing is that these guys who marshall so much in the way of political power and financial power, economic .ower, are optimistic not just about the prospects for the city of detroit, but for the american economy. job.eat you crushed it. it had to be in honor.

>> it certainly was. i said it before and i will say it again. a modern-day mount rushmore. how often do you have the opportunity to sit in a circle with four people like that? >> every day, i have the opportunity to sit next to you. i will say it's an honor for them. you can see eric's entire interview online and on your tablet. >> still to come, making it easier to use your iphone. apple has come out with a new operating system. we show you what is different. >> plus, are we getting any shares of the hottest ipo in years? alibaba is a lot more than just one e-commerce platform. ♪

you are not getting

the new iphone, you are still going to be able to upgrade your old one. apple is releasing i wes eight. -- ios 8. sam takes us through the five biggest changes to apple's mobile operating system. 8 is not as much of a break with the past. seven was known for introducing n entirely new design. here are five of the most important changes. past, when you got a notification that somebody had either e-mailed or texted you, you had to read the alert and then open the app and then find the message and then reply to it. respond, you can directly within the notification itself. it allows you to get back to people very quickly without interrupting whatever else you are doing.

os such as android and blackberry, apple's os now keyboard that critics words as you type them. the system can learn your writing style and make suggestions based on it. it's good in theory. i wish the suggestions would come up faster. when you have a bar of suggested words above the keyboard, you limited the amount of visible screen you can type on. if you don't like it, you can turn it off. you can now record your voice and send it to someone as a text . this may seem silly because you might ask yourself, isn't that what the bonus for? it makes a lot of sense. >> i will be there in five minutes. for the kind of phone calls i generally make, this is going to replace a lot of them.

apple's mail app has some new swiping features that are actually pretty nice. you can perform several malfunctions from the inbox without having to open an individual message. more importantly, apple finally seems to have gotten search right on its mail app. after using gmail's app for years because apple mail search was so lousy, the combination of the new features and an improved search function may have me coming back. if your device is plugged in, you can now activate seery with your voice. with fewer boys. competitors have had this feature for a while. when placed this feature is very useful, the car. if some of these features sound familiar, it's because they are. we have seen them on competing devices in the past. apple is never shy from taking an existing technology come refining it and including it in its own devices. rule.er the downloaders

the first version of any software is likely to have some bugs in it. if you can hold out, apple pushes out an update in the coming weeks that aren't out the kinks -- irons out the kinks. betterfact that they are than ever -- are you going to get it? >> i'm going to upgrade. it's very awkward if you are a reporter. "what the duck are you talking about?" picks as business teenager for the job.

stay with us. ♪

>> we are approaching 26 minutes past the hour. it's time for bloomberg tv to go on the markets. green on your screen. the dow surging to a new record high.

the s&p back above over 2000. the nasdaq also about 24 points -- the biggest rally in the day is dupont. this comes after the fed announced it would perhaps tighten rates. that puts considerable time in their language. let's show you what's happening on the currency markets now. the dollar strengthening versus the yen. the dollar is stronger than it's been at any time since lehman collapsed. the british pound also a bit stronger. this comes as it looks like some hedge funds are putting back -- putting money back into the british pound. the euro also a bit stronger. one dollarng below 30 after news that mario draghi

's big bet for getting money into smaller and medium-sized companies came up a bit short. the euro is stronger on that is because it's a signal that he will have to do a lot more. >> we are seeing equity fund sell out of their tech positions to make room for their alibaba allocations. when we come back, we are talking more about alibaba. we are a few hours away from finding out if it will be the biggest ipo ever. we will show you exactly what investors will beginning for all that money. dinner?ng for a deal on restaurants are hurting this month. catelli why -- we tell you why. ♪ .

>> welcome back to "market makers." for the day,rtner olivia sterns. this is one of those days where you wish there was a commercial cam here on "market makers." it is really awesome. schatzker is in detroit for that big interview. you can catch it online. just a few big hitters. nowhere i might be shopping for christmas presents this year?

alibaba has established its position as the world's largest online retailer with chinese billion spending $250 on its platform/your. how much is that? more than amazon and ebay combined. there are many interesting business lines here, but let's start with what we consider their bread and butter, e-commerce. is very important. so many different verticals. it is important to look at it -- the the lenses of largest online retail platform in the world. if you go christmas shopping, you can get whatever you i and source it anywhere you want because this platform will have it. customer offering. everyone says their online shops provide the content and products you want to have. they derive the majority of the revenue from ads, unlike ebay, which is one of the competitors, which gets a lot from

transactions and just commissions, more or less. >> how about the competition? some saying, why are you going to buy into alibaba when $.10 is the growth story? >> let's look at china and globally. in two or one inch or two, in china, they compete with brick-and-mortar. they have the access and ability to get what they want on the street. if you take a look at tier 3 to arch shopping, lexis don't exist. i can't even name them all. >> these are cities with 3 million to 5 billion people. there more perspective, are 5 million people in scotland. >> exactly. tier 3 to tier 5 cities of these malls to exist, alibaba

almost competed something out of thin air. they're not competing with brick-and-mortar shops. it is created a new layer of playing. talks because people did on have access before? >> no, because the shopping infrastructure doesn't exist. you cannot get off your christmas shopping done in one place. you have to go to variety of areas. make, the chinese do not celebrate christmas. >> how is t-mall different? >> it is part of their e-commerce platform. it gives a different value pop relation to population. 57% of the market share for china's business consumer transaction -- >> what is that? put it in perspective. c is like amazon, a business providing to consumers. as e-commerce moves into mobile

commerce, the idea if you want to buy something, you can buy right here on your iphone rather than having to do it on your pc, that is becoming a trend in china. it is just starting to take off. that is what alibaba is hoping to capture. >> what i'm looking for this summer are some of those nerf bow and euros. -- arrows. we're going to order them in the next commercial break. >> thank you so much. all eyes on alibaba. we have a lot of coverage on alibaba coming for you in the next 24 hours, including a thatentary about jack ma airs tonight at 9:00 p.m. eastern and in tune in for a bloomberg west special, the alibaba story. stay with us. we have more to cover here on bloomberg television. ♪

>> welcome back to "market

makers." making millions at the tender age of 17 after selling his new summarization app to yahoo!. these days, he's working for yahoo! to redesign how it brings you the news. this week it is introducing a newsroduct yahoo! digest. you are still a teenager. aren't people your age just getting the news from twitter at this point? >> there sorts of places that people get the news but what is exciting about this new app is we really make an effort to make it very summarized and also visually compelling on a small screen. we won the apple design award two years ago. is one ofws digest the sources. talks your project manager for yahoo! news digest. he went from being a boy who learned to code when he was 12 years old after sports practice to selling your company for $30

million to marissa mayer, are you actually running a division based on your job title? >> i am in charge of this new product. we unveiled january 7 early this year. we are now available on iphone, android, and now ipad. it is exciting as an entrepreneur to be able to come to yahoo! and continue doing what it was doing at my startup but with the new app, new devices, really progress the concept forward. >> how are you going to adapt your product to the apple iwatch? >> because it is a small screen, what is interesting about summarization is it really lends itself to that. if you think about the art of condensation, the whole point is you want a small screen real estate. in the case of the watch, we are excited to bring hyper summarized, but sized information to the product. there is a nice little space we

can move into. >> since mobile is your back, why is yahoo! having such a hard time really breaking into the mobile world? >> since orissa has come, we have done a lot of info -- amazing things. product, into a great yahoo! news digest. i think it is exciting to see a lot of people use our apps. those take care of both the design and technology acting people are realizing that. >> what is the toughest part for you? you are a 17-year-old boy. you understand your audience. you partner with city court. is your audience interested in watching katie couric on an ipad? >> absolutely. every sunday we have a segment called "now i get it." concept of the news that is hard to understand, and summarizes it for you in a video medium.

we'll integrate and do things based on feedback. we're extremely excited to be working with someone with such credence in the industry. >> what is your biggest challenge? >> we have an excellent news project -- product. because we only launched this year, we ask him how to you go from our scale today to everyone using a news product like this? it is not a question about the mechanics working, it is more about, how can we get people to download it you never heard of the product? old.u are 17 years you left school when this took off. are you going to go to college? have you graduated high school? >> i just turned it team. i'm still living in london. i just completed my high school exam in london. i was able to do that on the site of yahoo!. i'm glad to have that high school completion. i am really excited about the things i'm working on here. from the age of 12, i been doing

applications. being able to still do a new product but the company of yahoo! skill and audience, something that motivates me. >> how have things changed for medically? two years ago we set them with your mom before your company took off before you solely yahoo! >> at a very young age, he was just interested in anything to do with technology. >> next mother diana always knew he was no ordinary kid. >> we have a video of nicholas when he was about one or less and he was try to build blocks on the carpet and couldn't do it. he just kept going and going and going until he got it. he is now.it like she never, ever gives up. >> you never give up, true entrepreneur. are you in the right seat being a yahoo! employee or should you be a guy on his own? >> i've enjoyed my 18 months at yahoo!

because i have the autonomy to digest, i still have that throw right. clearly, longer-term in my life, i want to start other companies. i amhe time being, absolutely enjoying what i'm doing at digest. as we were discussing with the apple watch, i am a massive fan of apple and it is exciting to work with those companies on wearable computing. i think that is where the endgame is for this company, the wearable computer. >> take your yahoo! had offer a moment. what do you want to do next? look at all of the products and apps being started now. is there anything you're looking at saying, man, i wish i came up with that or i want to do the second generation of it? >> i'm very passionate about artificial intelligence. automated augur them. i no longer term, my field of interest, whether be potential

university studying or a place like that, longer-term, doing something else in technology i'm pretty sure it will be in that a.i. area. >> before we go, i have to know. when you sold for $30 million, your 17 years old. what was your big purchase? are you rolling around london in a gold plated bentley? >> i'm not allowed to touch the money. my parents have that. i haven't done anything frivolous like that. i have invested a bit. imotivation behind it was wanted scale for my company. i wanted to take it and leads a people. that is our quest with the upper digest. >> window 17, i wanted to go to prom. nick, thank you so much. great having you on. congratulations to your success. manager at yahoo! digest. >> coming up, restaurants and the post-summer slump. there are practically dragging

customers in off the streets. we will find out where when we come back. ♪

it is all-you-can-eat after labor day. the restaurant business apparently falls off a cliff when summer ends. that is why companies have to offer deals to help fill in the gaps. isomberg's head of research here to explain. on principle, this does not make sense to me. sweater weather, so i'm going to eat more because i can hide things. ask in the summer, and barbecuing at home. september, fall, i'm watching the game at tgi friday's, having a beer. eating wings. >> the big thing is back-to-school behavior. summer vacation is over, kids are back in school, homework us to get done and parents schedules are different now, much more structured. they don't have the time and the ability to go to restaurants in

september and october. also, all of that back-to-school spending we see that really benefits a staples or bases, that takes money away from the restaurants. if you are in a limited budget, you just bought a bunch of backpacks and shoes, you don't have money for that blooming onion anymore. talks let me tell you something, always have a few extra dollars for a blooming onion. that is a special item that you can only have at outback steakhouse or chile's. what kind of deals today have to offer? olivia once to go out this weekend. >> let's pull up this chart i know you guys have. september, october, in november, the average price per ticket at a casual dining 10% fort drops about to $30. per family down that is because they've done so many deals to get people in the door.

wasears ago, the pricing about the same but no one showed up. they have to make it up in volume. when you see all-you-can-eat ribs, endless shrimp at red lobster, the all-you-can-eat .asta deal at olive garden >> that is my jam. >> all the deals are from september to right before thanksgiving. >> basically, like your fattening up as if they were turkeys, ready for slaughter. >> a restaurants losing money? >> no, it turns out 20% to 30% of customers are coming out for these deals. in the long run, they make more money this way, making it up in volume, then if they did not do the deal. they get less money, but they get people back. >> one would think post-thanksgiving, december, people are out entering thing, holiday parties. >> they stop mid-november

because thanksgiving is a big opportunity. a lot of people don't want to cook thanksgiving, so they go out. garden, all-you-can-eat pasta ins in november. the endless shrimp for red lobster, stops in mid-november. the figure out the exact numbers. enthusiasts,alue the months to eat at red lobster, olive garden, outback steakhouse is right now. find yourself a lady and had to run lobster tomorrow night. >> what about some of the other holidays? we also think valentine's day is a racket. >> it is, but it turns out the whole week is profitable for these companies because a lot of people don't go in the 14th itself. they go on the other days. and you don't to skip dessert or

drink for your valentine. >> it is really important to not look cheap on valentine's day. thank you so much. >> love having you on. no time to ask about what he for valentines. we will be back in just a moment. ♪

>> olivia, thanks so much. she once to give me a present.

i am going to say to you, you're not coming back tomorrow. we're going to have a huge show not for olivia. >> i will be watching. >> it will start to trade between 11:00 and 12:00 tomorrow, and we have an incredible show plan. ,ormer yahoo! board member author, and some fund managers licking their chops to scoop up all the shares they can. for now, 56 pass the are, bloomberg is taking you on the markets. live it, thank you. -- olivia, thank you. we will send you out to the newsroom. scarlet fu is like, get off air, hand it over. >> it is a lovefest. u.s. stocks are gaining for third straight day, pushing the dow to a new record after the federal reserve making clear

they just rates will stay low for "considerable time." joining me scott bauer. the volatility we saw yesterday following the fed announcement, to what extent has a carry through in options this morning? >> we are seeing increased volatility to the downside. we're seeing the vix trade down to almost 12. we have seen that as a support area. we have seen that continued through the downside. missing lots of sellers of paper. -- we are seeing lots of sellers of paper. we are still grinding higher. the vix number around 12 spring much an inflection point. either we will see a pretty quick bounce back after the 14, 15 area, or we may see it really trend down for the 11.5, which is really the bottom support. >> we will be keeping on that one.

i want to get your take on pier 1. that is a stock we are keeping a close eye on after came out three souls, lowering its full-year forecast. >> the big option buying today looks like big closing position. there were some huge open the 715 put line. yesterday before the earnings announcement, closed at about 40, 40 five cents. today it looks like those are really close down. trading around 205, 210. the owners of those puts had a big windfall. this stock is honest like in purgatory. -- almost like in purgatory. there was nothing good about this earnings report across the board. there is no support. i would stay with from this thing here. >> you see that reflected in the way it is trading now. i want to get to yahoo! because alibaba is going to be pricing tonight and begin trading tomorrow. the stock as gone up about 11%

so far this month. really, as a proxy, tracking stock for alibaba. what is your strategy on yahoo! post alibaba listing the volley -- the volatility is based on the ipo. i want to use next week's options, next friday's options. that expirecall next week. i can collect about $1.50 to $1.60. my break point is to the downside, an area i would love to be. on the upside, breakeven at $47.60. i want to take advantage of this extreme volatility we're seeing. quite frankly, is much higher than what we see going into the yahoo! earnings report. >> how much in general are options pricing in a move for with earnings, they tend to get quite active. you're looking at a much bigger

move. >> exactly. the move just for tomorrow for options that expire to mark, the market is looking at about 4%, 4.5% and for next week, options that expire next week, about 9% move. prettyket is pricing a hefty move. i want to take advantage of the volatility. >> thank you so much, scott bauer. we are on the markets once again in 30 minutes.

>> welcome to "money clip." i am adam johnson. here's the rundown. and nation, the topic of conversation, small business. in sports, money talks. more sponsors have a message for the nfl and its commissioners. world, whether it is yes or no, the scottish referendum, the one true winner? intech, tim cook. exclusive look at the