>> built-up tone -- build holcomb call it christmas, and now he is stepping down as the ceo of the publicly traded harbinger group. >> mall operators want you. they will do anything to get shoppers and the stores. >> taylor swift, her complaints are just the tip of the iceberg. facing billions in losses because of copyright laws. morning, everybody.

tuesday on this thanksgiving week, you are watching "market makers." >> thank you for joining me. >> any time. >> let's get you looking at the top mobile business stories of the morning. more national guard troops are ordered to the town of ferguson after the grand jury decided not to indict a white police officer for shooting a black teenager. protesters looted stores, burned businesses, attacked guards. over two dozen people were arrested. here is the st. louis county police chief. >> most of the building set on fire are to -- total losses. i have two that are melted on .he road just to the north we have had a lot of incidents with officers getting hit by rocks, batteries, things like that. i personally heard about 100 50

shots fired. >> president obama has urged peacefullyto protest and for police to show restraint as well. an exclusive story of insider trading that comes from the files of the at the eye. the citadel told the agency that they made millions trading on insider information from dell. neither the analyst nor the employee was prosecuted. there was not enough information to charge the analyst but that five firms were eventually convicted. speed bump in asia, the world's second-largest luxury retail jeweler cut its forecast. sales in japan and other asian markets climbed 3%. citiesices in 20 u.s. rose slower pace, prices were up 4.9% in the latest trade, the smallest gain in almost two years. falcone is up, the one

time billionaire stepping down as the leader of the publicly traded harbinger group. his hedge fund is the second largest investor. bloomberg has documented some of his comings and goings over the years here and we are here to talk about it more. people have been waiting for the other shoe to drop regarding phil falcone and his hedge fund properly borrowing money from limited partners, giving preferential treatment to some of his investors while not treating the others the same way. he was barred from serving as the director and officer of a publicly traded company. not the harbinger group, as it turns out. fell, and i am

surprised. i am surprised that it fell so far. phil falcone is in a small world of incredibly powerful hedge fund managers who is no stepping down from the one thing that we thought he had left. after all, don't forget, being barred from managing other people's money meant that we thought having this publicly traded company was one of the interesting things he had in his life. the stock price is about highest it has been in a long time. there was a strange consolation ofthings -- constellation things. batteries, the george foreman grill. but now he is gone. he's out of it. >> is there a connection here with his dispute over lightsquared, the company he is pushing to reorganize? >> that's right, lightsquared is still up in the air. he is fighting with another billionaire. we don't know where that is going. >> the other side, his hedge fund really has nothing to do

with the harbinger group. the hedge fund is simply one of the larger investors. >> it is fair to ask. first of all, in the same way that trajectories go up and down, there are also rebounds. maybe, somehow, i think he has been banned by the fcc for managing money. >> he has been banned by the new york state confidential watchdog of guaranteed life for seven years for using hedge fund money for personal taxes. >> i believe they are connected to the publicly traded company, right? but maybe time will pass and it will be all right, but he is certainly joining a crop of hedge fund managers who have been having this problem. >> this is the thing, you mentioned a trajectory but for most hedge fund managers the trajectory is not always up and up. eventually your luck runs out.

it ran out for him soon after the financial crisis. it ran out for john paulson. it is kind of running out for michael platt. and it kind of ran out for steve: in the sense that he is now barred from managing other people's money. even though he and his employees still have 10 million in their own money. >> it is amazing to hear those names listed one after another. it was like a new crop of people. these hedge fund managers with billions in assets, there had never been anything like his crop of managers in the wake of a crisis. they rose when everyone else was suffering. now they seem to be having nothing as bad as phil falcone. >> maybe we need to step up a little bit here, he was lending

money to himself yet he is a billionaire from what i am just and and he is going to be getting a lump sum payment worth 20 point $5 billion. yet there seem to be cash for -- cash flow columns. >> a good point. the thing that got him into trouble, as you say, he is lent himself money. i actually visited his townhouse before he bought it. i was writing about real estate. time, ipartment at the and into the house believe he has a pig there and it was one of the biggest pieces of poverty i've ever seen in my life. in the same way that bob guccione did. >> it is one thing to be wealthy, another to be liquid. >> i guess that's a good point, but he would still think that with his assets he would be

fine. and maybe he will. we may find that he steps into a new, ridiculous never. >> the parting gift, let's call it because we can. the harbinger group says that that is the recognition of the money that they earned. the prorated bonus. works if you can get it. >> thank you very much. down ascone, stepping the ceo and chairman of the harbinger group. still in the cards, the proposal had a value of $160 billion. tell, is thiscan perspective deal getting any

more or less likely? is on hiatus now. they were in a position last month where they had to clear themselves in or out. a lot of people think that in , that is therm genesis of the story. hedge fund in london have come together for quiet, off the books meeting. >> some people describe his takeover as inevitable. do you see that as the case? quiteon't know that is where the general market opinion

has landed, but would people do know is that he was the chief executive. they approached rio tinto over the summer. this is a guy who tends to get what he wants in the long-term. that is something that he worked up to over a long. of time. that is what people get drawn to. reason that rio tinto is a potential target. byy have both been hammered the drop in oil prices. no matter how you measure it, prices are down some 45% to 50%

over the last year. >> it is very weak and when you are at the big ones, these basically iron ore companies, that is what they do. there is also some copper in there, but iron ore is the big one. it primarily goes into skyscrapers in china. as china needs less skyscrapers and cars, iron ore is in trouble . that is where we are right now. this is how the timing angle gets interesting. most analysts who follow the market think the price is only going down over the next 12 months and if it does it makes them look weak and vulnerable. >> eric brings up a good point of prices falling and how there might be some pressure to consolidate as users cut costs. across the resource complex, energy or mining companies? >> that is an interesting question. we do seem to be in one of these

moments where there has been a in ironnvestment energy ore and copper and some would say that that resulted in a flood in the market. this is something that they have criticized their competitors for doing and saying they want to take capacity out. >> that is matt campbell, with us from london. >> coming up, we are just getting started. you cannot resist a good bargain ? you will have plenty to choose from is black friday get started . >> all the same, american express does not want you spending all your time at the mall. they want you taking part at -- in small business saturday. ♪

>> it is all about the sales. in a world where 40% off is the new 25 are off, how do retailers

make any money? visited the garden state mall in new jersey and came away with observations. >> looking around, looking at inventory levels of the stores, what i am hearing from analyst and in the malls is that retailers are going into the holiday season leaner than they were last year. even if things are on sale, it is not out of as much desperation, perhaps, as last year. this is bloomberg intelligence , this was only nine times in 1%. much lower growth going into the fourth quarter holiday in the past several years. who madeth an analyst some observations about inventory and competitiveness. he said. what >> we feel better about inventory levels, but really it

all requires one retailer to have too much for the holiday to run out of everyone else. retailers need to be competitive. there always watching what others are doing it is clear that this is a day by day battle. >> in other words, one retailer makes a mistake and it becomes a race to the bottom? thinks almost like if you about the airline. if one airline cuts fares, even if the other businesses relatively robust, everyone does it anyway and similar things can happen in retail. if your competitors inventory levels are too high, you have got to do the same thing. then, thatt, retailers came into the holiday season light on inventory? >> they learned the lesson after last year. the x station last year was not that positive, but it was not as negative as it turned out to be. the other interesting thing is

that traffic is still down year-over-year as many of the retailers. we are hearing that from malls, we are hearing that from walmart . trends are improving heading into november, it is not as though there is a positive traffic trend. holidays will depend on people spending more and buying more stuff. >> it is amazing how little control these retailers have over the business process. on the one hand, it is the consumer. are they shopping? not shopping? are people getting jobs and then your margins are only as good as the worst guy at inventory management. >> that is part of it. the other thing that has spiraled out of control, if you where you getdea into this race to the bottom totality when customers are getting used to deals to such an extent that everyone is cutting and cutting.

i keep seeing a lot of examples of people discounting dell by 50%. when you'ret way looking at budgets. >> gapper four dollars. >> there you go. >> doing the legwork, heading over to the walls herself. makers, why market investor to investor trades are taking off. ♪

>> high-frequency trading has taken a lot of the friction and cost out of selling mons. funds are the point, there is still plenty of friction in the fixed income market, that is why

plenty of investors would, if they could, bypass wall street and the data suggest that they should. about twitter should bypass wall street? >> basically what they used to do is they would earn money to say look, if you are big investor that wants to sell bonds, i will take you down to find the investor later who can find it on the other side. they are doing less of that. they are basically just matching up investors with each other. of the bondsg 52% overall traded this year going from one investor to another on the same day. this just goes to show that the deals are mounting and that they are still acting like the middlemen, right? the question

is, if there was an electronic system that could be created for investors to find each other, they would need dealer as the intermediary. they just need to have technology, like amazon or ebay, with a recommended list of bonds out there. does it add? you ask the investors. >> the big question, the corporate bond market has undergone a dramatic shift in the past six years. with debt sales controlled by and the big concern is taking a step back, they will have less money to emit to

facilitating debt trading and more from mutual fund investors and others who have not played such a dominant role in the space. the issue is that you need dealer's more than ever, you need someone, some structure to it sort ofrading reverts back to neutral ownership. people inre still this business, like blackrock, who tried to do this. there is not enough liquidity to make it work unless you get most of the players involved. you cannot just have large money managers like blackrock or pimco , or insurance companies about the hedge funds do a lot of the trading. >> there is a race to be the dominant player in this space. a certain amount of trading goes

on, you will naturally draw in other investors to say -- look, we can actually get stuff done. if you can't get things done, no one is going to go play. yes, there has been a race to critical mass, but there has also been an increase in market value their. overall corporate debt trading is not taking off, it has declined a bit this year compared to last year. >> to the regulators have a say in this? to work withrying electronic trading systems and would like to have these systems take more of a role. because they foster transparency. >> but it is harder. pretty much everyone is different. >> that is the issue, right? >> it helps to explain why these investors are so frustrated.

all right, thank you very much, lisa. bomb -- bondhe market. >> shopping malls and shopping small, we will talk small business saturday. ♪

>> you are watching "market makers." i am scarlet fu, in four stephanie ruhle. we are trading places this morning. >> that's right, she was on "surveillance." >> why not. >> here's a question for you, what do small businesses one or of? more customers, of course. but how to get them? american express created small business saturday in 2010, but now optimism among small business owners is finally back,

things are looking brighter this holiday season. year to discuss the importance of shopping small, ed gilligan. remind everyone why american gets behind small business. when we were coming out of the recession in 2010, most of the economy was recovering, but small businesses were not. we had a mission to do everything we could and with that philosophy in mind we came up with the idea of small business saturday. we lack of that by shopping small. >> i think what is important for other people to understand is

the value proposition for amex. using amex as their corporate card, like this one. presumablyesses are more expensive to service. .hat's thousands of people explain. >> we have millions of small businesses who are customers. we are the largest from wider credit insurance in the u.s. and around the world and we have millions of small merchants who accept american express for our customers to use the cards and we are constantly trying to find ways to add value. small business saturday certainly good for american express, building goodwill and giving back, but it is more than that. it is clearnto it that while american express is still pushing hard, getting consumers to shop, others are catching on.

small businesses are owning the day. 3000 communities in the u.s. i now making small business saturday their own. >> tell us a little bit about small business saturday this year. what is the difference or distinction this year? lot more community involvement. 3000 around the u.s.. last year we saw millions of american consumers spent over 5.5 billion dollars in this year we are cautiously optimistic that it will be even bigger and we are using lots of digital social channels to get them word out. we are working with federal, state, local chamber of commerce, and amex now get money back when you shop small. >> what are some of the biggest obstacles that small business owners face right now? >> you clearly mentioned this in the intro, the number one concern that they have is

finding ways to grow in this economy, finding more customers. particularly in all the noise of the shopping season they can get lost in the shuffle. that is why we wanted to created day for american sewers to think about shopping small and act on that. i think that with the fifth anniversary it is now over 80% of americans who are expected to shop small. >> it seems to me that the trends continue to favor disproportionately large .usiness >> very expensive for small business. the data is not available in any economic fashion. >> true, small businesses have been competitive for hundreds of years. but it is hard to compete when you see the big sales going on. they have kind of unique items

and are competing on a different asis. done research suggesting that american consumers do better when they shop small. it is not just the biggest discount, it is the best value. >> they do have a certain advantage and i wonder if there is a role for big-name, big-box retailers to play. what about going into bloomingdale's or renting space? is that something you are hearing a lot of? of the things that is different. we have a partnership with at sea and they are letting local artisans around the country popping up. it is a way for these small artisans who live and work at home to be a part of main street the big retailers. >> part of that foot traffic. >> exactly. >> i am delighted to hear that

small businesses are here -- feeling better about the prospects. i did have a somewhat depressing conversation about this very topic with kelly king, the ceo of bb&t in winston-salem, north carolina, and i wanted to play you a short excerpt. is very soft.ess companies that are large enough to participate nationally have an overall strength. it is a kind of bifurcated economy. main street companies are still struggling, they are dependent on the u.s. economy and main street. while it has improved, it is not very good yet. 2.5%? most of those for the lowe's

companies would be slapped at 1%. >> does your experience match what he was saying? view, is thereal a bifurcated economy? that companies with international exposure are doing reasonably well in a small to medium-size business? >> i would disagree with the last point. whether you are domestic or international markets as well. the struggle continues. in the u.s. we are cautiously optimistic about where we are right now. consumer optimism is at the highest point. the stock market is up. we believe that consumers are going to go shopping this holiday season more than last year. we are cautiously optimistic, we

just want to make sure that small merchants are holiday shopping right now. i am expecting a reasonably good small business saturday. it is all about getting the word out. i think that one day can make a difference. >> does your cautious optimism extend to apple pay? 3% of u.s. merchants have adopted it. >> i don't think it will make a difference this shopping season. to your point, the -- to your point, very few terminals are equipped to handle the transaction. all merchants in the u.s. have to install new terminals over the next two to three years. consumerse way the will be paying into the three years. american express has created a fund for small merchants to upgrade their terminals over the next year. i don't think that apple pay will be a big part of the shop small occasion, but i do see

over the next couple of years apple pay and mobile payment in general growing fast. >> you are trying to help the small merchants make that transition. >> yes. >> lots of the small merchants are looking to spend the money. >> they will get caught up in it. they have to convert the , the threat of fraud in the u.s. economy -- >> they will have to it they don't. >> i do think that there is a positive net present value for you when they have to upgrade their terminals and then they overlay that over the next few years. we wanted to jumpstart that by creating a fund for them to help pay for their terminal upgrades. it is going to happen but it will just take a year or two. >> all right, thank you very

much. >> thank you. >> the block small business saturday. >> coming up, it is not just performers complaining about streaming music services, some songwriters say they are getting ripped off as well. ♪

less goodis good, but for certain players in the music industry. inside the span of a decade, we have seen once dreaming services replace digital downloads. david joins us from washington to explain. the largest u.s. publishing trade group that advances the interests of music creators, --."me to "market makers.

taylor swift can tell spotify to talk your hand and the fine, most artists are not taylor swift and cannot push the industry around like that. >> that is true. she is uniquely positioned to bring attention to this issue and i am so thankful she is talking about it. while she is going to be just fine, she is really looking out for the next generation of songwriters who cannot make a living at their music is being consumed by digital models in the current economics. i am proud and glad that she is standing up for all songwriters, talking about what is going on in the industry. these models are wonderful and are great for consumers, but the economics don't work for songwriters right now. >> you mentioned taylor swift as a songwriter, she is also a recording artist. but there is a difference there.

can you give us a definition of each of those? musict people look at the industry and think of it as one industry, but in reality there are two separate industries. when the songwriter writes the and, the music writer have everything to do with it, when recorded it is regulated under the law very differently. while taylor swift the artist has the choice to polar music off of spotify, but taylor swift the songwriter has no choice. say no tos cannot digital services and do not get to negotiate the value of her songs. most have a difficult time making a living, even with -- even when successful with digital models. >> can you explain how you perceive the balance of power between the songwriters,

publishers, labels, and , whatever theorms case may be. >> there is a clear shift going have ownership models. which is fine, it's actually great for consumers and as a fan i love the new services, but the problem is that in most cases the songwriter and publisher do not have any negotiating leverage because of a law from 1909 a.m. from the consent decree with the justice department from 1941. this law from 1909 and consent decree from 1901 foot songwriters in the position of not being able to negotiate a fair value of their songs with these models. while in many cases the record labels are able to negotiate the value of the copyright, the songwriters are not in the end result is just devastating. we wind up looking at a model

like dora that pays only 4% of its revenue from writers, even though it has no other business model then delivering the songs written for songwriters. are getting labels 50% of the revenue from pandora, songwriters are only getting about 4%. take a model like spotify, where they can negotiate the model and they are getting about 60% of the revenue from spotify. songwriters and music publishers are only getting about 10. the reality is that in a free-market the balance would work out fine, but we are not in a free market and as a result you already have -- you either have a federal judge in new york or three copyright royalty judges in d.c. setting the price for songwriters and it is not a good system. >> the conversation is certainly lopsided. i wonder, what kind of role do these websites have that air the videos? do they have a horse in the race?

is one of theu2 most popular services on the planet. nota long time they did compensate songwriters, but now they have a licensing deal with songwriters who are starting to see meaningful income coming in. the difference is that because it evolves video, it is not subject to his world war i law or world or to consent decree and the rates are significantly higher for songwriters, even though it is not a lot of money and is not making up for the change in consumer behavior. are some bright lights looking to the future, but the economics of these models have got to change if you want songwriters to continue to be able to make a living and be successful. if they are not doing that, they will not have music on the services to begin with. >> aren't some people shaking by playingf things multiple roles at the same time? dr. thinking of a guy like

luke, a producer, songwriter, mixer, he has worked with katy perry, pink, katy perry, all of these different artists. he surely must be doing better than your typical songwriter. >> he clearly is and is at the top of his game but it comes to the music industry. the problem is that you listen to it is written by a songwriter different than the recording artist. the most recent billboard top 100 chart has over 90% of the songs written by songwriters different from the recording artist. while you may know the famous artist and may buy a ticket to his concert or her concert, the one writing the music is only getting compensated from the spotify or an pandora, which right now are paying them very little money and as a result even successful songwriters are not making much money.

desmond child, he wrote the song living on a prayer. it got more than 6 million spins on pandora and he made about $100. these are the economics? you will find them doing something other than creating the music that we love. >> thank you for putting that into perspective. i had no idea that jon bon jovi did not write living on a prayer. learn something new every day. >> we will be back in a moment on "market makers." ♪

>> washington is debating the path to citizenship for millions of illegal immigrants, but what about the americans that don't live here? more and more are choosing to -- choosing to give up the dream permanently. >> giving it up by forfeiting their password -- passports, the right to live, work, and pay taxes in the u.s.. we are talking about

expatriates. 1001 of them gave up their citizenship in the first quarter , the tall bar at the far right, more than the quarterly average each year in the past 15 years. that puts 2014 on track to top last year's total of 2999 renunciations, a record high. you can see the big spike up. >> i have a pretty good idea what is behind this. it is called for an account tax compliance. bikes not very exciting. >> no, and it has a terrible acronym, but it has become well-known by act fats, most of them consider it terribly unjust. >> it basically means that foreign banks need to make sure that they are coordinating with sure that to make they are reporting on americans who have deposit counts abroad. american citizens abroad need to

often sell a foreign bank account report. if you have more than $10,000 in the bank account, you have to file paperwork. if you don't the government contacts 40% of the highest value of each year you didn't file. this has been an enemy for 40 years, but only recently has the government been enforcing it. as i understand that it was part of the legislation passed in 2010, which is why we have seen the big spike upwards. it objective, i hate to say but the devil is in the details in the application, especially for people that consider themselves middle class . >> for the people who are not stashing their billions in swiss bank accounts, after having lived abroad for a couple of years everyone always looks back and considers it in a conspiracy.

kind of way, the government cannot get its act together, so let's tax ex-pats as much as much as recant, increasing the amount that you contacts and making it more onerous. >> things have got to be pretty bad, like the long reach of august sam must be a tough experience of people are givingd to go so far as up american citizenship. >> the u.s. is the only country that double taxes its citizens. canada does not tax you for working here, right? >> it is not a worldwide tax or a worldwide tax or tax on income. >> in canada. >> you are at their, you pay it there. here you are in it everywhere and pay it here. on that note. >> "market makers" will be back in a moment. coming up? >> some suggestions for the ceo, meg whitman.

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>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >>? how is meg whitman doing? she announced a split at hp. we see what they need to do next. >> from overheated to cooling down, housing prices rise in the slowest pace in two years. where real estate is headed next. >> is the perfect thing to wear with your smart phone, the smart shirt. a breakthrough in biometric apparel. it's 11:00 in new york city, you are watching "market makers," i'm erik schatzker. >> and scarlet fu in for

stephanie ruhle. prototype, the real thing is on sale and shipping just in time for christmas. >> you will be a guinea pig. >> by try to this weekend. you will see more. >> that's coming up. in the meantime, let's start with the bulletin. the top global business stories of the morning. the u.s. economy has not grown this vast and 11 years. the government says gdp rose at an annual rate of 3.9% in the third quarter. that is more than previously estimated. add that to the 4.6 growth in the second quarter, and it is the best six month performances 2003. consumer spending and business investment grows. apple is the world's most valuable company. shares of apple rose this morning, giving the market cap -- giving the company a market cap of $7.1 billion no u.s. company has ever been valued that high. -- $701 billion. troops willl guard

be deployed in ferguson, missouri. a grand jury decided not to indict a white police officer for shooting a black teenager. protesters looted, burned it, and more than 50 people were arrested. >> i know there is at least a dozen buildings that have been set on fire. most of those are total losses. two police cars that are melted. withd a lot of incidents officers being hit by rocks, batteries, different things like that. i personally heard about 150 shots fired. president obama urged protesters to demonstrate peacefully. and for police to show restraint as well. investor phil falcone stepping down as head of his company harbinger group. he wants to focus on his hedge fund, where he made a fortune during the financial crisis by

betting against the subprime mortgages. inbinger group owns a stakes george foreman grills. we have an exclusive story of insider trading that comes from the files of the fbi. an analyst at the hedge fund .irm said adel -- city dell neither the analysts nor the dell employee were prosecuted. have evidencedn't to charge the analyst, but nine people at five firms were eventually convicted for trading on tips from inside dell. >> five hours from now, hewlett-packard will report earnings for the first time since announcing its split into two companies. here's how shares are trading ahead of that report. will a split salvation is problems? -- solve hp's problems? is ano discuss associate manager the school of business. is meg whitman, doing the right

thing? the argument is to make hp number -- more nimble. and to value for shareholders that is trapped inside a much larger business. >> traditionally we have seen value coming from spinoffs. these two big split ups like this, more spinning off of individual divisions. >> like ebay and paypal. >> is the same kind of thing hp has done. it's a less common situation. it tended to create value in the short term in the stock market and the long-term and performance. managers cane focus more on the needs and wants of individual businesses, and they are heterogeneous businesses from that perspective. incentives work better and more focused companies as well. >> we see a lot of activists push for these kind of changes across the tech sector and other sectors as well. that wasn't necessarily the case at hp. >> i figure was. >> my mistake.

>> he had been advocating for change. he had found a way to get along with the ceo of meg whitman bile -- while being a member of the board. >>'s was a long-term relationship. >> thank you making that distention. does this quell their push for change? is this what they wanted? >> there's a clear sense that hp has been foundering. there is no question. a significant effort like this to allow for restructuring and focus on the business will help. my guess is there will be a significant bump in profitability for the firm. will be back advocating for change within each division within the next year or two. >> why is that? is it because the outlook is that abysmal? >> the personal computer business is -- there's a lot of volume, but not a lot of volumes. the printing business was their stall work for a long time.

it has not been a strong proponent for them. barring a big in the 3-d printing world they are trying to move into, which would be an expert to given their track record, the consumer side will struggle. on the enterprise side, the question is how do they differentiate themselves for my bm, amazon, microsoft? there are many players going after this space. dell has been able to refocus on this market without public scrutiny. >> not to mention low cost producers from china and india. i was reading a report from jeffrey's you pointed out the 3-d printing technology could be disruptive. the details are pretty scarce when it comes to the technical differentiation. what advantage could hp exploit that other smaller companies can't? does the brand count for that much more? knowledgehnological that hp had in the purging not transferred to 3-d printing. we called it 3-d printing because it's kind of like a printer, but it's not the same technology. we are talking about the brand

name. will people see a brand from hp being that valuable? i think consumers want a new brand and a new piece to latch onto for a new technology. it will be a hard sell for them to get a lot of value out of that. >> because not enough people will want a 3-d printer the way that they had to have a tablet? the product that destroyed hp laptop business. >> but will be a significant long-term demand for 3-d printing. it will take some time at. initial models are very expensive or low in quality. we will get there eventually. i don't see that hp has any advantage over any other players going into that space, given the fact that the brand i don't think will translate as well to that space. they might be successful, but so might anyone else going into that market. >> it doesn't have pricing power with that either. >> not on the printer side. it will be technology driven. if their technology is better, they will have pricing power. the brand won't help them in a significant way.

>> what about the corporate structure? meg whitman will be the ceo of the enterprise business. dion wisely will be ceo of hb consumer business. should it be cleaner? >> to the extent the two divisions rely upon each other for products, services, information, their reasons to have these connections. in all likelihood, it will mean in those relationships, the enterprise division will keep the consumer under it some, getting whatever it needs, which will end up depressing the value for the consumer division even more, given that relationship. >> talk about the culture change that has taken place in the last couple of years. you had meg whitman coming in in between. that turned out to be a disaster for hp shareholders towards the end. what remains from the old guard? >> at this point, probably very little.

>> you blink and they go by relatively quickly at hp. certainly the old school, innovative, relatively hard-working nose to the grind stone mentality that made hp successful for so long -- they try to move away from that, be aggressive and more businesslike from that perspective. that forced out a number of people that would -- that were not happy in that environment. they brought in a new set of cultural identities. given the challenges that top management team had and the board had, i think we can pretty safely say there has been significant cultural challenges in there. i believe the split will be an opportunity to try and solve that. these major reorganizations provide a chance to move people around, separate people who have been fighting within the top management team. in order to create a more coherent culture in the firm. that will probably leave better leadership. will that lead to old-school hp innovation? it's unsure.

>> do they need an engineer to take it in the next level? >> if the goal is to try and become the innovative leader, on the consumer side, and make 3-d printers successful, they need an engineer. if it's going to be about harvesting the existing brand they have, the market share they have, and writing that out as long as they can, that's an mba. >> they should have made a more set in a della decision. >> is a bigger bet. that's trying to get back to being profitable. is that the right way to spend the company's resources? in the enterprise space, it's a different story. there's a lot of opportunity. it's part of the reason why we are seeing the separation. there's an opportunity for the innovation to sign -- shine through. on the consumer side, we are

nothing attention who makes the laptops are i. >> j.p. eggers, thank you. when we come back, lessons eo.rned from aerial -- aero >> what's next for the housing market? the home price index shows deceleration as we head into 2015. ♪

bankrupts --ght saw ben grubbs the protection. ceo iseaming startups finally speaking out since the court's decision. in an exclusive interview with betty liu, he reveals what he will learn from his relationship with mary dylan. >> i loved every interaction with i had with him. a great mentor just my

observation in terms of how you react to certain things, do overreact, to you under react. >> what did he tell you? greg c said you did your best, something good will come out of it. something good already came out of it. let me know by can be helpful. >> betty liu is with us now. how did he seem, was his body lynwood like -- body language like? >> he was subdued. his company is going through chapter 11, something he hopes see never expenses again. this is a david versus goliath story. a little company aereo called aereo -- a little company called aereo trying to disrupt the media giants. lost in thewhy he supreme court was that generally, he felt like judges

in the courts -- they're not as amenable to new technology. there's a fear factor there. >> there clinging to the past. >> they don't know what's going to happen. it's safer to make a judgment against a company like him then decide with aereo. foraves the way conversations on video streaming. we have seen hbo, cbs itself going to online video. his nemesisabout during this time, and what he thinks about cbs online. done allk if they had of that before we did this, it would've saved me a lot of time and money. [laughter] >> all these consumers that wanted to be able to have the ability to buy all the cart -- a carte, would've been great. >> he says that tongue-in-cheek.

by the time this company folded, they had one million people in line to subscribe to aereo. they felt they were giving consumer something they wanted. >>, a subscribers did they have -- how many subscribers did they have? >> they never disclosed. i've heard up to hundreds of thousands. they were customers signing up to aereo. 's is there a future for aereo technology. he said he thought it was a 50-50. this room court one against aereo, there was no plan b. >> ira member that interview. it was very revealing. i meant to bring the antenna up. it's a dime sized antenna. it's like a paperclip. the technology is still very valuable. that was one of the things i asked. what happens to these assets as they go through restructuring?

they may be sold off, another company might want to buy it. you can imagine google, youtube within google, or another media company would want that kind of technology that makes it easier to strain video. that is valuable. how much it is, we will see. >> or what the application will be. >> i can't guess what the value is, but it's a buyers market right now for technology. >> is a to be continued. we will find out. betty liu from "in the loop," thank you. her latest from the ceo of aereo . >> we see where home prices are rising the most. >> hint, not here. ♪

--rket makers," >> this i this is "market makers." the latest data on home prices shows the market is decelerating. but take a look at what we learned this morning from the s&p. >> it's a lacking indicator because it comes from the numbers in september. it's a couple months old. because of that, they have had time to pick over the numbers. there are just many revisions. report if yous have been counting on resurgence in housing as we had to 2015. it's not happening yet. , risingdeceleration 4.9%, down from 5.6% growth in the month of august. that slowdown continues. it's fairly broad-based as well. in the northeast, the first negative monthly returns since september of 2013, primarily because of weakness in boston and washington dc.

in the west coast and southwest areas, which were previously strong, we see price gains fade. the southeast was the only region to show sustained growth. that was led by florida. there is one pocket of strength here, that would be florida. everywhere else is decelerating. that of people anticipated we would start to see things change a bit. pick uphis flat period once again. that hasn't happened. >> is a rude awakening for those people who got used to double-digit gains in the s&p 500. that was the case for most all of 2013 at the beginning part of this year. >> you can blame institutional inventions -- inventors -- investors follow that. >>: capitals, for example. >> if you look at the housing price index, you can see the pickup in 2013. a lot of that driven by institutional investors, distressed inventory.

that's still being worked through. when you look at that dip, that rollover this year, it's because of difficult comparisons. you are working through that inventory as well. when you overlay mortgage rates on top of that, there's the blue line mortgage rates. they are off their lows from 2013. the federal reserve is determined to keep interest rates, mortgage rates teddy, even as it ended quantitative easing. the goal is to keep that study and not to have arise too much. regulators on their end, there's a lot of talk in washington about loosening some of the credit standards. credit standards that prevented the former fed chairman from being able to get a refinancing on his mortgage because he doesn't have a steady job. on paper, he does not look like the perfect candidate for refinancing. isthe director of the fha proposing reducing the down payment on a house to as little as 3%. if that plays

out. there is a lot of talk both ways about how we don't want to go back to loosening credit. the bubble back in 2007 either. in terms of the outlook for next year, if you look at the pointconomics, all signs to more normal dynamics and easier read next year. about are feeling better their job prospects. we know the job market has recovered. it's not as robust as it could be. >> we talked to the chief economist at goldman sachs yesterday. he said that goldman is expecting to housing investment to drive a lot of economic growth in the next three years. >> we will see how that plays out. it probably won't be in the first or second quarter. the spring selling season is when things might begin turning. today's report was a splash of cold water. >> he is looking for a pickup in home starts. >> that would be a forward indicator. >> they are hovering at about

one million. they should return to 1.5. seeing a lot of their growth is coming from north america as opposed to overseas markets like china. >> at's the story on home prices. is approaching 26 minutes past the hour, it's time for bloomberg's on the markets. let's begin with tiffany. the 10 largest luxury jewelry retailers in the world. in six months, higher than projected sales here in the americas. we have been talking about the resurgence of the u.s. economy. that is what appears to be driving results at tiffany. last quarter they had a big drop in asian sales. >> they saw sales to pine -- decline in japan and china. for once it's the u.s. that's overcompensating. let's take a look at shares of cracker barrel. the restaurant chain trading under cbre group is up 3.5%. it raised its outlook for the 25% inarnings climb to

the most recent quarter. have you been there? >> i have never been. i saw one recently. the world is full of infinite possibilities. >> we will be right back on "market makers." ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. onthis is "market makers," bloomberg television. i'm erik schatzker. i'm scarlet fu. buyinge of consumers goods from another country is up to 40%. let's bring in craig read, vice president of global e-commerce atkinson bows. e-commerce is expected to increase to $1.5 trillion. which countries are the biggest beneficiaries? >> obviously the u.s..

but we look at is how global trends manifest. we see a lot of buying coming from the usual suspects. canada, the u.k., australia. we also notice there is demand coming from other developing markets. asian markets, brazil, russia, india, china for example. it has driven a lot of demand across borders. >> how long before cross-border you shopping becomes something we all do? is try to make it easier for chinese shoppers to buy goods from a u.s. website like macy's. they can care of the logistics -- taking care of the logistics and deliver it in china. most people don't do it here. >> what you just described is exactly what we do. we take all those complexities away from the u.k. and u.s.

retailers who want to ship globally. with the advantage of being canadian, i live in canada. i can say this. i asked to do shop cross-border quite a bit. is not typically an american experience because they're such great supply in the states. it's a supply market. supply and demand, obviously, but there markets globally they can't get all the stuff you can get domestically. a lot of u.s. retailers have realized that as they have seen their domestic growth not stop, but it is moderated compared international growth, which has exploded. it's a huge opportunity for retailers to get access to global demand. u.s., heric is in the doesn't need to go shopping online to other countries websites or four things from australia or the u.k. for instance. for those of us who are interested but intimidated by it, what are the biggest barriers to are doing so? >> it comes down to first at the

border. for retailer, what that means is they have to know with a custom rules are. they have to do what shipping is going to cost. they have to tell her buyers what they are going to pay. they have to worry about tracking and in country delivery. there is friction at the border. on the buyer side, that they feel is higher shipping costs, difficulty tracking goods, sometimes delays through customs. that's all we spent a lot of time doing, taking that border friction and really putting a software and services layer around at the removes all complexity for the retailer and the buyer. >> at what price point does this make sense? most of the shopping that people do is for small dollar items. or small yet items. whatever the case may be if we are talking about a global shopper. to actually go to the trouble of order something from a foreign country, it would have to be a big ticket item. >> it might surprise you where that price point is.

typically you would use about $125 average. across all kinds of baskets of goods. we see a lot of demand of lower value goods, especially from canada because it's cheaper to get those goods from an to canada. with australia, their duty threshold is 1000 aussie dollars. it's cheaper to get goods when you factor in shipping from the u.s. markets for example. relative to what's happening in the local market, and what kind of supply and price point exists in the local market. >> unless you are prepared to , air freight has to be a considerable factor. >> we found through the amount of volume we were able to push through these networks, we have lowered the price point. you can consolidate volume to a point where it actually starts to make a lot of sense. you can get delivery times down to the five to seven day range, seven to 10 raise -- days

depending on where you're going. >> explained about how it has to be a big enough order for you want to go through the hassle. either categories where it is much more -- it's easier to purchase something from overseas than others? apparel, obviously, there is sizing issues. for electronics you have things like the plug size or circuits, or current right? >> typically luxury goods, luxury brands tend to do quite well cross-border because they are known globally. apparel, textiles in general do pretty well. we also see pockets where there is a lot of demand because of the nature of either the economy or what supply exists in the market. auto parts in australia for example is a really interesting category. there are other pockets like that. we work with ebay on their global shipping program. we see demand across all kinds of categories of goods that

might action surprise you. >> a whole new generation of mad max. >> australians are buying auto parts, when also they buying? -- what else are they buying? >> consumer electronics, apparel. >> is there one category globally that stands out? >> across everything, nothing that really jumps out. i think apparel has been the leader in terms of what's been out there. but we have seen that really start to spread across all categories of goods as the price points of come down for shipping. you can imagine luxury goods can absorb more of the shipping cost in the market. as we've seen that cost come down, the breadth of the goods that's available and the demanded is widening. >> let's say someone wants to do this, wants to go to a foreign website. how is that they encounter your services? i assume there are competing services. are you notified when you arrive at the website that you can

order it for phil internationally? is there an option that you have to click when you go to check out? >> it varies depending on what the retailer wants to do. all those options are available. best in class you would want to welcome an international buyer when they come in the door and say welcome. we understand that you are from this country. we will speak to you in your language. not necessarily from a language standpoint, but it currency standpoint, we will tell you how much it costs. we will make sure you have a good buying experience. that's typically what we recommended to our retailers to do. on ebay, for example, the same thing happens when you are on a listing page that is enabled with the service you see. you understand how much you are going to buy, how much you pay before you buy. it's a better buying experience. ed joiningou, craig rea us. >> when we come back, no smart watch, no sweat. there's a short you can measure every thing you do in your workout.

>> we are still waiting for you to wear it. ♪

>> the next big thing in wearables really is wearable. a bio sensing shirt, a workout sure that measure heart rate, breathing, steps, no wristband required. i tested a prototype back in may. as of yesterday, the canadian company behind the bio sensing shirt is shipping the real thing, just in time for christmas. i figured it was time for a follow-up. i spoke with their ceo about the final product. hardware,nced the change the design of the shirt. it is a new product. when we last met, you tried on the prototype. this one is a different product. >> telly with a new shirt can do. your allows you to track heart zone, your training zone.

you can do that in the cross training context, which is pretty novel. it tracks your breathing, and in a fitness context, the ability to harness and control your breath makes a big difference. the other thing that might be interesting is we integrated a visual program, a workout program that grades your fitness. it looks at your fitness from the inside and will. your rade yourevel -- g fitness level. >> why do you need it shirt when i can buy an apple watch next year? >> their fundamental differences. our view is that ultimately, the most common type of wearable technology will be clothing. the only wearable that everyone is wearing his clothing. with close in textiles, you can reach biological signal wherever

it happens on the human body. we get your cardiac information from the torso level, as well as breathing. it's different information that we could get at the wrist. it's so connected with self-expression, identity, fashion. >> you are wearing a bio sensing shirt. as it turns out, i'm wearing one too. we might as well look alike at the very least. i can see it tracks my heart rate, and my breathing. you mentioned that the breathing is particularly important for people who do fitness. i like to think of myself as a reasonably fit guy, but i haven't bothered tracking my breathing. what can i do by tracking my breathing but i can't with a fitness watch? >> good question. we worked a lot with fitness trainers, professional athletes in developing the applications. what many fitness trainers -- >> look like superman.

us is theey tell athletes need to own their breath. it's a first phase. , if you manage your breathing and maximize the auction and intake i regulating your breathing, you reduce the creation of lactose axis -- acid. you can push your fitness further. inclined tole be compare the metrics you get off of the bio sensing shirt with the kind of things you can get from a job own horn apple watch -- jawbone or an apple watch. do you see an opportunity to work collaboratively with any of those companies? edit sharing technology, or developer kit so that your product is better integrated into the apple experience? >> absolutely.

there are multiple platforms out there. there will be more. we are not going to operate in an island. we want to do this recognizing the consumer interest, and consumers don't want to share chordata too fast. we take your ecg from the chest. your breathing is reading the expansion and contraction of your thorax. you have activity and information, a lot of information. absolutely, over time, we are a platform. we will build bridges with other experiences. >> what about licensing technology? >> i'm not sure of the optimal term is licensing. because we see ourselves as a platform, this manifests in our business model. mentioned,partners i we lodged with them at the u.s. open is ralph lauren.

ralph lauren launched at the u.s. open the polartec shirt, our signal.ered by that's an example of an iconic brandon bringing their design. next -- what's next? you have shirts, you are developing bras, go to you -- where do you go from there? >> we have software, hardware, intelligent textiles, and scientific algorithms. this platform is there to create multiple smart probably -- projects. the sure you are wearing is just one of the times of products we bring to market. we are working on things that have nothing to do with fitness. >> there could be a dress shirt? >> built into your lifestyle. they are not about fitness.

>> health monitoring. >> and so on. we are a platform, and what you are wearing right now is the first-ever consumer. sensing shirt. the first product manifestation of this platform. there will be quite a variety of products down the line. >> that gives you a sense of the scale of his ambitions. if you think about what they have now, it really is a fitness watch, except you wear it. it does more than a fitness watch can do. breathing for example, which is an important thing. t version.he muscle >> if you were going to compete with the apple watch, which is something you could wear anytime of day, and which can track everything from your sleep and heart rate like the jawbone does, they are going to have to make a lifestyle product. it will have to be integrated into what i'm wearing now.

>> a dress shirt, for instance. >> for date become something other than a niche project. >> how much does it cost? about sleeveless shirt is $100. the t-shirt is about $120. that's just for the shirt. there's the transmitter that you plug into the side of it. >> that's a separate purchase. >> at the about $120. if you want to step it up again the t-shirt with the transmitter, that can indicates via bluetooth with your ipad or iphone, that will be a $250 purchase. >> they own the data that's collected? >> i don't believe so. they have a privacy policy. ,ome people feel more concerned were anxious perhaps about data like that. >> "market makers," will be back. ♪

>> that does it for today's "market makers." >> i had fun seeing you in that compression shirt. that workout shirt. now we know what you are getting for christmas. >> we find out what banks want from congress. ♪

it is 56 past the hour,

which means bloomberg is "on the markets." is have little fluctuation in the s&p right now, down 1/10 of 1%. the dow jones gaining three 100th of 1%. these indexes are at or near record highs. the nasdaq as well slightly in the green today. there was an honest by to drop in consumer confidence, but faster economic expansion. gdp gain of three when i percent. we were looking for a revision denver 3.3%. -- of 3.3%. the rally in equities has pushed stock valuations to the highest level since the end of 2009. joining me to talk about that is max priory, the senior trader from dmo capital. thanks for joining us. let's talk about where the markets are, and why the mix --

the fix -- vix is so low. with such a precarious situation across the globe, the vix would be in the teens? >> there are global and locations, but the reality is the s&p has rallied back to new highs. the domestic picture is pretty good. ofatility is reflective where spot equity levels are, which is at all-time highs. it's interesting to keep an eye v2x,ings like the btx -- which is not so low. october selloff was topped by the imf lowering its group forecast, specifically mentioning europe as the culprit of what might be global weakness. >>: it's a frothy. -- calling markets frothy.

things look more disconnected than we previously thought as far as a global market is concerned. are you hearing people say that volatility is cheap? >> most people think of all -- vol is cheap. people are afraid to buy volatility. the cost of buying options has been prohibited in such a low realized volume environment here it. it's just very low volatility in general. >> let me ask about stocks we are watching today. hewlett-packard earnings out after the closing bell. the first report since the company planned to separate to break into. >> volume has been somewhat muted. with interesting with hewlett the volatility being priced into the event is actually quite low. the options have a 4% move.

people are more focused on the breakup of the company than the actual results themselves. it's having the effect of dampening volatility. >> what your move on this? >> people are interpreting this breakup in a positive way. we think there is more commentary on it for investors that want to play options for a bullish view, we think risk reversals are a smart way to play. you're not paying a lot. you can sell the december 5 to buy the same expiration 39 call, pay about $.19 come i think that's the cheap way to get outside. >> you have specific play on oil out of the opec meeting? >> the headlines on opec have been proliferates. we think error sentiment is baked in right now.

xle looks like the cheapest energy vehicle to play the opec event. uso, which is a crude-based etf. sentiment is bearish. something like the 8992 calls red out to that december 5 exploration looks like a cheap way to express a bullish view on the event. >> max, thinks for joining us. we take a quick rate on bloomberg television. stay with us for "money clip," to. ♪

>> welcome to "money clip." i'm olivia sterns, here's a look at the run down. eo may be bankrupt, but he is not giving up on his mission to disrupt big media. what would it take to get you into a mall? maybe 50% off? twitter's top accounttant accidentally shows his cards. general motors moves on from recalls, but gm's president says execs are scouring social media looking for defects and cars.