announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker in stephanie ruhle. stephanie: oil prices may have collapsed but not the oil business. we will see why energy companies are doing better than expected. george soros says the rich should pay more taxes when it comes to building his own fortune, the billionaire sings a different tune. he did index investing before it was cool. we will talk to my favorite princeton alumni, founder of the vanguard group, jack bogle. welcome to "makers -- looking to

"market makers." bill: it is bill cohan with stephanie ruhle. stephanie: as you know, my husband went to princeton. bill: duke alum. stephanie: the last time he was on the set, bill cohan said duke would take it all the way. bill: when you are right you are right. stephanie: how often do you and the president of goldman sachs agree on anything? we have a great two hours. i'm thrilled to be back. i'm a little bit tired. i had a big weekend in washington for the white house correspondents. i've been in l.a. for a few days. bill: did you go to the vanity fair party? stephanie: it is called the bloomberg/vanity fair party. of course i was there.

bill: did we have some highlights? stephanie: i'm not going to share any. only for people who were there. let's get you to the bulletins. consumer spending ended the first quarter on a positive note. it rose 4/10 of a percent in march. shoppers spent more while not seeing a bump in income. little change last month mostly due to a drop in dividend payment. economists are relying on household spending after a slump in business investment. the world's largest energy company posted its biggest earnings surprise in at least a decade. exxon's per-share profit was 41% higher than estimates so the stock -- though the stock is not really reacting. exxon's refining margins sword because of -- saoared.

comical look phillips best conical phillips lost more. conoco's focus on shale has helped ease pain from the collapse in oil prices. who could be prospective buyers for salesforce.com? bloomberg crunched the numbers and found that microsoft oracle and sap all have the resources. people familiar with the matter say the company is working with bankers to field takeover offers after it was approached by a potential buyer. the central bank is trying to jump start the economy by cutting its key interest rate more than expected. the bank of russia lowered the one week option rate from 14.5% to 12.5%. it said there could be more rate cuts inflation keeps slowing

down. russia is entering its first recession in six years next to low oil prices and western sanctions. in japan, the central bank has decided not to increase monetary stimulus. at the same time, the bank of japan pushed back its timetable for reaching 2% inflation because of the collapse in oil prices. a socialist in vermont will challenge hillary clinton for the democratic nomination for president. senator bernie sanders warns, do not underestimate me. he will formally announced today that he is running. sanders is a socialist who usually both with democrats. he could force clinton to deal more seriously with the party's left wing. more on energy earnings season. exxon and conoco both beat estimates. exxon made more than expected and conoco lost less than expected. joining us now is stephen short

and vincent piazzolla. we have seen beats from all industry leaders but the big issue eric and i complain about why don't we just look up the actual numbers? the fact that the stock is responding to what analysts are estimating analysts keep moving it so they look smart. vincent: expectations and sentiment. when you think of exxon in particular, you have a combination of both the downstream and the upstream that tends to smooth out volatility in the earnings. if you think about the average prices for both pi and brent down over 50% year-over-year it had an impact on the upstream business. earnings were basically cut in half. the refining stream really provided support and ballast to the overall earnings picture.

yet, earnings were off over 40 some odd percent. it is in expectations game. relative to the overall views of investment class. bill: i thought we got over this game years ago, back in the internet bubble when everybody was expecting that people would make certain amount of money and when they missed it by a penny or made it by a penny, everybody was happy. i thought eliot spitzer came in and found there was this link between research analyst and investment banking. yet here we are, playing this game. stephanie: stephen, what do you think? stephen: we have this equation where you have two key variables. the upstream which is what you are pulling the barrels out of and the downstream are you condense those barrels and sell. this is not an issue of any sort of like between research analysts and the actual

estimates. they have no idea. we're looking at oil prices historic plunge. we are in the midst of a major retrenchment in this market. therefore, we are essentially blindly throwing darts at the wall to see what sticks and we are starting to learn what is going on. what is going on is we have refinery margins that are trading at five-year highs in some market areas. in some point in january a 40% premium on what refineries are selling as opposed to the pro -- as opposed to the crude oil, what is buying. that downstream is helping to mitigate. an integrated oil company is in far better position because they have one side of the balance sheet that convinces and smooths out volatility on the upside. when you look at conical

phillips, they lost fewer dollars than expected but they still lost. their decision to diverse them -- to -- it is coming back to bite them. bill: are you saying the problem is analysts are not able to figure out the impact of all these lower oil prices? they have been suggesting where they think it might come out now we have actual data so they might be more precise in the future. stephen: i would expect. now we have two full quarters. to digest very low oil prices. i believe the street will be able to fine-tune its look at these companies and i would expect them to come in closer to the mark through the -- through the remainder of the next three quarters. vincent: over the next couple of quarters you will still have the impact of realized pricing being down.

you also have hedging rolling off. the companies themselves are doing what they can to control what they can. cap x and op ex to support through this period of lower prices. bill: in the low 1980's it was over 100. do you expect this earnings beat to actually move -- vincent: you still have the concern about a lower realized price environment year-over-year. as management has indicated we are going to be given with this for a while. it is a tempered view of the overall industry. stephanie: i have the chance to sit down with bloom pickens and talk oil prices. bill: no names dropping. stephanie: the best line i got out of him, carl icahn, smoother

than a stuckco bathtub. >> not for $45 oil. i know oil prices coming back up . it takes a little bit for that to work to the field price. six the five dollars a beer -- $65 a barrel, i would go back to drilling again. stephen: do we think boone is putting his mouth where his money is? we have to take into consideration. let's look at those margins. what we seeing art that refinery margins. a tremendous amount of demand for crude oil because every refinery wants to realize its 30% margin. what we are doing is stealing demand from the future. we're putting off the turnaround season until -- and so we're going to max -- maximize the

demand for crude oil. once we get that demand stolen and we get enough product into the market. we are about 90% of the way full to capacity. we're still producing my .4 million barrels a day -- 9.4 million barrels a day. when you factor in stolen demand capacity, i have to think in the months ahead we will see another significant call down in crude oil prices. we also have to be careful because there is a strong length coral -- a strong correlation between europe and oil prices. there was a perfect example, the dollar got crushed yesterday. crude oil had a rally in the face of a bearish storage update . we're looking at a situation where the long dollar trade i think that trade is going to

unravel. i think the fundamentals suggest that the dollar moves. stephanie: we have to leave it there. anyone who disagrees with boone pickens cannot be on the show that long. thank you for joining us. we will be back with more "market makers." companies are keeping a tight hold on their money in the first quarter. business investment fell off a cliff. we will look at who that is hitting hard. ♪

matt: time to bring you up-to-date on the top stories of the morning. employers may believe that the first quarter slowdown is only temporary. 200 62 2000 was smallest the lowest forecast in the survey of

economists. jobs openings already 14 year high. financial professionals are growing more pessimistic about greece. a majority is predicting a greek exit. 52% of bloomberg terminal subscribers surveyed believe greece will eventually leave the eurozone. 43% say greece will stay in area greece has been meeting with european countries about unlocking more bailout money. the country is running out of cash. bloomberg is reporting that both sides hope to have a deal by sunday, though we have heard that before. it is no secret any longer. a story of rags to riches to rags again. secret is shutting down. secret lets users share information anonymously. the company raised $25 million at a hundred million dollars valuation. use of the app has declined for months. one of the founders says he will wind down secret and return money to investors. back to you.

stephanie: thank you. coming up, a 401(k) without any limits. a tax loophole that has made hedge fund managers billions. now it is time for them to pay the piper. also, diversity on corporate boards. you have to look hard to find it . a lot of noise but little results. we are talking boxing. the most lucrative boxing match ever. saturday's big fight by the numbers. yesterday's gdp report showed growth almost ground to a halt in the first quarter held back by severe winter weather and slumping business spending. corporate investments of the biggest clients in 2009. i want to bring in senior editor mike reagan, he is been following the trend. let's walk through who is getting hit the hardest. mike: it goes back to the oil story to some degree.

a lot of industrial companies exposed to the fracking boom in this country are seeing big hits. the other usual suspects you often see, the strong dollar hurting exports. some temporary things like the weather and port shutdowns which causes people to roll their eyes as convenient excuses. the best caller on these numbers are the earnings releases and seeing what the companies are saying. those issues come up over and over. the question really is, is this just contagion from the oil drop or is it something else? one of the industrial companies with the biggest clients in sales for the quarter was a copy called pet air. -- pent air. they make valves for fluid control. it is used in a lot of industries. sales dropped about 15%. they said they were prepared for the slowdown in energy spending

but they saw it in all of their businesses. the ceo called it a global capital spending freeze and said there is a lot of uncertainty that is causing people to defer spending money. that is what's coming from the company with the biggest sales the klein. -- the biggest sales decline. industrial companies saw sales drop about 1.2%. business spending on technology does not appear to be taking as big a hit. sales are up about 7% or 8%. a mixed bag. the real issue is in the gdp report. what they call nonresidential facilities which are factories, warehouses, office buildings whatever facilities you need in the oil business was the biggest issue. mines and oil wells, spending on that dropped by half. bill: is there anything anybody can do about this?

you don't expect congress to implement any sort of physical program? the fed obviously cannot -- any sort of fiscal program? usually when they figure out that the interest rates are going to stay low, that is a boon to the stock market. maybe we have a real slow down. mike: you also have to look at it -- gdp is so backward looking. some of these variables have improved since then. the dollar has weakened from its highs. oil has rebounded from its lows. bill: the weather has improved. mike: people laugh at that. look at the gdp numbers last year. bill: they laugh but every company in the country is blaming everything on the weather if things don't go well. stephanie: it is so silly. bill: a time-honored tradition. mike: in some cases it is an excuse and in some cases it is exactly what is going on. the trends have to deal with what happens with those trends.

. inflation expectations in the bond market are improving. it looks like inflation is expected to pick up. if those trends continue, maybe it will not be as big an issue. stephanie: thank you so much for joining us. my favorite university of delaware alumni, mike reagan. working on wall street is one of the most lucrative jobs in the world. bill cohan moans about it every day. a new poll shows finance professionals do not make enough. ♪

stephanie: i am so happy bill is here because this story is a gift. we like to cover wall street. we do it for a living. there are something that will bring a tear to your eye.

bankers say they are not being paid enough. in our global poll of bloomberg customers those who have the terminals, nearly half said they are getting paid less than they had hoped for. let's put this into perspective. that is like asking a man if he's having enough sex. they are never going to say yes. bill: this falls into the category of -- what else is new? this has been going on since time in memorial. bankers always say big not get paid enough even when they get paid more than enough. stephanie: goldman set aside 36.8% of revenue to compensate last year. as the second lowest since they went public and it averages out to about 375 grand for employees. bill: completely misleading but

keep going. stephanie: down more than the 500 grand. what you say that is misleading? bill: they are taking their big pool of bonus payments and dividing it by all of their employees. we know that clerks, runners, assistants and things like that do not get paid as much as the big bankers and traders. it is getting you to a mean when you want something different, like a mode. stephanie: i like to argue with you but you have said this is the golden age of banking. bill: not for bankers. stephanie: they're going to say they do not get paid enough. if you take the likes of jamie dimon, they will say people are being paid correctly because before the crisis, just because you were the shale -- the trading counterpart of hedge fund founders is not mean you should get paid the same amount of money. bill: no question that this time around the only place that needs

to be cut are the bonuses. stephanie: if you don't like it, go work on the buy side. bill: that is what james gorman said. stephanie: we will be back. ♪

announcer: live from bloomberg headquarters in new york. this is "market makers," with erik schatzker in stephanie ruhle. stephanie: "market makers" is back. i'm stephanie ruhle. look who's here. bill: bill cohan in for erik schatzker. stephanie: there is still very little inflation in the u.s. economy. the price index that is tied to consumer spending rose 2/10 of a percent last month. if you strip out the volatile food and energy components prices are up 1.3% over the year . those first quarter gdp numbers did not seem to bother the fed.

policymakers ended their two-day meeting by leaving open the chance of an interest rate hike for the second half of the year. the economy was at a virtual standstill during the first three months. fed chair janet yellen and her colleagues blamed the slump on what they call transitory factors. my partner erik schatzker spoke to bill gross of janus capital. >> i think it is often june. some would say if we get a strong employment report a week from now that perhaps it is back on. i think it is off. i think the fed sibley wants to get off the dime. they want to prove they are not healthy, but that they can get out of bed and stand on their own two legs. that means 25 basis points increase. stephanie: the benchmark fed funds have been nearly 04 six years. general motors is planning a makeover for factories in north

america. gm will invest several million dollars to get them ready to produce future models. the joint venture in china will spend $60 million to expand their. quarterly sales fell at viacom. earnings beat estimates. viacom is controlled by sumner redstone. the company says it will take a charge to write down tv shows that did not attract viewers. the economy in spain has not grown this fast since before the financial crisis. spain's gdp rose 9/10 of a percent in the first quarter the fastest pace in seven years. spain is coming out of a record recession and the jobless rate is 24% more than twice the euro area average. hillary clinton has a new issue.

a challenger for the democratic nomination for president. senator bernie sanders of vermont will formally announce today that he is running. sanders is in fact a socialist who usually both democrat. he could vote -- who usually votes democrat. he could force clinton to deal with the party's left wing. a bloomberg exclusive. a complicated tax story. george soros could be facing a tax bill of nearly $7 billion. it is the cost of a tax loophole that congress closed back in 2008. soros and other hedge fund managers have been allowed to defer taxes on the fees they get paid by clients by immediately reinvesting them in their funds. that allows them to keep growing tax-free. it is kind of like a 401(k)

except you and i can only contribute $18,000 in pretax money each year and george soros and his friends were basically c contravening billions. over the years that makes a huge difference. according to a tabulation from a university of illinois professor it meant soros' fortune grew by $13 billion more than it would have if the taxes were not deferred. i turn to you, bill cohan. we wonder why popular opinion is to hate wall street specifically hedge fund managers . chew on the fact that because of this loophole, $13 billion more over this. bill: first of all, he did not do anything illegal so you have to say that. i think people accused mitt romney of something similar in the way he grew his fortune at bain.

this is something private equity guys and hedge fund guys are allowed to do. he's going to have to pay the piper. $7 billion is still a large tax hit. whether he contributes money to his foundation and avoids the taxes altogether, he has made a lot more than he would have otherwise. it is legal. good for him. i wish we could do it. the problem to me is you and i can only do it with $18,000 a year and he is able to do it -- stephanie: the question is once this loophole gets closed, what is is going to mean? bill: it means they are not going to be as rich as they were. stephanie: it is not going to affect the way they do their business, their ability to perform for investors, even their ability to buy big homes and be grateful if a pest. it are these kinds of loopholes -- and be philanthropists. that is a lot of dough.

bill: two and 20 is the most fun you can have with not having three feet on the floor. stephanie: i am going to say a distant second is to run a leveraged finance business at an investment bank when you get to say hello clients, let me give you free money. in moments they're going to be bid at 104. bill: you could not deferred your income on it tax-deferred basis more than $18,000 year. that is why two and 20 is the greatest invention since sliced bread. stephanie: if you are the person receiving. six years ago it had to be a fund to fund. you are not just going to pay two and 20. i'm going to choose fonts for you. you will pay me on top of that. on your own, it will be too hard for you to find hedge funds. bill: i think funds -- stephanie: for me, that would've been the ultimate of alternates.

-- the ultimate of alternates. ultimates. it's more than just a fight over casinos. a light on corporate boards and diversity. ♪

matt: i want to take a quick look at notable movers in this

first hour of trading. yelp, having its worst day since february. the stock, down more than 20% losing a fifth of its value, dropping to the lowest point in dollar terms since 2013. the reason is the company posted a loss when analysts were looking for a profit. yelp lost $1.28 million. analysts were looking for a profit of a penny per share. yelp, down big time today. over the past year, you can see it is lost almost a third of its value. world wrestling, having his worst day in a month after a big swing. it was up about five point -- 5.5 percent. it rose after beating estimates. analysts were only looking for two sense. it be on revenue at $176 million. it came out with subscriptions

adding 511,000 subs to 1.3 million paid subs by march 31. the stock just came down. not clear if that is by on the move or sell on the news. how can you be disappointed with world wrestling? sales missed estimates for celgene. it had a disappointing quarter for its lung cancer drug and also for its psoriasis drug. you see celgene shares down in early trade as well. stephanie: thank you, matt. not many days you get to pull in world wrestling federation and you got to. it is time to bring you up-to-date on top stories of the morning. it looks like consumer spending cap the u.s. economy from streaking in the first quarter. purchases rose 4/10 of a percent in march. the biggest increase since november. yesterday, the government reported that the economy was

virtually stalled in the first three months of the year. goldman sachs, betting on bit coin. bit coin is back. goldman has joined a $50 million fund-raising round for a bit coin start up. circle has raised a total of $76 million. the firm offers a variety of services and uses the virtual currency. other investors include idg capital. why are there so few apple watches on the market? the wall street journal says the company has had to limit supply of the smart watch because it found a defect in a key component. that part is made by aac technologies, a hong kong-based company. apple is not commenting although the company said it is rushing to make more watches. coming up, this fight is going to be a knockout. the price tag sure is. the saturday championship bout in vegas.

also, who has got the wallet to buy salesforce? the company may put itself up for sale. jack bogle is going to be talking about indexing and how it is the best way to grow your savings. for now, we are talking power women. elaine wynn lost her battle to keep her seat on the board of the casino empire she cofounded with her ex husband. other directors say a legal dispute between the two of them had a negative impact on board decisions. bruce goldfarb, ceo of okapi partners. we are not going to belabor elaine wynn's situation. why is it that it made so much sense for elaine to be on the board? people could say, it is all white board, all men. why does that not work?

shouldn't you have the best board for the company? bruce: as a proxy solicitor, we help clients understand how to create the best board. in this instance elayne, who ran a great campaign, brings a sense of diversity two aboard that would otherwise be stale, male and pale. stephanie: the issue they face is the crackdown in macau. how would a lane win's presence solve that problem? bruce: she was identifying the right people on the board. ultimately, in this instance the board said, we're going to find new people. that is where other institutions said we will give some of these directors another year to go out and do that. that is what we see institutional investors want. a large institutions are saying we want investors -- board

representatives who are going to represent the diverse interests that we feel companies need. whether it is gender or diversity of other issues but also bringing in the skill set. stephanie: let's talk about the skill set. i would love to see more women on corporate boards. more women running fortune 500 companies. the situation we face is not enough women have had significant jobs in corporate america that would position them to have the experience or the gravitas to take a board seat. for saying we need to have more diverse or boards, aren't we running the risk that we are putting people therefore a quota's sake. ? the last thing we want is a candidate on the board was not making it happen. bruce: i think large institutions are saying they want the right board members to be identified and in certain industries we have.

retailing. we have found good candidates in boards in the mining industry. it can be all sorts of industry as the talented executives, as the skill sets build up. you can bring in women who have that talent to get onto the board. bill: my sister-in-law was for a long time on the board of j.p. morgan chase. two years ago she was the low vote getter. she was tossed off the board, in part because investors thought she was not qualified. stephanie: what is her background? bill: she was a lawyer. she now runs the museum of natural history in new york. the youngest college president in history. she is been on the j.p. morgan board for close to 20 years. she was on the new york fed board. investors decided she and david conte were no longer qualified for the board of j.p. morgan

chase. explain that to me. bruce: i think there is a different issue. the other thing investors are looking for is a refreshment of board skills and experience. what you find overtime after a certain amount of time -- bill: they never "refresh" old white men. stephanie: the importance of diversity. we want a more diverse board but why is it not actually happening? i go to conferences about it, i moderate panels about it by do not see the numbers. bruce: when you take a look at some of the activist campaigns tartan -- star board is a perfect example. bill: only 9% of the company, incredible. bruce: they identified a board of talented people. of diverse backgrounds, of skills that the company needed in the restaurant sector, in the real estate sector. bill: i don't think you was

about people they identified for the board. it was the sentiment that the old board had to trade shareholders. stephanie: when they replaced the board, they had a more diverse orton. after the financial crisis i thought with this shakeup we would see a woman running a bank but we did not. it stayed white old and male. when companies are looking to diversify their boards are they doing searches in the right way? are they looking under all the right rocks? bruce: certainly there is an expectation that you have to think harder about board service and you have to go out and identify and explain why the talent, why the skills you are bringing are going to be the skills this company needs. activists do a really good job with this. our clients on the company side are starting to catch up. stephanie: you just have to be a scratch golfer, 65 in white.

-- 55 and white. bill: you see with ellen pao with that whole situation. the kind of torment she went through eliminate quality women from the financial world. bruce: i don't know about that particularly but i do know the institutions who vote are very serious about this as an issue. stephanie: if you want to be a global citizen, start acting like one. bruce goldfarb, ceo of oh copy partners. -- of oh copy partners. let's hope it lasts more than a couple minutes. surely it is the most hyped. we will be speaking about the big bout in vegas. ♪

stephanie: it is being called the fight of the century. mayweather versus pacquiao. there is a lot of money at stake when the gloves go on saturday night.

>> floyd mayweather versus pacquiao -- versus manny pacquiao. it is one of the richest boxing matches of all time. the fight is projected to shatter records. its paper view's expenses match ever, costing almost $100 to watch at home. estimates for how many people will watch range from 2.5 million to 4 million. face value tickets range from $1500 to $10,000. the $10,000 seats were not sold publicly. the gate revenue for the fight is set to reach $72 million. for comparison, that is 3.5 times more than the current gate record, $20 million, set by the mayweather versus our is fight

in 2013 -- versus alvarez fight in two dozen 13. fewer than 1000 tickets were sold to the public at face value and they sold out in 60 seconds. the resale markets will likely be extremely lucrative. when you factor in other revenue streams like foreign broadcast sales, closed-circuit viewing, sponsorships and merchandise the fight is expected to bring in at least $300 million. that would make it the most profitable boxing match ever. while it is not clear who will win, both fighters are set to pocket millions. they're splitting the purse 60/40 in mayweather's favor. he is projected to make about $180 million with pacquiao walking away with more than $120 million. with money like that, everyone walks away a winner. stephanie: everyone walks away richard.

$10,000 might year. i was in l.a. for the last three days and vegas is a hop skip and a jump away from los angeles. bill: by private jet. stephanie: even if you flew commercial. number of people i was with over the weekend are going or wants to go and they are gaming out the price of these tickets. those expensive tickets are dropping a bit. i heard one of the reasons they're trading at such a premium is part of mayweather's contract is he got to have a big slug of tickets. that is pulling out a number of tickets. they are trading at a premium. pacquiao is going to be on street smart this afternoon. whether he wins or loses, big boy is getting paid. let's just hope that the fight lasts more than two minutes. even if it doesn't, people do

not mind spending that though. ♪

makers" with erik schatzker and stephanie ruhle. stephanie: jack ogle has been laughing about the first index fund for decades. we will see what vanguard says about investing now. senator bernie sanders enters the presidential race. will that force hillary clinton closer to the democrats progressive wing? and how much can high-stakes sell for? $100 million is not really a

record anymore. are you kidding me? bill: it's not a benchmark for us, but a benchmark. stephanie: those people that are rich, it doesn't matter how expensive things are. they can just keep sending. $100 million, no problem. bill: and bernie sanders entering the presidential race. stephanie: bill ackman taking down a penthouse he just doesn't need. bill: let's get bill ackman and bernie sanders in a room together. stephanie: that might be better than the vegas fight this weekend. bill: it might last longer, too. stephanie: let's get to business news. a bright spot in another a sluggish quarter. consumer spending rose by the most in over four months. the increase, 4/10 of 1%. economists are counting on household spending to get the

economy growing this year. businesses hit roadblocks in the first three months. the world largest energy company posted its biggest earnings surprise in at least a decade. exxon mobil per-share profit was 41% higher -- put this in perspective -- than analysts estimates. because of lower crude prices and exxon pumped more oil than expected. meanwhile, conoco phillips lost a whopping 200 lane dollars in the first quarter -- $200 million in the first quarter but it still beat analyst estimates. and the parent company of comedy central by tom posted -- viacom posted quarterly earnings that beat estimates. sales fell by 3% and the company previously announced it would take a $785 million charge for tv shows that did not attract enough viewers.

but the ceo was upbeat about the new future. >> the market looks to be very strong and we are confident going into the coming season. we are quite hopeful that we will be able to see improvement in our ad sales performance. stephanie: viacom is financed by -- one of its units is paramount pictures. 52% of bloomberg terminal subscribers surveyed said that greece will eventually leave the euro 43% greece will stay in. the country is running out of cash. bloomberg is reporting that both sides are hoping to have a deal by sunday. guess what, kids. we've heard that before. and the secret is out, the anonymous social app secret is

shutting down. it lets users anonymously share information. just last year, the company raised $25 million in a $109 valuation, but use of the app has declined. -- in a $100 million valuation but use of the app has declined. the ceo said he would wind down. what do you do with $100 million? $33 million is too much to give to just one child. on the other hand, 26 nine dollars is too little. that all comes from -- 26 million dollars is too little. that'll comes from a survey of high-end individuals. in high-end bank takeover offers, we do not know if they are actually for sale, but salesforce has a market cap of $47 billion.

there are a few others with a motive and means to buy it. cory johnson does more than just look good on the west coast. this boy helped break the story yesterday. bravo to you. cory: it happened. it is interesting, because salesforce is a fascinating company. they have fantastic topline growth and nothing for profit. forecast last year was nothing compared to the previous years. no free castle after acquisition. you wonder what anyone would see in such a business where maybe the future's so bright you've got to wear shades -- stephanie: did you just say that? cory: sun is coming up here. it's early. clearly, customers like what ails force is selling particularly because they sell it for less than what it costs to make it.

-- what salesforce is selling, particularly because they thought for less than what it cost to make it. but companies like oracle and sap, they are really focused more on the cloud and less in the traditional software commitments. but do they want to grow in the direction where there are no profits, which is what salesforce is doing by spending boatloads in marketing to boost the topline? their spending billions and acquisitions to boost the topline. somebody out there is looking at this thing. we want to be bigger by doing what salesforce is doing but the number of potential candidates to take the company over are limited, indeed. bill: do you have any idea who actually made the offer? cory: i have some ideas. bill: do you want to speculate? stephanie: speculate. cory: we are talking about companies that are big into software and have a lot of

revenues. bill: and can afford a $60 billion price tag. stephanie: can i have a question though -- if you are mark benioff, -- marc benioff, why wouldn't you want to tell? -- sell? cory: he still owns most of the holdings. stephanie: but what i'm saying is, if you are mark benioff and you own most of the stock, you could say, guess what, i won and on a high note, why wouldn't you want a takeover? cory: i'm sure yet conditions to be the biggest software company in the world. that is what he has been moving toward. he is taking a big new lease on a big opposite building in san francisco. always a good sign, right? he knows all of this. he knows that the market will

reward him for sales growth and not profit. but if they stop doing acquisitions, maybe the whole thing falls apart. we don't know, because they have not talked to doing that. but a strategic investor -- bill: speculate for me. who is the one that made the offer? koran -- cory: i find it hard to believe oracle would make such an offer. it would boost their sales growth but at a tremendous cost to the company. and they know what it takes to make enterprise software. they know what it takes to take -- to make crm software. they are second in that software. microsoft is out there, ibm is out there, and both those companies talk a lot more about wanting to be in the cloud and it would be a fast but expensive way to do it. bill: it wouldn't be terribly dilutive for ibm or microsoft earnings? maybe no one cares about that anymore.

cory: debt is so cheap right now, if they did it with stott ibm is very -- with stock, ibm is very constrained when it comes to debt. but if they did it with stock, the market might let them. the stock might all quite a bit, but then they could reset the slate. things have been so bad ibm, no revenue growth for 13 quarters. if you can believe the estimates moving forward, ibm would continue to see revenue declines, but not quite as bad as the 10% pretty good for 2015. we do not know at this point. stephanie: cory johnson, thank you for joining us. he is our bloomberg west editor at large. way to go breaking that story yesterday, and i didn't think you had it in you. cory: i appreciate that. sort of. stephanie: if you had any money in the an index fund, he is the

guy you want to speak to. the one and only legend, jack bogle. and how about this description for a presidential candidate? he is a socialist to was officially independent and usually votes with the democrats. i'm talking about democrat or not -- i'm talking to senator bernie sanders. he is now in the race. ♪

matt: a comeback. time now to update you on the top stories of the morning. in spain, the economy has not thrown it fast since before the financial for -- financial crisis. its gdp rose 9% in the first quarter, fastest pace in seven years. still, the jobless rate is 24%. more than twice the average in the rest of the euro area. here in the u.s., employers are indicating they are more confident in the economy. applications for first-time jobless benefits fell last week to the lowest level in 15 years. the number was 262,000, smaller than even the lowest forecast in

a bloomberg survey. the level of firings is consistent with the fed view of the job market making sustained progress. and general motors is putting more money into u.s. factories. gm will spend more than $5 billion to upgrade plan as they prepare -- plants and figure pair to allow your models. gm and china will end 16 -- spend $16 billion to expand their. stephanie: coming up in just a few minutes, talk about longshots. why is senator bernie sanders getting into the presidential race against hillary clinton? and goldplated real estate, when a $100 million home doesn't make people gas, maybe it is time to think "-- doesn't make people gasp maybe it's time to think bubble.

jack bogle was the founder of vanguard group, the largest mutual fund manager on the planet. he joins us now. how does investing in a disease change since you -- in the industry -- in the indexes change since you started four years ago? jack: it was not only the dominant force with pension and the like but 70% of our funds are the index fund. i think we probably have 40 different index funds now. there may even be too many. but in very sectors of the market, various ways way to look at the market, international emerging markets, total stock market, things of that nature. it's a great idea, but took a

long time to get going. i would say, 20 years from the time we first started that first index fund. and it became public, and ipo in 1976. and it took almost 20 years before the idea caught on. it was welcomed into the industry with a big poster that said "stamp out index funds. they are un-american." and there was a golf fan canceling all these stock certificates. we, long way -- and there was uncle sam canceling all these stock certificates. we have come a long way. 25% for active mutual fund managers, which is a remarkable turn of events, a confirmation of what we are trying to do. bill: jack, you mentioned 75% of the money you manage is in index funds. 25% in managed funds is that

inconsistent with your vision for how investors should invest? jack: i don't think so, but let me expand on that just a little bit. when the index fund came out, the initial underwriting was a complete flop. the underwriters are going to do $150 million, pretty big for those days 1976. they produced a check for $11 million for me. they said let's drop the whole thing and send everybody their money back. and i said, are you kidding? we have the world first index fund let's go. so we did but the big base of our assets at ben cardin -- and we were around -- and vanguard then and we were around $1.5 billion or $1.6 billion, and the remaining $1.4 billion was

actively managed funds. i was not about to tell them i'm smarter than you are. and the actively managed funds have been a great part of the business. in fact, they are the most widely distribute it and most widely sold and bought active funds of any firm in the business. we are the leader of actively managed funds. and the reason for that is, first, i think we have a couple of great winners in health care and others that i picked out 30 years ago i might add. great durability there. and the other funds, we tried to keep in high correlation with the market. do not get too distant from your target with your standards or your index. stephanie: as used just said -- as you just said, you never said "i'm jack bogle and i'm honored and you are." we are looking at funds where investors are getting all of the attention are activists. they are saying, i'm smarter

than you are and you're wrong not to listen to me. do you think activists are the wrong way to go? jack: you never know. i cannot protect the future but i have seen data that suggests that these activists that come in and try and succeed in changing companies even taking over company can have about a 50% success rate. that's what you get from flipping a coin. some of the outcomes are bad. sometimes they stripped the assets. in the old days for me, maybe 25 years ago, they strictly pension fund as an asset, just in the price they paid for the company. leveraged buyout, highly leveraged, and many of them failed. you saw that tsu, text -- txu texas utilities, with a total daily are. i think it was a $58 billion leveraged buyout.

-- was a total failure. i think it was a $50 billion leveraged buyout. bill: what about the fees that activists and hedge fund managers and leveraged buyout guys -- they charge huge fees. one of the payout funds is that they average very low and they are attractive for the average investor. are people getting their money's worth? jack: in the last five years, unequivocally not. hedge funds went through a time probably in the 10 years prior to the last five of having rather outstanding returns, but when you get more and more of them and smarter and smarter hedge fund managers, and they are a brilliant group by and large. -- i know many of them personally and i respect them but they cannot all be each other -- beat each other. it's the law of averages there.

the price discovery has made it much more difficult to be successful doing hedge fund investing. that will probably go -- come and go. everything changes year after year. and they had five rather poor years and last are just awful. but they will probably have a good year this year. stephanie: but even when it's awful, it's really nice to collect two in 20. if you were to turn the clock back and do this all again, would you still believe index was the way to go? is that where you would have wanted to make your mark in the financial industry, or would you have set your cell, i should have gone the hedge fund route? jack: number one, you don't get to do it all over again. never too, when i wrote my senior thesis at princeton university in 1951, my idea was to give the average investor a fair shake. hedge funds cannot do that, and mutual funds can.

if you go the mutual fund run out, go to a few -- a truly mutual structure and we have not talked about that our company is run by shareholders. not an outside manager trying to make money. and believe me, the hedge fund managers try to make the same kind of manner -- money that other managers do. bill: jack there is obviously a lot of volatility in the stock market. we seen -- we have seen any number of crashes in the stock market over the years. we've gotten a lot of smaller investors, reeling -- real american into the market, and now they have kind of been with sob -- whipped sawed. how do you explain to investors to stay in the market even

though they are being thrown right and left? jack: the stock market is a giant distraction to the business of investing. the stock market has nothing to do with the business of investing. the stock market is a derivative of value created by corporate america, that is to say, when you buy your share of an american business and the subsequent earnings growth, that is the 100% of the market return in a long run. the speculative return sweeps up and down. just ignore it. stephanie: jack, we have to leave it there. that means the next time you join us, i need you right here on set where we have more time. jack bogle, the ceo of vanguard. "market makers" will be right back. ♪

stephanie: when we return, ernie sanders -- bernie sanders is set for a fight with hillary clinton. the senator will run for the democratic nomination. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and that the rule. stephanie: welcome back. i'm stephanie ruhle. bill: and i'm bill cohan in for -- erik schatzker. stephanie: we want to take you to matt miller at the breaking news desk for action overseas. matt: stephanie, thanks. we are starting with broader averages. the stocks 600 is down for the third straight day. if you look at greece, happens is up 3%, its best level since early march. and greece has been higher for

six of the past seven sessions. go figure. the dax, you can see it gaining one third of 1% to 11,471. take a look at currencies. the euro, straight days of gains, its longest winning -- six straight days of gains, is longest running street of the year. due in part to the weakness recently of the dollar. the euro is at a two-month high against the greenback. as far as individually members -- individual movers nokia is at its lowest level since october. st micro also having his worst day -- its worst day in three years. and rolling of scotland at a six-month low, posting a larger

quarterly loss than analysts predict it from having to set aside more money for currency probes. they are in vogue right now. stephanie: i want to talk about a woman who is invoked come hillary clinton. -- en vogue now she has a rival, bernie sanders. he is officially independent but usually votes with the democrats. sanders will be speaking on capitol hill in about 30 minutes. mark halperin is here in new york city. peter cook, let's start with you. is bernie sanders further to the left than elizabeth warren? peter: he calls himself a socialist, which is something that elizabeth warren doesn't do.

they are big supporters of raising the minimum wage breaking up the biggest thanks action on climate change -- raking up the biggest banks action on climate change. there is not a lot of daylight between them. it might push hillary clinton to the left may force her to take some positions on issues she might not otherwise want to take given the general election to come. but by and large, it proves it will not be a coronation for hillary clinton. it is a token opposition for her, which may be a plus rather than a detriment. stephanie: how big a deal is this, really? mark: it has long been expected he would run. he represents the aspirations of tens of millions in the democratic party on the left. it's not a majority. he will have to work hard to expand the knowledge to those who don't know about them but are interested.

clinton has artie shown in her brief time in the campaign -- hillary clinton has already shown in her brief time in the campaign she's very aware of the pressure on her from the left will stop this will put more on her. stephanie: does this mean there will be more? mark: there will be three or four guys that make it in. none of them will raise her kind of money, but all of them have the opportunity to threaten her. and if she stumbles, you may see a more heavyweight candidate get in who could be her. stephanie: who? mark: like joe biden. bill: isn't elizabeth warren already putting pressure on her? mark: iowa and new hampshire in particular are the venues where hillary clinton will have to fight for voters. in both those places you see a lot of liberal activists, who if

you took the names and the resumes and genders off, and say, here is what bernie sanders is saying now and here is what hillary clinton is saying now, a lot of them would prefer bernie sanders platform. stephanie: do you think we will see a debate between the two peter? peter: i do think we will see a debate. i think bernie sanders is looking forward to, but i'm not so sure hillary clinton is. bernie sanders is someone incredibly popular in his state. he won by 70% of the vote. vermont is not the nation, to be sure, but there are many in vermont who would fit in the democratic caucus in new hampshire, and might fit in well in iowa. he has been underestimated before. i think he is looking to be more than a past two hello -- a pest

to hillary clinton. bill: this is kind of a good thing, isn't it, for hillary to have a challenger. she cannot expect to be correlated, number -- coordinronated, number one -- mark: it will take some of that pressure off and allow her to be more centrist. where it be that is if they do damage to her. if they beat her, longshot, but not impossible. or if they dragged her so far to the left that she looks inauthentic and has trouble in the general election. i think on balance, she would prefer not to have any opposition. stephanie: of course she wouldn't. does bernie sanders have his own ben & jerry's flavor? mark: i believe he does. stephanie: peter, does he? peter: i cannot attest to the

actual flavor, but you drive through vermont and you see barnes in vermont with his name written aside -- alongside the side of the barn. he is a popular guy up there whether he has an ice cream labor or not. -- ice cream flavor or not. mark: do not underestimate his intelligence and his ability. he goes and talks about the power of corporations and tax codes etc. in a way that is unbridled and from the heart. she needs to do more of that. she did a good job yesterday talking the criminal justice. she's not able to do it regularly. maybe bernie sanders will inspire her to do it more. stephanie: peter cook, mark halperin, thank you. and you can see bernie sanders announcement live at noon eastern. and at 5:00 today on "with all

due respect," republican candidate senator ted cruz. ♪

stephanie: welcome back. i'm stephanie ruhle. it's time to bring you up to date on top stories. consumer spending ended the first quarter on an -- on a positive note. it rose .4%, the biggest increase since november. shoppers spent more, even though they didn't see a bump in their income. those changes were mostly due to a drop in dividend payments. economists are relying on household spending to keep growth going after a slump in exports. and why are there so many apple watches on the market? -- so few apple watches on the market? the company had to limit supply because of a defect. apple is not commenting.

meanwhile another problem has cropped up. some apple watch wearers have claimed that some of the functions have been disrupted by their tattoos. the ink is confusing the sensors on the bottom of the watch. that is not a problem i will have. and if you are going to watch the fight saturday night, head over to hooters. they will show it at about two thirds of their u.s. restaurants. each restaurant will have to pay more than $5,000 to get the fight on paid tv. hooters is counting on the live event to bring in a freespending crowd. this is a knockout. from new york to hong kong luxury home prices are through the roof. according to a report released by christie, more homes than ever were sold for $100 million or more last year. joining us now to break down their findings dan con christie's international real

estate ceo. let's break this down. $100 million is the new normal? is it that there are more priors -- more buyers in that price range? dan: the buyers at the $100 million trophy thresholds are in the billionaires club. and in 2014, the world minted more than 200 more billionaires. they have $600 billion more capital than in 2013. there's a greater ability to spend. stephanie: are there better properties than ever? we talked about one right here in new york city that is a brand-new building. six years ago, they were not buildings that high and spectacular. is that part of why it costs so much? dan: we have a $140 billion estate in east canton right now. we have a penthouse that is the most luxury development in london. it was completed in the 1920's. it is across the spectrum.

bill: you worked with peter solomon, a restructuring guy. you know almost better than anyone that this could end in tears all right? and yet here you are, ceo of christie's international. stephanie: it is not his money. he is just selling them to stop -- selling them. bill: any advice to these buyers? dan: i think of this market as fundamentally different from the rest of the market. in order to buy one of these properties you have to be in the billionaires club. stephanie: are they getting more you -- mortgages? dan: no, paying cash. these are people who will buy and hold multi-generally. stephanie: hold on. in 2005-06, maybe the apartments were not $109, but we were

saying all you need to do is hold real estate and it could not be hotter. then it fell apart. now we are back in it. what is different now? dan: two different things. $100 million is a small part of the market. the broader market there are tighter credit standards. fewer people are able to borrow. when they are, they are putting a bigger down payment. i was in the market spectrum is more fundamentally sound. the luxury market is above $1 million. what you are seeing is more cash buyers and a more significant down payment. you have more structural stability. bill: we've all seen the infamous bill ackman who is part of a consortium with the panel -- with the penthouse at 157. that is not multigenerational living that you just referenced. this is purely speculation on his part. stephanie: does he still own it?

dan: 157, my understanding is yes but he's not my client or my building. what we are seeing honestly, the client that we are dealing with, the christie's client they are buying and selling the same way they collect. entire that would buy a 140 lane dollars picasso, that buyer will -- the buyer that would buy a $140 million picasso, that buyer will buy the same price halt. stephanie: someone argue it is speculative. if you have international buyers who have a difficult time moving money because of regulations they will park money in a big expensive apartment that will never -- that they will never move into. isn't that a sign this is a bubble? if you sell -- isn't that a sign this is a bubble? isn't this risky? dan: the penthouse, for example

9000 square feet, a terrace that looks over the tower of london and the london bridge. it has amenities out of this world. stephanie: i promise, i have a passion for that apartment. bill: generally speaking though, is the real estate market getting overheated again? dan: again, i don't see the same dynamics in the real estate market that you saw back then. overall, it is a more structurally sound environment. bill: what does that mean? are prices moving up? are people bidding more than the asking price? are we seeing that fracking us that we won -- that frothiness that we once saw? dan: toronto is hot right now, although it has been hot and i move there 20 years ago. ellie and san francisco are seeing strong growth. bill: how about new york?

dan: new york is actually a stable, slow growth market. you have inventory constraints and you have what i think is a pretty sound environment. stephanie: there you go. thank you so much for joining us. christie's international real estate the io, dan -- ceo, dan conn. you know, if you need me to take out any of these luxury places, let me know. we will be back in just a moment. ♪

>> my boyfriend, erik: is back tomorrow but my love bill --

80 will see each other in vegas this week. i will not be there for the fight this weekend. bill: are you going to be there for kentucky derby? stephanie: i'm sad that it is getting overshadowed by the boxing match. i have a wedding to attend, so i will not be doing either. that will be at for "market makers." tomorrow, and very excited about my guest. you know when you go to the grocery store and you see organic, we will talk to the man who is leading for more transparent labeling not just on your vegetables, but everything you buy. the founder of stonyfield farms, gary hirschberg, is getting -- is fighting to get labels on your products. for now, bill and i will sign

off. we are going to go to lunch and hopefully eat some organic stuff. thanks for watching. ♪

matt: bloomberg television is on the markets. i am matt miller substituting

for scarlet fu. i wanted take a look at how markets are shaping up midway through the trading day. losses across the board, not big drops, but about one third of 1%. the dow jones industrial average at 17,978. the nasdaq off about 0.75% 4985. it's the fourth day in a row of drops for the nasdaq after its height of the bubble market level there. joining me for today's option inside is max brier, a senior equity derivatives trader at bml capital. crude is up more than 20% in the past month. how are you trading off of that? is it related to the move? max: it is related. a high correlation has been driven by two things, one is crude, obvious. the other is reports coming in

at better than expected expectations. that is also driving higher correlation, this sort of positive earnings effect. as we take our eye off of market earnings, and coming out of earnings the macro will be more in focus and we will look at the opec meeting as a big catalyst in early june. matt: in which direction? volatility, or a direction? max: i think euphoria likely comes out of this eight as we rely saudi arabia is not any position to make cuts will stop people hoping -- comes out of this space as we rely on saudi arabia to not make any position cuts. matt: what is your trade specifically? max: in order to put that trade in the cheapest way, you are

selling a shorter dated put in buying a longer dated put in order to capture that event specifically. this is a big trade is selling may 29, and buying the june 12 37 foot. you can do that trade for about $.35. it's a cheap way to get some exposure to ally h. -- oih. matt: fascinating. digging with oil, the shares are bouncing row between -- sticking with oil, the shares are bouncing around between losses and gains. have you seen anything interesting in this stock? max: exxon mobil is a large cap refiner, integrated name. expectation for a big earnings move was not priced into the options. the shares are mostly flat today. a really good report, but it looks like it was largely expected going into the report,

therefore not a lot of volatility. matt: that is sleepy in general. you can tell the truth on tv. max, thank you for joining us. money clip is next. ♪

pimm: welcome to "money clip" where we bring together the best stories and this news. i'm pimm fox. here's the rundown. the to-day selloff in european stocks is slowing, but investors that think it will continue climbing in value is getting louder. we will show you a personal reunion in ho chi minh city formally known as saigon. and animations, baseball, but without the fans living