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tv   Bloomberg Markets  Bloomberg  May 11, 2015 2:00pm-3:01pm EDT

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market day. mark: they will not prosecute banks or the rigging of libor, the ranch mark interest rate. scarlet: vice president joe biden talking about an experience like being in a third world country at laguardia, and now there are calls to shut it down area -- shut it down. vanagh.a good afternoon. i am mark crumpton. here is scarlet fu. withet: let's start equities. we have a decline in the major indexes. take a look at the s&p 500, off by one quarter of 1%, with energy shares the leading decliners.
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losing 62 points, the nasdaq woman onto a game now, up by 1/10 of 1%. look atw, let's get a the top stories we are following this hour. it will be the first time secretary john kerry will be russian president vladimir putin in two years. they will meet in sochi, the site of the olympics. they will talk about the ukraine and iran. vladimir putin denies providing separatists in ukraine and blames the u.s. for helping to back the president there last year. citigroup's office for one investigation. they said the justice department failed to prosecute the bank after the investigation into libor. was month, deutsche bank set to pay a fine. meanwhile, they say they are
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still in talks with prosecutors over another investigation, one talks about rigging foreign currency, and they say is settlement in that case could involve a guilty plea. welcoming the progress made on the greek bailout, but they say there is more needed to resolve the differences. the finance ministers want an economic reform plan from greece before they release any more money. earlier, they downplayed expectations. >> there is no final outcome. we can just take stock of what progress has been made, and hopefully that is positive what we will hear. greece will have to pay $840 billion tomorrow to the imf, and a warning from former secretary all sin, talking about creating asset price bubbles if low keep asset prices too
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for too long. he said that is not alone a sound policy. i've clearlylson: been a fan of the bernanke monetary policy, because we delivered in the u.s. while rolling in the third quarter from 2009 on, but there is a time or you just cannot rely on monetary policy. it covers up other issues, and there is a big, ugly, messy problem. you are never going to solve it with some simple, elegant solution. scarlet: he was secretary during the financial crisis and before that worked for goldman sachs. and we are going to head over to julie hyman at the breaking news desk with breaking news. jule? fore: conditional approval the royal dutch show group to drill in the arctic on an exploratory basis. in 2015. that is this year. that will be allowed by the u.s. to drill as many as six
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exploratory wells. it will need to require permits from state and u.s. agencies, but, again, winning u.s. backing to resume exploration in the arctic sea. this is something that shell has been working on for some time. this would represent a significant victory for the company. shares anding the where they are trading in response to this, so this is the conditional approval. it sounds like they are going to have to get some permits from other agencies, but they are getting federal approval, at least in principle, to drill as many as six exploratory wells in the arctic sea. thank you so much, and she showed us those prices. coming up in the next half-hour of the bloomberg market day, the californian drought has cost millions in wildfires, and it is not even summer yet. we will take a look at the golden state and other parts of the country that are expected to face debilitating firefighting
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bills this year. op-ed calledecent for laguardia airport two we will talk to the man making that call. scarlet: and what michael cavanagh can do for a media giant. k: costing deutsche bank a record over $2 billion last month, but citibank says it is still in talks with investigators over another investigation involving rigging foreign currency markets, which could involve a guilty plea. our market makers anchor stephanie ruhle and another is with us here. reporter: it looks like they will pay about that amount in
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the upcoming settlement. there are going to be five banks, and they are expected to plead guilty, possibly even their parent company. how common is this? reporter: they were not that saw b.n.p. we paribas and another plead guilty, and that was the first of its kind for two banks to do that, and now we are probably going to see five banks plead guilty on the foreign exchange case. it was very unusual up until just about a year ago, and now it is becoming very commonplace, and now they are asking if the department of justice is going to start losing some leverage in solving these cases. scarlet: the compliance costs are extraordinary, and they are not going away. exiting his misses. deutsche bank decided they were going to get out of some businesses. not go away.
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you still have residual positions. those businesses need to be wound down, and you still have the overhead and none of the and i am glad you bring that up, because deutsche bank avoided a lot of the big will headaches after the financial crisis. it was not as badly affected, but now it is kind of paying the price. >> it seems like they have been waiting and waiting, like a volkswagen sitting in düsseldorf, and there is just garbage sitting in it and rotting away in it, and the global head of fixed income and currency has been with the firm for over 20 years, worked around the globe, one of the most senior dies in the americas, announcing today he is leaving the bank, and in his memo, samuel l jackson in "pulp fiction," say he is going to walk the earth. are you ever getting this kind of commentary from a very, very deutschenker?mark:
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bank pay $2.5 billion. and maybe nothing. >> may be nothing in this case. they did not pay today, that they paid yesterday. they paid last month, and i am sure they are paying tomorrow. all of the banks are in this horrible situation, but right now for deutsche bank, if you look at the ceo, who was running the bank before, during, and after the crisis, now they are paying these huge fines. we are seeing people leave. is it that there is a u.s. bank while deutsche bank is a foreign bank? is that an issue? >> we are fighting that is not the case. the big issue, and just to clarify, citigroup is going to have to settle with libor. they are just not going to have to have a guilty plea to this case, and, basically, the issue conduct, and how serious is the conduct, based on
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whether or not they will have to have a you'll deeply. mark: looking into the foreign exchange markets, what are they looking for? >> who is being paid late for it, millions of dollars a year. no other person at a bank was getting paid that. more than the senior executives in the bank, so as they are looking for bad conduct, sow play, i do not know anybody at citibank getting paid like that. that is a big number. -- one inthere is in deutsche bank, maybe there are at others? >> not necessarily. that person or that organization was condoning behavior that no one else was. that was not simply the hate the game, not be player, because that was the only player getting paid anywhere near that joe on planet earth. the banks basically
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participated. some of them were more agree just. with the deutsche bank case, regulators have said they did not really cooperate as much as they should have, which may have led to larger five and possibly even the guilty plea. there is a notion out there that the more you cooperate, the better deal you get. >> when you tell your kids, just tell me the truth right now, then you find it out down the road, sorry. mark: where are the other banks? what's everyone is worried. we are looking for a settlement with other banks, including royal bank of scotland, citigroup. it will be a big week. if it happens this week. they will all pay about a billion dollars give or take more here and more there, and it is a case that has been dragging on for two years. the doj acted much quicker on
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this than they did with the libor case, and everyone will be punished pretty severely. >> we have had libor cases and the mortgage-backed security and others. what is next? >> we still have a few banks that are probably going to settle on sanctions, and i think the department of justice prosecutors's are looking for the what is next. >> i heard there were some that weredwiches being overcharged by some cafeteria workers. mark: appreciate it. onrlet: still ahead bloomberg market day, have to pay for it. ♪
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biden: it is an honor to be part of bloomberg. you are supposed to laugh at that. i spent time with mike last weekend, and he is the only man who has a permit. is,let: he tells it like it and he has a humor site, because president obama, he keeps his poker face. mark: he is stoic until they get to the white house. scarlet: you are watching bloomberg market day, and let's go straight to julie hyman for a look at the markets. alie: it has been sort of lackluster session. shares have been trading in a pretty tight range, trending more negative, and we have seen
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the nasdaq hang on to gains, though they are very scant at this point, and energy shares have been dragging down the dow and the s&p, and i wanted to point out one out performer, and that is netflix, and that is because that stock is trading at an all-time high. no fundamental news seems to be driving that, but that is not terribly unusual for netflix, which is one of those so-called momentum stocks that tends to rise and fall without necessarily a lot of underlying news, and i also went to take a look at what is going on in the treasury market today. we are taking a look at the 10 year. yields are on the rise. that is the chart you are looking at. the 30 year, notable, as well, because we are seeing it breakup of 3%, so definitely yields, in general, have been trending higher, at least today breaking
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that streak we have seen as of late. scarlet: thank you so much for the update. look atd let's take a stories crossing the terminal this hour. more than 100 deaths blamed on switches, and gm setting aside money. emily's of those killed will receive payment, and so will almost 200 people injured. beent 4300 claims have made, and some of them have not been reviewed yet. scarlet: staying in the auto sector, volvo will be building a plant in north carolina. sales have fallen by about 50% in the last decade. it will employ about 4000 people and is set to open in 2018. and former president jimmy carter is back, after falling ill while on a trip to monitor the elections in iona -- guyana. those90 years old, and
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are some of the top headlines we are following at this hour. scarlet: infrastructure week kicks off. trustomes as the highway fund is likely to run out of money at some point this summer. mark: vice president biden, as we just said, was at an event on infrastructure this morning in washington. this is what he had to date. vice president biden: i understand the need to pay for what we need to do. i don't get the debate about whether or not we need to significantly invest in our infrastructure. because to be monitored it is not now. it is not now. now. not we ranked 28 in the world in transportation infrastructure. americaed states of ranks 28th in the world in terms of a modern infrastructure. and, of course, he made
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headlines when he compared la guardia to arriving at a third world country, but it actually kicked off a much-needed discussion on american infrastructure. and infrastructure spending in the united states has been stagnant between 1979 and 2014, and you and i were talking earlier, it seems every few years a discussion about whether or not there should be an infrastructure bank, but then the question is, where is the money going to come from? the moneyhere is going to come from, and then there is also talk about a tax. nobody likes that. mark: and maybe the next president will deal with it. scarlet: or to kick down the road. mark: or to kick down the road. all right, we have more bloomberg market day coming up. ♪
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as we told you earlier
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in this hour, this is breaking news, shall winning u.s. approval to resume expiration off the arctic coast, and this comes after regulators imposed safety conditions after the mishap that play to the company just three years ago. joining us on the phone is the former president of shell oil and alix steel also with us. why do you get us started. is this a good deal? alix: yes. the arctic is vitally important. it has as much as 20% of the world oil, and show has wanted to get in there for a while. they were actually kicked out back in 2012, and they spent billions over the last decade trying to get involved in this space, and now shell is allowed to drill as many as six exploratory wells. this is a big deal for the company. their production is down about 2% in the last quarter. these guys are running so hard just to stay in place. mark: sir, thank you so much for
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joining us. ?ow big of a deal is this >> i think the future in the 2040's in this century will depend on access, deal forit is a big them a consumer standpoint, and i am very happy to hear the news. oil prices have climbed. they have staged a bit of a rebound. does this give any indication about what oil prices will do in five or 10 years? alix: this is a decade-long bet. it is not what you're thinking about 13 billion dollars, and
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you get oil and weeks. this is very, very expensive, and that is a great perspective. you have any idea about how quickly they can get this out of the ground? hofmeister: i have never heard shell talk about a date that they expect to the getting oil. i never didhere, that because of the uncertainties. they are in or miss. you have to be able to successfully operate under the arctic conditions, manage the risks, and take care of the environment, while producing oil, all at the same time. that is something that you have to learn how to do it, and you cannot begin the process if you don't have the ability to actually drill the exploratory wells, so this is a very poor luminary first step.
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alix: and i should point out that doing this is sort of like drilling on the moon, and they have to comply with the endangered species rule, so this is not as a fairly a green light. hofmeister, back in 2012, show was fined, air pollution violations, a rig ran a ground. what lessons were learned from that? fmeister: well, you have to do a lot of preparation work and make sure you have all of the contingencies taken care of, and the industry is never not learning. ae industry is basically technology industry, as in any technology, as in aerospace or whether it is drilling in the subsurface of the earth, you are continuously learning what to do better, how to do things differently, and it is all part of a learning process, and so that will carry on for years and years to come.
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as alix pointed out, john, these are long-term projects. shell has spent billions over a decade in preparation for this. will a new administration and a new party in power jeopardize that? meister: not if they care about american security, national security, and the affordability of oil products in the future. any president from any party i think really has to take care of the nation's security and the consumer needs as a first priority, so it is not about shell. it is about what americans can expect from their government, as i see it, and i think the government has a responsibility to look out for the wide interest of its population, including the availability of oil but also including the security and the environmental protection of the land and the oceans that we used to produce the oil, so it is a complicated
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process, but every permit is a good step forward. hoflet: all right, john for joiningnk you us, a former president of shell. and alix steel. you are done. format, new camera angles, and it is a pleasure, and i was the you tomorrow. will see you i tomorrow, and, of course, we have much more on bloomberg market day. and a solution. shut it down. get rid of it. we will discuss. ♪
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scarlet: welcome back to it i'm scarlet fu. the starttime since
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of the ukraine crisis. john kerry will be meeting with vladimir putin in russia. he will meet with the russian president tomorrow in sochi. there is or was the site of fletcher's winter olympics. talks will focus on ukraine, iran, and syria. economicimposed sanchez on russia, accusing rebels -- what the ventures. european finance ministers say they have read progress but after today's meeting in brussels, they say there are still differences. want them toers come up with a new plan before they hand over new cash. city says the justice department will not prosecute but the city still faces a probe into the foreign market.
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could result that in a play. joe biden says fights over infrastructure are worse than they were when he came into washington three decades ago. event hosted by bloomberg government. he said when it came to highways and bridges -- the idea there is a debate in washington as to whether or not we need to invest in infrastructure is mind blowing. i have been here a long time. i understand the need for a debate in how we pay for what we need to do it i do not get the debate as to whether or not we need to significantly invest in infrastructure. the vice president called infrastructure a national issue. coming up, the bloomberg market day.
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ceo says he sees consolidation in the cable world. we will hear from his interview earlier today on market makers. and we will get the morgan stanley fund manager's take. and, pointing a new cfo. we will hear about michael in a few minutes with erik schatzker. have you been to the airport recently? nobody seems to like it. even joe biden said he thinks it is a big mess. you may remember history ashen from last year. biden: if i took you blindfolded you must think you must be in a third world country. scarlet: recently, the port of authority announced plans to update its terminal, a $4 billion project. our next guest wants to skip that completely and shut the airport down. in a recent op-ed, he said it is not only to noisy but cannot be expanded because it is essentially water locked.
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now is george, the president of the institute for rational urban mobility. with also a civil engineer broad experience, research, and analysis. you realize your op-ed and reaction, manyof defensive. surprised. it seemed logical to me that you think about things before you do them. in new york, you think the knowledge capital the world, we would puzzle over this stuff. i was pleased to there was a reaction and i am to be here today to discuss it. it location, location, location? you cannot upgrade the location. that is reason in itself to upgrade. ofrge: the location residence find it just not quite right.
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we are trading off proximity, which is important, to environmental issues like reducing noise, and also, we have a larger airport. scarlet: kennedy is congested on zone and it is hard to fit more flights on there. george: that could be debated. impacts of our airports. .t was postponed for years the local folks got to the assembly members and said, let's do the study mandated to be done. that is beginning. we are saying it is a perfect place to take a look at what our noise impacts, economic impacts, having thepact of airport remain as it is. the mayor and many others are
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looking for sites for new housing and new residential development. site.s a 640 acre scarlet: attractive coastal living. george: maybe. those kinds of places are hard to find. it is a trade-off. the op-ed piece suggested there should be a trade-off. scarlet: trade-off is one thing for him want to bring in a comment from the chairman of the global gateway alliance. here is what he had to say about the prospect of shutting laguardia down. >> no way. we are desperate in the city for airstrips and air engagement, air friendliness, air welcoming environment and cutting one third of the airport infrastructure.
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is it may be a management problem? would privatizing change anything? george: i think part of the problem is institutional. they really should be working together. sincerely 1960's, it may try to get a one -- a right to kennedy. , but it isht of ways to restore thece railroad that once was there. this would get into kennedy in 21 minutes, maybe a little less if you used the high-quality technology. kennedy is not easy to get to because we have made it that way. authority would sit down and roll up sleeves" great, we would have magnificent access.
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you're talking about shifting things around. my other question is, can the other regional airport, newburgh, could they take on the world place right now? airports.tiny think growth in air traffic will be overseas. the markets are growing much -- like mad. it will not happen at laguardia no matter how fancy the terminal building is. we have fundamental things we need to think about. we need to plan aviation in a comprehensive way. it is a three state issue. san francisco. i do not think any are my
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favorite. there are nice terminals and kennedy. terminal one. they have been upgraded and a couple of terminals have not been upgraded and that is what we should be doing, upgrading terminals in kennedy, penn station. thank you so much for your time today. the author of the op-ed in the new york times mets adjusts we should just shut down laguardia. chairman and ceo dick parsons weighing in on consolidation taken place in the cable industry. hear what he has to say. ♪
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scarlet: welcome p ryan scarlet fu. we will get a check of commodity prices. let's start off with oil prices. perhaps that is one reason why it will and other commodities are showing signs of falling. is that the easiest reason? >> across the board, you see commodities in red. fundamentally, you are looking at prices for oil and copper that had huge runs in the past week and they are retreating a little bit. todayys had a note out lumping in oil and copper saying in theory, higher prices should point to stronger growth globally. however, that might be wrong and it might not actually be the truth.
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i love -- >> i love how circular this argument can get. now there is inflation and the inflation will feed into the growth and what the central banks do next. >> specifically when it comes to oil. will that wind up hurting demand prices.y low oil you also had opec in the report. saying oil prices will not probably hit $100 on a consistent basis. $75 by 2025. not seeing the huge hump we are used to in the past. terms of copper, have we seen the global growth? they had imported a lot of copper but a lot of that is stockpiling and not necessarily user demand. if we do not see the stockpiles drawn enough, we will lose a key
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demand on the global market. scarlet: aren't we getting ahead of ourselves? >> countries there are losing money under $100 per barrel. iran really needs it to get the investment. in the next couple of .ours, you will cover oil is this precursor to come in the market? this is the start of it. we will talk greece, obviously moving the bond market. and ripple effects here in the u.s. and our bond market as well. scarlet: there you go.
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we will take you through the next hour of bloomberg markets. we want to get to a look at top stories crossing the terminal at this hour. let's start with the government trilling for oil in the arctic. regulators say they can drill new offshore efforts. $6 billion in preparation for drilling. the company wants to tap into toy $4 billion in our for oil under the frigid waters. environmentalists say the fragile ecosystem make it a mistake to jail in that market. previous operations were shut down the cousin of violations. foring arguments are set wednesday in the penalty phase of the boston marathon bombing trial. prosecutors are seeking the death penalty. three people were killed and more than 200 or will -- were wounded. wereers and relatives
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there to testify on his behalf. this is a sign of a corporate revival. rolling out several luxury jets in the next few years. bettingnt company is the aviation market is rebounding from its collapse in the recession. after of 15% last year five years of losses or modest gains. those are your top stories. cable world are heating up once again for charter is said to be taking 25 in the time warner cable bit. on market makers earlier today to give us his take -- is the poweron behind it. without that come you have nothing. they have got a terrific platform. what makes the most sense, i think with they will have to do fromy to find out shareholders be a consolidation has been going on since there
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was a cable business. it will continue. my own view is ultimately there is probably room for the two big cable companies. scarlet: he also weighed in on another company he knows well, citigroup. declined to prosecute after a probe of the legend rigging of libor. here is what parsons had to say. the big banks are still in the penalty box and they will be there for a while because, in my opinion, the regulatory regimes around the world have decided they are too big and they want to put pressure on him not to bust them up, but to get them smaller and less risky and also, as someone told me when i was the chairman of citibank, the people are still angry at the banks. he had a front row seat from early 2009 until 2014.
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speaking of banks, china is trying to get its bank to put more money to work by increasing stimulus. over the weekend, interest rates were cut for the third time in half the year. it has the desired effect in stocks, sending the shanghai composite up 3% overnight but you wonder whether the rally had legs. currently down half of 1% right now. says you have got to consider the backdrop. toy $5er who manages billion as head of morgan stanley passes emerging markets was on bloomberg surveillance this morning with tom keene. when asked, he says his rate cut boils down to one word. the economy there is growing today a possibly 45%. in gdp. are down hir: this is a last gambit.
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you throw money at it to try to make things grow. there is no shortage of skeptics out there. the big question is, how much will the cost of money matter in generating growth for an economy that is overleveraged? one area where debt is building his china's stock market. the blue line there tracks the amount of stocks ought on margin as a percentage of the total market cap. it does not register until 2010 and 3.2% this april. more portly, you can see how it is now higher than u.s. equities on loan, which is the orange line. china is likely to follow its latest, nation with more cuts in the months to come. man inup, there is a new the sea suite of comcast. we will hear about it after the break, making a big change. ♪
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company will join the earlier this summer. for a look at why he has left the private equity firm, we will talk to erik schatzker. this is surprising because the wall street guy usually stays -- he does not make a left turn. erik: it happens now and then. the chief officer google. there is precedent for this kind of thing.
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it is a mystery. carlisle spent six months recruiting mike cavanaugh at j.p. morgan to become copresident. he left but has been there for only 11 months and from what i understand having talked to a person familiar with carlyle's situation, he was not pushed. it was very much his decision. the firm was taken aback. in the words of this individual, very surprised, and it was not part of the plan. mike cavanaugh became toresident and was supposed represent the future leadership of the firm. at some point, david rubenstein and bill connolly, the three cofounders of carlisle, would step aside and at the very least , devolve management responsibility and those guys and becomete co-ceo's. that would not happen any longer. carlisle, from what we understand, has no plans to replace them.
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this is not the first time he was supposed to be and then he left. erik: he was close to jamie dimon and he was on the short list of potential successors should he ever leave. came as a surprise to jpmorgan cabinetie dimon in my would be willing to leave that behind. we know a little about the circumstances behind his departure. he has young kids. he was working brutal hours and he was traveling a lot and had responsibility for a lot of people and he was not sure the life of a bank ceo was something he wanted for his young family, --ticularly given banks off operate under a heavier weight of regulations than they used to. it is kind of a pain in the ass, frankly. relative to the way things used to be. that is the point. that is why it makes it that much more confusing to see him leaving carlyle per on the one,
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he could have made a lot more money, in theory, at carlyle, then he will it comcast. private equity firms are some of the world passes greatest vehicles. the tax is favorable. the fact that you just aren't a percentage of your client's profits makes it that much more appealing. over time, you could amass a fortune. he is a billionaire. david rubenstein and bill conaway, they are billionaires several times over. to be at that he wanted billionaire. what we understand and what this person familiar with the situation told me, is when he spoke to cavanaugh, kevin i said, i am not a small company guy. i'm a big company guy. jpmorgan has 220 house and employees and previously had even more. comcast has 130,000 employees. carlisle has a portfolio of --
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only 1700 direct employees. it is more like a partnership, if you will. maybe not the partnership it was in the early days, but it still has much more. it is not a gigantic financial institution, nevermind the fact it has $100 billion in assets. it does not operate that way and does not feel like that. that is one reason cavanaugh offered up for his departure. i have not spoken to the man. i am dying to talk to him. it is a bit of a mystery. i only got part of the picture and i want the rest. mike cavanaugh, had he wanted to come up probably could have gone at aecome the ceo significant if not major financial institution. he just wantedk to be in philadelphia. he wants to live in philadelphia. erik: that is a noteworthy point. he had been commuting from his
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job and never made a move to d.c.. philly holds more promise, more appeal. right, erik schatzker care let us know when you get a hold of mike and tell us what he says. thank you. still ahead, u.s. and cuba relations. a company taking advantage is airbnb p or we will hear from that ceo next. ♪
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scarlet: this is bloomberg market day. a top european finance official says talks have advanced.
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we will cfr they have come. a $2 billion deal fueled by the worst draft in oil prices in five years. we drill down to see what the agreement need -- means for the overall industry. ceo aboutear from a the company's's expansion plans in the country. ♪ alix: good afternoon. i'm here with scarlet fu. you can see declines all around for the s&p and the nasdaq. so much for that rally. alix: the action is in the bond market.

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