so close to the holiday weekend. you are watching "market makers" at our noontime -- new time. i'm stephanie ruhle. erik: janet yellen yellen making her remarks while we are minutes away from the latest read on inflation. stephanie: across wall street alarms are sounding over liquidity in the bond markets. we are going to discuss whether these concerns are actually warranted. erik schatzker, good morning. as a mentioned earlier, it is a loyal day weekend, which means that no matter what you packing a suitcase this weekend, it won't be ready for the weather because it is always too cold this weekend. traffic no matter what time you leave is always went to be horrible. instead of having a a lot of disappointment in the next two days, enjoy the next two hours. erik: i'm doing a staycation. i'm avoiding all that. stephanie: i'm not. i'm wearing shorts freezing on the beach. i'm going to time when i leave. everyone is going to be crying and the traffic. i will have bloomberg.com to

watch. erik: time for our top stories is one of his best begin with this. german chancellor angela merkel is standing out optimism in the greek crisis. they end the night with the leaders of greece in france. greece once the remaining $8 billion in bailout funds to the void -- avoid the fall. she says there is a whole lot more to do before that can happen. >> i will have bilateral talks and have hardly spoken last night with the french president and the greek prime minister. it was a very friendly, constructive exchange, but it is clear that further work with the three institutions is necessary. erik: she was referring to the imf. it is behind greece's bailout. president obama says that the u.s. and its allies are not losing the fight against the islamic state. he says more needs to be done to help iraq. they talk to the magazine after

isis captured the city of ramadi. obama says they could use -- when the war without needing more troops to fight. >> i can say with full confidence maybe this is a connection, but i can say this with full confidence. the president would not become from old with a full scale we invasion of iraq by the united states military can that is a strategy that do not serve the long-term interest of the united states. erik: the pentagon is sending rockets to the iraq forces to fight off car bombs. stephanie: the senate may vote on the fast track trade bill. this would allow president obama to speed up passage of trade agreements like the asian trade deal that is being negotiated now. yesterday, the senate voted 62-38 to advance the bill. democrats have tried to block the legislation. they say the trade deal will cost american jobs. members of the board at j.p. morgan won't have to face

investor lawsuits and that so-called london whale case. that is the ruling from a judge in delaware. investors had claimed that jpm morgans board did not do their job when they wrote trader in london lost more than $6 billion to the bank. farm and construction equipment maker john deere is raising its profit forecast. they are predicting 2015 earnings that are better than analysts estimates. sales of the famous green checkers of slowing down. that is offset by demand for construction equipment. uber may be taking another step towards an ipo. "the wall street journal" says that the service is seeking a $1 billion credit line from large banks. companies frequently seek credit lines just before they go public. it is seen as a way to force relationships with lenders. those are your top stories. now that lyft is in new york are using it? erik: i haven't yet. stephanie: i use uber all the

time. i'm not a loyalist, but i want a car when i go downstairs. erik: i'm not sure what lyft would if it i want the rights to be cheaper and i want uber to cut commissions. i wanted to cut commission rate so drivers get more money. i'm all for it. but if that forces them to reduce prices so that drivers get less, i'm not in favor of that. stephanie: uber is a big evaluation. erik: let us look at the five things you need to watch today. at number one, it is federal reserve chair janet yellen. she is giving her outlook for the u.s. economy. she is speaking at it and event hosted by the greater providence chamber of rhode island. we know from the fed minutes that came out a couple days ago that janet yellen and her fellow

members of the fed are very concerned about the possibility of another temper tantrum. stephanie: without a doubt. she has so much she needs to focus on. everyone thought that in june and september that we would see a movie with all the bad data that does not seem to be the case. she is walking the high wire. erik: we are getting that cpi number in a few minutes. julie might be talking about it. that is something that is going to change or set the stage for what janet yellen is going to say. stephanie: that is our number two. there is a lot of data to watch today. we're going to get that april cpi number at 8:30 a.m.. in just a few moments, if you want to watch her movements and oil as we get the latest recount data at 1:00 p.m.. that is specifically what boone has said to us over the past few weeks. just shut down some of them breaks. we will see what the rate count looks like. erik: julie?

julie: we saw foot locker release its earnings. it is being acquired by athena and they are seeing more about what they're going to get. sales are down 1.5%. i know that you are all about leisure. foot locker is up 7.8%. this really reflects the trend that we have seen. sportswear has been on a tear. stephanie: i don't wear levis or jeans. i wear workout. i wear workout running around in doing stuff in jeans? i'm so tired. workout close all the time. the sad thing is that it is not exercised. erik: we are watching time warner cable and charter. this is fascinating. according to a person with knowledge of the matter, fcc chairman tom wheeler called the heads of both companies time

warner cable and charter to tell them that there is no federal ban on cable industry mergers. just because comcast cannot buy time warner cable does not mean that charter or perhaps somebody else can buy time warner cable. tom wheeler wants everybody to know this. they had an issue with the comcast deal but they don't have an issue with consolidation in general. stephanie: i think that is an important message to get out. erik: it is unprecedented though. the stuff normally does not happen. the sec chairman does not take to the phone and call them. stephanie: i like it though. getting off his perch and acting like a real got it i want to take you to number five. it has got to be greece. german chancellor angela merkel gave the country every all the country a reality check, saying greater effort is needed to unlock those bailout funds. also news just out that germany's finance minister is floating the idea that germany -- excuse me, that greece may

need a parallel currency. that would be a cluster. on the corporate front hewlett-packard posted second-quarter earnings. meg whitman's restructuring efforts seem to assuage worries over winning computer cells. what you make of this? >> the view is that this is a cost cut journaling earnings speech than something more prolific for the company. every segment across the board had weak sales growth. currency had a major impact. they are cutting costs and they continue to do so. that is having affect on the bottom line. from a cash flow perspective things are better. if you look at at the underlying performance from a growth perspective, we are not seeing it yet. there is some flashes of growth

in industry standard servers. and pc units, vertically on the laptop side. most of the large segments posted declines. that is not a good thing. currency continues to have an impact in amidst all the tron bear going to split the company and two. they are going to have charges as part of that. the bottom line is that i want to see topline growth. we do not see it yet. erik: hp is talking aboutd dissynergies. i've never heard that before. the companies will break into. they will end up spending $450 million more collectively because of the fact that they are two companies instead of one. as a result, they have overlapping cost that you see a limited when companies merge. the reverse is going to happen. they talk about the need to cut $3 billion in expenses from the company. should we have any confidence that they can get rid of it? stephanie: where do you find

three alien dollars laying around. -- $3 billion laying around? anand: you have some tremendous areas where you can take out costs. renewed focus of the split into gibson -- and to give them an opportunity to say that they want to be in certain segments and not others. i want to be in certain geographies and not in certain others. do i want to focus on unit growth or profitability? they are making all those hard decisions. he saw the china transaction yesterday, selling part of their chinese unit. that was for a lump sum in cash. that helps to pay for the breaking up. these are choices that you have to make and they are large numbers, yes. this is also a company that has billions of dollars in sales. you have to find the numbers

somehow. stephanie: are they making the hard decisions? it seems like they are slicing and dicing and restructure stuff that doesn't work. at the end of the day, what is the point? anand: that is a fantastic question. one of the things happening to large hardware companies is that the market is shifting underneath them. we have this phenomenal move to the cloud. a lot of companies are embracing the potential that. you get stuff cheaper. you get stuff nonbranded. you get stuff in scale. a lot of internet companies like uber for example uses a lot of infrastructure from the club. don't buy your own service or services. when you have that sort of movement, how does hp become relevant again? enterprise is struggling. these are very tough questions. you are absolutely right. does the split help them temporarily? absolutely.

does that answer all the questions in the long run? no. erik: you have to be delighted not to be on the south side anymore. here is why. stephanie and i have a long-running conversation with our viewers about the value or lack there of them beating estimates. hp beat estimates again last night. in fact, hp has the estimates in every quarter but one. since meg whitman became ceo back in september of 2011. stephanie: it makes it look like a superstar. erik: what has happened to the stock since then since the first army report after meg whitman? to to cover? down 57%. stephanie: what is the point of the estimates? maybe they can work at hp and make new products. you know who are shouting more than erik and i? our producers.

we will be back in two minutes. you watching "market makers" pattern in time. -- at our new time. ♪

erik: you are watching "market makers" on bloomberg television. i'm erik schatzker with my partner stephanie ruhle. time for top stories. take over in the cigarette industry is about to get the go-ahead. luber reports that reynolds american is getting antitrust approval for its takeover of lorillard. reynolds is know for camel smokes. with approval, they will offer to sell e-cigarette and it's cool brand. in washington, d.c., police have arrested a suspect overnight of the killing of four people in a mansion. the husband, wife, the son, and the housekeeper were found dead in the house overnight. they demanded $40,000 in cash.

the suspect was identified from dna left on uneven pisa crust inside of the house. police say he had worked for the victims company. the daughter of the korean airlines chairman will be released from prison in the so-called net rage case. in february, a korean court did the woman a one-year sentence. she had ordered a korean airline flight to new york after in attended surfer macadamia and nuts in a bag instead of on a play. those are your top headlines. stephanie: investors traders and hedge fund managers have been sounding the alarm over liquidity in the on market in recent months. but is there fear unfounded? let us ask andy brenner. ante, let us start credit. many people are great that we are back in 2006-2007 territory. investors are flocking and looking for yields. if volatility spikes, how are

they going to get out? andy: we are different from 2006-2007. that was a real state crisis. we are at a liquidity crisis. the high-yield humidity have access to 250 billion of capital and high-yield bonds. that number is under $40 billion today. in high-grade, you have $300 billion of positions from the dealer community. now it is down to $50 billion. stephanie: since then, we have seen the hedge fund community and real money have more assets under management specifically in credit. if you talk to any of these guys, if they need to sell $15 million of any names and high-yield, good luck. they simply can't. andy: absolutely correct. it is going to get worse before it gets better. central banks of the world have flooded the market with money. making things cheap. on the on ahead, you have cut

back when dealers can do tween the dodd-frank rules and bouncing and restricting the fed. the deal community is much smaller and secondary trading. erik: help the people out there who aren't familiar with credit and do not spend their lives in fixed income trading. understand why in your words this is a crisis. andy: you're going to have a lot more volatility. why do you think we are worried about temper tantrums? in the last two weeks, you have had large moves in germany and that is because of a lack of liquidity. you have to understand how things work. hedge funds, end-users whatever -- go to the dealer jim that he for liquidity. that dealing community used to be able to take over the other side. stephanie: we have that framework. what is going to happen? fast-forward six months. andy: when the same residence rates in september, which is the expectation right now, i think

before them that you're going to have real temper tantrums in the bond market. you're going to see it in treasuries and corporate spirit you're going to see it and widening spreads. i think it is going to affect the etf market as well. erik: the people who are affected most are those who trade the most frequently, right? andy: most people aren't trading as much as they used to. if you are a pension fund manager and you have to raise money, you're going to find it much more difficult to sell something. on the other side, when the market rolls the other way, you're going to have difficulty buying stuff. a lot of the reasons that corporate bond markets have gotten larger recently is new issues. you can go beyond on those new issues and it does not matter what sector you are in whether it is emerging markets or high yield or high-grade, liquidity is a fraction of what it used to be. when you start to get some major moves, like if everyone left like leaves say we are going to

have a huge amount of moves and people will be panicking and central banks will step in. stephanie: art the hedge funds taking the place of market makers? andy: absolutely not. stephanie: josh friedman said he was doing that. andy: when they get to absolute level. in other words, look at last week. you saw go from 215 to 35 in a matter of hours. if you want to sell 10 years at 225, you will not get a bit. stephanie: hold on. all those additional bodies that those hedge funds have a hiring -- if you look at the flood of guys have gone to the high side -- by side, are they looking at jobs? for them going to firms like canyon and marathon, what are they doing is not making markets? andy: they are absolutely not making markets. they are taking advantages in the marketplace. they are not making markets. erik: we have to leave it there.

we have a commercial break we have to get to. that is andy brennan. he is from national alliance securities. ♪

♪ stephanie: coming up this hour boys and girls, on disneyland birthday, we are taking a hard look at the money at its parks business and opportunities in china. speaking of opportunities, valley of ceo and jersey resident tells us where he is hunting for the next big pharma deal. erik: if inflation is truly accelerating, u.s. interest rates will certainly follow. in a few minutes, we will find out what crisis did in april our economics editor michael mckee is here.

you say this is going to be an energy stored. why? . michael: the annual rate of inflation may fall. perfectly gasoline in the month of april as people start driving more and the government i just for that. erik: however in april last year, energy prices were a lot higher. michael: at this point, you have to look under the hood. stephanie: pun intended. i like that. michael: inflation followed oil prices down of the past couple of months. if you strip out energy prices, after seven months, prices are finally starting to rise again. you can see that in the last two months that they have been up. that trend tells the fed that we are starting to use up slack and we are moving back towards the 2% goal. that is all they want. erik: very little inflation. michael: they want evidence we are moving in that direction. they don't say we need to be there. erik: they don't say we need to

be there, but there is a view on where we should be. as far as expectations are concerned for the fed to justify a rate hike. michael: they want wall street to recognize that. in the inflation expectation measures, if the cpi goes up and it is not what is following they're going to get that. stephanie: doesn't wall street went janet yellen to think that we are still suffering? keep that heroin pumping. michael: this is not a personal survey. this is a my money survey. if you are a bond survey, you wanted compensation. you want to see yields rise. they are not going to let personal feelings about the stock market influence their bond market investments. erik: how does the fed feel about inflation expectations as measured the wall street way through things like break evens and inflation expectations through other things like the michigan survey? michael: an interesting debate on that. most people say the surveys are

better but they watch what wall street is saying. they watch the break evens. they want to know that wall street thinks prices will behind. whenever they do and monetary policy will be reflected in crisis on wall street. erik: yes but ultimately reflected by prices of the real world, too. michael: what wall street is expecting that we have finally passed the worst of it now. we are starting to see inflation expectations rise. energy prices are starting to rise. even though it might be confusing this month, we will have strikes still lingering because all the cheap foreign goods that would be here in december are coming in now. apparel prices might have been a little weaker during the month. they have to take all that out and strip that out. in general, prices are starting to rise. stephanie: mike is talking about apparel prices. can you close your website -- laptop for a second and talk apparel? let us get a shot of what this

guy is way today. you are turning about it congratulations. i want to say thank you for that. janet yellen, you are dressed and ready for her today. michael: she is in rhode island. stephanie: you could look good in that getup. michael: a lot of people waiting on every word. we saw in the minutes this past week that there may be pushing back from june to september how firmly does she underscore that. the sheets help out will -- does he tell people to look to september and that june is off the table? it is unfortunate for traders who would like to be out to the hamptons. stephanie: poor guys. they have to work. on friday. erik: if the inflation numbers come out significantly below expectations, how much does that change the backdrop of yellen's remarks this afternoon? michael: it probably change the

mindset of some people on wall street, but she is going to set the tone. they will trade off of what she says. we are not seeing much in future markets this morning. erik: right now they are waiting for cpi, and we are about to get that number. here it is. julie hyman. julie: the month over month change is as expected, a rise of point 1%. x food and energy, it is higher, about .3%. so perhaps the trajectory that mike was just talking about, we see increases, even though they are not huge. we still seem to be on that same track. erik: there is one other number that i want to throw at michael mckee -- real average weekly

earnings of 2.3%. stephanie: what does that even mean? before you dissect the number what does it mean? michael: it is adjusted for inflation and it means we see an increase from last month. we are starting to see wage gains for people. erik: as recently as december 2013, not that long ago, it was still negative. michael: it is what the fed wants to see. prices going up because companies have to pay more for material, and labor is 70% of the cost, so you are starting to pay more for workers. erik: that is the in-demand inflation. michael: a sign that slack is being used up in the economy. slowly going in the direction they want to see. stephanie: even if this is what

the fed wants to see, how real is the rates will go up this year? michael: very real. stephanie: really? michael: they are looking for more inflation. what happens if the economy goes down -- they have no ammunition. they would like to get rates up by a couple hundred basis points , maybe 2%, so they have some ammunition should something go wrong. stephanie: that outfit is too good to waste behind the desk. you need to be walking the street. michael mckee, breaking it down. here are the top stories of the morning. greece could end up using the draw again, or some other currency in addition to the euro. that would be orderly. bloomberg news reports that german finance minister wolfgang schwartau raised the possibility of a parallel currency for greece if talks with creditors fail. the comments suggest some in

germany are preparing for a worst-case scenario in the ongoing crisis. german chancellor angela merkel said greece needs to do more to get to the next round of the bailout funds. investors in hong kong are calling for more oversight at the stock exchange there. in the space of just two days, three hong kong listed companies lost $35 billion in market value. critics say hong kong regulators are too hands-off and need to do more to prevent price manipulation. erik: apparently microsoft try to play hardball with the british government. a former aide to prime minister david cameron says the company was threatening to close plants in the u.k. because the country was promoting open source software. microsoft, for the moment, is not commenting.

oil is headed for its 10th straight weekly increase, the most since trading started in 1983. still higher prices will not keep americans off the road this memorial day weekend. 37 million people will travel 50 miles or more from home during the holidays. even with the increases gas still goes for $.94 a gallon less than it did one year ago and those are your top headlines. in the meantime, disney is all celebrations on its 60th anniversary or disneyland. -- for disneyland. there is real money behind this enterprise and that is what we are talking about next. stephanie: stay with us. you're watching "market makers" at our new time, it :00 a.m. right here on -- 8:00 a.m. right here on bloomberg tv. ♪

erik: disneyland turns 60 years old today. the global company with an annual revenue of almost $50

billion was not always like that. media networks include abc and espn and they make up the bulk 43%. parks and resorts make up one third of the revenue. jamie is here with more. they charge $100 to get into disneyland, disney world? jamie: that is right. it crossed the threshold in february. 60 years ago, you want to guess how much a ticket was? one dollar. that did not include the prices -- tickets to the rides, so you had to pay two dollars $.50 for each ride in addition and look how far it has gone. erik: disney world inflation has been 10,000%. stephanie: they can charge whatever people are willing to pay. they are charging $100 now. what does the flow look like,

more people than ever, losing gas -- guests? jamie -- ramy: they saw a record numbers. they are pulling in about $15 billion each and every year. you can see here from 2008, and then we see a stagnation during the financial crisis, but we are getting 128 million. stephanie: how do you compare that -- six flags is not kids focused. it is for teenagers. ramy: i do not have a numbers off the top of my head, that i saw them earlier, and they are blowing out of the water. that is the entire experience. the mickey mouse, "the

avengers," "star wars" intellectual property that has been coming along. the movies come to life in the parks and people are attracted. the acquisitions disney has had pixar, lucasfilm -- that has been a long-term strategy, and even for marvel, of course we saw "avengers",, they had 12 more movies and we will see that take form. stephanie: in terms of parks, they do not really have competition. if you do not go to disney where you going to go? ramy: i am from virginia. i thought kings dominion was the best place ever. when you go to disney, it just blows your mind that there is so much escapism. stephanie: luckily my kids are at school. ramy inocencio thank you so

much. erik: ramy inocencio. when we come back is chris christie really presidential material? he delivers some unpresidential remarks at a press dinner. ♪

stephanie: welcome back to "market makers." here is a look at the top stories -- inflation slowly creeping toward the federal reserve goal. consumer prices excluding food and fuel rose at the fastest pace in two years. the core cpi was up .3%. the fed has said it wants inflation increased to an annual rate of 2%. and live from my home state of new jersey, it is chris christie night. the governor of the garden state rarely centers himself in public appearances. watch out when he is behind closed doors. he had plenty of off-color

things to say about the media at a dinner hosted by reporters who cover him. governor christie: i heard that part in his speech. just get the -- expletive -- away from it. open your eyes, pay attention. stephanie: while the dinner was off the record, i was unaware that get in the f away from me could be used by someone running for president. one person taped his remarks and of course, put it online. nothing these days is truly off the record. i find this timely because one week ago we were sitting here ken langone next to us, and we put this question to ken. people from the northeast, new york/new jersey, they love chris christie's style, sweater

in-your-face way, but when you hear him off the record, is this a guy that can run for president? ken: absolutely. america needs the truth and america needs candor. we have a lot of issues that have to be dealt with in america and it is time for putting politics aside and putting an executive into the white house. erik: there is no question you get candor from chris christie. the reporters got candor from him last night things we cannot repeat on live television. however, if you read those remarks as i did first, before hearing them, they come across a lot differently than when you hear the people to whom he was directing the remarks laughing out loud. it is a different environment than you might think reading them in print. stephanie: and these are reporters from the state of new jersey who chris knows well because they travel with him

they follow him. erik: there is a hate-hate relationship. stephanie: one could also make the argument that one of the problems they have with president obama is he is unable to talk straight to his people get them at the table, and say this is what we need to do let's talk turkey. maybe there is an argument that chris christie whom may not eat as much turkey as he once did, could be the man we need. erik: what will make pharmaceuticals cheaper -- we will asked the head of a pharmaceutical company. ♪

erik: blue vaccines are a $4 billion global industry. novartis's flu vaccine -- the acquisition will create the largest -- second-largest flu vaccine company in the world. paul the ceo of csl behring is

with us. why would you have one of the flu vaccine, you are a blood product company, right? paul: we are, but we have been in the flu vaccine business since the early 1900s. erik: is the point to visit up to a point where it could stand on its old -- on its own? all: -- paul: we have to look at all the options. it could be a spin out. i think option elderly is a key to strategy for companies, so you have to keep your mind open. erik: you would not have that had you not. paul: no, we would not have had the scale. we understand flu deeply, and now we have the scale. stephanie: you want to continue

to make your focus flu. paul: it is actually the smallest part of the business. the main part is specialty products in blood. stephanie: when i think about valeant michael pearson, that would seem to be the opposite of what they want to do -- rare disease. is there enough funding, a universe of people that need that treatment? paul: we think of small populations, but there are over 400 million people with rare diseases. stephanie: could that mean anything? paul: it is not anything. you are talking typically about generic diseases, thanks transferred from one to the other, for instance, hemophilia. 20,000 or so in the celiac's in the united states and in china there are 75000 and they are untreated today. erik: i am glad stephanie

brought up valeant because i spoke to the ceo michael pearson yesterday and talked about value . here is what he had to say. michael p.: we made a commitment that until we got our leverage under four times we would not make another significant acquisition, so we are probably pausing until we get our leverage under four. erik: so he does not think that will happen until mid-2016 which means you and everyone else could breathe easy. paul: [laughter] erik: does it alarm you -- i am curious, do you worry about a trend valeant is setting with a slash and earn, get rid of rnd just focus on the stuff the company has developed very close to commercial markets or already selling and just do that -- that becomes the business model?

paul: look, because you have "market makers" it takes multiple people to make the market work. that is one strategy. our shortages different. it is about innovation. if you're not innovating in this space, your managing your exit. stephanie: "if you're not innovating, you are managing your exit." how can you afford to innovate? paul: you have to pick the right thing. stephanie: easier said than done. paul: there is a lot of waste through r&d through the years. i do not think we will see the return on investment. we launched, last year, over 22 new products or indications around the world and that is because we were able to pick things. i listened to the scientists we have in our business. it is not how much you spend, it is where you spend it.

erik: makes sense. paul, thank you. he is the ceo of csl behring. in the next hour, more with an interview of michael pearson the ceo of valeant. stephanie: i want to look at the markets with some extent calls we hear -- our markets correspondent wearing a true evening look. i like it. scarlet fu what are analysts telling us? scholar: let's put some contact scott: let's put some context -- scarlet: let's put some context. the market has not swung more than 100 points from peak to trough. yesterday -- wednesday, 77 points. tuesday, 90 points. all the way back to last friday, 57 points. the longest such streak for this year. last year around memorial day

weekend, we went through nine days with undoubted not move more than 100 points from peak to trough -- where the dow did not move more than 100 points from eight to trough. the average point swing this year was 200 points. stephanie: in the last hours viewers got to hear us slammed the table and bang on about hewlett-packard. what are analysts saying? scarlet: there are global and locations. you and packer as -- hewlett-packard -- those that make the hard drives for their computers -- the results are slightly positive according to rbc analyst and that is because it implies flat demand as opposed to a flat to down environment that analysts and investors were pricing in here because it was not worse than expected, it might be good -- might be good for investors.

stephanie: thank you, scarlet fu. she is off to hit the club. when we come back, what other companies might be ready to take the ipo plunge? ♪

ers" with erik schatzker and stephanie ruhle. erik: good morning. i'm erik schatzker. stephanie: find stephanie ruhle. a lot to cover in the next hour. erik: we'll begin with some news -- the cost of living is now rising at the fastest pace in more than two years. core cpi rose .3% last month. that is inflation level excluding the cost of fuel and food. price increases were across the board. one of the fastest rising categories is rent.

the federal reserve wants inflation rising at about 2%. stephanie: the germans are talking about the return of the drakma. wolfgang shuai peng -- the german finance minister raised the possibility if talks with greece fail. some in germany are preparing for a worst-case scenario. an eu summit in lot via failed to -- in lot the failed to produce an agreement today. angela merkel said greece needs to do more to get to the bailout funds. erik: it is ok to merge after fcc chairman tom wheeler called cable ceos to say there is no government ban on big cable deals. this came after a report that regulators are not inherently against mergers in the industry.

regulators -- companies had been expressing concern that begins cannot get done after a comcast time warner cable merger was scuttled. stephanie: bloomberg news reports reynolds american is about to win antitrust approval for its $25 billion takeover of lorillard. reynolds is best known for its camel brand. it has offered to sell its blue e-cigarettes and its kool brand. erik: hp reported quarterly profits that beat estimates by a small margin. ceo meg whitman said there were bright spots last quarter. meg: the pc market is weaker than anticipated. we are doing better in some businesses like industry standard servers, so other cash flow might be lower in pc's, we

will make that up and you can see that in earnings per share. we are holding our earnings per share guidance. erik: hp is preparing to split into two publicly shared -- traded companies. stephanie: for the first time, the clinton foundation is releasing a comprehensive list of the family's speech fees. this will be a biggie. since leaving the white house, the clintons have been paid at least 130 million dollars for speeches. i want to know how much that is her word. the foundation -- her word. the foundation received $25 million. hillary clinton stopped giving paid speeches when she became a presidential candidate. one-third were paid for by colleges. the cost of education is becoming a campaign issue. my brother, this is a "wow."

erik: we will hear about this more and more. a huge selloff is getting the attention of investors in hong kong -- three companies lost $35 billion in value in two and regulators are being asked why they did not step in. traders on the chinese mainland can buy and sell shares through an exchange link. those are some of your top headlines at this hour. stephanie: turning to the u.s. markets, shares of e-commerce software maker shopify surged. following its ipo the company surged 51% in trading. for more on what else could be on the ipo arising bloomberg -- horizon, bloomberg's leslie pater is with us -- leslie picker is with us.

i'm sorry, you should not have 51% pop. leslie: i talked to regulars and they blamed it on canada. stephanie: they have to blame it on someone. leslie: shopify is the first to be listed in canada in more than a year so the scarcity argument has canadian investors clamoring for the stock. they raised the range, priced above the range, but given the appetite in tech companies, there was no way to prevent a pop. erik: that is not unreasonable -- canadian retail investors in particular might be looking for exposure to an internet company. stephanie: it is not reasonable. here is why -- bankers are paid massive, massive fees to understand this. erik: yes, that is true, but the

after-market demand for the retail investor is not necessarily -- look, it happens here to. it is not just a canadian phenomenon. it is not something they can necessarily defined in the book building process. stephanie: fine. 51% -- i'm going to say there is room for a margin of error, and i do not know how much they were paid in fees but i am guessing it was a big, fat, giant number and that big, fat, giant number should give them the ability to price a deal in such a manner that it does not spike 51%. erik: look, we have to look at it. i am not defending anyone. as far as i'm concerned, this is not a canadian story, even though shopify is a canadian of any. look at etsy, $16, popped, and where is it, seven. -- $17.50. leslie: they have this habit.

you get this system what you have a strong demand with consumer name stocks. stephanie: that is gaming the system. that is saying let's create a small deal size so we have huge demand because once that prices and everyone is on the floor of the exchange shaking hands and kissing babies, three months later, six months later, call one-800-where is my banker? erik: given the fact that shopify was up 51% etsy was up 88%, there have to be a number of companies itching to get out the door. leslie: what is interesting about today's dynamic is you look at uber raising $55 million in the private market, 10 times the size of what shopify raised yesterday. it is clear the private markets are cheaper to raise capital and

an ipo, which is keeping companies private. companies like shopify and etsy are the brave ones doing ipo's whereas most are staying private. i would expect to see more private financing as the year goes on with the exception of fitbit and vizio. erik: why is that the case -- are the early-stage investors able to get out in private rounds now? leslie: that is a great question. there has been a confluence of late investors because they have seen these gains. stephanie: they see how sexy and cool it is. there are so many investors that say why did i not get the call on uber? they feel they are not in the silicon valley universe of people getting the call, so they are racing to these private deals thinking they are great. erik: these are not traditional startup bets. leslie: carl icahn took a stake

in lyft not traditional at all. stephanie: if you are fidelity and you know jay-z and his crew are early investors in uber, if you are fidelity and you have invested in a video that is out there for -- invested in every deal that is out there they are banging on the door, saying i want in. erik: i go back to facebook -- it was valued at $100 billion before it went public before it went -- in the private market. do you recall the last series of raising? what was that valuation at? leslie: 50. erik: and subsequent to going public, facebook drop below $50 billion in market value. stephanie: exactly. erik: the guys at the table might just be turkeys. stephanie: without a doubt, but history repeats itself and people forget that. no one think of themselves as

the bottom of the pyramid scheme. leslie: if you are a private equity fund manager, you are used to building and hedges, so they are -- building in hedges. they are protected. a lot of these guys will be the guest of the last laugh. stephanie: every once in the velvet rope nightclub, no one wants to be the last one in line and you never know if you are. erik: leslie pickard on ipo's thank you. talking health care -- there have been a flurry of deals by this guy, valeant ceo michael pearson. a bubble in health care? we will have more. ♪

erik: last hour we were talking about how hot, red hot, in fact, drug deals have been, and there is no more aggressive acquirer than michael pearson. valeant had an unsuccessful run

at allegan and bill ackman. i spoke yesterday with michael pearson on where else he is prospecting for m&a. michael p.: i think the emerging markets -- people are nervous about the emerging markets. there is been a devaluation in terms of the strong dollar. i think many companies are reluctant to go there, and we like to go where people are reluctant. our strategy is somewhat of a contrarian strategy. erik: so, i should look at markets like brazil, for example, or russia, where we have seen a tremendous amount of currency depreciation and say that is the kind of place valeant likes to go shopping? michael p.: so, we like to do deals that will create long-term value for shareholders. so, we always look for the right price, one where we feel we can earn a great return but we are also looking for markets that have great long-term growth prospects and that comes down to demographics. that comes down to whether we

believe income will rise over the next decade or two. so, we look at the fundamentals. erik: right. michael p.: we are not going to buy a company in a market -- erik: i was going to say, where are the economic fundamentals good from your point of view? michael p.: we like asia. we like the middle east and northern africa. we continue to be bullish on russia longer-term. i think mexico, colombia, chile peru -- we like those fundamentals. so, those are just a few examples. erik: does the speed with which you reached a deal, even though it was a competitive situation with endo bidding as well, say something about the way valeant will bid in the future? michael p.: we always tend to move pretty quickly. we have great interaction with our board. that is part of it. you are willing to meet virtually anytime, anywhere.

so we can get them involved early on. we have done a lot of these -- and deals. one of our core capabilities is both due diligence and making sure we can do that and are ready to do that, and also innovation very quickly for it we believe speed is one of our competitive advantages. erik: how will your strategy change, or evolve let's say, once access to capital and leverage and rise, as it inevitably will? michael p.: there is always times in the cycle where capital is more expensive but part of our strategy is to make sure -- to make sure that we always have access to capital. that is why we want to keep our leverage ratios at reasonable levels and -- so, part of our strategy is to make sure we have access to the capital markets.

erik: as you pointed out -- michael p.: i would disagree that inevitably it will all dry up. erik: well to your point there is a cycle, times at which capital is -- credit is readily available and times at which credit is much more expensive, and the price of credit, at times, determines whether a deal is feasible or not. michael p.: that is very fair. if interest rate are much, much higher, it makes the hurdle rate for doing that deal much, much higher. if we go through a period like that, a year, two years, six months -- our base business is performing extremely well and we are more than happy to continue operating our base business and we will use capital to buy back shares and if, again, we believe we are worth more --there have been periods of time what we have done that aggressively. erik: you walked away from

allergan, but that deal attracted a lot of attention because of the innovative approach that you took partnering with bill lachman and pershing square. we talked about -- bill lachman and pershing square. we talked about this before, but i am interested to know in the success -- no -- no if the success -- you did not get allegan, if it becomes a template for the future? michael p.: we have learned something about hostile takeovers using a stock, especially against a target that is not adjusted in really evaluating our business. i think it is not likely. i will never say no about anything but we are not likely to approach -- to take that same approach again. erik: so, that is michael pearson, stephanie, of valeant. he continues to be a happy acquirer, but as you may have just heard, deals will be

limited until they get the leverage ratio down sometime next year. stephanie: we need to talk about the market for a moment, don't you think? erik: huge move in euro-dollar -- take a look at this. and the last hour, the cost of the euro has collapsed. it was trading at about $1.12, and it drops to about one point 25. -- 1 point 1025. stephanie: we will hear from janet yellen today. if she echoes the sentiment that rates could be pushed higher in the next month, we are only going to see the move more dramatic. erik: hearing something similar. also, euro-dollar options expiring today at $1.10 $1.11 $1.15. stephanie: if the dollar rises sooner, it is why you watch bloomberg tv -- it is only hear

what you can get this live coverage. that is what the street is telling us. erik: we will be back in two minutes, everybody. ♪

erik: let's go back to the euro-dollar chart so that you can see the most exciting move of these pre-memorial day markets. stephanie: if you look at the timing, it started exactly at 8:30 a.m., when the cpi number which was more positive than people expected came out. ♪

erik: you are watching "market makers." i am erik schatzker with stephanie ruhle. david's are both is here.

michael reagan. we were talking about the euro-dollar move and that is what we should begin the conversation. michael r.: a reaction to the core inflation numbers we got. it reminds me of comments from james paulsen last month. a very contrary and prediction. he said the fed could be forced into a panicky exit from low rates. most people believe rates will stay low for the rest of the year, but his thinking was inflation expectations especially in the breakeven rate market -- it looks like people do expect inflation eventually and it could catch up to us all of a sudden. it is a contrary idea, but it is some thing to think about. stephanie: david, what do you think? david: the back end of the yield curve is not moving that much, so it is hard to get excited about this. erik: and you are an and excitable

guy -- an excitable guy. david: i think the inflation was already in pace. -- in place. stephanie: hold on, look at that graph -- no biggie, it is already in place? david: it is a nice move. stephanie: for a horrible move depending on how you are positioned. david: four dax like me, it is a good move. to me it feels like $1.15, the ecb was interested in stopping this move, and that was the core comments we got earlier. we got the move lower, chopped around, and the cpi gives you a chance to move back to the middle of this range. erik: how much of it has to do with the fact that it is already early afternoon in london traders are doing something other than --

stephanie: more than that erik:. erik:home --more than that. erik: how much is due to the holiday weekend here? less liquidity and there might normally be? david: it could be, but i do not think so. they are expecting this volatility. i do not think this is something like a two standard, three deviation standard move. stephanie: that is nerd talk. david: it is a nice move. stephanie: for the guys getting nervous, it is a nice move and the range of $1.05 is probably a place where the fed is unhappy. $1.15, the ecb's unhappy. we are sitting here around $1.10. everyone could be happy. stephanie: that is what makes you a fixed sigma watcher of the markets.

story number two, what do you have -- michael r.: jimmy's finance minister raises the idea of using -- germany's finance minister raises the idea of using a parallel currency for greece. stephanie: baloney. a cow could jump over the moon. david: a could happen. the greek people need to take control of the payments. politicians have no control if they cannot control finances and at some point you have to say this is unsustainable, and you basically say we're not going to pay that, we are defaulting, going into a different currency for a time and hopefully we can come back later. i like that strategy. stephanie: ok, in theory, but let's get real. erik: you need to build this parallel system to transition. david: the euro will always exist. there is no question about it,

but the question is what can the greeks do if they have no purse strings. they cannot create euros. stephanie: let's get realistic. do you think a parallel currency could be relayed -- created in some orderly fashion? david: it would be disorderly in greece, but not the rest of the world. everyone expects a cataclysmic systemic risk to come to this. people do not have exposure to greece. it is an ecb, the imf. it is not in the banks, hedge funds, anywhere. a few hedge funds bought some bonds. they will go after the non-hair-cut it bonds. frankie, there is no way these guys can pay it. we all know that. everyone is looking at who will foot the bill and i think ultimately it will be footed by the northern taxpayer. the question is when and how.

it will be painful for greece in the beginning and great for greece two years later when they get out of it. stephanie: and when will it be great for the northern european taxpayers who did not want to do this to begin with? david: they have actually been -- stephanie: screwed. david: that is a good word. erik: they have been screwed? where would the euro b without spain, portugal, greece ireland? david: the difficult worker was sending one-third of their wage to a pension fund. that pension fund bought greek bonds. the greek bond purchase funded a bunch of products -- projects from siemens, every other company increased ailing airports roads, -- building airports roads, and the structure. the greek people have some nice stuff that got yelled, at the wrong --built at the wrong price.

stephanie: what do you mean nice stuff? david: great hospitals, great airport. all of that was built with jobs created in the north of europe. they got paid a wage and created jobs in the north on a, kind of fake, debt-created infrastructure boom. you have to go back and tell european worker you have been made it -- making 50,000 euros a year and talking a way to 10,000 or 15 thousand euros for the future. that is only 5000. i'm sorry. we lost it. it is not a pleasant thing. that is why the northern europeans are petrified of telling the body politic in the north of europe that they did this. it was a terrible decision. lending the money to greece was a terrible decision. stephanie: turn the clock back. david: yeah. stephanie: what really could they have done -- what should they have done? david: it is the same as a

subprime loan, saying you can live in a house for $700 a month. stephanie:'tis not the same as a subprime loan. this is a country. it is a country that is part of the european union. 17 countries that decided years ago we are all in it to win it together. this is not a bartender in san diego living in apartment with four limits saying how about selling me a four-bedroom house on the beach. david: it is the same thing. stephanie: not the same thing. david: greeks started at a gdp per capita at 40% of german gdp per capita, skyrocketed to 65%, and now they are back at 48%. they should have never been at 65%. they should have never been given the money and creating a structure projects that got in greece during that period here they could never have afforded that. just like the guy in san diego who was a bartender that could never have afforded the cap the

house -- the house, but there was an incentive. the politicians like the trade. they got elected on that trade. stephanie: that is politicians around the globe. david: it is the nature of predatory lending. it works for 2 3, 85, seven years, and then collapses because the guy can never pay. stephanie: do we blame predatory lending, or culture today that people want to be serviced paid, treated this moment -- there are nothing with long-term goals or ideals. david: it is a combination. do you blame the lender or the person that took the loan? stephanie: the system, the overall system. david: it is a hard blame game. erik: mike, you have also been looking at chinese stocks. michael r.: chinese stocks -- whoever is to blend they are on fire. erik: except for those two or

three. michael r.: in the mainland, we talk about the shanghai composite is the main index, but the smaller compass, less affiliation with the state, up 12% this year, up 160% over the past year. 103 stocks in this index have gained more than 500% over the last year. on average they trade for 375 times reported earnings. many of them, recent ipo's. obviously, how this will all end is a question on people's mind. erik: david, how is it going to end? david: the chinese stock story is fascinating and i do not claim to be an expert. i had a debate with louis. he is a huge china bowl and after the debate i kind of thought the story had a bit of legs. i am not an em guy. i am worried about dollar strength hurting em but if

china is going to get the renminbi put into the sdr in the fall, as some people are talking about, if the renminbi goes in there there is no one in the world that really owns the stock market except chinese people. so we are all short. that is the basic story. we are all short china, and if it is a reserve currency and we are all short, that is a problem. this happened in japan in the 1970's and the 1980's. erik: when i look at all the stuff, shelves, i feel i am long china. david: what you do not own a lot in your 401(k). the flipside is the jim chanos argument -- it looks like there are great investments, easy to get in, but when you want your money out, it is a different story. we saw a lot of that we saw these stocks overnight. all of that race you very skeptical that the property rights structure is ready for prime time. it does not feel like it is to

me but if this, sort of, reserve currency story moves ahead and the imf story moves ahead, it is a big deal. the other thing, remember, they created this world bank competitor to china and they have thrown the world bank and the imf into a big tizzy over it. stephanie: larry summers talks about it all of the time. david: he does, and he is right. if we do not put them into the sdr, they will create a china imf and that will go around saving the world and china will be in control of what the political structure is that gets rewarded for doing the right thing. stephanie: we have to take a break. you're not going anywhere, david. michael reagan gillette four join us. it is time for a commercial break. we'll be back with david zervos. ♪

erik: we are watching the euro collapsing against the dollar this morning.

perhaps "collapse" is a bit of a strong world, but nonetheless let's bring up the chart so you can see what happened. stephanie: a legit drop. erik: absolutely. this started at about 8:30 a.m. when we got print on cpi. inflation coming faster than expected. stephen wondered a -- steve england there is on with us. steve, you are on earlier this morning. i know the euro came up with your conversation. are you surprised by the speed of the drop in the euro since the cpi number came out? steve, anyone that says they are not is not telling the truth. there is the substance and a signal. the substance is u.s. inflation numbers have held up at her than people expected. it was a small surprise to the upside. inflation should be tanking right now given where the dollar is and where oil is. like i said, it is holding up at her, which makes you think once the -- better, which make you think once the fact is pass, we

could see more inflation. liquidity is terrible. there are more cars headed north and south on the fdr. it is a bad time to get a surprise in the market. stephanie: david, steve is saying this is a big deal and people that say it is not are not paying attention. david: look i am excited about dollar strength. i think it is the right, longer-term trade. we went very quickly from $1.22 to one dollar -- $1.05 and we learned the u.s. economy stinks at $1.05. gdp will be negative retail is not strong, trades fall apart and the u.s. economy is not ready for a super-strong dollar. we saw the fed push back and they did. they pushed june out, talked about the dollar, talked about how it will not be a very fast and rapid tightening cycle. they lowered some of the longer-term forecasts in the last summary of longer-term projections, yada yada yada, and

they went from $1.05 up to $1.15 and then they said we need to go faster now. was that because of the summer or because the euro got too strong, too quick? now we are back at $1.10. $1.05, the fed is not like it. $1.15 the ecb does not like to -- like it. stephanie: yada yada yada -- what do you think, steve? steve: we see both imports and exports, you know, containers into the west coast being strong . abundant evidence of there are seasonal issues. you know, i think -- look, we're not out of the woods. i think it is much more likely that the u.s. economy and the u.s. export sector will prove somewhat more resilient than david thanks, but i agree with him -- dollar strength. erik: stephen, thank you very

much for getting on the phone with us. stephen englander, managing director from citigroup global markets. david zervos managing director from jeffries, has been our guest. always great to have you. david: thanks for having me. have a great weekend. stephanie: moving on, he is a french billing of the most into the spotlight this year. he is the chairman of lt's, and france period third -- -- france's third richest man. he is looking to make further acquisitions in the u.s.. for more on who this mystery man is, i want to bring in rob lafranco. tell us a bit about him. rob: pardon us. we are having a fire drill at the worst possible moment. he is adjusting guy, a dealmaker from morocco who is an engineer. think of him as john malone with a sexy accent, i guess, he has

rocketed into prominence since the ipo of his company, altice which happened about 16 months ago. nobody really knew this guy. he was a name outside of europe, had a large cable company in france, but that is it. when we first wrote about him he was worth $6 billion. he is worth about $21 billion now. erik: rob why is he all of a sudden, or seemingly all of a sudden it's that in the u.s. cable market? rob: they have been clear about this. he is a dealmaker, trying to cobble together a global footprint. the problem in europe is you come across these regulatory hurdles. you have problems with government getting in the way, a lot of monopolies in the telik medications business and they see the u.s. market is ripe for consolidation, a place that is easier to do deals and they have stated they want their revenue to be 50/50 u.s.-europe.

stephanie: besides the john malone with a sexy accent, where did all of his money come from to begin with -- what is his history? rob: he is entered a, and really private. nobody really knows. he is an engineering nerd, an advanced degree in optics and electronics, and again, he has come into his business fairly light compared to the other entre nous with in the field. -- entrepreneurs in this field. the mid-1990's. he bought a couple of small cable company's, stole them, and in 2002, created altice, which became a holding company, -- sold to them, and in 2002, created altice, which became a holding company. he is loaded debt. the company is armed for battle. he has proven to be extremist shrewd dealmaker. erik: until now he was a mystery

man. rob, you cleared it up. stephanie: i think he is still pretty mysterious, but a little less than he was a few days ago. our own rob lafranco the bill bloomberg billionaires -- bloomberg billionaires team join us from l.a.. julie hyman is taken a close look at some of the companies to us this morning. we have been focused on the euro-dollar move. let's talk individual names. julie: yesterday we saw movement in u.s. futures at the same time. let's look at what is moving. hewlett-packard -- we have been talking about it this morning and last night. second go to profit exceeding analyst estimate of the give more details on its split. you also talked about that weird dis-synergy word. the number is smaller than what the covenant had guided for according to analysts. that is helping the stock as well. deere surprised this morning

given the struggles we have seen in the u.s. farming business but being paced by its construction system, coming out with a better than expected profit forecast for the full year. at is than expected by analysts. finally, foot locker, one of the bright spots in retail that we have gone this week, first quarter earnings above analyst estimates. first quarter sales above analyst estimates at .78%. erik: julie, thank you very much. have a great weekend. that is julie hyman. stephanie, have a great weekend. stephanie: a long weekend. i am headed to long beach island. send me good traffic vibes and good weather for everybody. erik: have a good weekend, everybody. stephanie: see you tuesday. erik: see you on tuesday. ♪

julie: we are coming up to the top of the hour, and it is the end of the week, so that means it is etf friday.

there are thousands of vick's etf's but ironically none of them track the vix index. we are joined by eric balchunas the etf analyst. explain this to me -- etf's that are supposed to track the vix do not, actually. how does that work? eric: is measuring volatility on implied options and you cannot wrap that up. the etf tracks the futures and they do that well, the problem is futures do not actually track the mix that well. so something that is very popular, if you look at the daily performance of this, it will only get you about 40% of what vix does.

it just rips it to shreds. so, this is a problem. that is why the current lot does not track vix. the new company is not active shares. they have something called vix the spot, up shares and down shares. julie: how are they doing it? eric: create a contained system, take money, and put it in cash. then they will have been down shares any of shares. i know people want to short vix and go long. the one caveat that is important to know is when you are in the down shares, it is almost like you are in the position of writing insurance. everyone knows vix will spike at some point. compensate for taking on that risk, 15 basis point is transferred from the upstairs to the down shares each day, which equates to 40% year. you can go into the down shares and get paid 40% of year for providing insurance, or going to the up shares and hope vix

spikes. so far, it is doing ok. it has tracked the spot vix pretty well. it is the actual value of the shares. all of that is great and they thought of everything but the problem is you take the design and moving into the actual stock market, then you have a trading price, right? and the trading price is not close to the nab right now. julie: how do you get that back in line? eric: arbitrage, the secret ingredient. someone will need to step in and go long the futures, short the etf, and collapse it to make a difference. the company is out there educated you on how to do arbitrage. until that happens, it does not matter if it is tracking spot vix. if the price you buy that is not close to thenav, it could collapse and there's potential here. julie: quickly, is there demand for this new etf? eric: i think so.

they trade about $1 billion a day. there is so much money moving back and forth. when vix spikes, it is a big deal, literally the inverse of the s&p, some people rush to get it just like they buy insurance. so, vix i think, is very popular, but there are people griping about issues. the company is trying to solve a problem in the market at we'll see if it actually plays out in the market. julie: eric balchunas talking etf's as he does. stay tuned. bloomberg market day picks up after this short break. ♪

♪ >> erik: welcome to bloomberg

market day. >> uber wants a billion dollars and is asking the bank for a line of credit. erik: shot a five surge is in its trading debut, up 51%. what hang on to the gains or will it go the way of his more famous cousin? >> good morning, everybody, i olivia sterns. erik: i am erik schatzker. let's find out what is happening in markets. it is moving the fixed income market. it is most definitely moving -- but right now equities are flat.