>> live from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> carl icahn gets his way -- ebay is splitting off its payment unit, paypal, and creating two independent companies. >> from pariah to sensation, one decade ago the u.s. would not give a visa's to the man who is india's prime minister and now he is visiting the white house. >> is the nfl about to get sacked? regulators might be on their way

to doing away with a rule that football fans absolutely hate. it is 10:00 a.m. in new york city. you are watching "market makers ." i am erik schatzker. >> i am stephanie ruhle. sacked"nfl going to get -- i am betting you thought that was corny. i am cringing, and we know i am the cheese of the show. let's start with the big news -- ebay spinning off the paypal unit, bowing to carl icahn, who pushed for the split nine months ago. donohue opposed the move and he will be leaving once the spinoff is complete. let's bring in senior marcus correspondent julie hyman. what aren't -- senior markets correspondent julie hyman. what are investors saying? >> the conventional wisdom is this does more for paypal than

it does for ebay. why are they splitting up? why did carl icahn start pushing for this nine months ago? he felt as though, and it seemed other investors agreed, that paypal was being held back by ebay. than half ofmore the volume of payments from paypal comes from ebay itself. was it holding it back in terms of soliciting other businesses? did other clients not want to sign on because they were in bed with ebay? >> like who? >> we do not know. there is also the question of investments. paypal was the more quickly .rowing of the two on the call, that is something john donahoe talked about -- this would be good for ebay because it would have to siphon off investment to paypal. he is claiming this is good for ebay as well.

bottom line, paypal has been growing more quickly of the two, and it seems as though carl icahn and other investors want to tap into that and take advantage. >> people forget how long it has inn since ebay bought paypal 2002 4 $1.5 billion, and estimates are that paypal is worth $30 of every ebay share, making it a worth less than paypal, but it implies a value of paypal for more than -- of more than $30 billion. it is no apple, but it has done pretty darn well. 20 times. >> let's look at the numbers. versus 10% growth we have seen in ebay revenue. according to ebay, paypal facilitates one dollar in every six dollars spent online today.

analysts say it is difficult to get market share numbers because there are so many vendors and so many payment options, and there are more springing up every day. another way that is interesting to look at it is versus credit card companies -- they are witnessing double the growth of amex or visa. mastercard, 13%. paypal, 26%. obviously you see bigger volume growth. >> all right. we see john donahoe having to leave his post. is the lesson here, if you are the ceo, do not stand up and speak out against carl icahn? was that a fatal mistake? now he has to leave the building. pays tove seen that it go along with carl icahn rather than go against him. if john donahoe is being forced out or if he is

stepping aside saying i do not want to be part of this. >> it is possible they wanted to get their ducks in order. we know carl icahn continue to clamor for a paypal spinoff, even after they appointed the independent director. it's not forget where david dorman came from -- at&t. dennis shulman, who will be running paypal, also a long time ago, came out of at&t. he made stops at priceline, virgin mobile. that he would not have come if not for the split. he would not come over and run paypal as a division of ebay. ago, erikfew months schatzker and i had a chance to sit down with dan shulman. here is what he had to say when we talk to him about the documentary "unbanked."

problemsare so many that are on tractable, as seen they have no solution, but financial solution is not one of them. it has a solution rooted in new technologies. we are entering into the era of the non-tank -- -- non-bank -- you could have all of the power of what you used to be able to do in a bank in the palm of your hands. >> there you have it, dan shulman, then of american express, now taken the post that paypal. julie hyman, thank you. >> our own julie hyman with the latest on ebay and the spinoff of paypal. force says he has cut the profit forecast for the year because of problems in north america, and russia with russian demand. russell, currencies in south america.

record-breaking quarter the third would have been the best even without the ipo for ipos. pimco is making sure you never knew bill gross work there. the company is scrubbing all digital cases of the bond king. pimco's twitter feed has deleted all of the tweets from bill gross. a vanishing act. >> vanishing act. it has been a volatile week for stocks. we are entering the final quarter of the year, and all three major indices are showing gains. will they continue? i want to bring the chief equity strategist for goldman sachs. volatility, is it back? littleas increased a bit, but fundamentals suggest u.s. equity markets should move

higher as we move out to the end of this year and into next year. >> david, what are people nervous about, valuations, the fed, the u.s. dollar? not would say nervous is the right description. it is areas they are focused on. people think the strengthen the dollar is a trend that is likely to persist and goldman sachs thinks the dollar will go toward parity with the euro. opportunitiest is to invest consistent with that trend. that will be a big area of focus, and then the second area will be the path of fed policy and long-term treasury yields. there, the relationship of global economics matters, and the idea of a liberal ecb policy to keep rates low anchors the long-and of the curve and that is beneficial for u.s. stocks. >> what does history tedious --

this time might be different and may not be different -- teach us? this time may be different, and it may not be different. >> it is always good to think about history, and history suggest the stock market will have a strong return the next year. 20 years ago, that the 94, 15 years ago, in 1999, and a decade ago in a thousand 4 -- three episodes where the fed began tightening cycles. 2004. three episodes where the fed began tightening cycles. they were different, but they were followed by multiples compressing. fed is an issue that members are focused on -- the timing, something as early as next year, or as late as 2016. exit you're a long-term investor, which it seems no one -- >> you're a long-term

investor, which is aims no one else is, is the timing that important? >> the opportunity is to take a longer-term view, looking at the economy. is it getting better? earnings are improving. it is a talent. valuations are high, but not extra nearly high. at there to look out next five years, you're looking at a 6% annualized return for stocks from now through 2018 compared to about 1% for bonds. the relative attractiveness for equities is better in my view than most other asset classes. hitou expect s&p 500 to 2150 over the next five months. >> that is correct. >> what will play greater role in stocks moving up 8% over that time -- expansion of margins or expansion of valuations?

my view is it will be earnings growth. earnings will take the -- >> my view is that it will be earnings growth. earnings will take the market higher than margins. margins, in my forecast, i believe they will remain roughly at this level, 9%, record high margins. they have been here for four years. the idea of an expanding economy drives sales. margins can be static and that can take earnings growth higher, and that ultimately will take the markets to a new level. >> people will want to pay more of a premium for stocks and they are paying right now? >> the market trades around 16 times forward earnings, historically high level of valuations and the idea of earnings growing is a more vital issue in the next year as /e expansion. >> you speak to clients every day. what is their confidence like? really, the news has not been

that bad, but it seems the market is skittish. >> people feel reasonably confident. there is economic growth apparently slowing in china. one issue is in europe with the asset quality reserve reviewed on the banking system. there are questions about growth, inflation and deflation in europe. those are issues they are concerned about, but from economic fundamentals -- the idea of corporate profit growth. next week we begin the third quarter results that are expected to show strength. the economy has been growing at a rapid pace. economic data points suggest fundamentals are there. corporations are spending money. capital spending is up roughly 9%. >> the ipo market is going. >> there are a lot of positive elements. there are risks, but the general thriving is pretty good.

dog wagsrkets -- the the tail. >> i will leave the metaphor to you. >> does it work at all in the reverse -- does healthy ipo activity have an impact on valuations and demand for stocks in general? >> from a perception point of view, it can offer cosmetics, but the size of the market is much greater than any given ipo. it could create interest in some sectors, technology, for example , but fundamentals matter for the rest of the companies. that is much more important than any specific ipo. >> do you feel investors are focused on fundamentals right now? years it seemed like it was about momentum. are people doing their alibaba homework? >> the idea of the dollar, what it means for the u.s. dollar, which companies are better -- my

forecast is to focus and my recommendation is to own companies that have domestic revenue exposure. paychecks, discover financial services -- they are immune from concerns fund managers have. most fund manager concerns relate to non-us development. the u.s. remains pretty strong. fundamentals, job creation, economic committee, -- activity, those are pretty strong. it is giving us confidence. you want to participate as an investor. you want the tailwind of activity that is driving revenue. they are really focused on the drivers of value over time. , stay with us. the conversation is not over. we need to take a break. david kostin will be with us when we come back.

>> plus, meet the south american billionaire who is willing to risk some of his fortune to help his native country, argentina. >> nice guy. ♪

>> first. bloomberg. >> let's return to our conversation with david kostin, chief equity strategist at goldman sachs. asked you theie question of whether people are doing their homework, and you said yes, they are focusing on the fundamentals because they are asking questions about the implications of the stronger u.s. dollar and asking questions about the implications of tighter fed policy. do you detect that people are doing stock-level analysis, the bottom-up analysis that leads them to a decision on whether stocks are properly valued, overvalued, or is it a hybrid momentum training, -- trading, looking at macro levels, but not

stack -- stock analysis? forve been on wall street 30 years, and i would suggest that they are definitely looking related drivers, and all of them are incorporating more macro. >> what does that mean? let's think about the developments that suggest court -- >> you think about developments that suggest if correlations are high, what are the drivers that indicate why that is the place? what are the implications of individual companies that might allow them to diverge? >> was that the 2007-2000 and 2007-2008all -- pitfalls, investors not looking at valuations? >> the relationship has generated almost 50% excess return in two years since the

middle of 2012 to the middle of 2014 -- the weakest balance sheet companies have outperformed the strongest. we have a basket on bloomberg that we trade and we trade on that fundamental theme. it is sector-neutral, company a versus company b. >> fundamentals would be telling you they are being rewarded for the wrong thing. >> they are being rewarded because of a low interest rate environment. companies with strong balance sheets are being disadvantaged or heard because the economy is getting better -- hurt because the economy is getting better, and that is a complaint, why with her balance sheet companies have done better than stronger balance sheets. ,ou asked a question earlier what are some of the questions fund managers are asking. why have qualified -- quality stocks lagged the market

recovery, and the idea is in a low interest rate requirement -- environment, that helps companies with low balance sheets, which are associate with being not quality. >> do you have a view on how long that will continue? heavy sweet balance sheet companies insulated themselves -- have these week balance sheet companies insulated themselves by restructuring some of the debt over a longer period of time, or will the chickens come home to roost in a bad way. >> it is gone this way for a long time, and it is our view the fed will not be hiking for another 12 months. most companies in the u.s. have been optimistic or taking advantage of the fact that rates have been low and extended their maturities, but the profile of their company, which is certainly a strategically smart thing to do. >>. sure --sure. >> these are what investors are focused on, the macro, micro

issue. when will the fed raise rates? how should we position? a. are lesscompanies well-positioned for that? >> one sector you do not seem to be keen on is the energy sector. why? >> one of the most important drivers of the economy is the energy sector because one out of every three dollars of capital spending of s&p 500 companies is taking place by energy companies . the importance of energy as a driver of continued expansion is definitely there, number one. number two, there are pockets within the world of energy that are beneficial and will benefit from the development, and then some that are less beneficial. halliburton, goldman sachs has a and they areation,

highly leveraged to the growth in the u.s. economy. would be consistent with a stock we like to own in energy, even though as a sector, it is new england. >> date -- doing billing. >> david, good to see you. always fun. david kostin is the chief economist at goldman sachs. "market makers" will take a short break. we will be back with you in just a couple of minutes. ♪

>> coming up, welcome to one of the basket cases of south america. argentina. in a moment, the billionaire trying to turn the company -- country around. prime minister has a

second day of talks with president obama. we will see what he hopes to get out of them. ♪

>> live from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> good morning once again. "ou are watching "market makers on bloomberg television. i am erik schatzker. >> i'm stephanie ruhle. >> argentina has a problem. the country is in default on its debt, the peso is shrinking, and business owners face the prospect of steep losses. one of those business owners is a billionaire named eduardo eurnekian, and he wants to help argentina and is willing to risk some of his own fortune to do

it. we sat down for an exclusive interview and started talking about argentina's default. >> development -- they know what they are doing, and we should takehem to proceed and to the mechanism of dealing with the situation. >> who could fix it? >> there are financial investorsns, banks, that are approaching. >> you briefly were involved in a plan to help argentina exit default. what happened? >> no, i don't. say that there are a lot of businessmen that are willing to share their support in this circumstance. >> financial support. >> yes. >> are you and president

fernandez friends? presidentay that our is open, and the front of everybody. >> president fernandez met with george soros. >> it could be. >> do you think he would help? >> why not? he could be a good idea. he has financial resources and knowledge. he is known. >> will he? do you believe he will? >> it is within his hands to do would.ng, and i think he he would. why not? >> you know there is talk about another peso devaluation. >> yeah. >> and the talk is it is inevitable. what you think will happen?

>> no, i do not think so. i do not think it will be a devaluation because argentina is a rich country. i do not think there would be such devaluation. batista --t i can stake in a's company. is there anything else to be brought out of his broken empire. -- empire? >> no. it is part of our strategy to diversify. >> to diversify. technologyo to investment. to develop the technology industry -- that was our purpose. >> as you know, brazil votes for president just five weeks from now. which candidate is better or your business? semi conductors in your -- in

brazil. when you reach a level of democracy they have reached already in brazil, things will not change too much. it will not make much of a difference. >> for you, or for everybody? >> for everybody. >> what about argentina? who would you like to see the next -- become the next president? >> i do not think there is much difference between the three of them. they respect each other. that is important. they play within the rules of democracy. that is also important. >> you, sir, are the founder and chairman of corporation america. you have talked about taking some parts of the business public. when might that happen? >> maybe after -- when we approach the next elections in

argentina, and when the picture will be more clear, not for me, but for the investors. >> you are the youngest met,enarian i have ever but i wonder, nevertheless, who will inherit your businesses? >> we are working on that. >> you are working on a session -- succession plan. >> i have a lot of nephews at work with me. >> will you divide your business among your nephews? do not think so. i think i will give the title to some complete, some group, -- company, some group. slow.think i have done my job. >> to build the business. >> it is enough. that is all the people deserve.

>> you have in the course of building these businesses amassed something of a fortune. i am curious, has bill gates or warren buffett picked up the phone and asked you to do what they are doing, to take their money and give it away? >> the money does not matter -- what is problem important is the job, the creativity, ingenuity and your capacity. if you can improve that, you can add value to what you receive in your life. that is already part of your success in life. >> that was argentine billionaire eduardo eurnekian, and, stephanie, you heard him say there there is a difference, right, between argentine billionaire and the likes of bill gates and warren buffett. he questions -- you can tell

when he was talking, he questions the motives behind the commitment warren buffett and bill gates have made to give away half of their wealth, virtually all of their wealth, and mike bloomberg is pledging to do the same thing, but from the perspective of south americans, there might be more to it. >> is there a difference between a argentine billionaire and a brazilian billionaire? a celebrity.s >> and maybe an empty suit. >> that is aggressive. >> it was like castles in the sky. empty suit is aggressive. i am saying, i think it was a nice guy. prime minister is at

the white house. both countries say they want closer ties. is this the start? we will find out when we come back. ♪

" onhis is "market makers bloomberg television. i am erik schatzker with stephanie ruhle. just a few decades ago, the u.s. as a pariah,modi and now he is an international sensation and this morning he is meeting at the white house with president obama, who has been trying to improve ties with

india, which happens to be the world's largest amount per se. peter cook has more on -- democracy. peter cook has more on this meeting. what is happening down there? this is a relationship the president hoped to kick off well in his first term. the first date visit was with narendra modi's predecessor and the first state in her was in india's -- first state dinner was in india's honor. this meeting is supposed to reinvigorate the relationship. they had an op-ed in "the washington post." they talked about the shared interests between the democracies, the world's largest two, and a big focus is going to be on the economies. do not expect deals to be announced. it is more of a chance for the leaders to get to know each other, and the president hopes narendra modi's popularity will

rub off on him. he had a landslide victory and has been writing the popularity -- riding the popularity. a lot of indian americans are eager to see what he can do is prime minister. >> is this just a goodwill meeting with nothing hard actually happening? meeting, butodwill he is trying to get tangible results. . the dinner -- results. the dinner last night, he met with the leaders. you had lloyd blankfein, the boeing ceo, other top executives . these are businesses invested in india right now and narendra modi would like to see them invested even more. he is trying to sell them on the fact that this is a good place to do business. behas power, and he will able to undo regulation and get rid of red tape that has been keeping american businesses from investing in india. it has been a challenge for

american companies to do business there because of trade barriers and other factors. >> peter, is there a strategic imperative? by embracing india, the united states has an alternative to china? india has presented many obstacles -- the judiciary, the impossibility, in some cases, of getting business done? pledges todi making clean that up could translate into real opportunity. >> narendra modi himself has tried to forge a solid relationship with the chinese, but certainly there is a lot of regional power at stake, a lot of strategic gamesmanship on the part of the united states. building up the relationship with india would be a counterweight to china's growth in asia, economically, but narendra modi has always been careful. he is trying to foster better

relations with the chinese and at the same time with the americans as well. >> is he also careful about who's cooking he trusts? we read dinner was awkward. he did not touch the food. >> i do not know about awkward, but it was planned in advance. he is in the middle of a hindu ritual. he is testing at the moment. .here was a lemon tea he does drink water. the white house was prepared for this. it was not supposed to be an awkward moment. they were going to deal with this and have a positive dinner. he has another lunch today. given his schedule, i do not know how he is hanging in there. >> his stomach was full with enriching conversation. >> that is right. something is tying him along. he is doing just fine, apparently. there had been some intense visits. it is an action-packed schedule. he is also going to capitol hill

to meet with john boehner and nancy pelosi. >> peter, thank you. our own peter cook. >> coming up, what we may want from advertisers can in many cases, -- advertisers. in many cases, brands are not delivering. >> we will be right back. you are watching "market makers" on bloomberg television. ♪

>> welcome back to "market makers." i am stephanie ruhle. here is a hint to brands -- you not get women. we cannot throw, we hate spiders and nagged husbands constantly. joanna coles is attempting to change how women are portrayed in the media. welcome. what is the mission you are on? fun, isi think is brands with the increasing presence of social media are trying to figure out how to have conversations with their clients, customers, and in our case, readers. there are all sorts of campaigns

coming out from advertisers that engaged with women on a different level than just trying to share them shampoo that will give them an. sim.- orga armour.t from under downloads? brandmillion views, and favorability went out by 9%. >> all right, we hold you to task. what took you so long? a few years ago jessica simpson was in a bikini carwash in a convertible. if the numbers are there, if the works, it isercial working for under armour, where have you been? ? --what have you been?

>> the other stuff works, but what we are now finding is this works better. when you said what are we doing here, we are trying to sell stuff, build brand, business, and this is a way to do that. jessica simpson probably sold stuff. this doesn't that are. -- this does it better. >> a lot. andhe markets are shifting the customer needs to be talked to in different ways. she is no longer just going to the supermarket. she is buying online and you have to be able to engage online, and have a conversation and make you feel you get her and you get her life -- if you do not, someone else will, and sat on the brands are scrambling pante he new panteene -- nne. ass is a new idea -- women

strong. --'s go back to the old way no, we do not. >> i want to go to the always campaign -- always like a girl. >> i'm going to give you some actions to do -- do the first things that come to mind. show me what it looks like to run like a girl. god. hair, oh, my -- how me what happened did this happen, and why did the media perpetuated -- perpetuate it? >> you could ask joanna coles. it is not the media that created this. we all did. culture created it. the way we have all historically talked about and talk to women. i am not just talking about the talked to women, but the

way women talked to women, conditioned behavior, and you see it globally. >> do you agree with that? >> sort of. the interesting thing about the running like a girl that you one of the people we talked to is that women have these clichéd views of them in because if that is what you are being served up, that is what you tend to absorb. i agree with andrew in terms of it being the culture at large that needs challenging, which is what people try to do. >> what about your companies -- here comes the super bowl -- you want to win the budweiser campaign. are you actually going to push these initiatives with those companies? >> it does not make sense to do it with every brand on every occasion, but if you are trying to really connect with women, this is a huge opportunity. >> is the only way this is going to be successful is if the dallas cowboys cheerleaders stop wearing trampy outfits or is

there room for all of this? >> there is room for all of it. if you want to wear trampy little outfits, it depends on what you are signaling -- maybe spending 40 hours a week working out to have the most fitness, extraordinary delay, as long as you get paid as well as the nfl players, i am good with that, which is another issue. i cannot member the original point now. >> is there room for both? >> of course there is room for both. what customers want, and what you hear from readers, and the 60 million people talking about add talking about the woman doing something and then the man doing something, it is the same thing, and she is labeled as bossy.

you know the woman wants more than just shampoo that nearly orgasim, one of the most bizarre ads that we have ever seen, then you develop a relationship and they have a good feeling about you. it suggests we have a nuanced understanding of your life. >> when you suggested this to pantene, what was their original reaction? >> it started as a small initiative in the philippines. >> why the philippines? >> it is just where we were asked to put together a movement, and in order to have a successful movement, you have to have something to fight against, and we suggested we would fight against the damage that labels to the -- due to the progress against women -- progress of came outd the data

with the words that were misused and the effect that they have. that is where it started. we honestly did not know it would end up being this phenomenon with 57 million views . it was a local initiative. is fact that it became one evidence to how much it matters to women to be understood and heard. cheryl sending me the ad, and i thought that she said it made her cry. i did not cry, but i was impressed. >> i cried at the dove ad. thank you both, so much. it is not just a great summer session, but real action. joanna coles and andrew robertson. stay with us. you are watching bloomberg tv. thank you so much. ♪

>> live from bloomberg headquarters in new york this is market makers. >> breaking up is hard to do. ebay will split up with paypal by next year. they will be two separate companies. >> pro football could be on the verge of another loss. they will look at the blackout rules. over digital degrees. online education is keeping students out of the classrooms. we will look at the long-term impacts. >> welcome to the second hour of "market makers."

i am stephanie ruhle. schatzker.k news corp. is spending nine hundred 50 million dollars by realtor.com. that will put murdoch in head-to-head competition with websites. in 20 big cities where six point 7%. the year ended in july. that is according to the home price index. the smallest gains and two years. in hong kong, tens of thousands of protesters are jamming the streets. they are demanding free and open elections. they want the chief executive to quit. the demonstrations will escalate unless the demands are met. >> we have a great guest host this hour. john patel. he has been chronicling the tech world for two decades.

with the publisher of the industry standards, the bible of the tech in the late 1990's, now he is the chairman of new coke. let's get to the top story of the day. ebay spinning off of paypal. people thought it was inevitable. people have been talking about it since ebay acquired paypal 12 years ago. -- they large companies are large companies and large startups are attacking the space. paypal needs to be more nimble. at --.s a tech analyst our own cory johnson who used to work for john back in the day. cory, what do you think? >> he taught me how to shave. what do you think of this? this is an of ways,

acknowledgment of the bull market on wall street. investors are willing to pay for growth. ebay recognizes, for all of the business sense that it makes to keep paypal away from competitors like amazon, which is probably the reason they bought it in the first place, the ducks are quacking and ebay has decided to feed them. at 56 dollarsding $.25 less than a lot of people then you think it is worth. why is not the market recognizing the full value of paypal right away? that is supposed to happen when you announce a spin off unlock value for shareholders. time.will happen over the rise in the shares is the attribution that there is unlock the value. there was a number of investments being made across the total enterprise that will have to be refocused and allocated toward areas that can

pay tangible results sooner than the investments that were being made before could yield. thisy didn't they make decision sooner? why did it take him banging down the door for this to happen? forhe fact it took a year -- a year of icon banging down the door is a reflection of what they are realizing. they need to move faster. the best talents will not be attracted to work at a unit of ebay. when you have a war for talent, which is what is going on in the valley and around the world, you need the equity. >> it raises questions about whether dan schulman is coming into turn a pal into something different or if you will just sell it. a lot of people think that alibaba may be shopping. what do you think? couldis an avenue they consider. there are lots of opportunities to even partner with alibaba.

what this allows paypal to do is look across the spectrum and find other avenues that may not have been available before. down the road, that does not pay dividends. then, you make consider a cell. >> it is worth noting homages to jump then, that the pavement business, this is not the worst time to sell. the growth in the paypal business has slowed down noticeably over the course of the last year. mobile has saved them from a lot of that. it is unclear if there will be a permanent slowdown in growth. the business is not lying like it was. the braintree acquisition has helped. nots it fair to say it is lying because the market is saturated? everyone uses it. numbers are growing nicely, not as fast as they

were. we will go to a dramatic change. apple is looking at the mobile payment world and the new digital payment world. digital wallet is struggling. they are well-funded and not successful. there is a notion there is more spending to happen in that world, there is more growth around the corner. the question for me, is not what just happens. most of the ebay merchants are using paypal. if paypal ends up in the hands of a competitor, like amazon, that has always been the concern of ebay. what makes ebay work is found in the payment service. that could be the issue. question, why the wouldn't even a work with other payment businesses? in theory, the payment business wants to partner with as possible. >> assuming that alibaba does not swoop in and buy it, the best outcome is that we have a company that is large, and is a

switzerland in the space and plays with everyone. they are focusing on down payments. then, do you believe that paypal will be a takeover target when the companies split? >> it is possible. it is an attractive asset. they have over 100 million active subscribers. they are the most penetrated digital wallet out there. it could be an attractive acquisition candidate. their are other avenues of growth. >> what does paypal -- what has paypal not been able to do? there was a reason that karo icon was rattling the cage. he believed there was more paypal should have been doing. i looked at what ebay paid for paypal, and what you say it is worth. space of 12

years, 20 times is not a bad return. what could paypal have been doing to make it worth more? >> that goes back to the discussion of why it took a year for ebay to come to the decision. they were trying to build an off-line acceptance footprint. has not panned out as they hoped. the realization is that they stick to the core business, which is growing the online footprint, both with partnerships and internationally. the switzerland point. 71% of paypal's transactions in the last 12 points were off of -- in the last 12 months or off of ebay. it is the preferred platform of all the digital payment platforms on the internet, and increasingly off of the internet. >> did he have to go? >> that is a piece of news that people are not focused on.

after this, john donahoe is gone. he will still be a director. he came, consolidated, split up, and is leaving. a new executive will be running the two companies. he was obviously ready to move on. move on, orready to were they ready to move on? >> what do you think? was john donohue pushed out of ebay? >> ebay has made a lot of managers look really good. she was a rock star when she left ebay. we will see what john donohue his career looks like after this. ebay has been a tremendous company. the way i think about ebay, i think of amazon as walmart and ebay the world of small business. it has been an enabler for people to start large and small businesses and use that as a plot for him. it is the anti-walmart and

anti-amazon. no manager has been able to screw that up. when they take away the paypal aspect, someone will look at ebay and say that this is a good business and dominant in its world. >> you want to comment? >> i agree. they have the right people heading each separate segment at this time. it requires a specific skill set . they have the appropriate people in place. if you look back in time, john donohue did a great job of rebuilding the business to what it is today. happens, thepinoff focus will return to ebay's core business. does the new ceo need to do to differentiate ebay and make it stand out in an increasingly competitive e-commerce world? be focusing on

enabling everyone outside of amazon to compete against amazon. amazon has been doing a great job. as someone mentioned, ebay is an enabler. not everyone has the most optimal online, strategy. they can help that. with agreements in place with paypal, they can facilitate a payment mechanism and get more transactional information. >> a great conversation. and ournology analyst own cory johnson in san francisco. john, you are stuck with us for the hour. john patel is sticking with us. we will tell you what survival of the fittest means in tech land. many have survived and others have tell by the wayside. why? to end thehas voted decade old blackout rule. it is about time. that rule prevents television

broadcasting games if the game was not sold out. more on that coming up. this is "market makers." ♪

>> darwinism in corporate america. why do some companies thrived for decades while others flameout after a few hot years. so many disappeared when the.com bubble burst. others like apple, ibm, and amazon are still around. what can companies like facebook , and snapchat learn from those experiences? battelle is still here. jp at yours is still here. he is a strategy professor. let's start with you. is there something different about tax? -- about techs?

it seems like the cycle is faster in technology. >> the cycle seems to be faster. the cycle is similar to other industries. the challenge is that in other industries dynamics don't move as fast. an attack world, lifecycles are more compressed. the same pattern shows up whether we look at it in retail or technology. harderat make survival for the tech ceo then for the guy running other companies? >> the big challenge for older companies, is that in other industries you are making a 30 year investment that. you can be more neville with the tech companies. you have to be. you can make decisions faster and make decisions with

more uncertainty. you have to go off of instinct to some extent. >> many tech of bunnies are all about innovating and are against 30 year cycles. a company like docusign, which is often whispered as a candidate, has been around for a long time. 12 years. that is a long time for a technology company. they are trying to disrupt paper. if i am running a paper company, or a company based on the economy of what signatures, i am inried about this disruptor the technology sector. it is interesting that these companies seem to be all about disrupting the other longer burn companies. >> this idea of disruption and what it means. >> do we give these companies too much leeway and credit? do we just slap on innovation

and disruption, and people think they must be doing it right? >> a key piece of success for any business is disruption. it is a specific phenomenon where you replace a specific --. >> why do so many companies as larger haveder and so much trouble dealing with the existential problem? look at microsoft. even though it has built a business, you still think of microsoft as the company behind windows and office. largeccounts for a percentage of its revenue. how many companies have reinvented themselves? ibm, apple, and then the list runs out. >> what you think of that? a business that gets addicted to its old revenue line. >> a company makes a lot of money in an old space.

then it money gets reinvested into the area of the organization. that then reinforces the cycle and makes it difficult to step away from that. and make that move. it is more about politics and structure and human behavior, then about management and technology. john you can see this, and can see this, and this is not the first time we have talked about it, why does it persist in happening? investmentat every bank and hedge fund? as soon as the guy makes money, they give him the big job, and he holds onto that job. he is not thinking about the broader place. how is that different from a bank? >> he needs to be thinking about that, because his net worth is about that stock going up. disruption, in general is a easy thing to see in retrospect, but hard to see in the moment.

because you are focused on the things that have made you successful, but for every disruption that happens in the real world, for that industry there were a hundred attempts of disruption that never happened. if you jump at everyone you will move too much too quickly and miss out on the core. everyone thinks, this is like last time and we will weather the storm, and be ok. >> did facebook have the winning formula? they may not be able to disrupt on their own, but they bought into the acquisition model. generallyket does not reward lowering your margins to run after potential disrupting opportunities. if you're a bank like rbc, to do create inside rbc, or he you watch employees walk out the door and do something innovative that may change the market. you're not sure. if you're a highly valued stock, which everyone expects to do

something like by for $19 billion. which, by the way, is not the norm that companies are bought for that much money after one or two years of operation. >> what is normal, is the transition and the way that firms before they go public, most developed their own ideas. they have scientists and the grammars, and engineers. when they go public, the focus shifts and they cannot take the big risks entailed in that kind of innovation. the best risks are that we will just pay more for something that is already established now that we have the resources available. difference between hardware and software. it is harder to respond to technological innovation as a hardware company. >> it depends on the kind of hardware and software, but generally, yes. saying, itwas

depends on the company. the big difference would be software like microsoft office and microsoft windows versus a game platform. a lot of those are smaller relatively bite sized apps. it is much easier for those companies to adapt. for a company with a big wet form, that may include facebook, that makes it more difficult. >> is there a company that you point to that says if they continue to innovate, disrupt themselves, and do it right? >> there are not a ton of examples. who will comes to mind. they were able to recognize the had the user base and had to monetize it without killing the golden goose that they had as far as users. they said we are owning the desktop laptop space. what would happen when mobile

comes? they identify the threat that would potentially have disrupted them. that is the logic for getting into the android space. you can tell a similar story for apple. those are the two. >> if you look at google now, i would not be concerned with them with the facebook announcement of getting into advertisement. >> if you did it once, you can do it over again. it is a better sign that having had failed. sticking around, we will be right back. ♪

>> coming up, regulators for nfl vote to lift the blackout rule. >> looking at the promise and

pitfalls of online education. ♪

>> live from bloomberg headquarters in new york, this with erik makers" schatzker and stephanie ruhle. >> welcome back. is also withlle us. >> we talk about it all the time. the commercial breaks during market makers are nothing shy of extraordinary. was theto remind, john chronicler of the tech industry for years. he currently runs a conference company called new co. chronicler?

>> it is not a word. >> it is a word. should we just make a friendly wager? notebet you one salt caramel chocolate chip cookie. >> i think chronicler is not a word. we will move on. please. us >> is that a word? >> we need to talk about the nfl. it has been battered for the last few weeks. the ray rice and adrian peterson scandals. fe of the nfl

was made worse. the blackout rules. blackout of the telev isation of the games in that game's home state if the game is not sold out. >> most everyone is on the other .ide of roger goodell no one thinks that the sec, that the government needs to intervene to support the struggling nfl. they don't need the help of government regulators to make money. in 10 billionull dollars in revenue every year. everyone gets this rule, but they don't really get it. it blocks cable or satellite providers from showing the blacked out games. firm retransmitting what the

local station has agreed not to show in contract with the nfl. the contract will stay. the nfl will have a contract with whenever the local cbs affiliate is. if the giants game does not sell out. >> we are in a number one market. >> i went back and looked, 11 have sold out more than 100% of their seats on average. for average, in dallas 114% capacity is used every sunday. >> that is the cowboys. people love the cowboys. a lot of the times buffalo does not sell out. the owner will buy all of the tickets at 34 cents on the dollar so the game is shown on air. the real problem for the nfl is

to draw people into the stadium it makes $2 billion of its $10 billion in revenue in the stadium. they need to boost that if roger goodell wants to triple the revenue. how can they bring people land, other than threatening them that if you do not come we will not show the game on your local television station. they're trying to put in wi-fi, big screens, so better beers. they are doing a good job. what they are not doing is lowering ticket prices. average costs $122 on to a patriots game that does not include parking, beer, or popcorn. day isn'tend of the it the money in television? from ticketon comes sales. they get a couple of billion from long-term sponsorships. those are indirectly related to

stadiums. if you watch a game, you don't want to see an empty stadium like you do when you watch the yankees. it is not good for the sport. roger goodell does not care that much. >> is it that they have the right to do it. is that what the fight was about? right totill have the demand the broadcaster do not show the game. if the broadcaster lets the cable provider retreads minute, maybe he needs to work on his contract negotiation skills, or go somewhere else. don't have this blackout rule, it will drive us to pay tv and fans will have to pay to see the game on tv anymore. >> are you a 49ers fan? >> i am a 49ers fan. rulehoping the blackout ends at the golden gate ridge. >> the blackout rule is done.

after 40 years, it was 5-0. the fcc hated it. everyone hated it. only the nfl owners were against it. it was only a small tool and a small -- and a large toolbox in order to bring people into the stadium. even though we would all rather watch the game from home. >> let me point out, that matt miller and i are on the losing r is aecause chronicle word. pulling it up right now. >> the writer of history who accountse conflicting of battles, depending upon which side they favored. defiance a chronicler as a

recorder of event. which is exactly what john battelle is. >> matt, we will leave it there. you have to go pick up the cookie. matthew miller, thank you. >> we have more to cover. goes toet makers" class. we will look at the boom in online education and what it means for traditional universities. ♪

>> does the bricks and mortar classroom-based the same fate as the mall. increasingly obsolete. online education is a growing industry. they partner with colleges to programs that went public in march. >> you're not trying to put the

bricks and mortar classroom out of business, but if it happens your company would have played a role. >> that does not mean we are trying to put the campus out of business. the high quality of a berkeley, northwestern, education has never been on line the same level with the same faculty with the same rights and responsibilities. the campus,eplacing we are ending the segregation of the online student. it is the same degree. you have class sizes that are more intimate than you would find on campus. you are talking about live, intimate face to face high quality faculty. when i think about the college experience, part of it is the relationships you are building with professors and

being part of the school. how will you get that online? >> we believe the students are not just becoming masters graduates, they are becoming tar hills. in a way that may not be obvious. students is ugly get together often. they do practicum in their local community. one degree is a master of science in midwifery. they will not make someone a master of science and medical every without delivering -- master of science and midwifery without delivering babies. education done in a different way. thinking about the labor force. how did the professors think about this? is it more work for the same pay, or as someone who has taught at a university, i know professors think about this a lot. if i am teaching more students, am i making more money? >> one of my favorite quotes from a faculty member is a

professor at usc that said i have a greater sense of intellectual intimacy then my online students and their on-campus counterparts. you have 10 people in a classroom. it is super intimate. phrase no back row. what if you could eliminate the the row and bring all students forward. this does that in a very real way. >> what do the students look like? are they older? where are they from? >> you have students that are older in the workforce, and for the first time ever you don't have to quit your job and move to attend a top 20 be school. that opens the door for many people. i am in the mba program in chapel hill. opportunity for people who will not quit their job. half of the audience are people

who prefer this. you are unleashing the university from the physical boundaries. an interesting thing about the faculty, when the school gets hireto it, you can amazing faculty from all over the world. had relationships with tenured faculty and they tend to be stuck in a rut. my sense, is that perhaps there may be resistance to a new approach to teaching. many are excited, that it will probably be a generation that needs to turn over before you see this take off. unless, they are making more money. >> then they will embrace it. >> are they going to make more money? berkeley,'t get to northwestern, or chapel hill without being pretty awesome. you are a professor, you have to be great to be at one of the schools. the more information they get

about aba done this way, -- way, a ba being done this they have a preconceived notion about online education. >> we have to leave it here. his company partners with universities. >> now you too can become a midwife without leaving your career. rate news. -- great news. john battelle will be back with us. final thoughts. ♪

>> welcome back. it is time for final thoughts from our guest host, john battelle. tomorrow is that kickoff for your new co-conference in new york.

>> it is a traditional business conference mashed up with a music festival and an artist open studio. instead of going to a ballroom, eating bad chicken, and having people talk at you, you go out into the city like a field trip. you go inside all of these interesting new companies. hence the name newco. the attendees are working professionals in the city who do not have an excuse to see companies who are changing the economic row file of the city because they have a job. if you go to a business conference, instead of going to a hotel ballroom, you go inside the companies. >> why would a company want to show you how the sausage is made? >> that is part of being a new company. how there is a new approach to core values and how businesses are created. being able to open your doors, talk about your business, open to new partnerships, it is a core value of a newco.

1 it sounds exciting. have saved a few minutes for a game you like. >> let's start with disruption. >> overused. >> agreed. >> i try to keep it out of my speech as much as possible, although i did use it at the top of the hour. particularly coming from the valley. and someone who hears a lot of investment pitches, that word is almost a no no. >> -- >> back with a a vengeance. one of the newco in new york is argan co.. for dogs. co. it is a vertical of a vertical of a vertical. it is driving because you can do

what pets.com wanted to do. >> peter --. new book.hiel has a he speaks his mind and everyone wants to hear what he has to say. he has strange and interesting points of view on everything. >> you agree with them? >> not on everything, especially not politically. >> cory johnson. >> great guy to go to a baseball game with. i went to a game with him, i've been to a few, every time the giants have won. we have a game tomorrow, maybe i should watch it with him. >> the tea party. >> irrelevant. >> inequality. >> the largest rising issue of our day. >> is it being addressed? >> know, and it is an issue we will have to deal with shortly. >> john, thank you.

our guest host for the hour. john battelle a tech chronicler. >> market makers will be back in just a moment. ♪

for market makers. you'll want to tune in tomorrow.

the kosher pickle is back. about.s plenty to talk his business, where he is investing, what he thinks about temperatures. the organizations that he chairs, the robin hood foundation. how about pro football? >> he is a minority owner of the steelers. all of that is worth bringing up. >> lots to talk about with david, and i am sure he has a few opinions to share. >> bloomberg television is on the markets. >> thank you. stocks are trading hard, even after consumer confidence fell to the lowest level since may. we have a weaker than estimated read on the housing markets. joining me for the days options insight is kevin kelly, a strategist at regan capital partners. good morning. let's start with a broader markets. one thing that is driving the markets is the news that russia

is considering capital controls. they may introduce capital controls to stem the flow of money leaving the country. what do you see playing out in volatility? >> what is happening during september and october, qc volatility peak. it is the end of the quarter. earnings come out. the market is responding to volatility responding to the market. in july, at averages around 13. the market says we will have volatility coming and whether it is geopolitical earnings or -- >> in response to external shocks. seasonably traded? >> it is. tends to trough in december. be low. seemed to apex back up in january. >> we are at 15.5.

talk to me about ebay. a company you made a lot of money on. walk me through what you trade with. >> the trade was to buy the stock at $52 and then collect premium. with the activist shareholders. they got what they wanted. a great day. the high volatility is still high, about 30. if you look at the nasdaq 100, it is around 18. you can capture that in volatility and roll it up and collect at more premium. >> congratulations on that. you have a strategy. how do you play that? >> the biotech space people don't grasp very well. there are a lot of players in there. they are a company that franchises drugs. they have a growth ratio.

it is a great company to invest in. we are getting a high volatility in october, and reporting earnings on october 23. you can sell the put option and collect 1.5% to october 17. it is a great way to get paid to buy the stock. >> why is at the right time? isone thing you want to do capture the volatility. it is heightened. with high volatility, that leads into earnings. you're getting paid to take that in. if you look further down the curve, it is the same. you want to capture it sooner rather than later. >> they have a drug in the pipeline for crohn's disease. it could be a rival to a $14 billion drug from abbvie the. talk about the fundamental case. >> the fundamental case is great. they have the right balance sheet. you see them growing at 17% year

over year. with the drug you mentioned, they will taken 20% year over year. the gross margins are at 20%. operating margins are around 50. 47% to 51% on the operating margins. >> kevin kelly, thank you and congratulations on the ebay trade. that does it for on the markets. in the meantime, money clip is up next. ♪ . .

>> welcome to "money clip," where we tie together the best stories, videos, and interviews in business news. i am adam johnson. it turns out it is easy to keep investors smiling. be talk about ebay's split from paypal. thatecalls -- we dig into one. city leaders say, just go home please. the ceo of dunkin' brands says bring it on for chains trying to get in on