happy friday. this is "market makers" on our new time slot. erik: the gdp ridge's vision and a fee for vote is coming. let's get to our top stories. less than 30 minutes from now, we will get the first revisions on it gdp data. they will show that the u.s. economy shrank. the initial showed it grow 0.2%. now it has probably contracted 0.9%. the present of the st. louis fed does not appear concerned there and --. >> they are a little bit suspect. last week we looked through the number and we did get strong growth. we will see if something similar happens. erik: he spoke to our mike mckee and he will be with us when that number breaks. the head of fifa is expected to

retain his position. the vote maybe closer than expected. support has waned leading up to the vote in zurich. the u.s. and canada say they will vote for a another candidate. before the vote, he appealed for unity. >> it main up always be is eat but we are gathered here today to tackle the problems that have been created. we will try to solve them up. erik: isn't that surreal? it may not be enough to get him the two thirds vote he needs to win election in the first round and that would mean a runoff. stephanie: time is running out for greece. the company has -- country has not said how they will pay $1.8 million to the imf starting next week.

the positive reports from the greek government don't reflect what is actually going on it. what does that mean? the two sides not close to a deal that would unlock bailout funds. greece has claimed that a solution could be reached by sunday. greece must come up with more economic reforms before they will hand over this money. how about this story? the number two head honcho over at goldman sachs he was considered for the ceo job at emco. he was on the short list to succeed mohamed el-erian in a 2013. he is not commenting. he is considered a replacement for lloyd blankfein. it was a spectacular sight in japan. a volcano arrested, forcing the evacuation of a small island.

a cloud of dust billowed 30,000 feet high. no one was hurt. it is the second time the volcano has arrested in the last 10 months. those are your top headlines. erik: treasuries are headed for the first weekly advance for the first time in a month. the worst of the sellout may be over. take us back to the first two weeks of may. the german bond market lettuce slump. if it is over, will the bond bull market continue? that could be a problem for investors. he is expecting something entirely different than a rally. >> i think it's time to get off the train. we are entering bear market and fixed income. markets are interesting and it will be confirmed once the fed raises rates. erik: this could be a clock

question. i hope that the time comes sooner than laser. -- later. it looks like he was right in the money with those first two weeks of may and bill gross was looking as though he was right on the money as well. that traded network out so well with bill gross. if mike is positioned -- stephanie: that maybe his overall view, it doesn't mean that is how he is currently trading. the best example, he has been so negative. he has been making it so much dope. -- go -- dough. the newark post reports that intel is near a deal to buy ibm. bloomberg is not confirmed the news.

julie, you've got number three? julie: we have the figures coming out on gdp in 20 minutes. this is the second revision. the numbers will show output was slow, that is a happened last year as well at this time. it is not quite as deep a contraction. it was 2.1% last year. it was 0.9% this year. what will be the new information? it will be corporate profits which will be a factored in. corporate profits were lackluster in the first part of the year. erik: i've got to take everybody to number four. we are going back to gary cohen. in 2013, pimco is said to have considered him for the position of chief executive officer after mohammed all area and the parted. this was a time of intense

problems at pimco. bill is not there. when it have saved pimco? would it have guaranteed gary a much fatter paycheck? the gross got paid $290 million. stephanie: it would have guaranteed him a fatter paycheck that year. i'm not saying he should stay at goldman. he has been there 25 years. he started when they were 6000 people and now there are 37,000 people. he's been through the ipo and the financial crisis. erik: it's not clear if they were ever reaching out to them. gary is a logical choice. stephanie: he is a logical choice for uber or one of these

tech companies that want to go to the big stage. i don't know that anthony noto has the experience. he doesn't have experience dealing with regulation and the overall financial crisis and the media. gc does. there is so much to talk about in banking. there are a few headlines this morning. jeffries was able to have the ability take on higher risk levels. which bank is upping their number -- deutsche bank -- they are hiring. erik: it's effectively the same sides of the same coin. stephanie: they are hiring in

the asset management business. there is far less capital intensive. erik: two sides of the same coin. deutsche is bulking up where they approve of. deutsche bank can't. jpmorgan can't. stephanie: firms like jeffries are becoming more and more attractive to top talent. they don't have that overhang it. you can control your destiny more. it's not a true boutique firm where you've got to get in there and slug it out everyday. if you are working at j.p. morgan guess what? we just got nailed with $10 billion in fines. when not going to pay you. that's nothing case it jeffries yet. erik: those are the top five. we've got a lot to talk about it including fifa. they could see a change in

leadership's members vote in the presidential election. we all know by now the international governing body of soccer faces charges of corruption, money laundering bribery the list goes on. mark barton is live in zurich. what is the mood like? mark: you used the word could. i think the excitement that you guys felt ahead of your high school prom is the excitement that i am feeling ahead of the presidential vote. the problem is he for your high school prom, there was a sense of the unknown it. there was the sense that anything was possible. it's pretty unlikely that blatter is not going to win

election. it's david versus goliath. he is a four-time winner of the presidential. stephanie: should he assumed he should be prompting when in truth he should be expelled? mark: that's a great question it. this is the most scandalous week in their history. don't forget that he has not been indicted. he has never been a prosecuted. other members have. he is the head of an organization whose members are indicted nine current and former members have been indicted. the charges are astonishing, going back over to the years. he remains the favorite.

he is loved by africa. he took the first african world cup there in 2010. he is loved traditionally by asia. are they turning? the u.s. and canada are going for prince aly as well. it's not as assured as it was earlier. the prom king is waiting to be ground. erik: mark, that is terrific stuff from zurich. the vote is coming up very shortly. we expect results by noon eastern time. stephanie: they don't have a prom king. just checking. let's move on. erik: when we go with that? stephanie: i went to high school

in new jersey, public school. it's a big deal. i was my homecoming queen not even close to being prom queen. erik: what is gamestop's strategy as gaming goes digital? that is up next on "market makers."

stephanie: welcome back to "market makers echo --." there are plenty of questions about dennis hastert being charged in a hush money scheme. prosecutors say he had agreed to pay someone $3.5 million to cover up past misconduct. he broke banking rules doing it. the indictment does not say who the other party was or the nature of his misconduct. the senate will meet sunday in a

rare session. it has to do with the nsa surveillance powers which expire on monday. opponents want to stop bulk collection of phone records. the nsa has the authority to do that. uber has, with a new privacy policy. it does not change a lot. it makes it easier for customers to understand. they tell writers that they can r --iders that they can follow everything using the app. those are your top headlines for the hour. erik: gamestop is playing to win it, except in this case, the enemy is time. for now, they are winning, they just raise their earnings and shares are up in early trading.

tony from irving, texas this is what people wonder how do you stop gamestop from becoming the next radioshack or blockbuster? tony: it's a growth story for us and we are on growing the business. we are going to continue to do that. erik: i want to hear about that. i guarantee that wayne high zynga thought blockbuster was a growth story to. tony: we are changing the business model on a daily business. we want to be close to our customers. one of the best things we do is understand our customers and give them exactly what they are looking for. that is so we did in the first quarter. now what we are doing it, we are taking that and moving it into other segments like our at&t business. we are taking that skill of understanding the customer and

knowing what they want and moving it into other areas. stephanie: people need to go into gamestop anymore. the growth of apps, my kids love to go to gamestop. the more they are able to buy apps at home on their devices they won't need to go. tony: we see people move into mobile gaming. we also see when people move into mobile gaming, they become a bigger gamers and eventually they do come into gamestop. we are a large mobile publisher. our vision is going to publish 12 games this year and they have grown a 38% in the first quarter. we are moving into that business. we see that as a credit to gaining when people go on to apps and mobile gaming, we see them enjoy gaming more.

that benefits the population including the physical gaming population. erik: you want to increase non-gaming revenue to 50% of total revenue in five years. what will that be? have you reach that target? tony: you see a really good example in our technology brands. they are an extension of apple and at&t we -- where we offer their services and their products and a very high service atmosphere. one of the examples, we have doubled the store count year-over-year. we are going to add 550 stores this year as well. we are quickly growing that business. another example is collectibles and licensed merchandise something that we just rolled out. it's a very strong business. it is an $11 billion category in

the united states. we see that is another opportunity for non-gaming revenue. stephanie: you are opening a 550 stores, what is your view on the economy and the consumer? tony: there is tremendous growth taking place in a technology and specifically in the wireless category. we are talking about companies that are spending billions of dollars generating additional network capacity each and every year. we are filling that need and capacity in areas where they did not have representation. stephanie: we are not seen an increase in consumer spending. retail numbers did not look great. 550 stores that is a bullish call on where you think the economy is. tony: we see good returns on the stores. they are growing. it was strong double digits.

this is a growing trend in the u.s.. people are going to be using it more and more data and more and more devices. erik: the money to be made is on the digital side. otherwise, we would not see things like time warner cable being snapped up by charter. how does gamestop take advantage of that migration to digital? once we are in a four k world or in hd world beyond four k and alter high-speed broadband, you're not going to need to go to a retail for that. tony: we love to talk about the digital business. we have a billion dollar business. it is growing 17% in the first quarter. what we see is people love the experience of coming into the store and talking with people who understand the games and making an investment whether it be physical or in digital. erik: you make an excellent

point and we have run out of time. we are back in three minutes. ♪

erik: stephanie: we are expecting the government to say that the lousy first quarter was worse than we thought. should we believe the government's numbers? a growing number of officials say no. michael mckee has turned it out today. i am going to need a full body shot with what this man is wearing.

he just returned from visiting one fed policymaker. were you wearing anything like that? michael: this whole issue of the gdp is a big topic for the fed. it was a major discussion in their last meeting. can you trust the numbers? since they product the issue, it's been one lousy first quarter after another. it's winter and the economy sinks. why is that? the san francisco fed it put out a study that suggests that the economy is much stronger than the first quarter numbers have been telling us maybe as much as 2%. this is what he is concerned about as well. jim: it looks like the first quarter will get revised down into negative territory this year as well. i think there is substantial

seasonality. if you take the quarterly gdp numbers and you run them through a season or filter you're going to get seasonal factors that should not be there. this is supposed to be d.c.'s allies data. -- de-season allies data. we did get strong growth. we will see if something similar happens this year. michael: they want to raise rates, but they can't trust the data. unless they are sure, they are going to be sidelined. they need better data that they are getting right now. erik: he has helped -- felt for some time that there are big issues with the looseness of monetary policy he's got to be happy that quantitatively easing is over. has he feel about interest rates?

michael: he expects unemployment to be 4% next year. growth will be around 3%. stephanie: why hasn't it happened? is the fred delusional -- fed delusional? michael: they need consensus and the right data. he says if they don't move soon there will be a bubble. jim: i would like to normalize. that is what i will be arguing for and supporting as long as we don't have indications that the economy is slowing down. i would be supportive of getting started with the normalization process. we have a long, long way to go. michael: he won't say how far along. erik: does he share the view

that the neutral rates in this cycle are going to be lower than it was in previous cycles? michael: yes, but long-term no. he thinks the economy will come back and we will have to get to 3% or so. for that neutral rate, he will be closer to the top of the chart. erik: what other concerns does he race? like all: heat says qe doesn't necessarily work. the forward guidance that they put out as a policy -- stephanie: what is his ultimate goal? these are aggressive criticisms. michael: he put that these papers. he was when the first people to talk about deflation, that famous speech. in this case, it's monetary policy at the zero bottom.

he says we thought we would get faster growth from qe than we did. maybe it works in theory, but not so much in practice. stephanie: guest: we got richer rich people. erik: first quarter gdp revision is out momentarily. let's take you to julie hyman. julie: we are not seen as large a contraction. it is 7/10 of 1%. personal consumption is up 1.8%. the gdp price index is down 1/10 of 1%. those are the numbers we've got. again the original reading all this is marrying what happened last year. that contraction was a much

steeper one than the one we are seeing here. this is a smaller one than had been anticipated. erik: how are economists can read this? michael: all a lot of this was in the change in inventories and trade. stephanie: what does that mean? erik: we did not build as much inventory as we did it. michael: you are going to have to ramp up production. the trade numbers influenced by the dollar. it has gone up and then gone down again. consumer spending and business spending was not much changed. it was not so much that it sets a bad precedent going forward. erik: that is the latest read on the economy. it shrank by .7% against an initial estimate of .2% growth. stephanie: thank you for breaking it down. how about some top headlines.

209 people will decide whether step bladtter will win a fifth term as the president of fee for f -- -- fifa. now they are pushing for another candidate. david cameron called for him to step down. >> in my view, he should go. you cannot have accusations of corruption at this level and on this scale in this organization. you can't pretend the person leading it is the right person to take it forward. that cannot be the case. this is the ugly side of the beautiful game. he should go, and the sooner the better. stephanie: the ugly side of the beautiful game. he does have support in asia and africa. he may not get the two thirds he

needs to win the first round. we will expect those before noon eastern. you can catch them here on a bloomberg television. in germany, the government of greece is not dealing in reality. he says that the positive reports about bailout talks don't reflect the real situation. greece predicted there would be a deal by sunday. creditors say the two sides are not even close. greece needs money to make $120 billion in payments to the imf next month. jack wu says they need to come up with a workable plan. >> the need for greece to take serious action is something everyone agrees on. what happens in a world where they put a plan together is something we will have to see. there is a credible plan and flexibility to make it work. erik: he was speaking at the g7

in a germany. stephanie: those are your top headlines. erik: i want to know who is listening to jack lu on greece. they just don't know if his voice is being heard. stephanie: i think the voices that do matter are being delusional. when you hear from greece, yes, we are getting close. erik: that's the greeks talking. stephanie: they are speaking nonsense. erik: coming up, more presidential bids in the gop bid for the white house. can there be a clear-cut leader in this crowded of the field? ♪

erik: the would-be presidential

field is getting bigger and bigger. two more candidates announced this week. >> i am proud to stand here among you to announce and i'm running for president of the united states. >> announce i am a candidate for the republican nomination for president of the united states. erik: we are waiting for even more has to be thrown into the ring it. mark halperin is here to walk us through the field. stephanie: i am going to announce that i am writing at this point. erik: there has never been anything like it. guest: so many candidates. there is conventional wisdom that the top-tier and second-tier, the dynamics are unpredictable. erik: what does the polling show? guest: a poll showed five guys

tied at 10. erik: five guys? guest: it's a perfect metaphor for where we are. there are three other guys that could be in first at this point. when your top support is people with 10%, you think about how quickly support can move around. nothing has ever been this wide open or unpredictable. stephanie: let's go down the line and make a case. rick santorum. guest: he is not in the top five. he ran last time. he has run before, that's a big advantage. you'll learn a lot and you understand the rhythms. he has an economic message that is aimed at working class voters. erik: a guy who has been out of politics, tacky -- pataki. guest: i think those states are

going to matter big and he will focus on new hampshire and he is the oldest candidate in the race. erik: he was here last week and does not come across as an old man. guest: he is a vigorous guy. he is so much smarter than his public image would suggest. he is going to pick a spot. he is a long shot. , but i think he will take one person down. stephanie: jeb bush? guest: the voters disagree, but i think he is the front runner. he is not doing particularly well. he starts spending the money and starts meeting with more voters he does better. erik: his public announcement was weird. then carson. guest: unless you are a viewer of fox news or really like him,

i hear the most enthusiasm for bennett carson. stephanie: from who? guest: people like that he is not a politician. stephanie: in what parts of the country? there is a decent chance people don't know him. guest: he is not well known in some parts of the country. even in iowa, he does not have the broadest support, but he has passionate supporters and people like that he is not a politician. erik: he could take it to scott walker. guest: he has been focusing a lot on wisconsin and then some foreign travel. his formal announcement will, in the next couple of weeks. when he is front and center let's see how he does under that pressure. erik: great seeing you. thanks very much.

that is mark halperin. stephanie: we are going to talk about another superstar. it's going to be jay-z. we are talking about his new streaming service and how well it's doing. we will talk about that when we return. ♪

erik: it's time for top stories. the news came out a few minutes ago, the economy shrank in the first quarter. the revisions show that it shrank at .7%. one of the reasons is the harsh winter and strong dollar that hurt exports. they think the setback in growth is temporary. the founder of the drug peddling site will be sentenced to at least 20 years in prison. that is the mandatory minimum sentence for him.

prosecutors want him behind bars for a lot longer than that. for the first time in more than two decades, chevrolet will build camaros in the united states. they are moving reduction from canada to lansing michigan. the plant will add 500 jobs. those are some of the top headlines at this hour. stephanie: for someone who has been able to sell ice in the winter, jay-z is having selling his streaming service tidal. andrew joins us from a billboard. they have really only been in this business for less than eight weeks. is it premature to say it's been a disaster? eight weeks for spotify or hulu and we have said they are a success?

guest: there is the expectation that they should be free. the average person spends $60 a year on music. there is some market factor. erik: i would also add that netflix and hulu were category creators. tidal is the last man to the party. stephanie: is it? erik: there was nothing like netflix before it. stephanie: he is operated -- offering the opportunity to go to the small, curated events. they are offering content that other people are not. erik: you go from free to $20 a month? stephanie: there doesn't have to be just one game in town. guest: because people want free

content, they are pirating it. as soon as the video goes up immediately, people are copied it to youtube. they have been taking it down him easily. even jay-z's concert was streamed for free. there was no incentive to login. erik: what about this idea that artists have more control over their content on tidal than other services. stephanie: they get paid more. guest: the business model is ahead of its time. with the exception of jay-z and maybe jack white, the other 13 artist stakeholders don't own the rights. they are still tied up in record companies. until you are your own label,

they have new singles that can only live on tidal for three days until they go to other services. stephanie: there is no way did they can protect this? guest: the record labels are majority owners in every streaming service. stephanie: would you agree with eric that the experiences and the content isn't enough for the price? guest:erik: it's not whether people will pay, it's whether enough people will pay. they have to be a hi-fi subscriber. guest: with the high fidelity auto market becoming more mainstream, there is a little bit of a niche there. will that drive 15 million subscribers? erik: i want to know what apple

is doing with beats. what kind of a threat do they pose not only to tidal but everybody else. guest: apple has incredible marketing spend and brand power. when they launch a new product they go big. they spend $100 million that first month. title spent -- tidal spent maybe $10 million. erik: could it exist and not be a threat to spotify in terms of content? stephanie: why can't it be a failure and just be a niche player? guest: when you give equity to 16 artists, you don't ask them to put in capital. stephanie: isn't that the way of

celebrity now? on a business but with no money in it. guest: you can buy a company for $56 million, which is affordable in the present scheme. beats got sold for $3 billion. stephanie: thank you for joining us. andrew have is from billboard. you can read about this in business week. we have some breaking news. we're not going to share that. we are going to take a break. when we return -- in a what is mark i'm just going to hand it off to eric. we are going to take you behind the scenes in the fight for one of new york's most iconic spots the four seasons. it is a favorite of the most powerful, located.

it is also a designated landmark. the owner wants to renovate and that's where the fight comes in. the preservation commission says no, hands-off. caught in the middle is the restaurants owner who leases the space. we sat down with the co-owner. i asked him if we are seeing the end of an era in terms of the four seasons. guest: our landlord does not want to renew our lease and it will expire july 31, 2006 teen. that is the question you have to ask them. we cannot read his mind. stephanie: what is your goal? guest: we are looking forward to working with our landlord to make this restaurant shine like it did in 1959 and first open. stephanie: what are your

renovation restrictions? it would be due for an upgrade. guest: you can change the air-conditioning and heating systems. everything else has got to say the same. stephanie: is a good thing or bad thing that it's a landmark? guest: the restaurant first opened in 1959. it is exactly the same. this is the only addition that was added on. we have this incredible chain which is exactly the same. stephanie: how long does it take to clean this? guest: we have no idea how much time or money. this is the grill room. stephanie: this is where the

power elites set? my favorite seat is in that room. i used to really enjoy this. guest: this is one of the things that is no longer here. the landlord did not like it. we removed it. i believe that it really belongs in that space. stephanie: maybe it will be back. guest: i don't know about that. this is our wine cellar. as you can see, it has been here since 1959. stephanie: this is where i like to sit. from 1959 until today, walk me through this room. guest: the artwork has been added on in six months.

it looks very beautiful on this occasion. as you can see, there is not a more beautiful place in new york city if this moment. i think this is the most beautiful room in new york. it's spectacular. stephanie: what is so special about the fountain? guest: i think it's magic. if you would remove the waters you could hear every conversation. since we have doubling of water in the pool, you can only hear your self. that is the beautiful -- beauty of the restaurant. this is the most iconic design. guest:stephanie: if you cannot come back, is there a space in

midtown? could you run the risk that this place that has decades of history, could you lose the magic? guest: i don't think so. we are excited about doing whatever it might be. we are looking forward. erik: i've known a lot of people who can't even begin to conceive of a new location for the four seasons. stephanie: that random tuesday when i was sitting there, henry kissinger, doug paul, john blackstone, all either. where are you going to move? we got some comments from the building owner. he says he was to bring new life to the restaurant, which he says has grown stale. he said he is going to restore the four seasons to his glory.

i don't know. it did not seem stale when i was there. ♪

>> live from bloomberg in new york, this is "market makers echo --." erik: good morning. we have something new out of zurich. this is where everybody is waiting for the fifa vote. you can see a lot of protesters behind our own mark barton. mark: it's amazing. in the last 10 minutes the peace and calm has been completely shattered.

about 10 minutes ago, i took the video. we had the protesters behind me attempt to storm the congress. the barriers have been put up. what happened was they came through into this conclave and they literally tried to storm the doors. the security guards found it impossible to hold them back. you can see we had police on the scene. this is the first time i have seen police in the last three days. they have completely partitioned off the entrance. it was exciting and exhilarating stuff. at one point it did seem as if the protesters would get into the congress where the 209 members are having their meeting. just to give you a backdrop, they have been here since 6:00

this morning. they have been singing and protesting. they have been asking fee for to suspend israel from the governing body. it was very peaceful. it moved across the road. for the last 10 minutes, they tried to storm the fee for congress. we've got security guards and police. it's a completely different atmosphere. stephanie: i have been campaigning for this four days could this be another reason why they should hold off until. guest: i think we are too close to the vote. it's not going to happen. the big news already happened this is the biggest scandal ever in sports.

if they were going to call off the election, they would do it then. they are cocooned inside. these protesters are not going to get in. this vote is two hours away. the vote will go on it. he remains the favorite despite what's gone on in the last few minutes. erik: we are looking at live pictures from inside the meeting where things appear to be calm. i saw some flags behind you. where are they from? does the makeup of that give less unanimity in places like africa then we might have thought? guest: it's a great point. the majority of them are palestinian related.

not everyone is from the west bank or the middle east. when i was doing reporting at 6:00 local time. they were playing arabic music and french music. they are coming from all sorts of nationalities. i don't think the stronghold that is africa will stop supporting him for the reason that he awarded them that first world cup. you have hit on a very good point. is the support as strong as we were led to believe. these are traditional strongholds. the caribbean is considering it's position as well. it may be closer than we think. it's more exciting than it was a half an hour ago. erik: there he is himself at the

fee for meetings. they may elect him fee for -- president. there was a setback here it figures show the strength was contracting it .7%. that is not as much as economists expected. the harsh winter and stronger dollar and officials say that setback will be temporary. greece holds the key to saving its own death -- that crisis. >> the need to take serious action is something everyone agrees on. what happens in a world with a put a plan together, that is

something we will need to see. there should be flexibility to make it work. erik: the positive comments from greek officials don't reflect the true status of the negotiations. they are not close to a deal that would unlock bailout funds. greece must repay the imf $500 million in june. officials in not saying how they are going to do it. stephanie: i try to never agree with you. i was -- why is he weighing in on greece? i will not say who cares. here we go. a man who was once second in line to the presidency could be facing 10 years in the clinker. dennis has to is accused of

breaking banking laws in a hush money scheme. he was paying somebody to cover up prior misconduct or it he has been a lobbyist since leaving congress eight years ago. the number two executive at goldman sachs, he was shortlisted for the ceo job at pimco. he is not commenting. he is that to be a contender to succeed lloyd blank fine. i think he is the only other executive on the board. when will lloyd go? i don't think he's going to go. he says he loves his job. erik: the clock is ticking on

american surveillance programs. this weekend, the nsa's ability to collect phone data will come to a swift and. that would put security at risk. peter cook has the latest on this standoff. the senate is returning. peter: it's an effort to send action. right now, there are back channel conversations but no deal on the table. the easiest solution is for the senate to adopt the house bill that reforms these programs and ends the collection of phone records. it counts on the private sector to hold that material and then with a court order, they could access those records. the problem is mitch mcconnell

opposes it. he prefers an extension of the current law. you have his senate counterpart who opposes both an extension and the house bill. he says it gives the government too much power. that is why you have this standoff. he thinks these programs will expire on sunday. guest: i think were looking at some disappearance of these authorities. it's not possible to pass this before the end of the day on the first. peter: the most likely scenario is the bill will have to between to satisfy mcconnell. there is no deal. the nsa will start pulling the plug. erik: that is our chief

washington correspondent. it is a highly debated issue. homeland security and just what kinds of power the government should have. black and white, liberty and security. stephanie: we've got 50 minutes left on this show. stay with us. we've got some good stuff ahead. ♪

erik: here is a question that. where is the inflation? inflation is almost nowhere to be seen. marvin is the head of strategy. marvin, what explains this

persistent lack of inflation? marvin: i think that's the problem. we don't seem to have a good explanation for it. it's a pervasive problem. central banks we have looked through what could be causing this series of surprising at mrs.. if you look at traditional variables, it explains about 50% of it. if you look at demographics they don't have that much. about one third of this is just a mystery. slashing interest rates to zero,

quantitative easing are all predicated on this faith in the idea that the triangle model and built-in inflation would actually work. does this suggest there is a flaw in keynesian economics? what we have is a mystery. they know there is this trend as well. that is part of the caution you hear from someone like janet yellen in terms of telling you the rates will be dependent and shallow. you hear central bankers there use all sorts of new measures trying to reassure us that they will be in place for a long time.

it's going to take us a while in this grand experiment where we have seen 31 different 31 central-bank e-zines this year. -- easings. at some point we have to start asking that question or it --. what -- they need to try a lot harder. if you think about a lot of baby boomers in the peak savings years or peak earnings years trying to save for retirement. erik: the older people get, the less susceptible they are to the

effects? guest: the central banks have less effect on them then on it younger people who tend to be borrowers. maybe it still works just as we always did it. if that is the case, they have to work harder. erik: japan has the most severe demographic problem and they have doubled and tripled down on quantitative easing. guest: that is another potential. while there is much more caution because of this missing inflation, you have the out put gap largely closing. wages are starting to increase. we will start to see inflation

pressures there. the fed has to because it's about that. erik: you have identified a few other factors. technological progress and productivity. pick one and explain it. guest: i think one of the ones that's most interesting is productivity. you hear people talk about buying everything on amazon. that is bringing down prices. they should show up in a productivity. what we find is while productivity does bring down inflation, it doesn't explain this global missing inflation program. productivity growth was much faster and higher in the mid-to thousands that it is today. now you are getting less pressure from technology today

than you did then. erik: i would not want to be mario draghi. stephanie: i would. rocky is so stylish always. erik: jake and elwood, that is his look. stephanie: marvin joins us from london. we've got a lot more when we return. a stick with us. you're watching "market makers" on bloomberg tv. it's friday. ♪

stephanie:uber some customers

have complained about it. the direction of a volcano has forced people to flee a japanese island. you can check it out right here.

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look at what is moving markets. sam is the director of u.s. equities. what you focused on? tracy: that has to be u.s. gdp. it was worse than originally estimated, but better than what people had expected. erik: stocks did not budge. the two-year yield dropped any 10 year dropped. ; i think people are looking forward to a better second quarter. they are looking for 8.7% gain. tracy: we have three fed presidents speaking. some are saying slightly different things. if the u.s. holds off on raising interest rates, we will get more bubbles.

erik: what are we divine from these slightly conflicting messages? tracy: the fed itself is conflicted. we have some market commentary out from blackstone. they estimate that the fed has contributed $3 trillion in the stock market. sam: if you go back over 60 years and look at the monthly meeting differential between core inflation meant and fund rates, we should be above 3%. right now. tracy: number three has to bring all things asia. i am going to run them down a. we had the yen dropping. we had the weakness. we had a wild ride for chinese

stock. they are down again today. at one point they were up 4%. we've got massive asia volatility. sam: i think with the prospect of higher interest rates, that is making the emerging markets more competitive. they are shrinking. also take a look at the baltic dry index, down 60% over the past six months. there is no economic growth anywhere. erik: do you have as much faith in the baltic dry as you used to? stephanie: it used to be hot. it used to be all anyone cared about. sam: it's been saying that there is a diversion since the fourth quarter of last year. nothing has really happened. erik: is there any buddy younger

than 40 that still believes in the theory? stephanie: julie hyman told me that i was following the doubt. . the bell has been wrong. people are shaking hands and kissing amy's. so many middle-aged white men celebrating success. thank you so much for giving us the latest. let's take you to the newsroom where julie hyman tells us what she's looking at. julie: we are seen markets little changed out of the gate. we are looking at that big deal takeover of broadcom. we may see a combination of these two companies. we reported last month people familiar with the negotiations

saying out terror rejected an offer of 50. a four dollar per share by intel. sandisk is one that seems to be the target of some m&a speculation as well. susquehanna saying it is a particularly take -- a new deal being done in the data center. you can see the london shares air. they are trading a little t lower. the price on this, 3.6 billion dollars. it is a big deal. equinix is scuttling a previously -- a previous deal. let's take a looat gamstop. you guys talked to the chief operating officer. those a shares are surging by 7%

after the largest videogame retailer said it is raising its full-year outlook and first-quarter net wn -- first-quarter net come -- first-quarter net income rose by 3.8%. >> he had some persuasive answers. investors build up in gamestop. stephanie: tina people in my house love gamestop. erik: you have taken a look at the cell away and go away -- what is your research suggests that will not play out this year? sam: depending on how we close today may will be up for the s&p 500 -- s&p 500.

instead of getting your average 1.3 percent gain you get a 3.5% gain in that may through october period. obviously no guarantee anywhere. 3.5%. it is still less than we typically get i like to tell investors rotate, don't retreat. erik: one second that's an average. you look at those 70 years, and had -- and how many of those 70 years to the market advance? sam: 64%, the market how was higher. it was up 78% of the time. stephanie: where specifically?

sam: specifically if you rotate into consumer staples and health care in the last 25 years that's as far back as our index department you would have had it 300 basis points to your annual return and really -- and reduced of volatility. a rising tide lifts all boats. if it is challenging you and up losing less in the defensive categories. stephanie: what are you scared of? sam: i am still scared of utilities. they are trading at a 21% premium to their absolute and a 5% premium to their relative pes. investors are gravitating toward them because of the high yield.

stephanie: when sam said i'm skin of utilities, i said that can happen? when we return, limited access to close and accessories in top names fashion by on $99 per month? this is truly the sharing economy. stick with us.

stephanie: you have a music subscription on your phone, entertainment substitution on your tv, so why not a subscription for your closet? the company's ceo and cofounder joins us now. many of people have known a rent the runway for many years. they want to rent one dress. you only rent a special -- you

only wear a special occasion trust a few times anyway. 99 dollars for an unlimited amount of dresses? it's extraordinary. >> 50% of a woman's closet are comprised of things that are worn three times or less. there are tops that you wear out for dates and things you wear for work. the idea is why don't we i our genes and by our white button-down black -- white button-down? our subscription is not just dresses. its pans, its jackets, it's whatever you need. stephanie: how does it work for you? you can't even buy one work dress for $99? >> we run all of the jet -- all of the logistics. we make a nice margin on having that inventory look brand-new.

it can look amazing over time. stephanie: you guys have raised $116 million. what are you going to do with all that money? it's a lot of pressure. >> i believe in five years everybody is going to have a subscription to fashion. she is going to use this. erik: everybody is going to have a subscription to fashion in five years time? >> that is what i am aiming for. erik: i'm willing to make him -- to wake a mate -- i'm willing to make a wager that doesn't come through -- come true. >> just five years ago people were buying songs on by -- on itunes.

you would think they were insane if you saw anyone buying music. stephanie: there are way more people who listen to music in their car all day long. my mom isn't buying new blouses. >> not true, the average american woman dies 64 new articles of clothing per year regardless of income and age. clothing, food, and transportation of the only thing -- the only three things we need every day. erik: a lot of those close our tank tops from american style. >> that's totally fine. why over the last 10 to 15 years the only part of the fashion industry that has grown has been fast fashion. fast fashion is a rental. of you walk into h&m, you buy a top for $19.99, and i know i can wear it to or three times.

what a for that same price i can give you something higher quality, you can still wear it to or three times, then it is gone. you don't have to have the junk in your closet. stephanie: that is an awesome point. erik: i'm not lined up against you on this one. the 1.i would make in addition to that what my girls love about shopping in a place like h&m is the opportunity not just find something you are going to wear once, twice, and maybe ditch or throw away in a dumpster, is that some of those items turn out to be memorable items. i bought it for 20 bucks, i love it.

>> the brilliance is that it is the motion of wearing something new. that is what friend the runway does. every time you put on a new or of hearings or a new dress, it is the first time you are wearing it. you feel more confident. stephanie: you are in it to win it. them a wearing something for the 10th time, you never get that same high. i think there is a men's market for renting clothing. there is this joy and this self confidence comes from clothing. i would feel joy of my husband wanted in new clothes. our biggest expenses inventory

people, and the cost of our logistics. stephanie: congratulations. i went there on tuesday and it was a packed house in the showroom. eighteenth street between fifth and six. she is the ceo and cofounder of rent the runway. erik: let's take you out to julie hyman in the newsroom. stephanie: amber cumbrian fitch the sales not that great. downgrading the stock to a cell. those comparable sales are going to persist. amber crombie is facing a challenge time to make its business. it says that it's second or second quarter earnings to be

lower than anticipating. erik: we're going to bring you i candy to start your week. matt miller went to barcelona. have a look. matt: christmas has come early for the supercar family because lamborghini came out with this is brand-new car that costs $500,000 and has 750 horsepower. we're going to test it out at the world-famous track.

>> the downforce makes this car so exciting. 175. 200. on the track now, testing it out in the back roads of barcelona. see what it is like in the country, may be in the urban setting. i am noticing the gearbox cannot decide what to do. at low speed, this automatic gearbox does not move into a manual mode. among the other things lamborghini has improved upon

includes lamborghini dynamics to allow an easier turning of the wheel at lower speeds and more stability at high speeds. those were some of the most insane roads i have ever driven. the car is i wouldn't say it is perfect because of the power and whiteness, but it is huge. the campy hairy and scary, but that's not bad. let's take you back to the track. erik: matt miller is with us. i want to make some of the noises you are making in the car

. matt: the noises i made when i was driving. i can't do that unless i am actually in a lamborghini. it was an amazing experience. the handling, the stickiness specifically for the lap of the nurnberg ring. i spoke with the ceo when i was in barcelona. first he was over the moon that he got the ok from audi to produce the suv. it was a question about whether or not they would be able to get the bentley. both of these companies are owned by volkswagen. both of them chose absolutely awful names for their suvs.

i asked him where in the hell did they make it outside of italy. they were in talks with the prime minister of italy. they are going to hire people and invested the factory there. win-win. i don't think i can make the noise. stephanie: matt miller. clearly we have been torturing him. he had to go to barcelona to testdrive a lamborghini. we will send you out to the newsroom. after the break julie hyman will be waiting for us. for now we are going to say goodbye. im. thanks for a great week. a little college reunion time.

julie: it is the top of the hour and the end of the week. many investors who jumped into the popular joy -- popular oil and energy sector are bailing out in droves. here to look at the current landscape is bloomberg's etf analyst. you talk about uso because that is what the most popular oil tracking etf is. eric: when you track oil futures a lot of people use it for shared convenience. it just maintains a position in the vti crude. it is down 4% this year, which a

lot of people find shocking. this etf is for short-term use. if you are holding a future, nobody wants to get oil delivered to your house. the etf has to jump to the next month to maintain a position. that adds up to 20% per year. people in this have itchy trigger fingers. we saw billion dollars come out in may even though it took in a billion in the last few months. you basically already have an 11% difference. maybe they should have used to ug a which is the united states gasoline fun. it is up 15% this year. the driving season is getting started. people are using a lot of gasoline. it is interesting to see

divergence between the gasoline and oil futures. it is $100 million. a lot of people don't know this exists. if you see one getting all the money, usually there is a smaller one doing better. this is the big one, $13 billion. it is up 0% this year. if you look at the one people may have chosen oil exploration and production companies, this one has small mid-caps and equal weights. that a volatility that you wouldn't want in a down market the small caps tend to outperform. the relationship right now is right in line with where it is in 2009, when oil was up 70%. x le was up 20%. you are taking on more risk because it has more small caps.

julie: that tracks even more closely with oil. eric: they're going to be jumpy or. the smaller cap and the higher beta. julie: stay tuned for bloomberg market day coming your way next.

>> welcome to bloomberg's market day. we are reading the tea leaves for you. so many policymakers have been talking about when we can expect lift off. we will decipher it for you.

>> we could find out when it has been reelected. >> live from new york, it is the saturday night live museum exhibit. all characters on display to celebrate the 40th anniversary. erik: consumer confidence from the university of michigan. julie hyman has the details. a -- actually it is mike mckee.