>> live from bloomberg headquarters in new york, this ," with erikakers schatzker and stephanie ruhle. selltsmart agrees to itself for $8.3 billion. it is the biggest lbo of the year. plunging.ces are opec members are at odds with one another. is now the time to double down on energy? happensing over, what when the world of vintage champagne collides with hip-hop? we will take a look at jay-z. ons "market makers," here

bloomberg television. welcome back. >> i was on assignment for the week. week but i didly not have a lonely week because so many people stepped in. bill cohen was here. -- was going to say you just made a fat joke. i was going to say i did miss you and i had an exciting week. >> i missed you too. but because i had help i wasn't lonely. >> it is great to be back. today. a lot to cover let's start with the global business stories of the morning. firmup led by the british bc partners has agreed to officially by petsmart. the deal is valued at a whopping $8.3 billion. out apollo beat global management.

petsmart has been hurt by competition from amazon and other retailers. still boomingis in the u.s. economy. industrial production rose by the most since may of 2010. reduction of consumer goods did even better, rising by the most in over 16 years. and a dubious record for the ruble. the russian currency was trading more than 60 to the dollar. this month it has fallen 18% against the u.s. dollar. the central bank is under an enormous amount of pressure to do something to stem the default. and sony is in serious damage control mode over those leaked e-mails and documents. the company is warning news outlets not to use any of the by thetion revealed computer hack. lawyers say the data is stolen and should be destroyed. among the information disclosed is salaries among them uv unit -- among the movie unit.

number of embarrassing e-mails between the sony executives and hollywood producers. 20th century fox, exit us, gods, and kings. in second place, the lake -- the latest hunger games movie. have you seen either one? >> i haven't. i want to check out exit us. us -- exodus.xit i suspect i will end up seeing mocking j. -- mockingjay. siege isdney hostage entering its second day. we do not know how many people are being held by a gun man, who forced his captives to display a

flag with arabic lettering. what do we know about the hostage taker? is there any connection with islamic militants? or does it appear to be a lone gunman? >> i think it is becoming more evident this is a lone gunman. arece have indicated they not too worried about any other developments. cafe, centered on this where we believe around 15 hostages are still spending the night. is into its 16th hour. it started at 9:45 a.m. media outlets have released the name of the alleged gun man, because apparently police have known about this man for a number of hours. they haven't wanted to release the name.

the city herald claiming it is man haron monis. 1996 asto australia in a refugee from iran. he has a string of of fences behind him. he has been convicted of sending ofensive letters to families soldiers killed in afghanistan. he has 50 counts of sexual assault. foras also on bail accessory to the murder of his ex-wife, which was allegedly carried out by his current wife at the time. certainly all of these allegations very disturbing. this man may be acting a load and it is not part of a broader terrorist threat. >> what is it like in the central city?

are people evacuating the area? home -- early at year we had a lot of evacuations coming through from the offices around that side. a couple of blocks around it remain in lockdown. indicated that anybody who works within that zone should remain in that's own tomorrow. -- in that zone tomorrow. train station's underground that cafe. the city transport system remaining as normal. >> thank you very much. working late into the night in sydney, covering the hostage situation. in the u.s., we are

saving the biggest for last. petsmart has agreed to sell itself for $8.3 billion. it is a huge win for hedge fund .ana partners stephen welch is covering the deal from detroit. what does bc partners see in the come any -- in the company? , they see a company that was probably undervalued by the market. the company had slowing growth. thought the internet was taking a big hit out of their sales. bc figured it was a good way to jump in and by this cheap. -- and by this cheap. >> it is hard not to come up with cops from petsmart. one done in the

1980's. look -- we come up with look favorable. at these petsok deals, this one seems a little pricey. >> there are a couple of ways to look at it. in 2006.lbo was petco if you compare to other specialty retailers, they trade around 12 to 13 times. did pay a good amount of money for this. they felt come for the company has a strong cash flow. they also believe they have incredible strategy to fend off online retailers. >> who loses here? who is this not a great deal for?

>> it looks like to me everybody made out pretty well. nearly a 40% got premium on this thing. janet partners jumped in quite some time ago. bc partners and the rest of the consortium can get growing again, this could be a good investment. they have been pushing this for quite some time. why did it take so long? >> is the question why did it take so long to get this done? , yes. a couple of things going on. when you have three large private equity firms and there you are going to have a aggressive auction. all the different bags were involved.

they are leery about going with this much leverage on the deal. all three were in there until the weekend. it wasn't until saturday that d.c. partners -- that bc partners invested in the other two rivals. -- someit was maybe a staying and some going, and you have to can everybody down. that is one reason this took so long. if there is a red flag, is that it? i have heard some people say that many of you start to see private equity firms competing with each other in public auctions for public companies, you have to worry that the market is getting a little bit frothy. >> repeat the question. were privatehey equity firms competing with each other to do a leverage buyout of a public company may be a sign

that maybe valuations are getting a little bit frothy when you see that behavior. seen very many leveraged buyout's. there were not a lot of assets out there for sale that private equity thought was cheap enough to go after. they pointed out online sales were taking a bite out of the growth and potential for s -- potential for petsmart. is it a red flag? possibly. this is one of the few assets they saw cheap enough to it -- cheapbidding enough. it ended up bidding quite cheap in the end. in the choice.

elections in japan give prime minister shinzo abe a something to cheer about. >> black friday comes to the energy sector. it may lead to plenty of great deals for investors. ♪

>> premised her shins of all they has pledged to make japan a more appealing place to invest cuts, aporate tax stimulus package, and more economic reforms. let's talk to a man who is already invested. he runs the japan for -- japan portfolio at cumberland advisors. you are an investor in japan. >> yes. >> bulls are hoping they will what doesslide win. this mean? reforms are historic.

for the last two decades, japan has been the place where international investors went to die. wants a place you did not to be. because of the deflation that is going on there. these reforms are the important part of moving out of something nobody wants to see again, which is that deflationary spiral. this election result does is it reestablishes in the minds of the electorate and japanese citizens the need to continue forward with these reforms. these reforms are only halfway done. shinzo abe wanted to reestablish the momentum to move forward. >> is that mean it is time to double down on japan? >> we are very constructive on japan. we are managing the international portfolio. have been long japan for a wild. so i think you have to look at the fundamental perspective, which is related to the policy

move. you also have to watch the ebbs and flows. goes, we doubling down think you need to look at the , just as important as the overall market. it is the difference between a successful portfolio and having a loss. >> we need to take you to australia, where there has been a shooting at the site of that hostage scene. there was something akin to an explosion. -- were seeneeing running out. some kind of alarm went off. very patchy details. >> people on the street can hear gunshots. we don't know if any person has been shot. -- seem likethink things have gotten chaotic. >> you can see members of the

swat force gathered around this area here. they pulled the trigger, went in and try to free the hostages, whether something happened inside. >> clearly -- >> abc television is reporting police have stormed that cafe, the site of the hostage siege, where approximately 15 people were still held inside. >> five or six hostages did run out. it does seem like this was initiated by the police force taking action. until then it seems like somewhat of a waiting game. here is a hostage being escorted out right now. >> i wish we had more to go on.

people are being carried away, seeking medical attention from the scene. we don't know if anybody was shot or fires -- or if shots were fired on a warning basis. these people have been held for 16 hours. we don't to know what is behind this man who is a hostage taker. we are speaking to a correspondent who is giving us background, but it doesn't seem like this is tied to a broader group. >> those were the initial flight -- initial fears. conclusions, make the assumption that there is some kind of connection, a direct connection between the hostage taker and what is going on in the middle east. from what we can tell he is acting alone. he has a very long rap sheet in the past. you can see more activity going on.

people are inside but nothing is happening. people were seen. hostages seen fleeing the cafe. >> abc is the australian broadcasting organization, as opposed to the abc news we know here. >> time for us to take a break on "market makers." when we return we will be speaking japan.

the siege had entered its second day and local news,

the australian broadcasting company reporting that police have stormed the cafe. >> you can see people in that shot. it appears it is a police worker bringing out a hostage. -- itaos we are seeing appears it was started by police. they stormed the cafe within the last 10 minutes. hostages have been brought out. we saw one hostage being carried by police just before the commercial break. if have been there a total -- they have been there a total of 16 hours. alarms going off, gunshots heard. >> the stretcher is there. that is a difficult calculus for the police, went to make a move? getting information from people inside? several of the hostages have escaped over the course of the

hostage taking. they at least had an idea of what was going on inside. >> there are still people inside. i guess it is a slight positive to know there are six people who are out. >> we are awaiting further details. you can imagine the australian media -- police appears to be the charging and rushing in. lasttook place within the half hour. in,ce officially stormed charged into the cafe where this single individual has held at least -- >> local news reporting they fired stun grenades. that was a tactic they appeared to have taken, as opposed to firing on the hostage taker. this is all breaking news. the hostage situation appears to have been broken up in sydney than 16a after more

hours. sydney police broke in, fired stun grenades, enabled the hostages to flee. we saw a woman being carried, seeking medical attention. we are awaiting an official word on what happened to the hostage taker, this 49-year-old man with a long rap sheet, who had styled himself as an islamist sympathizer. but with no apparent connection to what is going on. >> one of the reasons this immediately became an international story was because of the flag hung up. a rodarte be tied to islamist message? >> the same question we were asking when that man was killed on canadian parliament. gunman?e a single was he affiliated with islamist

groups in the middle east? the answer is no. it appears this is the same case here. picture ofhowing a downtown sydney, where that cafe is. it is 2:00 in the morning there, so it is no's price the streets are quiet. we will be back with more. ♪

>> you are looking at a live shot at this moment of sydney australia. it is 2:30 in the morning. that is the hostage outside of go, you arere we looking at more hostages. this is over the last 10 minutes. holdingle man has been a number of hostages by gunpoint. over the last 20 minutes we have seen the police force charge the building and a number of hostages have made their way

out, some aided by police. some just running out the door. stun grenades were used to get in. to hear gunshots and explosions. you can see some smoke in there. >> it looks like smoke illuminated by one of the police flashlights. that is the current situation in sydney. still awaiting details on the hostage taker himself. man who wasyear-old known to authorities. he had a whole list of complaints and violations. now we are waiting to find out how many people were actually inside the cafe, how many of them were able to escape, if any of them were injured. >> what do we know about the hostage taker? born, self-proclaimed cleric. a long rap sheet is an

understatement. >> not the kind of guy you want to meet in a dark alley. nor in a chocolate cafe in sydney. of 16 hours ago, when you were getting a cop of coffee. -- cup of coffee. is to goal for the police get all of those people out of the building. remember, it is 2:30 in the morning. to sky news, four people were injured. beingdid see one woman carried out. >> were they injured in the course of the police storming that cafe? or did something happen inside before? injured in this broken siege. >> we are going to take you back there when we have more development. we are going to turn our

attention to the u.s. economy. of course it is recovering, but you cannot say it is booming. one reason is ceos remain reluctant to invest. they would rather cash buildup on a balance sheet. ofid thomas, the research carlyle group has been taking a closer look at the problem. one area of comparable strength of business investment has been the energy sector, so much on it being poured into shale drilling in north dakota, texas, other bouts of the south and midwest. what is the outlook for that? is interesting you mentioned oil and gas because oil and gas investment accounts for 70% of the net in industrial investment in the u.s. since 2009. that is after depreciation. this has been the lone bright spot in business investment.

it is a relatively low share of the overall economy. he should likely offset the decline in fixed investment and energy, and lead to slightly faster growth. >> how will we see that play out? investment, the largest number what could get for fixed investment and energy exploration activity, it is about $245 billion. if you expect this to decline slightly more to part -- proportionally, the offset is a little small compared to the household sector that is going to get an effective tax cut in the range of 110 billion u.s. dollars, once the client -- once the decline and gas prices flows to the pump.

>> the money is being spent in a different way. consumers are going to buy -- gs the corporation the business investment problem remains just to that, a problem. >> it does. this is the loan portion of the economy, where you have genuine investment. how we are down about 25% in relative to the precrisis peak. extent will is what the oil consuming industries offset the decline? other large consumers could see their fixed investment pickup. >> is it possible those two things might not be simultaneous because drillers have raised the money they need to spend next year? will we continue to see moretment in energy stay

or less stable for the next several months while the consumer focused industries benefit from these oil prices? that is certainly an optimistic assessment. when you look at the financial selfts, it appears to be a first, ask questions later mindset. -- that could have a greater negative effect on the short run. assetsseen some of the -- some of these assets oversold as oil prices continue to decline. >> as far as lack of investment in businesses, what to you point to specifically from a macro standpoint? >> there are two main drivers. to zero, a price down

there are a lot of investors that are from start to yield. this increases the valuation on dividend paying high-yielding stocks. they distribute more of their current income rather than reinvestment. tes has had in ra some reverse incentives. i think there are still the scars of 2008 still visible. we had cash among non-financials increase $150 billion since 2008. you also see a desire to increase returns. it's a desire to return -- to reduce the denominator through buybacks.

it is a mechanism to increase your returns at lower risk. diversion is playing a big role here as well. >> how responsible for some of that is activism? >> in some cases i think it is a desire to shake things up. especially in a lot of corporations you have orphaned divisions. they just managed to hit cash targets for distribution. there are businesses that could be spun off and managed more eternally. -- more internally. there will be a reset of priorities when those businesses are detached from their corporate parent. just more focused management. >> looking at what is missing in

the u.s. economy. >> argan hunters hit the energy sector, how to make money off the crash in oil prices.

>> police have stormed the cafe in the central part of sydney australia, where a lone gunman was holding hostages. the siege is over. juliet, what can you tell us? what is been happening -- what has been happening? >> it seems like police decided to really get this situation to a head. we had a number of gunshots. it is alleged there were some grenades thrown toward the cafe. a large number of explosions heard just past 2 a.m. we are heading into what would

have been the 17th hour of the siege. video coming through of police storming in and taking out some of those hostages on stretchers. some people like may have been injured. they were held that kathy for 17 hours. police rescue -- held in that cafe for 17 hours. police rescue is on the scene. don't really have scenes like this. we don't have guns in australia. it is a frightening situation to unfold. it looks like police have decided to try to end of this. no sign of the gun man yet. >> when the police rushed in, to the best of your knowledge it was not response to anything

happening inside, it was strictly an action to get those hostages out? it is not like they were hearing gunshots or explosions before you go -- before? was part oflike it their tactical operations. we know police have been keeping very closely to their chests the way they were dealing with this situation. passersby watching, well away from the cafe. looks like police have decided to take things into their own hands as it started to enter a second phase. seeing,tage we are where they have gotten those guns -- you can see into that cafe, in which all the lights are being turned off. imagine it would have stacked up to where he would have wanted to target. well away from where the hostages are seating.

we enjoy the response to the government. >> thank you very much. reporting in sydney. police have stormed the cafe, freed the hostages, further details to come. we will bring them to you as soon as we have them. if you were to look in financial markets, you would see that crude is plunging once again. now some of the top investors say it is a major buying opportunity. you heard from steve schwarzman last week. our next guest says the deals you find right now are as good as the ones you find on them -- on black friday. he was among the most to make money off the shale boom. seem like it was way back in 2008. approach isyour

these on an expectation that 57 and 58 isn't here to stay? >> it really was a supply and demand issue related to the opec strategy. the latest gap down is a function of the financial is 18 times leveraged. in 1997 it was three times. investors can't understand and can't price risks on the other side of the balance sheet. i think we are going to settle over time.

>> what do you specifically like in here as an investor? >> it is exciting to see public companies down 40%. solid production hedged down through 2016. if you look at where the american shale players have, i like places like -- i am currently -- i am certainly constructive on the permian basin. >> what appeals to you most? is it publicly traded equities? you are looking at credit? perhaps some of the other areas you just mentioned, like the permian basis? >> i am certainly a hard asset buyer. it is thrilling to see how things will happen.

the best values on the asset purchase side won't come through until mid-2015. although i recently did on a midstream pipeline it looks appealing on pricing. caps,edit side of large where senior debt is trading at 10 to 11% yield with some good names trading at in multiple of two times cash flow, and sometimes the current value in the ground, that is a very good deal. side,ooking on the equity there is some very good value if you have the staying power to keep buying down through the market. horizonave a 24 month and a buying a large cap name, you are going to make a lot of money doing that. >> you think it is a 24 month payout. you need to know you are holding on for two years? your drynt to not put

power forward on anyone name. gap is down 10% over the next six months i think you will do nicely with 20% irr's just by owning a public security. if you have a longer-term horizon and you like credit, it is nice to get an 11% yield on a senior term loan. you are retail, it is exciting to be in the public security space. the yield is so it tracked to the 10 year treasury. it is certainly available to all types of investors. ,f you are patient right now

you will see a deal come in over the next two quarters. down as a deal comes toward a sale over the next year, how much is going to be available? i wonder if this shakeout is going to be a bit like the european non-recovery. the assets just don't become unavailable in nearly any of the volume they were banking on. >> what i believe is going to happen is because there is so much liquidity in the global energy markets, public companies and large owners have to reprice their debt every six months. are loot -- when you are using a lower deck, you have to come up with more equity.

with half a trillion dollars being raised, there is going to be at least $50 billion of real opportunity. there is certainly not that much out there for private equity. these are assets all on the public eye. the assets need to be re-rated every two quarters. we will see a lot of them come to market. i do think there is a lot of opportunity and is going to be consistent opportunity over the next 18 to 24 months. to check in with you a few months from now and see what you have done and what you are doing. it is black friday out there in the shale patch. back for atake you moment to sydney australia where

we were giving you an update on the hostage situation just under 17 hours ago. one single man took how many people? , we do not know. we know it is somewhere between 10 and 20. >> it has been reported two people were killed when police .ent in we have seen or 10 people come running out of the cafe. >> this is the nature of the situation. two people are dead. we don't know the status of the hostage taker himself. he was a self-styled cleric who sympathized with islamic militants, but was not connected with anything directly to the middle east.

the hostages are free. a couple of people are dead. that is a tragic situation. sayingralian police are the sydney siege is officially over. you are watching market makers live on bloomberg television.

>> it is over. this is germanic footage taken in the past half hour of police storming the cafe where hostages were being held by a lone gunman. two people have died. there were four injuries earlier. the only official word is that the police, the sydney police say the siege is in fact over. we are awaiting word on the fate of the hostage taker, the gun

man. more details coming next hour when market makers returns. . .

"marketme back to makers." there is a report that at least two people have been killed, and plenty of questions still to be answered. i want to take you to my reporter in sydney. what's the latest? there's reports that there have been casualties. and certainly no confirmation. the only confirmation we have

from the police is that they say the sieges now over. about 45 minutes ago, we heard gunfire shot into that café. there are reports the grenades were thrown into the café. there are reports now that it was the police's intention to go into the café. these are all speculative reports of the stage. it is very much speculation. paramedics and official operations with police go to the café. they have been carrying out people on stretches. away,s a hospital not far perhaps the 200 meter walk away. there will be a good chance that people who have been in that café, on around 17 hours. the people i can see look like they are more in shock rather than injured.

been speculations that their injuries. until we get confirmation, i'm loath to say that anyone has been injured or killed. >> what we know about the hostage taker? >> we do know that the hostage taker was very well known to police. he was identified about an hour ago. his name was released. shakea self-confessed from iran. these 49 years old. he has a string of offenses behind him. he is known to police. unfortunately, allegedly, he has a number of sexual assaults behind him from when he called himself a spiritual healer. was on bail, charged

with being an accessory to the murder of his ex-wife. he allegedly stabbed and set her on fire. she was the mother of two children. he also wrote a string of poisonous letters to the families of deceased australian soldiers killed in afghanistan. clearly, some of you has a lot , is very and also upset with the australian way of life in the australian government to be sending those poisonous letters to those deceased people. the people who had their family members killed in afghanistan. we do know his name, and the identity of the gunman. whether or not he has been killed or taken out of the siege, we don't know that yet. >> julia, remind us how the hostagetaking began? 9:45 on theat

morning of monday in sydney. martin places a very busy area. it's in the heart of the sydney central business district. the reserve bank of australia and the post office are in martin place. the new south wales parliament is at the top of martin place, and a number of the large banks all have their headquarters. as you can imagine, there's also industry, anding this popular chocolate café, frequented not only by workers, that by workers. there were a lot of machine -- a lot of workers going in there before they started their day. gunmanrstand that the walked into the café and is in -- he then some cow blocked the

entrances and locks the doors. it was when the customer was trying to get into the café and noticed that she couldn't get in, and that the doors were shut, she saw this man with the gun and then alerted police. -- police were on the scene very quickly. for hours, they were trying just to negotiate with the gunman, not trying to get into the café with any force. we did see a number of people around 3:00 in the afternoon, escape from a side door of the café. at 5:00, two women ran out, terrified. they had terrified looks on their faces. we knew that five people were safe. you can imagine the police were just talking those hostages about who the gunman was, and how many other people were in there in order to get their police operation underway. and to get to the point where it's now. >> thank you. just have word from sky news that the gunman is one of two

people who died in that effort to free the hostages taking place to free the hostages in the last 45 minutes. >> we check in later in the hour with julia. it sounds like the sieges over. many questions to answer. when he did talk about russia this morning, and the incredibly shrieking wrubel. you can see that line pointing up there on the screen. that means the wrubel is weakening. the ruble is weakening. >> the same trip abroad will cost them double in 2013. it means almost certainly double-digit inflation because the large amount of imported products that russians consume it.

in 2016, google turned 63, the oil price will hit $63 per hitel, and the ruble will 623. oil is now below 63, and the hit 53.- ruble just it's extraordinarily concerning to all russians. depending on which benchmark you looking at, oil is down one half percent to 2% now. down on most 8% today. you have to go all the way back to january 1999 to see a one-day slide like that. >> how about the rest of the economy? inflation could be a problem. rublese is the weeak

hurting the russian economy? >> it helps exporters. that should be good for them. except for because of concerns le, we are hearing from around the kremlin that they should turn those dollar earnings into rubles. if that idea gets any traction, that would be bad for them. the economy is in great either. the russian economy industry has forecast that it will contract close to 1%. they were looking at it grow about 1%. that was based on a $60 a barrel -- $80 a barrel oil price, choose well better than where we are now. they will see a contraction. how deep is it going to be. >> let's talk about that

exclusive interview you did last week. it was one of russia's most prominent -- i hate to say naysayers, what did he have to say about vladimir putin's future? >> he was once russia's richest man. he owned russia's richest oil company in 2004. he was worth $15,000. he spent the debt -- a decade in prison for money laundering. he said it was because he was being persecuted for his political opposition to vladimir putin. he's now in zero. -- self-imposed exile. asked what the odds were for change back home. >> i can say that there is 50% chance that vladimir putin's reign will be overthrown in 10 years. the likelihood is that he will be replaced by a european oriented government is 50%.

the likelihood of the success in the next decade is tried 5%. those are decent odds. >> you talked a lot about russia post vladimir putin. you said that the first be anments would need to government it's not democratic that you would be prepared to lead. explain that. unfortunately, it's obvious that the current regime can't be changed through democratic elections. it's been aimed at present -- for venting a -- preventing a transfer of power. it won't change is the results of democratic elections. the sole duty of a provisional government is to carry out fair and honest elections.

>> you have really thought this through. how much time do you spend thinking about revolution in russia? >> i'm not sure we need to be talking about a revolution. i'm talking about changing the government in russia. i've spent about five years on that, collectively. thinking about it in prison really helped me distract myself from my personal fate. thinking philosophically, thinking about global issues, writing. after 10 years in prison, i think i spent about five on that. >> i think what's most extraordinary is that he is forecasting a kremlin to -- coup. he thinks the russian president will be betrayed by people in his inner circle. any signs of that that i have seen -- absolutely none. the president has a huge amount of support in his inner circle. and certainly, amongst the russian people.

thehe says before revolution of 1917, the biggest revolution perhaps of the 20th century, there were very few signs was coming either. >> ryan, thank you for bringing us that exclusive interview and giving us the latest. >> coming up on "market makers." a dramatic end to the hostagetaking in australia. more information coming through less from sydney. we bring you the latest details after the break. ♪

>> first, bloomberg. >> welcome back to "market makers." i'm stephanie ruhle. sony is still dealing with the fallout of hackers who stole millions of pages of documents, including e-mails from top executives, health records of employees, private information about mega movie stars, and a whole lot more. today, sony movie stars sent an official letter to press outlets, telling us to destroy

any documents that we possess. no doubt, brent, you poured over these hundreds of pages of documents. >> they are very salacious. they are very embarrassing for top executives. >> in other words, a dream come true. >> for a journalist, christmas came early. >> is it? say, these areo documents that were obtained illegally. >> i am being a little glib. to be honest, this does raise a lot of troubling ethical issues here. what is newsworthy, what is just gossip, what is intended to embarrass, what is intended to inform? these are the kinds of debates that i think newsrooms all over hollywood are having. >> i think everyone is ok with gossip, it's what sells. but this gossip was obtained illegally. does it make journalists who promoted accomplices? >> that's a good point. whatever one is struggling with

is --, do you ignore knowledge the fact that there is an ongoing debate about these kinds of documents. being leaked or causing all sorts of issues for top executives in hollywood without doing the work of the guardians of peace, this hacker toup that is clearly out undermine and destroy the credibility of top executives at sony. and it is working. seems to be trying to control the narrative now. that's why this letter from lawyers, that's why you keep seeing statements, the repetition of the phrase stolen documents. they are trying to emphasize that they are not the villains here. they are the victims. >> journalists are accessories to these kind of things all of the time. people sign nondisclosure agreements, and then pick up the tone and make agreements make information public. >> that's journalism. you are trying to get

information that people often don't want people to know. this is just that type of situation on steroids. there are some legal precedents here. there's a 2001 supreme court decision, in which the court ruled that a radio broadcaster had the right to a are -- to air a stolen illegally obtained it recording, because they were third-party. >> never short of having a few words. aaron sorkin wrote an op-ed in the times today. -- if you close your eyes, you can imagine the hackers sitting in a room, combing through the documents to find the ones that will draw the most blood. in a room next door are american journalist, doing the same thing. as demented and criminal as it is, at least the hackers are doing it for a cause. the press is doing it for an all. nickle.

he doesn't know what everyone was doing. he's drawing and narrative. what do you make of it? has given then game. he's one of the people who is being discussed in some of these e-mails in embarrassing fashion, saying he is desperate for money, trying to cut corners in that regard. he has been one of the people who has been victimized, if you will come in this case. the reality is that these documents are getting out, they are not always going through realistic institutions. reputable journalistic institutions still have a commitment to the truth, to accuracy, to fairness. we do reach out to both sides. we try to knowledge their perspectives. that's where the poorest -- the press has a role. >> how intense is the debate in your newsroom? >> very intense. our editor-in-chief wrote an op-ed saying it doesn't make me feel great, but i think it's right to do this. >> is it right to do this

because -- have a years has variety been around? >> i will fail that quiz, but decades. >> is that editor-in-chief saying i don't feel good about it, it is writes -- it is right. is it because in the last 10 years, the likes of tmz are eating your lunch? >> how do you report on something about people raciallyng for insensitive remarks without reporting on the e-mails that contain those remarks? it's a quandary. we cannot pretend like these kind of discussions are taking place. we only to our readers to have accurate information. >> the substance of the reporting is exactly what reporters would put in stories if they were able to get it via other means. if you have sources at sony who were privy for this information, and related to you -- even read them to you from paper or

digital copies come and you felt that that source was credible, you would take that information and put it in a story in a heartbeat. -- haveelf has a pained obtained documents i wasn't supposed to have. that's reporting. i think it's journalism. information,by the provided you didn't purloin it -- in theory,ld in a world of the first amendment, insulate you from -- i'm not a lawyer. that's the attitude i would take. as though there were risk, when i check with in-house counsel? of course it would. >> is someone going to lose their job over this? >> their questions swirling around her. createstion is does that a dangerous precedent? >> we know a lot about amy pascal and her relationships with people in the industry.

we are asking issue that different from the other studio heads? >> these correspondences are very embarrassing. if you went through the inbox of anyone in hollywood, there would be embarrassing revelations. nothing in these e-mails, as far as i can tell, appears to be a fireball offense -- fire rubble -- a terminated bowl offense. messages, chat room what they have said. damning for sure. it's nowhere near as clear as this. >> if someone pulled my e-mail today, there might be embarrassing things on there that i might not want the world to read. clearly, not this kind of content. couldn't one make the argument that a studio head -- how many people report to the studio head?

>> going forward, people will be much more careful. >> haven't we been saying that for the last four years? we laugh, but it is a serious issue for sony. that is for certain. >> thank you. from friday, talking with us about sony. i suspect we will be talking about this for a few weeks. >> more "market makers," when we return. ♪

>> coming up, police and the hostage siege in australia. the question is, was this an act of terror? we speak with an expert on counterterrorism.

>> live from bloomberg headquarters in new york, this is "market makers." >> welcome back. >> i'm erik schatzker. >> the hostage siege and most really has officially come to an and as police stormed the cafe in sydney where a gun man had been holding hostages for over 16 hours. all authorities are at saying is the situation is now officially over. there are reports that two people have been killed him a one of those two, the gun man. let's take you back to sydney, australia. give us the latest. morning, the reports are

unconfirmed. the fate of the gun man is unknown and it's reported that one other person may be dead. ambulances are on the scene. ambulance crews are inside the cafe so the siege is definitely over. police are saying that it's over. the timeline to get us your was dramatic over the past hour or so. and little after 2:00 a.m. local time, a male hostage ran out and a few moments later, two more groups of hostages ran out of the cafe and it to 15 a.m., shots were fired. at that point, police accident through flash grenades and multiple shots were fired and they entered the building and moments later, it was announced the siege was over. we have the identification of the gun man now. he is a 50-year-old self-proclaimed cleric.

the media did not know his identification earlier and agreed to keep that quiet. he is iranian which is curious because i ram -- because iran is no friend of the islamic state and he did not have an islamic state flag during the siege but ajihadist flag. he was known to the police. to thee previously writtens families of dead australian soldiers or he was the gun man but his fate at this stage is unconfirmed. the policeusual that have not released a statement or held a news conference? i would say that a statement in a press conference will be

coming from the new south wales police. we have had press, says and, more the day frequently, the deputy commissioner who has been down at the scene. police have certainly had plenty of communications with the media. they will be circumspect about beenthey say and it has asking cooperation from the media and asking that reports be very cautious and that appears to have happened. i would expect to hear something from the police very soon. >> thank you so much for giving us the latest. also davide gartenstein. have been following this situation from afar as have way. what conclusions have you been able to draw thus far?

>> it's difficult to get solid conclusions right now. as the previous guest mentionedm,onis is from iran. they are adamantly a shia country. he has been filmed recently with a turban reminiscent not of sunnis but shia clerics. he has a heretical background and appears -- i claims to be an estherin black magic and allah j. -- and astrology. -- ald up a dishonest flag jihadist flag but demanded someone bring him and isis flag so there is a lot to be said. i think we will know more

about this within 48 hours. >> what are your early guesses? something that strikes me is possibly be more n-islamic and pa anti-west worldview rather than located intocally jihadist ideology which is emblematic of isis or al qaeda. >> would you draw a parallel between the situation and what we saw unfold i think six or seven weeks ago on parliament hill in ottawa where you had a , a soldiern shooting effectively who was guarding and a war memorial? >> on the surface, yes. you had a rash of attacks, one

in canada and then a new york city attack and all of them appeared to have been inspired by isis. lone wolf actors are not that common. a very stronghave record of success in bringing out local attackers or inspiring them. they haveat is that an innovative use of the internet which can service a mechanism to prompt people to action. one reason we see so few low guelph terrorists is because usually it's a group that brings someone to carry it something like a violent act. i think there is a decent chance that this man may be mentally ill. he has a very erratic past including charges of sexual harassment, sexual assault. he had been in trouble with the

law before. early guesses are really just early guesses. we will know more very soon. >> you are an expert in counterterrorism. what approach, if any, should --e governments and austria in australia or canada in the other case have taken? in both circumstances, the individual was previously known to authorities. these attacks are difficult to stop. if these individuals have not broken the law, there is not a lot you can do. in this case, he had been in some trouble with the law. they may have been able to use the immigration system to get him out of the country sooner. there are some ways they could have intervened but inherently, this is a very difficult type of attacker to prevent. the flipside is that lone wolf attackers in general able to do far less damage than groups.

the average level of attacker kills about.6 people in the course of an attack whereas the amount killed by groups is over 1. whichthality is much less is the upside of them being difficult to stop. >> upside -- it's difficult to find the right words. thank you very much. >> coming up, we will discuss more turmoil in haiti. haiti and uponin my return, the prime minister was sat down with was dying over the weekend. ♪

>> hopefully you notice that last week i was not here but in haiti doing reporting for a special we are working on for next month when it will be five years since the earthquake and it turns out, i was there right before a political crisis.

over the weekend, the prime bowing to demands from protesters for -- who are angry about government policies and allegations of corruption. i have decided, on the basis of article 165 of the law of the country, to hand to president martelly my resignation from government and the resignation of all the ministers. with a feeling that we did whatever we were able to do for the country. >> it's extraordinary. this happened over the weekend and i was with him last week when his message was -- this is a very difficult time and the president appointed him to the position and said we have to stick together. uses not justgest against the prime minister but the antigovernment establishment says we need to have a election s. this is just going to create more chaos. , in myon in haiti

observation, is heartbreaking. the earthquake took place five years ago and even though the rubble has tons of been removed, the country is still in a shamble. protesters are in the street but what exactly the opposition is fighting back against. it is considered to be one of the most corrupt countries in the world, one of the worst countries to do business with. >> furthermore, one of the poorest. >> it is the poorest country in the western hemisphere. one thing the prime minister has try tone is attract local businesses. he has a close relationship with president clinton and his initiative in many think president clinton has done more for haiti than any political official there. when he had the resignation speech, he said i am leaving your feeling like much of my duty has been done. if you walk the streets of port-au-prince or outside the

city in the poverty, it does not feel like the case. he is stepping down, he is saying there is so much conflict going on in a group has been put together who asked for him to step down and the state department and troops from the u.s. came to try to quell this. he is stepping down but in six punts, will he run for the president's position? there is a strong chance the answer is yes. >> did he give you an indication that is his ambition? >> definitely not but he is a politician. if he stays in that position while people are fighting against him and haitians are burning cars and hurting one another and dying in the streets, that is certainly not going to help him if he wants to run for president. on many levels, it feels hopeless there. one thing you can hope for haiti five years after the earthquake is the country could sort of group together in one general mission to help the country survive and help with infrastructure. as is only going to set them back further. >> either any clear dividing

lines between the people protesting and those who they are protesting against? >> no, it is chaos. paidhave said they are protesters. many of the memos of the opposition party don't want change. haitians are afraid of change. our the last 100 years, all changes done is for them and set them back further. there is an enormous amount of corruption there if you are part of the establishment, you might not want change. with ahoping to sit down prime minister again and get an update. what you hate to see his influential haitians saying i am moving to miami. that is happening more and more. the messages to educate your kids and save your money so you can get out. if the haitian dream is to escape, how is this country going to ever get out of the hole they are in. the fact that the prime minister is now stepping down, it does

not feel there is a clear path to improvement. >> i look forward to more of your reporting. when we come back, we will speak with the fbi former head of counterterrorism in new york about the siege in sydney. ♪

>> the hostage siege in australia is over as police stormed the cafe incident where a gunman had been holding hostages for more than 16 hours. there are reports out of australia that two people are dead including the gun man. let's bring in the former head of the fbi here in new york city. always a very difficult calculation i would imagine for police went to go in and when not to go in. walk us through the kind of situation the new south wales police were facing in sydney in the early hours of this tuesday morning there. >> we are speculating when we guess as to why they went in at that particular moment. usually, it is a situation where

the negotiations are starting to break down. we heard they were moving the hostages into another room and there may have been some type of indication that the violence was going to escalate so the police come at that time, made the decision to do a dynamic assault to try to save as many lives as possible. you believered australian authorities were for something like this? this is not something we see their in a country where guns are not a big issue. >> it is but we see more and more of this across the globe. if this is a situation where it or a sympathizer to isis loan will situation, it's difficult to prevent. -- a lonel situation wolf situation, if he does not -- any intermission information to anyone else, police have no idea this will occur. intelligence is usually the best method of trying to find out to see if somebody identified they

were going to conduct an attack thereby giving the police the ability to try to prevent it. in the situation of a lone wolf when no one has any idea this will take place, it's difficult to prevent. other tactics that police appear to have used like stun grenades come as standard operating procedure? >> yeah, these stun grenades are used in a dynamic assault to disorient the individuals inside so that the assault team has the ability to go in and for a split second, try to prevent any loss of life. they are commonly used in this type of situation. >> thank you very much. makers" will be back in a moment. ♪

>> that will be it for a quote market makers." >> tomorrow, i'm afraid you will be without me. >> but i have a good

replacement. cofounder, howard marks, out with one of his very special letters from oak tree capital. >> i'm sorry to miss him. >> do you know what time it is? it is 56 minutes past the hour which means we are on the markets and here is more. >> stocks are starting off the week relatively in the red. have the worst weekly declines last year, 120 point rally in the dow. police termed a cafe in sydney, australia where a gun man was held -- holding hostages. stocks plunged on the news. the fed is getting ready to hold her two-day meeting.

lastbeen a while since we talked. the day before i went on vacation, we had the vicks close to 12 and it's now at 22. where are we headed from here? over the very near term, we are likely to see higher volatility and deeper pullback with stocks. is thatotable so far volatility metrics have outpaced the magnitude of the pullback in equities. vix on friday was 21 and change and the index of the vix volatility is well through the october levels. spotvix was above 26. al that is in the context of s&p 500 that was down 3.5%.

in equity, volatility metrics are higher and as far as the degree up all back and stocks are still relatively mild. moreink stocks pullback from here and volatility moves up. >> what does this mean for an investor? they see oil at low levels of a look at what will happen with the fed and interest rates. how do you think investors should position themselves? >> for long-term investors, it's just sitting tight. we all look forward to 2015 and make prognostications. 2015 probably looks like 2014 in volatility terms. an upward trend in u.s. equity market interspersed with fairly short and shallow pullbacks. but that's not true for professional investors. professional investors need to be on top of these events and timing these peaks and volatility. peaks and those below,

it is 10 days but the s&p 500 on average is up 4% over that same time period. proactive and professional investors, reading these peaks and getting long stocks into them is really critical. below last time we were 14 was on friday, december 5. it will take us a while to get there. i want to talk about whirlpool. without talk about it often but why are you watching it? >> they have an analyst day later this week, wednesday is the first analyst a in four years. the stock is up almost 35% since july. they made an acquisition and started looking at forward guidance they had not provided previously. outpaced significantly and we want to because this. term structure has flattened out and the near term implied volatility tells you the market

is pricing in this event. the straddle that expires this friday priced at a 3.5%, we think the analysts say it could be disappointed so we want to put on a collar. for those already long on whirlpool stock, we want to look toward january and sell a one dollar 90 said -- a $1.90 try call. >> we have to leave it there but thank you. we are on the market and 30 minutes, "money clip" is up next. ♪

welcome to "money clip." i am olivia sterns. petsmart gets scooped up in the biggest leveraged buyout deal of the year. dealmakers are circling the wagons for cheap energy companies. in politics, we have a republican showdown over the conclusions of the so-called torture report. today's wild card, a russian dissident sees the end of vladimir putin's reign and in sports, it's college football's most prestigious award, the heisman