that being said, approval ratings are still very high. >> that is true. evans, thank you so much for your time. next. makers is coming up ♪ >> live from bloomberg headquarters in new york, this is "market makers." >> cap suddenly replaces the ceo credited with reviving the retailer. how safe is your bank account? into theho broke jpmorgan computers may have had other financial firms. you will hear from the former financial security chief. a ceo earnings by raising prices and cutting costs. will that be enough to fend off calls from pepsi to split itself up?

good morning. stephanie ruhle is on assignment. you will see her in less than an hour. let's start with both ends the top business and financial stories around them morning. carl icahn posted a new open letter to tim cook, calling the apple ceo to buy back more company stock and at a faster rate. he owns more than $5 billion of that there -- of apple shares. he wrote that the market undervalues apple. apple responded in a statement that it always appreciates hearing from shareholders and will review its capital program on an annual basis. icon has had success putting pressure on cook before. it raised its dividend. we will talk with carl icahn later today and we will see him at three clock p.m. eastern time

. 11% in a single month. down 13% for the year thus far. almost $23 billion in assets. companies involved in events such as spinoffs. investors not happy with the shakeup at the gap. the gap ceo glenn murphy, the man credited with reviving their chain in the past years is retiring. cap shares more than doubled under murphy's run as ceo. hackers broke into jpmorgan's computers have been linked to attacks. among those targeted, citigroup and e*trade. hackers use and employee .assword to penetrate defenses

authorization and 83 million consumers and small businesses. we have known since bloomberg first broke the story the attacks were not limited to jpmorgan. we now know who else is involved. there is evidence that hackers are working with russia. computer crime is a growing industry. at achnology is advancing rate of doubling every two years. what that means, for all these capabilities, where all our wealth is stored, our intellectual property is stored, all our government secrets are stored, protecting them is becoming increasingly difficult. >> left at this not going to be a cash cow for facebook, at least not at the moment. thebook completed acquisition of whatsapp yesterday. the ceo says he has no immediate plans to generate revenue. zuckerberg was speaking in india, where he was promoting internet access for the billions

of people who do not have it. he said india's big problem is infrastructure. >> playing traditional network infrastructure to connect rural communities with low population density is not really cost effective or practical, which is not -- which is why it has not been done yet. we're working to develop new technologies that could be more efficient in doing this and can help connect these people. >> let's talk more about the sudden change at the gap, the one not sitting at all well with investors. here with me now is julie hyman. and robin lewis, the ceo of the robin report and co-author of the new rules of retail, competing in the world's toughest marketplace. welcome. >> thank you. >> who would have thought -- glenn murphy is a talented retail executive, no question. the 1.7 track record,

billion dollars, does it make sense that that much market value should have been wiped off the gap today? >> i do not think so. that theion marketplace has to change is surprising. you could have numbers jumping by 10% and the share price goes down afterward. what glenn did was a phenomenal job of fixing a sick puppy. the shortfall there, if there is an athletecture hurting themselves and getting the athlete healthy again is one thing. a star is athlete another. i do believe the cap has been somewhat commoditized. we have to talk about generational changes. consumers want other millennial's. they were raised on glenn murphy's gap. it is a different business. folks that more and more are turning to the technological side, rather than the classic brick and mortar side to time --

to find the talent to move forward. >> tell us about tech, the man who will succeed murphy. side ofmes from that the business. he had been a consultant for many years he for joining cap in 2005. -- the of made the round rounds in the gap. the head of american gap business. he has headed up other businesses. currently, he is the head of what they called physical growth and innovation. not only is he ahead of the online business, but a head of the smaller businesses in the cap, in some cases growing more quickly. so, you know, he has done a lot .f different things within gap >> you have written extensively on the shifts that have taken place in retail over the decades. given what the landscape looks like right now and what it is likely to look like in the years

ahead, is a guy like this the right man to run the store? say, i thinkke to there is a bigger issue and it has to do with the brand. saying,with what he was but i would like to expand on that a little bit. i think glenn murphy has done a a heckuva job- stabilizing that business. but the brand, it has suffered from three issues. first being ubiquity. -- mickey will tell you that to this day and that is when it crashed. the second, which is more severe, is what i call positioning draft. mickey position that brand around a young consumer but then, as they were putting a cap he was therner, drifting holder with that customer, not looking over the shoulder to the younger millenials coming up, the

younger brothers and sisters who are not interested in wearing what the older brothers and sisters are wearing. so, the gap as a brand, and that is why i say it is not just a product. it is a brand issue. it just lost its cool. i do not think they have been able to get it back. issue, we are overstuffed. the young consumer today has one million equally compelling brands at their fingertips. >> that is not unique to gap here it that is a problem a lot of retailers have. >> what is the solution? cap has almost 3600 stores. it has been that way, although the number of stores has varied over the years, picking up ever so slightly and is where footage has been down ever so slightly. it has pretty much been, the scales are adjusted to give you

a sense of what has been going on, but, you know we're talking about 35-40,000 doors -- i mean square feet. stores. should it be half that number? >> i cannot give you a number. certainly, murphy has cut costs and stabilize business. i do not know about the infrastructure and where that goes. again, the perception of the havingconnecting and some resonance with the millennial consumer, that is what they have to do. whether it is capable of doing that, i do not know. >> i shop there, but i am not a allennial era it >> that is consumer with no loyalty, that moves from moment to moment. whether they do it in their careers or whether they do it in how they shop, they have a sense answer.hat you have to

that is a tired brand. >> clearly, investors are concerned about the fact same-store sales, the core business, down 2% of the month in september. are they also not concerned about the potential as ceo? in theory, this is what shareholders should want. the currentr to ceo, brought from within the company, except for the fact for 23 hasas a ceo and years, he was a consultant. people have very mixed opinions about consultants abilities to run operating businesses. >> there's one thing we know. selfishly for my business, there is no planning not only for the cap, but the entire industry. it just does not happen. ceo ande, being a having what we call a standing ceo experience, is what all investors want.

it is not always the right answer. >> should they have conducted an open search the way they did for glenn murphy? --seven always say yes area >> i would always say yes. [laughter] yes, but it does not mean the answer is not inside that company. we always say, we are always the best second choice, not the first choice. you should have it and do it yourself and not rely on us. more than often, that is not the case. he is someone who has the potential because of his takeing within the gap to it to the next. the vision for us comes more side thanechnology the brick and mortar side. >> let's talk about ubiquity. the gap is ubiquitous much more than j crew. question is emphasizing that. that is what i find fascinating. you have the norm trend, whatever that means. it means not differentiating

yourself. collect being everything to everybody, being everywhere. >> their ad campaign right now is to just normal. do you pull people into the stores? they did hire a new design earlier this year. she rolled out her new stuff. story onweek did a big her, talking about her aesthetic. it is a clean aesthetic. and yet, that does not seem to uppushing up area -- pushing . >> starbucks is ubiquitous. to the basic,k brand core roots. they got away from the intense service and the environment and the experience, and it became a machine and it got back to that. with fashion, it is much tougher. like harker be more

question mark >> mostly online with a select number of boutiques, where you can go and find what fits you and what you like. >> again, the gap, that is the brand. when the consumer and a little millennial here is "gap" does he resonate cool? that is a problem. a huge problem and it is not just product. she is a fine designer. >> i would say it is a combination of innovation. a fabulous product. we take a look and watch an of that business, and they have fabulous designers and their driving the business. and she is in sync with that consumer at a level that she gives her what she wants, but she is always surprising her, and you know, she could deliver the fashion version of the iphone 6 and the cap cannot do that. companies, both

levi's and the gaps -- and the cap. in the past seven and eight years, there has been an enormous rebirth of denim. at very high price points. that was the moment in time for the cap to get into fashion and deliver that at a value price point, and they did not do it. >> thank you. great to see you here. a headhunter who specializes in retail. robin lewis, author of "the new rules of retail." very uncertain with the stock getting hammered today. coming up, companies deciding to split themselves up. is pepsi going to be part of that trend? a lot worse than we thought is one way to describe the revelation about the hackers of jpmorgan. you will hear about the secretary of homeland security.

♪

>> is time to talk about earnings. pepsi's third-quarter profits topped analyst estimates. the company raised its forecast for the year. of results that bolster the case against call to split up the company. scarlet fu is here with more on this story. the ceo has been under pressure. press yes. and she has delivered in terms of earnings and boosting that earnings-per-share. in fact, since nelson began about a year and a half ago, was just checking, earnings-per-share growth in every single quarter except for one, that is compared to the five straight quarters of falling per share. nelson has built up a 12.9 million share stake. about .9% overall. he first proposed it back in april of 2013. he originally pushed for a

merger. merger. then he shifted gears a little bit and then pushed for a split of has to go, saying it would boost value and higher multiples . it would result in more focused marketing and spur growth. he is not really gotten that far and his latest move is to suggest he may fight -- start a proxy fight. they have not talked since february. >> really? well?s it she is doing >> raising product prices and cutting costs. big initiative where she is cutting $5 billion in costs. so far, she is doing well on that. as long as she continues to be earnings estimates every quarter and top were matched sales estimates, advise her some time and removes pressure for her to have to do anything. if you look at how the share has a totale, pepsi return, including dividends, of 28%. coca-cola is 15% total return. that tells you something. >> outperforming their request pepsi is outperforming.

looking at the army's report today, not many of them mentioned anything about a split. the yummy cap -- the only company that did said they remained unconvinced. >> there has been an effort to wean pepsi also pepsi, which is to say, off of soda. is that still underway or has pepsi decided -- >> pepsi has always had other drinks. they have to rely on carbonated joints quite as much as coca-cola. having said that, pepsi is still doing other things in the cola wars to differentiate itself. americans are drinking less sugary soda to begin with. pepsico has come out with something made with natural sweetener and it will be sold with amazon so they can gauge initial response is better. it will eventually hit store shelves for that is one option it has taken. >> what is that? >> a good question. an old school craft soda they

have introduced. i have not tried it. it is made out of cane sugar. if you like mexican coke, this is like pepsi's response to that. coldan coke has gathered a following. >> for good reason. taste better. >> and also, it is a bit of a throwback. idea asa throwback well. playing on nostalgia, any tactic to differentiate itself in a mature market. to choose between coke and pepsi? >> i still have to go with coke. but i do not drink soda. >> we are not the target market. >> that is the problem. they need to get us to drink more. >> of something else. a good quarter for pepsi fighting back tears more market makers when we returned moments from now. ♪

>> welcome back. we are approaching 26 minutes past the hour. time to go on the markets. one stock we are watching for you, sears. just the retailer falling 4%. this is on news three of the biggest insurance firms are seeking to reduce their coverage. that prompted at least one to to sears.ents sales off 4%. year to date, they are down 30%. another stock on the move is cap. this comes after the ceo announced he will step down. murphy reviving the brand and turning things around it cap.

another stock we are watching, micro devices, down seven point 67% right now. naming a new ceo today, a week before they were due out with earnings. lisa, who until now had been chief operating officer, will step in immediately. is on the layout. it happened so quickly, the terms of his separation and employment are both the hammered out still. let's show you what is happening on the bond markets today. the yield is that a 15 month low on global growth concerns, a yield of 2.31%. hard to believe we started the year off around 3%. a different story, ever so slightly higher. >> thank you. the former homeland security secretary will talk to us about twin threats to the u.s. economy. the spread of ebola, and hackers

who have penetrated more than one bank. plus, and eat payment revolution. we will hear from one of the revolutionaries himself. ♪

>> hi there. i'm. chester. stephanie ruhle is on assignment and you will see her shortly. the hack on jpmorgan was more widespread than we previously knew. the perpetrators are now being linked to cyber attacks on at least 13 more financial firms. they include citigroup, fidelity, each rate, regions adp.cial, and they still do not know the hackers are. they are believed to have links to russia. with us now, michael runs the

church group. he is in washington this morning. do we have a better idea at all who these people are? connected inare some way, shape, or form in russia. the attacks might have come from russia itself. senseat we have a better of what they were going after and where, who are they? difficult ton attribute where an attack comes from. the vehicle -- the people who attacked or not normally go directly from their headquarters, from their own computers, directly to the target. they will move around what they call hot points. there may be a notion, based on the tradecraft, based on the ip wasess, and based upon what

being sought, that these people were connected to russia. even there, distinguishing between criminals, those acting with some kind of tacit state support, or those who actually may be directed by the state, is often very difficult. solve not be possible to that question. >> the public cannot find out about the jpmorgan hack until bloomberg wrote the story in august. we learned thanks to the new york times today that president obama was getting briefings during the summer and he asked his advisers whether it was theft or possibly retaliation by the russian government. what do >> well, one of the obvious things you do is what waste and ask, the motivation and who would have benefited? the obvious example in a case that bank is attacked is somebody is doing reconnaissance in order to carry out some kind of fraud. obviously, if you have information that it comes from russia, you have to ask the question, which comes up on other occasions, whether a state

actor were somebody sympathetic to a state actor, is doing this to commit reconnaissance for a potentially disruptive attack. we have seen that in the past with groups sympathetic to iran. russia has a history of using 2007 andcks back in 2008. it is an obvious question to ask. >> do you have a sense as to whether it is likely to be sponsored by the russian government in some way, shape, or form, even tacitly? >> i do not want to speculate about this particular motivation. i will say often the line between criminal behavior and statesponsors and tolerated behavior it is a very thin line. if you read the report involving china, came out about a year ago, what you saw were hackers who sometimes are acting on

behalf of the state, but we're also doing moonlighting on behalf of operations. this area of attribution is murky and in many ways, not very different from what we have seen in the physical world in the ukraine, where you have people not wearing russian uniforms, but appear to perhaps be russian soldiers carrying out missions in disguise. >> in the case of jpmorgan, we now know that data on 83 million customers, consumers, and small businesses were stolen. we are getting the sense that the hackers were not nearly as accessible in the 13 other firms and in fact, they may not have any traded the data defenses at all. should that make the companies themselves and their customers feel any more secure? extent you canhe prevent an attack from taking place. but it is wise to not get overly cocky.

the truth is, almost any institution, including government institutions, can be penetrated. what is critical is how segmented and how protected is your most valuable information, how quickly can you discover there is a problem, and how quickly can you remediate it? -- nott is not only stop only, did you stop coming at the door, but find out how to quickly and effectively take steps to minimize the damage. >> i would like to talk about ebola. what kinds of questions have you been getting from your clients and what advice have you been offering them? the question is travel. what are the risks of travel? there are obviously substantial risks. there are medical people out there to help out with treatment and response, but those are trained. my sense is this is not the time to take a pleasure trip to siberia. for example.

tourism, what the impact will be on american treatment of foreigners coming to the u.s.. we have an individual in dallas who died yesterday. and i think there are messages, we want to be careful. i think the measures announced by secretary johnson yesterday were good measures that we do not want to overreact. people said, should we eliminate visas or shut down all travel? it is unnecessary and damaging to the economy and counterproductive. we are looking for a measured response. my biggest message to clients is, have a business continuity and be prepared in case there is some kind of public and or your employees start to become nervous about coming to work. .his could be avian flu this could be the ebola virus. it could be any kind of thing that causes people to start to stay home.

continuity is a critical element of planning. >> isn't there a problem or a potential problem with the measured response, and that is that development can quickly overtake steps the government has taken an open officials and authorities up to the allegation ,hat they have not done enough and star what we hope we will never see, which is a panic? >> it is always the challenge. sometimes, it is true, your government overreact to things. people say, that way, i cannot be blamed. so you can overreact, hypothetically, by saying, we will not let any traveling to the united states at all,. . -- at all, period. >> what about closing the borders? i know it sounds like an extreme step. but the possibility of ,losing the border to anybody that we should not be traveling to a centrica, the point you made earlier. why should anybody in west

africa, necessarily be allowed into the united egg? it is an open question. >> you could do this. there are about 150 travelers a day who come from the three countries that are most effective. you could decide that you would either suspend visas for people traveling from those countries. those would be people who live there and not necessarily people who visit and come back. or you could institute a more rigorous prescreening program for people who want visas to come from those countries, including having them beor you d a couple of times before they get the visa. is no question there are measured responses you could take in addition to what has been done already. people talkear about, for example, one of these through belgium, maybe we should stop traveling through belgium, that strikes me is way too far. steps, butdditional

you want to balance the fear factor against the damage to our economy and trade. >> we could take those steps. should we? steps, but you want to balance the fear factor against>> i think i woule what the current regime is turning up. it looks like we're seeing other people coming from the area who have potential risk, then i think i might take a serious look at whether i want to suspend residents of those countries from coming to the u.s. for a time. i want to be careful to say we should not interfere with the ability to train medical going to the area to help out. at the end, as tom said yesterday, the only way you will is stop it at the source. if you do not do with the problems in those three countries, this will be with us for a long time. >> thank you. michael is with us this morning

from washington. coming up, there may be a simpler way for apple to get into television. just buy an existing network. ♪

>> out in san francisco, the who's who in tech and media. chang. emily here with me now to bring us some high points. >>., good morning. really, and amazing to days of newsmakers and influencers, not just on the stage, speaking on the panel, but around vanity fair. an extraordinary night last night and everyone was chang. talking about the great commentary we saw all day. we got a chance to sit down with math and because i'm from new york, i want to talk about banking payments. here is what he had to say there it >> i am not sure it needs

reinvention. it needs a reputation adjustment. point, banking, these people scheming out there. >> does it need a reputation adjustment? we sit here and we put silicon valley icons on a pedestal and we attacked bankers. that fuelmany bankers the american dream? >> there are tons who are good people however, when you go to a retail store and they say, how would you like to setup -- save 10%, you know better and you know that is designed to make you pay and you will pay between now and the end of your date. that is not a good reputation. and yet, a debit card is a great tool. an api to your finances. it should be maturing and getting smarter and instead, money list, 21st-century consumers, hate those things and they know better.

they run away from that and they switch to a cash lifestyle. my job at the firm is to the old products millenials can relate to and say, that is the credit card of the future and that is what i want to be a part of. >> there is so much happening in terms of how we pay for stocks. paypal, we talked about it last week. the day ebay announced this would happen. now that we have had a week or so to digest, what is paypal futures? is paypal going to be out there buying companies like square? paypal has been criticized for not innovating over the last decade. >> i hope the first thing paypal does -- i am impartial or neutral on the buy or not buy square thing. but what i hope they do first and foremost is wake up and say, you know what, we have not been a new type of participant in silicon valley. there are a lot of little companies that are saying, i

want to plug into the infrastructure that is the payment system. mrs. is striped. they made their business on being extraordinarily developer from a. paypal deserves the system instead of being stuck with a knife when it comes to that. ebay has got a good business. they have $3 billion worth of market caps. i think he commerce is changing. offline is still well north of 90 prime -- 95% of retail sales in america. a lot of people are saying, i ought to open an online store finally. ebay should be a platform for that. there are tons of renovations to make e-commerce retailing better thing to do online. i ought to open an online store finally. ebay should be a platform for that. >> i do not disagree. need to have many

adjustments. when you walk into the gap, you know it is not a good idea to get the credit card. i find it a little tough to swallow, in san francisco, right, left, and center, the iconic figures talking about the financial industry and the banking industry really needs an adjustment. come on now there is less one of the other things he said was he thought paypal would probably be bigger than ebay, ultimately, even though paypal has missed every single payments , he thinks over the next several years, if everything goes as it should, paypal will be a bigger company than ebay. one of the things we talked about was yahoo!. it was a company a lot of people were questioning how much innovation is happening. it is not a tech company anymore. take a look at what he had to say about his confidence in the ceo, marissa mayer's. >> very intelligent. almost all of them have stayed on her team.

i am pretty supportive, very supportive, of her plan and what she has done. are challenges and it is not like everything is perfectly going to plan every single day. but i am impressed. i am away from., we needed to bring a canadian on, shane smith, the it will in the news and media world. he was one of the original guys behind mtv. when we talk about, what is the new network going to look like, what does it mean for the big networks, what is the future, here is what they had to say. >> the big thing coming up is more of these over the top digital networks. netflix. there will be more channels and you'll see more of that. a whole move from analog television, digital television, to video. no offense to you. and tv andn video

online. >> you have it all but netflix has been the gateway drug for the internet and internet video for a lot of people. setspeople have their attached to the internet and a lot of companies like device will come up with that new platform. >> a little word association. thinkou fit -- when you network tv, what do you think? is a great movie. it is the third screen for me. we started online. it is the third screen for us. there is still a lot of money and a lot of audiences there it we are platform agnostic and we will be in all screens at all-time. >> what about apple and the potential do something innovative in tv. can they? >> everything is -- everyone is waiting for the killer app. it is really integrating online,

tv, broadcast, cable, all one place. obviousll be the company to want to do that. >> they also have a lot of money. they are a natural to buy one of the nature networks area gigabyte with their pocket change. they sort of have a shot withs the music industry youtube, that there will be a different model. they will look at different models of control of content with their platform. >> is that the only way they can innovate with tv? >> they also interact with consumer, a big thing going forward. direct to consumer, transactional, all that stuff will be big. apple is one of the only companies really set up to do that. >> apple should buy a tv network. that got people talking.

one of my favorite interviews was speaking with the editor and chief of vanity fair. a granddaddy who has been working at this magazine since 1992. pretty frank about the future of print media and the future of paper magazines. take a listen. monthly magazine so we are not competing with the internet. weekly or daily, i think it is rougher. if there is one magazine left on this earth, i plan to make it vanity fair. geto something you rarely on the internet. we tell great stories at the hands of rate writers. we team them up with great photographs. there will always be an appetite for that, whether a digital or printed version of that. we are ready for anything. you can get it in any way. >> not afraid of the internet coming after vanity fair. vanityt is hurting the industry in total, but vanity fair is a standout and a standalone and it is different

for the current audience. the question is, if you still want to be this relevant, that audience is getting older. what will they do to capture the next generation? we will see. we will have a lot more to cover throughout the day. you know where we are. summit, sans new francisco. we are back with more. >> i am looking forward to it emily, and stephanie. thank you so much. a lot more from the summit is coming up. the discovery communications ceo at 6:00 p.m. eastern time tonight. we will rejoin you in just a minute. we are taking a quick commercial break. stick around, please. ♪ emily, and stephanie. thank you so much. a lot more from the summit is coming up.

>> we are approaching 56 minutes past the hour. i want to once again point out what is happening with cap.

-- gap. the man credited with turning the apparel change -- chain around will be replaced by the gap's current head of digital. art peck has no previous ceo experience and was a consultant for 23 years before joining the gap in 2005. he is a successor inside the company, often what shareholders are looking for. on the one hand, he does not have that kind of executive ceo background that glenn murphy brought. secondly, gap's core business, the gap itself, that brant, is in trouble. before we go to commercial break , a look at what is happening in the broad market. yesterday, a germanic turnaround. stocks are once he let -- once again on the way back down. it was the best day in almost a year at the s&p 500. it was down points today.

we will be back in a moment with the ceo of disney. ♪

>> live from bloomberg headquarters in new york, this is market makers with erik schatzker and stephanie ruhle. disney will not let go of bob iger. they just extended his contract. you will hear from him in a few minutes. the big companies are getting even bigger and spending more money to buy live sporting events. if you have pay tv you will pick up the tab. the words you never thought you would hear. poor harvard. the college with the world's biggest endowment has a mediocre investment record area did you are watching market makers.

i am erik schatzker. stephanie ruhle is on assignment. with stephanie out, i needed company. since you want to know more about the tech tonic shift underway between media and tech, high friend is a veteran investment baker. he is the founding and managing partner of methuselah. that specializes in media and digital properties. he will be my guest host. john, good morning. the form you get to the conversation about disney, i want to get to the top business and finance stories. the unemployment rate is 6%. there is another sign the labor market continues to recover. an unexpected drop in the number of americans filing for jobless benefits. it is at the lowest level in eight years. employers are hanging onto workers to meet rising demand. it lays the groundwork for more

wages. run icon is making another at apple should be valued at more than a trillion dollars. so, the stock is trading at half it's worth. in an open letter to cook, he wrote the market misunderstands and dramatically undervalues apple. he asked companies to meaningfully accelerate the magnitude of shared purposes. apple appreciates the feedback from shareholders and will review the capital return program on an annual basis. icahn pushed cook to boost the -- dollars.- but\ he raised apple's dividends. the president of the world bank says the global response to ebola is behind the curve. he called on the world to speed up and scale up the efforts to contain ebola. he spoke at the conference in

washington. >> unless we contain and stop the ebola epidemic, nothing less than the future of west africa and africa is at stake. the ebola crisis in west africa has infected more than 8000 people and claimed more than 3800 lives. the epidemic continues to spread. >> the world bank estimates ebola will cost 32 billion dollars from the west african economy. appchat makes the mobile for sending disappearing photo messages. it is valued at 10 billion dollars without having any revenue. the ceo, evan spiegel says the first ads will be placed around the story's product. they will be optional to view. once consider the affordable alternative to manhattan, you may drop the affordable part. home prices in brooklyn, where i

live, rose to a record in the third quarter. brooklyn is the only part of new york city to surpass the peak in home values before the crisis. the median home price is more than $487,000. let's take you back to stephanie . before we go back to stephanie and emily at the vanity fair newest out the schmidt summit, you want to wait for them to interview bob iger. i will turn to john of methuselah capital. knowsow bob iger and he you. disney is a powerhouse. bob iger has been persuaded to stick around as the ceo. what do we need to know about disney? >> a great run. rob and his team have run the company extraordinary well. pixar, lucasfilms, makers studios, --

>> makers is strategic. >> a multimillion dollar investment in vice. the company has really fired on all cylinders. it takes real talent to have a team that allows you to do that. the board is wise to hang onto a-team that works like that. wanted to bob iger leave. what does it say about disney now that he is sticking around? ceo changere is a someone always knows what someone wanted to do. readyhad his retirement and he has now extended his run as ceo. >> he is probably having a lot of fun. here's had good performance in every business they have. why what you want to leave that gay? it is fun. he will be fact there longer, for a few years

longer, make it easier for disney to line up the right successor? >> he has indicated he will to eliminate some of the noise which is inevitable and a large organization. there are several candidates and he will pick someone. >> who is at the top of the list? >> my suspicion is that tom and --. they are the two. there was a third and and sweeney has departed the company. it has now down to a couple of guys. i think you will note in. >> is there anything that disney does not do well for a market in which it is not present that it would make sense for bob iger to do another deal? video producer is so much on the transition that is happening to the digital platform. what that means for their

business, is that the bulk of the strategic initiatives will be in places that protect their flank. you and i spent all of our time looking at their device and changing our consumption of video. so much of the profitability of media companies come from tv where the money is made. they have to protect themselves as that environment changes. i cannot tell you there is some missing link. think anyone really knows how rapidly the change will take. whether someday young people will get up in the morning and watch their television on that devices as opposed to the one on their wall. a film the success of like frozen tell us that disney still knows what kids want? >> you bet. there are lots of those that come out each year. there are few that turn into franchises. it is not just that one.

look at other film franchises that they have created on the back of johnny that. >> and what they are doing with marvel. talent of taking characters and turning them into sustainable long franchises that work in various markets is the secret sauce of the company and they have done a great job. >> there are some things that don't work out that well for disney. the injection and the new cash injection that europe disney -- why? why pump cash into an asset that has not delivered value? >> the theme park business and the nature of their brand that they want to protect means that -- >> it is a marketing vehicle? part of the broader strategy. you're making these fantastic characters and you need to make

them evergreen so you can roll out another version every 10 years and another extension. you can do -- you cannot do that if you are only an american company. you need to be global. john, we will take a break. when we come back we will have a bob iger, the disney ceo talking to emily and stephanie about his prospect. he recently re-signed for a view more years as ceo. he is on the board of apple. he is under attack from the hedge fund billionaire carl icahn. you'll find a lot of the best brands in silicon alley. interbrand. the value of global brands. stick around, market makers will be back in a minute. ♪

>> you're watching bloomberg television. i am erik schatzker. you are watching market makers.

my partner, emily rule, is with one of the biggest -- my partner, stephanie ruhle, is with emily and one of the biggestos and entertainment. the wordtalk about disruptor. you'll be talking to jack dorsey. it is an important word in san francisco. since been a disruptor the beginning. the name was not invented three years ago in san francisco. >> i get energized by disruption. atreach a similar reaction the company. i think disruptio creates opportunity. most people look at it as a threat, i think it is an energizing force and something we look at to take advantage of. i also like to preach that lets disrupt before we are disrupted. what can we do to d ourisrupt

own business model. disruption is inevitable so we may as well be ahead of the curve. your -- foren on a while now. valley people of silicon and disruption bring to disney? >> we have mighty drupts on our board. weorder to be effective, need to have a diversity of opinion, background, and voices. it is very important for the ceo and shareholders. they bring a pspective that companies need to thrive. i love the fact that jack, a disruptor, is on arrow board. of course, steve. is technologies business always standing ahead and never standing still. they bring in energy and insight . and advice on where the world may be going. that is what they are thinking about, that is valuable.

>> what is the most exciting thing for you inside of disney? >> i have a lot of things that excite me about the company. with the businesses we have, they are fun and exciting to run. i am most excited about the ment and construction of shanghai disneyland, it should open in a couple of years, and we are making star wars in the u.k.. that is extremely exciting. there is always something going on. to protectyou going segh going the way of euro disney which is in trouble. >> two different circumstances. euro disney's trouble goes back a couple of decades wi the financial structure of the business at inception. on a lot of debt and the pricing model was off. they ended up in an economy that was very bumpy over the years.

the recent announcement we made about the recapitalization was due primarily to the debt burden they had and the european economy. from thed a lot experience we have had there. the financial model for china is very different. on very solid footing financially. the market is as robust as any market we have seen. even if there is a softening in the chinese economy, there is a huge population base that is interested in going to theme parks and can afford it. that environment is more more likely to produce solid results over the long-term. >> the economy is not getting any better in europe. why continue to inject cash and euro disney when the outcome is not positive? >> the ongoing operations needed it. we have a brand we are proud of

and seek to protect. unless you invest in making the experience great, what the hotels look like, or the rides, that is very important. when you also look at things over the long run, looking at just over a quarter, the long-term health of the business. in less you invest in it it will not succeed. >> how excited are you about foumore years? >> two more years. >> altogether four. decision.a mutual i have one of the most exciting jobs in the world. >> because y get to go to disney world for free? been 25 times. exactly. we have a collection of great brands and dynamic businesses. it is great to have this

experience. not only have i enjoyed it, there's a lot of unfinished business and things i'm looking forward to. with great energy and enthusiasm. why not? >> you said you are looking for the next step and the next leader. how do you decide who will be coo? >> the board will make the decision, and with my put. we have been developing executives at the company that we feel good about. we focus about the process. we have given people brought experiences and have had an opportunity to observe them in various positions. we feel good about how we are set up for succession. we said, occasionally, we will probably name a coo early enough to give that person a chance to expand their experience at the company and give them an opportunity to develop. extended your nba contract. it is very expensive.

what will that do for cable bills when espn is the heart and soul of it as it is? >> espn delivers huge value to the cable distributor and to the advertiser. espn, theiser on company, and the customer. we sought to produce and nse a wide array of high quality for espn. the offering is strong and is getting stronger. we had the u.s. open tennis, the expanded deal with the nba, and so on. the value of espn is increasing. we are mindful of the cost of theproduct that goes into marketplace and the economy and the ability of customers to afford it. we continue to invest in the theme parks and the immediate networks in the quality so the price value relationship stays high. >> so you will be paying more

for cable in the future? >> those decisions are made by the cable distributor. we charge them a monthly fee for our channels. espn, abc, the disney channel, and so on. as other programmers do. they determine what they charge for the bundle of basic channels that they pass on to you. that is part of the package as well as broadband access. it is a collection of products that they are selling. to suggest just because we made the nba deal that is more costly than the one before, that your cable bill will go up, it is getting ahead of things. that is not necessarily the >> you talked about the value of franchises like the nba. will the nfl take a hit in the value to advertisers and viewers given the negativity they have had? inwe don't detect a decrease

viewership. in terms of advertising, we have not heard from our advertisers advertising on monday night football on espn. we don't detect that is an issue. whether the league has issues with sponsors, i don't have much insight. the football fans, generally are probably aware of the issue and many are probably concerned about the issue, but it is not affecting their viewing. the board of apple and and investor of vice. jane smith suggested that if apple wanted to disrupt television they should buy a tv network. what do you think? >> as a member of the board of apple, i don't comment publicly about their business. i love their products and am an avid user of them. i am optimistic about apple's

future and they will expand in a variety of ways. many ways apple represents a trend that we are seeing in many other places and companies. opportunities for creators and content owners to reits -- owners to reach people in new ways. whether it is in the software they create like itunes and the interface they have or on iphones. >> carl icahn wrote another letter to apple. is that helpful or harmful to shareholders at this point? oni don't want to comment the circumstances of the letter. the actions that apple has ken in terms of distributing capital to the shareholders is substantial. the biggest to buy back in the history of modern man. that has been significant and noteworthy when it comes to distributing capital to the shareholders. >> let's talk about hallo

.oumes and elsa you just started selling hollowing costumes and apparently the demand was crazy. >> the demands for the halloween costumes were crazy since the movie came out. this season. clearly, halloween is a great opportunity. it looks as though we are ng technical trouble with the feed from san francisco. that was bob iger, the ceo and chairman of walt disney. we may have the feedback, let's take you back to san francisco. >> what movies are you excited about? >> alexander and the terrible horrible no good very bad day. jennifer garner and steve carell. a animation called big

hero six before thanksgiving. into the woods on christmas day. very famous musical, we are very excited. we have cinderella and of interest to the next year. hasuardians of the galaxy characters we did not know before. will that be the new direction? we know what to expect an ironman or star wars. were you surprised by the success of the characters that we didn't know and our kids didn't know? >> i was surprised that who hundred 25 million in box office in the u.s., yes. had potential, and it exceeded our expectations. what has surprised me is that the interest in marvel has grown . it is very well known and liked and respected. when they put out a product, it is anticipated and sought after.

it gives marvel room to tell a variety of new stories with new characters. >> what is your favorite movie of all time? i love movies. i have an array of movies going all the way back to my childhood. >> not even a number one? casablanca has to be up there, but i'm sure everyone would name that. i remember going to a movie theater when i was young with my grandparents to see center relative. it is not just a movie, but the experience -- with my grandparentssee cinderella. it is not just the movie, but the experience. i can go on and on. west side story. one last question. we were talking about disruption and new technology.

exar, mastuds, marvel. what new technology are you looking for down the line? >> we are looking at new technologies, but not for acquisitions. sometimes there is a reason behind it acquisition, but for me, when i'm looking at technology, an and technology are not necessarily linked. we look for technology that makes products better. higher quality movies and team park experiences. that enables us to get our great storytelling to more people and more places is something we are interested in. bob iger, chairman and ceo of disney. i hope my husband was watching. cinderella and casablanca. you would affect terminator. -- you would have picked

terminator. wasn't that a great conversation with bob iger? we will be talking about the battle of the brands. the names on the rise and those in freefall. ♪

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♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> it's 11:30 in new york city. you are watching "market makers" on bloomberg television. atphanie ruhle is out "vanity fair" summit, and you just saw her interviewing bob iger. my guest host is the founder and managing partner at methods like capital advisors and investment bank, specializing in media and digital properties. we neeto talk about the world's most powerful brand.

again sit atnce the top -- apple is number one with a brand value of almost 100 million dollars. google, number two. you fear about the rest of the list in a moment, but the global d is with usrbran from the new york stock exchange. any surprising findings in this st global brands? andou mentioned both apple google were worth over $100 billion. apple actually broke that limit last year, but i think growth this year has been astounding. -- surprisingly, gnocchi a nokia d nintendo struggling right now, so it is not a great story for all tech companies. if you look at up-and-coming brands, facebook had in 80%

increase in value this year -- and 80% increase in value this year. >he you brought up, gnocchi a -- have and nintendo that undergone a swift, punishing decline in value, what does that teach us? is brand value that ephemeral? >> brand value actually tends to defend a company. when you have not got your product right, they help defend you, but there's only so far you can go if you do not have a brand that really connects with human beings and products and services that they really want. in the technology industry, like innovation is really key. somewhere along the line, those brands lost connection with their customers, did not have latest products they wanted, and can see that their brand

is ultimately being affected. >> is it fair to say the brand question is creating a possibility that you could see shortening of these brand lives when you see technology shifting so quickly? when year, a high-performance technology company, and the next year, the brand is gone. , theng at new kia -- nokia brand is being discontinued by microsoft. >> we are trying to determine what proportion of those earnings are due to the brand, and second, keyed to your question, how far to the future that is likely to continue. we look inside and outside a company to determine a measure of competitive strength, which gives you a clue as to how far into the future those earnings might continue, but at the end of the day, it's pretty much the same in every industry -- if you lose touch with your customer and are not producing products, services, experiences that they really want, then quickly, you can start to see your business

suffer. your brand can help you through those difficult times, but there's no substitute for having great products and services that people really want. >> do you think the study revealed anything about where luxury brands were really going and whether they carry the weight at they once did, or has that changed as the consumer product is emerging at the top of your list? >> luxury brands fared very well, as we know through the , and brandscrunch like burberry really paved the way in terms of digital engagement with their customers, not just in luxury,but i would say they are really a case in point or benchmark for the retail industry as a whole. i think our connection with luxury remains very strong. many of the brands are playing heavily around their authenticity and craftsmanship. you walk into louis vuitton stores hermes stores, and you're likely to see craftsman working in the stores.

this is important to make sure you are buying something that's not just a name but a strong product. i think there's actually a lot to learn from luxury companies from that perspective. they are good at understanding their authenticity, the reason why people really come to them, and, of course, have been extremely good at maintaining that balance between volume and demand on one side and maintaining strong pricing on the other. >> a guy whom our viewers have seen on bloomberg television a number of times, scott galloway, professor of marketing at new , told meersity recently that apple is a luxury brand and people need to get their heads around that idea. do you agree? >> i would certainly say they are a premium brand. if you are looking and that a probablyand, it would be virtue, the people who make handsets with diamonds all over them. >> except nobody buys those

phones and tens of millions of 6.e will buy the iphone >> i suspected that they have a view on where they might be able to take a higher-end offering. they came in with a cheaper version when they brought out the 5c. there's no doubt that people pay significantly more to have an apple phone, and it is as muc a statement of fashion and style as it is a telecommunications prowess, so there is certainly something about th which makes it quite different than somebody like samsung, for instance. >> when you look at the handset , or a name nokia like blackberry with a tiny piece of that market, is there a way that brands that have had a fall from grace can resurrect themselves? >> i mentioned burberryst now, and it's one of the things that anga and her team managed to achieve during the seven or

eight years when she was running the business. when she took over, it was not a happy ship whatsoever. they did not have the money to invest in flagship stores. product a lot of concerns and were associated with the wrong people, and it took time, but they did a fantastic job of turning around. there's no doubt that if you have a strong brand and you nurte it, develop it, work with it in terms of products, services, environment, people, culture, communication, you can revitalize and make once strong brds great again. >> given how financial performance factors into your brand valuation, what do you do when a company like they'll goes private and you lose access to that information -- when a company like dell goes private? >> we want to make sure that everything is on the level in terms of the way that we look at information, so you have to be a isted company to make it onto best global brands.

consequently,suspecthat in addition to the very first chinese brand on our table this year, a brand like alibaba will probably find its way in next year because now we will wind some powerful information -- now we will find some powerful onormation and calculate it terms with everyone else. >> if an investor is looking at your best global brands list and sees apple at 100 $19 billion, how does one disentangle apple's brand from its market value -- $119 billion, how does one disentangle apple's brand from its market value? >> there is obviously a natural linke. one of the things we've done over time is tracked the best global brands -- basket of brands, shall we say -- against indices like the s&p.

what we find is that branded companies tend to perform better than companies who do not use brands to such a great degree. there is not a direct connection, but you see much greater degrees of volatility around stock rises because there's a lot of opinion built into them. the way we actually calculate brand value is by looking at a company's are earnings and then using analysts' opinions of earnings into the future. the two are connected, but you see more volatility in a stock price, whereas a brand tends to be more stable, and as i mentioned, can be an effective weapon against risk because it gives you time to perhaps get things wrong within your organization -- put them right, and yourrand will protect you. >> great education into the value of brands. always great to see you, the global head of interbrand with us.

coming up, we'll hear from bill gross nce the -- for the first time since he left them cope -- since he left pimco. ♪

>> it was the shot heard round the bond market -- bill gross leaving the firm he cofounded on september 26. for the first time since, gross is talking. he's putting out his first investment outlook. olivia sterns has the latest .rom our newsroom >> bill gross setting the bar very high. he says goodbye to the days of high returns because investors should recognize that times have changed. returns will be lower than the double-digit days of old. he says the fed will go slow. he says zero interest rates have capital anding

yields are artificially low in the bond market right now, but he does not see the possibility of a significant bear market. he also says that he sees the global economy slowing more broadly. he says the world has to much mucdebt as a too fundamental structural problem. it's not clear if he is shifting from the new neutral back to the new normal, but either way the global economy is slowing. he also says technology is displacing worke and that the world simply has to much debt. really, raising expectations, saying that the days of double-digit returns are over days of highre the returns. >> bill gross has changed firms, but he has not changed his tune. we'll be back in a moment with capital. methuselah

♪

capital's john chachas has been my guest at this hour. the landscape in media, john, is shifti dramatically. we are, it seems, about to see comcast complete its purchase of time warner cable, but the justice department presumably has to sign on that, and the ftc, i guess, give their consent . the shareholders, for the time -- time warner shareholders are going to get their chance. that's not the whole story, though. it seemed we were about to witness a wave of consolidation on the distribution side a .ouple of months ago

21st century fox did not buy time warner. so what are we in store for? >> you actually have two big is tradition transactions, though a different one on the satellite side, which is important. the question is looming about whether the other satellite provider does something at some point. there has been a lot of rumor about that. >> arguing about sprint, right? >> or something like that, but the distribution consolidation spurs some of the discussion of consolidation on the content side. >> the rationale makes a lot of sense. if you are u against a big -- >> big boy, you have to have tools to push back. we already have a situation where on the content side, about 70% of advertising and license fee revenues by cable networks and broadcast networks are on by a very short list to earn

a vast majority of the money in the tv world. there are a couple of other folks below that top five or six who want to transact -- that's a strong rd, but who will look at the environment and decide whether their scale gives them enough to really move. >> why is it that when we talk about media, the conversation almost inevitably turns to acquisitions, getting larger, when if you were to look at silicon valley right now, the trend is to get smaller? >> it is an interesting question, and it stas wit the question of if you cannot get to the consumer other than through -- in the old world, where you could turn on your television, and your rabbit ears reach everybody, that change. we created a lock to down distribution where you had to go through a cable provider -- we created a locked down distribution. they now have barriers to make sure they reach their customers. they have to get paid the right way. there's a quite diffioint

of leverage between distribution and content, and enforces this conversation about scale. the fact is that building new networks -- let's look at these young ones that are creating -- it takes a long time to get to real scale. >> in the meantime, the customer foots the bill, right? we saw earlier about the nba. bob iger was just aut the nba warner,h espn and time was it not? >> turner. amazing. as rights fees for live sports go, so go the fees which in espn, fox sports, or any of these other networks are going to charge back through to the cable provider. why are they paying it? because live sports remains one of those great pillars -- >> a must-watch. must watchay, it is appointment television. you have to sit in your living room. there has never been better stuff on your tv then this year, fantastic show, but a lot of it

you can watch when you want to watch it. sports tothese live underpin their audience. >> thank you for spending the hour with me. always great to see you. john chachas, th founder and managing partner of methuselah capital. "market makers" will return in a minute. thank you. ♪

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

thanks for watching, everybody. later today, you'll be getting more from "vanity fair's" establishment summit. zaslav, p.m., david discovery's ceo. it's 55 minutes past the hour, and that means it's time for "on the markets." the days are falling after they rallied the most for the year. energy stocks are leading today's decline. dropped to aude 17-month low, so by my count, this is the fifth out of seven of the past days where we've seen a 200-point move or more on the dow. a want to bring in the equity options trader at options hacker -- i want to bring in the equity

options trader at options hacker joining me from chicago. what is going on? why the return and volatility? >> absolutely. we would expect to see markets come off a little bit today even the session we had yesterday, a huge move higher. we probably would not have expected them to come off this much, so there definitely is some selling pressure in the market. we are about 70 points off the all-time highs and s&p futures, and we've been seeing the s&p over the past week and a half ,unce around in this wide range and it does not seem like it can find conviction to break those levels either way. >> thdow fell by 270 points on tuesday, up to 75 poin yesterday, and today we are off up 275t 225 points -- points yesterday, and today we are off by about 225 points. >> when we see the selloff

overseas in asian and european markets, it puts pressure on u.s. markets on the open, so it is hard for the markets to rally when we see the dax selling off 1.5% or 2% almost every day. it brings sellers into the market and causes investors to be concerned about global growth, so it puts pressure to the downside and people are taking profits off the table and looking for protection to the downside. >> pressure coming from overseas is certainly also what we saw out of the fed minutes. we are watching pepsi stock today. shares are trading their all-time highs after they posted third-quarter profit that topped .nalyst estimates what is the reaction in the options market? >> this move in pepsi was telegraphed some by the equity options market. the largest order we saw was a the april 90 seven half line along with some other data

ijanuary, implying that investors are looki for a close at the end of the year in pepsi above $100. the stock has been making new highs on a regular basis along with coca-cola, so it has been holding up well. they reported to earnings. i definitely think it will be heading higher from the levels and probably up more if the market was not down this much. >> the big question hanging over pepsi is will they split apart, as they have been urged to do, split apart the soft drink unit from the snack unit. are you seeing anything that indicates whether or not traders are g thbettinsplit will really happen? >> we are not seeing that type of action just yet here. definitely something that is on traders' minds when they look at pepsi, but there's a lot in the company fundamentals that could send the stock higher when we look at earnings sending the stock higher. >> just want to get your take on safeway. what is your strategy?

>> has not been selling off, holding up pretty well. i'm looking for a move above one dollar by october expiration's, so i'm looking to buy the call spread for $.30. better than doubling my money if i'm right by expirations. .> the breakeven is $34.80 >> exactly. >> thanks so much for joining us from options hacker. safeway earnings due out after the bell today. we'll be "on the markets" again in 30 minutes. " ishe meantime, "money clip next. ♪

," welcome to "money clip where we tie together the best stories, interviews, and business news. no rest for carl icahn -- he is going after apple again, demanding even more cash for shareholders. how do you top that? heavyweightsh speak out at the "vanity fair" new establishments summit, and we will take you there. mark zuckerberg wants to get india hooked on the internet. and we are actually going to head back to that summit in san francisco to hear from the