>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and numeral. -- and stephanie ruhle. scarlet: waiting on the fed. corporate selloffs at a roaring paste this year. and the lockup timeframe for alibaba's investors. how much pressure will that put on shares already down 19% year to date? welcome to market makers. i'm scarlet fu. joe: and i'm joe weisenthal in

for eric -- erik schatzker today. i cannot wait to see what happens. i feel that for them that they are not here today. scarlet: we will try to make it up for them. federal reserve policymakers wrap up their today meeting -- two-day meeting and investors will be paying attention to what the fed doesn't say. janet yellen is likely to be questioned about the strong dollar and how it may affect monetary policy. you can watch that live right here on bloomberg television starting at 2:30 p.m. eastern time. benjamin netanyahu beat the odds. he beat back the challenge from his main rival and capture the most seats in yesterday's election stop now he must -- yesterday's election. now he must form a coalition.

the hard work begins. netanyahu says there are issues that must be addressed immediately. netanyahu: we are facing great challenges ahead. i cannot elaborate on all of them, but i can say with that we have challenges in both -- with certainty that we have challenges of both diplomacy and security. scarlet: the prime minister appealed to his supporters to save israel from a leftist government backed by air of voters. general motors is saying goodbye to most chevrolet models iv and this year. the russian market has been shrinking. the move will cost gm about $600 million. it will still send high-end -- sell high-end pickles like the tahoe suv. west texas intermediate fell below $43 per barrel for the

second day. reports out in a half hour from now are likely to put even more pressure on oil prices, because those numbers will probably show the u.s. inventories grew last week. and in frankfurt, violent protests are spoiling the inauguration of the new headquarters. police five back with water can end. they say they have made a number of arrests. millions of us are making our picks for the ncaa basketball tournament. so, too, is president obama and he is going with top seed kentucky. he told espn he likes arizona over villanova in the finals. he has only picked one national champion since taking office. joe: really going out on a limb.

scarlet: taking a big leap. are you involved in the bracket? joe: what time do we have to gab it in? i don't think i'm going to get it in. i'm too busy. hedge fund billionaire ray dalio is one of those warning the fed not to run out of patience. it could be a repeat of 1937, he said. let's see what and lizzie are has to -- what edward lazear has to say about that. and we also have our own economics editor mike mckee. scarlet: let's start with you ed. i want to get your thoughts on whether the fed should be raising rates come june. is that the right direction

given the state of the economy? edward: there are two things you want to think about when it comes to the fed policy. first, is the economy strong enough to withstand raising rates? and the second is, will it stimulate a lagging economy even if it is not strong enough? the first question is what we want to focus on initially, and that is, where is the economy right now? there is no question we are in much better shape than we were love years ago and i would judge that primarily by looking at the labor market, and i think that's what the fed look that. if you look at the unemployment rate, which is down, but more importantly, the job creation rate but -- which has been strong in the past few months and the last year, that signals we are on track and it's time to be moving back toward more regular policy. the negative on that, if the fed wants to keep rates down, except plenty of ammunition will stop

-- ammunition. the unemployment rate is the right number to be focusing on because it takes into account things like labor force registration -- participation and population growth. that number is low and wage growth is low. and gdp growth is not great. and the recent quarter sales have not been fantastic also been a want to keep in -- has not been fantastic. if they want to keep things low they could have ammunition to say that the economy is not really a sickly where they wanted to be. but they should be looking at unemployment growth and moving toward a more normal trajectory. joe: how do you reconcile the criticism with some of your skepticism about whether the economy is really they are? edward: i was not a critic of the early policies. in fact, i thought the fed behaved admirably in two

thousand eight. they did a great job. and qe1 was probably a good move. qe2 less so. and qe3, even less effective. we are now in a situation where monetary policy is not doing much to stimulate the economy. i would disagree with your lead-in by ray dalio saying that if the monetary authorities tighten we will be in the trouble. as long as we do it in a gradual fashion, and i don't seen a chance they will do so radically, i don't see the economy struggling. i think we will be able to shake off and do so appropriately. and if we don't get to normal rates, we won't have the discretion to use monetary policy effectively in the future. that will be important to think about as well. scarlet: mike mckee, our economics editor, what is your take on that? because so many people say that they could hold off, but others

point out that if they do they will be behind the curve. mike gupta i think people are misinterpreting -- mike: i think people are misinterpreting raydalio's comments. all they see are the headlines. he does talk about how they will not be able to respond the future if they don't get rates up. what he seems to be concerned with is the speed with which the fed would raise rates and how high they would go. in 1937, they did not raise rates, but bank requirements up to 50% at a time that they were capping the money supply growth. the confluence of events they came together is not in place apples of the fed is not talking about a rate increase -- is not in place now. the fed is not talking about a rating priest, and even if they did raise rates, it would

probably not have the same effect on the economy. joe: what are the other things will be watching today? mike: janet yellen to go back to 2000 four, the fed playbook then, they wanted to get away from a statement of time dependency. they went to a statement where they said we could go to a more measured pace of raising rates. that is probably the statement she wants to get across today. they went with the word patient every time previously, but that is not going to have this time. you want to listen to what janet yellen says about the pace, and how fast will the rates go up. we are missing to fed members --

two fed members here. the staff is going to contribute their forecast to the projections, but when you get somebody to take those places, it may change again. we don't know which the dots ar e, but you have to take that with a little great of salt. but if they do in general, it will be a slower pace and that will please the market. scarlet: there is a factor the fed cannot overlook. what kind of allowances or concessions does the federal reserve make with regard to the dollar? edward: the fed certainly takes into account exchange rates in setting monetary policy. exchange rates are not simply set the fed, but also set in interactions with other banks as

well and the ecb has been the primary player in that scenario. if we are looking at exchange rates, it has not so much to do with the fed and much more to do with the ecb and the bank of japan as well. i do think the discussion on exchange rates it tends to be over emphasized. while exchange rates are orton and they do affect the economy and trade patterns, -- are important and they do affect the economy and trade patterns, this is not the net is particularly controversial. most people look at it and find exchange rates are a factor, but relatively minor factor in affecting the economy. even if the fed were to affect the exchange rates and i don't think they will in a dramatic way, it would likely not have a big effect on us. joe: i want to get your take on the recent slowdown in economic data. there has been some indication that it has come up below expectations. do you chalk that up to the

winter? edward, i checked this up to standard -- i chalk this up to standard volatility. you can see a lot of volatility in the gdp growth rates, things like employment growth. some of that is measurement error, by the way. the government comes back two years later and restates what gdp was doing, restate sales and so forth. part of that will be contemporaneous measurement error, just stuff we don't know what is going on at the time. i would not place too much since this on that. i do think you want to look over the longer run, two or three orders, and as i said early -- two or three quarters, and as i said earlier, primarily because of things that are happening in the labor market. we do see strength there and that is usually the best indicator of where the economy is going. and the other thing i would look at is the market, by the way. the market tells us where the economy is going more than just

about anything else, and the market has been reasonable over the last quarters, i would say. -- the last two quarters, i would say. we are probably on path for a 2% growth rate in the next year which is pretty much what we had. scarlet: to what extent is the fed looking at how the market reacts to what it says? mike: they do look at how the market reacts, but more in terms of expectations than anything else. they are watching inflation expectations particularly carefully and interestingly they have come up a bit in recent months. inflation has not. they are looking for it to increase in the next couple of quarters. if they are looking at their forecast and that is what they are desolate they expect then they are going to have to look at raising rates to be ahead of that, because inflation is a lagging indicator. scarlet: there is that chart.

that is what is supposed to happen. mike: that was the december projections. we will see whether the rise of the dollar and the falling oil prices has an impact on that as well. scarlet: mike mckee, thank you. and we want to thank stanford university edward lazear for joining us as well. at 2 p.m. eastern time, mark crumpton on bottom line will have all of that, followed by janet yellen's news conference during a 2:30 p.m. -- starting at 2:30 p.m. coming up, alibaba is getting the agreement to sell today, and given the stock performance of late, a lot of them may take them up on that offer. joe: plus, collateral damage. a year after fighting broke out in the ukraine, the economy is devastated. ryan chilcote takes a look at the toll. ♪

joe: time to bring you up-to-date on the top stories of

the morning. in tunisia, eight people were killed when gunmen stormed the country from and fled to a nearby museum. authorities said the victims were tourists, seven of them foreigners. no word yet on whether hostages are being held. a few hours from now investors will be looking for hints about what the fed will do next. economists expect them to be changed -- to change their language on being patient on rate hikes. that could open the door for interest rate hikes in the next few months. fedex had a strong holiday shopping season and falling fuel prices helped to boost earnings, but that was partially offset by unfavorable currency exchange rates. scarlet: like everyone else. many companies are saying this -- the exact same thing. the end of a lockup time could

put 330 million more shares of alibaba stock on the market. alibaba has been down 30% november. a selloff that could spark marshaling could be on the way. leslie picker covers alibaba and the ipo market overall for us. and a senior analyst has thoughts as well. leslie, let's start with you. leslie: because alibaba was so massive, they had this tiered system. usually, it's one lockup, but because of the massive company they have a three-tiered system. this one, however is a much bigger percentage of the shares for trading than the first one we saw in december. that one was 1% of shares available for trading. this one is 15%. it's a much bigger amount of stock that could be unloaded into the market.

scarlet: who could be unloading? leslie: some independent directors and the ability to sell from softbank and from yahoo! as well. scarlet: alibaba, the company is facing challenges in the past couple of weeks. it is still up from its ipo price, but at a post-ipo low. cracked the key issue for alibaba, the long-term investment is still low. clearly, they've had some short-term misses. the first earnings release out of the box public was a little light on the revenue. i think a lot of investors were saying, we are pricing this

stock for if not to perfection close to perfection. and alibaba has been pretty adamant about defending their position. but they are going to have to think harder about piracy, and the website and some of the goods listed on their website. that might have some short-term negative revenue implications. investors want to see the next quarter let's see how the growth looks and i think this stock is focusing on that. joe: something that bothers me about the whole of the discussion is everyone knows it is coming. why does it matter if the market knows the date? leslie: it's a calendar event. joe: if it is totally preventable, why does it actually affect the market? leslie: that is why it is important to see how the stock has been trading up to the lockup agreement get a sense of what will happen on the lockup state. today, it's up slightly, which could mean most people who get

the stock are analyzing this and trying to get into the mindset of those whose lockup will be ending today. this stock has fallen 30% over the last year. people may be looking at this and say why should i sell now when i think it has reached the bottom or could go up from here? joe: it's about trying to guess what the people inside the lockup or going to do more than the lockup is dell. leslie: it's about -- more than the lockup itself. leslie: it's about psychology. much of what is being released is yahoos stake. and we only know that is going to be spun off. we are trying to get into the method of who could sell, why they would want to sell, and why they might need to. scarlet: what is the external sentiment on alibaba? long-term, still fairly bullish?

paul: yes, it's a lockup. it is still going to flow and it's a question of how efficient they will be. scarlet: paul sweeney, thank you so much. and leslie picker, who covers ipos for us. joe: coming up, conglomerates in the spin cycle, they are spinning off records at -- spinning off at a record pace. we will see why. ♪

scarlet: coming up, oil prices falling for the seventh straight day. we get that data in just a few minutes. joe: plus, conglomerates on a diet. they are slimming down and

spinning off at a record rate. scarlet: "market makers" will be right back. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. the scarlet: welcome to "market makers" and i'm scarlet fu. joe: and i'm joe weisenthal. we have breaking news in the will markets. weekly inventory numbers are out. i -- julie hyman is in the newsroom with the headlines. julie: it looks the what was

anticipated. it look like we would see a build of around 4 million barrels in the weekly inventory numbers, and instead 9.6 billion barrels. -- 9.6 million barrels. supplies are now at a record. already, we've seen crude inventories up for nine weeks straight. obviously, we got a 10th week. this 9.6 million barrels is an eye-popping number compared with what analysts have been estimating. and if we look at the market in reaction, as expected, there is a lot of volatility. it looks like oil is down 3%. already, we got a seven day slump in oil industry -- in its trading. joe: thanks, julie hyman

exciting stuff. scope -- scarlet: now we are down even more and extending our losses off of 3%. it's a big gyration in the overall market. joe: it was a very fun 30 seconds right there. scarlet: let's move on because there's other breaking news. eight tourists have been killed in an apparent terrorist attack on the tunisian parliament building. someone joins us on the phone from cai what -- from cairo. can you give us an updated report on the hostages -- on whether there are hostages? selma? selma: yes? scarlet: can you give us an update on what is happening? salma: the hostage situation is

over now and two of the kidnappers have been killed. security forces have secured their release. so far, at least nine people killed including seven foreigners, one tunisian, and when security personnel. scarlet: just to reiterate, two gunmen and one police officer were killed on a raid. do we know anything about the terrorist gunmen who took these hostages? salma, can you hear me? can you tell us a little bit more about the terrorists, or the people who took these hostages? salma: so far, there is no claim of responsibility. we don't have any confirmed reports on who is behind the

attack. scarlet: thank you. it is remarkable, given that tunisia was the springboard of the epicenter of what turned out to be the arab spring four years ago. joe: it was certainly, after that initial burst, you did not see as much as you saw elsewhere. scarlet: we will continue to follow the headlines out of tunisia. coming up on "market makers," conglomerates spinning off at a record pace this year. is that good or bad? we will discuss. ♪

joe: time to bring you up to date on the top stories of the morning also the white house has congratulated the israeli people for the democratic election

process. no mention of benjamin netanyahu, who is likely to be forming the next government. the white house says that is because the obama administration will wait for the coalition building process to play out first. and tempers are flaring over the greek bailout. officials at the imf have said that greece is the most unhelpful country the organization has dealt with in 70 years. wow. according to people familiar with the matter, the imf also worries greece will not develop to its bailout extension agreement it made in february. and in frankfurt, protesters are trying to ruin mario draghi's party. thousands of them through --threw smoke bombs as a protest against austerity measures the ecb has imposed on greece. mario draghi: the ecb has become the focal point for those

frustrated with the situation. this may not be a fair charge. our actions have been aimed precisely at cushioning this shock severed by the economy. but as the central bank for the whole euro area, we must listen very carefully to what all our citizens are saying. joe: german police say they have made a number of arrests. and in nevada, lawmakers are talking about a new use for medical marijuana. sick pets. a bill in the nevada senate would allow animal owners to get marijuana for their pet if the vet certifies their animal may be helped by it. it is part of a larger bill that would overhaul nevada's medical marijuana law. skeletal and this is a growing industry of pot farmers. -- scarlet: and this is a growing industry of pot farmers. a new market. procter & gamble and barnes &

noble are two of the 57 companies that have already announced spinoff plans and we are not even through the first quarter yet. jp agarose is a strategy -- jp egger's is a strategy consultant. jp, let's start with you. is the shareholder value that -- that is created from spinoffs real or perceived? jb: in some cases, it's legitimately real. these companies are able to be more efficient and better competitive -- better competitors by being more focused. and it can help motivation for the firm. julie: and there was a report yesterday by a consultant group that pointed out an advantage to transparency in some cases. when you have a spinoff, you maybe get more detail into the separated -- into the inside of

the separated corporation versus the conglomerate and that can aid cooperation. jp: if it increases monitoring ability, then that could increase shareholder value. joe: i fascinated by -- i am fascinated by the times of collaboration and then de-conglomeration. jp: there's this belief that bigger is better and there is a lot of advantage there. part of that is because of the fact that managers want to run bigger and better firms, both for personal and power-based reasons. but there's also the recognition that in many cases, these marriages started for very good reasons. they were real reasons why these were together at one point, but maybe that time has passed. we will see certain industries glom up to take advantage of those economies, and then

eventually when there is no longer the need, you will see a change of pace. scarlet: and this has seen the breakup of different brands. julie: and sometimes it is difficult to remember why they made sense in the first place. we're just talking about fortune brands. now the company called fortune brands is a fire and security company, which used to own titleist golf bottles -- golf balls as well as jim beam whiskey. if you look at general electric on the consumer side of the business, it acquired all of these financial assets and at one time also rent media assets. it must have made sense to someone at the time. but over time, some of those make less sense. scarlet: it's better to be diverse when there's a recession or when times are tough. versus right now, you want to

give it to where you can really see growth take off. jb: the internal capital mark -- jp: the internal capital market and the ability to take off, to the extent that they can get assets outside the firm, there can be an advantage at a certain point. joe: where are we seeing this taking place echoed jp: there is a huge boom in the tech space. certainly ebay and paypal made a lot of sense initially, but makes no sense now. we have seen ways in the financial services industry the believe there would be this need to have the biggest, baddest financial firms out there. and at some point we realize we really need to be more agile and nimble over time. scarlet: i want to get back to

what you were saying about the ceos having an incentive. they get paid more if the company is bigger? jp: there is a relation between the bigger the assets and the congo ability in pay. -- the comparability in pay. julie: and the stock start to bid -- and the irony is that the stock start to do better when they split it up. not the parent companies, but the spun off entities. this chart does not make it entirely clear, but over one year we do not see that big a difference in performance. over the longer term, the spinoffs do tend to perform better. joe: and how much is the role of activists in this? that is something we've seen in the last few years. is that a big factor? jp: it certainly is. and there's often and if it does to change a firm in that

direction. if the shareholders are doing well, the may not feel a burning need to shake up what is going on. but this is a tangible way that activist shareholders can get involved and see immediate returns. and is easy to measure if the firm did was they were asking them to do or not. that can tend to lead to a short-term focus by the activist investors who want a quick payoff and turn around. and without recognizing them may have been benefits to the company being better or that the cost of splitting up is too big. but in many cases, it is fueled by the fact that these activist investors are looking for a way to exercise their muscles in order to get a return. scarlet: bob mcdonald, the ceo got booted. and there was pressure from outside investors. julie: bill ackman in particular put pressure on mcdonald.

again, it is this idea of activists trying to a lot of the value and get bang for their buck by doing this. in the case of p&g they are looking at 100 different brands they can spinoff to try to refocus what they consider to be the core products. and they are also struggling with a lot of these brands that they consider to be more fringe. tenant shoulders, for example, oil of the leg, the overall -- head and shoulders, for example or oil of ole, the overall beauty brands are seeing sales down. scarlet: they are being paid every time they actively advise for a spinoff. and you can maximize your value by spinning off different businesses. jp: if we are wanting to blame the managers for spinning off

and getting higher paychecks we can blame the bankers as well. in a space where we are not seeing as much of an m&a opportunity in this area, the bankers are focused on ways they can get involved in transactions and encourage the investors on the board of the companies themselves to pursue these opportunities. the question comes down to who knows more. is it the investors, the bankers, or the managers? oftentimes it's the managers but they need that push to say, ok, let's get over the hump. we know it's going to be costly and distracting, but with that incentive we can do that. scarlet: jp enters -- jp thank you so much. eggers jp eggers thank you so much. joe: coming up, the fighting in

ukraine and how the russians are coming to the rescue. ♪

joe: it has been one year since russia's annexation of crimea and a low intensity war in ukraine has been going on ever cents. the economics of a lot been devastated. ryan chilcote visited rebel held territory where he spoke with both eyes -- both sides about their attempt to address economic woes. take a look. ryan: the lines are getting longer at this soup kitchen. but these people are not homeless. ordinary folk need this food to

survive. the war means tens of thousands of people now depend on handouts. olga runs this place. she sees the elderly, families, even minors who are not getting paid. olga: people are not leaving. they are just surviving. they are close to starvation. ryan: even a bowl of soup is becoming a luxury. prices in ukraine are rising faster than anyone else -- anywhere else in the world other than venezuela. supplies for the kitchen come from one place and one plays alone. olga: only from russia. from the ukrainian side we get nothing. ryan: russia is not only sending food to eastern ukraine, but showing up in person and making a spectacle of it. alongside a convoy of humanitarian aid, a russian official tells reporters it is there on the personal orders of

the russian president. state tv reporters broadcast the message and good deeds across russia and eastern europe. meanwhile, this official tells me america is sending military advisers to the other side. >> humanitarian aid is humanitarian aid. food is food. this is in politics. i think you should not mix them together. ryan: dozens were lost in a tragic accident days before. tagging along, minors unload 50 kilo bags of flour and sugar. this is a hearts and minds campaign. in all ears are been watching russia, this is one of the most vivid examples of soft power i have seen yet. a local official complains ukraine is blocking the flow of vital goods to the separatists.

for the record, ukraine says their offers of aid were rejected. with all the weapons and troops ps says it is providing to kill its people, russian soft power is the affinity of hypocrisy. joe: ryan chilcote is with us now here in new york. phenomenal stuff. what does this say about the state of the conflict? ryan: i think what it tells us is that unlike crimea, this is a part of ukraine that has not been annexed and is kind of in no man's land of frozen conflicts, up for grabs, very undecided. and the people on the ground suffer as a result. at some point, it has to get resolved. somebody's got to pay. if it's not going to be ukraine then it's got to be russia and maybe they are already doing that behind the scenes. and there are industrial relationships between

separatists and the coal mining industry needs. and the federal government in the west. -- between the separatists and the coal mining industry in the east and the federal government in the west. they need the coal and ironically they also need the west. scarlet: it may force some kind of action. in meantime, how did you get in -- it in their? ryan: it's pretty collocated process. i flew into one place and then you go to ukrainian headquarters and you get a piece of paper, a badge saying you are ok to go into the antiterrorist zone. a few hours into their, you get another pass. this is probably what the ukrainian citizens would have to do. you get a pass that allows you to enter it so accreditation to be in there and then to enter

in. and then you go through four ukrainian checkpoints, and then through three separatist checkpoints and then you get the separatist accreditation. and you count your hail marys as you walk around. joe: and there is another segment that we will get to see of this on friday? ryan: that is correct. one of the things about this conflict is the average ability of it. to get a sense of where this might be going and how genuine and long-lasting the cease-fire that they have now, which is their third we went to donetsk airport, which is the frontlines. to give you a hint, it did not feel an awful lot like a cease-fire there. scarlet: fascinating. joe: thank you, bloombergs ryan chilcote. scarlet: much more when we come back. coming up, what do the tax

credits mean for tesla shareholders? ♪ . .

announcer: live from bloomberg world headquarters in new york this is "market makers" with erik shatzker and stephanie ruhle. scarlet: tesla may suffer a power outage ended may have nothing to do with the cars electric batteries will stop joe: retail therapy -- may church did not like a $16 billion takeover offer but more money might change their mind will stop scarlet: loose lips -- investigators want to delete sensitive information from the fed and lawmakers want to know why it took so long for them to start looking. welcome to "market makers." it t

minus three hours before the fed statement. joe: can't wait. eyes are twitching. scarlet: stock prices are down ahead of that is everyone waits for stop let's start with the bulletin -- the top is this news of the morning. breaking news -- indonesia, at least 19 people have been killed in an attack on the country's parliament building and nearby museum. authorities say it is over. police killed the two gunmen. one policeman was killed as well. no one has claimed responsibility but the country has been struggling with violence by islamic extremists in recent years including some linked to islamic state. another week, another record for u.s. oil stockpiles. crude supplies set a new market last week. that said oil prices down once again. west texas intermediate trading below $43 a barrel.

oil has now fallen for seven straight days for stop a few hours from now investors will be parsing every word of the fed's statement for hints about the central bank's next move. policymakers wrapping up their next meeting, expected to change their language about being patient to change interest rates. that would open the door for a rate increase in the next few months. shares of fedex down more than 2% today. they narrowed there for your forecast and had a strong holiday shopping season. falling oil prices helped boost income but it was offset by a currency exchange rate. in paris, police have raided the offices of uber. uber is technically illegal in france but has been operating in paris. uber calls it an attempt at intimidation. who has the longest work week? people right here in new york city. new york's comptroller says when

you add up worktime and commuting time, the typical worker puts him 49 hours a week. the average new yorker spent six hours a week commuting. you are trying to change that because you are trying to move. joe: a surprise ending in israel's tight race -- benjamin netanyahu's likud party won a majority. let's look at the politics of that with ethan bronner here in new york and leah lederman. -- leo lederman who joins us from tel aviv. what is the big political take away from the election? >> the big political take away is prime minister netanyahu has received an extraordinary mandate of reelection. almost double the number of seats.

it also says the exit polls from a week ago were wrong. joe: why were they wrong? >> they might have been right and things change. if that is so the promised or made a set of fierce appeals in the last couple of days to his base. he said no palestinian state under me. he said be nervous, arabs are voting in big numbers and he said look, don't vote to my right. vote for me. that's essentially what happened. the votes he drained way to his party came from the right, not from the left. joe: he closed strong by making a hawkish security argument. >> correct. a week ago, it looked like people were saying security is not making that big of a difference. it's up to social economic and housing issues. joe: speaking of housing issues

in the u.s. we talk about security the palestinian question the iran negotiations but that wasn't the only issue in the israeli election. much of it was about economics and housing. why didn't that become a big issue and what can netanyahu due to resolve these economic concerns? >> it's a very good question. i have no doubt the new coalition will put a very special emphasis on those social issues that were at the core of the election campaign. we are talking about the very high cost of living in israel, the house -- the cost of housing, the situation in the housing market with very high prices there. there can be no doubt that the new government, whatever the exact details of the new coalition will be, there can be no doubt it will put a strong

emphasis on social issues and the social agenda. joe: i saw after the election results came in that netanyahu said housing issues would be addressed. but what can the bank of israel due to address this problem? >> as you may know, in israel, because of security reasons, since the creation of the state the state owns about 93% of the land. what we are talking about here is speeding up and making it more efficient, the whole process of the government freeing land for the private enterprise and the private initiatives in order to increase the effective supply of housing in the country. there have been agreements in the last years about this, but when it came to implementing this, there were a lot of your credit cards tackles.

the true test of this approach will be in its implementation. scarlet: i want to bring in a tweet from david axelrod. he tweeted tightness of exits in israel suggest the 11th hour demagoguery may have swayed enough votes to save him, but at what cost? that's the question. but what cost to the economy? >> it's hard to quantify these and very premature to come to issues like assessing the true cost. i think the fact the majority made the decision that it made we have to look for work and see what happens in the future. from the point of view of the economy, the economy is on very solid ground.

if we look at the fiscal policy indicators if we look at the labor market if we look at the credit default swaps, i must say the new government finds the economy in a relatively solid position in terms of its macro fundamentals. scarlet: at what cost them to israeli society question mark -- to israeli society? >> economically, it has been a fairly strong lace and security has been pretty strong in israel . it would be presumptuous to argue there's a cost to israeli society. what is clear is there will be a cost between israel. the fact that the prime minister campaigned will only make it

worse in that relationship especially with regard to iran and if he doesn't system on building more settlement housing , what impact that will have on palestinians and whether there might be violence in the west bank, those are the big questions. >> is there any hope that they can be partners at all or is it over? >> there's an incredible partnership between the united states and israel. an incredible amount of economic , huge amount of military aid -- i can't see any of that being endangered in the next two years and it the level below the prime minister there are very many special relationships. both netanyahu and obama are business guys. warmth is not their main calling card to begin with. the fact they don't love each other may not be that significant. unless an iran deal does emerge.

scarlet: how does that play out for israel's burgeoning tech industry? >> i must tell you that tensions between president obama and netanyahu heightened with the visit of our prime minister in washington. you did not see any impact on our currency on our stockmarket. as indicated, the links between israel and the u.s. go beyond a specific persona. of course personas matter and we will have to see how these play out. what i can tell you is this so-called startup nation of israel continues with a lot of vigor and energy, i met with a

delegation of investors from singapore, next week from china business life goes on and people want to take advantage of israeli technology. all of this above politics. joe: thank you. scarlet: coming up, tesla won't get a charge out of this 1 -- one of the incentives for buying the electric car, at least in california, may be disappearing. joe: investigators want to know how market sensitive information got out early. ♪

scarlet: we have breaking news out of northern africa. let's head over to julie hyman. a terrorist attack in tunisian capital has left at least 19 people dead. julie: we're getting more

information from the premier in tunisian who says 17 tourists are among the dead will stop a total of 19 people were killed. he says victims were from poland, spain, italy and germany have been visiting the country. gunmen entered the parliament and then a museum. that's where they took the hostages. the premier also saying two of the attackers had been killed and three others may be involved. he says the country is boosting security at this time as it does appear more of these attackers are potentially at large. we should mention it looks like the death toll has climbed again with a total of 19 dead. there were reports of lower numbers.

we have seen some violence in tunisia. it has largely avoided the violence we have seen in other areas of north africa and the middle east throughout the arab spring. the latest is 19, according to the tunisian premier, 19 people have been killed in this attack. 17 of them from outside of tunisia. scarlet: thank you for that update on the tunisian attack. joe: time to bring you up-to-date on the top stories of the morning. u.s. oil inventories expanded by almost 10 million barrels last week to a record high. that's putting more pressure on oil. oil has fallen 20% since last month. one of the biggest makers of tech fest cereals, general mills, posted earnings that beat

estimates. the company also reaffirmed its forecast for the year. cheryl's -- shares of general mills are little changed. the state of oklahoma is feeling the pain from the collapse of well prices. oklahoma's government has frozen salaries and hiring. it may have to dip into its reserves to make up for a budget shortfall. revenue projections were down 300 million in the last few months. oklahoma is the fifth largest oil-producing state will stop scarlet: elon musk has planned a big announcement for tomorrow. he's as it will soothe customers anxieties about how far cars can go without charging. i think it is called range anxiety. joe: i love that term. very 2015. scarlet: will happen when a lucrative california tax credit gets capped question mark cory johnson is in san francisco. are these credits as important

to the company has the battery itself? cory: let's give credit to the link was him of elon musk. range anxiety. scarlet: it is a nice euphemism. cory: he introduced this idea on sunday morning in a tweet. he puts in a twitter account and says tesla press conference, about to end range anxiety. we will find out tomorrow morning what this means. what does range anxiety mean? they can drive 200 miles for one version of the car, but perhaps even worse in days -- in places where the weather is worse stop if you are going from los angeles to san francisco, that

is a range problem. you want to look at the efficiencies they've made around these batteries. the batteries are very important to the car and very important to the business. many states across the country, they generate credits for the manufacturers of the cars because they are making zero emission cars. simply, for every car they make that doesn't pollute, they can sell a credit to another carmaker that does and they can generate these credits may states across the country and use those in california. increasingly, that's bringing in a lot of money for the company. more cars they make, the more credits they make. in the last quarter the got to be as much as $56 million. it was all over the place. at the $66 million it generated was 33% of gross profit, nearly 40% of gross profit the previous quarter. so this is a material issue for this country. how long can they generate these credits?

joe: one of the complaints about tesla is the company keeps talking about these exciting new things they are doing but the core financial fundamentals are not that impressive and continue to deteriorate. is that what we are seeing now? elon musk can make this big announcement ending range anxiety, meanwhile the main story is this tax credit issue? cory: the promise of test -- the promise of tesla if you look in the teacher and a talk about self driving cars and hyperloop's and giga factories and solving range anxiety, it took six i. that's why love this as a story. when i look at these credits, it is to kill your. for every car they make, they get credit for the equal number of cars. the tax credits for cars, and

some quarter they are zero, but they are going way out. the text of their sec filings says they will have fewer credits and because they are selling overseas we're not going to generate these credits. it's a very weird thing. scarlet: they really do need to rely on the market here for the credits. what is elon musk saying about this on twitter? cory: much to my surprise, when i went to check the punctuation of the earlier tweet, elon musk has blocked me on his twitter. scarlet: what? cory: it is fairly unusual. i cover the company and he releases financial information or information of importance on the twitter account, but --

scarlet: back story -- he blocked you from following him on twitter? cory: i don't know. it is unusual. i can still read the financial filings and talk to current and former executives of the company, but i cannot read his twitter. joe: you can login to twitter and see that. cory: there are also the fake elon musk tweets which are funny anyway. joe: that is a big deal. scarlet: i think that should be in your description on your twitter page. cory johnson, editor at large in san francisco. joe: "market makers" will be back after this. ♪

joe: coming up, did someone talk? investors want to know who leaked information from the fed. scarlet: and this doesn't have to do anything with today's announcement. joe: i believe this is from 2012. scarlet: 2012, they are digging up ancient history. joe: apparently there was some sort of investigation and allocations perhaps want some heads to roll. scarlet: coming up, a big mall operator turning down a $15 billion takeover, but my guess is this fight is probably not over.

we will discuss all of that coming up. ♪

announcer: live from bloomberg world headquarters in new york this is "market makers" with erik shatzker and stephanie ruhle. scarlet: welcome to "market makers." i'm scarlet fu. joe: we are filling in for erik and stephanie today. scarlet: later on today, the fomc will give their announcement and everybody is on the lookout for the word "patient." joe: there was a split into whether it's going to go completely or whether there will be some sort of other language that would indicate some sort of

forward guidance. scarlet: or whether we are going back to every single data point. we are about two hours into the trading day in new york. let's check in with julie hyman who's watching how the markets are anticipating the fed. julie: with this light smattering of suspense around the fomc announcement, we are seeing stocks not do a whole lot, and that's not unusual. on these days when people are waiting for the announcement, we get stocks kind of bump along and and we see these wild swings in volatility. people trying to read the statement and parse what it means. we are seeing declines but not a heck of a lot of action. we are seeing more action in oil prices. we got the inventories report about an hour ago showing a much

larger build an oil inventories and had been expected. 9.6 million barrels. oil prices down now more than 2%, trading at their lowest in's march of 2009, down for a seventh straight day. so really resuming the slide we saw last year. we are also watching earnings reports. oracle came out with its numbers yesterday and we are looking at how those shares have been trading -- actually higher even though third-quarter sales missed estimates. they blame it on the dollar and see if you exclude the strong dollar effect, it would have risen by 6%. oracle also raised its dividend. we are looking at fedex -- the company harrowing it's for your forecast because of dollar affects. it gets more than a quarter of its sales from international sources. those shares are down 2.5%, so they are not benefiting like we saw from oracle. narrowing the forecast, bringing

the top of it down, putting pressures on those shares. scarlet: we will check in with you later for the latest on the markets. >> let's turn back to today's fed meeting. monetary policies not the only thing reporters will be asking about. you can expect an ongoing probe into market sensitive information back in 2012 will stop peter cook has been following the investigation. peter: this is one of the topics that could come up. this is from one of our reporters at bloomberg news who has been looking into this since december of last year. we are talking league of sensitive information all the way back to september of 2012 will stop the fomc met behind closed doors and they were worried about the u.s. economy. they decided to start buying $40 billion in mortgage-backed security on a monthly basis and

talked about the possibility of having to do more in the future to juice the u.s. economy. in october of 2012, the day before the minutes came out detailing the september meeting, medley global advisories released a note to geysers saying -- two advisers saying the mets will show the groundwork for further action in the coming month has been laid and labor market improvement is unlikely to be substantial enough to stave off new treasury purchases into 2013. that section from the note and other details caught the attention of ben bernanke and he was so concerned about the accuracy of that information because it came out before the minutes been released that yes to fed officials to investigate whether a leak had taken place. he also asked them to listen to -- to look into how a "wall street journal" reporter got

that information. we also know the inspector general launched his own probe a probe that was later closed. what we learned on friday was the house financial services committee chairman, jeb hensarling told us in a letter that he spoke to the inspector general's office and the inspector general has told him his leak investigation has been reopened. it is an open criminal investigation and that is where things stand right now. a lot of members of congress want more information from the fed. joe: a lot of times fed statements are predictable. is it possible this was just a coincidence or a great call on their part or are people certain there was a leak? peter: ben bernanke's thought was that there was something taking part by fed watcher here.

yes them to investigate directly after seeing that note. it rose to that level of concern for ben bernanke. medley global advisors has the klein to comment on the report itself and we don't know. did they have good intelligence and analysis of what was happening, that remains to be seen. for members of congress, including jeb penciling and elizabeth warring -- elizabeth warren have asked for information. scarlet: peter cook, this was back in september of 2012. the leak happened in october of 2012. it's now 2015. why did it take so long? peter: the investigation happen right away. everything has been private. lawmakers are trying to shed light on what happened, and this is part of a larger effort to

expose the fed to more scrutiny up on capitol hill. scarlet: coming up -- thinking big. the country's largest mobile operator wants to get larger and it's not likely to take no for an answer from a rival it wants to buy. ♪

scarlet: the number three mall operator in the united states has rejected a $16 billion hostile takeover bid from simon property group will stop the battle is just beginning. our next guest says he's expecting a higher bid from simon. he says everything is for sale at the right price. mace rich adopted a poison pill. but this is just defensive posturing. it still wants to get the higher bid.

>> we don't know their intent, but they are putting up all the defenses to give themselves some time to evaluate their options. joe: you always read about how malls are dying. why is there so much interest in these malls? is there some segment of the mall industry that is still driving? >> both of these companies specialize in class a malls. these are the most reductive malls in the country. they cater to high-end shoppers and high and retailers. the high-end consumer is doing very well and there's also a very limited supply of this type of space. the retailers have to vie to get in to the best locations. scarlet: why couldn't they just build more? >> we are pretty much built out in this country. also to get the anchors that would the necessary to get this

whole project off the ground. scarlet: there are vacant malls across the country. you cannot convert something that is lower and into a higher and mall? >> the higher and malls are located where the higher shoppers are. joe: the rise of e-commerce has hurt a lot. do you feel comfortable the mall as it exists can be immune to these secular trends? >> sure. the high-end malls have over a long time shown they are very adaptable to current conditions. over the years, we have seen food courts go into malls. we have seen other entertainment options, so over the years, the malls adapt and always find something to draw in the consumers.

they are also very a debt at managing the merchandise. all the stuff you can buy online has already left the mall. what is left is stuff like electronics and clothing that you would like to get your hands on. scarlet: i want to go to the people behind these companies. these are very strong personalities at work. i know you have said the mall business is very competitive. tell us about these people in a very competitive industry. >> these are two of the finest companies that we have. they have both done a wonderful job over the long term with their properties. to say macerich should sell out is not a foregone conclusion.

there's always the human aspect of these mergers. david simon most recently recognized that when one of his spinoff companies merged with another company and gave the ceo the ceo spot in the merged company. that was an important aspect of that deal. it just goes to show how david simon is thinking about the human elements. >> he has a background in investment banking. >> correct. he started his career on wall street and has great connections. joe: what is it going to take to get a deal done? how much more will they have to pay? >> there remains the question. most people believe there's upside to about $100 per maceri

ch share. the opening bid was about $91 a share. beyond $100 david is really going to have to justify that price and provide investors a visible path to growth in order to justify anything over $100. >> is it just on price alone or are there other components they would respond to? i believe there are some overlapping properties and maybe simon would need to sell off some of the malls. >> simon has already thought about that and has a handshake agreement with another major competitor, general growth properties. simon and gdp have agreed to parse their portfolio, each taking the properties at west fit for them. joe: are there other companies

you follow in the mall space you think are doing interesting things that we should keep an i on? >> if you like high-end malls, there's a trend outside the mall getting a lot of momentum and that is a urban and street-level retail. the same retailers that locate in high-end malls are realizing there are no more malls to go to. the last frontier are places like new york city, times where -- times square where you can set up a flagship store, really identify your brand and draw in consumers that way. scarlet: overpay for rent, make it a loss leader. >> so far, the stores are economical on the four walls despite their big size and 80 locations. there are a lot of people spending a lot of money. scarlet: this dance became public this month. what inning are we in of this

ballgame? >> we are somewhere in the middle. we have had opening salvos from both sides and there will probably be a few more rounds to go. scarlet: he says he's looking for more rounds to come in this dance. joe: time to bring you up to date on the top stories of the morning. in tunisia the death toll is rising after an attack on a museum. the prime ministers as 19 people were killed. 17 tourists and two attackers were addressed as soldiers. no one has claimed responsibility. in recent years, tunisia has been struggling with violence by islamic extremists. police in paris have rated the office of uber. technically, uber is illegal in france but it keeps to -- it is operating as it seeks to change

that. president obama is going along with the crowd, making his march madness picks. he's going along with top seed kentucky. he says he likes kentucky over villanova in the final. he's picked only one national championship since taking office. "market makers" will be back in a moment. ♪

scarlet: joe and i are waiting with bated breath. in just over two hours, the fomc comes out with its statement and we will see whether the fed is being patient or looking for -- sort of a back to the future reference. joe: if they do in fact remove the word "patients" it is a new post financial crisis europe. for the first time since the fed

started going on these extra very measures, they won't have anything in the statement that commits them to waiting until a certain time or certain level. that in itself will be remarkable. scarlet: 2006 was last time the fed raised interest rates. what were you doing in 2006? joe: i was writing about technology at the time. completely different. i was not waiting with eye twitches for the fed announcement. scarlet: i like what i read from peter at the lindsey group who said there's all this handwringing over a measly 25 basis point rate hike. it seems out of balance after six years of zero interest rate and an economy that has recovered thanks to three rounds of qe. there are people saying an interest rate increase will kill everything off. joe: i think that is dramatic to say that. the market has taken this in

good stride. we are close to record highs. for us in the media and fed watchers, it's an exciting moment but it doesn't seem too disruptive. scarlet: we will find out. that's all coming up at 2:00 eastern time. march madness getting underway -- the lawyer who sued the ncaa. ♪

julie: coming up on 60 minutes

-- 56 minutes past the hour. it way through the rating day everyone is playing the fed waiting game. stocks in the red as investors look ahead to the possible removal of the word "patients" from the statement. oil hitting its lowest price since march of 2009. joining me is the senior equities derivatives strategist ed bgc partners. how are you positioning yourself ahead of the statement this afternoon? what are two things i'm looking for. i think this is where we get a decisive shift from forward guidance to something data driven. this could be a major move for the fed. that could make the markets a little more volatile as traders pay more attention to those numbers. a little more uncertainty and

contained volatility in the market. it's something the fed might like to see. it is a warning against the speculative bubble of the past. julie: you might look at volatility in a different way? >> i think it could mean that we see more realized movement around key data numbers. julie: one individual stock we are watching today is fedex. the company came out with its earnings and also came out with a forecast and tightened the range, so the stock has been lower. >> options markets have been pricing in the top third of the last year or so of data. they are reacting as you might expect today. the key thing investors have to figure out is whether the strong dollar energy price reflects the real reality for the company or are hiding operational issues. julie: people are still trying

to figure that out. >> you have to hedge out the broader economic risks to focus on the operational part of the company. julie: macro looking at the housing market, lowe's has been performing well, trading at a record and had a strong recent earnings report. you are looking at a bullish trade on it? >> yes. we're looking at selling the april 72.5 foot -- 72.5 foot. the reason i like this trade is it gives you a bullish view. it you are not looking to hit a home run. sentiment is quite good and implied volatility is high, so you are getting a good premium for this kind of spread. julie: right now, it looks like

the stock is trading around $72.94 will stop >> consumer discretionary stocks have done well in a strong dollar environment will stop this is one of those things where you can take a bullish position and focus on the company. julie: thank you very much as we count down to the fed this afternoon. "money clip" is up next. ♪

welcome to "money clip." where we bring together the stories and business it's all in business news. politics, benjamin netanyahu and his party win in israel. the white house congratulates israelis. gremio celebrates the one-year year anniversary of being part of russia. people in eastern ukraine are starting. a nation, one party, to budget. -- two budgets.