s." last day of the week. i need time slot, what do you think? erik: i'm delighted. i love it. stephanie: he, too. i am stephanie ruhle. erik: i am erik schatzker. lots to tell you about. questions about the future of stock breaking. stephanie: a visit from home depot cofounder and chris christie supporter. he will be joining us at a: 30. -- at 8:30. erik: i would love to see him in a suit. stephanie: i will give you headlines and here are the news. >> avon said the company share are searching are surging. -- our surging. it was claimed that someone would buy a bond. >> an unexpected loss in four

years and they plan to slash jobs in cutting their workforce following a net loss of $1.9 billion. >> netflix said the company will talk to a chinese media group. ♪ stephanie: blues legend bb king has died. best known for his kids -- for his hits "we angel," died at his home in las vegas. he was 89 years old. erik: may he rest in peace. more headlines for you this morning in nepal. u.s. marines confirmed that the wreckage of the missing helicopter has been found. the helicopter disappeared earlier this week on an earthquake relief mission

carried six soldiers and two men from -- soldiers from nepal. the video earlier in the week shows at least one of those marines delivering food and other supplies to earthquake victims. a judge may have to decide how much many victims get from the amtrak derailment in philadelphia. federal law caps on total rail damages at 200 million dollars. eight people were killed and more than 200 injured. investigators say that in the next few days, they may get answers to the questions about why the train was speeding. >> i am very pleased to report that we have contacted the engineer, and he has agreed to be interviewed by the ntsb and we look forward to that opportunity. we will be meeting with him in the next few days. erik: the engineer told abc news that his -- van vleet -- the engineer's lawyer told abc news that he suffered from a concussion and was not using his cell phone.

stephanie: president obama promising to defend u.s. allies in the persian gulf and keep up the pressure on iran. i'd yesterday's camp david summit, iran made it much of the agenda. the president agreed to greater security cooperation with the gulf state to counter what some call iran's destabilizing behavior. >> the key purpose of the capacity of our partners is to ensure our partners can deal with iran politically, diplomatically from a position of confidence and strength. stephanie: the president also told the leaders that any deal with iran would cut off a path to a nuclear weapon. he said he could not expect gulf nations to endorse the plan yet since there is no final agreement. ceo from three of the nation's day is -- biggest airlines are going after rivals in the persian gulf. carriers like qatar airways are using government and city areas to take away passengers from american, delta, and united.

the ceos will appear together in washington this afternoon to press their points. the gulf carriers maintain they are actually increasing passenger traffic with their flights to and from the united states. in pro football, you know who i am talking about. tom brady, if you wonder if las vegas is setting a line on this matter, today is the day we find out. nfl commissioner roger goodell will hear brad -- tom brady's appeal on the deflate-gate suspension that was handed down. the appeal must be held -- must be heard within 10 days. brady was suspended for a total of cointreau games and the nfl players union urged the league to hear the appeal. those are your top headlines. erik: we want to get everybody to the straight -- to the five things you need to know. number one, we have our eye out for filings today. the deadline to file and we are all waiting to see what stocks and notable investors are holding. what positions they have changed

honor at the end of the first quarter. a little bit of historical data. this is important because if you like to follow the stock pickers and like to follow the downloads, the george soros is and the carl icahn's, you want to see. stephanie: without a doubt. all the m&a activity, we want to see who has increased positions in names like a well, verizon. remember, bill ackman had gotten so big, where is he exactly right now? excuse me, i will speak about my position after they are public and he has two. erik: number two, julie: i will be bringing it to you, empire manufacturing at a: 30, industrial production and 9:15, university of is -- university of michigan conference and none of these in and of itself will be big enough to move the market.

together, they will give us more on the picture of how the economy is doing. especially since some of the recent numbers have not been so fantastic. stephanie: i got number three. oil which is on a record run the longest rising streak since 1983. paring some of those games, trading around $59 a barrel this morning. it was sort of across the board. remember, i'd end of the year it could get to 70, -- erik: $75 even. stephanie: i spoke to dwight anderson and he is not so bullish about it. erik: long-term commodity investor. stephanie: not everyone is out there saying we are on this full run. they said they think this is going to 30. it's a pretty extraordinary time. i thought what was most interesting is when i talk to some cta guys and they say listen, we've got the algorithmic model. erik: yes, indeed. number four, applied materials.

the biggest supplier of chipmaking equipment. the forecast the third-quarter sales may beat analyst estimates. this is a good sign. stephanie, people forget how critical of old my companies like applied materials play in electronics food cycle or foodchain, if you will. the promise -- you have to have more and better chipmaking equipment. if panasonic, sony apple feel like they are bullish about electronics demands, they are going to tell the samsung of the world and the intel of the world that they need better and faster chips and intel of the world will turn around and order new agreement from private material. it is a signal of good times may be ahead is electronic business. stephanie: 20 think the last time you said panasonic? erik: we said it -- you know -- stephanie: like forever ago. erik: i will show it to you

after the show. i have an awesome panasonic camera. it's fantastic. stephanie: panasonic? do play donkey kong on your? tv number five we have got to talk pimco retreating from the equities business. more than five years after it started, it third effort to add stockpicking strategies to their lineup of bond funds. it goes that on thursday they will close the accu stock mutual funds and focus on enhanced indexing strategies. you were just in a newport beach and not the pimco proxy -- posse, but what do you think about that? erik: bill was urging them to get out of the equity business because it is so hard to build and equities business days on active management, right? markets have been going up active managers have not been reading the benchmarks to the s&p 500 until the first few months of this year but there was a long drought and we will probably go back to the times when it is better to be with

data and invest at the index when you pay single digit basis points in fees. stephanie: if it doesn't make sense for the buy side to be in equity, what do you think for this south side? the sell side has massive equity divisions where they have portfolios, research sales, execution guides. there are too many job functions and not enough commission. erik: as the computerization of the market. stephanie: ay, dios mio! erik: a three-year settlement regarding interest rates, berkeley likely will be fined -- barclay will likely be fine for a settlement but it is thought they will stop short of seeking the guilty plea which of course they are demanding from ubs. the finally come on top of a penalty and the justice department will announce it in coming days when it resolves the banks are dealing currency benchmarks. we are going to london by now to bring you perspective from kohl's anchor guy johnson.

-- pulse anger guy johnson. guy johnson: if you say you are going to be hit, you got to behave. as you say, three years ago, interest rate benchmarks for the subject we were talking about on june 2012. barclays did a deal with the doj and did not get prosecuted. they did not get find for making those benchmarks and stocks. three years later, here we are and there are bouts of potentially getting tanked again for doing something related to at the benchmarks. you say you are going to behave and you did not behave, so this is what it's about. they are going to get a final on top of the original one, but that may be as far as it goes. barclays said it will be good and maybe was not quite as good. erik: what kind of information are we getting out of our sources as to why barclays is not going to face criminal charges and ebs is by the looks of it?

guy johnson: i wish i had something smart to tell you but i don't. it's a bit of a mystery. what is it that ubs hasn't done because i looks like it's in the same position but could end up facing a prosecution on this. barclays has not done. was the story a little bit more egregious? i don't know. there are questions around in that issue as to why the authorities are going to treat barclays and ubs a differently. to be honest, i don't have more clarity to add to that. we will have to wait and see. it does look like they will be treated differently and we need to find out why. stephanie: it sounds like the authorities are under pressure to have had rules and they're looking for the lowest a group. erik: yes, maybe that's the case, too, but there is this question, and guy, i know you are familiar with this issue. the notion of institutional liability. if wrongdoing is so pervasive and you as a bank have manipulated the fx benchmark and

it manipulated some of the precious metals benchmarks and if it has been going on for a long time and it seems as though it is not limited and the bad behavior is not just limited to a bunch of road -- rogue traders, the question of institutional viability is a fair one and you have to ask if it is that pervasive, was there not some semblance of criminal conduct? stephanie: hold on, you know the difference. if there is a rogue trader putting trade tickets in his or her bottom floor and closing and locking it before he leaves as opposed to if there is a situation in some sort of chat across many different aspect classes, people are discussing prices, and levels and i'm not saying it's correct, but somehow it starts to feel commonplace. those are different things. guy johnson: that seems to be the thing here. let's face it, this is what institutions want to change. they are steady trying to change it on this side of the atlantic.

this goes to the point of, you know what? you said you were going to behave and you have -- and we have evidence you are not. here is an additional five to maybe make you go away and think about that and do it faster. erik: thank you. have a super weekend. that is guy johnson with us from london. stephanie: when we return, what are apples tim cook -- what does tim cook cap in common? they are the kind of leaders we need today. fortunately, they both are. we will have those details, next. ♪

erik:erik: coming up this hour empire manufacturing data out of a: 30. we will see how the economy is doing. breaking news. the cofounder home depot and -- will join us. we will talk about politics and equality. we will get him to respond to remarks from president obama earlier this week. stephanie: a look at the top

stories of the hour. in boston, a federal jury resumes deliberations this morning on the fate of the boston marathon bomber. jurors must decide whether he gets the death penalty or life in prison. three people died and more than 260 others were wounded in the attack. barclays will probably be fine for violating a three-year-old agreement on interest rate regime. still, people from way with the matter say the u.s. prosecutors will not seek a guilty plea. r clayton may be fined around $60 million and that all has to do with manipulating interest rates. in colombia, the government has defied the u.s. and ended aerial spraying to make cocaine. it has been going on for more than two decades. top officials have said the herbicide used to spray colombian coca probably causes

cancer. those are your top headlines this friday morning. erik: nearly six out of 10 chief financial officers in the united states say a lack of public trust has harmed the business environment. according to the dean of duke university school of business leaders are now feeling the kind of public disdain once reserved for politicians and maybe for journalists. what kind of leaders are needed in today's global environment? is this a problem bill that they can fix? bill: i hope so. we have to take responsibility, so we have to the knowledge that we need technical competence and we need people who are smart but being smart is not enough. it's necessary but not sufficient. i think there was actually a book and a movie about the smartest guys in the room. that tells you that maybe we need to move some of the dials. read to think about not just the

competence you have but your values, your character and sense of purpose. stephanie: were ethics not part of the conversation and curriculum before? phil: i think ethics of always been part of the conversation but this is something that has to embed itself in its overall culture and in the values of the institution within the business school and organizations that you move into. stephanie: is it a cultural shift or times of the sign -- signs of the time? when people went to business school in the 1990's, they loved these villains and wanted to follow them and emulate them. phil: i think that things have changed. since the financial crisis, you do see measurable effects around this disdain as you put it, for business leaders. i saw some data recently that indicates what is behind that is this belief that business leaders are fundamentally selfish. if you ask what people in the

general public believe is most important, it's your own compensation. erik: bill duke has graduated a few great business leaders. who stands out for you? who are the business leaders we should be looking to in today's economy? people like us, perhaps? tim cook? i don't know, is he the iconic leader in today's world? note: i think tim is a fabulous leader. it starts with his sense of purpose. if you think about what motivates tim, it's not his own compensation. it's that he thinks apple is a vehicle to improve lives and if you start with that he is someone who is created an organization where he understands the way they can get the most done is to bring people together and create an environment with incredible collaboration. he is authentic. stephanie: does the financial industry still have such a black-tie? when i think about duke alumni,

i think john mack, bob steele. is it that you just are not looking at the financial industry? bill: that is not the case. i think you cannot find an excellent leadership in the financial service sector, but you have to be in a position where you say i care about creating bio in the world and it's not just about my own compensation. i care about others. there is this notion of i want to support ambitions of other people in order to drive innovation and create value within the world. erik: wall street once was such a heavy recruiter duke mba's, now that they are hiring less, what are you going? where are you wanting to send your graduates? phil: i graduates are very much in demand in these technology companies so there are a lot of people moving into that sector. advisory services, and believe it or not, they are highly in demand on wall street. erik: thank you.

we will be back. ♪

erik: myanmar is open for business. that is new york city. you will find that after decades of economic isolation, the country was known as burma as rolling out the welcome mat for western companies. hilton worldwide is the first u.s. hotel chain to set up shop. i travel to myanmar to see the potential of close and also to get a sense of the challenges companies face operating on the new frontier. for almost 50 years, this was off-limits to the west. like cuba, myanmar was a closed economy.

now, the country once known as burma is opening up. >> just imagine billions of dollars taken for infrastructure. by default is a tremendous opportunity. erik: it has been only three years since the u.s. lifted sanctions. hilton moved fast. already, there is a 200 room hilton in the new capital city. a luxury beach resort on the bay of bengal and plans to release three more hiltons. >> after the sanctions were lifted, there was obviously great interest from a business perspective to come to the country and also from a larger perspective. erik: for decades, this was what the world knew of burma. a brutal repression under military dictators. now, tourism is taking off

growing by more than 400% in 10 years. the rest of the world is starting to discover myanmar's breathtaking beauty. its rich history, and of course, the food. >> look at the color. they don't smell. they are actually very -- very sweet in flavor. erik: what's missing our first world standards. after so many years of isolation, the economy can barely meet the basic needs of western companies. like hilton. >> we are trying to make five start from scratch. it's quite a challenge finding members, settling them here getting supplies to the hotel. a lot of logistic challenges. erik: myanmar once to more than double tourism in the next five years. the government has enlisted their friends and this is to help. hiltons partner is a construction typhoon that the

u.s. state department official once called an up-and-coming crony. tell me about your should teach a partner at the eating group. >> so far we have nothing but respect for each other. a lot of due diligence is it done before we choose business partners, especially before going to new countries. so far, so good. erik: myanmar's economy could quadruple in the next -- carved out of force in just one decade. the enormous city has less than one million inhabitants. judging by the barely used international airport and the deserted 20 lane highways hilton may have to wait for years to earn a return on its investment. stephanie: myanmar highway wrong way to do where's waldo. 20 lane highway empty? erik: empty. it's an anonymous city and these people have incredible ambition. they want to turn that city into

-- more than the next thailand. they are looking north to china in fact, for inspiration on what they want myanmar to be. this is where myanmar is. it's outlined in red and bordered on the north by china. on the east by thailand, on the west by bangladesh. yes, there is economic strife, yes, the country was effectively closed for half a century. now it's beginning to open up. companies like hilton, companies like bmw -- stephanie: massively ambitious, what do you think will happen? erik: i think it will take a long time for a city to be full. they build massive buildings, 20 lane highways, hardly anyone there. it kind of like a ghost town. it's kind of like a build it and they will, philosophy. a.b. they will, maybe they won't. if you go to the old capitol city, it is a thriving hub of activity.

. stephanie: where also the world is very 20-lane highway? erik: precisely. that is kind of how crazy it feels. stephanie: i was going to take you to the news. but manufacturing data is crossing the desk. let's take you to the breaking news desk where julie hyman has details. julie? jens nordvig -- julie: thanks. a reading of 3.09 that does or a rebound from the prior month when we saw a contraction number , a negative one point 19 rating. our economist at bloomberg had predicted there might be a downside in the number because of other manufacturing numbers we have gotten recently. empire manufacturing is the measure of manufacturing in the new york area. the more important number this morning will likely be industrial production which has a manufacturing component to give us a more complete picture. erik: thank you very much.

julie hyman with the latest on empire manufacturing data. 9:15, we have industrial production. at 10:00, university of michigan. stephanie: when we return, home depot cofounder is here to tell us whether chris christie will be entering the race for the white house in 2015. and if not, who will he support? we are sitting down with the one and only ken langone. ♪

stephanie: welcome back to "market makers." i'm stephanie ruhle. chris christie has yet to announce he is running for president. with new hires for a prospective campaign, christie seems to be moving more aggressively towards the white house bid. home depot cofounder ken langone is with us and is betting big on the governor for 2016. welcome.

ken: thank you for having me? stephanie: chris christie, you continue to be behind this guy 100%? ken: america needs truth and candor. we have a lot of issues that need to be dealt with. it is time to put politics aside and putting an executive into the white house. stephanie: you want a republican to win. if we continue to have more republicans? ken: if harry truman were running today, i would vote for harry truman. in my opinion, i see an alignment of what i believe has to happen in america with certain people. i don't believe we should put the american people totally dependent on government. the biggest problem i have with the entitlement programs is the damage it does to the self-respect of so many people in america. if you are not working and all you do is get a check from the government every month for doing nothing, at some point something

has got to kick in and say, what have i done? erik: why is chris christie the only guy that can fix the problem? ken: first of all can i think he has the personality to tell it how it is. the media beats up w -- beats up on him. stephanie: hurricane sandy. ken: i think the american people get it. i have tremendous faith in the greatest country on earth. we are set for the next 25 to 50 years. we have a lot of work to do. but i like christie says here is what needs to be done, here is what happens, if we do it here is what we give up and get back. what are you getting the social security for? explain that to me. you are doing what i do when you asked me a question. i ducked the question. what i'm saying is we have to be realistic about what government can and should do. the government should not be sending my wife and me a check every month. this is outrageous. stephanie: let's say we agree

and i do. don't you have to be realistic about who can get elected? can chris christie get elected? ken: help me out. last election, he runs against a woman and get 51% of the woman's vote. he got 52% of the latino vote. his vote from african americans went up threefold to 23%. stephanie: that is in the state of new jersey. ken: yes, in the state of new jersey. he connects. i had them down in florida a year ago. i had a lot of people from the midwest, southwest, and southeast. it was like bees go into honey. erik: what about the bridgegate scandal? ken: what about it? erik: is it going to rub off on the governor? ken: let me tell you what bothers me the most that i only learned two weeks ago. i thought to myself, how stupid and cruel could people be to

deliberately say it is bad to do it, there is no upside, but we are going to do it on the first if school. you have busloads of kids in a school bus. most don't have air conditioning. why? erik: we know it was ridiculous. the problem is perception is reality. if americans outside of new jersey or inside new jersey tag chris christie with the responsibility for bridgegate fair or unfair -- stephanie: are you going to tell me bridgegate is bigger than scandal after scandal? ken: i have a showstopper for you. what did he do as soon as he knew about it? he fired them? erik: i'm not talking about the facts. talking about perception. if people think he was responsible, does that doom his chances? ken: people have a perception i am a self-made man. it is the furthest thing from the truth. i'm anything but a self-made man. but they want to believe it.

you must be self-made. not at all. i had teachers, for festers, people -- professors, i worked with, stan drucker, all my life people like that. perception eventually results in reality. ok? eventually, it gets down to reality. we have an issue to deal with. we have to explain clearly. if people want to dwell on bridgegate, whatever you want to call it, ok. but the facts are the governor knew nothing about it. there was no testimony that came out. by the way, three investigations. not one said he knew. this guy, the kid that went to school with him whatever you want to call him, said i have ways to connect him. guess what? he is going to try and get a plea deal. pled guilty already.

who can i throw under the bus so i spend less time in the clinker? stephanie: perception becomes reality. political campaigns are all about perception. one concern about the election is the massive amounts of money going to get raised for this election. you are going to be a big donor. does this disappoint you at all, the amount of money getting dumped into advertisements? what a waste. ken: you tell me the rules, and does the rules i played by. change the rules and i will change my behavior. stephanie: should the rules be changed? ken: yeah, just like tax loopholes should be fixed. but it's not going to happen. understand something. those guys in washington in both houses, they are not known for courage. they are known for one thing alone. how do i get reelected? the first thought in their mind after they won the landslide election is, how do i buy the next election?

you figure a way to get term limits, and we will fix every one of those issues. erik: i want to tell you and everyone else what we will talk about after the next commercial break. he just happens to be the president. he has called out hedge fund managers for not paying their share. we will ask ken langone what he thinks about that. stephanie: stay right here. you are watching "market makers" on bloomberg television. ♪

julie: you are watching "market makers." i am julie hyman. trading above $600 in the premarket for the first time ever. the companies in talks with the chinese media company. other potential partners as well as it tries to enter the chinese market according to people familiar with the matter. though shares up about 3.7%. going in the opposite direction shares of green mountain. the company late yesterday saying its new cold brewing system will not be available in

all retail outlets next year -- until next year. that is a slower schedule than investors have been expecting. those shares taking a hit of 7%. erik: thank you very much, julie hyman. here is a look at our top headlines at this hour. president obama's trade agenda is back on track. the senate advanced the bill that would give the president authority to speed up approval of trade deals. democrats have blocked the measure tuesday but backed off once republicans agreed to allow votes on other bills designed to protect american workers. the maker of the popular mobile video game is not crushing it anymore. king digital did post a 29% increase in first quarter profit revenue -- profit. revenue fell and expected for the decline. other companies have picked up on the candy attraction and have introduced similar games. a california man is suing over saying he came up -- suing uber saying he came up with the idea and technology.

he says nine years ago, he talked with the uber c.e.o. uber is in talks that may boost its violation to $50 billion. the man who filed the lawsuit is a yoga practitioner and film maker who has sued two other tech companies. those are your top headlines. stephanie: we are back with home depot cofounder ken langone. i know you were at robin hood a few nights ago where the great people of new york raised $ 100.17 million dollars. on the same day, president obama making comments about hedge fund managers. i know you have a few thoughts on that. i want to take a look at what he had to say. president obama: the top 25 hedge fund managers made more than all the kindergarten teachers in the country. if we can't ask from society's lottery winners to just make that modest investment then

this conversation is for show. stephanie: what do you think? ken: can i put this conversation on hold until our president is back in private life? can i then see how much money he gives to charity? joe biden last year, 400 grand in income and about $2500 in charitable donations. very nice. let me tell you something. i want to be very honest. the great hedge fund guys are standouts. julian robertson, steve mandel leon cooperman, david tepper. there are many more that i can't take the time to think about. these guys are great. they have unique talent. why did somebody pay $178 million for an art painting? admittedly, the guy who made it

is dead so he's not making any more. that is more than supply and demand. in the realm of managing money these guys are picassos. these guys are fabulous. look at the records. the bigger problem i have with the president is he is engaging in something that cannot be good for america. he is engaging in the rich versus the poor. that is wrong. that is destructive. the thing that bothers me everybody knows about the gift my wife and i made to the medical center. what people don't know our the knot of days and nights elaine -- don't know are the days and nights that elaine gives to the animal center and i get to ronald mcdonald. i make more money every day. let me finish this point. i can make more money every day. for the clock is running on the time i have got left. when i spend that time on

charity, i'm not getting it back. i want to watch what this guy does. i want to see what he does in the private sector. then we will have a level playing field match about who really cares about the poor about who really feels the pain and anguish of a parent that once they get educated. stephanie: bill clinton is no longer president. clinton's global initiative is a massive organization. do you think the clintons are philanthropic people? ken: i don't think so. he said he has to make $500,000 a speech. he must have a big bill. $103 million in 10 years. my wife and i can't spend that kind of money. erik: what the president was talking about in those remarks was about closing, call it a tax loophole, carried interest for hedge fund managers. and it would apply equally to venture capitalists in some cases and also private equity

managers. stephanie: hedge fund managers are abiding by the law. erik: i don't think the brazing --the president is accusing them of breaking the law. he is accusing them of resisting what he sees as a sensible decision, loophole. lots of other people do. ken: we have a representative government, correct? let these people who think the law should be changed make sure they vote for people who will vote to change the law. erik: i think that is what he is trying to do, persuade. ken: all he is doing now with that demagoguery is saying rich people are taking advantage of you. guess what? he set the stages. these are the best times of my life. i can go to certain banks and they will pay me money to borrow money from them. go to germany. guess what? i did not set the stage. they did, he did. erik: hang on a second. he set the stage for negative interest rates? stephanie: ken has a great point. who created qe?

erik: the federal reserve. stephanie: washington. ken is trying to save these rich did not say let's screwed the system. the system was created as the valuations went up. how is that their fault? erik: i am suggesting we look back at the historical record. let's look back at the historical record. who was in office during the credit bubble? it was not president obama. ken: when did the credit bubble start? stephanie: 2006. ken: who on the floor of the house set every american has the right to own a house? stephanie: barney frank. ken: you know what? erik: the president. ken: they scolded the banks. how dare you? redlining is not done by race. is done by economics -- it is done by economics.

if you have an area with abject poverty, how can you loan people money when they cannot buy food. barney frank says you are an american -- a friend of mine -- erik: near blaming the credit bubble and barney frank. stephanie: there is an argument to be made. the banks are culpable, but they are not the only ones. barney frank says it is your birthright. it is not. ken: you just said it. there is enough going to go around for everybody. you cannot say bush -- erik: i did not say that. i said -- the point you were making is we can pin quantitative easing -- ken: i am not making that point at all. my point is more basic. they were all at the trough. dodd, all of them, hillary by

virtue. erik: of the lots of people can get behind the idea that politics -- a lot of people can get behind the idea that politics is a broken system. they bear responsibility. ken: we have a broken system. i grant you that. we are not going to fix that until we get term limits. stephanie: how can we only blame the wealthy and the financial industry for this? in 2003, is a bartender in san diego had three roommates in a small apartment and suddenly said i'm going to buy a four bedroom house the cost $1 million, he has to take some of the blame. erik: who blamed america's ills on the wealthy? ken: the president of the united states. erik: no use talking about resistant he believes -- resistance he believes the hedge fund community has to closing the loophole. stephanie: he said these are lottery winners! how is standard for a lottery winner? -- how is dan drucker a lottery

winner? ken: the way he frames the issue, a lot of people say these pigs, these horrible human beings they get richer and richer every day, do me a favor. erik: i'm going to be honest with you and say i have no idea what value the presidencies in demonizing wealthy people. i don't get that. that is my honest opinion. ken: i rest my case. erik: it depends on who he is tried to community with. if he is trying to persuade congress to close the loophole i don't think that is a great way to go about it. ken: you hit the nail on the head. how did he do it the other day? is all over america, all over the world. why not call the top 50 hedge fund guys into the white house? sandwiches and a beer, to get the state dinner. guys, let's talk reality. what do i need to do to get you to understand? your giving money away in huge

amounts. called jones, another great hedge fund manager. you are giving money away in huge amounts. let's put some skin in the game. that is how you sell people. you don't humiliate them. this is humiliation. this is saying look at what the fat cats are doing. the tragedy is the people he is talking to don't understand the mechanism. to understand because -- he spun it as if it is everything. stephanie: before we go, are you seeing that demonizing in terms of education reform? don't we have to find some middle ground? to saying the teachers unions suck, we have to find a middle ground. ken: you are going to be shocked. my current passion is income inequality. we've got to do something about it.

is one of the greatest threats to our freedom as a nation if we don't do something about it. this is a conservative republican capitalist, saying that. but i can't hire a kid at home depot that cannot read or write. do me a favor. i was on television the other day. i said to trump, let's all have skin in the game. but let's understand. i'm talking to people. i talked to larry fink. i said you own 6% of every company in america. get to these companies and let them understand how important it is we give people a living wage. my point is it is two-pronged. we need to get productive people. if you pay them $40 an hour they can produce. but a kid that looks at letters and numbers -- stephanie: we've got to leave it. erik: thank you for coming. stephanie: ken langone.

we will be back. stay here. ♪

>> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie will. erik: good morning. you are watching "market makers." try again. here we go. we have had such an exciting last hour. ken langone just joined us. passionate conversation. your back watching --you are back watching "market makers" at our new time. my name is stephanie ruhle. erik: my name is erik schatzker. that was a fantastic conversation. we will have more.

david cody, the chairman and chief executive officer of honeywell will be here. we will be talking about honeywell and the dollar, what a challenge it is for american companies, the u.s. economy and more. right now let me bring you up to speed on the news. nepal searchers have found the wreckage of a marine helicopter that disappeared earlier this week on earth quickly for mission. rescuers found three bodies near the crash. the officials state it is unlikely anyone survived. the helicopter carried six marines and two nepalese soldiers. video showed at least one of the marines delivering food and other supplies to quake victims. oil is headed towards the longest winning streak in 22 years. they are likely to close their night weekly gain in a row. they dipped slightly to today u.s. output remains close to a record high. opec is boosting supplies as they try to defend market share. speaking of oil a rickshaw

plant used for arctic oil drilling is in seattle. when it arrived, this is what happened. activists handled out to the rig as it was towed into the harbor. shell has a preliminary ok to drill but needs more permits. proponents say the wildlife will be threatened. stephanie: a transfer of leadership is on the agenda at samsung. the company announcing today the heir apparent will take over the firm from his father as the head of the two key foundations. the 73-year-old has been hospitalized since suffering a heart attack more than a year ago. he succeeds his father as chairman of samson life public welfare foundation and do foundation culture at the end of the month. net -- netflix shares are

gaining onward it may get his foot in the door in china. china's online video market is big and expected to get much bigger. >> netflix is talking with possible partners in china as it looks for ways into the country 's $5.9 billion online video market. according to bloomberg sources netflix has been speaking with western media backed by jack ma. the online t.v. market in china is inspected to triple to $14.5 billion by 2018. to take advantage of that growth, it is essential to have a local partnership due to the strict controls over licensing for online content. stephanie: a netflix spokeswoman says the company plans to be nearly global by the end of next year. in horseracing the field is set for the second leg of the triple crown. the preakness stakes in baltimore. the kentucky derby winner is a

favorite in tomorrow's race. he will face seven other horses, including the second and third place finishers from the derby. no horse has won the triple crown since 1978. i know who needs to win this weekend, erik schatzker. baltimore needs some good news. those are your top headlines of the hour. stephanie: pimco -- erik: pimco is getting out of the stockpicking business. the company announced it will close three active stock mutual funds and focus on enhanced indexing strategies. pimco also announced its chief investment officer will be leaving as part of the retreat. for more on the new strategy is mary childs. good morning. glad you could join us. bill gross wanted pimco to get out of active equities before he was forced out of the farm. what does it say that pimco has made this decision? mary: i think it says they are retrenching.

they have had record outflows for the last two years. they want to focus on what is working for them and what is profitable. they are doubling down on things they are doing. some of the products have not been attracting assets. some of the big ones have gathered less than a billion dollars in five years. that is not cutting it. the upfront costs of hiring and building infrastructure, if it is not justifying itself why keep it going? erik: is it just that pimco was too late to the equities game? there are lots of firms that have big equities businesses. blackrock for example. it is partly because blackrock and the companies it bought had been at equities for years if not decades. pimco only started to do it a few years ago and it never really got traction. mary: they tried three times. once in the 1980's, 1990's, and again in 2009.

what i think is happening, blackrock buys a lot of companies already doing these businesses. i think that has worked out well for them. the do a good job of integrating that and getting a recent system. pimco has been insistent on not acquiring anything but doing it themselves. within pimco, the first attempt they had a culture mismatch. you have this pessimistic bond few. it is a strong bond culture. he can reject the equity people they are trying to hire. stephanie: i don't think i understand. you are saying blackrock buys what kinds of systems? mary: what part does a good job of making sugar acquisitions get streamlined into the same systems -- sure that the acquisitions get streamlined into the same systems. pimco still has a cultural dissonance. stephanie: is called to the overriding issue at pimco?

when it was mohamed el-erian leaving, the way bill gross left. i thought we would be talking dollars in time -- terms of why they would leave equities. we are back to culture? >>mary: i think that is part of it. you have this culture of bonds. the relationship dynamic is very different from equities. if you are a bond guy and don't understand the equity market when you see your equity counterparts doing it differently, there is that thing where it does not add up. erik: what does it mean for pimco's fundraising prospects with larger investors? mary: it does limit it. people don't see pimco as a one-stop shop. i do think in code does have other things working like the alternatives -- i do think," does have other things working like the alternatives. that is a good idea for you if you're eligible according to the

returns they have managed to generate. they only have a couple of remaining active equities. bev a smart beta approach. i think you are right it does cap their ability to gather more assets. stephanie: i have never been to their office but both of you have. they get to work in the financial industry in newport beach, california. i would like to think i would be willing to do it with people yelling at me for 12 hours if i could live in newport beach. how back to the culture be? mary: people don't want to live in newport beach. erik: we've got to run. mary childs with the latest on pimco bailing out of active equities. stephanie: who would want 78 and sunny all year long at the beach? erik: we are taking a break. we will be back. ♪

erik: filings suggested a privacy equities firm was making a bid for avon.

avon shares shot up on the news. the filing indicated there was something suspicious, like the fact that ptg could not get its own name straight. it turned out to be a hoax. the shares were halted twice for 16 minutes. the s.e.c. is looking into the matter. dave michaels is with us from washington. david, is it just that simple? anybody can submit a press release, a statement, a letter whatever the case may be through the public filing system? david: pretty much. it is a very open door. there is a registration process to use the edgar filing system. once you submit your of registration -- your registration, you can submit filings. the s.e.c. does not verify them. to get over 4000 a day. maybe that is reasonable.

it is very possible for this to happen. stephanie: why does it not happen more often? david: it has happened. it happened in 2014. it is very possible for this to there was a guy in portland who submitted a firing for the -- filing for the system that offered by intel. the shares did not move on that filing. but it happens in other cases where people put out fake press releases indicating they intend to buy a company like american airlines or kodak. sometimes shares do move. erik: is it possible shares are moving more now because there are so many bots that scan filings and press releases for words like "bid" and "offer" and automatically start buying the shares. david: you would have to assume so. if you look at the filings, you would be suspicious this was a real offer. like you say, there are a lot of algorithm trading firms that trade automatically off of

filings. machine reading, they scan press releases or filings and trade in less than a second. erik: is the only assumption one can draw that there was an individual or group trying to manipulate the market and get ahead of avon shares and make a boatload when eventually the market corrected itself? david: that is one possible motivation. under the rules, it is prohibited to do this whether your intention is to integrate prices of shares -- manipulate prices of shares or whether you don't have enough money to block the deal. manipulation is it possible motivation. it could just be a joke, a hoax with no real intent to make money off of it. erik: what is the s.e.c. doing about it? david: we know they are reviewing the filing and looking into trying to trace back whoever this entity is ptg

trying to find out who this person is and investigate. in previous cases where people have issued fake press releases indicating they wanted to buy a company, the commission has sued them. there was a case a couple of years ago were a person said he was going to buy american airlines and kodak. the outcome was -- stephanie: we need to leave it there. dave michaels. we have breaking news. erik: industrial production coming in at lower levels than economists anticipated. economists resurveyed looked for industrial production to be unchanged. came in .3% down. last month, revised to a slightly better results. i guess it is six of one and half a dozen of the other. that is the breaking news on the economy. will be back in two minutes on "market makers." ♪

stephanie: just yesterday, i was at the commodity debate in manhattan and sat down with the founder of the hedge fund. here is her take on the slow growth in china and what it means for commodities. >> slow growth in china is definitely affecting commodity demand. in addition to having large sized crop, we are having demand, the highs. i expect it to go down more from here. as an asset class, we think there are pockets of growth. that is where you get back to the microeconomics and fundamentals. stephanie: do you think we could ever get back to where we were 10 years ago in terms of chinese demand? >> yes. it's hard to say. if you look long-term, we are growing. in another 10 or 15 years, i will say demand specific whether coffee or cocoa, i think

we will exceed the demand we had 10 years ago in some areas as you got the income ladder and also have long cycles of five years instead of corn, beans and wheat which are every year i think prices will ask steve -- exceed the height of 10 years ago. stephanie: corn crops seem to be awfully big start this year. are you surprised? >> not really. long-term, i do believe you will have to trend of. i think this could be a difficult year pricewise for corn, beans wheat. at these levels, i am not a big short. i think you have to be realistic because it is looking like the weather pattern, like we are going to get a big crop. this is a weather year. if we get a big crop, prices will trend down or not go up. it is a big if.

if we get a drought, we will get a price rise. i think this year, the corn crop looks great so far. you have to get it planted, harvested. the being crop -- bean crop looks big as well. stephanie: what about soybeans? it looks like brazil is poised to be the biggest soybean exporter overtaking the u.s. what does that mean for you? >> i think soybeans are going to be very difficult to achieve the highs of the past, even more so than corn, because of this reason. the whole market sees this and the market has been very short soybeans, which i think, and long corn, the market is stepping out. i think the huge short position in beans could make beans go up in the short-term. i think it would be a sell.

long-term, i would be more bullish corn and soybeans because of those reasons. stephanie: at the end of the year, where you see oil prices? >> may be back down around $45 or $55 range trade, similar to beans. if you look at soybeans, copper and crude oil, you know story beans and copper are used as financing instrument in china. they're cracking down on that. soybeans and copper have come down at the same time crude oil has. we believe we could go up to $65. i would not see us up to $70. but it is short covering. a lot of the players that were bullish capitulated. a lot of the sells are around $65. step out to $70 and come down to $50. stephanie: are we going to see a huge divide in terms of hedge fund performance? you think oil prices are going

down. boone pickens and standoff in miller says to look out for $100. >> it could be timing. i have had several trades were a trader next to me is short and i am long and we have both make money. it is timing and how you trade. there is always volatility in hedge fund managers and particularly commodity hedge fund managers. stephanie: there you have it. a lot more than a farmer's daughter. that woman is impressive. we will be back with more "market makers." erik: david cote from honeywell will be here. stick around. ♪

erik: we are a few minutes away from the opening bell in the u.s. joining us as the chairman and c.e.o. of one of the biggest industrial companies in the world. that would be honeywell's david cote and tracy alloway with the

three things you need to watch. what is on the top of your list? tracy: these are the regulatory filings that hedge funds are required to send to the s.e.c. and show what long positions hedge funds are taking. we will be watching those closely, as will the market. the s&p has had a good quarter. we want to see whether people are more or less bullish on stocks. stephanie: do you pay attention to these? do you want to know when they come out, who owns all of the shares? >> as you were talking, when you said hedge fund long positions, i thought it is great to know that is possible. i hope it continues. tracy: you're clearly not watching them as closely as we are. fair enough. the second thing we are looking at is what is happening in the oil markets. oil had a rally earlier this week and now is coming back down. it is below $60 a barrel. everyone is watching to see how

far that does. stephanie: how much do you pay attention to this? >> i pay a lot of attention to that. the thing i find interesting about oil forecasting is feel of us particularly go to $145. when it was $100 for most of us were protecting would stay $100 for years. keep wondering if our protection is correct. i have some predictions. if it is in the $60 range over the next few years, i did not forecast $145 and i did not forecast it coming down from $100. put it in that context. erik: people pay you to be the c.e.o. of honeywell and not an oil forecaster. >> they pay me to operate the company regardless. erik: you have a point. most forecasters get it wrong. why do we pay them for anything? >> i don't know why we pay so much attention. we all want to know the answer. there's some stuff that is not knowable.

when you look at the oil industry, 2% differences in and balances creates 40% price swings. this is extremists and. a lot of people get -- it is extremist sensitive. some people get it right and make a lot of money. tracy: that is a good point. the price goes up and people think they will start jumping capacity so the price goes down. these things feet on themselves and are difficult to predict. erik: what is number three? tracy: number three is for next week. we have a bunch of retail earnings coming out, a lot of household names like target, walmart, home depot. this is going to be big news for the market because everyone is waiting for the u.s. consumer to come back. we want to see evidence of that happening. erik: we will probably find out at 10:00 when the receive michigan comes out. stephanie: gas prices are down

but they are not in the stores. erik: you are not in the consumer business. you see what is going on. david: i pay a lot of attention to what consumers are doing. i'm shocked by how long it has taken for consumers to spend. studies would say this is the longest consumers have gone with newfound money and not spent it. i do think it is building pent-up demand. as long as oil prices stay this low i do believe it is coming. stephanie: the first time in history americans have learned their lesson and decided i'm not going to end right away. david: maybe. erik: david, you're staying with us. trace our way, thank you for the three things we need to watch. stephanie: we just heard the opening bell ring in the u.s. julie hyman is looking at some companies to be watching this morning. julie: we closed at a record

yesterday for the s&p 500. and he gained today would be a record on an intraday -- any gain today would be a record on intraday. we are watching netflix shares. premarket, they were trading above $600. it looks like they are in the regular session. though shares are at a record. the company is in talks with possible partners as it seeks entries into the online video market according to people familiar with the matter. also watching applied materials accurate forecast third-quarter sales that could beat estimates. reassuring investors after last month, it scrapped tokyo electron and the business will be strong. king digital also reported earnings and came out with a forecast that said it will not return to growth until the second half of the year. last quarter profit was unchanged and sales were lower. erik: thank you for the updates.

some stocks to keep an eye on this morning. still with us on "market makers" his david cote, chairman and c.e.o. of honeywell. i want to ask you more questions about oil. david: ird told you how good my forecasting is. erik: it is important you have an idea where we'll is going because it affects your business. explain how the price of oil changes things for honeywell. david: as a said before, the big thing for me is to be the to operate regardless of the environment. one of the first things i do is make sure nothing is such a big piece of the portfolio that it crushes me. the problem is no one thing ever makes the company either. have to be good operators everywhere. for me, oil and gas is about 10% of the company. not a huge piece. at the same time, i need to be able to operate at 10% as well as i can. stephanie: i will stocks just hit an all-time high. david: it is nice. it is has been happening a lot

as we broke $68. everything is a new one-time. it happens regularly now. the thing we do is make sure we operate all of our businesses effectively. we focus on the diversity of opportunity, which sounds like a catchphrase but it is real when you look at the businesses we are in, the geography we are in. it is like having a lot of bets in a lot of places. and something does not go well, it does not kill me. the majority are going to. in the first corner, we had a 10% earnings increase when our nearest competitor was 3%. erik: how about the dollar? david: i like dollars. [laughter] stephanie: i like dollars. erik: the dollar has been volatile. extraordinary rise. now it is dropping and continues to drop as the pound and yen

strengthened. how to you manage that? david: in general, i never did. my real trick has to be doing the best i can to match currencies in terms of cost and sales. if you go to asia we tend to have asia manufacturing design capabilities. same thing in europe and the americas. cannot predict where it will go. if you do, you will be right half the time. the same thing with oil prices. trying to predict is silly. erik: you still never do? david: i still don't. this year, i hedged the euro for the first time in 13 years. stephanie: why? david: i felt like for the first time ever, there was a crash coming. stephanie: what made you think that? david: watching what was happening in europe and what mario draghi was saying he would have to do. i believe the oil price decline,

the u.s. economy was going to do better and interest rates would rise. we hedged the euro at $1.24, which looks smart right now. i always say the thing with currency is you never know if you will be right at the end of the year. you don't know. i felt like the high probability outcome was that the dollar would strengthen. we hedged for the first time in 13 years, and it was a good call. so far. erik: the euro dropped as low as $1.05. now it is back up to $1.14. if this is where we stay, when you hedge again next year? david: i already hedged next year at $1.10. i looked very smart when it was down to $1.05. now i don't because it is $1.14. i felt investors in my operating businesses needed more certainty with this volatility.

if you have that kind of certainty, it makes it easier to make operating decisions. stephanie: you have received so much praise from investors, look how well the stock has done. had he changed the way you are approaching any businesses -- have you changed the way you are approaching any businesses? have you changed your behavior at all? david: not really. i have always tried to run the company based on a couple of perspectives. one is geared toward the long-term investor. i don't want to just make this quarter. i want to make this quarter five years from now. how do i do the seed planting and do the right thing for the long-term? the other thing i have tried to do is say if i owned this company, what would i do? when you approach it that way it causes you to ignore a lot of the jibber jabber and say, what is the right thing to do here? and stick with your convictions. for a while, you can look like a twit to investors and they may argue why you are not doing this

or that. if you stick with it, you can get somewhere. i got this a lot when i first got to honeywell. everybody wanted me to sell the specialty materials business. i kept trying to say it is bifurcated. half is good in half is not. why should i do the part that is good? why should i allow another share owner's to get the best of the business? today, it is a $10 billion business. it was $3 billion back then. stephanie: it worked out. david cote, chairman and c.e.o. of honeywell, thank you so much. erik: next, the story of an olympian and nfl player who raised more than $40 million in venture capital after his athletic career was over. we will tell you what jeremy bloom has done with the money and why failure was crucial to his success. ♪

stephanie: you are watching -- julie: you are watching "market

makers." i am julie hyman. the s&p 500 not holding on to the high on a closing basis. not at the moment, 10 minutes into the regular session. the dow slightly higher. nasdaq slightly lower. why are we not gaining more traction? we are seeing oil prices pullback for the third day in a row. we had a rally recently. there is speculation that will spur producers to resume drilling, which will exacerbate supply issues. crude oil pulling back, the s&p 500 energy index is going back counter balancing gains we are seeing today. erik: thanks very much. we are going to talk about something else now. david cote's chairman and c.e.o. of honeywell. if you were listening to david's accent, you knew he had to grow up somewhere in the patriots nation. new hampshire? david: i'm a strong pats' fan.

i like them all. there has never been a better decade to be a boston fan living in new york. i say that in a new york newsroom. stephanie: let's talk about tom brady. david: i think what they are voting -- doing to tom and the patriots is horrible. stephanie: why? david: this is totally unfair. they are quality people, the owners. stephanie: great people can do bad things sometimes. david: i don't think so. i have not seen any of the data but i know the people involved. erik: the were deflated, that has been established. david: i have not gotten into any of the data. erik: how can you say it is unfair? david: you are just reading something. how do you know it was not just cold air? entirely possible. it was cold that day.

besides, one of the colts players said they would have won if they used a bar of soap. it would have made them difference. stephanie: i might have passed my science test if i did not cheat, but i still cheated and deserve to get kicked out of school. david: i think that is a way over some provocation. they are hanging it on not providing all yourself and data. which of us would say, you suspect me of something i maintain i did not do so look at everything i have so you can confirm it for yourself. i don't think most people would do that. it is easy to say if you are in the position where you are looking at it and saying that i should do that. if all of a sudden it is you, i think you would look at it differently. stephanie: that is a good point. tom brady, american hero, leader of the patriots. he is a regular guy. may be on his cellphone he was complaining about his life maybe he was acting like a

regular american. i were him, i would not want that in "the new york post." david: whose business is it to intrude into my personal life? stephanie: now that you are in new jersey, everybody wants to know. erik: a pats' fan who feels it is unfair. ♪

stephanie: if i told you an nfl athlete and world champion skier classified his athletic career as a failure, you might say that sounds crazy. in many ways, that was the case for jeremy bloom as his competitive accomplishment were marred by injuries and setbacks. after the peaks and valleys, he successfully transitioned into the business world. now the c.e.o. of a tech company integrate.com. he chronicled his life in a new book "fueled by failure." he joins us now. let's talk about integrate. it is a venture-backed tech company.

how big is it, what do you do? germany: -- jeremy: we are about 100 people spread across four offices. founder and c.e.o.. stephanie: this sounds like a lot of compliments. -- a lot of accomplishments. jeremy: life is short and i wanted to express everything i could. my original dream was to play in the nfl and be in the olympics. i focused on that most of my life. as i transitioned out, i focused on a nonprofit that grants wishes to some of the oldest people in our country and integrate. i am enjoying it. erik: there is conventional wisdom that athletes make great business people. do you agree? jeremy: if you use the term athlete in general, i think he can define any leader as an athlete. the way i would define that is somebody who comes through an obstacle or barrier and independently or collectively figures out how to overcome that.

there is the athletic mindset of i will get over everything and a college everything. there is the victim mindset of i cannot do that and will blame other people. i think that is one of the things we look for in hiring any new employee. does this person have an athletic mindset? stephanie: how did you turn the page? how did you go from being an athlete down on his luck to starting a business? jeremy: i would not classify my athletic career as a failure. i would think of it as the opposite. stephanie: the book is called "fueled by failure," that is why i said that. germany -- jeremy: the point is your road to the desk was not able to metals -- was not paved with medals. all of us have said they -- setbacks. steve jobs was fired from apple. why did these guys not quit?

there is a secret topic for success about -- around how we deal with the inevitable setbacks in our lives. stephanie: i'm dying to ask about ncaa sports and college football. do you think these athletes should get paid? jeremy: they are already paid, just not enough. if you are a scholarship athlete, you get a stipend every month, so you are paid. that is supposed to pay for your expenses. it is not fair market value. a lot of schools until recently were not funding scholarships for the cost of attendance. you have a lot of kids that come from inner-city schools and families that don't have a lot of financial resources. stephanie: the family cannot afford to go to games. erik: how much should they be paid? jeremy: i think what is reasonable is in a market -- erik: let the market set the price? jeremy: i think student athletes

need to be part of the revenue sharing program. stephanie: what about the argument about athlete entrepreneurs? it is not real? jeremy: what do you mean? stephanie: we don't have time. we do have time. many athletes say i'm going to be a big businessman. erik: we are going to continue the conversation. jeremy will answer the question after the break. terrific athlete.

question in. many athletes are public about wanting to be a businessman next. talk to us about your business. what does it do? how big are you? now you are on the upswing. jeremy: the challenge for athletes is you go through most of your life, you sign autographs. part of the question was athletes want to describe themselves as businessmen. i think it is a bit of an identity crisis trying to clamor to something else. we have raised over $40 million of venture capital. we have comcast on our board. liberty global is the second-largest. we are a real business, high eight figures in revenue run rate. we are working with customers like dell, h p, cisco, and

symantec to help them automate customer generation which is a complex problem. we are building software to do that. stephanie: good luck. great story. jeremy bloom you want to get his new book, "fueled by failure." erik: that brings us to the end of "market makers." jeremy, thank you. julie hyman, straight to you. stephanie: we will see you next week at 8:00. julie: we will be tuning in on monday. it is the end of the week. in tf's half it -- if yes -- e.t.f.'s are passing hedge funds in size. that growth has not come easy. to look at where they are headed is bloomberg's analyst who joins us every friday to talk about e.t.f.'s. interesting we are seeing this neck in that -- neck in that race between e.t.f.'s and hedge funds. why are e.t.f. so popular?

>> they are popular for many reasons. one is liquidity. people love the idea of being a will to go in and out of markets when they please anonymously. they can come and go. they can trade china, small caps, junk bonds gold, any asset class like an equity. that is huge. e.t.f. trade about six the $5 billion a day -- $65 billion a day. they are huge and liquid. they definitely achieve that. the second reason is cost. this is on the retail side. when vanguard came in, that was a big deal. vanguard i equate to walmart. they would come in so cheap and force everyone to lower their fees. men is largely responsible for making all the e.t.f.'s so cheap. you can get a broad market e.t.f. for four or five basis

points. it is about half and half, which a lot of people don't know. when you look at the institutional side that is a massive market. they only on about 2% of their assets are e.t.f.'s. they are expected to increase usage. they go to 5%, that is another $1 trillion. on the retail side e.t.f.'s got their $3 trillion the hard way. nobody being paid to sell them. all of that is after-tax money. julie: what is the future growth trajectory? you talk about institutional investors. what else could fuel that growth? >> the money market space is interesting. there are e.t.f.'s that give more yield. overseas, i have been looking at sovereign wealth funds. they are interested in this stuff. their markets are not as liquid. as other countries start to

expand and launch i think liquidity and assets will grow in europe and asia and latin america. black rock, they all have offices there. they are bringing the u.s. structure over there. right now, the u.s. dominates about 75% of the assets. overseas is a good growth opportunity. julie: is there any reason it would not continue to grow at the pace we have been seeing? >> two things could derail it. it is complicated. there are leverage products. futures, swaps. if the wrong investor buys the wrong product, that can be a bad headline. that is one risk. i think there should be ratings on e.t.f.'s. i think the ratings is probably the biggest one. if e.t.f.'s start paying people to sell them that would bring over the sins of the mutual fund world and be bad. julie: thank you.

"bloomberg market day" starts now. ♪ julie: good morning, it's 10:00 p.m. in new york. erik: welcome to the blmedblmed, everybody. >> two days after retail sales number that raised questions

about the strength of the u.s. recovery. >> just few years after america lifted sanctions, hilton hotels is leading the way. i went there to find out more. >> and when a miller lite isn't good enough, when is it good enough? we are looking at the explosion of craft beer here in the u.s. ♪ >> oh. >> good morning i'm oliveya serns, welcome to the blmedblmed. erik: and i'm erik schatzker. that's a disappointing day to michael mckee now. michael: i want to be like you, erik when you see a bad number. the university of michigan