>> live, from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. erik: the fate of obama care for the second time in three years is up to the supreme court. this time the decision could come down to a few words. stephanie: shares of alibaba are now at a post-ip load. -- ipo low. erik: it will take more to convince teenagers that abercrombie is hot again. good morning, everybody, welcome to "market makers" i'm erik

shatzker. they are not below the price but below the finishing price on that day. stephanie: i would be calling all of those institutional investors that demanded allocation and then complain when they were cut back. this is your time to buy more stock. go for it. erik: this is the isn nonmanufacturing index measuring the services it economy. >> the service economy is the biggest part of the u.s. economy and we have an unexpected increase in the measurement tracking this part of the economy. 56.9, when economists were looking for a dip of 56.5. this is an increase from the prior month of 56.7. it indicates the service industry grew at a faster pace.

anything above 50 marks growth. we have pretty much been growing since august. nevertheless, this is good news and shows bad weather was not a factor in this part of the economy in february and perhaps also shows cheaper gasoline and job gains that we have seen over the last couple of months are playing their part in boosting the service industries. in terms of the effect on financial markets, u.s. stocks are still lower by our parent some of their declines. the dollar is at a session high. we just told you the euro broke 1.11. now at a 1.10 handle. the two-year currently at 66.85. everyone waiting for the ecb and what it says about quantitative easing erik:. thank you very much. -- erik: thank you very much. stephanie: it is time for the top stories of the morning.

the euro is now at an 11-year low against the u.s. dollar. the currency is trading against a 1.10 handle. the last time it traded at parity to the dollar was back in 2002. we are getting a preview of what the february jobs report look like this coming friday. adp says companies added 212,000 workers last month, slightly lower than the median forecast. meanwhile, january support was revised upward from 213,000 jobs added to 250,000. a worse than expected corner for abercrombie & fitch. they cannot seem to find their groove. comparable store sales were down 10%, missing analyst estimates. the store struggle to learn customers over the holidays. meanwhile, they are looking for a new ceo still. on the company conference call with analysts today, the

executive chairman arthur martinez, was asked about the search. >> the process is moving at acceptable pace but it is important to know that these things take time and it is more important to get the right person and to move quickly. stephanie: while this takes time, shares are down as much as 8%. analysts and investors do not like it. janet yellen is answering critics in congress who say the fed is too cozy with the banks it regulates. in a speech last night, the federal reserve chair set the fed works hard to avoid what she called regulatory capture. >> we enforce strict ethics rules and promote strong values among our employees among them a commitment to public service. it is important that anyone serving the fed feels safe speaking up when they have concerns about bias toward industry and that those concerns being addressed. stephanie: democratic senator

elizabeth warren has been one of the fed's biggest critics. she says the fed is to differential to large banks. the collapse in oil prices is having an impact on exxon mobil. the world largest energy company says it will spend almost 12% less on capital expenditures this coming year. they are planning on a $34 billion amount of capital expenses next year. a new twist on that story about hillary clinton using personal e-mail or official business while at the state department. the associated press says her computer server was traced back to an internet service registered to her family's home. that would give her extraordinary control over limiting access to her messages. clinton has not said whether she use private e-mail instead of a state department account. this problem does not sound like it is going away. erik: four seemingly innocuous

words. that is why obamacare is back in the supreme court. at this hour, justices are hearing arguments that will determine the future of the affordable care act. does the phrase "established by the state" bar the federal government from establishing a health care exchange? most of the health care industry and others are involved. with me right now is drew armstrong and phil mattingly. given the way that lower courts have ruled, it is a prize to some that it landed at the supreme court at all. >> a surprise to a lot of people. the constitutionality of the law was almost -- always viewed as the best chance the opposition have to take it down. a libertarian think tank. of these four words and really made a case for it over a period of time. the supreme court decided to take the case is no joke.

this is a massive threat to the law. if the court rules in favor of the plaintiffs here, as many as 7.5 million people currently receiving subsidies would lose them. that would more or less got the law entirely. stephanie: do you really think that will happen honestly? >> the biggest thing is what people will be taking from the justices said. a lot of people thought that in 2012, obama going down for sure. it is tough to say. it could go either way. that is why there's so much energy, so much intrigue as well. stephanie: for me, it breaks my heart. whether i supported it or not, at some point, put your pencil

down, this is the law, move on. erik: it went in a way that people did not anticipate. if you paid attention to the reactions of the justices to the argument being made over the affordable health care at in the previous case it would have seemed at the time that they were set to rule against it, and then with that surprised swing vote by chief justice roberts, it was upheld. >> 2012, a lot in quest built over the arguments. everyone said here is what will happen. anyone that comes out of the courthouse today and says this is how the court will rule, do not listen to them. nobody knows. it may take as long as june. it seems like a technical matter, and you make an excellent point -- stephanie: a technical matter. we are really going to hold this up over your words? erik: there is an important

philosophical principle here called constructionism. we know one of the justices on the court feels strongly about it. antonin scalia. this is something that he passionately believes in. laws should be interpreted according to the words used to write then, as opposed to the notion that you can divide the intent of the lawmakers. may be given the fact that this was recent history, that is not such a difficult thing to do but what about laws drafted decades ago, hundreds of years ago? either you stick to the principles or you don't. >> four words is why you have lawyers. stephanie: doesn't that make you sick, that no matter what people's good intentions are, let's just bring in some lawyers and they were looking to -- they will continue to argue. >> someone say that you should write a lot more carefully. when we did this in the last major supreme court challenge, a lot of the law was not

implemented. people are not getting injured or subsidies. this year, the government is giving out $22 billion, about 7.5 million people would have subsidies potentially put at risk. further along the law goes, the more entrenched it is in national need, policy. it gets a little hard take away from a policy standpoint. stephanie: once you are giving a subsidy, it is harder to take away. >> that is where the republican arguments against the law. we will never be in with to get this off the books once we have it. erik: is it overstating the case that obamacare would collapse? >> there are a lot of different parts of obamacare. this is probably the biggest one. we are going to help you fight insurance. erik: the employer mandate is at stake as well. >> the individual mandate is probably more important. it says that you have to buy it,

now you will not get any financial help. it's a real big issue for hospitals and insurers, who made some concessions in order to get these paying customers. this will create a mess that someone will have to sort through. stephanie: mr. mattingly, does either side have a plan b? >> the interesting thing is no. that is one of the administration's main points. they have made clear, they were to lawmakers saying that if this happens, we have no plan b. there is nothing we have that we think the same the law. drew may disagree with me, but there is no legitimate alternative coming from republicans right now. they know that if this goes in their favor, they will have to try to figure out some type of fix. they have not coalesced around one. the point you're making right now, stephanie, if people see middle to lower income people

losing subsidies for health care , losing health care by the millions, that is terrible looking. republicans need an alternative if this goes through and right now there is not a solid one they are considering. erik: to what extent is this a beaker for what you wish for scenario? i have a feeling that they kind of like those subsidies right now. >> if you talk to republicans behind the scenes right now they are aware of the problem they could be facing. however, their perspective is that this law is so destructive to the way they think government should work, they would rather have it taken apart and get a shot at taking it on again. look at what we are doing with trying to fund the government, let alone moving forward with new health care bills. stephanie: on both sides, it seems like all they want to do is hurt their opponent and not think about their constituents. >> they all care about

their constituents in their state, but you have all been paying attention for the past eight years. it is very much about attacks right now, not public policy. there is a lot of argument here about how the justices perceive this, how they are looking at this case. the fact that there is not an easy alternative or even a logical alternative in the wake of this -- it is hard to say that this will not play a role in their mind. erik: who will end up holding the back here? >> one of the powerful impetus is a getting things done is the fear of blame. say what you will about the political system but the fact that you may hold the bag may cause people to act. are playing a game of chicken right now. hospitals are probably in a little bit of a world of hurt. you have companies like tenet. texas got one million people covered under the subsidy law.

florida has 1.4 million. close to 30% of their hospital beds are in those two states. all of a sudden, those people will not be paying customers. stephanie: playing a game of chicken in a scenario that is about people's health. really, that is a good idea washington? thank you for joining us, phil mattingly. erik: andrew armstrong. stephanie: what is wrong with alibaba? shares have not been this low since the ipo last fall. everyone who wanted to buy on the deal, time to buy today. erik: abercrombie shares are plunging. we will speak to some retail veterans on how to fix the broken company. ♪

erik: it is time to bring you up to speed on the top stories of

the hour. the supreme court is hearing arguments on the case that may determine the future of the affordable care act. it challenges the fact that only 16 states build their own exchanges, the rest of them using the federal healthcare.gov system. those that did not create their own system are not eligible subsidies according to four weren't in the law. a big deal in the credit card business today. citigroup agreed to issue most of its consumer and debit cards on the mastercard network. the arrangement the last 10 years. citi will begin shifting more of its consumer business to mastercard. citi will now work on a deal with visa to issue cobranded costume cards. the willis tower in new york city is up for sale. numeral only know it by its old name, the sears tower.

the owners currently include two new york investors. the tower may fetch as much as $1.5 billion. stephanie: bad news for jack ma. shares are at their lowest since last year's record-setting ipo, don more than 30% since hitting a record in november. there has been concern about slowing sales growth and increased competition in china from companies. our senior intelligence analyst has been looking into it. how have things changed so much since the ipo a few months ago? >> i don't think all of has changed. stephanie: a hot deal that no increase attention to, they just one in. >> first quarter out of box was not a great quarter. when you have a big valuation like this, the revenue missed. that is what started the issue of is the growth slowing?

then you have a chinese economy slowing. that brings in the whole long-term growth story for alibaba. then you have some competitors out there that are putting up some pretty good numbers. stephanie: all of these things were not that different when the deal came and no one was having these conversations. the amount of stock that was treated with huge which would lead one to believe that everyone climbed in and end up to. >> -- then dumped it. >> we saw this with facebook. they have their own issues. the stock has to reset and then what the stock is looking for that is the next catalyst. erik: the alibaba chart looks suspiciously like a twitter post ipo chart. >> so once they figured out mobile? >> that is exactly right.

for alibaba it is as simple as putting of a quarter that beats expectations, particularly on the top side. they are still putting up extra near growth. nobody don't the long-term growth story of e-commerce in china. clearly, it would be nice to see them put up a couple of nice numbers the next time they report earnings. there is also a lot of noise on the stock on the regulatory front that will always be there. taiwan has said maybe you need to get out of taiwan because of some of your corporate actions. a small news item but definitely an issue for the stock. you also have the issue of or some of their merchants paying people to process customers to drive traffic and sales? it goes back -- when you think about e-commerce in china, there are a lot of day today risk operations in terms of fraud. alibaba is all over him but it is a tough act to deal with day-to-day.

lots of noise around the name and it is not helping. stephanie: when the deal was coming, we had so many conversations we never talked about the fraud issues in china. everyone had alibaba fever. erik: lots of people did. let's not forget, they bought in. anyone who bought in, bought at $60, now at $82. so they still make money. stephanie: and they have already sold. erik: many have. >> over 300 million shares could be coming onto the market in the spring. a couple of things that the stop me to digest. the company and the stock needs a reset and a new catalyst. i think the new catalyst is a simple as putting up a good number to wake everyone up to the long-term story. they have the work cut out the question. stephanie: thank you, paul sweeney. erik:m we will return after the

short commercial break. ♪

erik: traders when you see him growth in oil stop files is finally slowing down. we will bring the latest numbers on crude inventories and a couple of minutes. stephanie: abercrombie & fitch says it has a new strategy to turn itself around and it starts with getting rid of those half naked models, which last i checked was their original winning strategy. can they turn it around and bring those big lines back to their hot stores? ♪

>> live from bloomberg world headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. erik: some stunning news out of the commodities market. stephanie: weekly crude inventories are out. i will send you to the newsroom where scarlet has the headline. >> a much bigger build than anticipated in terms of inventories. 10.3 million barrels added in the week ending february 27. analysts were expecting 3.80 9 million, so this is clearly the highest in five years. our producer telling me the

highest in five years. a big building crude oil inventories. we know there is plenty of domestic supply here. when you look at how it plays out in the commodity markets, not surprisingly, you see crude oil going lower. dipping below the $50 a barrel mark trading right at that level at the moment. over the long term, oil has been basically stuck between this range of 47 and 53 and has not really straight from this as people try to anticipate how much more these companies will continue to grow -- cut production. crude oil down 1.2%, extending its declines, no below $50 a barrel. -- now below $50 a barrel. erik: stephen short is here, the editor of a widely read newsletter about crude and other hydrocarbon products. it is not just the crude oil inventories but pretty much

every measure for which there is an average estimate among we survey came out ahead of expectations. gas inventories don't instead of stretching. distillate inventory did not shrink as much as anticipated. does this tell us? >> we have too much supply in the market. the very large building crude oil is not really unexpected. because of the weather in philadelphia, we had a number of refineries to have to close down. delaware was frozen over. in california we had a significant event at the exxon torrent refinery. sibley not a lot of demand. -- torrance refinery. simply not a lot of demand. the upper quadrant of the u.s. was encrusted in snow and ice. right now we do not have a lot of demand on both sides. erik: let's assume for the

moment that you are the smartest guy in the room. stephanie: he definitely is right now. erik: talking about the proverbial room. they knew the northeast was encrusted in ice, that delaware was frozen over that they anticipated and inventory build a less than 4 million barrels. >> trying to anticipate the movements in the oil market on a daily basis, the only reason we do that is to make astrology look respect to the erie -- respectable. to be able to guess out of everything that is required to boil a barrel of oil and turn it into so many products, shipping it out on a weekly basis, it is a guess. the market simply guessed wrong. stephanie: so when we asked the question, has oil hit a bottom, is that a waste of time? >> it is.

no one saw this market breaking $70. no one saw this. i find it interesting that no one who saw the crash -- now everyone is telling us the bottom is in. i think this is a fruitless exercise. what we can look it right now is reduction in the night states -- united states is at the highest since 1983. oil is coming down from canada. we are at a seasonal turnaround so suppliers on buying as much. we have a situation in an air term were supply will continue to outweigh demand and we could see oil break the current rate. erik: we have crude oil going back five years underscore the point you made, but this is history. let's bring up the future. this suggests it is not perfect but people transacting in the

market anticipate an increase in prices. >> if we look at the futures curve, what we have is contango where c prices are cheaper today than they will be. there is no more bearer sign. if you have a oil on the bottom left, i could buy at $50. i could sell it at seven dollars a barrel in 2011. erik: you mean 2021. >> i could go ahead and charter a 2 million barrel tanker and pay $50,000 a day to charter the vessel, and i still make money. you cannot do that -- erik: at a certain point capacity is used up. >> what we have now is a

significant amount of storage increase that has been built out since 2008 at refineries here on the east coast which are closed but still have the extra storage capacity. same situation in northwest europe. with the tankers, we have added a significant amount to the market. we cannot exercise and bring back that curve until we met about the supply. stephanie: what has been the impact on the energy markets in terms of the brutally cold winter we have seen, how has this affected the market? it has affected me personally. >> we had a significant drawdown in oil of people heating their homes. 70% of homes in the u.s. are located in the mid-atlantic and northeast. so we have had a significant drawdown and we have not had a commensurate action in diesel.

we have seen a significant disconnect between the diesel and gasoline markets. erik: with oil at $50 a barrel how long will it take or you as production growth slows and turns negative? >> there is a tremendous amount of cement and steel in the ground with a lot of debt in the ground. the upstream in midstream mlp's at been getting killed, but they will still need to try to finance the debt. we are already seeing the capex being pulled back. this is akin to where opec was in 1986 when regardless of the plunge in price, they still had to bring oil to the market. erik: and they will continue to do it until they run out of cash. >> absolutely. stephanie: great to have you on. erik: editor of the shork report. the biggest built since 2001. stephanie: when we return

fixing abercrombie & fitch is ugly to be a lot more than finding a new ceo. -- likely to be more than finding a new ceo. ♪

>>erik: tied to bring you up to speed on our stores this morning. the biggest heart of the u.s. economy unexpectedly expanded last month. the eyes and service industry -- ism services industry number rose last month. wrote in those numbers account for 90% of the economy. the world's biggest energy company is feeling the page in the collapse of oil prices. exxon mobil plans to cut capital spending 12% this year. that number will be lower in 2016 and 2017. exxon says it is sticking to reduction targets that it made back when oil was still trading at $100 a barrel.

shares are down more than 5% this year. one more sign the error are former ceo mike jeffries has ended at abercrombie & fitch. in a conference call with investors, they said they would be selling their corporate jet, one of jeffries' most prized perks. jeffries left abercrombie in december. stephanie: on that same conference call, the company tried to explain yet another quarterly sales decline. same-store sales fell 10%. the company apparently feeling to lower customers during the holiday season. the fifth straight quarterly drop. investors are hammering the stock today. shares are down almost 13%. it gets worse when you look at the longer-term chart. the stock is down by half over the last 12 months. so what is the question we are addressing this morning? chen abercrombie ever get its groove back?

we have three great guest to get us the answer. the former ceo and chairman of bloomingdale's, the founder of story, a manhattan retailer with an interesting concept. it changes every month and offers you a retail experience. and retail reporter lindy ruff. what is the abercrombie situation? >> they are trying to get away from all of the logo products. that was a lot of their business, so they are taking a hit on that. in the meantime, they are trying to get their street cred back. that is hitting them hard on sales. erik: how would you describe the kind of company that abercrombie is trying to become? >> teams do not have a go to look around. do they tried to pete with h&m

or another european brand? stephanie: rachel, what is the problem? >> there are a few things but you look at the product. it has become your relevant. looking at the behavior and looking at these kids, they don't want much where -- to wear what everyone else is looking. you look at all these online cap arms that allow people to have access to different styles from anywhere, or to make their own. that is a fundamental flaw in there is no identity to it. stephanie: the gap sells t-shirts and jeans, abercrombie does as well. how can somebody say that abercrombie is lamer than this guy? >> one looks back, listening to your story this morning, over 20 years, we can all pick on my degrees today and may rightfully so for the past couple of years but for 19 years, he took a

one-store operation and turn it into a 1000-store operation. the challenge there is not just what was said but it is a product. going back five years when you have the other end of the spectrum when chanel said to bloomingdale's, you cannot buy 60% on your assortment anymore of handbag logos. we got the business would collapse. it didn't. stephanie: why would they want to do that? >> they were way ahead of the curve of getting out of the logo business reducing the amount of logo. it is not about .com. that is a fraction of what the customer is spending. it reminds me of the chinese proverb that says even if you are on the wrong track and you sit there, you will be run over. what abercrombie did mike did not evolve. one person running the business. micromanaging every detail.

they can come back. everyone talks about kate spade today. remember what they were nearly 2000 --in early 2000? every young schoolgirl was carrying one of her bags with an izod shirt. it is that. the issue of who becomes the new ceo, is a merchant person or somebody else? erik: i have teenage girls. i don't think they would have gone to abercrombie & fitch 5 10 years ago, and said that tank top is to die for. they bought it for the image. they bought it because back then, conformism was in fashion. now individualism is the new fashion. maybe it will again. >> in the same way, if merchants are doing their job she would not know that she is responding to the image and not the product. chanel was ahead of the curve.

the person who bought the back without the logo did not say i am ahead of the curve i got the back without the logo. it is the job of the merchant to be invisible. stephanie: walk us through how this is happening again. bloomingdale's customers want to the bags with the logo and chanel said i'm not offering that anymore. >> 20% of the handbag business which was enormous was lower merchandise. chanel said about five years ago, we will only let you buy this season 40% -- maybe i am off by the numbers. the following year it went down to 25%. instead of the business dropping, we had to rethink how we educated the customer and how the sales associates could sell something without a logo on it. everyone talks about tory burch. the riva flap was a logo.

we are missing the point with abercrombie. it is always about product, but it is also about people. it really became a business run by one person. when you are run by one person driving area -- every aspect of the process, you end up with groupthink. mike got stuck in his ways about four years ago. >> we should see some influence in the back-to-school season. they will be even adding dippers to the genes. stephanie: i hate button flys. >> they have all of these physical stores. really, what is that experience? there is nothing about pumping fragrance -- it is no longer debt by fragrance or needing a flashlight to get through the store. you need to give someone a reason to get in the space. uniqlo is a great example.

people want a high return on investment for their time. >> they closed 275 stores since 2010. erik: do they need to do more? >> obviously, we talked about this last time. the country is over-stored. there are probably too many. really, where is the excitement in the store? at one point, you had a line out the door and the shutters were dark and it was cool, but things have evolved. that is what retail is about. it is about evolving, not revolution. revolution would mean that the whole concept was wrong in the first place. nothing different from kate spade and others coming back. with the right leadership and product, it is still a great brand name. maybe it is bigger in europe than it is in the u.s. right now. stephanie: for me, it is never

about waiting in line in the cold on 5th avenue. erik: coming back to the conversation of abercrombie & fitch. stephanie: can they make a turnaround? we will find out. ♪

stephanie: welcome back to "market makers." we are back with michael gould rachel stegman, and the lindsay roughuff. abercrombie need a new ceo. is there someone out there that could turn the company around? >> sure there are people out there. abercrombie is not all that bad. there is a great culture there. i'm a passionate believe that culture trumps all. someone may come, maybe an internal or external candidate. stephanie: isn't the culture defined by mike jeffries? >> it is defined by whomever. i followed someone's path and

bloomingdale's in you develop your own way. you don't throw out everything of the old. not everything about abercrombie is bad. it is about my observation from the distance. how did you involve the group that is there? there are probably a lot of great people at that company right now the did not have the opportunity to express their true sense, what their value was. i have known mike simpson 1970. -- i have known mike since 1970. a lot of great qualities but at the end of the day it didn't work out. erik: what should they be looking for a new ceo? >> it is about bringing a point of view and a personnel into the brand. i have a lot of theories. one of them is the cocktail party theory. describe the brand to someone you met at a cocktail party. if you walk away and you think she was nice, she was ok, that is not much of a brand. stephanie: i say it is a poor

man product, i like it. >> i walk out and i put my hand over the logo on their website and it could be anyone's product. to me there is no point of view and that is what is lacking. in terms of leadership, they should be looking in unlikely places. maybe there is an amazing start of doing interesting things in the apparel place where you can acquire talent. stephanie: can a really creative start of later run a major company? isn't that an ambitious idea? how many stores does abercrombie have? >> they have been closing a lot, stowe still pretty big, but hundreds. -- so still pretty big, but hundreds. stephanie: i understand that it could be interesting, but running 1000 stores -- >> you have a ceo that is doing a ton of cost trimming.

they are trying to give each brand their own identity. the ceo it has to be someone that can set a vision for the people to execute. erik: do we know where they are looking? >> they say internally and externally. the coo and the other brand presidents. >> i have always been enamored when people say let's go wait outside. home depot when we out of the norm a few years ago when they hired bob nardelli. did not work out. a lot of people have done other things. i'm not here to talk about ron johnson. some of those ideas were good but the execution was terrible. the fact is, this is not a complicated thing. if are on the board i would say to me, it is about product man being a people person. retail is not complicated. everyone wants to make it complicated. what is the vision that someone has? i think there is someone out there, maybe internally or not. stephanie: well, it is not mike

jeffries. great panel, talking about the future -- ♪

for bloomberg headquarters in new york, this is m"market makers" erik schatzker is that any rule. >> making the case for why the health care subsidy should be vague or overturned. >> why wall street loves memento -- love millenial. eventually they will inherit the house and the whole lot more. >> cheers. imagine a job where you sit around and drink good with the all day long. of course it is a little bit more complicated than that, but sounds pretty good to me. welcome to the second hour of "market makers."

>> the supreme court right now justices are hearing arguments in a case that will decide the fate of obamacare. it challenges the affordable care act insurance premium subsidies. as you may know only 16 states build their own insurance exchanges, the rescues that federalhealthcare.gov system. the court not expected to rule on the case until the end of the term june. the latest economic reports from the united states and europe are highlighting the differences. that has the euro sinking to an 11-year low against the dollar. the euro trading a little under one dollar point $.11. -- under $1.11. adding 200,000 jobs for the third straight month. the service economy -- expanded

faster than expected. the price of oil falling on where there is more rude out there than traders the day. the government says oil stockpiles rose five much of expected last week and has been inventories at the highest level since the energy department began weekly reports 33 years ago. the benchmark west texas intermediate rate contract fell below $60 -- fell below $50 per barrel. in moscow, vladimir putin warning against extremist he claims are trying to destroy the russian state. one example of that, according to gluten, the murder of an anti-kuhn politician. >> the-- anti-putin politician. >> we must finally rid russia of the great the -- tragedy of the kinds of things we recently saw and areas. he audacious murder in the very center of the capital. >> putin's opponents have blamed

the kremlin for the death. the jury listening to open -- opening arguments in the boston marathon trial. just circa nara -- dzhokhar tsarnaev admitted. the little she disputes about the prosecution case except for the motive of the crime. prosecutors are seeking the death penalty. his older brother was killed in a shootout with police after the attack. microsoft cofounder paul allen and his research team have discovered a giant sunken japanese battleship. the largest battleship ever. u.s. forces think it off the philippines during world war ii. an underwater program took video of the wreckage. you can see it here. allen says he began to search more than eight years ago. >> back to the supreme court now, peter cook has just left the room. he was listening to the first hour of argument.

any hints from the justices what they think you com? >> interesting moments in the courtroom. tension and humor. both sides being represented with funky humor. in the room itself the moment came from justice anthony kennedy. potential swing vote where he challenged the lawyer representing the plaintiff michael carbon, on central issue that if the government did not intend to provide the subsidies to everyone across the country, including those benefiting from the federal exchange when the law itself all apart, a punishment to those states that do not set up their own exchanges? a constitutional argument that even the government it will did raise. he said your argument raises serious constitutional question. this is an element to a debate we had not yet heard. something justice kagan also jumped in on.

as to the argument, those supporting shooting down the law, michael cardigan said this is a straightforward case. he had barely gotten those words out of his mouth when justice ginsburg time -- trying to write in question of standing, did the plaintiff prove they were injured by the law itself? he walked into that itself. he was getting into it with the government lawyer the solicitor general. one question will be, is there standing for these four plaintiffs gekko did they prove they were -- that they in fact could not qualify for an exemption under the health care law? that is not has not been resolved in the courtroom. could they punt on the entire is to of the subsidies and save none of these people have the standing. i would say it was the question from justice and indeed stood out the most. justice ginsburg, sotomayor

challenging michael carbon aggressively on the central question of the case. the chaos that would ensue if the subsidies would indeed shut down. i left the room just as the government was beginning its case. justice roberts giving them next time. humorous moments with justice roberts as well. that was my first takeaway from what i saw the courtroom just a short time ago. >> i hope you can hear me with all of the noise the protesters are making in the background. it is very revealing what the individual just uses his are saying with a question the lawyers making the presentation but i guess we learned in the last time the affordable care act was challenged in the supreme court. it does not always work out the way you think it might listening to the questions and comments introduce to the court. >> that is absolutely right. you cannot take it at face value that is how they will vote.

i will tell you there was a really interesting moment in her room. justice roberts has been pretty cry it -- pretty quiet so far. -- i will tell you there was a really interesting moment in the courtroom. michael carbon was the lawyer in that case as well. some of his arguments have come back to haunt him in this one. justice kagan and others pointed out, subsidies were added important part of the law when they debated the individual mandate. at one point justice robert says there has been a lot of reference to the other case, did you win that case? of course, a lot of laughter in the room. could not see mark carbons -- my carbons expression at that point. -- marki expression at thatk point. e carbon's >>-- mike carbon's expression of that point. >> it is a little hard to hear

you with the protesters all around you. >> we cannot turn the camera for a wide brady of reasons. you have both sides here on the those who want to tear the law down and those who want to see the subsidy law of phil. you have some tea party activist. closest to me on the other side you have union activists in support of the law. i should point out in the courtroom it sells not very, there are members of congress in the courtroom, those who advocated strongly for the law and those who are trying to shoot it down. i have seen jim mcdermott, two democrats from the house with strong support for the law. i knows them republicans planning to attend. john barrasso, did not see him but would not surprise me. >> the administration and others who support the affordable care act clearly want the justices on the bench to feel the weight of

the decision comes the possibility that ruling the subsidies invalid would cause obamacare to collapse and leave millions of people without insurance. do you get the sense that is on their mind? >> absolutely. we have heard the words chaos. we heard justice sotomayor or talk about the death by role it the subsidies were invalidated for all of the americans. that would mean an undermining of the core law is itself. they are making the case or at least they are asked michael carbon about the question if the government did not want the subsidies across the country why would it choose that jacob that would undermine the core of the law itself. that certainly has come up in the courts in question. >> it is like a bonanza for lawyers. peter cook, thank you. >> coming up, we will speak to a state attorney general supporting the losses against the obamacare subsidies.

you do not want to miss it. >> on a lighter note, the job a lot of us have trained for four years. you will meet a master bourbon take -- taster, and i'm not talking about erik. ♪

>> welcome back to " market makers." time for the bulletin, top business stories of the morning. shares of abercrombie & fitch are now down 13%. the struggling teen retailer posted sales over the holiday time that missed analysts estimate. abercrombie has been looking for a new ceo since the departure of matt jefferies in december. the company says it is selling one of jeffrey a brick perks, the corporate jet. -- favorite perks, the corporate

jet. microsoft, apple, google and five other companies piled up another $69 billion offshore last year. they account for more than a fifth of the eight $2 trillion that u.s. companies hold in tax countries. there are few signs tech companies would bring that money home unless the u.s. tax code is changed. and in ukraine there has been an explosion in a coal mine more than 3000 feet underground. at least one minor was killed. more than 30 others are trapped. the explosion took place in a city under control of pro-russian rebels. the russians they the blast was not caused by artillery fire. >> justices are right now hearing arguments for and against the interpretation of four words in the affordable care act.

ultimately they will have to decide if the four words make illegal the subsidy that requires function. without them, many would be left without health insurance. one of them if west virginia hat trick morsi joining us from charleston this morning. mr. attorney general, thank you for being with us. my first western i hope is a simple one. clearly invalidating the subsidies would leave millions of americans immediately without health insurance, 7.5 million tens of thousands of people in your state. if your intent is not to deny the people, including residents of west virginia health insurance, what is your intent ? >> most importantly we want to assure when the president's takes action, he does so in a lawful manner. the fact is we think the language of the statute is very clear and whatever the intent in terms of providing subsidies

to individual him it is the goal to divide the people who are poor or in europe or get help insurance coverage. you have to do with the right way. we do think there are alternatives that will allow people to get good health insurance but you cannot just keep disregarding the law time after time. we are hopeful the supreme court will really stand firm and green the plaintext of the law and -- read the plain text of the law and hopefully will get this. we need to start over. the states have a lot of ideas as to how to make health care worker will work people. >> patrick, what happens to the people now getting subsidies gekko west virginia is a state that has many, many people using the system. >> you know, i think there are a lot of ways we can address that. i know there are plans floating around in congress and the states are working through

ideas. we think there are waiver provisions that could be applied. this is supposed to take 2017. you could actually accelerate when that takes effect modify it a bit in order to provide states with the flexibility they need to provide coverage to the citizen to need it most. we should also take the opportunity to revisit obamacare, which has had a terrible effect on the economy and not the right way to deliver health insurance. i think it is disingenuous people keep focusing on the fact that the subsidies were provided and they were done well in an unlawful manner. let's take the opportunity to fix a obamacare, and i think we could get a much better health care system in west virginia and the country. >> mr. attorney general, i am fine with opinions, and you have many, and i am grateful you are willing to share with us, but

statements of fact are in all together different thing. what is the statement of fact that this can provide for the american health care economy? pardon me for interrupting you -- i think is not int a fact. >> verse of all, if you look at the jobs of the state attorney general, we filed suit in order to make sure we are pulled the state of law and congress that's up to make sure we follow policy. i think over the past couple of years you have seen a massive amount of finance as the health care system has shifted over to the aca. that is a lot of regulatory burdens, and for a number of years wrote in our country was very in the mix but the broader point i want to emphasize today is this administration has taken so many actions that have spurred lawsuits, whether it

pertains to the subsidies, whether it pertains to a number of the other divisions that the administration has put forward. >>: on the second -- -- hold on the second -- i advised with the idea that you do not like the president perhaps or think the executive action is unconstitutional but that is not what the supreme court, you are taken from west -- you are the attorney general from west virginia which has joined with for plaintiff that would invalidate the subsidies. that is not -- that is what we're talking about. we're not talking about executive action or when you think of the president. but wait a minute, we're talking about executive action because

it was made in the irs rolled to apply the subsidies to the federal exchanges when i would argue -- >> executive order -- >> that came from a rulemaking. if you go back it came from the irs rulemaking. the plaintext of the statute is clear. this subsidy were designed for state-based exchanges. a lot of that was carried out through the role making progress beginning 2012. this goes back to the obama administration decision. i think it is important the public focus on why we're gone this point. the administration made a decision that ultimately provided the subsidies and they were not permitted instead of going to congress to fix the problem to fix the state to have innovative models to give more flexibility as to how health care is delivered to the state. >> that may be but let's go

back to the point about the irs role making and an executive order. the irs has to interpret in order to enforce legislation as it applies to the tax system. in this case as it applies to the affordable care act. would you similarly invalidate every rulemaking by the irs? every rulemaking by the irs is not tantamount to executive action. >> of course not. i think no attorneys general suggests that. what we're saying is they got it wrong by virtue of announcing a rulemaking that disregarded the plain language of the act. they exceeded their authority. that is the important point. here when you're talking about the plaintext or context of the statute, it is clear the subsidies were designed to be provided for state-based exchanges. that all started with the obama

administrations interpretation. once they put it into effect they said it will be difficult to modify it because people are starting to gain access to the subsidies. the obama administration has put us in a difficult particular -- predicament. we are suggesting there is a pathway forward that we can work with than one of the provisions to get state the flexibility they need to provide coverage to the citizens. >> what is the exact immediate prescription gekko if the lawsuit comes out in favor of what the gop want what is going to happen to the american people? what is your game plan? >> a couple of things. first, it may depend on what happened with the supreme court decision. no one can always predict with certainty how the court is going to rule. if in fact the subsidies are set aside, a lot of different ways the court can do that. one of the things we think if possible is if you were to beat

up the provision of the aca that allows for state-based waivers, and there have been a lot of waivers, dozens, hundreds of thousands of obamacare there is the way you can move with an accelerated process where a state i be able to cover health care for a number of the citizens. -- might be able to cover health care for a number of the citizens. >> and cute. i know we had a testy exchange, but this is an important issue at stake. a political level, practical level. we thank you very much for your time here on bloomberg television. the attorney general for the state of west virginia, patrick morrissey. >> i love working with you, a testy exchange. ♪

>> coming up, wall street's love affair with millenial. 30 trillion reasons why. >> that is a crazy number. plus drinking whiskey right out of the barrel. part of the job. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome back. i just want to say if you did not feed the last interview with the west attorney -- west virginia attorney general, you have to see it. it's hard work canadian that his ground. >> a great conversation. he stood his ground and we asked have weston, that is our job. i am glad we have the opportunity. fantastic, indeed it was. now let's think about what the markets are doing. taking you to our chief market

correspondent scarlet fu at the breaking news that for a look at the action out of europe. but weakness before mario draghi and the ecb tomorrow. that is the theme across europe. the broad stoxx 600 again with two days of losses after closing on a record high friday. today we are drifting higher. everyone is waiting for details. how greek bonds that into everything to. wilbanks able to use the best collateral again? -- will banks be able to use the best collateral again? quite entered chartered rally more than 5%. does not plan to tap more. ing gaining 1%. former u.s. financial unit. fresno down for and 11 -- 11 say in 15. full-year results that were shy

of analyst estimates. leading miners lower closing almost 2% on the day. we mentioned this earlier, the euro under the pressure before the ecb announcement tomorrow. now trading at a 1-10 handle. services index showed his appointing beat as well. the next level everyone is looking at is one is that a 15th. just below the level. do we continue to fall further? it is a big question here. the market may be increasing the short position before the ecb begins qe. the euro now trading at its lowest since september 2003. that would be an 11th-year low. >> thank you for giving us the london rep of. it was -- what is it like to be tied to iraq in the middle of the london hurricane?

you are about to find out. a look at what was said during the critical reserve meeting. coming through the just released france the policy meeting. -- just released transcript during the meeting. >> 2009 is the height of the storm for the fed. they knew the cross point of no return in march of that year when they introduced qe1. he called it crossing the rubicon. there will be a significant announcement effect. he got a hollinger you for yeah baby from kevin morse. only thing worse than buying treasuries is to buy them in such a tepid way. i think if we are again we are again, we're in. crossing the rubicon.

i am amazed they can chart this? the number of chuckles in the meeting. >> you can search the things on the net. you can go through and look for brackets for laughter. >> 2008 and 2009 low laughing. >> indeed. the only joke i felt was the beginning of the march meeting with ben bernanke says you're asked for a lot of information you are going to be sorry. let's in late 2007 they laughed 80 times. >> starting to recover by the end of the year. in march of 2009 ben bernanke

went on 60 minutes inside i think green shoots out there. the very next meeting nathan sheets you ran the international division of the fed, he said in the realm of green shoots, the forecast is like a small potted plants more vulnerable asparagus garden. hindsight is 2020. janet yellen thought they would be raising rates by 2012 the end. we're still waiting. san francisco fed chairman at the time. charlie plosser just for -- retired last sunday. obviously a get it wrong. they are in the middle of the hurricane. real-time constantly being updated. desperately trying to keep the banks from collapsing. you can cut some slack as to where they were and what they were saying in real time. >> do these transcripts tend as

a whole to flush out things we are a new with more details or do they rewrite history? >> they do not rewrite history all that much. you get a better sense of how they were thinking about the problem, and what their thinking was when they came up with the programs that they did. >> our people as a whole less impressed? >> it has not been long enough for us to tell. 2008 people general reaction is it was a remarkable performance. never seen anything like this before. had to throw something together. you can argue about it was right or wrong but they did not sit still in had to react. >> you can see them on the bloomberg terminal or bloomberg.com. i left the last chart, chuckle chart. quickly below that for market makers. >> we last all day long here on " market makers." especially during the commercial.

when we return, millenial, wall street once you and all the money you are addicted to inherit. ♪

>> welcome back to "market makers." i am stephanie ruhle. forget about baby boomers. wall street focused on the millenial in the 30 trillion they may inherit from parents. cartoon like graphics from big banks. mike reagan is here to explain. you have to walk through this. i will not say i was one of millenial but i was one young. when i was 23 years old i does not need jp morgan or citigroup to make funny or insulting cartoons for me, i just went to bank to get that is what i did. >> when i got out of college the early 1990's, i am guessing you

were about a decade later. >> right there i -- you got me. they call this the slackers and everything. people do not change from generation to generation. when you look at the millenial, the oldest graduated college around the time when things like enron were happening. you look disgusted with that. there is a built-in skepticism or cynicism among them as far as what the reports show towards wall street and investment. federated investment they are the ones that came up with the $30 trillion inheritance number they manage retirement savings obviously.

>> that is the federated website right there. i need to do business because they have this totally cool cartoon. >> goldman sachs has a similar thing out. >> that's always a millenial over? >> -- that will when a millenial over? their website has a really sexy cartoon. i just don't get it. . the interesting thing about it is millenial describes the investment as conservative. 43% compared to gen x is like 27 percent. baby boomers are a little less conservative than their kids the millenial in the high 30's. it is clear is it is so much clear with the data. who knows what our generation would have said.

i probably would have said i would never invest anything. grateful dead tickets or whatever i was whining then. >> they go to the show they do not have the card. >> the millenial, not yet? obviously with the generation coming in age they have less spending power. much better education. >> i love that cutie five. highly educated. a lot of them stayed in college and got graduate degrees. the education level much higher than ours. >> you display that out for us. let's i think max probably would could -- what if he could too. >> 15,000 per ticket. >> wall street basically salivating over them. they stand to inherit 30 trillion. that is financial and

nonfinancial assets, so presumably real estate and whatever else, jewelry and grateful dead records. right now the baby boomers as far as the generational bell curve those are the focus. so there was a great report on that think this is why health-care care stocks are good, long-term plan because baby boomers, that is all they will spend their money on for a while. eventually that will triple -- trickle down to the millenial. >> i happen to think max abelson would be more wu-tang claimedn. >> doesn't he have a collection of old midget draft records? >> he does. he would come down from heaven and faintly is legal? that is crazy. lutherans own mike reagan. -- bloomberg's own mike reagan. >> tom is a musician, he has a

right. >> a tough job, someone has to do it. a woman that makes premium hooch that is worth the price. ♪

>> we have some breaking news hospital companies are outperforming the broader market. anthony kennedy -- anthony kennedy cnet ps3 skeptical question. he that there was a powerful point to the white house argument the health care law would fall apart it to health care subsidies were ruled unlawful. specifically saying there was a constitutional problem if they roll -- role to help people in fort insurance. both are of five flights of it. hca up by more than 8%. tenet health care by almost 7%.

insurance companies aren't gaining but not necessarily significant way. outperforming the broader market but not to the extent you see saw -- see the hospital shares climb. it all increasing. aetna the lacker there. in this case, arguments have artie ended. the ruling is expected to come by jim. >> thank you. the best job in the world. what on earth could it be. some of you might envision show like we're about to show you. sales of whiskey sales rose almost 10% last year. with all of the booze, quality control is critical. meet a burden master taser -- . -- burden master taser. >> name is. ryan and master taster. we are responsible for what the

product his life -- taste like on the show. >> i got hired as an intern on research and development group. i always thought i would be dealing with energy or something like that. the biggest misconception i think is how do i keep from getting drunk or do i have to take a taxi home every day? >> that is not even close to what i do. we have a huge focus on responsibility. there is a time when the lining of your mouth goes completely numb. even if you're not swallowing, you just cannot taste anything. you have to give it time to drink the water. burden -- bourban than wine and you have to train yourself to look past the burn and alcohol

influence. so it is a similar process that you go through. >> i think it is a big influence for pop culture. bringing back the classic cocktail. in the rise of mixologists. when i tell people i am the brown-forman master taser, two things catch them. the eyes either light up or get a little bit confused. i know i do not look like your typical professional but when they embrace me, they love the fact that i am in the industry and position i am in. everyone wants to know where they put the resume in. >> on your list of dream jobs.

>> clearly a great one but not the best in the world. >> that would be sitting around on market makers the stephanie ruhle. >> i cannot say i would be good at that at all. >> i guarantee she did not think it was for her either. >> when i am asked if i can take a look in my wine, it just mean that. i've not licked a tree anytime recently and do not know what that taste like. pearson of the on the amazing dory since we -- here's an update on the amazing story. she decided to leave it to become a master taster at another bourban maker and has not revealed what that is. x no surprise because it is getting hotter and hotter. she is a master at her job. -- it is no surprise because it is getting hotter and hotter. >> it makes my tongue feel like

it is on fire. >> i clearly have some work ahead of me. tomorrow we will answer the age-old question, where is the beef? the ceo of the roast beef emporium, arby's. >> we will see you tomorrow. ♪

>> it at 56 past the hour. that means bloomberg television is on the market. getting you caught up on how

things are trading. the dow and s&p lower. consolidation really picking up some steam here. both are on pace for the biggest decline since january. the dollar back -- rallied on an unexpected pick up. everyone is rating for mario draghi to announce details on the quantitative easing tomorrow. senior engineering -- equity derivatives. there is a waiting game going on here. europe seems to be driving a lot of the activity. >> need to see how negotiations are going. driving the market down and volatility of. all i are on the jobs report coming out friday and how that will change the fed foster in the meeting. >> right. especially since june is still on the table. >> still a long shot but if the

friday -- friday jobs report runs hot as they say were not formed payrolls are more than expected, we could the sentiment shift higher. >> talk about how the weak euro is playing into all of this. the manufacturing data combined with the expectation rate will go up higher is causing dollar strength. anticipation of the ecb bond buying program. the different cycles and the central bank policy are dried bring -- driving the currency exchange rate. >> the strong dollar when it comes to the outlook. >> true, multinational it is a headwind, although it is being offset by weigle -- weaker oil prices. offsetting for dynamic. >> focusing on the trade. your trade is on the gold miners

. specifically the junior mining your -- junior miners. down 40%. so far this year up to 6%. >> the mining sector in general has become more sensitive. because of the interest rate sensitivity and the move has been astronomical. 4.5% in gdp rates closer to 6%. not for the faint hearted. the volatility is cheap considering the move they have made. looking at the weekly options with her pretty index active -- and expensive. >> you are not partial to one direction or another. the directional call is a bit of a punt. i think what we've seen over the past six or so really this is a much better bet. >> at the same time it would

make more money if prices to go down? >> yes slightly. in general looking for volatility one way or another. >> volatility one way or another is what a lot of people are waiting for. max prior, thank you for joining us. we are focusing on the market. the major indexes, dow s&p and nasdaq all the work after closing for the dow at record highs monday. money clip is up next on bloomberg television. ♪

♪ pimm: welcome to "money clip" -- i am pimm fox. in the rundown from washboard abs to sluggish sales abercrombie & fitch is looking for customers. in motors, zero to 60 in less than 20 seconds. how japan has woven silk for the interior. the geneva motor show comes wrapped in power and luxury. in politics, hillary clinton was mum on her e-mail account but strings her fans along. hillary, what are you waiting for?