from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. takeover target -- american apparel confirms it has been approached by a potential buyer charney'smean dov returned to the company. we have an exclusive interview with the embattled founder. whitneyn -- meredith down a whopping 11% this year and her biggest an answer -- biggest investor wants o-u-t come out. and no real ruby -- nouriel

roubini, why he says machines will take over the world. welcome to "market makers." i am stephanie ruhle. it is a special day because my partner, erik schatzker, is often they and their letting me drive the car all by myself. matt miller is in the newsroom with the headlines. what is the word? >> we're seeing existing home sales come in slightly less than had been anticipated on wall street. the forecast in our survey of economists is 5.2 million. we're seeing 4.90 3 million, coming in just below that in the prior month of 5.20 6 million. we are seeing the month over 6.1%.number down that is that it can lend you will see throughout the day -- that they can light you will see throughout the day. we are looking at it probably 1.1%. that is look so great, especially when you look at the bar graph.

but when you look at online of where they have been over the past four or five years, we are at a pretty decent level compared to, say, the low in 2010 but not nearly where we were at the high have 2005, 2006, 2007. bring in ato bloomberg economist who appears with us to analyze the numbers. >> weaker than expected but we are into november. we have to be very cautious as forecasters not to over interpret noise and volatility in the winter months. weaker than expected report. one thing that does linger in the back of my mind, the national association of retailers said it was a puzzling weakness in the report. we had a lot of bad weather. six feet of snow in buffalo and the northern midwest was impacted. very wet in the southeast. with the nor'easter on thanks giving weekend over the eastern seaboard -- >> can we -- may be postponed or

somewhat negatively impacted. >> can we put that much weight on winter knowing what a horrible winter we had last year? >> when we get bad weather the housing market shuts down. we got a little hint of that in november. i'm not sure it is compelling evidence but given the unexpected weakness, possibly impacting things, maybe they start to tell us something about the underlying story. the one bit of good news in this report is we looked at the median price of homes resold held at 5%. a year ago we were at 9% on price appreciation. now we are down 5%. year, low into next single-digit gains in home prices,. biggestyou talk to the real estate equity players, you

wonder, that is not you and me. >> i think that impacted the numbers earlier in the recovery. from what i have read, it looks a private equity has slowed down purchases and in some cases liquidating purchases and that is why we are seeing some of this moderation. driving the sector will be continued thawing and mortgage or at least the individual homebuyers, not the block buyers, to enter the market a little bit more on top of that. better household income growth, following of mortgage credit gives the housing sector a little bit more light next year. >> are you concerned about a bubble? i will be interviewing sternlicht-- barry about miami. five years ago it was the anderson -- epicenter of the housing crisis. average are not

homebuyers in the miami market or new york or along the coast. as we look at the market as a whole, the gradual deceleration in home prices is good news as it tells us we are not overheating and seeing a big run-up in prices like we saw in 2005 2 2008 -- that run-up in cities like new york and miami and l.a. doesn't have you can earn? -- doesn't have you concerned? >> those are different kinds of buyers. it doesn't squeeze the average resident out of -- it does squeeze the average resident out of metropolitan areas but that is a whole different story. that is a wealth allocation story. >> thank you for breaking down the housing numbers. now time to give you the bulletin, the top is the stories of the morning. president obama won't call the hacking of the sony pictures an act of war. the u.s. has accused north korea of being behind the attack, which is cost sony

hundreds of millions of dollars and effectively torpedoed their plans to feature the release of "the interview." here is the president speaking to cnn. >> no, i don't think it was an act of war. i think it was an active cyber vandalism that was very costly and very expensive. we take it very seriously and we will respond proportionately. >> the president's characterization drew a swift backlash from republican senator john mccain of arizona, who called the cyber attack "a new form of warfare." saudi arabia and the united arab emirates are once again pledging not to cut oil production to prop up prices. instead, the two nations blamed non-opec producers for the supply glut and urged them to cut back to the saudi oil minister says he is confident of the prices will rebound along with global economic growth and he is predicting that "inefficient producers will eventually have no choice but to cut output." if you need to reach someone at

coca-cola headquarters in atlanta georgia, forget about leaving a voicemail. office voicemail at the world's largest software maker has officially been shut down. the chief information officer says "it is simply a way to signify the way we work and increase productivity." telling messages callers to use an alternative method to call persons. and peter jackson's final chapter of the "hobbit" franchise opened on top of the theend box office could warner bros. film is generated $350 million worldwide and the latest "night at the museum" franchise was in second place, followed by sony's remake of "annie," one of the movies leaked online by hackers. on wallbe a star street as a banking analyst but

apparently those skills are not translating into managing money. fund is whitney's hedge down 11% this year and remain investors demanding money back. several top executives have left her firm and she is renting out office space. max, what has gone wrong? she launched this year ago? >> it was literally november 2013 when they actually started trading. american revival fund, very optimistic name. you think of the best is yet to come. that is not what has happened. they have lost millions of dollars, top executives and now the biggest investor wants the money back. >> what does this fund invest in? >> the main idea is to put into effect what she sees as the great vision for the united states of america. she thinks states in the middle

of a country like arkansas will have an incredible rebound, that their growth will be better than us suckers in new york and in california. >> she wrote a book about that. >> that is what her book was about. people, it isd to a little bit different to have a theory about what is going to happen across america and then be able to invest in actual companies. bloomberg reported that there is where onalled conns, credit you get washing machines, 's.niture, plasma tv it is down like 60% this year and they lost millions of dollars on it. >> how big are the funds? >> bloomberg reported that they had $50 million. >> $50 million? >> 50 million. >> is that meredith's own money

or investors? >> investors. she began with about $50 million from an investor and others related to blue crest and there's people wanted the money back. her attitude has been like, no. >> when do they ask for their money back? >> i'm glad no one asked me for the money back because i would also say no. >> but in her case it wouldn't be that she doesn't have the money. your biggest investor formally says "i will take my money," don't you have to give the money back? >> not if you believe that they are in the wrong and they are not equally entitled to the money. we probably will see some squabbling as to whether they are allowed to withdraw this early on. most investors get the money tied up for a couple of years. >> sometimes you can get special arrangements and that could be the case.

have you talk to a lawyer? >> he gave us a beautiful quotation in today's story that everyone should go read that talks about what a visionary investor is and what a hard year it has been for everybody in the market. for me, the bigger deal on the thing that seems stunning to me is that this was just the first year and if her biggest investor and executives are leaving -- >> hold on, who are these executives leaving? >> hurt cfo, her cofounder, the chief administrative officer. >> if she is still trading as last blue crest money but all of her lieutenants have left, what is it like meredith whitney capital? >> i don't think it is a buzzing, busy office. her office from which is a full floor of madison avenue, fancy piece of real estate, is on the market to be subleased.

a seven- ord eight-year lease. she has many years left for millions of dollars of real estate. she wants someone to come in. a very nice executive at from with -- bathroom suite furniture available. >> tough year. >> i guess so. , good reporting. you can read his story on bloomberg.com. when we return, good american apparel go private? shares are searching. you are watching "market makers" on bloomberg television. ♪

>> welcome back to "market makers."

i am stephanie ruhle. american apparel is confirming it has been approached by a potential buyer and is interested in reducing the retailer for up to $140 a share. "the new york post" reported last week that a takeover could be in the works and it would involve ousted founder dov charney's return. trish regan met with him a few days ago and she joins us with more. could dov be coming back? >> he thinks so. that is a debatable thing. just a little color on how i met with him -- he came to bloomberg, our record is, when i was on the air, and it was just as news broke that they were toentially looking at $1.30 $1.40 a share for management. we had a long, lengthy discussion. he can be quite entertaining at times. feeling right now that he has been taken advantage of by this hedge fund.

shares to them and they promised to give him his position back. not necessarily as ceo, but that he would be effectively running the company once the investigation had been completed. of course, there were charges of sexual allegations and misuse -- >> but he is the guy who founded the company. it is his brand. >> and he is the life and soul of that company could he lives, sleeps, eats, and pr that -- and briefs-- breathes this. it has been next ordinarily traumatic for him. making more than $800 million a year as ceo. healy has $100,000 a year to his name -- he only has $100,000 a year to his name. he is living on the lower east side at a friends place. he wants support to take his company private and to have a

role there. he told me he had a big hand in picking the new ceo. she is a friend of his. 30 executives of the company said they wanted dov reinstated in some capacity. it speaks to how the yes in the heart and soul of this -- >> does he have anything to say about standard general? >> he is very upset about standard general. --" standard general -- "my entire life's work and they agreed to put me back in, but instead they used this investigation to fire me, betray me. sharesthem my heart, my -- they teamed up with alan and work against me." "i bet the farm and they robbed me." i imagine that from the investors standpoint they're

feeling is that dov and all he is -- >> which is a lot. >> is perhaps a liability as they try to get the company back on the rails. >> clearly he is passionate, what did he seem rational to you? >> he seems fairly rational but there are times where he goes off on a little bit of a tangent. one of the things that makes dov and a lot of entrepreneurs special is that they have a passion. the question is, at some point, when the cover he to mature, as this one did, how much passion can you have and how much common sense -- >> no naked dancing. >> that for sure. that is the challenge he is in. they need an adult, so to speak, management team -- >> he is the lifeblood of the place. >> exactly. he would like to see the company

taken private. he is suing everyone, by the way. >> that $100,000 is going to go to legal bills overnight. great reporting. trish regan with the big news out of american apparel. miami was hit hard by the housing bust but it is roaring back thanks in part to investors like barry sternlicht. we will ask him why it is so attractive in sunny south florida. ♪

small, unmanned aircraft are soaring this holiday season, prompting new worries about thrown disasters in american airspace. chief washington correspondent peter cook has more.

drones are the must-have gift this year. you've got sons, i've got sons. what my boys are getting because obviously all of those gifts are coming from santa claus, but i have a feeling i will have a drone-heavy house. >> i'm not sure i want to see you piloting some of those drones. we will talk about that later. literally these things are flying off the shelves. amazon has been selling 10,000 drones amon -- a month recently. the company is not confirmed that, but there's a chance that a chance that a lot of americans will be getting it quad copter this holiday season. with so many drones in the air, there is a growing risk of accidents and we have seen that in recent weeks. a couple of high-profile events -- in november a drone struck and injured woman in a florida antique show. you had a small copter flown at a tgi friday's that cut the nose

of a news photographer. in september a man was arrested and charged with lying a drone within 50 feet of a new york police department helicopter. perhaps scariest of all, and airline pilot at laguardia airport in september almost hitting a drone. amazon trying to encourage a safety. there is a website that shows a link to a safety guide for how to fly responsibly. the faa does have rules were hobbyists come even though a lot of people don't know about them. can't fly within five miles of an airport. you have got to be seeing your drone at all times. next hour come even the faa this holiday season is taking part in a conference call with industry officials to remind people what the rules are because they see how many people might have a new drone after the holidays and they wanted to fly safely. a lot of those rules are being ignored. >> do you actually think congress could legislate on this? is it going to affect my boys in the new year? i would think congress has

bigger things to worry about. >> you have a lot of members of congress who are pushing the faa to move faster to approve the use of drugs, particularly commercial growth -- the use of drones, particularly commercial drones. you have the faa ruling as soon as the end of this year, a new rule regarding smaller drugs for commercial use. big interest there. they have been allowing waivers. they have allowed one-off exemptions for the movie industry, for the energy industry to observe pipelines, for example. but right now, other than that, commercial drone use is not allowed in the united states. we are waiting for the faa to issue this rulemaking by the end of the year to perhaps give a little better clarity as to how commercial use of drones can fly in this country. >> i'm worried about radioshack. matt miller wants them to rename themselves the drone zone and go all drones, all the time. chief washington correspondent peter cook. stay tuned.

we will have our own delivery drone later this morning. the horsefly drone. we have that and a whole lot more. ♪

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>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome to "market makers." i am erik schatzker. -->> welcome back to "market makers." i am stephanie ruhle. ispartner erik schatzker off, getting ready for christmas today. you have just me. and what a good year for munis. meanwhile investors are steering clear of puerto rico's big problem. where should you park your muni dollars and 2015? us -- lucky him

joins us from miami, florida today. tell us about what you have seen in the muni market? >> sure. very strong performance, also lower tier rated credit performed well. i think coming in for the first of the year, we are very well in the muni market. we oversold in 2013. , they put theings money back into the muni bonds, but there are improving underlying fundamentals -- >> like where? >> first of all i would say both are the coasts. new york, new york city also improved, the revenues in the budgets saw a real recovery in real estate, which helps the

municipal bond markets. >> what about those who say that in places the muni market is so strong they cannot see the light of day? >> sure. california is seen improvement in the real estate market and also they are having more conservative fiscal management at the state level for a couple of examples. puerto rico has been on a borrowing binge for the last two years. newoes not for financing infrastructure, but financing paying on debt on the islands.

as debt grows and growth falters in puerto rico, that becomes a risky situation. a over 2014 we have seen number of hedge funds raise money to specifically invest in puerto rico. those who have done it -- how long before you think it has a payoff, or do think that will be a bad strategy? >> i think when it comes to hedge fund investing in puerto to the best of my nature they are playing specific credits against each other. electricle, mike the power of authority be trading too low? they trade at $.35 on the dollar, now up to $.50. versus the general obligation the, still around $.85 on dollar. there are some short strategies there.

they have many, many challenges, just in the first quarter, in terms of raising billions of dollars of new debt. all right, puerto rico, a u.s. territory where it is not working. what you like guam so much? >> in terms of its credit trajectory, the fundamentals are stable to improving. they balance their budget the last several years in a row and in addition the borrowing they have done is for infrastructure. much of that infrastructure to support a growing buildup of the u.s. military presence in the island. in addition, both guam and puerto rico have special benefits, which is to say they are tax-exempt not only federally, but in every single state. a place whereted investors cannot find enough paper in california or new york useirginia -- they can

.uerto rico or guam credits but you want to be in something that has improving fundamentals rather than deteriorating fundamentals, or that could be a troubled strategy if you are chasing yield. i think guam has actually benefited from these. >> you mentioned virginia and north carolina. let's go domestic. who in the united states to like? my home state of new jersey is not doing so well. there are some laggards, state-by-state, new jersey being one, illinois being the other. they have significant understanding of their pensions and that underfunding has been growing. illinois,ersey and the are economic recovery, while they are growing, has lied to -- national rail averages

the national averages. a little disappointment on the revenue front and not taking care of their pensions. probably the two most lagging states and an overall economy recoveryan economic benefiting numerous types of municipal bond credits. >> what is your favorite state, if not be in j -- the nj? would say california. not only the ngo, which is had a rally, but the specific health within california that have had economic improvement and fair city value. incomeey have a 14.3% tax in the country, the highest in the country. >> all right, thank you so much for joining us.

normally we would speak to him and chicago, but he wised up and he is joining us today from miami. we will stay on the miami beat and talk real estate, why it is so hot. very starlike is going to tell us about his latest venture. ♪

>> welcome back to "market makers." i am stephanie ruhle. -- miami was one of the cities hit worst by the housing crash. but now it is seeing an improvement with lots of demand. i said down with barry sternlicht. from brought the mortgage one of the investment banks for $.10 on the dollar and that allowed us to put a base in this property where we could spend

.lose to $300 million we had a lot of confidence in the market and particularly the beach market. for theere an appetite high end? these are expensive units. >> actually, it did not start out that way. prices have tripled. >> why? >> because demand is there. i think you are seeing in florida and general, miami in particular -- you are getting all of this international travel, international buyers, europeans as well as this mannish. the spanish. for the south americans, it is a second home. when you havek south american buyers. they do not live here. if the market cells, they could all try to sell. >> i think it is slightly different. many of them -- couldn't you and i have had

this identical conversation in 2006, 2007? what is the difference? >> much to my chagrin, we sold about 75% of what we had to sell , other than the penthouses, which i kept off the market until we finished the hotel properties here. we sold it cheap. we kept raising prices, but we sold it to cheap. we were selling for in a week. in a week. week --4 we have the edge of the baby boomers. but there are high taxes. we seem to have reached the inflection point where people are thinking hard, do they need to be there? you think you will see investment professionals really set up shop here? >> yeah. >> really? in scale? isn't that what puerto rico is for? >> we are not going to go to

puerto rico. the see of access is here. there will be a reinvention behind miami. i think it will squeeze miami like a toothpaste. so many new hotels, so many great developments -- >> we are in a great location, the epicenter of south beach. also we have the largest beachfront of any hotel -- >> what those one hotels mean? >> 1, 1 world. this is a green friendly eco-brand. we are teaching people to live luxuriously and still be eco-friendly. there is no paper in the rooms. you do not take home cosmetics. you check in with technology. the materials are all-natural. the betting is all-natural. i think we will get people who define themselves as it wanting

to say something about them and what they want to tell the kids. >> this sounds like a fantastic idea, but such a huge expense when people are saying, i want bottle service. own market.ave our if you want to get bottle service, you will have to go somewhere else. we will still have bottle service, but it will not be in a water. it might be in a reusable plastic jug or something. >> why? decided we should pull from the european spirit that is what of the few things they have done really well. and i think my generation is starting to really care. this is a conversation we have been having for a year and a half. we are not perfect. we are going to get better all the time. we have had to make compromises. the green architecture. the green is not yet there, but

we say you can live luxuriously and live ecologically green. i think it sends a message to your kids about what you stand for. >> is this the only thing or is it the design? >> the design. it is a passion. >> when did that happen? when did you make the turn? >> when i was six. >> really? >> i wanted to be an artist. my mother told me i would starve. for me, this does not feel like work. >> why? >> for me it is like a concerto. i can hear the bad notes. >> is this your favorite project? >> they are always my favorite. the last one is always my favorite. >> that is barry sternlicht, with his latest project, 1 hotel and homes.

afford one of those penthouses. i probably cannot afford a studio on the second part, but it is amazing. when we return, electric vehicles for ups and expanding into delivery drones just like this one. we will hear from the ceo of electric the of goals. ♪

>> welcome back to "market makers." i am stephanie ruhle. delivering holiday packages may get a whole like greener if amc electric vehicles get their way.

aey are talking with ups for deal for electric delivering vans and they are also developing a line of drones that cut the cost of delivering. they are working on delivering drones. and ofth us, the ceo course, where there is drones and electric trucks, there is also our resident motorhead matt miller. >> and electrical engineer. it is amp? right. per.ike an ambe the delivery guys -- is this going to take them away? >> no. help? so how will it truck, theyc brown

are buying electric trucks from us. but in a move -- >> which is basically what, electrified versions of ups trucks? >> yeah, and not to overstate the complexity there, but that is a great application of electric vehicles. they stop and go, they return to the barn every night for recharging. get very bad gas mileage is trucks. a great application for electrification. ups is stepping up and saying, we will branch out into that. thein a move towards future, given that we cater to delivery companies, if this is going to be part of the mix, we want to lead the way. this resides on the top of the truck. it rides with the truck. ae claw sticks down through portal where the driver can load it up with packages. spot, ando a specific

the driver can tell it not just a specific address, but right on the stoop. >> i have to say i would coined as the decapitate her. this thing makes me a little worried. what happens if there is legislation against drones, because there have been accidents the past few months. this one does look like a real danger. we're working with the faa and the university of cincinnati. this is a toy -- this is not a toy drone. this is not something you are buying for your kids. this is industrial -- actually military grade. to quell the common fear, gps house.t above your it pilots to a call center. there are four cameras. they take it down the last 400 feet, make sure there is not a shrub or a kid or a dog or anything. about where itto needs to go, you have a human takeover.

there are four cameras underneath it. relatively cheap, i'm guessing, to manufacture. how much does this boost the efficiency of the ups guy? >> we think it is going to be -- there are two things. truck ise electric dramatically cheaper than diesel. diesel is about a dollar mile to deliver -- >> even now with the drop in gas prices? >> yet, a little bit. electric brings that down to $.25, $.30. this can deliver, the electricity it uses is about three cents per mile. and naturally it pollutes a lot less. faahat happens if the restricts the use of commercial drones? what is going to happen to you? >> that is for the

non-commercial market. commercial delivery, we have been working closely with the faa. amazon famously has been really pushing them just to test. says, we will faa work with you. we will still put this restriction on. what then? captive, we go outside the u.s.. this is the kind of thing they want to see it happen. jumping off a truck -- it is a lot better mechanics. you have a driver close by, a driver who knows that delivery place well -- >> what needs to go into training these drivers. yes, they know how to drive a truck. they do not know how to pilot a drone. not be thewill pilots. the pilots will be in a call center somewhere. those are certified pilot or the driver is not the pilot. the driver goes on his way. >> this is definitely the future. this is happening. it is not a question of the faa

regulation or the driver having anything to do with it. the question is, are you going to be the ones that supply ups? are you going to be the ones who supply amazon with these? onesou going to be the that dominate the market because you have first mover advantage? >> we have first mover advantage. we have this battery technology we have been working on for a long time. and the fact that it takes a small battery that recharges on top of the truck -- it comes back, recharges, ready for the next mission. it stays within the weight limits and all of the faa guidelines. we think we should be in a pretty good space. stephanie'suntil kids get their play mobile shipments actually dropped off in soho or -- the country --in >> let's assume she lives in greenwich. how long until it is dropped off

at her horse farm in greenwich? >> the steps are the indoor , and thentadium outside. that is what amazon is trying to get. then after you have successful in the wind testing, landing on top of the truck, landing on the roof, then you apply -- if the law is not out, you apply for exemption. there have been a few exemptions. most of them pipeline inspection, that sort of thing. >> this must be an expensive venture in terms of r&d. >> we're not profitable yet. >> when will you get there? >> i can't say, but we're getting there. expensive?ually the thing looks cheap to build? to make sure this never comes out of the yard -- the redundancies. >> is about safety. >> we have dual computers. >> we have to leave it there.

we will be back with more. stay with us. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> dr. doom is in the house. he is talking about the global economy next year. he rise of the machines. says the microchip will replace human beings. that is not necessarily a bad thing, at least for most of us. and we will look at billions of with a man who helped investors put together their collections. welcome to "market makers."

i'm stephanie ruhle. erik is off today, getting ready for christmas canada style. 6% in november -- the $4.93 million -- i can't get this straight, it is the lowest it has been since may. the price of a home increased 6% from a year ago and the market is tightening. -- the acquirer has expressed the goal of acquiring the company. just last week they fired dov , who had already been suspended as ceo earlier this year. shares have surged. reported lastost

week that a takeover was possible. iphone has raised its price in russia by 35%. that is the second hike in a month. costs $955. in russia -- that is compared to a mere 649 bucks in the united states. and china for largest smartphone vendor is now valued at $45 billion after a new round of fund raising. expanding overseas. xiaomi has overtaken samsung in and isone sales expanding into content and services. and a major storm cloud may put a wrench in your holiday plans. beginning tomorrow, a system is

going to chicago and new orleans, headed for the east coast, bringing heavy for jen. -- millions will travel and that is not including santa. travel was up 4% from last year. it is time to bring in my very, very special guest host for the hour. i am over the moon about it. nouriel roubini, dr. doom. he worked in the clinton administration, advises to the world bank. dr. ruffini -- >> very pleased to be here, stephanie. >> you are dr. doom. dr. realist. what you see for next year? positives.e some the united states and the united kingdom are going to grow about 2%. but there is some downside risk. i think the eurozone is in trouble.

they will go into sovereign quantity easing. it will be too late. the eurozone will have the shop of recession and deflation. and there will be other problems in the eurozone as well. >> but is any of that new in terms of the eurozone? i feel like it has been a mess for years and we have been ignoring it. mighthink a new dimension be the political risk in the eurozone. for example, the anti-europe party could come to power. these reforms are going away and you could have someone more populist come to power. spain, they are number one in the polls. -- andunderestimate

there is fatigue in the eurozone and fatigue in the core of the eurozone, starting with germany. that is a must and percent of the votes. >> so what happens if we see these anti-euro parties get control and when? >> if they come to power in greece, if it is not a set of policies acceptable to them in the troika, that is a collision course. than the germans will decide to bailout greece. if one country leaves the eurozone, -- do you actually -- three years ago we were sitting here talking about, is greece leaving? none of that is happening. do you actually believe it is a real risk? >> it has gone away for the last couple of years. but they are at the point where

there are actions coming with a number of the eurozone countries and recession has employment rates at 25% in spain and greece. 50% among the young. were published by the left and by the right. toshould that be important janet yellen? do she need to factor that in in terms of her decision-making here? about growth and inflation in the united states and financial stability. they do not care about the rest of the world, but the rest the world cares about the united states. if other countries are weak, the strength of the dollar is going to imply weakening of the u.s. are someso there assets the united states. not directly. the fed will not have to worry about the impacts of tightening

on emerging markets are europe, but certainly in a world in which there is additional on a terry easing from asia, starting with japan and the rest of asia, starting in europe with ecb, deutsche bank, the speeds, you name it, then all of the is going toing imply strengthening further of the dollar and at some point, the stronger dollar implies lower growth in the united rates and lower inflation and that is a challenge for the fed. and the fed said if world inflation were to survive on the downside, they would move more slowly the policy tightening. >> they talk about this around and around. what is really going to happen and when? >> i think it will be either june or the beginning of the third quarter. is the market expecting -- >> i think the market is expecting, depending and who you talk to. july or september, maybe later than that. june 3 september.

they expect them to only move slowly, gradually. i think the exits are quite priced in. beyond september, that there will be a supply is -- a surprise is highly unlikely. >> do you think janet yellen is doing a good job? doing a greats job. there have not been any significant market hiccups. she communicates to everyone what she's going to do. the tapering of qe, a lot of that in the world economy -- so far we have not seen a repeat of the taper tantrum or people worried about the rates rise or something like this when they start hiking rates. >> you have said before that you that it is the mother of

all asset bubbles. do you still think that? >> i think next year, assets are slightly over valued. case-shiller's index, they are well above historic values. so, excesses have occurred -- >> for the future? pitcher, but when you have p/e ratios at 50, 6 he, if many then i wonder of the social media firms are going to be sustainable or not. up as.s. equities going , p/eas earnings, 60%, 70% ratios are essentially so high that we do not say multiples rising. [indiscernible]

for the next season, maybe another year. >> for those investors sitting in cash right now, looking to put their money to work in january, where do you think they should look? >> at think more than the united states and equities, i would look at the rest of the world. i think the eurozone is so fragile and weak, even if spots are doing well financially. there might be a separate rally. japan is essentially using the weakness of the yen to boost corporate profits and reduce corporate taxes. >> just to make sure we understand, as worried as you are about europe, in the short term do you think there are investment opportunities? if the ecb starts doing qe as i expect in january or at the latest in march -- >> you do not think it will be too little too late? >> it will be too little too late, but there will be a market rally as they do it. there could be a rally at the beginning when there is an

announcement. i see over the rest of the year, we have the growth of inflation surprising on the downside and plenty of risk in the eurozone coming with that correction downwards. >> ah. quarter one there could be a relatively short-term trade? , i head of the ecb in january or march. >> perfect and spring, take your profits and go on vacation. >> spring or summer. >> ok, we will have more with nouriel roubini coming up. i will ask him why he thinks that human beings will be replaced by the microchip. yes, the microchip. plus, we got to talk about art herein i will be looking at a bubble. just in miami a few weeks ago enjoying all of that amazing contemporary art. we are going to find out if it is really worth it. ♪

>> christmas came early on "market makers." onlyjoined by the one and nouriel roubini. i want to talk about what you have called the rise of the machines. you write, the microchip may well replace the human brain. are we talking about the terminator here? robots going to be taking over? i hope not. >> in the long run, many things will change. in the short-term, what is happening, technological innovation is increasingly capital-intensive. say 1000 machines are 1000 robots, one or two workers manning those machines. any guy sweeping the floor right now can be replaced by a robot

who can do it cheaper. >> but how -- >> i think it changes the technology and they are putting that into services that are labor intensive, whether it is health care or government or finance or real estate or retail. slowly, slowly there will be machines and software that will replace human beings. >> but haven't we been saying this for decades. i feel like you could look at a movie from 40 years ago saying, robots will take over the future, and they haven't. changing with manufacturing and services. for example, we have reached the point where artificial intelligence can become really thinking machines. i think the speed of that innovation in the last decade will be much faster. economist's

perspective, how will this affect the world? >> there will be an issue with jobs. we've seen the advanced with aes being dynamic, trending high unemployment rate, still high in. look at china. china -- they are planning for to replacecade workers with automation, machines. countries like emerging markets, the same issues can occur and be an even bigger problem. technological innovation, laborsaving, that increases the problem as it becomes a social and economic issue. china?is the winner, >> the owners of capital. there will be skilled labor. but then low skilled workers, blue-collar, white-collar.

white-collar are going to be replaced by machine. the same kind of thing is going to happen. >> what needs to be done to help our labor force in advance of this happening? the usual thing that people say is we have to provide something like education, training so people can compete in this global digital economy -- thosed of the day who do not have jobs will be challenged by technological innovation. >> if you were the u.s. government right now, do you think the u.s. government should be providing job training? this will only widen the wealth gap. this needs to be addressed today before it is too late. childrend to make sure

and students get the kind of education so they can compete in the digital economy. but what i'm saying is, this powerful trend of automation, globalization of trade are going to mean that millions of jobs will be displaced regardless of that. we will have to think about that policy, distribution. if you were a policy maker ?oday, what would you do if you believe robots are taking over. stage, tofirst provide the kind of skills that will allow you to compete in this global economy. i do not think that will be sufficient. then you talk about the right income policies for those who will lose stability. there will be winners. there will be losers. eventually there will be social or political to -- instability or worse than that. >> can you be more specific

about the losers? >> whether they are blue-collar, white-collar jobs, and historically there will be job losses, but right now, take for revolution.e-books it is great. we can download in one second, four 10 box. but all of these jobs and distribution are gone. think about the education. why do need 100,000 professors of economics when you have the top 100 on an online course? >> and you are in the top 100. >> hopefully. if you have education or government or financial services, a lot of stuff is going first offshore and eventually will be replaced by computer. maybe you can have the same job as someone in europe for one quarter of the salary. so, that is a trend. stuffkily, you got your

on e-books and you are in the top 100 professors of economics. will be our guest host for the entire hour. we have got a lot more to cover. you are watching "market makers" right here on bloomberg television. stay with us. ♪

minutese approaching 26 past the hour, so i'm going to take you on the markets. i'm julie hyman. the s&p 500, very little change today, but we could potentially see a record. the closing, 20207037. that's the number you want to see. we have risen present on the year.

terms of today's session, what is holding it back, again, energy. oil prices not gaining traction. oil producers slump. the worst performers, chesapeake and southwestern energy. one stock that is gaining today is gilead. it makes a treatment for hepatitis. gilead has been at odds with its competitor over the cost of a medication, over $1000 per pill. despite winning a victory, those are down slightly, but gilead taking much more of a hit, one of the worst performers in the s&p today. and of course, we continue to watch shares of american apparel. a buyerany confirming

is interested in the company for $1.40 per share. one of the entities interested was reported as a firm called moving place. of the of the conditions of dovould be a return charney, the controversial founder who was fired after a month-long investigation into his conduct. steph? we have been talking about that story on morning. trish told us earlier about her conversation with a man who basically said he was stabbed in the back. we just got a statement moments ago -- our objective is to help american apparel grow and succeed.

we respect the board of decision to terminate him. we believe american apparel will benefit from the leadership of its new ceo. coming up, we have more. we are talking beauty. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back to "market makers." i am stephanie ruhle. my partner erik schatzker is out today, so i brought in a very special person, nouriel roubini, my guest host for the hour, professor from in my you, and he runs a new website you definitely want to check out, ro ubinisedge.com. scooping upve been art as they look for something

for the altar of wealthy asset classes. let's face it. -- is it anind out actual good time to buy? the fundhe ceo of group, a leading investment firm, and they average 15 million bucks for clients in 20 different countries here and he joins us from london. tell us. of what does the market look like right now? is it a time to invest? is it a time to look cool? >> i would not bother with looking cool. it is time to invest. the super careful. there are two extremes. you see the antiwar hall markets market making huge amounts of money. on the other hand, you could lose money with the ruble. wave geithner three

or four years ago for $40,000. i foolishly sold out and the next year i found that it hit $1 million, and in fact $2 million as part of an auction. i sold out early, but there are superb gains to be made if you understand what you are doing. at art basil.n we took a tour, and he says he does not look at it as a financial transaction. take a look. >> in no way do i view this is a financial or economic relationship. if you do that -- if you buy stuff and you love it and the world loves it, it goes up in value, great. but that is not what you should count on. is not what you should count on, but what if you thought russian art was great? what if you love furniture five years ago? you would be in the dumper today. >> you diversify.

we look at modern and contemporary markets and impressionist. if you look at the lovely -- $63 million. the owner probably paid less than 10 million. six and a half times is money in 20 years. if you understand the market, it's very interesting. you need to be at the top end of the market. you need professional advisors working with you. and you need to look at areas where the really is a limited amount of supply. there is a huge amount of money coming into the market, new wealth. when i was a christie's 20 years ago, we saw a small contingent of key collectors buying. now we have huge amounts of investors. but i believe they will be piling into the art market over the next 10 years. i reckon that some of the art world will multiply by 10 where we are now in the next 10 years. but you have got to be careful.

avoid some of the rita markets because they can me very prone to economic ups and downs. if you focus on the contemporary and modern, focus on the top end. i think you will do extremely well. a question.k with the demand in high-end art in the last year going from wealthy people in russia or the middle east or asia -- the ruble is collapsing. many oligarchs are losing money. prices are falling. a lot of sheiks are going to make less money. there is conspicuous consumption where there is art, fancy cars, watches. do you think in the short run this might lead to a correction? >> i don't say that. russians, at the huge amount of their wealth is already out of oil, into london or new york, out of moscow.

many chinese have money outside of hong kong. the middle east, still sitting on very large amounts of money. if you look at saudi arabia, in , a small a dobby amount of their allocation of onh -- it as a huge impact the upside of art. we have been involved in the about $200nths in million of deals. three deals of over $40 million. in that is unprecedented level for us. we have seen assets coming our direction up from 10 years, 10,000,002 nearly 400 million. we have seen that grow, people looking to invest and hold off under our banner. but i think people are going to selective. they will be super careful. they will be buying blue-chip

francis bacon, and theydégas, warhol, will shy away from lesser-known market. affordthose who cannot the true high-end, they should not even play? the true cannot afford high-end, be careful. ,y view is, you take the advice by what you like, but by from the good dealers. if you buy from the top 10 dealers in london, new york, paris, they all look after their artist, and you will see their --ist get into museums >> you have to pay is worth it given that they know how to cultivate those artists and get them the dollars? >> i absolutely do. tonow that it seems crazy pay a margin, but trust me.

look what happened a few years ago. one artist on the way up, in the auctions making huge prices. you could afford something pretty inexpensively. look at crystal will. abstract forord an $50,000. now it is nearly $4 million. a question.k other asset classes can give you again -- [indiscernible] rent and sos you on. art, with the psychic leisure of having a beautiful piece of art -- 90% of it in stored somewhere -- [indiscernible] is, it gives people a great deal of pleasure, but art is verynt, movable clear it a hedge against inflation, is a -- it is a

currency of its own. you can sell off in new york or london or moscow, japan. you complain the currencies are there's an interesting opportunity there. clients are putting their assets , about 5% of their wealth into art. not because it will make huge amounts of money, but they want to have a safe given and they and seen art hold its value in some cases do extremely well. putting 5% into art -- a safe haven. people thought that was buying muni bonds or putting it in a mattress. not buying a warhol. you clearly hang out with swing gear people than i do. people than i do. when we return, nouriel roubini will tell us why he is on a campaign to tell americans they need to learn a lot more about finance. stay with us. you are watching "market makers"

right here on bloomberg television. ♪

>> welcome back to "market makers." i am stephanie ruhle. along with my very special coast for the hour -- famed economist nouriel roubini. you launched a website, roubinisedge.com. your goal is to help her with financial literacy? everyone? >> pretty much everybody. it is appalling how little financial literacy people out. they believe that stocks are more high risk than bonds. there are lots of stereotypes. you need to make the decision when you're young how much you are going to save, how much you .ant to allocate your savings there is not much financial literacy. >> what are you doing? a we have the website with

newsletter written by myself, giving you the basics of what is happening in the economy. in california, you can diversify across the u.s., diversify your assets internationally, but if you invest abroad, you need to know where to invest. it is educational. the pieces will be written by lots of prominent people, myself and others, to give you basic economic, financial literacy. you seen a decline in financial literacy? when you are at nyu, do students today no less than they did 10 years ago? >> my students, of course they know a lot about business. you take the average undergraduate, i think most of them do not take economics or finance. i think that they should teach this in high school. you are making leases visions all your life about how to

invest, how to save. it is what the key things you should know about and most people do not. >> you believe that it should be a core part of a high school degree? all, you make economic decisions. which major effexor human capital and how well you are going to do. secondly, you make these savings decisions once you have an income of any sort and if you do not invest in the right things or save any amount, most people are under saving in the united states, it will not be there, it will not be sufficient. people are retiring at 60, but they will live until they are 80 or 90 longer. , many people use to die before they got their first check. now we are living much longer. these are main decisions about aging and savings and investments. know so little? when we look at the housing

crisis for five years ago, it was extraordinary how many people did not understand the mortgages they were signing up for. there was deception. there were people trying to do predatory lending, for example, financialong the operations, there were respectable operations, but there were also scum out there. you should know if the fees are too high. if you do not, the decisions will be negative toward you in your lifetime. >> [indiscernible] . >> something educational. there will be a basis for a discussion, for a blog. there will be a discussion about the global economy, investment, financial choices. >> all right, you definitely want to check out his new website. we will have more candid conversation with nouriel roubini when we are back. stay with us. you are watching "market makers"

right here on bloomberg tv. ♪

>> we have a few moments left with my guest host, economist new railroad meanie. let's do were decisions -- word association. r putin. >> dangerous. >> dangerous? isthe ruble falling, he going to double down and become more aggressive. that is what i feel. >> obamacare. the goal of having universal health care for everyone is a good one. i am a supporter of obama care. it has many intricacies over time like other social welfare programs. >> elizabeth warren? shehe is very bright, and

is cognizant of the fact that we bailed out the banks and a lot of this irresponsibility is happening again. there is a lot of resentment against the financial industry and she is tapping into that resentment. >> is her criticism valid? do she truly understand? thehe knows a lot about financial system. she was spear hitting -- spearheading the efforts and protectionsancial which the republican congress is pushing back against. i think she is doing a lot of good stuff. >> jeb bush. bush againste clinton again. another repeat of that one. there could be a lakh of civility. . >> what is your view of hillary clinton? >> i think she would make a great president if she wins. when the clintons were in the white house, i got to know her.

she is very, very smart reaching is about domestic alice he, foreign policy. very smart. -- is very smart. >> whether you agree with him or not, whether you like him or not , he is great. >> xi jinping. question about xi jinping, is it going to be about financially consolidated power, or is he going to be like mao zedong, someone who wanted to maintain power. i think it will be a combination . he was to make sure the communist party is in power, and therefore changes will occur more slowly than his optimal. >> kim jong-un. it is carrots on one side and threats on the other side. i do not know if he is trying to get the world's attention. the guy is weird.

>> last one. uber. >> i use it all the time. i think it is great. there you go. nouriel roubini, you have got to check out his new website, roubinisedge.com. we will be back with more. ♪

>> that is going to be it for monday's edition of "market makers." i got to be honest, i was little

nervous at the beginning of the show. driving by myself. i had a good time. hopefully you did. tomorrow, hopefully we'll be even better. i will be joined by jeremy siegel. i will also be sharing with you theitdown interview with world's fastest man, you same bolt -- usain bolt. we were in a running race. i held my own. that is important. it is 56 past three hour. that means bloomberg is on the markets. julie hyman has more. i hope you were betting on me bolt it comes to usian versus stephanie ruhle. there is running. i do not think there is any contest. if you are looking at stocks, we see a mixed picture going forward. potentially the doubt is at yet gain, butiple digit

stocks are coming off their biggest three-day rally since 2011 and posting record highs. these strategist at him km holdings, and since we are getting near the end of the year -- let's look at 2015 in what you are looking at in terms of options. >> sure, a good thing to look at this time of year. of focus is on the unwind volatility. what is notable, i think, is in october, we saw barely significant volatility events. this was the same time that the quantitative easing program to round down and we had and other significant high magnitude volatility, the highest since january 2013. that really has been embedded in the view of 2015. >> in what way? meaning we can expect more of these events? >> that is right.

i think the implied volatility is higher. it is still in the 10 to 12 range. volatility usually averages five or six years. btw over volatility regimes were just under five years. we are marking this just about two years. unless you have a markedly different view of the u.s. economic cycle, we think there are several more years of expansion i had. you can also expect this volatility regime stays in place for a couple more years. >> if you go along volatility, how you do it? >> not here, now. the last couple of years, we have had volatility events almost every two months. it is very apparent. we think of it as a natural frequency of the market. to us, it is plain as day. many people argue it might not repeat.

but it is critical to building a forecast. expect the out and next valid volatility does not happen until february. get long, yes. not herein now. we think that we are clear to year-end and through much of january as a result. about a traitalk that you have that underscores what is going on. this is the search engine in russia, the stock is down, as you might expect. everything russian is down. you are looking for a potential return, if i am reading this right? of hourslot of clients want to do long-term trades at this time of year. if you look of the ruble, the implied volatility is up above 70%. the implied volatility for the 10%. is usually more like perhaps a real unwind, i.e. real

stabilization. with that, we think equities can do better. one of those is the yandex. relatively expensive versus its global peers. we want to go out to january 16, by 16 strike puts and by the strike calls. it is called risk reversal. >> thanks a lot. we will be watching that trayvon the short-term and the vol call in the long-term. we will be back on the markets in 30 minutes. "money clip" is next. ♪

welcome to "money clip." i am olivia sterns. american apparel gets a bed. a buyer is interested and a takeover may mean he is back. meredith whitney has found it harder playing mage fund manager. and where the money is not going. faa ways new rules and a look at the top stories. homes fell more than forecast. the national assoio