year, there has been a big to virgins and it is definitely a flight to safety. --divergence.on's it is definitely a flight to safety. >> this is "market makers." >> here we go again, markets strongly in the red again. the wild ride on wall street and where will they end up? qe?e or not to that is the question facing the federal reserve. will ask one of the decision-makers james bullard about the u.s. central bank, that is where he works. , compensation

costs are down. goldman sachs for third-quarter earnings, look at the markets today. welcome to "market makers." miller, i'm excited to look at these markets. i'm excited when i see big swings in markets, that is what i live for. and trucks. >> yes, not as bad as it was at the open, the dow jones just down 100 points. the s&p 500 down .75%. were up wellad but over 1% at the open. >> if you look at the market i will not say it is unchanged but in the grand scope of things it hasn't moved that much. the issue is, it has been an extraordinary, devastating, tearjerking roller coaster. sick to your stomach

and want to go home. say you can say we're unchanged if you look at the -- s&p 500 year to date because yesterday we gave up all of our gains for the year, and that they and of yesterday when jan yellen came out dovish, where looking at an unchanged picture today. on the s&pegative index. europe took it on the chin again today. i don't know where that expression comes from, i guess boxing. and change,1% european markets have not recovered from earlier this morning and yesterday was a bloodbath. a look at the peripheral benchmark in spain, italy and portugal, you see these coming down here and although if you look at the yield situation, we will talk about that. let's look at our yield situation here in the u.s.. take a look at u.s. treasuries, the 10 year yield at 2.1%.

>> who won yesterday? >> the fed. i was running around the newsroom excited about the of a loto made a hell of money, the u.s. federal reserve. with 2.5 trillion dollars worth of treasuries and that is all anyone wanted to buy yesterday. if they were bond traders they would've been like, here you go. you can have them. the ones getting back their gains are hedge funds. they have given up 2.5% and are down 15% on the year. a bigger problem is, hedge funds are all in the same trades. the mortgage market, and in stock, so if you guys are trying to sale, they're trying to jam through one door. phone fillingll prophecy that we cannot seem to get away from. >> some big fund managers, though, gary shilling for

example -- >> gary is a real money guy. >> you know who i am thinking about? bill gross. tim pointed out that this was his bag. if he had just a get out a little bit longer -- >> that is also the 2006, two dozen eight story, if you had held out when the trades in 2008 were cracking, you would have won out. just like now, if people can hold on -- but they can't. it is not just about the u.s. markets, we are in the global economy. we can turn our attention to europe. -- let's have a real style commute here, but they can't dot turn your attention to china where we are getting more bad data. japan needs to double down. does she need to get more dovish? she is one more piece in this puzzle. >> here is what we are hearing

from a lot of managers and economists -- anyone who comes on live tv today who is long u.s. equities or is bullish is going to say the opposite. he will say focus on the u.s., it is all about the u.s. economy, we are doing that. not saying that is the right thing to say -- >> let's take you to our senior markets correspondent julie hyman taking a deep dive into early trading. yesterday, it is a broad-based selloff, every much every group in the s&p 500 is lower just as it was yesterday, but who is down the most? we have telecom services taking a big hit and then both consumer discretionary, but not in trading because you have both cyclical and so-called defensive stocks that tend to do ok to matter what the economy is doing but are down today just as they were down yesterday. again that speak to the idea that there is a wholesale sailing, get it out the door, does not necessarily matter what it is that in terms of individual stocks of

course, that is always our individual story and we have to at least mention netflix. down 23% after that company subscriber growth. front, the the oil company executive saying oil below $75 a barrel means clients are going to be's cutting spending, that is e&p, expiration production companies in southwestern energy buying some assets. energy is a group that has been feeling a lot of pain. let's go back and look at how we have done since the s&p 500 hit its record september 18. we are down about 8% to. we have not entered that formal correction as of yet, we are not down 10% yet from close to close, and energy has been the single worst group during that period of time, not surprisingly given what we've seen with oil prices, guys. >> thank you so much for breaking it down for us. here to help us make sense, one of the biggest investors, the

chief investment officer of global credit at pimco. cannot be sleeping very well right now. what is going on? clearly the market is looking at the lack of inflation and increasing deflationary risks, and yes there is a flight to quality into treasuries, but we see a lot of opportunities in the market today. we would not focus on treasuries, we would look at credit assets, mexico and the dollar is very good long-term investment opportunities here. >> when we speak to guys and they say absolutely no bit in this market right now, are they exaggerating? >> may be a little bit. we are actually sitting on a lot of cash and we are using this opportunity for our clients to find very good value for long-term investors, so yes, the liquidity risk premium has increased a little bit, but the fact is that there is significant value out there in the markets right now for long-term investors. >> i want to bring this

conversation, mark, to fed policy for a moment, as exciting as that is. paul krugman was talking to charlie rose yesterday and he gave kind of a forecast in line the edgiest forecasters out there in the market. listen to what he said -- >> you look at five-year implied inflation forecast, and they're are saying five more years of depression. certainly -- the idea that we are going to normalize come of that interest rates are going to go up next year and every thing is going to return by 2018 to the way the world was in 2007 -- the market does not believe that anymore and neither do i. >> maybe i should've said only the zero hedgiest of forecasters out there. he is one of those guys saying there will never be a return to normalization. >> we think the fed is going to normalize but they are going to do it very gradually. we are in this new neutral,

which means that because of this debt overhang and the slowdown in the global economy, policy rates will be lower for longer and that when the fed does eventually tighten, they are going to do it very gradually and they are going to end up stopping likely at a 0% real or a 2% nominal, and that could be three years or four years from now, so we have been calling for this and finally the market is pricing in pimco's forecast. >> i want to talk for moment about liquidity or the lack of it in the credit markets. if we do see outflows of it, it seems like more and more people are panicked and want to put their money in cash -- is the market able to absorb? if you want to turn around and sell across the books, candy street take it? >> the street has been reducing their balance sheet for years, stephanie. is less is that yes, it liquid today, although the liquidity risk premium and the default risk premium -- investors are getting paid a significant premium over the risks, so the reality that

credit is a buy here, specifically high-yielding bank loans, so we will continue to buy into this market. >> is a risk for you when you see hedge funds in your space because traditionally they pick up so much of the high-yield market and they are suddenly sitting in cash, not playing, is it a risk for pimco if you and a being 30% of the market ini specific names in bonds? is that a risk for you? >> no, it is not a risk for us. we have a $2 trillion balance sheet but pimco is not too large and the overall marketplace. we are able to do ploy our cash, and we have been sitting on white a lot of our cash in these markets when hedge funds dislocate and we get significant opportunities. you can buy the bank loans today at 4.5% where you have got three times to four times asset coverage. you can buy the highest quality high-yield segment today at 5.5% to. that is long-term value in a market of 2%'s treasuries.

>> how do you feel about the credit markets today compared to how you did in 2008? >> we feel much better about the credit markets. there are several positives going on -- the u.s. economy, 70% of the economy is the consumer. delivered, yous have low energy prices, low interest rates, you have a robust private sector in terms of corporate profits for many banks have basically recapitalized. bank capital has doubled in the u.s. banking system. this economy is much stronger and as a result the credit market should do well. a lot of people are talking but the strength of the u.s. economy today, and i can see where they are coming from, but when you look for example a company like ford that had to cut its forecast a couple of weeks ago because of problems in russia hurting european demand, because of problems in south america with inflation down there giving them a lot of currency risk -- aren't those two problem areas only going to get worse going forward?

especially considering the low oil prices and how much those economies count on it. >> yes, matt. fortunately pimco has anticipated this and we are underweight a lot of these sectors where supply is overwhelming demand. our framework is working. we invest with companies with pricing power, with high barriers to entry, and with superior growth. we are avoiding those commodity markets and what we are favoring right now is the consumer sector -- lodging, gaming, hotels, tower businesses. there are numerous effectors out there with very strong fundamentals. health care in addition. >> what you make of the a bullet risk care, mark? a couple of those -- of the ebola risk here, mark? hotels, lodging, anything which ith travel is going to get hit with these ebola concerns. >> that is a risk in coming we have been monitoring and we have

been talking about it frequently in the investment community, but if you look at the facts, a lot of these companies are reporting red par growth of 8% to 10%. a lot of that is coming from increases of 4% to 5%, and revenue per available room increased by 4% to 5%, that is positive fundamentals, and what is happened in this lodging industry is there has been no supply at it for four years or five euros. demand has come back and businesses are starting to travel, consumers are traveling, so there is a risk but the fundamentals are very strong for the large infector -- lodging sector. >> emco is 30% of the open interest in mexico's cbs. where do you stand on mexico? >> we like mexico. mexico has low government debt and is a country committed to reform. onyou look at the spreads mexico versus 10-year u.s., we just talked about 10-year u.s. at 10%, we are receiving 10-year

mexico it over 6%. that spread is over 400 basis points with an economy that has real interest rates right now approaching 3%. these are some of the highest interest rates in the world. >> what do you think the ecb needs to be doing right now? all in. b needs to go the reality is whatever it takes needs to become all in for qe in 2015. we think it is going to happen. clearly as you alluded earlier, stephanie, it is much more difficult in terms of the politics but ultimately it is going to happen and we think that will be a buying opportunity for the peripheral countries, italy and spain particular, in europe. >> let's say it is not. let's say politics does not override things and ecb does not get its act together. then what happens? >> he will have continued volatility and seligson the marketplace. that is a risk that we think is relatively low. ultimately the central bank we think will come in.

>> is of the kind of thing that happened yesterday and is happening today in european markets? is that going to be a signal to wolfgang that he needs to back off and let mario draghi do his job? >> yes, well said, matt. [laughter] >> it is a spanking. >> let's talk about china for a moment. when i look at data out of china, it feels negative four us. are you paying attention to it? >> yes, stephanie, we are talking to our colleagues on the ground every day in china through video and e-mail. clearly the economy is rebalancing. they're going from building a lot of buildings -- they are doing more infrastructure, they have a huge buildout in terms of gas distribution. they want to ultimately bring the consumer online. we think that gas distribution is an opportunity and we also see asia gaming, billy wagner not, as an opportunity. the mass market is growing 15%. las vegas sands reported earnings last night. mass market growth in macau up 15%, so china is a long-term

positive play. >> mark, let's get a takeaway -- if there was one thing to buy any the credit markets today, what would it be? >> we like bank loans. you're basically getting four part 5%, you have low interest rate risk, you have -- 4.5%, you have low interest rate risk, this is a great asset loan to own. >> are there any hedge funds knocking on your door saying mark, here is my books, take me out of it? >> if they are, we will take the other side. this is a great time to be pimco. we hope those hedge funds call us because we will be taking the other side for our clie nts. >> mark, absolutely great having you on this morning. you can have matt and i talked to all day. mark kiesel, the chief investment officer for a reason of global credit over at pimco and the guy who gets to live in california. >> what a lovely place, newport each. i would work for a pimco even.

>> even? maybe even more now. >> coming up, what will the fed do next? we will talk with st. louis fed president james bullard. why not go to the source? we will do that come a bloomberg's clues of coming up. ♪

>> welcome back to "market makers." we are seeing u.s. stocks roback over down to session lows again, now down about 174 points, and has been down to about 205 minutes ago. the s&p 500 -- remember when i said we were unchanged for the year? down 1.25%ger, it is an hour into the session. >> it is not matter for the year because time horizon, very few investors role like harry schilling these days. aren't there people sitting in the same position from a year ago? not so much.

risa depends on the investor. if they are on 15 park west, that is true, but if they are regular people who just have retirement accounts, they are probably in it for the long run. >> the problem is for many with retirement accounts they are on fixed incomes, they started in the last year to invest in more and more yieldy assets because they had to because they could not survive on 1% to 2%, and guess what, you are waking up in the market is ugly? that is bad news. >> in any case, markets are moving and we will talk to a man who will probably move those markets while he speaks out st. louis fed president james bullard is with our economics editor michael mckee. >> thank you, matt. president thank bullard for coming in. you have global growth concerns from a collapse in notations notation some oil prices down and markets extremely volatile now. is there something the fed should do to address this? >> plus the cardinals loss. [laughter]

>> i'm sure that have a lot of power over that. >> u.s. fundamentals remain strong, and i think the u.s. macroeconomic forecast remains intact based on the data that i have today. i still think we will get 3% growth in the second half of the year. i think we will be over 3% next year. i also think there are bullish factors coming out of this market selloff that are good for the u.s. economy. lower long-term rates for the u.s. is usually a bullish factor for the u.s. is a powerfules incentive for u.s. i think those are feeding into an already strong u.s. economy. thater, i also think inflation citations are dropping in the u.s., and that is something that a central banks cannot advise -- we have to make sure that inflation expectations remain near our target, and for that reason i think a reasonable response from the fed in this

situation would be to invoke the , that saidhe taper the taper was data dependent, and we can go on pause on the taper at this juncture and wait until we see how the data shakes out into december. >> in other words, continuous qe. >> continue with qe at a very low level and then assess our options going forward. if it was just me, and i am just one person, but if it was just me, that was one of the things i would think about at the upcoming october meeting. >> $15 billion, you would keep that up level? that would not every much stimulus to the economy. >> no, but it would keep the program alive, and it would keep it, keep the option alley as to what we want to do going forward. if the economy still is robust as i'm describing it, then i think we could just end the

program in december, but if the and isis right, portending something more serious for the u.s. economy, then the committee would have an option of ramping up qe at that point. i have long time been one that says that the qe program would be open ended and that we would be able to adjust it in response to macroeconomic development. this is a serious macroeconomic development. it is primarily coming out of europe. it is just that europe was expected to have a good year and they are not. prospects there are ,ooking bleaker than they were and the disinflation and even deflation outlook for europe is not looking good. ment that isvelop occurring in europe but affecting u.s. markets. >> you think the u.s. economy is going to be strong, and so are the markets want to be selling

off the way they are? >> some of the selloff would a lot of u.s.ause multinationals have important fractions of their business outside the u.s., so if you thought that the global outlook previously, that it would make sense that some u.s. stocks would be marked down on that basis. i would not worry about that part. that part seems to make sense. >> the follow-on would be -- what do you do about interest rates? you have been in the campus as you raise rates sooner anin 20 15. are you lower for longer if you want to keep qe going? >> as i said, i think the forecast for the u.s. based on the data i have today, the tracking forecasts are still strong for the second half of troy 14, i have still got 3% or better for 2015. labor market data has been very good the last report was good,

unemployment is down in the five range, we are only a couple of jobs reports from being a normal levels of unemployment, so all of that still looks like it is on track. i'm willing to a knowledge that this is a serious development in the global situation with the situation in europe. we could invoke our data dependent clause on the taper at this juncture. >> but you would still see a first-quarter rate increase if things normalize? >> to get me to change my rate forecast increase, you have got to get me to change my forecast, so as of today i would not change the forecast. if -- a lot of people and markets say global growth is going to be much weaker and will spill over to the u.s. -- if that kind of a scenario develops, that i would change my forecast and change my outlook for the first rate increase. i do not really see that happening as of today. what i see is a fairly strong u.s. economy that will now be

pushed ahead bullish factors long-term rates, and lower oil centralbut i think the bank, the policy committee about thecautious decline in inflation expectations, which is a serious matter. >> what is causing that? >> my forecast is for rising inflation, that is why i am concerned about the rising deflation expectation. the five-year tip for example 1.5%, thed below the five-year forward is down from its previous level. the central bank has to guard expectation in the market that would suggest that the central bank it is not going to hit its inflation target, so you have to be credible in your inflation target. what i'm saying a simple step that the committee might consider at its october meeting pause onto just take a

the taper, let more data accumulate and see how the u.s. outlook is going to evolve over the rest of the year into next year. >> from your viewpoint, do we have a disinflation/potential deflation problem? does the fed have a credibility problem? what is behind the collapse next rotation? the collapse in expectation? >> one idea that there is a global factor, if you put all of the central bank of the world together and have one central banks, there would be one policy and that policy might be a little too tight and therefore the global inflation factor is low. it certainly seems to be true based on the inflation numbers coming out of europe. -- we aree trying to partly tried to that global islation factor, and that the down graph to our inflation. that is not really a complete theory, but that is one idea

about what is driving inflation expectations lower in the u.s. despite fairly good real-time data in the u.s. >> a lot of people also point to oil prices. you cannot really influence the direction of oil prices. >> the inflation goal for the fed is a headline inflation goal. it means that we want to hit on average over a period of years the headline inflation rates, the price of the people actually pay, so they are important prices and people substitute out of goods that are more expensive and into goods that are cheaper, and that is part of the way economics works and part of the way the price index works, so i think it is important to look at the headline, even when it is down and when it is up. you need to look at the headline inflation rate over the medium-term because that is what the goal of policy is. >> you can influence the level of the dollar and a lot of collies have talked about the dollar being a drag on the

economy going forward, particularly if it continues to appreciate. how worried are you and how much does it influence your thinking about what policy should be? >> dollar policy is up to the . easury secretary i will let him comment on dollar policy. the actual movement in a trade weighted value of the dollar did not seem large to me compared to what they have been in the last 10 years to 15 years, so i do not see that as being a factor. it is certainly a factor, but it is relatively small. compared to other things that are going on. >> a lot of people have suggested -- a few people in the markets looking at the volatility have suggested that the fed might be forced back into a qe4. is there any chance of that at this point? >> i think we should quit numbering the qe's. [laughter] ofave been an advocate having an open-ended program. i think the qe is our most powerful tool when the policy rate is at zero.

i think it is far more powerful than forward guidance, and i think we saw that during the taper tantrum of .13. 2013. therefore i think i have been for having an open-ended program that reacts to economic data. so far we have been able to taper the program down on the face of really dramatically improving labor markets this year. maybe this is a juncture where we would want to invoke that clause of being data dependent. >> one quick question about the mechanics of raising rates when you do, market experts say that if you retain your balance sheet, don't select thing off, the amount of reserves will overwhelm the fed funds rate and you will not be held control the level. >> no. i think we have a good plan on that. we are going to use the interest rate on interest reserves as a lead indicator of policy. we are also going to use this

overnight reverse repo program to put a floor under the federal funds rate. a gap between those two rates of around 25 basis points, fed funds will then in between those two rates and if all three rates more or less move in tandem, then i think that will be a good way to describe policy. >> if you are mike matheny, what you do to turn the cardinals around? >> the cards were down to the giants -- i am sorry, up on the giants two years ago, three-1, 1 game away from the world series and we were outscored by 24-2 as i recall last week, and the giants went on to win the world series, so hopefully we can pay them back now. i think of we can win a game in san francisco, we can bring about to st. louis. >> st. louis fed policy president james bullard showing his cardinal colors. here in new york

listening with bated breath i guess to everything jim bullard said, making news and news to us, too. he is basically saying the fed should put off qe, at least put it on hold for a little while, and that deftly moves markets. you take a look the indexes, they are still down but have come back fairly significantly, and i think everyone who is listening -- >> that was james bullard right there. why did the market spike? james bullard. >> mike mckee's interview with james bullard. there's another side going on with jim bullard and what the u.s. fed should do as far as putting qe on hold, as far as being more dovish. you have the kind of response like him a weird response out of the austrian national bank novotny, awald voting member on the ecb and he is saying that the markets have overdone. qe, that it will

start in december at the earliest. >> remember everyone got comfortable because they said there will be a big bond buying program. we never heard news that it was happening and not to have somebody who is this much of an insider say well, the expectations are exaggerated. what power does the ecb have? what action are they taking? it feels like nothing. that is why so many people are super negative on europe. >> we were talking to mark kiesel, and i said it is what is happening yesterday and today be enough of a banking that wolfgang sits down and let's mario draghi pull out his bazooka, and he said he thinks that is the case, but now you have someone sitting on draghi's council say not so fast, we will not be buying abs until december at the earliest. it is only october 16. werest before the ltro, we feeling so negative about things two years ago.

i remember someonthink they would not touch banks with a 10 foot hole, then draghi, all he has to say is we will do whatever it takes and the market comes back. sayingesel from pimco is yes, things look back, this is a buying opportunity. those who are reading the tea leaves are waiting it. what are they buying, how much commended to get a headline to say that is all in exaggerated -- that is not see like the ecb is doing anything. >> we're going to take a little breather here. speaking of u.s. banks -- >> i know one that has good news today. a blockbuster quarter for goldman sachs. >> is that term blockbuster a little overdone? lucier withearing a khakis, so you do have a blockbuster uniform on. they reported more than $2.2 billion, far surpassing analysts' estimates. one big reason -- lloyd blankfein cut costs by setting aside less money to pay employees that

let's take a look at goldman's shares, mister. >> yes, i'm looking at them, down 2.5%. >> there you go. goldman comes out with a good number but the market is not feeling it done i want to bring in bill cohan and bloomberg's michael moore to help us parse the report. william, michael, welcome. >> thanks. >> i missed during garcia. >> i do, too -- i miss jerry garcia. >> i do, too. >> a do you remember electronic dance music? it is my belief that electronic dance with the is the new grateful dead. i think the grateful dead was more about culture, less about music. >> that is not true at all. >> in your opinion. >> in many people's opinion.

>> you talk about is going off the rails. >> i have a feeling that lloyd bank finance gary cohen are neither grateful dead nor calvin harris fans. >> jerry garcia was the goldman sachs of guitarists -- >> and of some risers -- and of song riserwriters and of singer. >> let's talk about why goldman 2.5%? are down >> why are we treating michael like this? do you like the dead? >> they are a little before my time. >> he is like -- i am not sure. talk about goldman today. >> i think investors are looking some privateng, equity gains, so it is not seen as sustainable gains from the

revenue side. in aboveas ok, it came expectations, but not enough to excite the market. >> this is exactly what some -- i cannot member who is a meeting, but they are just putting up this profit because all they have done is cut everyone's pay, that is not -- >> he is cutting! [applause] >> they are not cutting people's pay. 1% decline in the ratio this quarter. >> they are paying those big , but the regular people who work at goldman sachs are getting a raise that least. >> no, no, no. this is a very good quarter. >> we're still talking music because this is a broken record. why are they overpaid? makes a lot of money. in my opinion, why does goldman sachs not up-to-date? look at the market.

the market is down 100 points. everybody is freaking out, it is october, the market has to be down 10% -- >> don't we need to keep in mind goldman is putting out their third quarter -- they are not putting out today's numbers. this is how well they did when it was the alibaba deal and ipo mania over the summer. this number today is no reflection of what they have endured over the last week. >> and a probably made a lot of money over the last week. >> but investors haven't? >> we are not talking about investors. we're talking about goldman sachs. yesterday was a painful day for overtime. >> for the clients. >> what will be interesting, the theout unlike 2008 is streak is not long much risk, so volumes were up massively yesterday, so active trading days are great for banks and they are not sitting on all of the junk that hedge funds are. >> mail i also suggest that today is a buy the rumor, sell the news thing? off 300y the dow was

points and goldman sachs is not even down 1%, so today when the markets are only off 100 points, which seems pretty tame, now 88 points, this seems very tame compared to what was going on yesterday. goldman sachs was down 2.3%, so it is not like they are moving at the tied. bellwether of feeling on wall street and we are in a bad little patch here. james bullard in that interview airing before we were sitting here -- i mean, that is very interesting. he clearly sees strength in the economy and it seems to me that the fed, for whatever reason, good or bad, if not going to be taking its foot off the qe pedal anytime soon. told charliean rose -- did you see that -- he said he does not expect -- >> when you are addicted to morphine, as the market is, it is very hard to go through withdrawal. that is part of what you are seeing here. >> the only way the market is going to feel better -- they are begging for a liquidity injection in china, and japan,

and in europe. no one is talking about fundamentally improving those economies. mr. bullardnk what said was that our economy actually is fundamentally improving, and i think he is right about that. >> the question is -- is goldman sachs in a good place to play this? >> my favorite topic. >> we had the discussion the other day, you think that banks are well-positioned to benefit from -- exactly come a golden age. is that consistent with what goldman sachs thinks and what other investors and goldman sachs think as well? >> they do benefit from the volatility, but i think investors are a little disappointed that goldman did not benefit more. jpmorgan and they come america blew away their fixed income trading revenue estimates. goldman did not quite. they did well, but not as well as you might think they would have done in a volatility september. >> back in the day even two years, three years ago, goldman was in a position where they like a tray, they put it on

alongside or before the clients. now all they could do is behave in a way that jpmorgan does, and the fact of the matter is jpmorgan is better at that. >> i don't know about that. goldman is very close to its clients. you are right -- it obviously could not take the principal positions a used to take as they againstin 2007, betting the mortgage market. it probably cannot do that as readily anymore, but let's be clear -- one man's client service is another man's proprietary bet. the fact that a client asks goldman to buy a $2 billion portfolio stock and they can then dribble it out into the market over a period of time, is that a principle that or a client service that? regulated awayen by dodd-frank or by the volcker rule, so goldman sachs is still does to do what it best -- figure out a way to make a lot of money. >> do you feel we are in a better position today than we

were in 2008? the fact that dodd-frank is they the negative here is cannot absorb -- when blackrock or pimco or whomever needs to sell -- >> you cannot have it both ways. on one hand we want the banks to be more like utilities and on the other hand we are complaining because they're not making enough money -- >> imf eu -- are we in a better situation? -- i am asking you, are we in a better situation? we need toare, figure out a better benchmark to figure at how these firms are doing. theilize the market -- street cannot stabilize the market. the federal government is the only one i came in and stabilize the market. >> i think it is interesting -- you think we are in the golden age because the economy is going to improve, but at the same time you realize that this u.s. economy is addicted to the opiate of quantitative easing -- that cannot be good. >> not the u.s. economy, the stock market, people on wall street are addicted. >> got you, good differenc

tiation. michael moore, thank you so much for joining us as well, very interesting chat on goldman sachs. a problem or a lifestyle choice? we will leave it there. congress is holding its first hearing into ebola today. the head of the cdc is there. we are going live on capitol hill. ♪

>> the director for the center for disease control will find himself on the congressional hotseat later today. dr. tom frieden is set to testify before the house about the government's response to the ebola crisis. our chief washington correspondent peter cook is on the hill. >> it will be a rough day for dr. frieden of the cdc, he will be the star witness at the hearing before the house energy subcommittee. he will be with other directors,

such as that from the nih, and the top executive from the company that owns the parent company that owns the dallas hospital where of course the original ebola patient was first treated, so all of them are going to face some tough questions from this committee. we have already had to house vulcans call for dr. frieden to be fired before the cdc's handling of this crisis, the scare in the united states, and you can be sure that he will get some very tough questions from the tough questions about the cdc response and what should happen with u.s. policy toward this crisis and whether enough has been done already. >> peter, some lawmakers are calling for a travel ban for flights to and from countries hit hard by ebola to west africa or from west africa. what do we expect to hear on that? >> i would expect there will be lawmakers, perhaps democrats as welcome as the weather not that

makes sense. we even have speaker boehner, the highest-ranking member so far call for a travel restriction. there are procedures now in there are screening procedures now a place at airports. >> shutting down travel to that area of the world would prevent the expeditious flow of personnel and equipment into the region, and the only way for us to stop this outbreak and to illuminate any risk from ebola to the american public is to stop this outbreak at the source. likewise there are still members of congress, matt, who do not agree with you administration on this. they say at minimum if a flight needs to go over to west africa they can be military flights but it is not safe for the united states to allow these planes and, commercial flights from guinea, theory lyon, from liberia, so that will be another getty, sierra leone, from liberia, so that will be another hot spot.

yesterday the cdc saying this latest health care worker to get infected by ebola showed no symptoms was you on a flight. now she is hearing she contacted the cdc and told him she had a fever and they told her to go ahead and get on a plane. >> matt, i think you touched on the one piece of information through the course of this entire ebola scare that may be the most damaging to the cdc at this point. dr. frieden will certainly be asked to explain exactly what happened there. her temperature was 99.5, the fresh old here is above 100 degrees, but the idea here that she was told by a cdc official it is ok to get on that flight -- you can be sure dr. frieden will have to answer that question and it will be a difficult challenge for it to do that in this environment. >> absolutely. peter, thanks so much. peter cook from washington. we will take a quick break here on "market makers." stay with us on bloomberg television. ♪

>> we are approaching 26 past the hour. you know what that means -- it is time to take you on the markets are here is our chief markets correspondent, scarlet fu. i have got a headache, i'm nauseous, i and sick. >> do not get too excited. we have stabilized, the dow off only by 30 points. it was down as much as 206 points. louis fedrom st. president james bullard to mike mckee saying the fed should consider delaying an end to qe, the next meeting at the end of this month. europe has come off the lows as well, down only .4%, but still slated to fall for an eighth straight day, and the vic's back as welcome and now below 26. last week it was below 19, october 1 it was below 17, so we are elevated compared to where we had been. take a look at the 10-year yield, almost positive as well as the losses in stocks get

pared back a little bit here. we are looking at a 10-year yield that is coming back at little bit following those st. wti,s fed comments and th west texas intermediate, below since 2012. four-year low, citigroup try to verify the low oil prices and a qualified by think it would provide a $1.1 trillion stimulus to companies, to consumers because it will put more money to in people's pockets. it will not help to much of their is all the uncertainty and volatility in the markets but certainly that is one positive data point. also we should mention jobless claims came in better than anticipated. it fell more than what had been looking for, so the economic data is also encouraging as well. >> encouraging, but if you look at these markets, you cannot even point to an asset class or a type of investor who says that guy is winning here or credit is winning, equities are losing, stocks are up, we are just

moving as you said earlier in this roller coaster that maybe for a true long-term is holding things in a 401(k), maybe it is ok, but for anyone who is invested in this market -- >> perhaps -- >> the fed. >> consider how big the losses are not five percent is now the new 10%, 1% of the new 5%. it is because we had a look these months of complacency come of call miss that it is draining. >> if you are an active investor in this market, you cannot afford to be watching bloomer television or at least following us on twitter because jim bullard really moved the markets today and you had to see that or else he would have missed out. red arrows, but the market wants to come back. >> you can catch the interview with michael mckee on bloomberg.com, and where else can you see it -- in the reaction by the markets. "market makers" will be back in two minutes. if there was ever an important

day to watch us, it is today. ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> a we are still in the red dot it is another turbulent day on wall street. we will see what this means for corporate america. >> and the biggest loser -- shares of netflix for sure. it is not adding customers the way it used to and there is a new rival on the horizon. >> so where does this leave one of the pioneers? it was not that long ago that everyone would tivo their favorite program. we will speak about tivo's future with their ceo tom rogers. welcome back to "market makers."

i am stephanie ruhle. >> and i am matt miller in for erik schatzker who is on assignment. ingsre seeing while swe in the market, the dow was down and they came back almost unchanged at. the s&p touched a that unchanged points though we almost all the s&p go positive on exclusive comments from jim bullard to our very own michael mckee. yesterday we saw treasuries go $1.90..30 to today you see yields actually rising, 2.1358 to go out all four significant digits, as tom keene would appreciate that i .34%.d a two-year note at >> many people say look at this, there is much less leveraged in the system, banks are far better

capitalize, corporate america has so much cash on their ballot sheets, we are in a great position, but from an investment position, some of us is making us on easy. what are we seem fixed investors do over the last couple of years? search for yields in these higher tech stocks, playing in the distressed markets, so much like 2008, that is when things freeze. when investors who should not necessarily be in those riskier markets are in them when the market turns, there is paralysis and they cannot get out and the liquidity crunch we are seeing today. >> a specially if you bought greek debt. that for the bulletin, the top business stories of the morning. let's get you caught up maybe the fed should delay the end of its quantitative easing program according to st. louis fed president james bullard in an exclusive interview in the last hour, right here on bloomberg television, he told our own michael mckee that it would all depend on inflation. >> we have to make sure that

inflation, inflation expectations remain near our target, and for that reason i think a reasonable response to the fed in this situation would be to invoke the clause on the taper that said at the taper was data dependent, and we could go on pause on the taper on this we seee and wait until how the data shakes out into december. >> in other words, continue with qe? >> continue with qe as a very low level, as we have it right now, and then assess our options going forward. >> bullard says u.s. fundamentals remain strong dot he blames market turmoil on downgrades in the outlook for europe but guess what? investor, you are investing globally. one strengthen the labor market -- applications for jobless benefits hit a 14-year low last week despite signs of global weakness. employers are keeping workers on staff.

payrolls are on track to rise by the most since 1999. that is good data for you. the question is -- does anyone care? directors at abbvie have had a change of heart. they are now urging shareholders to reject that proposed a $53 billion takeover of british drugmaker shire. they reason -- that u.s. crackdown on so-called tax and version. new rules are aimed at discouraging american companies from buying foreign corporation so they can move and save on tax. that is what abbvie had planned to do. and you can call this paul normal. new the nobel prize-winning economist is not see the silver lining in the clouds dotted line he spoke about stocks in the bond market less night with charlie rose. >> the idea that we are going to normalize an interest rates are going to go up next year and everything will return by 2018 to the way the world was in 2007 -- the market does not believe that anymore, and neither do i doubt

>> you can watch all the interview tonight with paul on bloomberg television. and we have not seen mortgage rates this low in 16 months. the average rate for 630-year mortgage has dipped below 4%. mortgage rates are falling. costs have fallen for four weeks in a row. >> let's take a look now at how the market's wild right is affecting the really economy. we have the ceo of ethan a joining us. he is going to be joining us for most of the hour as well as "in the loop" anchor betty liu because she has been talking to people in the c see sweet -- -- c suite. >> when you say markets affecting business, as far as the ceos are concerned, it is business as usual. i got off before the ceo of 3m who said to me look, right now it is all about execution, it is

all about executing for his company, and he is not the only one, by the way, who said this to me. last ceos i talked to night said i think the market rout certainly cost a lot of people money, but it has not changed our status, we have not called in the emergency meeting, we are not planning anything different, in fact this might be as they say a little bit of hype by the media, that the media wants to talk about how the markets are going down. something of the want to mention, just went down a whole list on the phone about why this economy is still strong got he said the cost of capital is so low, corporate balance sheets are very strong, the economy is getting better, look at the jobless claims. a 14-year low. he told me look, when did europe ever caused a recession here in the u.s.? thanid i may be calmer others but i feel pretty good about the economy. even ifight, farooq,

the u.s. economy is struggling along and europe cannot cause a recession here, what is most important? >> that is a big "if." >> the u.s. economy or the global economy? >> they are both important, but i think the u.s. economy is important online i think we are living in two different worlds, the world of wall street and the real world. >> really? so last night after the daily hack yesterday which was just daunting, exhausting, terrifying, were there people who were planning to buy a coffee table, a couch, and an armoire at ethan out and saying i'm going to hold off or are they still going to buy? >> people are cautious. i would say the consumers cautious but somewhat optimistic. you are absolutely right what you just said. theseere to worry about daily swings, look at what is happening on wall street. this is becoming a trading business, so we have to look at it, but we really cannot take it that seriously on a day-to-day

basis. i have to make decisions for the next one year, two years. we are now changing 60% to 70% of our product line. we are investing in the united states, which we're going to benefit two years, three years, four years from now. >> let's say hedge funds and up down 10% this month. will that affect your business, your consumer if we are seeing the biggest, most sophisticated investors out there, does that matter to the american people? >> they might be glad seeing hedge funds. >> exactly. >> welcome to the cloud. >> exactly. >> we see higher-end customers at ethan our, these are wealthy people that can afford these products. >> if i were to run my business on averages, we would be doing pretty bad. you have to take a a look at the consumer, yes. if you take the top one-third or

so, they are doing well. thirds, even half of that are under pressure. that is what you see pressure on mass merchants because of the fact that they have been impacted, but when you take a look at -- and the numbers we just heard -- unemployment down, consumer confidence was not at the highest levels is holding up . certainonsumer is because everybody has invested in some way in stocks. >> speaking about the consumer, there was another ceo who said to me yesterday we are forgetting that lower oil prices is going to benefit the consumer. that is going to have a bigger impact on the economy than what is going on in europe. , i asked if my airline tickets were going to be cheaper, and i was told no. >> airline tickets are not getting maurice was of, either, they have been the same for 20 years.

-- not getting more expensive, either, they have been the same for 20 years. regardless of the swings you see on wall street at the end of the week at some of you have the next are $100 in his pocket because gas is cheaper, he can spend that money that >> it is not only consumers. network inirly large terms of distribution. the gasoline prices are a major factor for us whether whack in terms of delivering products. >> still occurring products that factorver products -- for us -- >> in terms of delivering products? >> in terms of delivering products because we deliver product all over the nation. you have because as the optimist that whether you are running a business or you are a consumer. >> i look at your stock and it has moved to. do you look at us flailing our arms and screaming that as betty mentioned the media is

dramatizing? >> i would never say that, by the way. our stock is not affected in the last few days. the stock that has been affected in the last year is so because largely because of what we say. to makeat i'm going sure that people are excited about even now in but manage expectations. i do not want to run my business on expectations of the investment community -- big mistake. i do not mind if the strong term is over. we have a strong balance sheet. last quarter, we had a 9% increase in sales and a 47% increase in earnings, and our stock did not change much because we said look here, we are cautiously optimistic done i could have said we are fantastically optimistic, and our stock would have shot up. the short-term is not a big issue for us. >> i would imagine, though, if you talk to any of the oil ceo's, not every ceo in this

country is going to say of is being well buffered here, but not everyone is going to say nothing has changed me. are 16, i believe there companies who have lost a quarter of their value in the last three months just based -- a stock market value -- just based on the selling alone -- a majority of those are oil companies come us you can imagine their outlook has changed. >> i wonder what price looks like to you because i am sure that rob materials cost us are much lower for ethan allen. >> not necessarily. it varies. certain energy-related costs are going to be down. we buy a fair amount of petroleum-based products, so that is not affected away, but if this continues, that will have an impact. on the other hand, raw materials whether lumber or metal, some have gone up, so i would not say that we are not immune from increasing prices. i would say that our prices

average in the last year, the cost of our products, we produce 70% of our products right here in the united states. we are one of the few companies less than only produce but a 50% of our products that we sell in china we shipped from the united states. >> we going to continue talking about this, farooq is going to stay with us for the hour, and betty, i am sure you are going to hit those phones hard. we will take a quick break here. six years as the darling of the s&p 500, no stock dipped faster. shares of netflix are plunging, and the funny thing is, i just got netflix. theou seriously are behind curve on that one. >> iwatch "orange is the new black" for the first time last night. >> it seems like everyone used to have tivo. now most people, the kids, don't even remember what that is.

maybe the ceo of tivo have a plan to turn around our this is "market makers" on bloomberg tv, and we are digital. you can see our shows and interviews on bloomberg.com. on yourbloombergtv plus tablet, and this is a tech company, you know, baby we are streaming on apple tv and amazon en fuego, that inspired our ♪

>> shares of netflix taking a dive this morning. at one point the stock was down 25%, and it has not come back that months cents. investors are seeing to problems. first, it is not adding subscribers as fast as it used to and second, hbo, a big competitor, is about to get into the online business. sweeney,ow is paul head of north american research at bloomberg intelligence and our guest host for the hour is ethan allen ceo farooq kathwari.

paul, let me ask you about netflix. a lot of people were talking about this one dollar increase in price and maybe that is what led to a reduction -- well, they still increase in subscribers by about one million but not as much as had been anticipated. is it really the dollar that is doing it? >> i think it had something to do with it. it is probably going to push through -- they do not push through price increases very often at all at netflix, so they probably misjudged how consumers would react, but netflix has been and continues to be a subscriber-driven momentum stocks, and what we saw yesterday was a double way me. hammy.ouble wa subscribers were lower, and that is a sign to leave for a lot of investors. the second shoe to drop yesterday was hbo deciding to go direct to consumers over the bigrnet with hbo, so two issues for netflix shareholders

to have to deal with in one day. >> hbo making this move is clearly a direct hit to netflix, but is it a risk that they are cannibalizing their own business? >> yes, it is a big risk, and that is way hbo has not done this to date. atert murdoch making a run time warner making the issue that time warner has to maximize the value of hbo, and what that might entail is going more direct to consumers because the fact is you have to look at netflix and the growth of their subscribers to over 30 million subscribers in just a couple of years. that is where consumers are going and how they are consuming their media. i think hbo finally came to the decision -- we need to ,otentially take this risk potentially alienate some of our pay-tv partners, if you will, the cable companies and satellite companies to try to tackle this growing market. >> this is farooq kathwari. i agree with you. it is constant, consumers going direct.

as one might say with 300 design centers all over the world, but today more and more people are going direct in our business. we yesterday launched a new website. we had to make a major change because today, the website is the windows where people shop. they used to come to our design centers. >> what percentage of your business is over the web? quite very little right now, less than 5%, but that is the biggest opportunity and that is when he last year or so we have works to get this new website on because of the fact -- in our case, adding technology to the service to showcase our 2000 interior designers is critical. >> i want to bring about a net flex quickly because we only have about 30 seconds left -- bring it back to netflix quickly because will have about 30 seconds left with paul. i can understand investors' concern about hbo entering the

market, but lobbying fully one quarter of the value of a company seems an outsized punishment. what do you think about the scale of the drop? netflixve seen this -- investors have seen a story many times before both on the upside and the downside. the stock has exhibited a tremendous amount of volatility really during its entire history, so if the big move up in big moves down. a lot of investors have been in the stock, a lot of hedge funds have been in the stock, and it tends to move in big increments because investors view the stock as really a real disrupter of the traditional media ecosystem where consumers can get very high quality content directly from the studios over the internet and bypass the traditional pay-tv package, so there is a lot of money at stake with netflix and its ability to disrupt the traditional media business. >> got it, bloomberg intelligence analyst paul

sweeney, one of our secret weapon zero bloomberg. we will take a quick break here on "market makers." europe in the midst of the worst losing streak and 11 years. >> do not believe us -- look at the numbers. suddenly the great opportunities are looking -- we are back at looking at these peripheral countries, and one word -- greece. ♪

>> we have breaking news here on bloomberg tv. we are on the markets, and the s&p has just slipped into positive territory as we were speaking. it is now perfectly unchanged, which means it is up about 14 point since the start of the year. in negativel territory, down about 27 points, holding steady about 15,000,

16,115, and the nasdaq is up about 10 points. let's see what is happening in europe, the markets are about to close and that is where the center of the carnage is. there is the longest slump in 11 years. it is down about 3% since the start of the year. the benchmark in london also about -- also off about .3%. the dax in germany trading at little bit higher. the story is this selling on the periphery of europe. let's show you what is having spank him all portugal, italy -- is happening in spain, it 35 inal, italy, the ibex madrid also up by 1.5%, and milan down by .4%. you are seeing a spread of money going into the safety of german bonds.

they were trading as low as .7%'s, a record low for germans. italian bonds in great bonds were creeping up slightly, but we will continue to cover the markets. ♪ . .

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back to "market makers." i'm stephanie ruhle. >> and i'm matt miller, in four erik schatzker. i thought you were going to take it away with the european markets -- >> i give you a chance to introduce yourself. earlier today, our own michael was talking about how strong the u.s. economy is. the question is -- does that matter? can the u.s. economy exist in a bubble with lots of cash on corporate balance sheets, jobs

looking good? just across the pond in europe, china, japan, we are getting negative data, and we need to talk about what that means for the overall market. i want to bring in the crew -- an economics professor at dartmouth college and former member of the bank of england's monetary policy committee and also with us the chairman, founder, and ceo of gray let capital management, and our economics editor is in -- also with us, the chairman, founder, and ceo of capital management give us the number one take you got out of jim bullard. >> it's interesting -- everybody is focused on the idea of pausing the taper, but my biggest tape away -- take away is he is still calling for the fed to raise interest rates in the first quarter of next year.

he is saying that the u.s. economy is still very strong. it is an overseas problem coming from europe, and that's why he told me this when we met is morning -- this morning. >> i think a reasonable response would be to invoke the clause on the taper that said that the taper was data-dependent, and we could go on pa's on the taper at this juncture -- we could go on se on the taper at this juncture. >> he saying they could still use quantitative easing and its prudent to take action now. >> when we see this news out of europe, that we thought there would be major bond buying from the ecb, and now it sounds like it's overstated, not getting enough color around that -- should we be worried? >> absolutely. i have been worried for quite a long time.

this is probably action the ecb years ago. taken six they are paying the consequences of the increase in rates in 2011. vokes 1937 where rate rises occurred, tightening occurred, and the economy plunged back into recession. that's where we are, and i think what we saw in 2008 was the u.s. spreading to europe, and it's hard to believe in this global economy, the contagion of falling producer prices, falling industrial production, falling output will not spread back to the u.s. i think bullard is completely wrong. >> here we are climbing this wall of worry. why now? >> a lot of this has to do with industrial production numbers coming out of germany, and we had a moment where we thought that maybe they were kind of getting it, that these austerity programs they keep on imposing

are actually hitting the demand of the goods they are trying to produce, but the lack of action coupled with people leaning a little bit into high-yield plays , i think people got a little bit spooked. >> i think that is an important point. people were leaning into high-yield plays. maybe people who should not have been. plus, you had the imf warning that the markets were frothy, and they needed to reverse these austerity plays. a lot of it was these russian that's not have, and going to turn around anytime soon. all of this together creates the perfect storm. the question is -- is this the moment where you want to go in and buy? >> good question. in fact, i think we probably .tarted buying 2, 3 weeks ago

we were pretty heavy on cash. maybe we stood -- should have started buying before. timing is always difficult. but a lot of people, the people who have been holding the high-yielding plays have been more crossover buyers or leverage players. we do not use leverage, so we are not getting squeezed, but we were at one meeting with a bunch of people in greek bonds down in it was the rumored dear in front of headlights -- front of headlights. >> did it seem like there was a lot of forced selling yesterday? >> yes, and i think you saw the treasury move as well. not in a capitulation moment are close to it, things are going to get so bad it will not matter what you buy. >> what is standing in the way of the ecb taking action? is it politics? >> like jim bullard is one lone

voice in the fed, we saw headlines coming across, and some people are putting a lot of faith in this headlines, but is he just one man on the ecb ? uncil >> being a lone voice does not necessarily mean you are wrong. what happened is the ecb and the germans are eventually being overtaken by events. i have three screens open in front of me -- industry production, consumer prices, and producer prices -- and they look absolutely horrible. now, when? the worry, of course, is that in 2008, you had some firepower. you cannot cut rates. the ecb does not appear to have much it can do. have is italy now. where does italy go? it has deflation, producer

prices falling. germany needs to come to the rescue or quit the euro, and i think the prospect of a breakup is rising by the day. >> i think all the peripherals are getting hit. a 20 or 30-basis-point move in spain or italy, and you see 150 or 200 and greece. on a relative basis, greece looks amazing because the fundament of problems in italy or spain are really bad as well. you have to make a bit of a call if we are going to go to a breakup, and if we are going to a breakup of the eu or the euro, all bets are off. >> could we really be going that direction again? >> i don't think so.

i think fears are way overblown. people think they are reacting to fundamentals. they are reacting to technicals. there are too many people crowded into the space who were the 32-year-old guy who made a lot of money in the past few ares, and the partners looking at these, and plus, you -- the backdrop of pimco >> hold on. it's more than the 32-year-old guy who said, "let me get into this" -- >> or get out. >> investors need to find yields, and they go to asset classes where they should not have been. >> i would not argue that it not that the fed did what they did but that the european central bank did not ease quickly enough and is not doing any kind of quantitative easing -- i would argue that it is not that the fed did what they did. the countries that really blew out -- they have tremendous value in their markets. not that we eased to much. it's that europe eased too little. >> are we wasting our time

trying to read the tea leaves of janet yellen? when she is a sideshow of what we need to figure out is what -- which is what europe is doing. >> at this point, they cannot do a whole lot additional. they can keep qe open, but $15 billion a month does not add much to the u.s. economy, and it is strong already. it is a europe question and to a certain extent a china question beyond the level of the fed. we have to see what happens when we have more data going forward. if the u.s. economy keeps going strong, they will stay on their rate rise timeline early next year or by the middle of next year, and we will see market applications of much higher rates in the united states and the rest of the world, particularly if europeans just sit still. >> the reason we wanted to get you on was to get a real-world

business perspective on these market moves. we always talk about europe. it's interesting -- you were telling me during the commercial break that you are having a better time in romania than you are in your business in belgium right now. i would think they would be hit harder, but they are doing well. >> all these changes we are seeing right now really reflect had gonethat if things up too high, they would have come down. any concerns that people have, you have a major reaction. reaction is always greater than what it should be, and that is what is taking place right now. as far as we are concerned, we have an international presence -- our biggest one is in china -- and also, we are in the , but inast and dubai europe, we have entered the belgium markets, which have been tough because of the fact that attitudes of people in western europe are much more conservative, much more cautious, and attitudes in

eastern europe are somewhat like you might say the developing world and china. they are more entrepreneurial. the consumer is much more willing to invest and to spend, and we do not see that in western europe, and i think that reflects on the general state of the economy in western europe compared to eastern europe. >> final thoughts as we look at these markets and hide under the covers? >> we probably should hide under the covers, but the reality is that the people essentially will speak, and we have seen people in the u.k. voting for independence parties. ecb and thethe germans will have to act, but it has just taken them so long, and central banks in the u.s. have to react to things that are coming down the road. .he downside risks are growing

>> thank you so much for joining us. do we have time for one more question? all right, final thought from you. right now, these markets, the technicals -- help us out. you go back to work and look at desk -- es on the >> we had an investor meeting yesterday, and i asked my trader to go off to a bar around the corner, and i was going to buy the highest risk assets out there. at this point, you can worry, but there will be bounceback. if you look at the way this market has gone, there is always a blowoff and the third, fourth quarter, and there is a bounce back in november, december. >> i have to get one more in. are you concerned at all -- pimco seeing huge outflows, especially in credit. china, mexicos in -- are you worried they have created this lopsided market, and when they need to get out with these outflows happen, they will not be able to?

>> it's a good question. we are trying to track where the outflows are going and what is some instances with pimco is people are taking what they own and transferring it to another fund. as long as there is not selling all of the actual bonds -- people are changing managers. performance has not been that great. as long as it is not selling and buying, it may not impact -- >> that is a very interesting point -- >> thank you so much for coming in. i appreciate it. thanks so much. turn off those screens and go outside. mike mckee, get back here to the newsroom in new york. >> will be back in just a few. when we return, tivo tries to re-create the music experience for people watching tv. we'll be speaking to the ceo. ♪

>> cord cutting, i'll a cart cable, on-demand viewing -- cord cable,, a la carte

on-demand viewing -- our next guest has revolutionized the industry and has seen it revolutionized again and again. of tivo.s is ceo thanks so much for joining us. >> always a pleasure to be here, but to be on set with your other guest, that's a huge pleasure. >> has he ever borrowed a cup of sugar? >> no, never. >> has he ever called you and ask you to please said his tivo -- set his tivo? >> he has called my wife about all kinds of tech or ration issues, none of which involved consumer electronics. >> talk to us a minute about tivo. tivo was the first. .e all tivo-ed it became a verb. now what are you innovating with? >> our first chapter was the

digital recorder. we had to deal with the fact that a bunch of people came out eith generic versions and su our way through patent proceeds, but that was chapter one. the second chapter is creating a phenomenal experience now that we have infinite choice. the news of hbo creating a competitive streaming service to netflix, cbs talking about a streaming service -- we had to have -- we have been talking about not just how many channels are there, but really infinite ,hoice, and for the consumer that is really difficult. you do not know what to search where to find what. what we do is basically say that the great consumption experience was already invented a while ago. it was music. you can get any song ever written, put it together in one easy to use device with a

simple, easy, user interface, follows you in the cloud wherever you go, and you can personalize it by playlist, genre, however you'd want to do it. why should television not be like that? we went to create the television equivalent, and we basically implemented it. we serve 19 of the top 25 operators in the united it's with our version of advanced television. whatever cable service, then i'm going to get a tivo box made for them for my use in my home? >> we sell direct to the consumer at best buy, walmart, amazon, and we provide the advanced television experience, branded tivo, much more than the digital video recorder, including the entire experience for how you can consume media. when you travel, you can get it on your ipad, all the bells and whistles as to how you would

personalize content, so what comes up is relevant to you, what youour knowing like to watch. >> is the consumer today more demanding than he or she was a few years ago? >> absolutely. this question of instant instantation, information, instant knowledge is the real world. today, if you are not relevant in terms of information, in , peopleery acting fast move on. in terms of our development offerings, delivery times -- like i mentioned yesterday, we just launched a new website. it's critical today that more and more people are able to window shop on the website, and in our case, with our 1500 interior designers, we add personal service to technology. when we combine them, that's a

great advantage. >> it reminds me that a lot of kids these days are watching entertainment not just on tv. might want, someone to watch youtube programs about motorcycles, but if they want to do that, can tivo somehow bring in the internet experience as well? to askhat you were going about motorcycle programming for a minute. this is where our worlds join. you are right -- kids watch on many devices, and we serve that. and puttake your iphone your recording straight on tivo, but once people have their own apartment, once they are settled and have their own household, they go right to their big screen again. his world of how you create the best possible a phenomenalough brand like ethan allen and how thepresent television in

best possible way within those living spaces will increasingly become living spaces people confront as they sit there with truly infinite choice. >> luckily, you live in the same neighborhood, so you can think about it and strategize. great having you on this morning. thanks to our guest host, farooq kathwari of ethan allen. ♪

>> all right, matt, that's it for "market makers."

before we leave, what do you make of this? >> i just want to show one of the charts that i cared so much about earlier that i have not today, and it's the unleaded gasoline chart. if you look at it, it just goes down, down, down. this cheap in gas westchester, it would make my day, but the elite national average for unleaded gasoline is the6 -- but that is national average for unleaded gasoline, $3.16. the issue is what is happening in the global economy, houston that impact investors, houston that impacts everyone. remember, what did hans talk about? technicalities in the market. it was not a maybe but it definitely. >> people are reacting to technicals, not fundamentals.

even if they do not think they are, they are. it has been a pleasure serving with you today. i will see you again tomorrow. >> you will not see me tomorrow. i'll be on assignment tomorrow. you will see me monday. if you wonder what the leading minds in the financial industry think of these markets, look no further -- i'll be speaking to the best of the best. until then, stay with us here on bloomberg tv. it's 56 past the hour, and that means bloomberg tv is taking you "on the markets." both going toare voluntarily be in dallas, having nothing to do with work assignments. markets are trading on fundamentals, trading on technicals, but they are also trading very much simply on fear. that's why we'll be talking today.he vix the chief portfolio manager at cmz trading joins me now.

we are seeing a little bit of relief in the vick's today -- in vix today. what do you make of that? >> the fed had that -- they had that huge rally, and the fed started thinking things were not so great. ever since then, it has been a fear-driven trade, something we have not seen in several years. >> what is the trigger this year? ? ola, growth concerns what is the mood in the pit? >> i think it is all of the above. ebola is just giving people another reason to worry. rest of the world is slowing down -- people are worried. europe -- people are worried. we got a sustained selloff, not a one-day event like it has been, and the more things like that go on, the more it can

snowball. there are so many triggers, people are just nervous. >> you have a trade for us. what is your strategy? >> like i said, this market has been so resilient for so long, but it feels like there is a little bit of crack here, but i want to be long movement. i think buying a straddle is the best way to do it. straddle. 185 it cost us about six dollars, but we rally all the way back up to 1900, you will be ok. if we selloff a little bit, you will be ok because of the fear there as well. >> what do you think it will take for the vix to go back down below 20? >> there have to be some comments out of the fed. ofy have been the big driver this market because every selloff has been met with, "don't worry, the fed is going to do it."

if they can hold this area, say something to support us, maybe contain this ebola thing a little bit -- you know, the white house is taking this very seriously -- we might get a little bit of the vix to come down, but there is definitely fear in this market. >> matt cavanaugh, thank you for joining us from the cboe. our own mike mckee had an exclusive interview with james bullard, the president of the st. louis fed, and he said the fed should consider a delay in ending quantitative easing. ♪

," welcome to "money clip where we tie together the best stories, interviews, and video in business news. i'm adam johnson, and we are following the markets today. to know what is happening on the ebola front. many others want to know who is actually in charge. now that global markets are selling off all over the place, going --e fed keep qb keep qe going? the st. louis fed says yes, and investors like what he isin