>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> something to cheer about -- that is what yahoo! and apple are getting investors. shares of both companies are surging. outbreak -- this childhood disease is making a comeback, and it looks like it all began at disneyland. and, returned to the super bowl -- nissan comes back to advertise after sitting out of the game for 18 years. welcome to "market makers." i am stephanie ruhle. my partner erik schatzker is out

this morning. so, phil mattingly is here which makes me -- >> so lucky. all the way from washington, d.c., survived the blizzard thing. >> wrote to have you. start with the bulletin. >> the top business stories -- shares of apple surging, up almost 8% after it reported a record-setting $18 billion profit in the last quarter. give credit to the new, bigger iphone. the company sold 75 million of them in three months. yahoo! is rising as well. the internet company plans a tax-free spinoff of its entire stake in alibaba. investors had pushed ceo marissa mayer to return cash to shareholders and to find ways to cut taxes. it sounds like investors cannot get enough of the burgers and shakes. shake shack is increasing the amount it might raise in an ipo

to $95 million, adding value at about $675 million. the shake shack i feel is expected to -- ipo is expected to price tomorrow. new england is digging out of the blizzard that don't two feet of snow -- that don't two feet of snow on boston. the transit system is up and running. flights have begun arriving to the city's logan airport. >> now, more on the tech stories moving the markets. the yahoo! spinoff and apple's reppert -- record-setting quarter. scott the -- in charge of tech research, and our own guru weighing in. scott, do you take this as a big win for marissa mayer at yahoo!? >> i do not think there is any question they were able to achieve this in a more efficient and time beneficial fashion that

people expected. the question now is the core operations, and i do not know if they have answers as to what is going on there. >> paul, what do you think? >> from a tax perspective, the alibaba issue is by far than one issue. the management team delivered on the most cash -- most effective transaction they could have done. shareholders will benefit. from that perspective, marissa mayer really delivered. as scott mentioned now, the focus, for better or worse, will be on the core operations of yahoo!, and i will tell you what, the quarter that we saw last night, we did not see much evidence they have their arms around it and can start driving growth. >> what is yahoo! actually worth? this is cover essentially, and now it will be gone soon. what is yahoo! essentially worth? >> it is being valued at almost nothing. it is amazing.

investors are trying to get a sense of what the court cash flows of the yahoo! business will be worth, and investors will look over the next several quarters for any sign the management team can drive growth. >> who runs the spinoff? if marissa mayer is left with a core business that essentially has nothing going on, who gets the spinoff? >> the shareholders get the spinoff. it will be an investment vehicle. >> with an outside ceo coming to run it or run it down? >> someone will manage it and it will include one legacy operating business to be determined, but essentially the entire value of the spin co., as it is referred to, will be the stock of ali baba. scott, if you were ali baba wouldn't ali baba by the entity? >> that is the scuttlebutt today as ali baba gets ready to report quarterly results. i think it is fair to say the

company will look to address that very issue. obviously, if you have a big stake in ali baba separated as a publicly traded entity presumably ali baba would have an interest in perhaps, consolidating that stake. we will see what they have to say about that when they report results. >> scott, you talk about the core business. marissa mayer said there would be a couple of steps forward, a couple of steps back going forward. how much time do she have to actually have steps backward before people say, especially that ali baba is gone, something needs to happen to change the direction? >> i do not know. she is probably fine for the balance of the year. if you remember, when she took over in mid-2012, she made it clear, and people did not pay attention or believe what she was saying -- she spoke about taking years to turn around yahoo!. now we are in that period of

time. they have addressed issues and questions related to ali baba so, now, cleveland the focus has to be operations, and they indicated they would return to growth across major categories this year. it seems like this year will be her opportunity to deliver when it comes to, at least, that promise of growth. >> let's talk about someone who is delivering -- tim cook crushed it. what do you think? >> and unbelievable quarter driven by china and more so by the iphone. investors had been waiting on the new products, the next big thing to come along. this quarter showed existing products are doing fine, and they are driving the growth. tim cook notably, said he continues -- said he sees continued growth out of the line of products. xe also said 2015 would be the year of apple pay. there is also concern in terms of retailers willing to accept it. what do they need to do to make 2015 the year of applepay?

>> apple pay will be a big part of not just apple, but all e-commerce. alibaba amazon ebay, they are all recognizing electronic payments will be the driver of mobile e-commerce. apple will be there. it is a question of when merchants and consumers in general will really embrace electronic payments. we are seeing data that that is in fact happening across all of these companies. apple, you would expect to be there with their interface. >> scott, what do you think -- tim cook can do no wrong? >> with the company that size generating revenue growth of 30%, when you think about something paul alluded to -- 57% growth from iphone alone -- obviously, the company is firing on all cylinders -- the ipad japan. nonetheless, getting back to what we were discussing about

applepay i, for one, think suggesting this will be the year of applepay is hyperbole. it is wanting to make it available and to have marketing and news flow related to it another thing to generate revenue and profit. i think it will take time to deploy, to educate vendors, their employees, and users, and i hardly see this as the year of applepay. >> not to or cold water on what some people have called the quarter for the ages, but i am from washington and my optimism was crushed years ago. ipad sales went down, or at least slowed again. is that an area for concern? is that something the company should be looking to improve? >> it is something we have looked at. it is not something new. frankly, ipad sales have shown declines over the last few quarters. i do not know that there is any

near-term fix. on one hand, it is fair to say caplets -- it is a different category than -- tablets are a different category than smartphones. with tablets, you have an elongated, upgrade cycle. with smartphones, you have the benefits of long-term contracts. you have carrier support. in addition to that, i think it is fair to say that right now, you look at what apple has done more recently, they released the iphone 6 plus, which has cannibalized potential ipad sales. this is definitely an issue. i do not expect it to be remedied anytime soon. >> ok. compare what tim cook has done with apple and orissa meyer. -- marissa mayer. apple is crushing it. marissa mayer might have done a smart job in terms of financial engineering but operationally, running a company, i do not think you can compare the two.

>> you certainly cannot, and one might be arguing that marissa mayer's honeymoon with investors might be coming to an end shortly. internet advertising is growing 50%, yet yahoo! is not growing. >> even though advertising is growing on the internet, isn't it growing in new mediums, not old yahoo!. >> that is right. yahoo! stressed they are developing the faster growing parts that are not growing, most notably native advertising and mobile advertising. those are areas where they are lagging, several years behind the competition, particularly in mobile. her are some green shoots in the numbers. the core advertising business is just losing share relative to local, social, and mobile. >> before we go, i want to bring in scott to talk about my favorite subject -- piles and

piles and piles of money. what will apple do with all of theirs? >> 170 billion dollars -- bigger than at&t at the beginning of the day. that says a lot. a lot of that is overseas. i do not know if you have insight into this, but the most legislators and the president are able to implement tax reform for operations, that cash will largely remain overseas, so that means they basically can build out capabilities internationally, and they can buy, let's say, international company's. a lot of that cash is going to be committed, we think, to an increase in buyback and dividend plans. >> no big acquisitions on the horizon. >> i doubt it. they are still working on beats and there are questions about how that will be implemented and executed on. i do not see big acquisitions for the time being. >> thank you so much. scott kessler, senior director

and head of tech research at s&p iq and our own paul sweeney of bloomberg intelligence. >> coming up, waiting on the fed -- four hours from now we will hear if policymakers are becoming less patient. >> us, building suspense -- we can only show you eight seconds of this companies super bowl ad. they spent so much go on it they do not want to let the good stuff out early. stay with us. ♪

>> first. bloomberg. >> welcome back to "market makers." i am stephanie ruhle with phil mattingly. it is fed day. economists are not expecting janet yellen to drop more hints about the first rate hike in eight years but they do still think it is coming as soon as june. for a look at how the markets could react, i want to bring in jena martin-adams, and equity strategist and our own

strategist, carl. what are you expecting today carl? >> subtle tweaks to the statement acknowledging growth and the ongoing mending of the labor market. the thing to watch for is inflation commentary. said members are concerned about low inflation, core inflation decelerating the last 12 months. we are down over the last three months. likely to continue through midyear. the real surprise today would be a state-owned down the inflation rhetoric, hinting of deep concern. if they do that, the market would push expectations beyond midyear. i do not think the fed is ready to do that, but watch for expectations. >> gina, what do you think? >> economist might be hanging on to june, so you have a conflict.

the divergence needs to close. this meeting will be key. i think karl is spot on -- they are not likely to do a lot, not likely to rock the vote -- rock the b in the volatile marketoat. >> there is something you can see you can see in the statement that would actually do that -- close the diversion. >> it could go either way. either the fed backpedals and says we will be patient for longer, where they pull market expectations forward. obviously, the former would be better for the equity markets than the latter. >> i do not think they want to pull expectations forward. they want to keep options on the table. the reality is given the dollar, we see tightening of financial conditions. >> what does that mean? >> at some point the fed wants to take the punch bowl away and their way of doing that is through higher interest rates but it could also come through

other methods, other channels, and one of them is the strongest -- stronger dollar. without moving on interest rates, the dollar has appreciated considerably and we saw the impact yesterday in the durable goods data. a stronger dollar will slow down the u.s. economy. the fed will mow over this. we will see hence in the minutes and increasingly noted over the next couple of months. already, the downdraft are there. the fed might not have to do that much work, which gives them an option for the september meeting. >> any expected commentary on what is going on in europe, or finding a way to address at the u.s. right now is lonely? [laughter] >> they will not highlighted in the statement, but it will be a question reflected in the minutes. >> what do you think, gina martin adams? >> i think is spot on with the dollar. >> we only like conflict. this is business tv. try again.

works well, you have earnings depressing impact on the s&p 500 from the dollar that is greater than the economy. it is a pretty big difference. so, we are experiencing greater pressure via the dollar in the equity market than the fed might have to acknowledge on the broader economy. that is creating little bit of friction for stocks as well right now. i live in the world of stocks not in terms of the economy. we love liquid conditions at the fed, and are suffering from sort of, the precursors, of future fed tightening. >> before we move on, what do you think about the fed -- about earnings season so far question mccain seems every passing day we get a totally different asset -- so far? it seems every passing day we get a totally different comment.

>> there is a different shifts. there are absolutely winners and losers. that is what 2015 is about. as we move toward a period of liquidity and tighter conditions, you will have winners and losers. >> gina is touching on an important theme, talking about the pressure on earnings and corporate profits and earnings drive investment and hiring. the big feedback mechanism we have to keep an eye on is if the earnings disappointments translate to a slower pace of hiring later this year. i do not think we will see that but the perfect storm might be brewing. we had a lot of temporary hiring leading up to the holidays. that means the seasonal factors might not be accurately capturing this. the bottom line is january payrolls -- >> on the retailers stuffed it. >> january payrolls might not be reflective of the economic trend. it could be a one-off fluke, but

if that happens, people will see a slowdown in the pace of hiring, earnings problems, the downdraft are there, and they will overact and say the fed is not going until 25th -- 2016. that will be the overreaction to the employment in january. >> take me to the meeting. by sourcing alone, you might as well be there. policymakers in washington might not able to get their heads around what oil means right now. whatever you want it to be, it can be. how are the people in the meeting looking at what we see in oil? >> a number of fed speakers have indicated they believe lower oil prices are in positive for the -- are a net positive for the economy. since we are an importer, they view this as a tax cut or consumers, so it is a positive factor over the longer run. what i'm not sure they are catching is the impact on core inflation. everyone says core inflation

excludes food and energy, so the oil price impact will not be there, but over the last 25 years, every time oil has fallen by this amount, or even less because this is a substantial move, we have seen knock-down affect on core inflation by about 50 basis points. things like airfare, the cost of transporting goods to market and whatnot, come down as gasoline prices fall. this means the fed is talking about confidence, making the leap of faith that they can raise rates with the confidence inflation is not a target now but will eventually get there. if core inflation is slipping, that confidence will come under pressure. >> gina, you were saying before -- there are clear winners and losers. sectors, what do you like? >> we like health care. it is the strongest earning power in the index. secondary to health care, we still like technologies. i like industrials and materials

for a late-2015, early-2016 pick up. we will see expectations so far depressed that we are pricing out a rebound with respect to those lower cost inputs. we have bits and pieces of the index where we see optimistic signs and you want to hug those pieces through the turmoil. >> i just want to hug. expertly appropriate. >> thank you both, gina martin adams and carl riccadonna. stay with us. >> "market makers." we will be back in a moment. ♪

>> coming up, the outbreak of measles at disneyland -- some you could probably say all, public health experts will say it is totally preventable.

>> if you want a cheaper hotel room, you have to work on your twitter game. the bigger your following, the cheaper your rates. we will tell you why. stay with us. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome to "market makers." i am stephanie ruhle. >> i am phil mattingly, in for erik this morning. we are in the green this morning. let's check the movers with scarlet fu in the newsroom. >> the dow might be 3% away from its all-time high, but our producer doug up individual stocks trading at their best. starbucks -- the highest since 1992. lowe, the home improvement and

-- retailer also at a high. whirlpool also at an all-time high. the lesson we learned this week especially yesterday earnings matter. i will give you a preview of what we are looking for after today's close. the tech sector is in focus -- facebook and qualcomm. for facebook, revenue is seen increasing 46% from the same time last year. monthly active users might increase to 1.3 billion, more than the population of china. as for qualcomm, people will be looking for commentary on samsung's decision not to use qualcomm chips in the new galaxy s phone and whether that is an indication going forward. three companies have reported earnings so far. let's give you a scorecard. i will head into the terminal. it is hard to see.

it allows us to see where things stand. i will verbal it for you -- sales and profits have increased across the board, on average, 3.8%. profits have grown 5.7%, but it is not without its losers. the material sector posting declines in sales and profit. in terms of the surprise -- what does it mean relative to analyst estimates? let's show you a chart that highlights everything. companies, we know, are careful to under-estimate and beat the lower bars, but the right of the positive surprise has diminished. in the fourth quarter, companies are beating earnings per share on average 4.7%, versus 5.1% in the third quarter, 5.2% in the second quarter and the high water mark of 5.9% in the first quarter of 2014. we will have more movers for you in a couple of minutes. >> great charts. thank you very much. >> now to a subject i just do

not like. the measles -- they are making a comeback -- a completely preventable comeback. an outbreak in california that apparently started in disneyland, has put the ole miss back in the headlines, and -- illness back in the headlines and put the emphasis on parents that are refusing to vaccinate their children. it is not just their children they are putting at risk but their classmates. i want to bring in july and strong, who covers health care issues. i cannot believe -- drew armstrong, who covers health-care issues here on bloomberg. i cannot believe this. parents that are risking not vaccinating their children's national kind of risks are they putting on their community question >> we have a safe --community? >> we have a very safe vaccine. this disease kills around 150,000 kids year. it is capable of being

eradicated. it is only transmitted among humans. we can do this. you talk to these experts and they say people forget how scary these diseases were. >> maybe they forgot it because all of those people wised up and vaccinated themselves. >> that is exactly what happened. we eliminated measles as native to the united states, and only had many 100 cases a year with people bringing them in from other countries. now we see pockets of the country where you have maybe one out of four school-aged kids who are under-immunized -- who do not have the full components of all of their vaccines that they need and they can create these pockets of outbreaks. all of a sudden you have real transmission in the u.s.. >> there is a question. some celebrities make this an issue. i will not name them. >> jenny mccarthy. >> stephanie went ahead and did it.

are they driving this? is there a way to quantify their role? >> we have seen rates of non-vaccination growing and a lot of times it clusters in certain communities where either parents or physicians, or whatever, they might think i am not going to get my kid vaccinated, so you will have pockets. central california, sometimes. we have seen high rates in michigan where there are waivers. there are state laws that allow waivers, not on medical or religious exemptions, but a philosophical waiver. >> this outbreak has happened in california. what can be done? can the whole community say let's get vaccinated? >> the vaccine works. it is 97-plus percent affected. >> compare that to other vaccines? >> the flu vaccine was only 23 percent around those lines.

in this case, it works. we fixed the problem in the u.s., and we had 650 cases in 2014. >> put that in comparison, how many cases? >> 644. that is what we monitor and gets reported. 10 years before that, we had 100. >> this is crazy. >> it is crazy. disease experts are worried. they say this is a major public health achievement in the united states and we are at risk of undoing it. >> this sounds so bloomberg, i apologize, but is there a company impact -- companies that are primarily responsible for the vaccination hit the fact that this has become an issue? >> the beautiful thing about the vaccine is that it is cheap, widely available. people can make this thing for pennies. it is not a big moneymaker. it is a fundamental health issue for the world. >> for those choosing not to vaccinate themselves, their children, are there other

diseases like measles we should have an eye on? >> whooping cough has been making a comeback. you know, we have the flu vaccine -- the flu vaccine, you know, it is important. there are vulnerable, sick people out there that are put in danger when they get ill with the flu. measles can cause serious competitions in some people. it is a low rate, but in 1990 in the u.s., this killed three of every 1000 people. 1990 -- i believe we had mtv that. it is not the dark -- then. it is not the dark ages. it is a scary figure. it seems small, but if you are a parent and you have a kid and you know they can get infected, that is not something you want to be walking around with. >> it is true. thank you for the latest. bloomberg's own drew armstrong. you had better get yourself vaccinated. >> coming up, trading tweets for a discount -- the idea behind a

new hotel room. >> not a bad idea, i have to say it. thank you, drew. ♪

>> welcome back to "market makers." i am stephanie ruhle -- do you have a large following on twitter, instagram, or linkedin? that could help you get up to 50% off of hotel rooms thanks to hotellead. we have the ceo. walk me through it. how does it work? >> the idea is it is the first booking platform that matches

individuals with personalized discounts. today, when you search, it does not matter who influential you are, what you spend, how often you travel. it is the same price for everyone. if i'm in new york hotel, someone who comes 10 times a year, it is much more valuable than someone who comes once a decade. >> i am someone that uses twitter, instagram -- i like 20 take hotels, eco-friendly. i hate skyscrapers. >> this is stephanie angling for a discount. >> this is what i want. how does it work? >> is perfect for you. we specialize in boutique and luxury hotels. you create a profile and it includes social media instagram, facebook, twitter, and you link your frequent flyer program. we know how often you travel. we negotiate exclusive discounts

that are only available to us and they get to decide what type of consumer they are going after. one hotel might say we want the frequent traveler because we are having a tough time getting that consumer. one might want the one that will create a following for us. >> let's walk through that. let's say phil mattingly, who is handsome young, cool, says i want to stay at the four seasons and will tweet up a storm, he gets a discount? >> and my pledging tweets -- and my pledging tweets question were >> no, you are not pledging. it is amazing how often people tweet and post when they are traveling. >> what happens if i go, you give me a discount, i get there -- >>. post, hypothetically. >> let's say i get a discount

and then i tweet myself with a horrible dinner and bad service and i say this blows. >> hotels believe in their product. it is a losing strategy to say i need to avoid social media. the reality is if the meal blows, you might do that anyway. i think hotels are embracing social media and they understand they have to him indicate differently. a few years ago if you are unhappy, you might complain to the general manager, and now you are likely to tweak. >> i have been to places where i have gotten bad service, i have tweeted, they tweet back, and you like them a little more. >> i think they understand social media is not going anywhere, so they are embracing it, trying to get new demographics, that way, and for the first time rewarding the consumer for the free market. if you tweeted, the only one

that benefited was the grand. now you are getting a discount because you have clout. >> what is the process for getting the hotels? how did you break in, and what of the bigger targets going forward? >> for us, we are the only company that allows us personalization online. we are re-creating an experience that disappeared 20 years ago. you used to go to a travel agent and that travel agent had a relationship with you. they would say you are going to paris, i have a perfect hotel. they would have a relationship with hotels. we are re-creating that using technology -- we know who the consumer is, the hotels they're looking for, the matchmaker in between. >> who is your white well -- the hotel you want to link up with? >> we want -- we started with independent boutiques, and we

want larger brands. we would love to partner with four seasons, luxury brands at the starwood hotels, marriott hilton heard >> you have been everywhere seen every thing -- what is your number one favorite hotel in the world? >> it is probably in italy -- it is a personal story for me. i traveled there as a kid, and i think that was the first time i knew i wanted to go into the hotel business. >> in new york city, one of the hottest hotels to stay in question were >> a tough question that will get me into trouble. >> --stay in? >> tough question that will get me into trouble. >> that works for me. >> across the hotel. >> i like the hotel. zeev sahron congratulations. zeev sahron the ceo of hotelied . i would agree, crosby hotel good food, good location. i am with you there. we will be back in just a few

with more "market makers. still -- phil mattingly, he lives in d.c.. he is saying is that? ♪

>> this is "market makers." i am scarlet fu at the breaking news desk. the s&p 500, little change. the dow industrials struggling

to stay in the green. within the s&p 500, tech shares are leading the advanced, while energy shares are falling. the nasdaq, the out performer of the bunch, giving the earnings report out of apple. in terms of losers -- joy global is at the lowest since november 2009. these are commodity-related companies getting hit by the fallen -- falling demand for energy and metals. peabody energy, now at a three-year low. fremont mac moran lowest since 2009. report mac moran has not anticipated because it is right back to where it was. our producer has been keeping a close eye on netflix, seeing if it would extend its rally. it did not. it ended the seven-a winning streak, and during that time it jumped 40% versus the nasdaq 2.9% gain. volume has been less than

expected. there was a lot of talk about the company making progress for positioning globally looking for a returning global profits by 2017. i know you will be talking to peter cook shortly. in case anyone was wondering, "house of cards," season three set to debut in one month. >> the you like "house of cards?" >> i love it. in washington, you do not have a choice. >> of course. you cannot participate in the conversation. >> do not hate on washington. >> you could have binge watched on valentine's day. i cannot believe everybody did. >> nobody said anyone in washington was cool or had a social life. >> i happen to think you are cool and i hope you have a social life. i want to talk more about d.c.. i am lucky enough to have phil

with you. even though i prefer new york, we have to talk about d.c., and i want to bring in my other favorite washingtonian and duke university alumni, peter cook. entertainment. what is so special about d.c. this year question my >> let me first admit i instill a season and behind --this year? qwest let me first admit i am still a season and a half behind. >> there have only been two seasons. >> peter cook is all about "orange is the new black," "breaking bad," and he is tangled up in "girls." >> when it comes to washington, i know you are impatient, and the process boards you to tears. it is all about gridlock. however, there is something going on today that peter has been paying attention to and that is the confirmation hearing

for the next attorney general of the net states. financial crime, national security, everything. i was expecting she would get hit pretty hard by republicans, but peter, you are saying that is not necessarily the case right now. >> i am not saying that necessarily. she will be hit hard. loretta lynch, and by the way she is a fellow new yorker, so you should have more interest in what is happening to her she finished her opening statement. she will be hit hard by republicans -- ted cruz, mike lee, jeff sessions, on a range of issues -- but you can tell she has been prepared for this testimony. she delivered her opening statement very calm way, making the critical point that she is apolitical. she is not eric holder, a good friend of the president, if she steps into this job as attorney general. from initial impressions, she will handle herself well. she has been able to handle, most likely, the questions she gets, but she will be pressed on the president's immigration

order. >> she has to be pressed on that. that is expected correct? >> yes, but she needs to convince three republicans on this panel that she has what it takes to be the next attorney general, so her answers matter here. it is a question of basically surviving this committee as opposed to really scoring points in return. >> all right. what else is congress up this week? are they saying it is snowing in new york, so they cannot go to work in d.c.? >> they are going on retreat, going off to philadelphia to meet with the president. basically, the house is shut down for their mentor of the week, and that is a good thing for john boehner because he has had more problems herding cats this time. it had to do with the security bill they thought was sewn up, but it was not because conservatives did not think it was tough enough. meanwhile, more good luck in the senate. the keystone bill -- as many as 19 amendment votes today

stephanie. mitch mcconnell hopes to wrap this up by friday, just in time to send it to the president for a veto but that is taking longer than republicans thought. being in control is harder than it first appeared. >> or is a development that is important from a market perspective and a foreign policy perspective. the president got a victory when democrats got a victory -- when democrats did something related to the iran sanctions. >> you have top democrats like bob menendez who have been as critical as republicans of the president strategy when it comes to iran nuclear talks. they have been pushing to carry a new sanction bill that would carry the threat to irani as if that that they would face tougher sanctions if the talks failed. the president and other leaders have said do not do it because it could blow up talks in the meantime, and yesterday, menendez and a number of other leaders took a step back and back their president, saying they will hold off until march 24. we still support it, but we will give you more time. >> you are, peter cook, for the

latest out of d.c.. "market makers" with the two of us will be back in a second ♪.

>> live from bloomberg headquarters in new york, this is "market makers." >> apple leads the way as tech stocks bounce back from their worst day in months. >> what happens if republicans carry out their threat to rewrite a banking regulations? we will ask bart chilton. >> the birch best bit coin is down 75% from its high point. will the promise ever turn into a real payoff? welcome to "market makers."

i'm stephanie ruhle. >> i'm phil mattingly. >> phil, it is a treat to have a washingtonian with me. as you know, my husband is from the district of columbia. top global business stories of the morning. federal reserve policy makers up their two day meeting today. according to economists surveyed , the fed will retain language pledging to be a shot on the timing of interest rate hikes. officials have said they plan to -- officially, they have said they plan to raise rates this year for the first time since 2006. in a couple days in -- couple days in office, alexis suppress already has his first crisis. suppress his pledging to avoid a

standoff with european predators. he says he will not be forgiven if he betrays his promise to renegotiate the greek bailout. shares of boeing are up 4% today. boeing posted earnings that beat analyst estimates. the company predicted it will convert a backlog of jet long orders -- jetliner orders into cash this year. nintendo has cut its earnings forecast for the fiscal year in half. the company tried lowering --luring buyers, but the wii is selling less than its predecessor. i hate video games. i cannot stand them. >> i'm not a big videogame player. >> go outside play. >> so old school. >> all he does is make reference

to the fact that i'm older. >> i have another 58 minutes. u.s. stocks have given up their games already. even the nasdaq, after apple reported its record-breaking quarter. >> the nasdaq barely holding on. we're talking about erasing all of its games. i'm with you, old school. a videogame title publisher electronic arts, one of the big winners in the nasdaq 100. profit sales beat analyst estimates. the surprise is there are lower prices for generations of the xbox, probably the nintendo as well that sparked demand for some of ea's titles. apple shares ups 6.7%. the stock has been whipsawed because before the results were published, it has plunged. tim cook calmest a record

quarter and he delivered. -- promised a record quarter and he delivered. we also want to highlight yahoo! . it rose as much as 4.9%. the gains have faded and now it is up 2% because of the tax-free spinoff of yahoo!'s remaining stake in ali baba. yahoo!'s core business is struggling. how many people search for something on yahoo! on their phones? one final thing to keep you looking ahead, facebook and qualcomm will be reporting resort -- reporting results after the close. 1.3 billion is what analysts are looking for for active monthly users. samsung's decision not to use qualcomm chips. >> we have to move on to our

guest host. if phil does not behave himself, this host will take over. bart chilton he spent seven years as a commissioner on the commodities futures trading. the wall street reform bill gave it more power. now, it oversees the entire swath and derivatives markets. he spent years working on capitol hill. bart is a senior policy advisor. bart, welcome. >> thank you for having me. >> moments earlier, part converted his black berry into what he calls a man mirror. >> you needed to look at yourself. i tried to help out. >> what is the biggest story for you in d.c.? >> i think the economy is important for everyone.

it is fragile and we are hoping it improves. some of the focus has not been on the economy and too much on other things. secondly, looking out after reforms were made in 2010 and ensuring that those go forward to the extent that the law does not change. i know we will be speaking about that in a bit. phil covers a lot, tax reform on capitol hill. that is one of the areas where i think there could be compromise this year. a lot of people might say it is dead on arrival. i wrote an op-ed recently where i said there's a possibility it could be done. >> there is a key point to what he wrote. there's an individual he points out. i want to explore that. what is it about orrin hatch that makes you more bullish than some about the possibility of doing this? >> he's been around for a long time.

he is a memory of capitol hill. he had a 100% american conservative union rating a few years ago. one of the guys he worked with the most was a guy who had a 0% american conservative union rating. ted kennedy. they plan -- they passed regulations that were important and controversial when they were first brought out. children's health insurance, immigration reform -- >> he is one individual at a time when it seems like all washington wants to do is veto one another. >> he's a chairman of the finance committee. that is the committee that writes the taxing -- the taxes. if anybody is going to get it done, he can. just yesterday, the president backed down on his 529 proposal. taxing the gains on college funds. i think -- i figure was a horrible provision it to begin

with. >> politically or policy? >> both. the point is it shows the administration is backing away from their own provisions. >> here's my question on the 529 issue, if that's brings -- if that brings opposition, how will you touch -- tell me how you're going to go through a number of sacred cows -- 529 hits 4% of people. everyone has interest rate deduction. >> i'm not say divining a path is easy. i think it is possible. hatch also supports comprehensive reforms. comprehensive reform is something that democrats support. i'm just saying, the ingredients are there. whether or not they put them in the stew with the right point and heat them to the right temperature, that remains to be seen.

it is a lot more possible than the prevailing was to him is in washington. they are stuck with a budget deficit they do not have enough money to do with any to be done. frankly, we did a lot while i was there. overall dodd-frank required 400 rules to be done. only 63% of those have been done among the five regulatory agencies. >> what the term market making is? that is a fundamental problem. >> and it don't decide -- anecdotes aside, all the five agencies only 63%, we did 90%. unfortunately, there is ill enforcement action at the agency. >> we have you for the whole

hour. when we return, from flying high to find below the radar. it will look at the promise in pitfalls of that coin. >> republicans pushing to roll back the dodd-frank law. we will talk to a senior republican on the house financial committee. ♪

>> welcome back to "market makers." i'm stephanie ruhle. along with my guest anchor for the day, though mattingly. my guest anchor for the hour bart chilton. i've included matt miller because we are talking bitcoin. the digital currency was worth more than $1000. today, one bitcoin is worth about $250. supporters of the currency say that is beside the point. here

to talk more about bitcoin's potential is michael casey, co-author of the age of crypto currency somehow bitcoin in digital money art challenging the global economic order. matt miller, eu member 12 days a bitcoin. -- you remember 12 days a bitcoin. the general point is it does not matter if bitcoin is trading well. the fact is it is a disruptor? >> you could not have bitcoin dropped to zero or imagined value is not relevant at all. >> if i bought it at a thousand dollars -- >> when you bought it for $.50. it was a thousand dollars a year ago. bitcoin was worth zero in 2009. a lot of people are multimillionaires because they got into bitcoin for the five-year period before it became worth $1000.

it was only there for a few months. >> the price is a distraction. the technology behind it is critical. it is revolutionary. the idea that we can move currencies. we can use digital assets around the world with a decentralized system. we may not use it -- mom and pop may never use it for the groceries, but behind the scenes, this will work as the backbone to the financial system. at some point, the value will rise because of that. >> what do you think it coin enthusiasts need to do to get more acceptance? you cannot have -- the price has an impact. you cannot have the potential for drug laundering and you cannot have lots of people lose money. >> i agree. it is not just mom-and-pop, it

is regulators, the mainstream as well. to make this viable, they have to resolve volatility. new exchanges coming online. ultimately those exchanges are going to bring institutions in. that will start to bring liquidity to the market, give it more stability. stood to -- security is being developed. a lot of those exchanges did not have these things in place. >> because we're focused on bitcoin so much less because the value has gone down so much, regulators are not paying attention. these exchanges might not come. >> i do not want regulators paying attention to it. >> how important is it for bitcoin that stephanie ruhle accepts it? >> i let you into my house and you jump all over it. >> general acceptance and u.s. regulators okaying it and people

worrying about it being used for drug laundering. >> terrorism. >> how much more terrorism has been enabled with the u.s. dollar than with bitcoin? would you say it's 100 times more? at least there someone looking over the dollar. >> nothing to be as anonymous as a dollar. >> you can pay for strippers and prostitutes with dollars. >> some people can. i think the bitcoin community is a wide tent. it has serious financial institutions and venture capitalists who recognize some level of regulation is what to be critical to stabilize things. >> to legitimize it. >> when it was $1000 and everyone in washington cared. what could they put in place? >> we know that the bit license

is coming from been lost key and the new york department of financial services. they're building out a framework which is trying to bring protection to the things bart is saying we should worry about. keeping as much open spaces the can for innovation. >> stifling innovation and growth. >> i do not think the bit license -- there a lot of people in the community or upset about it. if gone a long way to opening the door for innovation. will this technology be developed? will all the multiple use cases that can be applied to bitcoin be developed? >> one of the points you make in the book is that the banks are so large that maybe this is a different venue. should the banks be broken up? >> another question i would probably say yes. a previous book tells all about the financial crisis.

too big to fails one of the fundamental problems of our system. this is where bitcoin feeds him. -- feeds in. the centralization of financial power in banks. the idea that we can bypass that is a different way of thinking about that or it goes to the heart of the question of too big to fail. >> how many years away are we from it becoming a legitimate disruptor? >> within the decade, we are going to see that this is a critical part of our financial system. who knows what shape it will take? >> is bitcoin netscape? the first attempt -- >> netscape is an act. pp. people thought they were going to use it for just sending files back and forth. nobody could imagine twitter or

youtube or any of the other things we take for granted. the way we run our entire global supply chain network is not based. -- is net-based. to have a platform like that transform into something big is unimaginable. that is why the guys like reid hoffman are investing in this because they know the possibilities are endless. >> for them to put $50 million in anything is like nothing. >> a small down payment. >> was the next innovation we should be watching out for? >> in terms of more stability, i think it is things like the exchanges and the institutional uses. the idea that -- >> all the hardware. -- wallet hardware. it is interesting for the consumer. an easy way to store bitcoin so

that you do not lose it. i have a bunch of bitcoin stuck in no wallet -- stuck in a wallet whose password i will never remember. fortunately, for me -- you will never see all 21 million bitcoin ever in circulation and one time. wallet hardware. your phone is going to be critical. an easy way to put it in and get it out and to trade it is one of the biggest keys. >> the legitimacy of things like , when you get the new york regulation done, that may be a template for the rest of the country. >> i think that is going to be critical. it may go too far and kill it. i think that is going to be important. innovation is not just about currency. it is all these other applications.

copyrights for example. the idea that you can use the block chain and timestamp and insert a file that represents the copyright of a book or painting and have this mark of copyright means you can then build contracts on top of that and all the derivative works and of their own contracts. >> you can use it as escrow. you can use it for machine to machine payments. >> is programmable money. >> what is it me to bitcoin that more and more people are getting worried about using their credit cards and information getting hacked? what does it mean for bitcoin? >> so long as a result their own security concerns, it is a big opportunity. bitcoin cannot be hacked. >> people do not fully understand anything about bitcoin. >> there's a book about this. [laughter] >>bitcoin itself -- the reason why cannot be hacked is because it

resides on thousands of computers independently. you cannot hack everything a person's word documents because it resides everywhere. the problem with the credit card and banking models is all this information resides in a centralized institution. you cannot attack -- there's real possibility for bitcoin to be a safer option. so long as we get the wallets safer. >> great to have a serious journalist look at that thing. [laughter] >> right front of my face. michael casey, co-author of the age of crypto currency. i'm not thinking matt miller, but he was here for the segment too. ♪

>> republicans are pushing to roll back the bank regulations. he will talk to randy know the bauer. >> new bank is paying me to million to come over. the 2 million is coming out of your clients pocket. >> switch firms too. i'm an interactive brokers platform. >> aren't you worried about your reputation? >>

>> live from bloomberg headquarters in new york this is "market makers," with erik schatzker and stephanie ruhle. >> we also have our guest host here the one and only commissioner burchell. >> and now we are to talk about one of his favorite subjects. scarlet fu is looking inside the action in europe. >> thanks. the broadest measure of european stocks doesn't really give a sense of the carnage increase. stocks closing down unchanged.

the dax moving higher by .6%. if you look at the index for greece, it is down to almost one 10th of its value overall. about three and a half times the withdrawals in december, according to people familiar with the matter. not surprisingly, if you look inside the greek market, banks led the retreat. this is the index that tracks the group. they opened down 1% and it looks like an orderly selloff, but i don't think you can call it an orderly selloff when the end result is a 27% plunge. it's the worst result in years, with greek banks at an all new

low. yields on the 10 year bonds are moving higher. yields on spanish and italian debt moving up as well. finally, the euro weakening after a two-day rally. >> thank you. breaking down europe just as everyone heads to the pub. >> republicans have the dodd-frank wall street reform act squarely in their sites. they have already voted -- actually, all of congress has voted to delay a piece of the volker rule. those changes may just be beginning now the republicans are running the house and senate. we do have a subject matter expert in part sheldon. on the hill, you will know randy from giving jon corzine a very hard time when he was chairman of the house oversight

committee. he is responsible for pretty much all of the major banks and consumer lending as subcommittee chairman as well. congressman, thank you very much for joining us. we have seen small changes move through. the size and scope of the changes will be debated, but we have seen changes on certain vehicles. is that how changes to dodd-frank are going to move forward if you map it out? >> i think so because if you look at the oversight hearings we had in the past congress, what you saw was bipartisan support to do away with unintended consequences. dodd-frank was a big flag we flew over the entire financial market. it hurt main street. the large banks got larger and main street banks have been shrieking. it hurt access to credit.

even my friends on the other side of the isle that may have voted for dodd-frank have realize that there have been unintended consequences. republicans have control of the senate no. >> what about those changes? everyone wondering that -- what might happen, and you are the guy to ask. what do you anticipate doing? what is on your agenda and what do you think should be on the republican agenda for this congress? >> regulatory reform, as i said rolling back some of these regulations that are hurting main street and making sure the playing field is level. we think we need to preserve choices. now all these regulations are coming out that are limiting individual's choices. we have the government telling

people you can have access to these kinds of products but you can't have access to these kinds. we think the consumers are smart enough area we are concerned that we are pushing people out of mainstream banking. another piece of the pie we want to look at his cyber security and data protection. it supports our industry on a daily basis. also on the payment chain protecting sensitive data that prolongs to hard-working taxpayers. >> did you believe after the financial crisis that we needed any new regulations? >> that's a great question. normally, when you have a failure in the marketplace or in your business, you sit down and analyze what happened, how did we get here and how can we prevent this in the future? one day many of us said was that

we had a failure not because of lack of regulations because of a lack of regulators doing their job. >> but congressman, if we didn't have dodd-frank fast-forward. the drop in oil prices, the big moves we have seen in the market, if the street had been able to take the risks they had taken five years ago we would have had much worse years. >> it is easy to sit back and second-guess what might or might not have happened. i believe the market is a better force them the federal government coming in and trying to make markets fail proof. >> bart i want to swing this to you, derivatives expertise. a lot of what republicans are doing would go after the rules that you wrote or played a part in writing. are there ideas that are

particularly bad that you see coming out of their chamber or are there ideas that they've got that you think make the changes? >> dodd-frank isn't written in stone. >> isn't that the problem? thanks still don't know what the rules are so they don't know how to play the game. >> the big thing is, if you push it away, what was this big big bill? regulation of swaps. that's something that's pretty basic that didn't have any regulatory oversight. as you say, regulators and some lawmakers, present company excepted, were to blame for the recession. on the other side, people took advantage of having no rules. i wonder if at a bare minimum you think the previously dark markets need to be regulated. >> one of the things we are very

supportive of his transparency in the marketplace. when everybody has their sights on the east transactions nash on these transactions, there is transparency there. -- when everybody has their lights on these transactions there is transparency there. more importantly, i think, is increasing access to capital. bankers tell me they are hiring more compliance officers that loan officers. i think that is problem attic for our economy. it is making credit access more difficult and individuals are having trouble getting access to credit. >> the cftc's budget is only $250 million. do you think they have enough money to carry out what they need to do?

>> i have never had a federal agency or regulator, or anybody in the federal government come and testify before congress that they were getting enough money. the problem is we have an $18 trillion deficit that's growing on a daily basis. we don't have the resources to meet the demands of every person who comes before congress needs. they will have to come forward and explain to congress and make a compelling case why you think you need more money to carry out your functions. >> couldn't the argument be that the overall derivatives work it is $700 trillion in size and they simply need more money and more man power to regulate it? >> do they need more manpower or do they need more technology? a lot of it for me is the technology. if they need additional technology advances or

infrastructure, i would be willing to look at that. we have huge regulatory employment out there. we saw that in 2008. that is not always the answer. >> you're absolutely right, mr. chairman that they always ask for more, but when you compare the sec, which has 4000 employees, and the cftc which has around 500, there really is a job to do it. i understand that the people who didn't like dodd-frank don't want to fund the agency because they don't want the regulations enforced. the for the libor scandal alone, $1.7 billion was taken in by the cftc, but it's a $250 million budget. they do need to make their case, and you are the guy they need to make it to. i will urge them to do so.

one quick point. >> we've got to go. >> i will make it to you personally. >> we appreciate your time. >> bart, we need commercials. we've got to pay the bills. you are a guy who cares about budgets. we will be back in two minutes and if we're lucky, we might get something special out of him. you don't want to miss it. ♪

>> we have a few more minutes with our guest host for the hour and i would like to get personal. let's take a moment to talk about you. clearly, you are not a typical washington regulator. how well did you get along with the other regulators and insiders? >> famously. i have always done that. in the past i have worked on agriculture and transportation.

these things are not very partisan. up until the recession financial things were not very partisan. >> what created the fire in your belly that made you so outspoken? >> it probably goes back to working in a steel mill when i got out of high school and realizing how tough some guys had it. until then -- since then, i have tried to be a consumer advocate who cares about average working folks. >> we heard you are a poet. >> i sprinkle poetry throughout some of my speeches in order to try to get people interested. >> i'm interested. >> i should note art -- bart's speeches are about swaths and they would circulate around washington newsrooms. and they had some substance to them.

best haiku you have ever put into -- >> haiku? >> i have two favorite speeches. i did one in front of international bankers called cinema of uncertainty in which i referenced 25 movie lines. even though they hated what i said, they liked how i said it. i will give you consider the future. given the current structure, the existing scheme, are these the best markets we have ever seen? are these the best markets of our dreams? are they safe and secure or were they better in days of yore with trading floors? was less more? let's consider the future. let's think about what best. let's not dwell on the past. it goes by so fast. let's go long on the future.

let's place that bet. we can have the best markets we have ever had yet. it will take tough questions, so let me ask you if one has tough rules, do you think the other should too? do you think we should reduce the volume if it studies the ships? so would you drink that down or maybe take a sip? what about these start rules that seem the rage? are they really good for this age at this stage? some of these rules, if i dare, they are so do but they are silly, they get in the way. -- if i daresay, they are stupid, they are so late, they get in the way. >> i hope aaron sorkin was watching. you just got yourself a part in flash boys the movie.

that was outstanding. >> these speeches are sometimes given that very dry, boring conferences. does this disengage people? >> i get a lot of high-fives. >> you are getting a high five for me and the tests. thank you. that was great. we will be back with more. stay with us. ♪

>> we had a great show. in honor of bart, we put together a haiku or two. market makers rule. catching whales inside jails. that's the way we rule. >> washington gridlock. elections don't make it go away. it is depressing. >> you know what is not

depressing? market makers today because you were here. thank you for joining me. tomorrow, ford numbers are out. we will be speaking with the ceo, bob shanks. we will talk about that and a whole lot more. rightnow, we are going to send you to commercial break. ♪

>> is 56 past the hour. that means it's time for

bloomberg television to go on the markets. i'm scarlet fu. record earnings from apple offsetting a drop in commodity producers. the backdrop here is that the fed's -- investors are waiting for the fed's interest-rate decision this afternoon. james, when we look at what going on overseas i think about the 27% plunge in greek bancshares and the week is that we saw from earning yesterday. is the fed factoring that into today's trade? >> i think it is. we are looking at a recovery but after a slide like we saw yesterday, we would expect a market to be a little higher if it was going to rebound today. we have spent the better part of the year trading in s&p futures and we have not been -- have a lack of catalysts. i think with the vix at 17, if i

was a traitor who was concerned about the fed, i could still buy some protection for a relatively cheap price. >> facebook will be announcing results after the close today. i know we have been looking at how the stock tends to perform. it is in the green right now ahead of results. are people trying to get ahead of it? >> what we are looking at in the options market is market makers pricing in a move a little bit above the average move on facebook. it has rallied five out of eight times. i am thinking facebook is going to head higher. i think we will hear good news about monetizing services like instagram and how they will integrate those into their core platform. i think the stock is going to had higher. we are looking just north of 81 is an upside target. >> the nasdaq has been

consistently in the green because of the strength we have seen in some of the tech earnings, whether it is apple or yahoo!. when you look at apple and we are anticipating facebook's results, is there a reason to be more optimistic on these companies as we head to the tail end of earnings season. >> i think we are truly an environment know that is beneficial for stock pickers. i cannot just buy the entire talk -- tech sector because we are seeing some weakness. we looked at microsoft getting absolutely crushed yesterday on earnings, and we are seeing apple and yahoo! very strong. i think those two stocks will get higher. it is beneficial for me to strip out weaker names and be very stock specific. >> even within the tech sector. alibaba is selling off today. you say this presents a

potential opportunity to get in, especially before the company reports results tomorrow morning. >> i am looking at an alibaba 104-10's six spread. that is where the market makers are implying the stock can go by friday. people are trimming their exposure ahead of earnings, putting selling pressure on the stock that creates a buying opportunity for me. i think they are going to have a strong quarter. the stock rallied quite a bit on their last earnings call. >> i want to ask you about yahoo!. they announced a tax-free spinoff of their remaining shares in alibaba. what kind of options do you see going forward for yahoo! especially considering the pop they got in after hours trading? >> we are seeing relatively

bullish order flow and yahoo! the question traders are asking themselves right now is what yahoo! will be worth after the alibaba spinoff. the valley would generally be around $6 billion-$10 billion. i think it was a great move by marissa mayer to do this spinoff. the sharp pencils will come out to try to figure out exactly what this is worth. >> thank you for joining us. "money clip" is up next on bloomberg television. ♪

♪ >> welcome to "money clip," where we tie together the best videos, news, and stories in business. here's the rundown, around the world for one day they are already trash talking in europe. russia is happy, though. billions in billions, apple numbers go bonkers. the company just added an entire motor company to its market cap. bernie sanders pledges his trillion dollar infrastructure plan and makes his -- shakes his