>> live from bloomberg headquarters in new york this is "market makers" with erik schatzker and stephanie ruhle. >> if you want a piece of snap chat, you will have to bite with the company valued at $19 billion. is it worth it? >> break up walmart? whether it's time for the world's biggest retailer to spin off some of its businesses. >> hairstylist to the stars. what it is like to be treated like a supermodel. >> good morning, everybody. you are watching "market makers ."

i'm erik schatzker. the supermodel beside me is -- >> stephanie ruhle. thank you very much. his supermodel reference and missy elliott. >> greece is showing signs that it is willing to compromise over its bailout. the greek government will ask for a six-month extension of its loan agreement tomorrow. no word right now if european lenders will change the terms of that bailout. greece has demanded that europe he's upe he's up. -- ease up. >> i'm confident we will make it and we will escape this debt trap where we have been for the past five years through the destructive policies of the bill appeared >>. >> another sign of the real estate recovery is uneven.

a drop in construction of single-family homes offset a rising work on apartments. apple has launched a secret project to develop an electric vehicle. there is a better option -- develop electronic operating systems and entertainment equipment for cars. you can call her top dog -- a 15 inch beagle won best in show honors at the westminster kennel club. only the second time a beagle has won this prestigious award. next up retirement. it is time to have some pups of her own. >> how insulting. her work is about to begin. many of us left a few years ago when snapchat turned down a $3

billion offer from mark zuckerberg. how much could and app that sense disappearing photos to you or france really be worth? a new round of funding values this company at $19 billion. leslie broke the store yesterday. this story yesterday. bloomberg businessweek's senior writer, felix gillette has been covering the company since the beginning. we have to start with you leslie. three years ago i said who would pay $3 billion for an app used for sexting? who is the full now? -- fool now? >> snap chat just started

monetizing last you. their strategy with their advertising is different than facebook and twitter. they are kind to have less intrusive ads, ads that do not come with demographic profiles of people. they will not target specific -- wedding rings to single people on facebook. their way of doing this according to their blog posts is through entertainment. if you look on snap chat, you can look at stories from cnn people, food network. their plan is to have traditional media with traditional advertising, not demographic profile -- >> sounds like a pinterest overlay. >> kind of. they're giving people a sense of traditional media not just the types of newspeople sure a lot

-- share a lot. the news that cnn deems important for teenagers. >> simon, who is to say that just because they belted -- built it -- >> they will come >>. >>exactly. google has failed, twitter is struggling. no guarantee that snapchat will succeed. >> we use the term struggling relatively. facebook is a $200 billion company. twitter is a $30 billion company. snapchat is growing likely faster than twitter. advertising businesses follow the eyeballs. snapchat have been executing

well with these products. discover is a great experience. we have a texting service. they have stories. it has done an excellent job executing -- user growth is phenomenal. this at 19 when they have around 200 million users is not as crazy as it sounds. >> last month, i sat down with ryan seacrest. i asked him what platform is the most relevant right now? >> i think there is something interesting in being able to post video or a photo knowing it will disappear. >> why? >> what are you posting? i have seen my pictures. i want them to go away immediately. that's why millennial's are using it. >> that is what ryan has to say.

how long have you been following the company? >> since the beginning, 2011 when it launched. 2013, we did the first big story about what ryan was talking about, the appeal of ephemeral media. why would you want to create things that disappear? for a lot of young people, they are so used to what they put on facebook coming back to haunt them a couple months later. people go through and scrub their facebook profiles. this will only last 10 seconds. your conversation will be there and disappear. >> what is snapchat's management team like? >> evan is the guy. he turned down facebook from the beginning. at big ambitions when a lot of

people were laughing at snapchat . >> i remember thinking when you first did that reporting that evan spiegel seemed to me like a guy who needs to grow up a bit. >> this is a company that grew out of a fraternity house. >> isn't it ok that he needed to grow up? >> he was still in college. >> isn't it fair to say -- >> it is not that long ago. >> a 22-year-old, of course he estimates or. -- needs to mature. the cost low needs to and he's 46. -- fixed costdick costolo needs to

and he's 46. >> it is a finite experience. i don't have to sort through and sipped through the junk to find what i want. -- sift through the junk to find what i want. >> spoken like a snapchat veteran. let's go back to the valuation. just because twitter is worth $30 billion why does a $30 billion valuation for twitter justify a $19 billion valuation -- >> go back in time to when facebook started. it was all about photo sharing. that is when the growth exploded. that is what snapchat is all about. >> that's also what instagram is

about. >> instagram is also worth that much money. it's a $600 billion market. if more people are spending time on these platforms -- most people are on these things all day. younger people -- >> that's usually how it works. >> this money is going to move to these platforms. >> of all the companies you work with in terms of social media strategy, what do they want to crack the most? what platform do they want to be on? >> most of our advertisers are large companies like intel and microsoft and they are getting their heads around facebook and twitter. that's why companies help them work those things out.

all of these new things coming out -- they are still try to work out facebook and twitter. >> people love it and it's amazing and exciting. what are the revenues of the e, the earnings? their revenue is likely negligible. this is still secret. there have been rumors that they have 200 million users. people have been looking at that to determine -- to extrapolate an evaluation. this company is still only 3.5 years old. has a long way to go. it could be the next myspace or next big hit. >> what is your guess? >> next big hit. >> next big hit. >> i don't guess. >> "i don't guess, i'm erik

schatzker." i don't know. >> there you go. >> i want to keep them. thank you very much. >> when we come back, he has bankers -- once he blames for the subprime mortgage collapse. >> why there's plenty of opportunity in real estate. we have a lot more to cover. you are watching "market makers ." ♪

>> welcome back to "market makers." now it is time for the top headlines from around the world at this hour. the cease-fire in ukraine today looks a lot shakier. government troops withdrawing

from a key crossroads town that has been under siege from pro-russian rebels. the rebels have said they have captured -- president obama called the fight against extremism a battle for heart and mind. the president rights that military force alone cannot solve the problem. president obama is hosting a two day conference on extremism with leaders from around the world. the islamist insurgent group boko haram threatening to disrupt nigeria's elections next month. they have already been delayed once. boko haram has stepped up its campaign to oppose islamic law. >> consumer and commercial finance was like the wild west. no sheriff around to oversee the market. now, that has changed.

our next guest says regular to a great thing for investors. returning a 12% to investors. >> nice move. >> welcome back. >> you call it utopia. >> i love the analogy that 10 years ago was the wild west. it is well-documented that regulation was pretty soft and lending standards were pretty weak and we have seen the ramifications of that. it has graded a lot of distress opportunities. this created a lot of distress opportunities. if you think about it, -- and moved into town. -- the militia moved into town. credit is exceptionally light in

terms of how well it is produced. you have qualified mortgage. . bes qualified-- qualified mortgage rules now. from an investor's point of view , that is almost a perfect scenario. there are people looking at it watching over the quality of credit. we want to invest in really good high-performing credit at cheap prices. >> what exactly are you doing? >> we are active in the residential market. what has emerged in the past 2-3 years has been a brand-new market. fannie and freddie have been asked to move a lot of credit risk to private investors like ourselves. you have pristine credit quality

and a market that has not been priced at. a great opportunity for us >>. that is key. if everybody understood what you are saying and believed in the credit worthiness of the borrowers, there would not be any value. >> that's right. >> that is not the case. >> we have any balding opportunity. -- an evolving opportunity. people focus on fannie and freddie from the equity side. that is not our domain. we are looking at the strategies fannie and freddie are going to move risk away from the taxpayer and into the institutional investor markets. that's what we do for a living. the new forms of securities are evolving. it is a brand-new high yield bond fund. >> do you have a view on fannie and freddie? >> they're running the companies

well. they are producing earnings, underwriting terrific credit. people would argue whether they are underwriting enough. i think they are doing their job. the companies are in good shape. it is a political question. what this congress wants to do with fannie and freddie. that is open for a tremendous amount of debate. >>commercial real estate is another active market. commercial real estate is -- we are seeing pretty significant price changes which supports the end of mental -- underlying fundamentals. the average loan is 10 years old. it is 2015. loans are due today. they were originated in 2005.

you have a lot of debt that needs to be refinanced in the next three years. people know there is a refinancing law. it creates opportunity. you have employment improving companies creating earnings. it creates a good fundamental environment. >> how do you make 12%? you can't talk about your returns -- >> we can. that's a big number. >> let's take that or 10% or 15%. ms. priced securities -- they cannot be ms.ispriced by that much. it doesn't sound to me like 12% returns. what is the secret?

leverage? >> not at all. you would be surprised -- there are large markets. inc. about the u.s. housing market and the u.s. real estate market. we do some stuff in europe. extremely large commercial real estate markets. you take on top of that the securities. they're not as conventional as you are used to incorporate bonds or public lps. -- in corporate bonds or public -- where we can get ms. ispriced securities that don't need to be leveraged. >> how much are you invested in europe? >> less than 10%. you don't just jump into europe

feet first. >> no? >> you have a lot of dynamics still going on there. a central bank that is highly motivated. we like that. that is a favorable technical environment. some markets have improving fundamentals. then you have greece and other markets that are still slow to recover. you have to pick your spots. >> congratulations. a great year. when we return, too big to succeed? why some people are saying it is time to break up walmart. stay with us. ♪

>> coming up, eric holder major banks paid the price for the subprime mortgage collapse. now, he wants to make sure the

bankers themselves don't get away. >> take no prisoners. i'm ready for the runway. it is fashion week. give credit to the hairstylists who work with fashions biggest names. ♪

>> live, from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. eric this is "market makers." stephanie: lots to cover. factory production rose less than forecast last month. there was a weaker demand for construction materials. motor vehicle assembly slowed down. factories holding back production because customers overseas are not ordering as much. one of the biggest stock exchange operators may make another try at an ipo.

-- global market is preparing to replace it ceo. the new chief, canceled the ipo after a glitch on its own exchange sent shares plunging a few cents in the opening minutes. this will not be your temp -- your typical family minivan. rolls-royce will develop a sport-utility vehicle as mercedes-benz repairs for the debut of a $570,000 vehicle. they are not saying when the suv will come out, only that "we will take our time." smoking marijuana on a full stomach might cause the munchies. scientists found out that pot flips the switch in the brain that tells the body it is not hungry. that may provide a way to help

cancer patients who lose their appetite during cancer treatment. erik: on his way out the door, eric holder says he wants to punish some of the bankers. here is what he said yesterday. eric: i have asked the u.s. attorneys over the next 90 days to look at their cases and try to develop cases against individuals and report back whether or not they think they will be able to bring criminal or civil cases against those individuals. they will be given to loretta to make determination about whether further action is appropriate. eric says he is referring to loretta lynch.

what is going on? on his way out the door, he gives them 90 days. >> i think the prosecutors have been looking pretty hard. the department of justice is using a civil statute to go after individuals, which they used to get citigroup, bank of america to pay for mortgage related fraud. he is not going -- these are not going to necessarily be criminal cases. the first way know of is angelo mozillao we expecting to see a case against him shortly. he is putting more pressure on these prosecutors.

stephanie: i guess that is the point. they have been killing themselves. they want 100% they want an individual had to roll. haven't they been trying this for the last six years to no avail? >> they have. it is hard to find a single person who is responsible for the subprime blowup, for derivatives crashes and all of these things. it is easy to fault the bank. when banks are faced with charges from the department of justice, they do not have a lot of leverage and they settle. under holder, he made two big cases. he got credit suisse to plead guilty. people are not happy with the

outcome of those because we have not seen big prosecutions. time is ticking. the statute of limitations is running out. loretta lynch is probably one of the most well-respected prosecutors in the country. people are excited to see her come into office. she is going to have a lot on her hands. she has to man the entire department of justice. erik: is part of the motivation to give loretta lynch something of a clean slate? >> it could be. i talked to a lot of people and there seems to be he might be pushing some of this on to loretta lynch as he is going out the door. maybe this 90 day window is -- we do not have these cases,

let's move on. we got huge fines, let's move on. it is probably a little bit of both. erik: to have any reason to believe loretta lynch feels the same way about collective responsibility, institutional responsibility, the way holder does, holding banks accountable that it does constitute a serious disincentive for future funds. >> i can't speak for loretta lynch. her office, they did the hsbc case, which was huge. $1.9 billion. there is a top-down approach to this. they are funneling obama.

the attorney general's have to put that motion in order. erik: good of you to come and help explain what is on eric holder's mind. stephanie: i love it when she comes to visit. when we return, maybe it is breakup time. say it ain't so. why some say getting smaller is the only way for walmart to grow again. ♪

erik: could it be the good old days again for sony? it sounds that way. they are forecasting the highest earnings in two decades. the ceo is using video games movies, and music to turn the company around. >> it was a year of change in

2014. it will be a year of profit increase and investment growth. we are determined to deliver what we have planned in order to revive sony. erik: shares are up 28% this year. according to people with knowledge of a matter, -- is in talks with banks to boost its ties with asia. a number of big investors put money into alibaba. tiger global management acquired almost 6 million shares. alibaba closed below its closing price. stephanie: i think people like it. walmart will report earnings for its holiday quarter tomorrow. the u.s. stores are struggling

with stagnant sales. one analyst has a big idea. break up the company. julie hyman has the details. i don't know the how they -- i don't know how they could have had stagnant holiday sales. julie: if stephanie is shopping there, they must be doing well. i want to talk about this provocative idea from michael x line. -- michael exline. some of the returns on investment have not been strong so it might make sense to exit those businesses. he is not clear on what you would do to get out of them. he says a spinoff of sam's club might make sense. sam's would be able to compete

with costco if it were separated from walmart. it would allow them to focus on strengthening the u.s. business without having international operations. there are more international stores then there are u.s. stores. in the u.s., there are about 4000 stores. there are about 650 sam's clubs. if you look internationally, it accounts for 32% of walmart's capital expenditures, but only 28% of sales. proportionally, it accounts for less if you look at it in relation to failed in operating

profit. here is why he is making the case to do that. is this a pie-in-the-sky idea or something that could happen at walmart? there is a very important element that has prevented big things from happening, the walton ownership of the company. they control about half of the company. it is unclear if they would be open to something like this. erik: you are probably right. the key question is about valuation. the argument has to be that some of walmart, whether it is the international business or u.s. business, it is being undervalued because people are applying and overgenerous discount to some part of the

company. julie: if you break up a company, you break it up because it is worth more apart than it is together. erik: which is supposed to be worth more? julie: that is unclear. it is not clear if you would get more out of this company if you split it up. erik: the markets are slightly different. stephanie: think about target in the u.s.. they were selling the same thing in canada. erik: in south africa, it is a developing business. julie: there is one argument that could increase the value of the company.

you return the cash to shareholders. there, you might see an increase in valuation. erik: what are the chances the waltons will do that? julie: i do not know. stephanie: julie hyman, giving us the latest on walmart. erik: a tough job, but someone has to do it. stephanie found out what it is like to have her hair done by the stylus to the fashion stars. ♪

stephanie: new york's fashion week is in full swing. the designers are not the only ones. behind the scenes, hair and makeup artists are hard at work. work has been showcased on the runways of top designers. they run a star studded so on.

i sat down to find out why they would have longevity when you are hot today and not tomorrow. >> when clients ask to go to the so on to get their hair done when they left, they said they got their hair done at lauren- - - warren-tricomi. it is nice, but it is not that important. the most important thing is making the clients feel like they are celebrities. we treat everybody that walks through the door as special as we can. we give them a great experience great service. they walk out of here, they say i got my hair done at warren tricomi, they tell their friends and family, people come in.

that is how we build our business. stephanie: you cater to the ultra-wealthy. when the economy takes a downturn, are you affected? joel: we do cater to the 1%. we also cater to the 2% 3%, 5%, 10%. we start our haircuts at $125. you are coming to get the quality so people will save money and come to us because they know they will get quality service, a great haircut, walkout feeling proud and it is not about the 1%. stephanie: many salons are known for having great color or cut. you have it both here, is that your winning combination? joel: everyone that works on

that floor has been trained by edward. their skills, the education on what is going on in the world is so important. we go through an array of tests and bring the level of. -- level up. everyone that has gone on the floor has been my assistant. i checked their work every week. we have classes every week. it is about the training that makes the salon different. that, combined with creating an amazing atmosphere, because the atmosphere of warren tricomi cannot be reproduced anywhere. stephanie: how did you decide to create this winning combination? joel: i do not know how that happened. there was a time i was trying to decide what i wanted to do. i realized i wanted to be a salon owner. it was not a well thought out

plan. i hung out with edward one day and we went out and he left me immediately -- no. we were at a nightclub and were hanging out together. we started talking about wooden it be great to have a great colorist and stylist create a brand. stephanie: how do you create staying power? how do you avoid being hot for the moment and being great for generations? joel: you have to be a classic. like chanel number five no one sells more perfume mention al -- van chanel -- than chanel no. 5. it is a combination that creates an iconic salon.

stephanie: this was a once-in-a-lifetime experience for me to go to the salon. guess who gets his haircut there every six weeks? erik: more frequently than that. stephanie: i got my haircut by his partner, the man who inspired edward scissorhands. you don't get to tell him what you want. he decides. inside the plaza hotel, one of the most expensive locations in new york city. they do not charge every client the same amount of money. it depends on who you are, where you come from. if you think about it, these guys have been in the business for over 30 years. you do not see that in this industry. erik: edward is the top dog, for

sure. i have had a $1000 haircut. remember? the thousand dollar haircut has not inspired me to leave. there you go. we are talking about life for the 1%. let's talk about life for the 1%. yesterday, on an earnings conference call by mgm resort, this came out. a $300,000 dinner check. stephanie: why wasn't i invited? erik: in vegas at the bullocks year. 12 people during the --. stephanie: it happened during

cef. i would love to know who was at that table. what were they doing? swimming in caviar while having champagne poured on them? it is amazing. erik: if you start to add it up there are bottles of wine that can cost thousands of dollars. there are cuts of beef that can go $50 to $75 an ounce. it is still a stretch to get to 300 grand. it is hard to spend that much money. stephanie: they had to have been pouring champagne on their heads and sitting on a bed of kobe beef. erik: the ceo of mgm was talking about how spending was not quite as good last quarter as it was

in 2007, but it is getting better. stephanie: if you know who picked up the tab, call me. ♪ . .

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> doing well by doing good -- we will talk socially responsible investing. >> connecting the world -- how mark zuckerberg plans to do it differently than google. this is a bloomberg exclusive stop >> and it's good to be king -- it's better to be the kingmakers. we will see if the billionaire koch brothers have a favorite presidential candidate left. >> where do we start?

>> how about the bulletin? it looks like reese will try to break the logjam over the bailout. according to a greek government official, they will ask for a six-month extension of its loan agreement as soon as tomorrow. no word yet as to whether the terms of the loan will change. the greek government wants some of the tougher restrictions lifted. a federal court in illinois has issued a subpoena to caterpillar , the largest maker of mining and construction equipment. the court wants to know about the movement of cash in caterpillar's international unit. caterpillar does not believe it will have adverse effects on the country. snapchat may soon be one of the world's most valuable venture capital backed startups. according to a person family with the matter, snapchat is seeking a new round of funding that would value the company at a total of $19 billion.

the company makes a mobile app for sending photos and videos that disappear within seconds. citigroup has a $100 billion financing go for projects that will fight climate change by 2025. it will focus on her noble power and sustainable transportation options. the city arranged $50 billion in similar deals. >> greece might be ready to compromise with european lenders on the terms of its bailout. perhaps that just means kicking the can down the road. how is this going to affect investing here in the united states? why don't we put the question to the man who runs investments at the country's second-largest public pension plan? good morning to you. greece seems like a good place

to start. we have talked frequently in the past about when it does and doesn't make sense for a fund like calpers to be prospecting in places like europe and japan. we will get to japan in a minute but what does greece mean to you? >> i have to point out today that my color today is by robin in my cut is by norelco. >> are you making fun of us? >> no, that was very cool. >> you can make fun of us on tom's show but on our show, you can only give us love. >> no kobe beef -- >> so it was your $300,000 tab? >> i was in napa yesterday and i shockingly open the car door and a 200 bottle dollar of wine --

$200 bottle of wine fell out. i went back to silver oak and they replaced it. >> enough of these niceties. let's talk europe. >> let's get back to greece. it's back to 2012. the same situation -- last time it was the liquidity crisis and now we are dealing with a default. we are going to run out of cash by the end of this month. i was over there about a month ago and it's pretty clear people think germany is going to have to give up on some of the restrictions if they want to keep greece in the euro. personally, i would say it's time to throw them out but people feel it is important to keep the euro together. as an investor, we have very little exposure to greece. we dropped it out of our

developed market index two years ago. that was early, but i think their troubles show it's not a great place for an institutional investor like us to stay invested long-term. >> when we were talking about greece in 2010 and 2011 during the european sovereign debt crisis and a risk from the exit of the euro, it seemed like the world was on the precipice and the verge of collapse and it doesn't seem that way this time around stop >> we are here in the u.s. we all care about greece but greece is not going to affect our gdp numbers or our housing numbers. italy is a little bit better off, spain a little bit better off, but they are watching what greece does. if germany gives concessions to greece, you can bet they will be knocking on the door, saying

it's our term -- it's our turn next and i don't know how you match that. >> so if greece leaves and we are talking hypotheticals, and the italians, the spanish and portuguese decide to make similar decisions of their own what does that mean for you? >> if you look at the elections or at least the polling you are starting to see in spain, you are starting to see that extreme left move come back in because nobody wants to deal with austerity. for us, it means to be underweight. we are going to watch it because over time it's an opportunity to invest, but not now. they still have to work through all these debt problems and that's going to take time. if you look to the northern part of europe, that's very strong. germany france, the northern part of europe, it's doing quite

well. what i hear from money managers is if you can own a company that operates in the southern part of europe and has cost in the southern part of europe but sells its products in the northern part of europe, that is the best situation. >> those southern parts of europe, the peripheral countries is where you will find real juice in -- as far as returns. you have $190 million to put to work. where are you doing that? >> right here in the usa. we have a home country bias which in our country institutional investors are pretty rare. we think the u.s. is a good place to stay invested and it has been for the last five years. we have done very well by being focused here and we think the u.s. economy will be nice and stable.

>> you generated and a .2% return in your most recent year. >> correct. >> how do you do that again? is the stock market going to go up another 8%? >> alley say my job is a marathon. when your return is the pace for mile. what i care about is the long-term and how we're going to do over that stop we are going to stay focused in the u.s. and we think real estate is a decent place to be. private equity has been generating double-digit returns not 20%, but double-digit returns. our equity exposure is right on target and actually a little bit high and we are right about market weight in the usa. volatility is the norm in 2015. but we are looking for some growth. >> let's talk socially responsible investing. we have talked about this a lot in the past and it's important

for how you look at what -- for how you look it what -- and how you want to be invested. if you want to stop climate change, he need to get out of a bunch of names. what do you think of this? >> for us, it's a matter of engaging with those companies because we are long-term oriented. we want to focus on sustainability but really get into companies -- the u.s. needs to set a price for carbon emissions will stop that will bring the economy and investors like us into the marketplace. it's not a matter of on or off, it's a matter of long-term engagement. it's a complex issue and it needs that dialogue. particularly in oil and coal. >> when you say life is a black or white, you need to make those returns year after year quarter

after quarter, week after week day after day. how can you have such a long-term outlook when you have to answer to those pensioners tomorrow? >> great question and we measure our performance over six months. we look at six months and focus on our three-year returns. we try to take the long-term perspective. so we look at climate change as an opportunity, but also a threat. in the opportunity space, we are investing in venture capital, in real estate, and in some cases in equities. in other cases, we are trying to protect against what we see is a coming risk with the more violent storms and more extreme weather. particularly in fixed incomes and in sectors in real estate, we see it as a risk to the portfolio and we are trying to mitigate that risk. >> there's something i don't understand about the approach you've decided to take as

opposed to the legacy fossil fuel business. if you believe climate change is a problem, why doesn't divestment have an impact? as you recall, you did take a position regarding firearms after the new town shooting. -- after the newtown shooting. how is this situation not comparable to that situation question mark >> that situation is unique. it has a different fact pattern. this situation is long-term and has a different fact pattern. one of the key things we need to focus on is, if you look at the world, advocates are saying you cannot stop the use of fossil fuels. it's in cosmetics. how are you going to fly airplanes? you have to have fossil fuels. you just have to lower the use of fossil fuels around the

world. for us, it's a matter of trying to invest in the new opportunities. solar wind, and also trying to engage with companies to try to get them to improve the products they make and -- exxon mobil is a lost cause. i get that. the products they produce are still going to be used but what we believe is to a lesser extent. that is going to be the big dialogue. >> if funds like callister's and other large institutional investors put a scarlet letter -- it doesn't matter who -- exxon, phillips, peabody even some of the lenders that finance dirty energy, wouldn't that make a difference if you all acted collectively and nobody would invest in these stocks, they

would not be built to raise fresh capital and that would force a change in behavior. >> that's the heart of the debate about the divestment movement and i wish one of the universities washing -- watching your show would step up. we divested to firearm companies a year and half ago. has that made a difference to those companies question mark frankly not at all. they don't invest and they don't care. it makes us invisible and takes $190 billion and we are not even involved in the discussion anymore. the vestment might have worked back in the 80's, but nowadays come a there's too much capital. there are sovereign wealth funds and enormous flows of capital that can replace large institutions will stop its worth and academic study as to whether it can be effective in this world. >> who is asking you to take this stand? we can look at those firearm

companies and if i was a teacher in the state of california my pension would be so important to me and my family. i'm not sure if i would actually care if you were invested in these types of companies, i would just want to know my money was safe. who's pushing you in this direction? x it becomes a discussion about whether it's meaningful for the portfolio? the people we hear a lot from our our retired members and active teachers. we hear from them collectively through different groups. i'm a money manager and i work for a board. that board of trustees is who directs us on what to do with the funds and we are founded in fiduciary rule and fiduciary law, so we are doing the research behind it. in those cases, we are trying to be aware of what is helpful to the portfolio and what is harmful. >> we need to take a quick commercial break. we will continue the conversation.

he's the chief investment officer at calsters. >> and it's a brave new world for rolls-royce. stay with us. we've got a lot more to cover. you are watching bloomberg tv. ♪

>> it's 18 minutes after 11:00 and this is a good time to bring you some of the top headlines from around the world at this hour. this cease-fire in ukraine is on the verge of laughs. government forces are retreating from a transportation of under siege by rebel forces. a spokesman from the german government that help broker the truth said -- >> this is a massive violation of the cease-fire agreement which has been affect and sunday. in addition it highlights the action plan agreed upon thursday. >> george soros is changing strategies. his emily office cut holdings of

u.s. stocks and shifted assets overseas. he moved about $2 billion in two countries in asia and europe. his firm manages almost $30 billion. the world's largest oil explorer is trying to get into other investments. the company is expanding into refining and petrochemical's and wants to boost ties with asia. >> we are back now with cio,. you're talking about all sorts of investments, and pe is one but let me ask you about snapchat. a $19 billion valuation for a company that we have no idea what the revenues are. what do you make of it question mark >> i'm going to go all the way back to 2000. iran the state of washington pension plan and i used to complain about amazon. they would lose money in the quarter and the stock would just

keep going up. technology in the u.s. is an amazing investment opportunity and i don't think we're back to 1999 but we see our -- we are seeing those kinds of prices for companies that don't have revenues. i don't use snapchat. my daughters telly what it is, but i'm a bit lost. >> what does it say when whatsapp sells for a billion dollars and twitter fetches $30 billion in the public market and eight company like snapchat can go to venture capital firms, the kinds of firms calstrs has investments with? >> i don't understand the business models that well, but what i do understand is how they invest what little they do make and i think that has to be questioned. they are buying companies taking the revenues and buying companies that valuations that to us don't seem to make sense and sadly in silicon valley

we've seen historic acquisitions that were written down to zero. >> does that let your appetite for venture capital? >> venture is a tough place to invest will stop despite the headlines and exciting news, most people have not made good returns out of venture. >> why have we seen all of the venture guys, the superstars of the superstars? >> is in restaurants in las vegas? they get headlines. obviously, the stars draw attention, but when you look at a typical venture portfolio, i would say eight out of 10 deals and a venture portfolio are full write-offs. one might break even and and you will have one with superstar returns that might be 10 or 20 times the money. the overall return out of

venture capital has been very difficult and is very low on our private equity portfolio. vc is the lowest allocation. >> i want to ask another question about venture. where is calstrs directing its venture capital? the talk is that more and more only the largest most powerful venture firms have access to the best potential investments, the snapchat's for example or what was once the facebook's. firms like andreessen horowitz -- who am i thinking of? >> kleiner perkins. >> yes. we have -- >> we have some access through banks and some exposures to those. most raise their conditions to a level that we just found too far.

people complain about two and 20 and some of those firms are at two and 30, two and 35. the legal terms are just extreme. andriy's and is a star and we are amazed by him. he's made money but across those portfolios, you get a lot of variability in return. when i look at institutional investors, it's a very small allocation of venture capital. >> he is a star tweeter. he gives me vertigo. i can't follow all those 140 characters. chris is always a pleasure having you on. chris ailman is the cio of calstrs. >> "market makers" will return after this break. stick around. ♪

>> coming up your on "market makers" -- this is what comes to mind when you hear the name rolls-royce. now rolls-royce wants to change all of that. ♪

>> live from bloomberg headquarters in new york this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back. >> i'm erik schatzker. it's time for european markets to close their trading day. let take you to our senior markets correspondent, julie hyman. >> we have had a rally in european stocks as you can imagine, what has been going on with greece has been causing others stock markets to do well. people familiar with the plan saying they are going to submit their request for a loan extension on thursday -- it's a day later than planned but if

there's going to be any agreement, there is optimism surrounding it. if you look at what is going on with the european stock market today, the stoxx it -- the stoxx 600 and france's cac touching its highest level since 2008. not only are they climbing, they are climbing to multiyear highs. in greece, it's an interesting day there. the athens stock index is on the rise, but an etf that tracks greek stocks in the u.s. is having its worst day in nearly two weeks. maybe u.s. investors are not as optimistic. we see and -- we see a rally in greek backed. you have to look at the bureau to see how that is reflecting any optimism or pessimism. we see the euro actually pull back a little bit -- not a significant pullback but down by nearly .5%.

the japanese yen is fluctuating today, little changed at the moment. we had a bank of japan governor saying the central bank would not pay to adjust policy of the underlying trend changes. and looking at the pound sterling -- strengthening about .5%. we saw some economic data out of the u.k. with the jobless rate falling to its lowest rate in more than six years and that was the reading for the fourth quarter. so a relatively strong day when you are looking at european equities. >> that is the latest on european markets from the julie hyman. >> some of the world's biggest luxury car brands are expanding into the suv business. the latest was a bit of a shocker for me -- rolls-royce. let's bring in a bloomberg moscone motorhead. he looked at what the world's most unique car brand is thinking.

>> rolls-royce is the quintessential luxury automaker. it doesn't make sports cars, it doesn't sell trucks, and its cars are not told for utility at least until now. in a manner befitting this tradition steeped brand, they announced plans to build its first-ever suv by hand-delivered post. so why would a century-old automaker famous for providing the world a incomparably smooth ride try to do that with a vehicle popular with soccer my arms -- soccer moms. >> we do it perfect, in a non-compromised form. >> maybe a news should not come as such a shock. one could say rolls-royce built the original sport-utility vehicle back in the 1930's will stop but rolls-royce has real

motive is memories, it is the guatemala -- it is the moolah. according to ihs, suv's will make up one of every five vehicles sold next year. drivers love them because they can take them anywhere. that's a fact rolls-royce plans to trumpet by calling its suv the everywhere vehicle. automaker's them because they are big margin behemoths. rolls-royce's luxury competitors have stepped out of their wheelhouse to way into the utility model. porsche built a four-door station wagon on beefed-up suspension and now suv's make up the majority of porsche upon sales and plenty of its profits will stop but rolls-royce is known for luxury on another level. so what will the gargantuan cost and what will it look like?

>> and matteo is here to break it down for us. lexical thing i realized and they've kind of in expecting this. torsten was on your show a couple of weeks ago. now that rolls-royce says it's going to make an suv, every single major carmaker in the world save for ari at least has plans to build an suv. -- save for ari f --erarri. >> it doesn't mean it's the cousin of the minivan. >> these jokes are hard for me when you are talking about cars. >> i drive suvs. >> my husband drives suvs. he has stuff to call.

>> people who drive around the biggest cars are the soccer or a lacrosse moms. everyone drives suvs now and that's the point. 88% growth in the past five years. one out of five cars sold in the world will be an suv. we want suvs, got a range rover, but i want something on another level as far as luxury. >> when you think about people in new york or people in london in show for cars, they are not in a town car. they are in a navigator or in an escalade. >> that's definitely the case. if you are in a phantom -- >> i don't think you will see an fbi agent step out of one. >> maybe not an fbi agent or politician, but you would see hip-hop stars who would normally be in an escalade, if they can afford it. rolls-royce only sells 4000 cars

-- maybe this will add 1500 extra two-volume. >> how many does porsche sell? >> maybe 100,000 of their suvs. >> have really big, tricked out suvs replaced limousines? >> can you imagine driving around in a stretch limo? >> you get in and you have to slide all the way over. >> you have the neon bar. >> what are the specs? >> the specs are not announced yet. rolls-royce has not even drawn up a rendering. they don't have any idea what it's going to look like except that it's going to be big. all of the cars they currently make, including there to door are huge. maybe it will defend phantom size or even a little bigger. it will be sitting higher on the

road, the question is will it have a third row? you can expect to pay $500,000 would this and may be up to a million dollars with all the customization. >> and i thought a stretch from the was the dream car. >> at your bachelorette party. >> thank you. when we come back, they say they won't play favorites during the republican presidential primaries, but a lot of people are assuming the koch brothers have one. ♪

>> you know the koch are the -- the koch brothers are the king makers of the republican party. they don't plan to endorse a candidate in the primaries, but by some accounts there personal favorite is the governor of wisconsin, scott walker. julie bike with has been covering this story. let's begin with the relationship between the kochs

and governor walker because it's hardly brand-new. >> the koch brothers and their various political organizations have been paying attention to scott walker for years now. they paid attention to him when he was milwaukee county executive and he took a personal pay cut and/to the payrolls of public employees, right in line with things the koch brothers believe in -- reducing the size of government overall. and then principally the americans for prosperity, huge group that does a lot of television advertising and groundwork for candidates backed him in the 2010 gubernatorial race and has been with him ever since. >> what is it the koch brothers find so appealing in scott walker and even if they are not going to officially endorse them , they and their fundraising organizations would get behind him? >> it's not just the koch brothers, it's all the donors

they are connected to. they have been able to harness a lot of power to their personal and business networks and that's how they go about raising this huge amount of money every election cycle. they are aiming to raise around $900 million for the 2016 races and talking with donors who are aligned with what the koch brothers believe in, a lot of them like that governor walker has delivered. a lot of candidates talk about what they want to do to reduce the size of government and what they want to do to decrease regulation and make government less intrusive, but walker, they tell me has actually followed through on his rhetoric. i'm sure we all remember in 2011, just after he took office he went to battle right away with public employee unions and won that battle and one a subsequent recall election, showing he has stamina behind his rhetoric.

he's not just talk. >> what do the kingmakers think of jeb bush? >> i think of the two koch brothers, based on the way they send their invites to political candidates, they have not been able to connect with governor bush on a one-on-one level the way they have with scott walker and rand paul. talking with other donors who are part of that network there's a set who really want to act a winner and some of them believe jeb bush has a better shot than someone like scott walker at not just winning the republican primary, but then defeating the democratic candidate in the general election. it is by no means a unilateral approach. each of them have their personal favorites. >> how about the koch brothers themselves? if it appears as though jeb bush has the momentum, with a shift

loyalties and get behind bush in order to make sure he defeats whoever ends up being the democratic nominee question mark >> that's a great question and it speaks to the real power of the network. it's going to be during the general election. americans for prosperity and the other groups in this network likes to get involved when it's time for the general election. they will stay on the sidelines during the primary but their resources will be available to promote policies with whoever the republican candidate ends up being. i think there's no doubt about that. >> thank you very much. great insight into the koch brothers and who they would like to see become president. he sure to read julie's entire story and the rest of today's political news on bloomberg politics.com. >> when we return mark zuckerberg wants to wire the world.

he will tell us how he plans to do it differently than google will stop -- differently than google. ♪

>> it's time now for some of the top headlines from around the world at this hour. president obama calls the fight against extremism a battle for hearts and minds in an opinion piece in the "los angeles times." the president says the military force itself cannot solve the problem. today, he starts a two-day conference with leaders from around the world. if tons of became jetblue's biggest investor in 2011 and currently owns about 15% of jetblue. jetblue shares have doubled since lived on the invested. a number of big investors put a lot of money into alibaba last quarter. tiger global management acquired almost 6 million shares on its part and shares of alibaba yesterday closing below their

closing price on the ipo in september. >> in a race to wire the world google and facebook want to provide access to the billions of people not already online. but the two text giants have a very different vision on how to get there. -- two tech giants have a very different vision on how to get there. emily chang sought down with mark zuckerberg. >> what to you think of google's approach to connecting the world? >> connecting everyone is going to be something that no single company can do by themselves. i'm really glad that they and a lot of other companies are working on this. internet.org is a partnership between a lot of different technology companies, nonprofits and governments. there are folks doing things at their contribute into internet.org and companies doing thing that are separate stop there is a lot of technology that will need to be developed

to be built to tackle all of those terriers i talked about. making sure everyone has a network near them affordability, and social making it so people have the content they need in order to get online and consume this. >> have you had any talks with google about partnering with them? would you ever partner with them? >> our team is in contact with them frequently. when we launched in zambia, google was one of the applications and the internet.org suite. people need to be a to search and find information. whether we work with google or others in all these other countries, that's an important thing and i would love to work with google. they are a great surge product. >> there's much more when that came from. tune in tomorrow night for emily chang's entire interview with mark zuckerberg on a very

special edition of "studio 1.0." >> we are going to take a quick break. >> "market makers" will be back in a few. you are watching bloomberg television. ♪

>> it is now time for us to sign off, but you want to come back

tomorrow. >> because jon leger is going to be talking to us. you know who he is -- he is the ceo of t-mobile. at one point only months ago, we might have called him the most controversial executive in the u.s. telecom business. >> i'm still going to say that. >> why is he controversial? >> just because he has quieted down -- >> i don't know that he has quieted down, i just inc. people have taken pages out of his labor. >> we will find out. your earnings are out tomorrow so get your dukes up. you will be in the hot seat. >> it 56 minutes past the hour so bloomberg is taking you on the markets. next stocks are edging lower after the s&p closed in a fresh record high yesterday. we're not seeing a lot of action today on the plus side. the s&p is lower by .2%. the nasdaq is little changed.

we are going to see if there are any signs as to when the fed is going to increase interest rates. policymakers said they would be patient in their decision. we will have fed minutes later. joining me is the derivative strategists from -- derivative strategists from an km holding. we have bumping up against this record high but not necessarily pushing past at any meaning of fashion. what do you make of it? >> or been some diversions recently between underlying equities in the u.s. and volatility. we always start on the volatility side. we've been cautious for most of this year, not just because was the vix elevated. it has come off but broadly come across asset classes, volatility has been elevated. it has come in a little bit. euro implied volatility has come in a little bit, so currency is

off. there are reasons to be slightly more optimistic and greece is still out there. we will get the fomc statement letter -- i'm sorry, minutes for january. will there be a surprise there? underlying instability in these markets, but equity is acting well. >> how do you position yourself given all of that? >> we want to get incrementally long but do it in a way that respects the fact that there is underlying instability. then we will talk about the option strategies that make sense in this type of environment. what i mean by that is a higher floor for volatility. one of those is just overriding and that means you a stock and sell calls that represent the same size of the underlying position. it's just a strategy to increase the yield of your underlying position. a great strategy that fell by the wayside when vix was 1012 at

his -- at its florida great way to generate yield on underlying long stock's editions stop the other is stock replacements will stop a name like netflix -- we have screen the s&p 500 for names that have performed year to date that are at or near their consensus price target. so, fully valued, arguably. if you are long stock and there's not an issue with the dividend, you can replace the long stock with call spreads, a synthetic position that allows the upside to retro exposure and allows you to manage your risk a little better. >> i want to get to your trade of the week -- you are looking at the qqq's, at a time when we have seen outflows from tech etf's. >> this is representative of what we just talked about where

given this level of volatility our clients want to get level. with iw and, we just want to buy with strike calls and pay about $1.22. the same thing with the qqq's -- you manage your risk because you are buying the calls. >> thank you so much. talking about this week as option strategies. "money clip" is up next. ♪

>> "money clip" welcome to where we bring together the best interviews and stories and business news. the suv is a moneymaker from soccer mom version to those luxuriously appointed. automakers are cranking out vehicles in all sizes and price points. there is one retailer waking up all over new york city. around the world, china welcomes a ghost. in our innovation story, mark