>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. matt: welcome to "market makers ." lisa: i'm lisa abramowicz. matt: consumer confidence data is out. julie hyman has the headlines. julie: a reading of 93. it does all caps off the best quarter since -- does still all

cap off the best quarter since 2004. we have a labor market improving. gasoline prices which remain low. the number coming in at 93. this is university of michigan's confidence reading. 95.4 is where it was in february. the average from january through march was the highest we have seen ends the third quarter of 2004. if you look at the various components within confidence you want to look at the inflation expectations in particular. it looks like inflation expectations over the next year remaining at 3%, which is what economists had predicted. we will continue to look through these numbers. overall, not seeing as much of a drop in the confidence number as had been anticipated. matt: thanks very much. breaking the march news, the consumer confidence number they are at 93. -- number there at 93.

the top business stories of the morning. big news out of washington. the most powerful democrat in washington will retire. harry reid will not seek reelection. he has been the democratic leader for 10 years. he says his promotion to minority -- the motion to minority leader was not the reason, nor was the eye injury he sustained in january. harry reid: we have to make sure the democrats take control of the senate again. i feel it is inappropriate for me to soak up all those resources on me when i could be devoting those resources to the caucus, and that's what i intend to do. matt: is most like we successors are senator richard durbin of illinois and senator chuck schumer of new york. the u.s. economy grew at a 2.2% pace in the fourth quarter. consumer spending rising at the fastest pace in eight years. the report showed corporate profits falling in the last three months of the year capping the worst annual performance since the recession.

the federal reserve's vice chairman says more work is needed to protect the financial system. speaking in germany during a conference on financial stability, stanley fischer pointed to risk pcs in short-term wholesale funding markets. -- risk pcshe sees in short-term wholesale funding markets. >> you do something and the other guys aren't going to sit still. they will figure out what they are still allowed to do and do more of that. matt: he says things are looking up for the non-bank financial industry. he thinks it looks less vulnerable since the financial crisis. we are learning more about the pilot who apparently deliberately crashed a jet into the french alps, killing 150 people. investigators say they found torn up medical documents from his doctor declaring him unfit to work, along with a torn up sick note. he apparently held -- hit his illness from his employer.

-- hid his illness from his employer. >> investigators searched the apartment for clues and other indications as to why the pilot would have done the deed. matt: yesterday, the lufthansa ceo said the pilot had recently been found 100% fit to fly. egyptian officials are saying an invasion of yemen is in the planning stages. planes from saudi arabia and regional allies are bombing rebels in yemen backed by iran. they want to form a strikeforce -- their plan to form a strikeforce is expected to get the ok of the arab league tomorrow. it is turning into a proxy fight between iran and saudi arabia. the undefeated wildcats go wild. kentucky trounced west virginia by 39 points to advance to the ncaa tournament finals. kentucky is unbeaten in 37 games this season. they will be joined in the round of eight by notre dame

wisconsin, and arizona, all winners last night. four more games are on tap. i expected this. i predicted this. kentucky will go to the final four and then on to the final game and win the entire tournament. you heard it here. lisa: honestly, i don't know anything about college basketball. full disclosure, the only thing i know is that kentucky is expected to win by about 45-0. matt: because i told you, right? lisa: you and my husband. matt: i actually was the number one player in our celebrity bracket contest, as much of a celebrity as i am, on the first day, and then dropped to almost last place on the second day of the tournament. that shows you how little i know about basketball as well. lisa: one thing that i'm really watching this week, there was a great story on bloomberg today about how unpredictable it is

getting, when you look at the wall street forecasters and what their oil predictions are, they are all over the map. they are diverging the most since 2007. it highlights to me just how confident it is to determine what the dynamics are under the oil markets. matt: i called the bottom in oil as well. so, i feel like i'm doing something right here. i didn't think oil would go below $40 per barrel. i've had this conversation with alix steel a number of times. she thinks we could still go lower. a number of analysts think we could go all the way down to $20 per barrel. lisa: others say we will go up to $90 per barrel by the end of the year. this is what is keeping the longer end of the treasury curve really influx right now, a little bit. matt: i'm just looking up a barrel of oil, trading for $49, $.85 -- $49.85. an incredible rise over the past week or two in oil, almost double market. -- almost a bull market.

lisa: more on the surprise retirement of senate minority leader harry reid. we turn to our chief washington correspondent, peter cook. thanks so much for joining us. what are you hearing is the real reason behind why senator harry reid is truly stepping down from his post? peter: first of all, anyone who has been on capitol hill and seen harry reid up close and seen the injuries he suffered on january 1 when he had that accident at his home in nevada knows that those were very serious injuries. he is 75 years old. he has set up to this point that he was planning on running for reelection. he has been on capitol hill for three decades. this decision is not a total surprise. given the injury, given the age given the fact that he was facing a serious reelection fight in nevada. he insists he would have won that fight. i know a lot of democrats here in washington think he could have won that fight, but this decision paves the way not only

for new leadership in the senate side for democrats, but also the possibility for a new senator from nevada. most likely potentially not a democrat. they could lose this seat now that harry reid is not running. lisa: who is the frontrunner to take his spot? peter: i've been talking to a lot of folks. the since i'm getting is there a two people in waiting for this position. -- there are two people in waiting for this position. senator chuck schumer and senator dick durbin. durbin outranks schumer right now as the number two democrat. the sources i'm talking to suggest it is schumer's job more likely because of his close ties to the younger generation of senate democrats he helped elect in 2006 and 2008. he has been in waiting for this job right now, it looks like he has the edge over dick durbin. dick durbin has been underestimated before. this could turn into a public fight, or it could end up being something much less than that. matt: peter, how old is too old

to work in washington? i mean, 75 76 sounds like a pretty good age to demand retirement. i know that john mccain will be 80 by the time he gets a chance to run or not in 2016. but we had senators who are much older than that -- but we have had senators who were much older than that. peter: if you walked the halls of congress and you saw who is spry with it, on top of things, age is not always the best indication of that. there are veterans of the senate who in their 70's and 80's, can still handle the day-to-day details of the job. harry reid was a very active guy. he has suffered some health issues, but no one has really suggested that his mind had been hurt in any way. just ask republicans the kind of fight he has been giving them the last couple of weeks. age is really not the factor here. for a lot of these people it is effectiveness and whether or not

they are enjoying it. this is not a great job to have these days. lisa: you think this is going to change the way that senator reid will run things in the next couple of years? peter: he's got more than 20 months left as majority leader. certainly, he loses a little bit of juice now that he's not running for reelection, but it does allow him to focus exclusively on what's happening in the senate and to do what he can to try and get other democrats to set the stage, if you will, or democrats to try and take back the senate in 2016. he gets to focus on helping other democrats as to -- as opposed to focusing on his own race:. -- race back home. lisa: who is the next surprise retirement? anyone you are watching? peter: there are a couple of folks who have been removed. pat leahy of vermont has been there a long time. we just got dan coats announcing he is leaving the senate for the

second time. he retired previously, then ran again, won one term, but says he is not coming back again. we will see. this is clearly the biggest retirement we will see, with the greatest impact on the body itself and on congress, the departure of harry reid. lisa: thanks so much, chief washington correspondent peter cook. matt: coming up, a financial policy advocate who took on bank of america in 2009 is back. he is taking on thanks again. and citigroup -- on bacnnks again, and citigroup. lisa: is it time to unload your puerto rico debt? ♪

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

the morning. the world's largest cruise company reported earnings for the first quarter beating estimates. the cruise liner also cut the top end of its fiscal 2015 profit forecast. the report comes after carnival announced lands to boost its fleet. it will add nine new ships in 2019, part of an effort to lower fuel costs and enhance onboard amenities. a surprise beat for blackberry. the smartphone maker reported profits of numeral four cents per share. analysts had expected a lot. they can think cost cuts, and price hikes -- cost cuts and price hikes. sales fell 32%. the ceo is trying to transition the company away from phones. shares are rising 1%. two people are still unaccounted for after the collapse of three buildings in new york's east village. 19 people were injured, four critically after a powerful blast sent flames pouring into the -- soaring into the air.

the luminary evidence suggests a gas leak. utility company inspectors -- the preliminary evidence suggests a gas leak. firefighters worked throughout the night without pockets of fire. we will go live to switch when for latest on the nuclear talks with iran. -- to switzerland for the latest on the nuclear talks with iran. does puerto rico have any hopes of a recovery? in the next hour, dreamworks animation's last stand. it released its only movie this year this weekend. what happens if it bonds? -- bomb? -- bombs? matt: i had not even heard of it. had you? maybe it will do well. we will discuss that. right now, i want to talk about banks. the health strip can -- he helped strip can lewis -- ken lewis of his position at the

other day. he is a financial policy advocate. he is pushing for shareholder votes that each company. -- votes at each company. at citi to change rules on executive pay. he joins us now from washington. thanks so much for your time. let's talk first about the proposal. then i want to ask about how you get them in there. you are not proposing to break up citi just to consider the idea, which you hope they would have done as good managers. guest: at its core, this is a modest proposal that asks for something that management and the board should always be insisting on and providing for shareholders. i do believe that bank of america would be worth more in parts. my view is shared by others including a leading bank analyst who recommended just yesterday in favor of our resolution. lisa: bartlett is there a model

for your proposal? is there a bank that is doing it right? bartlett: i think there are some banks that are slimmer and more focused wells fargo is somewhat smaller than bank of america and citi. but it is focused on what i would call more traditional banking. it does not have the swap spoke -- swaps book that bank of america and citi do, which i think is the area of danger. these banks and the economy would be better off with more of a separation between what the banks can do with the tax-subsidized deposits that they should be doing, in my opinion, socially-constructive things, such as commercial lending. in the end, i think that is more profitable and sustainable. matt: i want to hone in on how difficult it is for shareholders to put proposals forward for a vote. it seems that bank of america works against this kind of thing, even spending money hiring outside lawyers to try to get the sec to block them.

bartlett: to the extent that shareholder, shared ownership is supposed to represent ownership of anything, such as your own home, that's not really the case. there are so many barriers in between a shareholder and his or her ability to express their ownership prerogatives. for example, jp morgan engaged in massive fraud. one might want to call up the board of directors except that one finds the chair of the board of directors is the very person who is the ceo. then you say, well, i would like to have those two jobs split. in the company spends millions of dollars fighting that proposal. at bank of america, there is a 51-page legal opinion, that i'm sure cost more than i'm sure at least my hourly salary to produce, to try to prevent this resolution from appearing on the ballot, and it was authored by people who not too long ago, worked at the sec, in the same division that then ruled on this proposal. matt: the sec blocked this

proposal last year. this year, you got it through. whose side are they on? the side of owners or management boards? barnett: too often, the sec under chair white misunderstands their mandate to be on the side of shareholders, in my view. it was expressed by mike capuano . lisa: a lot of people would agree with you, especially after the 2008 financial crisis. some banks clearly seemed like they were too big or at least engaging in some of the riskier practices you are talking about, but there are some efficiencies of scale with big firms that make it cheaper for the end-user. do you think that bank depositors and other clients of the bank are willing to pay more to have smaller banks? barnett: well, let me address your premise and that is the

economy of scale. in this case, there may be a sweet spot but i think we are a couple of trillion dollars above that sweet spot when we are talking about 42 -- $2 trillion at bank of america and even more with j.p. morgan and cit i. -- citi. something closer to $100 billion is where i think that economy of scale may peak. be on that, you have dis -- b eyond that, you have diseconomies of scale. with bank of america, for example, over $10 million for a mortgage fund, it falls under the category of mismanagement. they are too big to even keep themselves honest. matt: at the very least, management boards share a duty to consider all options for maximizing shareholder value. let me ask about the proposal at citi.

you proposed that management cost haywood -- management should propose a long-term view over short-term gains? barnett: it is an idea embraced by the new york fed president and the fed governor. in this case, senior bank management, for example at city -- seeciti a sizable part of that would be deferred for a number of years. i propose 10 years. out of that hot would come -- that pot would come money that, if the bank engaged in violations of the law and had to pay a fine, that pot would be used. the citigroup fine of $7 billion was paid by shareholders. shareholders were certainly not culpable. management is. the only issue is my proposal says, whether or not the

government or the company concluded was that manager that was culpable, he or she would never less -- would nevertheless have their pay used. in my opinion it would harness the collective interests of all of management to keep the company honest if they see so many in the cubicle or the corner office down the hall engaging in some questionable activity, it would be in their interest to stop that, because their pay would eventually be docked as well. matt: the concern is that that would disadvantage that company in attracting the best talent, which would rather go somewhere else and get the cash payout. barnett: it would be different challenge. matt: thank you so much. bartlett naylor from public citizen, appreciate your time. we look forward to seeing what the companies do on these proposals. lisa: we'll be back with more after the break. ♪

matt: secretary of state john kerry is in switzerland for last-minute talks with iran. is there enough time to reach a landmark deal on that country's nuclear program?

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. matt: welcome. i'm matt miller. lisa: i'm lisa abramowicz. matt: the top business stories we are following on this friday morning, it appears that the pilot of the doomed german wings -- germanwings flight hid an illness from his employers. andreas lubitz apparently intentionally crashed the plane into the french alps. investigators found other documents showing he was unfit to fly. here is the police spokesman.

>> we have secured personal belongings, documents, etc. altogether, two boxes and a bag. these items are being scrutinized on their relevance regarding this case. we are hoping for clues regarding this man's. modems. -- man's motives. matt: there has been no evidence of political or religious motivation. senator harry reid will not seek reelection. he sustained a major eye injury in the next accident earlier this year, but says that is not what he is stepping down. here he is in a video statement explaining his decision. senator harry reid: the decision i've made has absolutely nothing to do with my injury, nothing to do with my being minority leader, and certainly nothing to do with my ability to be reelected, because the path to reelection is probably easier than anytime i've run for reelection. matt: is most likely successor -- his most likely successor as

minority leader is dick durbin or chuck schumer. overall, the first quarter was the best for consumer sentiment since 2004. 11 years ago, by the way. american -- an american astronaut is planning to leave earth today, writing a russian rocket -- riding a russian rocket to the international space station. he is scheduled to stay in space twice as long as any u.s. astronaut has ever stayed on the space station. he will be joined by two russians, one of whom also plans to stay in space for about a year. why not make it a full year? diet coke seems to be falling flat. according to new data from beverage digest, pepsi took over as the number two soda brand in the u.s. last year. regular coca-cola is still the big leader. americans continue to flee diet

soft drinks. diet sodas shrank faster than their sugary counterparts. indiana governor mike pence signing into law a religious ejections law -- religious objections law. the measure would prohibit state and local laws that "substantially burden the ability of people to follow their religious beliefs." there is some backlash already. salesforce canceling workers' plans to travel to indiana. mark benioff -- marc benioff tweeted, "pay attention to what is happening in indiana and how it will impact your employees and customers. we are canceling all programs that require our customers and employees to travel to indiana to face his termination." lisa: the u.s. -- face discrimination." lisa: u.s. wants iran to prove

it is not developing a nuclear weapon. iran wants an end to crippling sanctions. let's bring in indira. what are the odds of something being announced this weekend? indira: just moments ago, we heard the british foreign secretary, philip hammond, say that he believes they are more than halfway to a deal. that seems to point in the direction of both the iranians and americans who have said they are making significant progress. the problem is, more than halfway there does not mean you are there. both john kerry and his iranian counterpart have pointed out it is almost like a rubric skew -- a rubik's cube. the iranians want sanctions relief. many business people and oil markets are waiting -- watching to see what that might be.

nothing is happening until major gaps are bridged, and we don't know yet if that's going to happen. lisa: how much is this deal really between the u.s. and iran? how much support does the u.s. have from, for example, european leaders that are, right now kind of struggling with the sanctions and are losing money? the sanctions have already done their work. there is no more that they can do. how much are they really defined whatever the u.s. is going -- really behind whatever the u.s. is going to agree to? indira: you make a really good point. the europeans are maybe tired of sanctions. at the same time, everyone, including the europeans, the russians, the chinese, have said they are strongly behind this that the international community sees nuclear safety and heating the world safe from iran having a covert bomb as more important than the economic peace. if there is an iran deal and

iranian oil starts flowing again, it will depress prices. russia is already suffering. even so, they have not interfered in any negative way with the negotiations and they are pushing very much towards a deal. if there are going to be any sanctions we are talking about the summer and beyond. a final deal would not be negotiated until the end of june. matt: how much of a problem is it that our allies from saudi arabia are currently bombing iranian allies, as far as rebel forces are concerned, in yemen? there is essentially a proxy war that we are one degree of separation away from. indira: excellent question. it is an excellent question, and it seems the iranians have brought it up at the talks and they are not happy. at the same time, the iranians have managed to keep all the other issues, like syria, like yemen, saudi arabia, out of the talks, we are being told by

officials involved in those talks. while it has been raised, it is not actually interfering with the nuclear question. i think they are trend to look at the broader picture. both iran and the united states are under real pressure. if they don't get the deal by march 31, certainly in washington, you will see pressure on capitol hill to put new sanctions on tehran and to pass legislation that will give -- on iran and to pass legislation that will give congress and upper down vote on anything the white house agrees to. my own feeling is they will probably get agreement. matt: how much of a problem our opposition forces in congress to the president's -- p[rroblem are opposition forces in congress to the president's negotiations? indira: ultimately the president believes he has veto ability to overturn sanctions. he has said and the europeans have agreed that if they were to powder sanctions on iran now before a final deal is reached,

it could cause negotiations to collapse, and they don't want that. i think the president still has the ability to veto any new sanctions, but it is not something he wants to have to do. he would rather be able to show up and say, here is our tentative deal, give us three more months to negotiate. that's what they are hoping to bring back to washington next week. lisa: thanks so much, indira lakshmanan. matt: coming up, if you own any of these -- lisa: muni mutual funds. matt: chances are, you own the reagan that -- own puerto rican debt. ♪

matt: time to bring you up-to-date on the top stories of the morning. the u.s. economy expanded at a 2.2% pace in the first quarter, led by the biggest gain in consumer spending in eight years, yet the rate of growth is expected to slow this quarter. blame the winter weather and the strong dollar. . blackberry reporting a surprise quarterly profit. it can thank cost cuts and price hikes but sales fell sharply from a year ago. the market share has fallen to less than 1% worldwide. it is trying to transition into a software and services company. shares today are rising. and lufthansa is changing its cockpit rules after the apparent deliberate crash of a jet into the french alps. it will start requiring two people in the cockpit at all

times. that might have prevented a tragedy in france. the copilot apparently locked the commander out before beginning the descent into the mountains. those were your top stories. coming up, an update on the bloomberg charity bracket. which business titan leads the pack? you could probably guess if you have been following. and the dreamworks animation release, the only one of the year coming up this weekend. ceo jeff katzenberg is facing an uphill battle to turn his studio around. ruth porat may be leaving morgan stanley for google. 70 million reasons ruth porat may be leaving morgan stanley for google. you get paid a lot more on the west coast, it seems. lisa: paradise lost in puerto rico. legislators want to hold a referendum which would allow the islands to default. our next guest has a piece of advice for puerto rico bond investors, get out now. she is the ceo of envision

capital management. how are you? thanks for joining us. why do you want people to get out now? guest: well, i think this is a feeder complete -- a fair accompli. -- a fait accompli. i care about the little guy who has debt. puerto rico has been mismanaged for decades. projections of revenue have never met their goals. you have 13.7% unemployment. all they have done for years is paper over their problems. now the rubber is meeting the road. i want the little guy to say, ok, i have to take my lyrics and take my lumps -- my licks and my lumps. this is going to be the biggest default we had ever seen in muni land. matt: what can puerto rico refinance this debt like a

normal government? why not continue to borrow into the future until our grandchildren's grandchildren have to pay for it? lisa: if you've got a 13.7% unemployment rate, that could be a problem. marilyn, it is a good question. marilyn: this is what they've been doing for decades. they have been papering over and issuing more and more bonds in order to make the payments that they needed to pay. now a direct answer is you know, puerto rico yields are around 10%. if they were to issue 10% bonds and they cannot pay what they have now, you have an implosion on your hands. this is an area with $70 billion of debt. how bad will the collateral damage be when they do default? that is the big question. let's look a little bit back in history at detroit.

detroit's bankruptcy was $18 billion. the analysts said there won't be much collateral damage. well, there was a little. some of the citizens -- cities around michigan had to pull their municipal bond offerings but they eventually came to market. $70 billion is a whole different animal. i think there will be some collateral damage. will it be everybody runs like lemmings out of their municipal bond funds? i don't know the answer, but this is going to be a seminal event. matt: let's put this in perspective for viewers who aren't aware, though i figure almost all retail investors are aware of the fact that these are triple tax-free bonds. when i first got out of college and started my very first investment account and called up my buddy who just got out of college and started his first job inviting -- advising investors, his first piece of advice was buy triple tax-free debt in puerto rico. it's a no-brainer.

marilyn: that was then. everything has changed. the retail investor needs to look under the hood. etf's, municipal bonds -- they need to look in and see, do these funds hold a lot of puerto rico bonds, because what they have already seen is the net asset value go down on those particular bonds. if the income goes down because of a default, then they are going to be really unhappy. matt: i want to try to put it in perspective to tell people why. obviously, not everyone owns detroit debt. everyone seems to own puerto rico debt or did back then. why don't professional investors know all this? why aren't they already out? why hasn't everyone institutional already run for an exit? marilyn: the institutions have a lot of availability that the retail investors don't. they could probably go to the credit default swap market.

march of 2014, puerto rico came out with a $3.5 billion deal 8% due in 2035, and that was mostly in institutional. the institutions are fine. it is the retail investors, even though they know that something is coming down the road, i don't think they know the magnitude. lisa: marilyn, given how dire the situation is, why are yields only 10%? somebody still buying, no? marilyn: you are right. it seems like it is a misplaced yield. it should be significant and higher. the reason being, the muni market is so sought after. there is a voracious appetite for all munis no matter what the pedigree is, ingress and grade -- investment grade, medium junk. that has a lot to do with it.

i have been in the muni market and the bond market for decades, and i really would have thought the yields of prices would be even worse. i think people should not be swayed that it is only 10%. i think they need to know how dire. that is -- how dire that is. matt: you mentioned meredith whitney. who is the next puerto rico in the u.s. -- u.s.? marilyn: i am very negative on chicago. chicago's finances rms -- finances are a mess. talk about unfunded liabilities which puerto rico has. talk about plugging their revenues with bonds. and the unions have a jackboot on the net of the politicians -- on the neck of the politicians in chicago. lisa: so marilyn, what would it take for you to recommend that investors go back to puerto rico? marilyn: nothing at this point.

lisa: well, then. marilyn: i have had clients that commie and say what do you think about buying 50 puerto rico -- that call me and say, what do you think about buying 50 puerto rico bonds? i would not step in front of this. that's for the hedge funds, the distress guys. and bloomberg has quoted a lot of these people very frequently saying they think there is going to be terrific opportunity. there may be but i think it is not for the retail investor. even if they extinguish all their debt, when you've got a welfare island, in which less than 700,000 people are working in private industry and the rest are on some kind of welfare or eight or working for the government, those numbers are unsustainable -- of welfare or aid or working for the government, those numbers are unsustainable. lisa: some pretty gloomy words

from marilyn cohen, ceo of envision capital management. matt: we are going to take a quick break. we will be right back with a lot more, including the winner of our ncaa -- the leader, i should say. it is definitely not me. i'm going to check it out. stay with us. ♪

matt: last night, the undefeated wildcats went wild. they trounced west virginia to advance to the ncaa final eight. the wildcats will be joined in the round of eight by notre dame, wisconsin, and arizona, all winners last night. let's look at the standings in our charity bracket. 36 of the big names in business agreed to pitch in $10,000 apiece. ebay's ceo john donahoe is holding onto the top spot, just

edging out jimmy dunne. tie for third, dwight anderson and tilman fertitta. if donahoe holds onto the lead his chosen charity is second harvest food bank. three of his final four remain in the hunt, so he is looking pretty good here. i just checked. i am number 43 out of 47. lisa: it could be worse. you could be 47. matt: 35 men and women in the celebrity bracket. then we at bloomberg added ourselves to this celebrity competition. betty liu is actually doing the best of all of the bloomberg talent, so to speak. she is number seven. lisa: what was your charity? matt: what is betty posterity -- betty's charity? we don't put in $10,000.

the top six of the whole group, including anchors and reporters, are investment professionals or ceo's. they are going to probably win, and unless betty comes up and john donahoe and jimmy dunne fall down -- i'm not sure what she has for her final four. kentucky versus arizona and virginia versus duke. if it is duke-kentucky, she stands a good chance. i'm rooting for her. i am rooting for betty liu. jim chanos is celebrating. he sent us this photo of him watching the wisconsin game. he is from the badger state but did not put them in his final four. he is tied for 10th place. he has kentucky winning it all. as lisa pointed out, everyone has kentucky winning it all. take a look at the standings,

bloomberg.com/charitybracket. lisa: coming up in the next hour, we are talking dreamworks. ♪ ..

madgood morning. it is friday. we are excited about that. a let's kick off the second hour with top business stories of the morning. a limited liability payments after the jet crashed this week. investigators think the german wings copilot intentionally flew into that mountain. a specialist means -- especially says that would mean on rewards

to the victims families didn't medical documents found he was unfit to fly. he hid that from his lawyer. shoppers are getting credit for the economy's fourth-quarter expansion. the biggest gain in consumer spending many years led the way. capping off the best quarter in 11 years. a big pay raise for ford ceo. his 2014 compensation was boosted to $18.6 million. losses overseas increase. he was cheap operating officer. he took over for alan mullally who was at $22 million last year. blackberries fourth-quarter

results surprised wall street pleasantly. analysts surveyed expect increased prices for smartphones but sales were down from a year earlier by nearly one third. and a manhattan building exploded yesterday injuring 19 people. the blast brought down three buildings. a utility company inspector decided plumbing and gas work done earlier in the day was deficient. we are about 90 minutes in the trading day. the scarlet fu is in the newsroom with some of the morning movers. you have energy, tech, and financials. these are the most heavily weighted groups in the s&p 500.

the index can't make much headway. a gain of 1% for the dow industrial. oil is consolidating after a five-day rally that added 13%. a supply disruption appears to be easing. goldman sachs put out a note saying the unrest is unlikely to have much effect on the supplies in the near term. that theme of oversupply is still in tact. a the final read of fourth-quarter gdp came in as consumer spending was stronger than anticipated and it drove growth. the headline number was growing at a slower than expected rate. the dollar also stabilizing.

down 1/10 of 1%. matt: thank you for that update. lisa: investigators have seized materials from the copilot's apartment, including medical documents that showed he was unfit to fly. they join us now from frankfurt with more. richard, can you tell us about the search of his home. richard: we have to be a bit careful in separating what we know and what other people claim to know. the prosecutors have told us they have raided his home, his apartment, his parents house did they found something that apparently covered the day. they tore it up and threw it into the bin. he may not have been fit to fly.

we don't know at this point. there have been reports suggesting there have been treatment against mental conditions. there is a hospital saying that is not the case. we have to be careful not to jump into any conclusions here. it is safe to assume that the guide delivered to lead did this. something is probably wrong with it. lisa: the company said they were not aware of anything that made him unfit to fly. some of the stuff suggests otherwise. should the company have been aware to the medical issues that have been problematic? richard: the question is can they be aware? they have strict laws that

protect the privacy. a we don't know to what extent the company could have known about any of those challenges the guy may have had. the law does not demand that the airline sent the guy to -- presenting them with checks to say the guys fit to fly. from what i understand germany is stored by some agency somewhere. could they have known or do they have no access at all? matt: german confidentiality laws are so strict that they

couldn't even say why the copilot had gone on medical leave after the copilot was dead. there are going to be a lot of changes to rules regarding how many people need to be in the cockpit. do you think german confidentiality laws may have loosened a little bit if they are so tight that they could possibly be to problems like this? richard: if you ask me personally i doubt it. how many people need to be in the cockpit at any given point in time or could we have a scenario where it wants to water down the privacy laws that is something that will be discussed for sure. that is widely the spread in the u.s.. it is basically a consequence of foreign person having to steer the plane all the time.

the other guy needs to check who is outside. he has to get up and luck. at the same time he can't steer the plane. it is not so much of a matter of different law, it is a matter of safety and infrastructure is installed on the plane. a lot of differences we need to look -- to look at if we are to make broader statements. lisa: a big weekend for true marks animation. the struggling studios only movie this year is coming up yet what will audiences decide? matt: it is time to play -- it is time to play the yearbook game. this is all our producers is telling us.

do you have a gas? -- a guess? i feel like the pool should be a little bit smaller. there are a lot of women in tact for you and i could think of one who runs hp. but i do not know who this is. you can tweak me or lease -- you can tweet me or lisa. lisa bank we will be right back. -- lisa: we will be right back. ♪

lisa: time to bring you up-to-date. major political news out of washington. senator harry reid will not seek reelection next year. he has led the senate democrats since 2005. exercising in his nevada home. he says that is not why he is

retiring. dick durbin is his most likely successor as democratic leader. shares of carnival jumped on strong earnings. the company lowered its epf forecast slightly for fiscal 2015. it expects net revenue to rise by 2%. americans are falling out of love with soda. diet sodas shrinking faster than their sugary -- sugary counterpart's. both brands saw sales decline. matt: it is do or die for jim works animation. it is the studios only movie of the year. wall street analysts are worried about what will happen if it bombs. jeffrey katzenberg has been

slashing jobs and shares are down 15% over the past year. we are going to bring in paul sweeney, bloomberg intelligence. it is clearly important for this movie to do well. paul: they scaled down their productions because they have been having more misses than hits. this is it. expectations aren't high for this movie simply because dreamworks is on a losing streak. they had to take write-downs on these movies. seven or eight years. they are on the losing streak. they would like this one to break that. they had a kung fu panda, how to train your dragon, a lot of great movies. they were hits. who said my new strategy is

everything on one horse? like any other studio it is a hit or miss business. multiple businesses to shield you from some bad box office. they are at the mercy of the box office. they haven't build up the merchandise is like disney has. they are dependent. i am helping out jeffrey katzenberg this weekend, trying to help his box office. the movies are very good. they remain to be good. a much more competitive marketplace. every body is into animation. they are doing it well. dreamworks had computer

generation to itself along with pixar. matt: this is a distress asset. is it in play? paul: the company has not put itself up for sale but they have engaged in conversations with a number of people in interests of selling this company. the expectation is the marketplaces are for sale. this could happen but nothing has happened to date. lisa: why would anyone want to buy them if other companies are providing the same kinds of services. matt: they have started this whole animation. paul: if you don't want to go to pixar or to dreamworks who do you take? matt: they have a great library

worth a lot. they have tremendous talent in terms of the artist and the writers. jeffrey katzenberg, one of the leaders in the film in -- film business and animation business. a lot of value for the company. it is a question of what the role jeffrey katzenberg will take. who is eating their lunch? who is winning right now? paramount is in the business universal is in the business. frozen is everything. lisa: are plenty of them. matt: i only listen to the grateful dead and the frozen deluxe edition print those are

the two cds in my car. lisa: absolutely blown. matt: lisa was asking me this morning, what do we do to make something that is awesome? how do you make everything awesome? paul: it is all about the quality of the film. everything has to come together. they can kind of hedge their bets. if you are dreamworks you are stuck with three films. that is why there aren't many standalone studios that are public. they are part of the big media conglomerates. it is not a business that is great for public shareholders.

mapping a fully for your sake. thank you very much. paul sweeney of bloomberg intelligence. lisa: more "market makers" after the break. ♪

matt: researchers whose job it is to pump washington insiders with jobs and regulations that could move markets, then sell that information to investors before it comes really public. josh green wrote about the topic in the latest issue of the magazine and is in d.c. right now. give us a few examples of how this would work. josh: if you have a big bill moving or a big defense contractor, that can have big

effect on markets and companies that can give you an advantage as an investor. there are other cases that are in a gray legal area. found out about the internal workings in 2012. unfortunately that is not legal. there is an investigation into that leak. lisa: have these companies get there in case -- get their information? josh: when i was doing reporting for this, calling around to different people a lot of them were pumping me for information. they will call a reporter after a story and say can you tell me

more about this. you get the information from anywhere you can and try to find something that is actionable and tradable that you don't have that can provide an investing advantage. this is a gray area. they are in the habit of providing information to reporters and lobbyists spree of the they are trying to find out about these briefings. it is tough because the lines aren't clearly as delineated as one might expect. there has been pushed back from major members of congress to regulate this industry. most recently through the 2012 stock act. most people have been able to prevent the intelligence industry from being regulated. there's no idea how far-reaching it is.

matt: is arguably public information. if reporters can find out then anyone can find out. no offense to us. josh: that is what i try to do. the issue is are they getting material nonpublic information even beyond reporters. there are examples of cases where they are. there's a famous case part of the x -- part of the security exchange where news of a medicare hike leaked the day before the announcement. it bunch of the big insurers moved higher. a bunch of hedge funds have been tipped off and made a lot of money. it just shows you there is information the press can't get. lisa: are they getting kickbacks

with political intelligence by way of campaign contributions? josh: they certainly get a contributions and one of the messages they used -- they called it for a kickback of information. by virtue of being a donor often they are able to get a center on the phone be able to have a private briefing. they could potentially help some of the firms they are invested in. i keep going back to this term. it is a very great area and profitable one. matt: josh green from bloomberg businessweek. indeed he is getting information that no one else can get. you should read his story about political intelligence.

thank you very much for joining us. lisa: if you thought wall street executives were high paid, check out silicon valley. ♪

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or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before. switch now and get the fastest wifi everywhere. comcast business. built for business. matt: welcome to market makers bang goes good -- to "market makers" on this friday. lisa: scarlet fu is taking a look at some of the notable movers of the session. scarlet: let's start with a company involved in mna. dow chemical rallying for the first time in two months. the dow ceo has set a target of

selling as much as $8.5 billion of less profitable businesses so he can focus on higher-margin assets. and genetically modified corn seeds to capture the best shareholder returns. let's move on to carnival. best day in 3.5 years. the lower fuel costs we have seen have helped a cruise line operator beat analyst estimates. fuel prices fell 38%. i want to bring in tesla. registration in china fell 45% in february according to jail lauren capital. bringing in just 10 in january. i guess that was a bit of an

improvement there. that was down from last year's fourth quarter. matt: the chinese just don't want to buy teslas. scarlet: weren't there at its of overheating? matt: there were reports of elon musk -- no dealers want to take them did they have had a real issues. that has been a big weight on the stock. the sky's the limit for a stock that is already in the sky. scarlet: this is the enigma for every ceo out there. how do i sell to the chinese it -- chinese consumer. that bank the big problem in

china is the pollution. it is a big car. it handles like a dream. i don't understand why the chinese are not buying tesla's. scarlet: it is from power plants, from factories, from buses. matt: passenger car licenses are limited in major chinese cities because whether or not they cause pollution, that is what the public thinks did -- but thanks. lisa: if you thought street competition was rich. google is paying its new cfo more than $70 million in restricted stock and bonuses over the next two years. that makes her one of the highest-paid cfos in the country. this is more than double what

she was making at morgan stanley. cory johnson has been crunching the numbers for us. how big is this? is this considered excessive even by silicon valley? cory: it is so big. we have seen a couple of cfos come to silicon valley and command -- the annual basis a 650,000. that is what all the top executives make as base salary. this is big money even by silicon valley standards. it is stocks so we don't know what the ultimate value is going to be. lisa: when people on wall street make a lot of money they are

villain eyes. they are viewed as the promised land, the place of innovation. there doesn't seem to be this feeling about these big pay packages. do you see that changing. cory: there is a sense that that is the best practice to align with shareholders. unlike the case of meg whitman in ebay based on non-cap earnings after restructuring cost is creating an incentive to keep the restructuring from going on forever. these are pure stock option grants. in the case of others, a big pay package.

you have to be in it to win it. you have to get the stock overtime and deliver longer-term results. at least if they are aligned with the interests of the shareholder without funkiness getting involved and unaligned benefits. i think when you take a look at these pay packages it is at the very top level. google is one of the biggest companies in the world. facing one of the biggest challenges in growing. let's look at what he got to go for twitter. we haven't seen what the actual valuation on the stock is. i think we have a full screen to that effect. a lot of that was in stock. a lot of that was granted to him on the day he joined.

matt: how is it so hard for google? what is troubling them? being dominant on the computer. they are trying to make that change happen. they have created a germanic business where they are giving the software away. hoping to grow on other business. maybe they are doing that illegally to build new businesses. impair that to the challenges of yahoo!. chief financial officer at yahoo! has paid significantly less. this is a guy who has to figure out how to save this business. a long-term comp.

this is a guy who had to figure out how to sell alibaba asset and figure out how to keep the partnership with the government where he figures out how to monetize the softbank yahoo! relationship in yahoo! japan who has to revise the business from the dead. i'm sure he was looking at the pay package from google. >> i thought they only had to stay for nine months. matt: we are playing the friday name game. no boiler. i just want to throw it out there because i bet you are going to know. this is a woman in tech. class of 1975 in illinois. is that utah?

cory: it is also not -- believe hall cogan. matt: thank you very much. talking about the $70 million google cfo pay package. lisa: and what it means for the senate and democrats efforts to win it back.

lisa: french police say dna will be needed to identify the remains of things. officials say no bodies of the 150 people killed were found in tact. the copilot's mental health is the focus of investigators trying to pin down the cause of crash. police have searched his home finding documents indicating he

could have possibly had a mental illness. indiana governor signing into law a rigid -- a religious objections law. it will let physicists discriminate against a people. they could substantially burden the people -- the ability of people to follow their religious belief you salesforce canceling travel plans to indiana. the ceo says, pay attention to what is happening in indiana and how it will impact your employees and customers. and wildcats run wild for the ncaa tournament. kentucky trounced west virginia by 39 points. they are unbeaten in 37 games this season. kentucky moves on to the round of eight. for more games are on tap tonight. those are the latest headlines.

matt: surprise retirement of one of the most powerful democrats on capitol hill. harry reid announcing he will not seek reelection in 2016. harry reid is a fighter. time and time again he stood up to special interests and made sure every one of his constituents had a voice in the nation's capital. let's take a look at the implications with phil mattingly. the question is how much does this matter. is it possible it will be overtaken by a republican? let me take it off with you. >> harry reid is not popular in his home state. he has to figure out a way to win in 2010 when his favors were

over 50%. his ability to get out of this race gives him a real chance for potential democrats to ramp up and get control of his team. this will not be in easy race for democrats the matter who is running for the seat. one wildcard is it will be during a presidential year. if hillary clinton is on the top of the ticket, the ability to turn out the hispanic population will be huge. it should have an impact on who the democrat is that replaces harry reid. lisa: it looks like dick durbin from illinois are the frontrunners of this point. are they start to jockey for this position? phil: the jockeying has been going on behind the scenes for some time now. with the injury -- from

washington this is pretty fascinating stuff. they were roommates for years here in washington. everybody has been waiting for them to vie for this crown. it is a very powerful position. the early money is on schumer. such a loyal following in the senate democratic caucus. don't under estimate dick durbin. it may play out behind the scenes. to be sure both of these gentlemen would like to be in this position, it is going to be a contest. matt: and insight as to why harry reid is stepping down? age doesn't seem to be a factor here.

he has got a lot accomplished even at 75. is it the injury that is taking him out? phil: he is as sharp as he has ever been. it is not mental acuity right to now. it gave him and his wife some time to talk. the injury was a lot. there is recognition getting out on the campaign trail. his disapproval is very high. that is no short issue there. stepping down today is more than a surprise. today he decided to pull the trigger. matt: peter cook and phil mattingly, thank you so much for

joining us. we are playing the yearbook game. we are showing you a picture of a woman who graduated from high school in 1975. she is a very powerful woman in tech. you can tweet us at market makers. i've gotten about 20 guesses. big powerful women in tech on each coast. think new york. stay with us.

matt: she graduated from high school in illinois in 1975. we don't know who she is.

we each have a guess here. you think it is -- i am guessing ginny of ibm. it is ginny ibm ceo. i got a lot of feeds on this. a little less. meg whitman was pulling ahead. i look at pictures of both women now. from that i couldn't tell as much. it was a shockingly long time ago. lisa: don't all seniors have"? matt: that may have caught on in the late 70's.

i think that is a 70's generation kind of invention. thank you so much for joining us. i can't believe two hours have gone by. thank you for joining me on market makers. continue watching bloomberg television for interesting news.

it is time for bloomberg television to go on the markets.

u.s. stocks are attempting to recover from four straight days of losses. even with today's bounceback the s&p 500 paid for its worst week since early january. investors are assessing the latest data on economic growth. fourth-quarter gdp was greater than expected. joining me now for today's options inside his scott bauer senior market strategist at trading advantage. it seems like we are waiting for janet yellen to comment this afternoon. what a she going to say that could be any different from what we heard last week? scott: traders don't want to take a position on this, especially with geopolitical risks. the last thing they want to do is positioned themselves going into yellen speaking.

she is not going to say whether we are raising rates in june or september, whether we are raising them at all this year. we will see a real study market going into that. i wouldn't be surprised if we see a selloff before she speaks and going into the close. scarlet: a bit of positioning before she speaks. does it still work? : scott -- scott: janet had to say earnings over the next couple of weeks are going to trump everything. some of those earning estimates have been low here. they will continue this slow trend upwards.

scarlet: it is not scheduled to report earnings until april 15 but a preannounced this week. the stock tumbled the most in six years. sandy x -- sandisk cutting its sales forecast. >> unreal how this got hit. it is a real major support. the april 10 expiration i'm going to buy the 63 strike put against it. i love that. i get to collect the credit. if the stock continues to drop that is ok. rather than outright buying it i'm going to have this two week option play on. i don't want to go further than that. i don't want to have that position going into earnings.

it is a short-term play. scarlet bank do you expect yemen to be a factor in today's trading? scott: i think all of the geopolitical risks we have seen pop up, i think that may factor in to the selling going into the weekend. i want to give a real quick shout out to my son at indiana university. he is in portugal watching the show now with his buddies. guys, have a great time. scarlet: thank you for joining us.

"welcome to money could become aware we bring the best stories and video all in business news. imp pimm fox. more conflict in yemen and why it matters to investors. entry marks animation wants "home to be a hit. and in politics this is top democrat says he is out. harry reid will not seek reelection to the senate. who will fill the leadership role? how to make