is "market makers" with erik schatzker and stephanie ruhle. >> splitting up in silicon valley. a bona fide trend. the latest tech company to consider breaking itself into two. banksing from the central -- from the imf. good morning, everybody. welcome to "market makers." stephanie is on assignment. you will see her in the next hour. we begin with the bulletin. the top stories in finance at this hour. let's start with the imf. using central bank money has pumped up asset prices so much they may once again threaten the financial system. the imf points to specific vulnerabilities.

the increased sensitivity and credit markets could make the exit process more volatile, potentially undermining the ability of financial systems to support recovery. janet yellen has raised similar concerns. regulators need to take steps to curb financial excesses. right now. they were trading slightly higher. they're dipping up and down on either side. plummeted.elds the s&p 500 virtually unchanged. so is the doubt. ow.so is the td -- so is the dow. >> if you days of triple digit declines and more of those in the future. this is what the market is like. the true normal market has volatility that makes people scared.

people keep valuations reasonable if they're worried and that's where we are right now. and another named to the wrath of companies who want to split themselves up. talks tois an advanced two companies p one selling security programs and the other focused on data storage. both ebay and hewlett-packard have announced breakup plans of their own. bill ackman plans to raise their takeover bid for allergan. it will make their new offer in december, close to the shareholder meeting with some that's where some directors may be removed. allergan has characterized these previous bids as grossly inadequate. americans are living longer than ever before. edit be born in 2012 expect to live almost 78 years.

expectancy for women is little more than 81 years. for men, slightly less than 77. cancer and heart disease remains the big killers. alcoa kicks off third-quarter earnings and season after the bell. mike mckee says if you're looking at earnings per share, you are looking at the wrong thing. is the convention that has developed. did company x meet forecasts or not? it depends on whether their stock will go up or down. that's not how people who know what they are doing say this should be done. matt company. earnings by nature don't tell you anything about what's going to happen. stock markets are supposed to look six months ahead. they look three months back.

it's not a good indicator of what your earnings are going to look like. in the second quarter, 68% of ,ompanies that reported reported earnings better than the consensus forecast. that is not because the earnings were in a good quarter. because they are never bad. yet to go back to 1998 in order to find a quarter in which fewer than 50% of the companies reporting had poor earnings than forecast. companies manage analyst expectations. you look at what they started at earlier in the year for the third quarter and you look at where they are now. the white line is what the s&p earnings expectation forecast is. the orange line is what the financials are and you compared to what the actual earnings turned out to be. at this point, the quarters come in much stronger than we had anticipated. there is a lot to watch for.

what you don't want to be watching as the single number earnings per share. >> thanks very much. michael mckee with a look ahead and earnings. another stock we have our eyes on this morning's jcpenney. holding their first wall street analyst meeting in almost three years. thanks so much. and you are looking at what's going on with jcpenney, the company has been on this long turnaround under what was supposed to be an interim int after ron johnson. all of today has been emphasizing the turnaround of the company. he was speaking earlier and he will be speaking again shortly. the meeting is on a break right now. the first analyst meeting for jcpenney since 2012. he talked about expansion in , which heese stores

touted as being quite successful. he talked about having high single-digit percentage gains. the up for a in-store -- stores and thee disney shops in stores. they will expand that to 680. ,e mentioned the magical world frozen, when talking about disney. the company should get a boost from that. he talked about salons in the stores. the company will upgrade salons in 900 of its stores. he joked about not getting your hair done online. something you can't duplicate on an online experience per he also said that in july, jcpenney had same amount of active customers as 2011. it has come back to where it was

free ron johnson -- pre-ron johnson when he made other changes to the store and limited coupons. the strategy seems to be working. there has been a rebound in comparable sales and shares as well. thene quick question on shares. it wasy looked like being steered to someplace much better. since then, it is back to zero on the year. >> there still are a lot of concerns about jcpenney. the concern about where does this fit in the retail landscape? there's concerns about its core customers. even if they come back, they are not spending as they once were.

that is something he highlighted in his comments today as well. it's not clear that we are going to see a meaningful pickup and customer spending. he talked about moderate wage growth. at the same time, those increase want to their savings. if is not a lot of discretionary income. ackman invested in jcpenney and did not do so well. he said it was one of the worst wagers of his portfolio. is there any indication that investors are pushing him to go in a different direction? >> there doesn't seem to be. a lot of activists have been burned when it comes to retail. it can be difficult thing to turn around. there is the difference between the stock performance and the actual retail performance in some of these cases. , it if the stock recovers

doesn't mean that the underlying retailer is going to arrive. we haven't heard a lot of noise from jcpenney since ackman 's spectacular failure. >> thank you very much. the latest on jcpenney. back, it's become the trendy thing to do in silicon valley. breakup your company. symantec maybe next. ♪

>> you are watching "market makers." why is silicon valley so suddenly enamored with spinoffs? splitting itself and ebay spinning off paypal. today, symantec announced they are considering a breakup of its own. often focus on the

need for mergers that the rish rationale for spinoffs -- we are so often sold on the notion that consolidation is the answer. does it work in reverse? >> you are still going to be sold on that because there is a lot of cases where mergers to make sense if you're in similar lines of businesses and there is real synergies. -- businessesre that have very different characteristics. the pc and printer business of hp. separating those kinds of businesses where there isn't as much synergy makes as much sense. it's not one or the other. >> i'm glad you raise hp. that's a situation where investors can't be blamed for a

little confusion. the ceo who ultimately was forced out proposed the spinoff or split that meg whitman is saying is necessary right now . meg whitman has been making the case that hp is much better together than separate and all of a sudden it makes sense to buy the company -- divide the company in two. ebay rejected it spinning off paypal some time until they said yes. what is going on here? in meg whitman's case, she made needed to herhave three years to see what she could do with those businesses. the other factor which is increasing is these large pools forceivist money that ceos to really focus harder on these questions.

i think you will see this increasingly, not just technology, but across every industry. companies will look at this much harder because there is a catalyst now that did not exist in this five years ago. at this activist pools of money that can wage a proxy fight and own a big chunk of your stock and push you to focus on these things. >> we've seen that happen with time warner and news corp. you are absolutely on the money. the question that comes up inevitably is, are these meant to satisfy the interest of short-term shareholders or are they good for the business in the long run? let's go back to the merger argument. there is a reason to have a big company. you have back office savings and similar accounts and buying power and pricing power.

often times come you get a geographic footprint advantage. there is no doubt there is was possibility on every board and management team to look at the characteristics of businesses and do the analysis. how would these businesses trade if they were independent businesses? is there a big arbitrage that is not reflected in the stock? managements have to decide whether it's significant enough to act on it. the activist pools are doing that analysis and companies need to be doing that analysis. you will see a company like paypal -- it would not surprise me in three years if paypal is then again merged with someone else. if you are running a portfolio of businesses with to characteristics and different pe rates, growth rates, you have to focus on, does it make sense to

split them up? an activist can play a reason for role -- a useful role. you talked about one case where they get involved in how to run the company. that is not their expertise. they do much better when a focus on capital allocation -- they focus on capital allocation. when they bureau away from that, it's unproductive. -- when they've you're away from that, it's unproductive. veer away from that, it's unproductive. >> what would you do about yahoo!? the unrealized value of yahoos investment. in the stock price, that is. >> what i'm sure when on in the board meeting and should have gone on in the board meeting and probably did is an analysis of

paypal. the new advances by apple and others. throughg to think whether the company would be better served if it wasn't run by the current management. it's a hard one for management and boards to face. it's a blind spot. it's hard for management to admit that they may not run a wasness as well and if it spun off with new leadership come in micah run better. this is the pressure on boards today to make those judgments. if it was spun off with new leadership, it might run much better. >> as a matter of principle, does it make sense for a company like yahoo! to have investments like alibaba or yahoo! japan whose value exceeds the implied value of the underlying

business? >> for starters, this was a bit of a high-class problem. this is a result of having made a good decision. once you get to the point where it's this big of a percentage of the company, there is no getting -- they have to look at --s and still make sense they have to look at does this still make sense. if i were an outsider, could i create a lot more value if we split this up. this is what companies and boards have to face today and these large pools of activist money are pushing boards and ceos to face it. >> let's go back to the spinoff

trend for a moment and focus on the trend part. why do these things happen in waves? i remember during the last tech boom before the market cracked, there were a bunch of spinoffs. a number of companies decided they were discrete businesses better off on their own and now we are seeing that same trend play out again 15 years later. i think there are two independent trends going on. and 1990's, there were significant numbers of raids and people with take stake in stocks and push companies to excel or breakup and these people were willing to fight proxy fights. from the early to thousands to probably about two or three years ago and now we have a new wave of capital in

the form of activist hedge funds that are actively resuming that. is one trend going on. the second trend going on is the fundamentals in industry and business and the rate of change per globalization, technological innovation, disruption. to adapt and be nimble, companies are deciding they might be better to adapt at this rapid change by being more nimble and separating. make a prediction. likeu think these spinoffs are going to do better on their own then they would have inside the mothership? >> i have worked on a lot of

over the years. history of these situations is by and large these companies do do better independently. independent managements that are totally accountable for the future of business are more likely to adapt their capital structure. more likely to make acquisitions and mergers and mergers be aggressive in building those businesses. they will do better separately. you.eat to see appear market makers will return in a couple of minutes. stick around. ♪

>> we are approaching 26 past the hour here. we take a look at yum! brands paired slashing profit forecast for the year because of supplier issues in china. kfc have been under pressure. sales falling 14%. costco is rising after its earnings topped analyst estimates for the fourth quarter. the first time in five quarters profit was higher than expectations. walmartrivals such as which has had stagnant sales as of late. the chain was in dire need of some retail therapy. jc any's plans for a turnaround -- jcpenney's plans for a

turnaround. may in france, sold all over the world. -- made in france, sold all over the world. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> you're watching "market

makers." welcome back. stephanie is on assignment this money. we need to talk about the imf. beware of easy money. the imf says monetary accommodations is losing its power to revive economies while at the same time pumping up asset prices so much they may threaten the financial system. monetary director of and financial markets is with us. i read your report and those are two conclusions i draw. which centraly bank governors have few choices but to enforce in the easiest way possible is having some unintended consequences. message is that monetary policies remain it necessary to support the economic recovery .

they need the support of other policies as otherwise, you don't at thesufficiently -- same time, you get financial excesses which overtime complications regarding financial stability. it needs to continue doing its job, but it needs support from other policies. report conflict? go for simplistic about natural test --y that i was

across a broad range of asset classes, we see valuations which are too rich. we don't see anything which is extraordinarily odd. classes acrosset many countries where evaluations are on the rich inside. it's very important that financial policies keep these financial excesses from becoming too large. that could ultimately threaten financial stability. you have many assets which are not as liquid during stressed market conditions.

--estors >> how far away are we from that point? >> we see that risks are building up. a are far away from having financial crisis or anything like that, but it's very important to call attention to ese risks that are building up so that action can be taken. >> you and the imf are hardly alone in drawing attention to these risks and calling for macro prudential regulation. janet yellen and other members of the fomc have done so several times, including in some recent speeches. our investo -- our investors to complacent? >> they are complacent. this is reflected in the

valuations. when you have investors complacent, the authorities need to reinforce their policies in order to make sure that this disappears and this does not cause damage to systemic initial stability. this is why having strong micro-prudential policies and macro prudential policies which insured that financial stability. it's important to do it now rather than to wait. if you wait, the excesses will be much larger and too difficult to handle. argument tohe maintain a current levels or ?ven increase

you have made it clear that the results are quite predictable. if more liquidity is pumped into the system, asset prices will thereurther and will be this liquidity maras that people will ultimately face as they try to withdraw money. at the same time, you've drawn attention to the problems in the banking industry. we don't see enough investment or enough capital being put to work by companies. all of that's just monetary policy is losing its effectiveness very rapidly. iesi think monetary policy remain essential. they can't be the only game in town. they can't be doing all the job. monetarye reasons why policy may not be more effective in promoting growth is because

the transmission mechanism of monetary policy to the real economy through credit is not strong enough. ,his is why it's very important the role of the comprehensive assessment that the european authorities are finalizing now. which is going to lead to a stronger banking system. we hope this is the beginning of a process. that's something which is very important. -- at the same regarding the shadow banking, it is true that monetary accommodation is shifting risks towards shadow banking. the answer is not to withdraw money. states -- put in place the financial policies of the macro prudentials which take

control of these risks. if you were to withdraw money in europe or the united states faster than expected, this is something that could undermine economic and financial stability. monetary policy needs to do its job but you need other policies which are not playing a stronger part. for structural reforms which would increase the rate of return and they would be willing to invest more in real capital where they have the money coming in from the banking system. >> i have one quick question for you. you say banks need new business models. what would those look like? >> banks need to complete their to the post crisis economic realities. many banks in the nine states are -- in the united states are

already affecting change and adaptation of the business models. banks need to reprice their number of activities and reallocate activities from lower probability to higher -- there is a need for more consolidation in the banking industry in countries that have maybe too many banks for markets which are not that large. that's a process that needs to happen. sufficiently profitable in a sustainable manner. --ks which are profitable >> we have to leave it there. thank you very much. coming up, how to make green beautiful. ♪

topt's one of the world's

skincare and fragrance companies and most of its products are still made in france. clarins has resisted the pressure to take its business to more friendly jurisdictions and opened a headquarters in paris. welcome. let's start with this question. how brutal is competition at the beauty counter? >> brutal? no. it's complicated to explain the beauty product. i will not say brutal. there is a lot of competition, but it's good because the market has been growing always. you look at the trend of skincare, it has been growing. it has been a market growing all over the world. , it's also to china booming market. >> what are the top trends? >> the most important is antiaging. linked to aging is the

firmness of the skin. -- betterbrighter product to remove the makeup from the skin. that is the main trend. >> your top competitors would be home? whom?ld be come -- we also make products for men. >> luxury products withstood the --ession much better than tha we are celebrating our 60th birthday.

we have been growing and growing every year. mainly, we are a skincare company and we have an makeup line and a line for men. >> your company is still very proudly french. outside, france seems to be uncompetitive relative to other countries in europe. >> when you have a problem, you have to solve it. you have to be creative and i love my country. beauty a tradition of in plans.of tradition >> does being a french company make you a less competitive company? >> no. even if we produce in france, we have been able to produce any way where we are very competitive with the rest of the

world. export 87% of what we manufacture in france all over the world. >> how do you do that? you have to operate in france under restrictive labor laws? >> absolutely. but we have been very creative. thatve a lot of things replace the man's work so that we can have product at high quality and affordable price. >> do you believe france needs to introduce labor market reform? >> 100%. what has to be done in a country to be run properly -- >> you have abraham lincoln in your pocket? >> yes. >> do have confidence in the prime minister to bring about some of these reforms? >> i hope.

situation today is extraordinarily bad. --have to change >> throughout the government. >> absolutely. >> you and your family took the company private in 2008 after being public for quite some time. any regrets? would you ever take it public again? >> no. we joined the market in 1984. around 2000, it was the reverse. judge a man everyone hundred yards. -- everyone hundred yards. agile and be more more quick. we have to discover before the others something new.

>> what is the most exciting thing i will see clarins do in the next year? >> we are working on something we love. the firmness of the skin. unfortunately, when we age, we lose this firmness. we have one iconic product we sell all over the world. the first step to a new generation of product. maybe you will invite me to show them next week. >> thank you very much. good to see you. the chairman of the clarins group. ♪

>> have job, will travel. what about working abroad?

one out of every five people globally already have international work experience and almost two thirds are willing to move to another country for work. scarlet fu is here to share some of the other findings. thisnd i have both done . >> we are part of that 54% that have already done it or are willing to do so again. in the u.s., less than 50% are willing to move abroad. if you break it down by generation, the millenial's are more willing to. 92% of people from france and the netherlands are willing to work abroad. countriesf the actual , let's start with the cities. london, paris and new york are -- our way atp the top.

what i found really interesting in looking at the cities was that you did not have any asian city until number nine pick singapore coming in at number nine. toronto coming in higher than singapore. in terms of countries, let's check out the countries. more say theor u.s. is the place they would move to for work. 42%. in all7% english-speaking countries, which makes sense. >> what about china? >> not in the top 10. >> many of the millenial's want to go to china.

that's where the future is. learning mandarin in high school. >> you have to have specialized skills to go there. you have to think in terms of what skill sets you have. it's interesting given that most americans still don't want to live abroad. labor mobility inside the country, but not outside the country. now, it's approaching 56 minutes past the hour. it is time or bloomberg's on the markets. sears shares once again on the decline. >> look at the drop today. sears plunging in the fashion right there. the biggest drop in two years. people familiar with the matter have told bloomberg that three of the biggest insurance firms for the retailer are looking to reduce coverage.

at least one medium sized vendor has already halted shipments. let's put this in context. sears is pretty much in a very challenging spot. 30 straight quarters of declining sales. this latest news may make it more difficult for the company to stock products. saidompany's spokesperson they have had no interruption of goods flowing into the company. >> thank you very much. the latest on sears. market makers will be back in a moment. aboutl be talking walmart. ending health care coverage for 26,000 part-time workers. of course this has something to do with obamacare.

♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik shatzker and stephanie ruhle. the supreme court hears a case involving amazon employees. at issue is whether they should be played -- paid for standing in line when it came time to leave work. the grinch who stole christmas. this year it is walmart getting rid of health insurance for 30,000 part-time workers. we talked about the impact of obamacare. hockey executives take a tip from baseball, using big data when it comes to putting together a winning team. welcome to the second hour of

"market makers." stephanie ruhle is on assignment. we begin with a bulletin, the top global and business stories. arguments are ending that the supreme court in a case that may redefine how much control companies have over hourly workers. employees of amazon filed suit against the company who said they were forced to stand in line to go through an airport-style screening in place to make sure they were not stealing. the problem, the workers say, is that they are not paid for that time. sometimes they have to stand in line 25 minutes. if the suit is successful, amazon and staffing agencies may be forced to pay $100 million in back wages. the government is taking new steps to take a bullet out of the u.s. beenrts and ports have ordered to look at anyone coming in with signs of the disease.

no word on when the screenings would begin. the white house press secretary talks about what has been done thus far. >> we have trained our professionals to spot people with symptoms of ebola. we had this incident in newark over the weekend where they thought they had identified somebody symptomatic with ebola. they were tested and it turned out they did not have it, but they are doing what they are trained to do. imf is warning about the dangers of easy money. they say central banks have made money so cheap, it is pumping up the assets. the imf spoke with us this morning. >> this is resulting in elevated asset prices, credit spreads which are now too low to compensate for default risks in some market segments. and recently record low volatility. >> the federal government's

budget continues to shrink. fiscal 2014 will be $468 billion, almost $200 billion less than last year's deficit. that would be the smallest shortfall since 2008. if you are in the right place, you had a spectacular view of the blood moon. it occurs during a total eclipse when the sun's rays are refracted over the earth's atmosphere, casting a red glow on the moon's surface. the midwest and on the west coast had a good look at the blood moon. now that take a closer look at that amazon case. we recently visited some of the warehouses where plaintiffs work and spoke with employees about the security screenings i mentioned. d theer, what di employees have to say about what they endured at the warehouses? >> i went to warehouses in

nevada and in las vegas. the lines are not so much an issue at the moment. several told me they proceed fairly quickly, so it is important to note this case stretches back several years. the lead plaintiff worked at amazon warehouses -- and amazon warehouse in las vegas in 2009 and 2010. change thead time to situation but it can also get worse during peak season, when they have a lot more employees in the warehouses. >> by what you're saying, it sounds like amazon, whether virtue of a lawsuit or something else, recognize this was a problem and started to put measures in place to speed this process. variety ofs like a things. amazon would not answer specific questions but attorneys for the plaintiffs suspect that when they prevail, the appellate

court, that that was a warning sign and prompted amazon to make some investments to make things move more quickly. some of the workers i spoke to said they also became more familiar of the process and knew not to carry metal and that sort of thing, do some things to move it along. whenscribe what you see you go to one of these warehouses, where are the security screenings? --ake it it is >> that is the distinction, it is when they badge out. that is the big emphasis. the attorneys representing the workers in the case is to distinguish this from a security check that is for general safety, like i'm carrying a weapon. that is not what this is. this is checking workers on their way out to make sure they are not stealing from the company. it is not for a community safety benefit of a bottom line

antitheft purpose, which is why they feel they need to be paid. isn't that big a problem that they have to put people through body scanners and x-ray scanners on the way out? >> there are estimates of billions of dollars, employee theft in the retail industry. i spoke to law enforcement agencies in north las vegas and fernley, nevada who said they had not responded to many theft investigations at the warehouse. they said more often they respond to the amazon warehouse for medical emergencies. workers having medical problems. see you, thanks for sharing your observations. the case is before the supreme court.

right now, the justice department is elephant hunting again. prosecutors prepare new charges against banks and individuals implicated in schemes to rate currency rates. those familiar say the doj will likely seek its first guilty plea from a u.s. lender. richard farley is a member of paul hastings. we also have the former assistant acting attorney general under the clinton administration. stewart, let's begin with you. i have heard first-hand from it is so important for the justice department to hold companies accountable. we can get to the individuals in a moment. do you agree with the approach the justice department has taken? that they need to go after these companies, and if necessary, american companies? >> the justice department is

going after companies. what you describe is a certitude. large wasan public at told that. in terms of the strategies and tactics that the government is following, they are uneven and success has been uneven. the classic mode to get to the corporation was to turn individuals and move upstream. here, we are looking at corporations, some of which are cooperating, some are pleading guilty. a lot of the stigma of criminal cases has been eroded because so much is criminalized. what is clear is the department is committed to bringing cases. there is tremendous congressional pressure in order to do so, so the atmosphere is charged. the outcome is inevitable although the results are less than clear. >> i spoke to the u.s. attorney

of the southern district in new york, a couple weeks ago, and we talked about the idea of criminal responsibility for companies. here is what he had to say. toa lot of people begin scream from the hilltop said if you invite a financial institution, the sky will fall and it often did not. people would claim that only if you entered into a large financial penalty and a prosecution agreement. at some point, you get sent -- fed up. any reasonable person would get fed up with constant representations that the sky is going to fall, the chicken little talk. not to be overly dramatic, but it did not come to pass. preet is right, there was a lot of chicken little talk and when the justice department charged credit suisse and bnp paribas with guilty pleas, the company did not go out of business and stocks continue to trade. >> i don't know who was talking

about chicken little other than his boss eric holder. no one who represent banks of the sky was going to fall. what we have here is a situation where -- it is a bit like corleone justice. making you an offer they cannot refuse. on the one hand they are too big to fail so we are afraid to prosecute, but on the other hand, they say they are not too big to fail so we will prosecute. they need to get their stories straight. they have been trying continuously, for over six years .ow, to jail them the notion that they have been twiddling their thumbs worrying about what will happen to the to figure after the banks, is just didn't u.s.. tactics,k about your which is concerning from a civil liberties perspective. you leaked the fact that you will prosecute a bank. get the media going, get you and i on here to talk about it. then there will be a leak down the road about who the specific

things are. then there will be activity in the stock price, management will not be able to talk about anything other than the expected indictment. the esa done with the prosecutor and you say you have a choice, either pay us tens of billions of dollars or we will keep this up for as long as you like and let's see you complete your business land. that is a little troubling for me, in fairness. >> even though banks have deep --kets and >> it is the shareholders. that is your pension fund, my pension fund. that comes out of all of our pockets. the notion that these are institutions in the ether is unclear. >> stewart, richard raises a fair point. does the justice department need to adopt that aggressive a posture? is that the only way prosecutors

can get the results they want, could they go about it differently? >> there are a lot of things that could be done but richard is correct. there is an analog, the health care industry. act, fourfalse claims years, has been getting criminal pleas from large pharmaceutical and other companies under exactly the same circumstances that richard has described. often they are rewarded in terms of market cap performance when they settle these cases. i think, though, the real civil liberties issue is less in the prosecution of corporations, then it is in the inevitable demand that senior executives somehow, under the ambit of the criminal law. then you're dealing with questions of criminal intent, something called a responsible corporate officer doctrine, a dubious theory on which to prosecute. to be a short answer, there is a precedent to this kind of thing. the statement that this is onerous, that it penalizes shareholders than -- more than

is true.he company, there is a proper role for the justice department. a lot of what we are hearing is covered victory and unclear. >> does institutional liability work? >> we will find out. it works for one thing. was that a last week lot of the large banks said we are no longer going to make libor input because we are afraid of liability, even being associated with the process. if there is a rogue into leak that -- not only will our shareholders get hurt, but as senior executives. >> this is precisely what preet says the justice department wants, a change in behavior. can, and younly can throw the constitution out the window as you do it, so where do you draw the line? >> if banks engage in litigation

with each other, they are brothers -- are as aggressive as possible. why shouldn't lawyers representing taxpayers be just as aggressive? >> because they have an unlimited budget and they do not have the discipline of the marketplace to say, does the reward equal what we will invest in the litigation? you have something that is priceless, and that is politics. prosecuteay i will the senior executive of a big bang, i guarantee you that prosecutor has a political career. >> stewart, what will the fallout be once a u.s. bank we go to to a criminal charge? >> that there will be more of the same. the follow-on to that is there will be institutions that plea. they will survive in the marketplace, they will pay large fines. you do not jail the corporation, you are penalizing its shareholders. there will be large compliance

programs, statements of policy, but the real nut will come, if and when government starts to seek penalties against senior executives of these corporations. add, the justice department, while it does not have an unlimited budget, it has a different responsibility than private litigants. and that is fair. some of these prosecutions stretch that in the name of political reality. uart berson is with us from washington. here in new york city, richard farley. we are talking about justice and whether it is fair when it comes to the big banks. back, we go to the vanity fair summit happening right now in san francisco. part-timers are getting squeezed out, companies are cutting their benefits. walmart is just the latest. ♪

, thomas erico duncan, the first person in the u.s. diagnosed with ebola has died. we just received the report from texas health. he had come to the u.s. indirectly from liberia, admitted to hospital with symptoms that were diagnosed as ebola. we also mentioned earlier this morning that the homeland security department has ordered agents at airports and other ports of entry to the u.s. to observe a pier 1 -- everyone coming into the u.s. for potential infection. officials have put this in place as of today. we do not have any immediate details as to what measures will be taken and when they will be put in place. today.ouncement was made

the first patient diagnosed with ebola on u.s. soil has died. some other breaking news of a very different note. you have been following the news about bill gross, who left pimco to join janus capital. in the month of september, the unconstrained bond fund that bill gross will be managing, received six of $6.4 million in client deposits. $66.4 million in client deposits. this is really just a fraction. assetsad $220 billion in . as the chief investment officer, he oversaw $1.9 trillion, but nevertheless, he announced his departure and did not start at janus capital until september 29. and he did not begin managing money until this past monday. so the money is trickling in at the moment. $66 million of client deposits.

we will be right back here on "market makers." ♪

>> vanity fair issue again -- showcasing its annual look at who is who in the media. bloomberg is there all week with some interviews. stephanie ruhle and emily chang have quite a lineup this afternoon. both are standing by to give us a preview of who they will be talking to. though it is the 20th anniversary of the list, this is the first year of the big unveiling. other establishments, vanity fair is getting into the live event business. when we say they are rolling out the big -- red carpet and bring

out the big dogs, that is an understatement. >> only one person that has been on every list and that is rupert murdoch. this year you had 50 people and all of them in technology. >> elon musk is the top guy this year. when this list started, we had herb allen. in terms of media and technology, they said it was herb allen and the sun valley conference. we seet is shifting and so many big faces like our own michael bloomberg. we will be speaking with evan spiegel, the ceo of snapchat, as well to the editor of "vanity fair." they almost wrote the internet often. look at what has happened since then. we will speak to shane smith of ice media. >> when you think about what he's done with media, combining news and entertainment, he is kind of the new cool kid. this digital revolution is about combining personal computing

with the internet. the realink about disruptors, they are not corporate titans anymore, not elite bankers. it is happening out here. >> also talking about government, policy, we will be speaking to keith alexander, asking about the jpmorgan hack. and what is the new establishment, upcoming security technologies that companies can use? if jpmorgan is spending millions on i.t. and it does not work, what do we do? >> it will be two great days here. we will be sharing it with you and everyone else at bloomberg. >> i cannot wait, a great afternoon of coverage from the who's who of tech and media. back, this could be a sign of the times. walmart taking health care benefits away for tens of thousands of part-time workers.

then we will show you how hockey finds the best players, or for all we know, the best brawlers. more and more teams are depending on big data like baseball. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik shatzker and stephanie ruhle. >> welcome back. i'm erik schatzker. stephanie ruhle is on assignment in san francisco. 30,000 part-time workers are walmart are being kicked off the company's health care roles. the retailer says it will no longer provide coverage to employees who work less than 30 hours a week as a rising cost. target, walgreens have taken similar steps. of course, this is all about obamacare and while part-timers are no doubt upset, one of the

country's foremost experts on health care policy say they may come to feel differently. professor at princeton university and that is where we are this morning. when you say that these employees may find themselves halfway or at least happy in the long run, why is that? >> i would not say they are happier, but compare the pre-obamacare world were they would just tumble down and be uninsured. now they can go onto an exchange and get insurance with a federal do not have to worry about their health status not is because that is what is being asked. they now have a fallback addition which may not be quite as good as what walmart gave them but is nevertheless reasonably good compared to what would've happened pre-obamacare. walmarton that i feel

feels more comfortable doing that is because they know there is this cushion onto which these employees can fall, that softens the fall. >> here is the key question. walmart, walgreens, target be doing this in the absence of obamacare? >> i think eventually they would have anyhow. we economists believe when an -- pays part of your insurance premium on the job, they try to recruit that out of your take-home pay. there is evidence suggested that when you have very low wage workers, there is not enough wages to shift the cost back into, so therefore, the company actually eats some of the premium in their bottom line. when these costs keep going up and walmart put competitive

pressure -- the stock has been going up and down -- then it's a natural business decision to say , for the part timer, we will not offer them insurance. some point inat the future, happened to low-wage full-time spurs. >> was this an intended consequence of the affordable care act or unintended? i have to figure, if not the president, certainly, his policy advisors would know that this could happen. >> if you ask economists, a lot of people say that it should have been an intended consequence. a lot of us believe employment-based insurance is actually not ideal. the designers of obamacare were probably aware of it but said, these people will lose their company provided insurance, but that's what we are offering them

now, which is federally subsidized insurance, so they might be a little worse off, but not much. we will look after them. i think they knew what would happen and said it was ok. >> so should companies with part-time workers like walmart chains,et, fast food move those employees off of s, it providedll insurance is not ideal? ,hat about full-time employees where there is a very attractive benefits package? as long as you're wage base is good enough that you can somehow share that with the employer, that's fine. but it is hard to say for an economist what a company should do. these are business decisions. a company is responsible only to its

shareholders. its mandate is to maximize shareholder wealth. under our law, it is not really the role of business to provide social insurance to their workers. if they do, it must be because it is a good business decision. but very few companies do this out of the kindness of their hearts. most of them, it is a well thought out business decision in the labor markets. agoou were saying a moment employee provided health care is not ideal. what is ideal, what is the best way to deliver health care in this country? the reason we say it is not ideal is because when you lose your job, you also lose your insurance, just at the worst moment in your life. what you really want is portable the employmentat

decision is not polluted by your health insurance decision. >> isn't that what the affordable care act provides? >> exactly. the downside of the affordable care act, of course -- i told this to a student this morning. i am in the upper income level and i will have to pay more taxes to cover the subsidies for the walmart people. i am resigned to that. fine. these people serve me when i go there, so i will not cry over it, but i will pay more taxes. >> but that is also an intended consequence of obamacare. >> intended or let's say except that consequence. accepted consequence. ande are not going to go rewrite obamacare, even though that is what republicans in congress want to do.

what would you do to make it better, so that people like me and you would not have to subsidize these workers who are losing their health care coverage to companies like walmart? >> you look at any republican plan that is substantive -- and i have seen a number of them. publishedriend who through the manhattan institute and "forbes" to take obamacare and make it more republican, but all of them call for subsidies to low income people who could not with their own money -- afford health insurance. are stuck with this. those of us in the upper half of the income distribution will be forced to subsidize those in the lower half. all have a stake in controlling the growth in health care spending. the faster we let them grow, the

more taxes you and i have to pay , and premiums. we pay the premiums for you and me and the taxes for those that cannot afford the product. so that is really the message. >> that appears to be happening. health care costs as a percentage of gdp have dropped. , as an have, although article in "the wall street ,ournal" pointed out employment-based insurance is still growing faster than the wage base, although it still empowers is the worker. we basically have to do an even better job controlling spending. >> a responsibility that we all share. thank you. reinhardt, a professor at princeton university. it seems like you cannot avoid hearing from leon panetta these days, the former obama cabinet member making the rounds and promoting his new book.

that is how it works. you will hear from him in a few minutes. ♪

>> what is the biggest threat to national security? charlie rose put that question to leon panetta, who has been on a publicity tour for his new book. here is how we answer the question. >> congress has basically pulled back and said we are not going to do it. i think that is dangerous for this country and its future. you want to know what the biggest national security threat right now is? the dysfunction in washington and the fact that the president and congress, for whatever reason, cannot confront the issues that are important to this country. >> you can watch all of the interview tonight on "charlie rose" tonight at 7:00 and 10:00 eastern. washington, tim geithner says the failure of aig may have caused the hispanic. at theified yesterday

trial of the bailout of aig when he was president of the new york fed. the defensive, returning for a second day of testimony at the trial. for more, we go to washington with peter cook. you have been inside the courtroom. tell us about day two. >> we just took a midmorning break, so i left a few moments ago. basically, par for the course. what we have seen is much as what we saw on day one, calm and composed but very deliberate. he only gives a brief answers to questions when he gives answers at all. with hisd some trouble memory dealing with the key details of the bailout of aig in 2008. he has been composed, has not been aggressive or combative. at one point, he was asked if he wanted to amplify one of his answers and his response was i do not particularly want to say

anything, and that is sort of vibe you get. he would much rather be somewhere else. he is up on the stand again today, could even bleed over to tomorrow. the government has yet to cross examine him. the lawyer for hank greenberg, former ceo of aig, trying to get out of tim geithner? >> he is like a surgeon of their -- up there, asking very specific question to get answers out of tim geithner. it's not the big actor of whether the bailout was necessary but the specifics of the agreement itself and what geithner new himself and what he did. he was asked about his role in determining the interest rate, which he has suggested was basically like extortion. the rate was much higher than other financial firms being asked to pay.

asked about the circumstances around the actual bailout, the role that geithner played in that. he is trying to frame the case here that the government went too far in its negotiations with aig, basically forcing them to take the deal, that it was not as voluntary as the board suggested. he is basically holding his ground saying we had to do what we did to protect the economy. i know hank greenberg takes this issue very personally and perhaps that is why david boys put a particular question two tim geithner yesterday. did he hold hank greenberg in high regard? tell me how geithner responded. >> it was an interesting moment because hank paulson had the same question on monday and said that he did hold greenberg in high regard. when geithner got the question, he paused and then said, i had held a greenberg in high regard, but i held him in complicated regard.

the reason was, in 2008, he was not sure he could assess the judgment of greenberg as he was the biggest shareholder even one reason he declined to give him a seat at the table when the crisis came up and the government had to do something. >> fascinating to watch two people of such intellect, on the one hand david boys, and tim geithner, squaring off in the courtroom. thank you, peter cook. when we come back, hockey's newest stars do not score goals or even do open ice. they crunched the numbers. ♪

>> moneyball is turning into moneypuck. the nhl regular season kicks off tonight and they are following the lead of baseball by using big data and analytics like never before. scarlet fu, a hockey fan that puts me and tom keene to shame. >> a lot of clubs spent the

summer loading up on these new guys. ae toronto maple leafs hired 28-year-old as assistant general manager, known as one of these guys that follow advanced autistics. the new jersey devils hired a former poker player to be there director of hockey analytics. the edmonton oilers hired a former logger that took the oilers to task several times over the past few years on what they were not doing. there will be some tension with the front office and the coaches who do not prescribe to this way of thinking. >> can you analyze hockey the way that billy beane analyze baseball? >> they say you can. you have goals, assists, total points, plus minus rating, and more competent in the tricks -- metrics. rating looks at shots on goal, like the on-base percentage. then there is the fenwick rating

which is shots attempted minus blocking shots. when you correlate that with new on the ice, you can get insights hopefully into line choices, special teams, quality of ships. things that allow the number crunchers to solve real-time problems. >> what about fighting? >> teams will be mining the data to see if fighting is an effective way to win games. >> neutralize the opposition. >> the argument was always it is the intangibles, the grid, entertainment value, but if you consider the la kings, who beat the rangers last year, a big physical team, for skilled lines. the bruins have a similar lineup. 21 out ofinished tied 30 teams when it came to fighting majors. that should tell you something. >> but they have size. >> go back to the number crunchers and find out how wayne gretzky would have done under

these modern number crunchers. >> the toronto maple leafs had a terrible season last year. they collapsed. a lot of people say that pushed them to make a change in the front office. >> just rub my face into the ice. hockey and big data. "market makers" is back in a moment. ♪

>> that is going to do it for "market makers" today.

stephanie will be back from the vanity fair new establishment summit in san francisco. she and emily chang will speak to paypal and cofounder max leche and -- levchin. the viacom ceo will also be speaking. tomorrow, you will see one of the markets top media m&a bankers. i will be speaking to john about how so many media companies want to get your while others, like news corp. and time warner, are getting smaller. past the hour which means bloomberg television is going on the markets. giving up early gains, fluctuating right now after yesterday's big decline. this all comes before the release this afternoon of the latest fed minutes as well as the unofficial start of earnings reportingh alcoa

after the bell. joining me right now is the atity derivative strategist crest partners. when we have an earnings season like this, fomc minutes, what tends to move the markets more? >> that is keeping people under some sort of stress right now. risks to the downside in the market have been elevated. when you said external event, you refer to -- >> last week, there was a lot of activity in brazil stocks. there was a lot of options trading and results of spillover affects today. that seemed to be what is driving volume in the options market right now. >> one name we are focused on is yum! brands. they cut their profit forecast for the year. you would think that would be a negative catalyst but the stock is rising. what do the options thomas? >> the stock is rising but only

marginally. that is not really a surprise. the options market is predicting a further selloff in the stock. we sought a buyout of january 60 options, the stop getting around $71. january 72.5off of strike calls this morning. options market does not really believe the downside in the stock is done. potentially, there could be a further selloff. >> you are looking into the next earnings report as well. >> the reports from china were not good at all. these types of things take much , in terms of yum! brands, to come out of this negative publicity. >> that will be one month into the new ceo's tenure. alcoa will be reporting after the markets close.

you have a tray that you say is not for the faint of heart. >> that is right. i am selling a strangle ahead of earnings. >> explain what that means. >> i am selling both the put option and call option. sellingk is around $15, 14.5, 16.5. 14.5 puts andye 16.5 calls simultaneously and electing $.20. stock is trading around 14.5 right now. -- 7.5%ving me 17 point buffer on the downside, sick .5% on the upside. remainsas the stock bound, i can keep the entire 20%. that would be my next profit. there are opposing forces at work here. you have a strong dollar, weak economy in europe, imf lowered their forecast. that will put a lid on the stock. on the other hand, aluminum

prices have been stabilizing and the company is executing well, though that will keep the stock up. my hope is that these opposing forces will keep the stock in a range. her member, this is just a two-day trade. for two days i am hoping the inck stays around 6.5% or so the range and then i can make my most money. >> checking the last time alcoa reported results, it jumped 5.5%. thanks for joining us. on the markets again in 30 minutes. "money clip" is next. ♪

>> welcome to money could. -- two money clip. they get their day in court, the highest court in the land. the world's largest retailer making a move that affects thousands of workers in health care. many in italy's workers cannot be fired. that is a problem for a country that just went to its third recession since 2008. in the u.s., the president, has