of this funk. >> and right now we are still down on the week by about 2%. but it does appear the s&p and dow are holding on to their move back. michael purvis. thank you. we're back in 30 minutes, "market makers" is up next. -- >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie rule. >> markets around the world are lower. will the u.s. follow europe and asia into the red again today? >> here's what you need to know about the new tesla car it goes from zero to 60 in 3.2 seconds. and we're taking you for a test drive. >> lost luggage gets a second life. going to look at unclaimed baggage. you won't believe what he

found. you're watching "market makers" this friday morning. i'm erik schatzker. stephanie, good to see you again. >> good to be back. i wasn't here all week but now know adam, former hockey superstar. are you going to be skating with him outside the garden later? >> probably not. >> probably want to. >> yes. >> me, i'm -- >> we should say happy friday. >> happy friday for sure. >> let's begin with the top stories, the selloff in stocks hit markets overnight and half of the dow industrials fell almost 35 points posing the biggest drop since february. here is where things stand right now. you're well aware that concerns have been building about economic growth. it's slowing around the globe and the possibility of -- of course that the u.s. recovery will fizzle. you can see here that the ask u to at -- if it drops below

16,596 the dow will erase its gains for the year. >> it looks as though the stocks in asia dropped and earnings are well off their morning lows. >> turning its advisory business into a stand-alone boutique investment bank. the blackstone group will combine its unit with partners and spin it off tax-free to shareholders. the new boutique which does not yet have a name. we'll call it spin crowe but it's competing with the likes f mullets and co and raise is going one who left to be chairman and c.e.o. of the new firm and free blackstone of conflicts between investing and advisory activities. >> it's the meeting of the mowing always. getting together to join a form

a joint venture. they will combine end model, shine group and core media. core made iowns american idol and "big brother." >> the subject of endless speculation, tesla. turned out to be an all-wheel drive version of its model s electric car and has radar that can see through fog and comes with two engines giving the car enough power for accelerate from zero to 60 in just 3.2 seconds. tesla c.e.o. elon musk talked about his baby with betty liu. >> you have two motors. you can optimize between them and actually have the motors operate in their more efficient regime more of the time. and the net result is that we're able to get 10 miles more highway range just by going to dual motors to where as in every other four-wheel drive

system you lose range. here you gain it. >> it's asia's favorite guessing game. where in the world is their leader? he was at a no-show at ceremonies honoring his father and grandfather. he hasn't been seen in public for 37 days and earlier he was seen limping and late in the month the media made an admission that he had an unspecified disconfident and there's a report today that kim has a leg injury. >> if you were hoping to get a better sense of the markets, no luck. we're going to spend a lot of time on this global selloff that we've seen all week and the highest volatility we have had in months. let's bring in scarlet fu. she is here to help us break it own along with alessio a macrostrategist at oppenheimer funds. can you walk us through some of the asset classes? because it seems at this point

there's no correlation. >> if you look at the world index it tracks how stocks have performed. you can see the lower open in asia and when europe opened up for trading, then tough spike up or recovery when u.s. markets bounce back at 9:30 a.m. certainly that's the mood where we are kind of struggling for direction. when you look at how we've done for the week it looks like we are down for the week even longer when you worry about how small caps have favored. small caps down 3% in the past five days and the vicks moving higher now at 19 for the week. and that of course is getting us ever closer to 41 which was the high so far this year. >> when was the last time we had a bona fide correction in u.s. stocks? >> a bona fide correction? 10% would be the summer of 2011 right around the time when the

s&p downgraded. some would say maybe we made a bear market at that time which was 20%. we been correction free for years now which is why a lot of people are saying we're due for some kind of pull back. the catalyst could be anything that the point. >> is this just another blip in there have been blips to other blips? >> i don't know if they feel if the hedge fund managers feel it's a blip. >> i'm not worried about the hedge fund managers. i'm looking at the people who are long and strong and say do i insflest >> ok. long and strong. what do you think? >> i'll take the compliment. the blip? what is the catalyst? as you guys mentioned, there's a jedgized slowdown which is being led clear by europe around japan. the u.s. has been the only global engine of growth for the u.s. and that story now seems to be running out of steam.

we expect 37 growth which is a high threshold to beat. you do classic business cycle development and entering a slowdown regime which could last six months, a year. what do you see in terms of major asset class performance in this environment? you end to see overall from the beginning to the end of this phase overall flat performance and risk of returns except for treasury bonds globally. so what does that mean? it doesn't necessarily mean you want to sell, because if you want to live through it, you live through it, however, this is a very important time in the market where you look at your strategy. if your strategy was i need to reduce risk for whatever reason, you might as well do it right now. but if your strategy was, i missed a big rally. i am comfortable with more risk. i'm using the dips now to build

those positions. >> is the problem we're facing that so many investors we're facing are short-term players and because we are, we are paralyzed in a market like this that only makes it worse? >> i think there's -- investors are big, sovereign wealth funds that are large. and the amount of money that has shifted over time into longer term focused investors on perspective basis it's much bigger, so you have that buying power and the opportunity to support the market. >> in terms of what happened this week. we had fed minutes come out and different people and different markets interpreted it in different ways. the bond market reacted rather violently then the german economic data that reinforced a lot of concerns. what can you take away from what the fed said it can do about the local economy? >> i think the feds stated

clearly that rates will go higher, but they continued to send clear messages that they are not precommitted to any pace and that most likely in my opinion we're going to undershoot the current expectations if you extrapolate the dots. ant will be data depend and if europe, asia, japan, if they are slowing down, they will factory that as a risk to -- -- they will forecast factor that as a risk to their forecast. >> 10-year t 231 on the right now. could we be back down to 2%? >> well, when you look at risk of adjusted returns. 10-year treasuries here over the next year. not over the next 10 years but over the next year, your

returns will look a lot more attractive. closer to 4%. because the curve is very steep and holding government bonds, it's true in japan and europe so holding government bonds over the next 6-12 months may provide that unfortunately modest and -- >> but risk adjustment. it might look better than -- >> why? because stocks are going -- you talked about stocks going sideways over time? > but i wonder how you fold in all the cogs for the bonds bull market. leon cooperman talked about how the bond market is ready for a crash any minute. >> the bond market has been ready for a crash for the past five years. >> but there's a different sense at work here. >> so when you look at the level of interest rates, we hit the peak already when treasury has bommed at $150 but going as we know going from 150 to 3%

did not turn out into negative returns on a total return basis if you keep holding those positions. and similarly in japan they have been waiting for the crash for 20%. -- for 20 years. >> alessio, the macrostrategist at on i'mer funds and our own chief market correspondent, scarlet fu. thank you. >> does tesla's new car live up to the hype? we check out the new model. >> and break out the all-you can-eat pasta. it's a big day at olive garden restaurants. with'll the you what the crucial vote may mean to the company. ♪

>> we all waited for it, and the kurtens have been officially lifted. tesla unstrailed new car dubbed the d. it's an all-wheel driver version of the s.

the d is somewhat automated but not completely autonomous. musk? explain the difference. they have is what in airplanes. we use the same term where there's still an expectation that there's a pilot. so if the onus is on the pilot to make sure the autopilot is doing the right thing. we're not yet at the stage where you can go to sleep and wake up at your destination. we would have called it autonomous instead of autopilot if that was the case. >> our betty liu sat down with mr. musk and joins us now. did elon deliver after all the hype? >> i know. and you can just see right there, steffey, as you're talking it's at the low point of the session so far. this was by far one of the most important events for elon musk

and tesla motors. wearing his black velvetal jacket and there were about 4,000 people last night celebrating this new model, but look. it looks like it's been kind of a disappointment for shareholders who were expecting a whole lot more. they were looking for an autonomous car and something bigger than just an all-wheel drive. while that's exciting and it was very exciting for me to be sitting in his car going from zero to 60 in three seconds, it wasn't quite the show case that some people had expected. they were hoping for a little bit more than just all-wheel drive, guys. >> bedy, other companies have experimented with driverless technology, haven't they? >> yes, german competitors have been big on those autopilot features. mercedes, b.m.w. the model s, it could read road signs and adjust your speed

according to those signs. we took a ride in his car and i asked him a little bit about what his new technology was and here's what he had to say about that. >> it's a combination of radar, camera with image recognition and ultra sonic senses. so lane change just by indicating and that's integrated with maps and real-time traffic and really what enables the sint sis of all those four systems. >> ok. so you said the car went zero to 06. betty, why weren't you driving it, girl? >> they wouldn't allow me behind the wheel. i might have crashed it on autopilot. but look for yourself what happened. >> oh. ha ha! did you see that? that person jump aside. >> this thing, stephanie, was like a rocket ship. you know elon musk actually makes rocket ships on the side, and this felt like we were

taking off in his car. he said basically he modeled the speed to the mclaren f one, one of the fastest cars in the world. so if you need some speed you might want to be in the market for one of them. >> uber, that's all i need. maybe a bicycle. two wheels. >> thank you so much bedy. we waited for the big d and you got it. >> there's types and then there's cold hard reality as you saw investors are a bit bummed but we're asking how important is the model d to tesla and the auto industry. to lorenz the contributor kelly blue book. matt, people want a lot of things out of tesla but for a car that outperforms everything until you get to a car that is worth $300,000 is pretty impressive. >> well, it's impressive but a

little anti intuitive in terms of what it presents. so from that perspective, yes, it's a great piece of bragging rights, but in terms of moving the ball on the tech in a logical standpoint, no, it doesn't, really. >> so what is elon musk getting wrong here? does he need to be making a cheaper car so more people can buy and enter the easy world? >> well, that was his goal when he came out. he was going to revolution nies the industry and push the internal combustion off the stage with the ev. he's announced the gigo factory which will produce 500,000 batteries per year but i would have liked to have seen an announcement where he addresses some of that and when that will happen and when he is going to get the production capacity to put those batteries in his car

because at his plant right now at free monte i don't think he has the capacity just with that one facility to use all those batteries. >> are consumers really buying into this electric car snaze on? trend? >> at the top end he has made legitimate car. it's tech in a logically advanced. it's very expensive. and i think these kinds of features, he is catering to that market. the whole autopilot part of it. those types of things he needs to do to keep pace with lexus and mercedes that have those features. that's just to stay in the game that he is already in. so unfortunately i don't see his lane changer being a game changer for him. >> but matt, that makes me wonder whether we're being a little unfair to elon music. the man has done some pretty

extraordinary things on his own against what initially appeared to be all odds. he's got a car. the model s is doing relatively well. his company isn't losing that much money. appears to be on track to be cash flow positive and net profitability in the not too distant future and for the time being if he is competing against the b.m.w.'s and porsche's what's wrong with making a tech in a logically superior $100,000 car? >> athletes nothing wrong with that and i'll give him credit for it but if he sells 50,000 cars a year in a 17 million car a year market, it's not going to change things. that's the whole thing behind his philosophy is that he was going to be a change agent. and it's not going to change things. and as he moves down into the lower-priced ranges, he is going to find the competition a lot stiffer. and on top of it california is

mandating that he has competition because of the zero emission mandate here in the state. >> so let's say the gig afactory. it appears it will become a reality in nevada producing many, many, many more batteries. elon musk may have to open up another plant outside of the one he has in free monte. what can you envision tesla doing say three or four years from now? >> we mean, i think there are several scenarios that may play out. he could sell it to ooh larger manufacturer that have could use that. he could do a joint venture. he already has a relationship with daimler and toyota where he could become a battery supplier to either one of those manufacturers and he could open up a second assembly plant. but all these snare yost, fep

he goes on it alone, he will need a tremendous amount of cash. selling 50,000 cars a year even at that isn't going to fund what he needs. if 50 is not the number, how many duds he need to sell? >> he is going to have to build cars to match the number of batteries that he wants to make. you know? the gigafactory is going to make 5,000 batteries. he is going to have to have cars to take all those batteries to make the whole thing work. >> thank you matt. matt delorenzo is the kelly blue book manager. "market makers." we'll be right back in a moment. stay with us. ♪

>> coming up here on "market

.akers," an active investor we'll show you crucial vote. >> and more when we return.

>> it's a friday here in new york city. you're watching "market makers" i'm erik schatzker. >> and i'm stephanie rule. let's do a quick market check. take a look. you are looking at a market in search of direction. the dow and s&p have been fluctuating between gains and losses and over in europe the major indices are at one-year lows are headed for the biggest weekly drop in 10 months. across the board, red, red, red.

>> well, what had happened around 10 p.m. there was a brief relief but the s&p 500 and the dow had turned positive and european losses had become somewhat more moderated. the market had found its direction and now it's back down. it's close to wiping out -- i'm going to check, because i want to know. no. the dow is still up .2% for the year but close to wiping out its gains for the year. >> you have investors panicking right now where we are approaching a final corridor for the year and remember redefinitions come at the beginning of the year. people are going to look at what this year looks like. 2-20 for endowment pension funds. they are going to choke on this. >> because it's not just in stocks, right? you're seeing the treasury trade. i wouldn't say reverse. >> but it's dislocation across

the board. >> let's take a look at commodities heading towards a five-year low according to the bloomberg commodity, that's the next line on your table. rude trading below $5. the spread between the two continues to shrink. pretty dramatic moves in financial markets that we have not seen in some time. >> without a doubt. moving on. let's bring on one of my favorite people talk about a tough subject. it's hard to describe the ebola outbreak as something over than horrible. but our own pim fox has his eye on it. first of all, pim. absolutely awesome to have you on. >> thank you for having me on. welcome back from san francisco. >> thank you. >> the story we're going to describe has to do with a company called lakeland industries. to be clear, they are not doing

anything out of the ordinary, because of the outbreak of the bola virus or evd 68 another intro virus but has to do with the protective clothing you see in all of the photographs of people dealing with this disease and the virus that is part of it and trying to protect themselves. this company makes has math mat suits so you can go on amazon and spend $85 and you get 25 hazmat suits sent to you, and the stock of the company was up 55% yesterday. it's up a little bit today. as well. but this and alpha pro tech. this is the classic example of take a look at what's going on in the news and then see how it ripals into the world of investments. how closely linked the two things are. and you have been covering the ebola virus outbreak so lakeland industries.

we've talked about the biotech companies that have been trying of they both have trials vaccines. but there's no known vaccine right now for ebola. so the best you can do is protect yourself if there's going to be greater demand at airports and public places of travel. >> it seems cold and heart less. >> but it intentionally comes across the people as crass but this is the beauty or genius, if you will, of financial markets. identifying opportunity. >> that's the thing. you look at people what maybe bought into the stock prior to the big move higher and maybe what they saw is a company that is producing suits and protective gear for all kinds of industries whether it's the chemical business or suits for people cleaning oil tanks or whatever. so it's interesting to look at these kinds of things and

recognize that for every possible thing out there, you know there's a business that is doing something about it, and you may want to be a shareholder of it. and this is the idea. lakeland industries. based in new york. >> yes. i knew that. because when you're on the lie d you see it you're like gwonkonklima? pim fox. be sure to tune into pim this afternoon. he will be sitting down and it's friday. what do i call it? the mystery guest? i don't know that deepak chopra is the mystery guest. >> what? >> i can't help it. friday means different things to different people. >> when we come back here on "market makers" you might wonder if the victory party will be held at olive garden. an activist/investor scores a

huge win at darden restaurants.

>> this should have been staged as a wrestling smackdown in the middle of an olve garden. today's annual shareholders meeting and pretty muches toed the company out of the ring. star board overthrew all 12 directors taking control of the company which owns olive garden and until recently red lobster. a professor at u.c. berkeley's school of law.

steve, is this just desserts for darden's board? >> it is. this is an epic fail by the board and its advisors goldman and the launch lenten. >> let's talk about that for a moment. because walk tell lipton as you well know they like to coat ilts or at least put on the garb of the aggrieved investor and try to protect companies from unwanted takeovers and the like and in that regard it's not surprising that they ended up a an advise tor darden but how could walk tell lipton and goldman in good conscience advise darden to sell red lobster which it did for like a net gain of effect lively $21 million? >> well, i think you would make

a good prosecutor, erik. >> i tell him that every day. >> ha ha. i think everyone's wondering, you know, a boardroom is like a marriage. you never really know what's going on inside. and the real issue is the darden board had to know that the shareholder backlash from selling red lobster would be quite heavy. so you wonder why they took this step and what were they thinking and what were the advisors telling them for their millions of dollars of fees? it's all baffling and frankly we shouldn't have been here. we all should be eating bread stibblings. >> where should we be? >> well, they should have spoken to their shareholders. they sold red lobster at a time when the shareholders had called a vote on the issue and over 50% of shareholders wanted to vote on whether or not to sell red lobster and to go ahead and weeks before the meeting sell that company was

just a slap in the face for shareholders. i mean, what was the board thinking? >> what was the risk for shareholders if just one guy controls the board? >> well, we don't really know who controlled the board here. it's all baffling. the c.e.o. resigned shortly after the sale of red lobster. actually on the same day. we don't know who was the puppeteer here. but what was going on here is a board that just wouldn't listen and it seems to be all the directors and one wonders what they were thinking because now we have an epic fail, the entire board replaced which lmost never, ever happens. for shareholders with assets that have real value like olive garden and red lobster even if it's not making as much value out of them as it should. to watch that company

effectively piddle away that value in exchange for what? with the presence of an activist. i guess what i'm trying to say is even the entrance of an activist like star board doesn't mean a company is going to try to do the right thing. >> i think that's true erik and hopefully what we have here is hopefully a warning sign for future companies. what darden did was so extreme. and maybe they believe they are right that olve garden was the way to go and that red lobster was worth -- star board says they sold it for only $26 million a piddling sum when you back out the real estate. maybe they were right but maybe they should have spoken to their shareholders more and i think this is a warning sign to boards that you have to speak to your shareholders. >> the problem is the directors are protected by the dno liability insurance and thanks to delaware law do the

hareholders have any help? does it not protect them t board from a lawsuit? which shorlsde would probably want to do right now. >> well the board can sell, so yes maybe the law hasn't caught up to the situation but it doesn't look like the law seems to want to change either delaware or generally, this is something that's going to happen behind the scenes with shareholder activists and institutional investors making sure they have the right directors. so it's to be continued. >> well, the new board will control who the c.e.o. will be. have you heard anything about who we might expect? >> well, it won't be me. >> or ron johnson. >> ha. there's a whole slew of people at the country club that i'm

sure would be happy to take over. but no, and that was one of the other puzzling things about this situation. he old c.e.o. resigned after the red lobster sale and they really had nothing else to look at for continuity and that only empowered star board to come in. so one assumes they should be able to get a good c.e.o. olive garden is a good asset. their other restaurant groups are growing. this is not a radio shack. the restaurant will be around for a while, for those of you who love it. >> i would like to go to a radio shack and then go eat dinner at olive garden, personally. >> i'll buy. >> ha ha. before you run, even if shareholders are onboard with what darden is going to do, let's say they feel aggrieved. do they have any options? >> ugh, the short answer is,

no. this is the way it works, whether it's good or bad, and i think u highlighting a problem. there's a lawsuit in florida against a board, but i don't think it will go far. it will settle out far less than what goldman is going to take on this deal. so this is where we are. maybe it needs to be changed. >> could the shareholders sue goldman or lipton? might the discovery process reveal something? >> well, we don't know what the advice is. and it's easy to sort of criticize and i do wonder what were they thinking? and what was going on? but at the same time, for lawsuits and otherwise to happen season probably not where we are going to go. carl icahn has been known to take over companies and turn around and sue and he did sell

lipton but if you read the press release from darden they seem to be moving on. but other than doing something foolish, we don't see anything done wrong here by the advisors or the board. >> it's all head-scratching here. >> i want a date for olive garden and radio shack. i mean, whatever happens, happens. >> call me jealous. >> and i just want you to know you can have all the bread sticks you want. >> and pasta right now. thank you so much. join us in studio. >> steven, when you're next in new york we want to see you here. professor at u.c. berkeley. >> and not going to be the new c.e.o. of darden. >> he ruled himself out. >> yes. coming up, call it a lost cause. you have to come back for this. it's going to be so good. we're talking about where matt miller went to shop.

no longer are you going to be asking yourself, where did he get that? ♪

>> clothing is dry cleaned on-site at one of the largest dry cleaning places in alabama. department of defense is used to clear the data and various departments do research online to price items. 34 high value items come with appraisals but there's only enough inventory to support a single brick-and-mortar location. this has made the store a bucket list destination for many and a top tourist attraction in the state. >> are you from jackson? >> no. actually from california. >> and how did you find this place? >> we found it on an app that said it was located nearby.

>> where are you guys from? >> michigan. >> michigan. just outside detroit. >> well, we're on our way to san antonio. o we just turned left. >> from loose antlers to a $60,000 rolex this year, people will travel with anything. but if you're thinking of making a special trip stoupt find your lost bag, think again. >> we have people from time to time that come in looking for their items although it's not something we recommend. it's like a needle in a haystack. >> i wish i got chosen for that assignment. matt is here in a pancho. i'm guessing there were sonl sombreros? >> there were actually not one cricket bat. this place had like 10 different cricket bats. i actually bought a horse saddle down there. a nice english horse saddle.

someone lost this at the airport and never claimed it. it's pretty amazing the amount of things that they have. they said they had had a ferrari engine, a 12 cylinder ferrari engine. crates and crates of b.m.w. wheels. no tires. no car attached because they also do unclaimed freight, unclaimed baggage from the airlines, the bus lines. >> what's a saddle like this cost? >> it cost me $250. >> how much in a store? >> new it would cost $500. you saw beats by dr. dre. they have hundred offense those. they go for $300 at the apple store and $200 at the unclaimed store. >> would i load up and sell the gear because even if i sold it for only 20% higher? >> i don't think you can get stuff for bargain basement

proprietorses. this cricket bat was $29.9 for a tool no american is probably ever going to use. yet they have them there for sale. >> but given your obsession with cricket. >> i love a good five-day test. >> what was the best thing you bought there? >> the best thing i bought was probably this hat. i probably will wear it when i go to davos next year with tom keene. but november 1 -- first of all doesn't erik's hair look amazing this week? >> always. >> no. this week. >> my head is larger than i thought. >> what? erik's head is big? who'd a thunk it? >> so i find it fascinating that they have no competition, no online presence and as a skier, i'm excited that they have a massive selection of skis, parkas, boots. they only sell it starting

november 1 and sell out of it by the end of ski season. >> are you going to go back? >> maybe next week. >> where? >> alabama. >> we'll be right back with more. ♪

>> this is "market makers," with erik schatzker and stephanie ruhle. >> a who's who of bankers. d.c. today. in we will tell you what they are talking about. >> amazon takes a great leap, going from >> two bricks. the giant online retailer plans to open its first physical store in manhattan. >> the old joke -- what came first, the chicken or the egg? now, there may be another possibility. >> it is 11:00 here in new york

city. you are watching "market makers." >> and it is national egg day. >> there is a national everything day, but today happens to be eggs. top business finance news -- u.s. stocks mostly down. the s&p 500 and the nasdaq, after a selloff in europe and asia -- nasdaq has been losing more ground than the other two main and smart indexes. one reason -- shares of intel investorsmost 6%, concerned about the impact a global slowdown would have on the u.s. recovery. we heard from investor art lover. -- faver. >> i believe the fundamental reason for weaker start races in the last few months -- stock prices in the last few months has been the recognition by the investment community that global growth is not accelerating, but actually slowing down.

>> shares of the casual dining chain dave and busters rising on their first day of trading. $94 million. the low end of the targeted range, no surprise given the volatility. they been busters targets adults with food and -- dave and esther s targets adults with food and games. the world's largest alternative asset manager is turning a stand-alone business into an investment bank. the blackstone group will .ombine and spinoff it will advise corporate clients on corporate restructuring. the spinoff will free blackstone conflicts between its investing and advisory activities. the microsoft ceo wants a do over on a question about women

asking for raises. satya nadella was speaking in phoenix and was asked what women should do when they feel uncomfortable asking for a raise. he repeated advice you once got -- believe in the system and the right things will happen. it won't surprise you that did not go over so well. another speaker disagreed, saying women should push for what they are worth. later, satya nadella tweeted he was inarticulate. a great way to avoid saying the wrong thing is just doing the right thing. and then talk about it. makers, things are all over the place. by all over the place, i mean in the wrong direction. chief joined by ubs's additives and a rigid use -- and derivative strategy, and bloomberg news -- what does it say bloomberg news?

formerly of bloomberg news. guys, let's walk through this. what gives? >> basically, when you look at the summertime, lower oil prices, lower interest rates, and a stronger dollar were viewed as a positive for stocks. along comes september. mary odegard he is having a harder time of implementing qe -- mario draghi is having a party -- a harder time in for many qe. seem like a gross care. we saw it before. my kids get more volatile. >> why is the nasdaq taking more of a hit? >> a gross care overseas would hit growth companies more. we heard the nasdaq is pretty tech heavy. smaller companies, tech companies, relying on overseas

markets -- you will see the nasdaq underperforming major benchmarks like the dow and the s&p. momentum stocks getting hurt a little bit in trading. that continues the trend overall of people looking to save for big-cap stocks. >> angela merkel? >> should get some of the blame because she has pushed austerity for so long. i would love to be a fly on the wall at the g 20 meeting in washington this weekend with the finance ministers. there should be a lot of pressure on the germans to try to loosen things up. but the gross care we are seeing is turning into a disinflation scare worldwide, particularly in europe. troubleaghi is having implementing monetary lot -- policy, but the fed is getting in trouble. we are seeing a plunge in

inflation expectations to numbers we have not seen in years. normally, a drop like that would call for more fed stimulus, not raising rates. every time we have seen this kind of plunge before, they have done qe. people are beginning to question the credibility of the fed. >> a critical is the unknown, the degree to which fed policymakers factor in the global economy and global markets? >> he got indications this week that they are most definitely thinking about it. it is an issue. we may have not believed it to be quite so on the path, but the last month, price action definitely tells you the care. the economy and the globe is more interconnected than ever. will betain extent, it difficult for the u.s. to grow at 3% if europe is growing at zero. lessully, draghi will get pushback. >> have inflationary fears fed

him to the euro weakness? what do companies say about the strong dollar's impact on their results? you have already heard from analysts at bank of america, saying machinery companies are going to suffer from the stronger dollar. analysts at morgan stanley have made the case for general motors, and ford has cut its profit forecast. init will probably hit more the fourth quarter than in the third quarter. it takes a while to work through the order process. this is going to be something that plays itself out for some time. through it all, the dollar keeps getting stronger, which worries people about the future. >> when you look for signs of where things are headed, what are you paying attention to the most? are you following the 10 year treasury trade? >> it is the ten-year treasury trade, oil, and the vix. that is absolutely it. you are coming toward the number of 20, which has been a long-term mean, and we are

telling people the dow is moving 200 points a day. the s&p is moving 20 points a day. get used to it for a while. it will subside eventually. you have to use the weakness as a buying opportunity. market wasn the running, there was still a lack of confidence. all of a sudden, we get hit with volatility. could we see a lot of money get taken out of the market? >> that is a possibility. her has not been such a fantastic performance. that money is less likely to get time being. the >> in addition to looking at oil and the vix, a couple people want to look at the credit market. look at what is going on in the investment grade etf, which tracks a high-yield debt. investment-grade etf is up half of 1%. down 1%. is

credit is the fastest moving asset class, in terms of where people feel the global economy is going. >> what about technicals? people seem to have an on-again, off-again love affair with technical indicators. i know you have been looking at moving averages. the 50 day moving average -- we broke that trendline. the 200 day moving average is pretty darn close now. south,he markets turned everyone becomes a technician. the 200 day moving average has held since november of 2012. if it gives way, there is probably going to give -- be a bit of fear, which will create the buying opportunity, in our view. >> we have not had a correction since 2011, when s&p downgraded the u.s. it has been a longtime since we have seen a sizable -- >> and that was a buying

opportunity. >> the ipos and that deals -- how long are they really going to stay? had a deal for toys r us, trading at a $91 price. those who are saying they love the story, they want a big allocation -- as soon as the market gets hit with volatility, they are not so hot. it's the fed are noticing all this volatility and saying this should be a buying opportunity. days are getting better here. they are not that bad. mueller came out and said, in my mind, the markets are making a mistake. is a mismatch, sometimes it does not end well. not ismuch help or somebody else at the fed, fisher, doing by telling everyone that consumer a bowls -- that consumer could be everything from two months for

two years? or a market looking for certainty, that is anything but. >> that is one of those, he really said that? put a timeframe on something they have not wanted to put a timeframe on. two months to a year is not a long time, so maybe the damage is not tremendous. but that is the kind of thing they have avoided saying, because it does create that question in investor minds. i do not want investors questioning at this point. >> retail sales and housing starts -- to get any kind of forward indication -- >> turning to the fed one more moment, in a lot of ways, uncertainty works in their favor. if you look at the balance sheet, if you look at rate zero, we have never been here before. we have never normalized from this kind of area. they really do need to be as flexible as they can be, and this is a perfect example. respond to incoming data. europe is weakening. we need more flexibility.

>> this is an awesome conversation. thank you so much. >> julianna manual and scarlet fu and mike mckee. up, you cannot walk a block in washington today without running into a big-name banker or an economist. with us, he was the president of reagan's chief economic advisor. >> it is friday. your booking. in chattanooga, tennessee, in 1956. >> graduated from high school in 1956? >> he is an old dude. that is all her producers are telling us. -- all our producers are telling us.

>> some of the most influential bankers and economists in the

world are in washington. jamie dimon going for treatment for cancer. -- brian moynihan. they have a lot to discuss. peter cook is there right now with martin feldstein. much.nks very an all-star lineup in washington. institute of international finance, monetary policy. a pretty healthy debate on stage. i may get your sense. as everyone gathers, how close to think europe is for -- to a recession? >> europe is in terrible shape. you look at italy. you look at spain. you look at france. they are hovering around zero growth. germany, which used to be the strong point, is not much better. is in very bad

shape. >> how does that change your outlook for the united states? is that going to drag the u.s. down? or is there a possibility the u.s. could hearken back two days of old and help the rest of the global economy? >> neither. it will have a strong negative -- a small negative effect on the u.s., but only small. trade, to the u.s., is only 10% of our gdp. it is not going to have a big impact on the u.s. we are going to have a helper year coming up. u.s. gdp growth. it does not have a big impact on europe. their problems are homegrown. >> he said something that caught my eye. onthat quantitative easing

the part of mario draghi is not going to work. >> it worked in the united states by driving down long-term interest rates. that made the stock market more attractive and gave us a $10 trillion increase in household wealth last year, tony 13. -- 2013. in europe, short term rates are already down at close to zero. the german 10 year interest rate is under 1%. qe is going to achieve in the european context of that they have not already achieved without buying government bonds? >> what is the solution? fact that u.s. interest rates are going to be rising over the coming year. gap is going to widen the between u.s. and european rights. that is going to drive down the euro. that is the worst in terms of

fighting their potential deflation and also increasing aggregate spending and exports in europe. i think that is important. but they better do some structural reforms to make it easier for people to start businesses, to get into professional occupations, to do things that they have not been willing to do. reforms are market too complicated? >> they can certainly try. there are little tiny reforms being done in italy and france, that they are really very small. they are really not tackling the problems in a big way. >> against that backdrop, what do janet yellen and her colleagues do? how worried are they about the european situation, and the prospect of two low inflation? you cannot get into their heads and know how much to worry about europe. i think, as i said a moment ago,

it is a small impact on the u.s. economy. u.s.nk inflation in the has been 1.5% over the last 12 months. it has been a disaster, if you look more recently. the second quarter numbers were over 2%. the inflationary pressures in the year ahead -- the unemployment rate has now gotten down to a point where it will reflect freshers -- freshers -- pressures in product markets that will be more inflationary. i think it could come as early as march. i would be surprised if they wait until after june. >> where should rates be at the end of the year? you and i were talking earlier. >> i think if you look at the little dots they put out in their most recent report, it was

less than 1.5% at a time when they are projecting that inflation will be close to 2%. that means a negative real interest rate. that is not a good thing to have at a time when the economy is recovering well, and when inflation is beginning to pick up. the fed could be behind the curve? >> i think they could be. they may be behind the curve on that. dealing with some of the financial stability risks in the , i worry about reach for yield. exactly. >> thank you for taking time out. dizzy day for you in washington. busy day for a lot of folks. we will stick it out here. >> thank you very much. thank you as well to marty feldstein, our chief markets correspondent. lots more coming at noon.

>> i have said it before. i am going to say it again. the commercial break during "market makers" -- precious. if you think i am the one who does not pay attention some days, it is this guy. you know what it is time for? >> on the markets. that's look at what is happening with broad indexes. the dow is close to giving up its gain for the year, flat right now. but the broader market is continuing yesterday's decline. the dow dropped 2% yesterday, more than 300 points. the nasdaq is leading declines. intel and cisco are dropping

today, helping to lead tech stocks lower. >> there is one reason the nasdaq is falling so much. >> this is what i am talking about. >> a sexy sector. after microchip technology warned a correction may be in store for the entire industry, and you are saying it across the board, negative. >> dave and buster's -- >> going midtown. have you been? you have not? i am going to tell you -- >> i have been missing something? >> i have been there are a number of times. you would be surprised by how good the food is. i am not saying it is good. but it is pretty good. >> there you have it. fine dining with stephanie ruhle. dave and busters raise money for million dollars in its ipo last night. people are finding value in the stock. up 12.4%, which is pretty remarkable given the environment in which other stocks are

traded. know who finds value in dave and busters? my sons. a media mogul. chattanooga,from tennessee, in 1956.

>> live from bloomberg headquarters in new york, this is "market makers ergo. >> welcome back to "market makers." it is friday morning in new york city. could be better. the world's largest alternative asset manager is turning its advisory business into a boutique investment bank. the blackstone investment group will combine with pgp partners, and spin it off to shareholders, dynamic forw greendale. let's talk about it with jeff mccracken, bloomberg's manager

for -- managing editor for global m&a. --m kind of figure out where whether blackstone is spinning this off because of the conflicts inherent between investment and advisory work, or the fact that boutiques are getting more and more of the share of global and mende? ?- global m&a >> and our paul tallman -- are employees begging him for work today, or just most of them? its legionse, with of people, was ranked 94. some really high profile clients. last year, finished in the top 20th on the basis of one deal. he advised verizon on a deal for vodafone. cablet buying time warner assets. every year, he has a big

multibillion-dollar deal. that alone will propel blackstone to a higher level. it raised the idea and blackstone there were conflicts between investors. blackstone wanted to buy dell. >> it feels like an excuse to me. the highest profile situation was big on. -- avon. on that one. not to say they did not do some transactions, but they were not showing up that frequently. i do not know the extent to which the lbo side of blackstone is keeping me and mende -- the m and a side away. >> pershing square -- in no doubt, a generate some revenue, but perhaps not as much on a

transactional basis. maybe it is better to have a aubman running- t it. he is a transactional type of guy. >> restructuring has not been a big deal of late. blackstone worked on the gm bankruptcy. >> involved in aig. borrow, youcannot have a strong restructure practice. >> if and mende depths, they have a good restructure. >> i mentioned bill ackman and , and still did run is, for the time being, m&ackstone's and mende -- business. he is going to continue working for steve schwarzman. we have the players. >> isn't that an ideal set up?

the seat, andin you spin off. >> maybe he helps them find deals. in has been one of the few areas of m&a that has not exploded. you have not seen a lot of lbo's. maybe this frees up blackstone. all -- a lot of this is cbd. boutique guys have done better, i would argue. center field, a relatively small shop, compared to ring help. >> probably because he knows what is coming. joel perella went to lehigh university.

>> that is going to pay off handsomely. if you put the same revenue multiple on blackstone's five guyspaul and the he is bringing with him are make a lot. >> they are going after deals for $500 million to about $2 billion. they have been aiming for multiple billions. they worked on time warner. level, is more that fortune 500 companies. >> great to have you on. >> jeff mccracken. up, this may be the numerical on 34th street. i am not talking about santa. amazon getting ready to open a real store.

>> erik schatzker is focused on

market volatility, i wonder -- did you know it was world a day? >> i did not before i got here this morning. i have watched you peel a hard-boiled egg. >> and you were grossed out. >> i like poached eggs. i like scrambled eggs. i don't like over easy. cook? you know eric >> to he does. this man with a vita mix, impressive. look at the company who wants to replace your traditional chicken with eggs made from plants. you heard me, plants. it is called hampton creek. the ceo joins us now from san francisco. it seems like more and more people have chicken coops in their front yards. they want to go the chicken route. what are you doing? >> i think it is a good thing world -- a good thing.

world egg day is interesting. the chicken egg is not the problem. crazy systems this that surrounds the chicken eggs. about 1.8 trillion are laid every year. about 99% are usually inefficient. do not come from the best places. it is kind of crazy. in our approaches, let's think about it a little bit differently. it does not mean your omelette is a bad thing. it just means we are going to feed a growing world and make food that works for people in the states. maybe we can think about it a little bit more efficiently. >> why make an egg substitute? i don't know how you would describe what you do at hampton creek, but that is the best -- those are the best words i have found.

how would you describe it? is it umag substitute? substitute?egg >> food is this massive, incredible market. antiquated. the chicken is just an example. it is a manifestation. >> there is lots that is broken about the global food industry. we can debate it all day long. it raises important questions. why re-create what people are used to? why not give them something new? why not just eat vegetables? i have the same thing for you about eggs. >> we screen through plants. phenomenal data science, food scientists and shafts.

it to make food better, the egg being a manifestation. imagine -- we could not do this 100 years ago, when the horse and buggy was going on outside. you could ask the same question. why try to re-create transportation? why not make a different sort of horse and buggy? are goingy is, if we to feed a growing world, make food work for people like my dad, we need to think differently. the reality is, you love your own luck, right? you are not going to eat a veggie patty for breakfast. love the mayonnaise that might be on your turkey sandwich. eggs are not just an omelette.ugh you are not eating a cookie because you love a chicken egg. you are eating a cookie because you love a cookie.

why should a cookie have inside that comes from lots of water, lots of land? we want to give you a better cookie, and hopefully a better omelette. >> you can make a cookie with an artificial egg that tastes just as good as a cookie made with a firm-raised a good -- a fa rm-raised egg? >> they are better. we have an agreement with a ampany that serves 4 billion year. hospitals, corporate cafeterias. we supply them with cookies. it is not artificial. it is a plant. we work with farmers in the midwest. we have identified a cultivar of sorghum that is used instead of the chicken egg and enables us to make a better cookie. why try to replicate things? i totally agree.

this is not about replication. this is about how you can do things that are better. the car was not trying to replicate the horse and buggy. it is trying to be better. >> you should send stephanie and i some of these new products -- >> we can taste test them. i do not really like doing food segments without eating. >> i cannot wait. we would love to send them. >> back in a couple of minutes.

>> earlier in the hour, we shared matt miller cost trip to alabama, where he took a deep dive into where unclaimed luggage goes. it was so good we are going to take you back to scottsboro, alabama, where they sell hundreds of items of unclaimed baggage. take a look. in ist of what we get clothing. and most of what is packed is

ladies clothes. we get wedding dresses. >> nice leather goods. furs. have first -- do you do alterations? do you have any kitls available -- kilts available? i have been looking for one. those are serious. they are a size nine. you want to try them on? hold on to me. there is a lot of handbags here. i know ladies love handbags. and tom keene loves handbags. he anchors "bloomberg surveillance." buy these for to stephanie ruhle. i think she could wear these. 's poncho?lady this is unisex. >> i believe so. >> you have cricket bats.

like multiple cricket bats. actually, i kind of like it. a good look for me. i think it's called a caftan, right? like an egyptian thing. i have got my poncho. i have my rick at-bat. i feel like this english riding saddle would be a great addition. i am definitely taking this. fits.t it just feels right. i think it goes well with my hairstyle. so, somebody lost this in his luggage or her luggage. and now you are selling and for -- selling it for $10.59. we will take this. we don't want bloomberg swag getting in the wrong hands. i have running the style writing saddle, bloomberg

investor relations wired, a poncho, a ladies sweater that fits me pretty well, a cricket bat and a hat box with an english style bowler. thank you very much. thank you. >> we had to bring matt back. >> i have stolen the poncho. >> i know you asked if it was female or male. it was unisex. sexy, no matter who wears it. >> and they double as a picnic blanket. >> that is why i have it, so i can eat lunch at my desk. >> since we aired the first portion of your trip, we got huge audience feedback. talk us through this one more time. huxley flew into huntsville, alabama. you have to make a connection in the southern part of america. you sleep over there and then drive to scottsboro in the morning. >> who is in the store? who goes there?

>> there were college kids from all over the place. apparently, it is a cool college kid destination. talked to, couple i an older couple in michigan. the guy who did not understand the fashion sensibility of an egyptian caftan. why's it so remote? it is not near a major airline hub. >> a very good question. let's list the reasons why this is an incredible story. no competition. this is the only place unclaimed baggage goes for every airline in america. ask if they were in atlanta -- >> in the middle of nowhere. no online presence. what the hell? so many questions you could ask about this place. >> you, my brother, discovered a national treasure. a world treasure, since there is only one. atlanta?to >> i like it undiscovered in the

middle of alabama. i had a great time getting there. alabama is a fantastic state for a drive. i would go back. >> maybe before we had to break -- this is today's candidate for the yearbook game. in chattanooga, tennessee. class of 1956. a handsome young man. who is he now? ♪

time to wrap things up. >> with the yearbook game.

who is this media mogul? he graduated in tennessee back in 1956. >> they could only be one. 1956, media mogul, tennessee. answerus bring you our from twitter. bring it up. of course it's ted turner. >> indeed it is. people knew it across the board. >> it has got to be a younger ted turner. huxley got a lot of responses. it was an easy one today. tough guy to miss. that is going to be in form -- it for "market makers." >> ted turner, founder of montana grill. now that i have this poncho, i need to go to a really glamorous lunch. i have to hit radioshack and the olive garden. >> join us on monday after you have a great weekend. we will be talking about volatility and the future of europe. pimco's chief investment officer joining us from london.

you heard martin feldstein raising serious questions in his conversation with peter cook about europe cost prospects. he said europe was a mess. that is an understatement. >> thank you for joining us today. 56 past the hour means it is time to take you on the markets. week of ups and downs, mostly downs, the dow and s&p 500 are relatively flat this morning, making their smallest moves in four days. 1%, led byan semiconductors. joining us is kevin kelly. he is a strategist. this is a three-day weekend coming up for a lot of people. maybe not the markets. is there a little bit of a calendar, seasonal factor playing into the trades today? >> i think what you are seeing

in the overall broad markets is that the market is trying to figure out what is really going to happen. no news has really changed the fundamentals. we were up over 2% on wednesday, and went down yesterday significantly. i think everybody is trying to position and get a view on where they want to be tuesday. >> let's talk about the vix, spiking a lot after yesterday's movement. now about 19. still below the year to date high of 21. what are the indications so far it will mess -- will match that? >> there are a lot of things happening in the vix. and 2009back to 2008 -- a lot of people had naked exposure on positions. now, we are seeing the dodd-frank regulation. a lot of people did not have that letter. times.sed to have 33 they have cut that back. that has passed on to an investor. institutional investors and hedge funds are trying to hedge. i cannot have naked positions.

they have to be hedged. that is why volatility has stayed compressed at under 20. if you have three days in a row where volatility stays above 20, you will see it break out further. >> we were talking about volatility within volatility, and how you are seeing percolation's of that. explain what that means. when you get to higher volatility regimes, like we are seeing in october, you are seeing volatility stay within 15-20. it is trading up and down. you want to position yourself in there. down towent all the way under 15, and here we are back at 20. >> certainly staying within that range, however dramatic it looks on the chart. we mentioned the nasdaq and how it is a laggard this morning. related companies. you have got a trade on semiconductors, the philadelphia

semiconductor index. what is your strategy? >> as you are looking at the semi-doctors, they become more commoditized. you want to position yourself into a stock that is a leader in that space. when people look at apple pay, how is that going to work? they are going to need a shift. that is what nxp does. 52, 50putting on the risk reversal. you would sell 52, 50 part. -- put. ♪

>> welcome to money clip where we tied together the best stories, interview, and video in business news. musk has aelon brand-new tesla. he takes betty liu for a ride. in summit, the discovery communications ceo tells us we channels. and why we need boots on the ground in syria. inp