is "market makers." erik: it's crunch time in washington and greeks put lawmakers on deadlines for deals. stephanie: we'll be talking phrma, as investors look for the next big cancer drug. erik: what happens when the activist investor wins and actually takes control? an exclusive conversation with "star wars" c.e.o. jeff smith and olive garden president david george, coming up this hour. stephanie: what happens, erik, no more unlimited bread sticks and salad and without those, what will you do friday night? erik: beginning with our top stories, five programs aimed at stopping terrorists have expired. the senate failed to extend them before a midnight deadline yesterday and means for now the national security agency can no longer collect americans' phone records in bulk and search for links to terrorists. republican senator rand paul used senate rules to slow down action on a bill that would keep the spy programs in place.

>> are we going to so blindly give up our freedom and so blindly going to go along and just say take it? well, i'm not going to take it anymore. i don't think the american people are going to take it anymore. erik: senator paul acknowledges he'll probably lose the battle. the senate is likely to approve a bill that extends the programs while cushing others exposed two years ago by edward snowden. greece and its creditors are blaming each other for a lack of progress in the bailout talks over the weekend in an article for the french newspaper lemond, the greek prime minister says it is not the fault of his government. in the meantime, a german official said greece has to follow reforms it agreed to before tsipras took office four months ago. greece has to pay the i.m.f. a total of $1.8 billion and the country continues to run out of cash. stephanie: we're close to another deal in the semiconductor industry. bloomberg news is reporting

intel is near an agreement to buy altera. there have been reports the price would be about $15 billion altera is rising in free market trading. last week avago agreed to buy broadcom in a deal worth $37 billion and is the biggest acquisition in history. a merger in the health insurance industry might be in the works. bloomberg news said humana is considering a deal after being approached by cigna. shares jumped 20% friday after the reports of a potential merger were released, if cigna snags humana it would be the biggest medicare advantage insurer and could be the leading company for medical care part d drug coverage. and this story how do you not love it? it could get millions of people rummaging through their garbage. in april, a woman cleaned out her house after her husband passed away. she dropped off a computer at a

california recycling center but she did not know what she had. it was one of the original apple computers built by none other than steve jobs and steve wozniak. the recycling center ended up selling it for $200,000. they are now trying to find that woman to give her half of it. those are your top headlines. search no more, recycling center, obviously she watches "marketmakers" monday through friday so you'll hear from her shortly. seriously, i love that story. they said they're looking for her to give her her half? erik: how hard are they looking? stephanie: how about not half, how about all the dough? erik: starting with the five things you need to know, what's number one? stephanie: oil halted the

two-day advance as saudi arabia maintained a record crude output during the month of may. the country pumped out 10.25 million barrels a day last month. opec meets this week to discuss its production policy. well if you ask t. boone pickens, he'll say who cares when opec is discussing. erik: saudi arabia is not the problem but the american oil production. the credit markets remain open and new evidence that american investors are willing to finance independent drillers even at $60 a barrel and if that's the case, the oil glut could last for longer. stephanie: how about number two? erik: in 30 minutes we'll get personal income and spending data for april and the spending data should tell us what consumers are doing with savings from lower fuel costs and if households are pulling back on consumption. we've already had some indications about what the spending data show. we've had retail sales for example, what we really want to see is some more of the income.

are people earning more money? stephanie: one of the issues has been with gas prices where they are and unemployment where they are we definitely will see people spend and the fact they haven't has so many people puzzled and really those bulls starting to doubt how strong the u.s. economy is. because if you've got more money after cheaper gas, why aren't you buying skinny jeans at the mall and orange juliuses and cinnabum. erik: julie, number three? julie: i'm like at altara, this after the "new york times" piled on and became the latest to report intel is close to buying the chipmaker. bloomberg reported it last week and "the new york post" reported it last week and the financial times talked about it last week and reportedly the two companies have been in talks for months now and seems to be a question of when, not if at this point. i also wanted to mention since we've been watching an uptick in deals, there's a company called o.m. group which calls itself a technology driven

diversified industrial company and makes specialty chemicals among other things news crossing it's going to be purchased by apollo for $34 per share. that's 28% higher than the companies close. this is a $800 million company, the market cap as of friday but it's not exactly a household name but still more deals. erik: nonbank lenders like quicken loans are now originating more government-backed mortgages than u.s. banks, according to a study done by harvard's kennedy school and stephanie, once again, i'm not sure whether this is the unintended consequence of regulation or the intended consequence of regulation? the money will find a place, right? if you take banks out of the business somebody else is going to fill that vacuole -- vacuum the shadow banks, the marketplace lenders, whatever you want to call them are filling the void. it's expensive for the banks to

do business and decided it's not worth their while to originated as many g.s.c. qualifying mortgages. stephanie: i don't think it's not worth their while, they're strung up and can't possibly do it and as much as bank c.e.o.'s say we're not going to be in that business, i assure you it kills them to see some of their biggest customers take that business and get paid tons of money and raise more money. erik: these are smaller customers getting residential mortgages on their homes but going to quicken loans, for example, instead of jp morgan. stephanie: i don't care how many bankers smile and say this is the way we want to be, they don't like it one bit. number five for you, talking chinese stocks shares of hong kong based investment group reorient are up 152%. that is the highest level since 2007. this comes, of course, after a private equity fund backed by the one and only jack ma agreed to invest in the company.

when you say jack ma has the midas touch, 152%. what about that? erik: people wonder how quickly it will come down. stephanie: more people getting concerned and when you see a number like that there's a reason for it. moving ahead, going from china to greece. june marks a crucial month ahead for greece and i'm not talking about erik's vacation plans. the country must make four payments totaling almost $1.7 billion to the i.m.f. this month and in its bailout package backed by the euro region expires at the end of june. for more, i'd like to bring in our own international correspondent hans nichols from listenedon who has been all over this story. hans, how serious are these deadlines? erik and i sit here and speak and some people are saying greece nothing will happen,

stop worrying about it and others say here we are, it's go time. hans: you know it's serious when you see athens in my backdrop. no one can tell you how serious these deadlines are because they keep finding ways to extend them. take the june 5 deadline turns out the i.m.f. can accept payment the end of the month. now what you're hearing in the german press is the july deadline is the real one. what we do know is the state of negotiations are pretty poisoned right now. we had an op-ed overnight from alexis tsipras, the prime minister. normally he cleans up after verivaucus criticizes his creditors and they'll issue a phone call and say there's some progress. yesterday was a harsh op-ed and let me read you a couple quotes. it's due to the intransients to certain institutional actors submitting absurd proposals and displaying a indifference to the democratic choice of the greek people. to certain institutions it could mean the i.m.f. there's been a lot of criticism

from the greek government what the international monetary fund is demanding. what's been clear throughout the morning here in europe is that both the european union, jean-claude unger and the i.m.f. and german officials won't allow the troika now called the institutions, won't allow it to be split apart and remaining united. erik: does it matter at all what the greek people think? i don't mean that facetiously. i'm wondering yes, of course, tsipras was swept to power on the promise they'd end austerity. whether you called them the institutions or the troika, do they care? hans: at least among german politicians they do wear what's happening in greece and want to respect the democratic outcomes but at the same time they say the greek government needs to respect the obligations and agreements it made when it submitted itself to this bailout program and have to finish and complete the program. so does that mean simply because there's an election in grease does that mean the entire bailout program gets

thrown out? and a view from the creditors is clear no. if greece wants continued more money, democratically elected, however they came to power if greece wants protected money they need to abide by the rules and terms of the deal that were initially set out. erik: hans in london instead of germany. stephanie: and would be most serious if he were in athens. erik: it's the year's biggest cancer research event and as usual, investors have their eyes on it closely. we'll talk to one who has some final pics we want to know about.

erik: coming up this hour on "marketmakers" "star wars" -- starboard c.e.o. jeff smith and olive garden's david george will be here to talk about the changes they've unveil dad. the new olive garden makes its debut, coming up at 8:30.

stephanie: it's time for our top stories of the morning. microsoft will come out next month with its latest version of the windows operating system. windows 10 will be released in time for the back to school personal computer season. does that exist anymore? it will be available for p.c.'s and tablets as a free upgrade for people using windows 7 and 8.1. and here in n.y.c., authorities say a terrifying accident could have been a whole lot worse. a giant air conditioning unit being lifted to the stop of a skyscraper broke loose and fell 28 stories. 10 people were in fact injured. city officials say it was fortunate the accident happened on a weekend when the street was not filled with people. and when uber needed help with driverless car technology it went to one of the best robotics institutions in the world, heading straight to

pittsburgh carnegie melon university never figured it would turn out like this. uber ended up hiring away 40, that's 4-0, of carnegie melon's scientists and researchers. "the wall street journal" said some scientists saw their salaries double and they received hundreds of thousands in bonuses and those are your top headlines. what do you make of that, erik? erik: well, based on what i have seen and read, it sounds to me like a bait and switch. it sounds to me that's what uber is doing with the $5 billion they've made, going out and raiding, gutting one of america's top research institutions. could they not have had a partnership? i should hope so. stephanie: might be sunny in philadelphia but not necessarily in pittsburgh. erik: the annual meeting for the american society of clinical oncology is in full swing, more than 30,000 oncology professionals around the world gathered to discuss

state-of-the-art therapies in breakthrough research and gives the investors the opportunity to see which biotech and phrma companies are developing compelling drugs and technologies. christiana is at a equities fund specializing in health care and has been attending the conference the past couple days. doctor, what excites you about oncology and what you've seen at the conference so far? doctor: there are two more things in cancer development these days. one is the concept of targeted drug therapies and is the second is immune oncology and target drug therapy is understanding the specific mutations driving an individual's cancer and using the drugs to treat those specific mutations. i have no doubt going forward all cancers will be sequenced to understand their mutational status. the second major theme is immune oncology and that's utilizing the body's own immune system to attack the cancer. these two major themes have transformed cancer from what

used to be a rapidly fatal disease to something which might an long-term chronic disease or may be something which might be cured. melanoma is the perfect case in point there. stephanie: what are companies in this space you're most focused or excited about? doctor barredon: one of the hottest variation is immune oncology and the biggest companies are bristol-myers squibb with their drug octivo and merck with their drug takuda. they've been approved in melanoma and lung cancer but eeg the efficacy across countries including renal health cancer, small cell cancer and eventually what we'll see is a spectrum -- efficacy across a broad spectrum of cancers. and suspect for the market potential could be north of $10 billion. given that these will be the new standard of care of cancer, i think the strive is a broad

wave for the pharmaceutical sector. erik: do you see more potential for development in either sort of the gene specific stuff or the immune therapy stuff in big phrma companies or are small biotechs leading the way. doctor bardon: big companies have primarily driven the early growth but will say there are several biotech companies following along in the next generation of immunotherapies. i would point to one of my favorite names in the space, insight pharmaceuticals and see them as developing the next grention of immuneo oncology drugs. their first drug jackify has been approved for two cancers. these should be billion dollar indications alone but going forward i think the drug potentially has efficacy across a broad spectrum of cancers including pancreatic and breast cancer and sat down with their chief scientific officer yesterday, reid hubert and he and the rest of the team really

assembled the most thoughtful and productive pipeline in the biotech industry. stephanie: is there any concern biotech from an investment standpoint could be a bit overheated? there's so much enthusiasm and noise right now. dr. bardon: as a fundamental biotech investor who is biofocused is the industry is not cheap now but at burrage capital we're optimistic about the long-term prospects. the truth of the matter is as long as there are cancers to be treated and unmet medical needs, there's plenty of drug development and growth to be had. i think g.b.m. is a perfect example. we heard vice president biden's son died at the age of 46 from brain cancer. g.d.m. brain kansaser is still a completely unmet medical need with very few treatment options and efficacy. as long as there are cancers to be treated and unmet needs, we'll see ongoing growth in the industry. erik: these kinds of

conferences are places where people often drop some bombshells. anything really surprise over the weekend? dr. bardon: there's always a hem and haw of what the eventual opportunity will be in immune oncology but if you take the long term, maybe people are expecting efficacy in a certain type of cancer which didn't turn out to be true and why we see certain volatility even in a big cap company like bristol-myers squibb but i think what you have to take as a long-term perspective and really this class of age is clearly working and what we have to do in a systematic way identify the cancers where it works and leads to long-term growth of these products. erik: thank you for joining us, dr. christiana bardon, portfolio manager at burrage capital. stephanie: spending data is out in a few minutes. unfortunately i can't hold up the whole economy. we'll hear about the latest state of the u.s. economy and fed policy and those f.m.s will

be after -- and those numbers will be after the break. stay with us. ♪

♪ stephanie julie: welcome back to "marketmakers." i'm julie hyman. we're talking oil after reporting their best gain from friday. oil recovery from a six-year low in january is stalling amid speculation a global glut will persist but everyone is waiting for june 5 when opec meets to discuss production. my next guest says that will be the most watched meeting of the year. joining me is phil streebell from r.j.o. futures.

everybody has been talking about this meeting. do we anticipate any meaningful change to production there? phil: not a at all. here's the deal, opec has been producing 31 million barrels per day. their quota is only 30 so they've all been cheating a little bit here. what we anticipate here is over the course of time they're going to acknowledge they're cheating and acknowledge they need to have them all meet their quotas but you have a deal with iran in the works here. as soon as that comes on, you'll see their production start to boost and what will happen is their output will slowly continue to creep up. i think a peak in the oil market will be around the corner and we'll start to decline again. julie: we'll see the dynamic we have seen particularly with saudi arabia where they're sort of cheating, as you say pumping more than they're supposed to be in part to try and put pressure on the u.s. shale producers. has that dynamic eased at all

especially given the coming entrance of iran into the market? phillip: yeah, i mean, if you look to saudi arabia what they just did was kicked back a bunch of money over to their citizens to make everyone all happy but what they have to do is replenish that money so they've been pumping out that record amount of oil. now, in the u.s. we saw our production peak and it's starting to stall out here just because of our wages and costs are too high on oil and we need to be north of $65 in order to break even on a lot of these rigs and why you're seeing that baker hughes rig count decline week after week. so i think production in the u.s. has peaked and we'll start to come down and start to see maybe a tightening between brent in west texas. but i definitely anticipate 65 being about a resistance point and trend back down to support near 57. julie: phil, tell me what your strategy is when it comes to oil right now? phillip: again, i think we'll probably see throughout the

week, we'll see prices that will continue to creep up and may have overshot on friday and why we're backing off today, we'll probably see the e.p.i. and a draw down on stocks and oil prices will remain elevated into that meeting and i think after that meeting comes, i think that we'll see a peak around that 65. and again, i think a sell-off back down into the 50's. julie: not a lot of optimism arnaud peck. phil streible talking about the opec meeting we've been anticipating and talking about for weeks. erik? erik: joel is here because we'll have breaking economic data in a few moments. joe is the managing editor of bloomberg markets and we'll see personal income and personal spending for april, joe, what do you care? stephanie: mine was up joe. joe: have the economists factored that in their forecast. erik: wasn't that embargo until 8:30.

stephanie: oh, gosh, sorry. joe: everyone knows the q-1 data was weak and people are looking for signs of an economic rebound and this q-2 data, april, so we're going to see is our income in spending picking up, are people spending their so-called gas savings? that story kind of faded but still is interesting. so if the data is good, maybe there's signs we're coming back. stephanie: what's the delay when we see people saving more money because gas prices are low, how long should the lag time be we should see the turn around and actual spending happen? joe: it's a good question. there's skepticism about the thesis gas prices fall and people suddenly start spending more. stephanie: i'm a complete skeptic. joe: people will spend for all kinds of reasons, job security, how much they're making, wage gains, price changes. gas price is one factor and maybe if people didn't think the gas cuts were going to be permanent then they wouldn't disspend them. i think the whole thesis is just sort of people aren't

taking -- erik: what would the u.s. economy look like without cheap gas? stephanie: we know people aren't holed up in their houses because of bad weather and can be out at the shopping ball because we like to bring it on the weather. joe: there is debate whether the q-1 data was as bad as people thought they were. erik: let's take you out to julie-annjulie: it looks like consumer spending numbers are coming in unchanged even as incomes rose in april. the personal income number better than estimated, up .4%. it was estimated to rise .2% and rising .5% in march. we are looking for inflation numbers. up only .1% year over year.

.2% is what analysts had been estimating. the personal spending member is what we will be focusing on. we knew retail sales was flat in april. the question is, what is happening to the extra money people are earning? erik: maybe it is going to savings. joe: could be. again, we get this disappointing number the same story for a while. income is all right, labor market seems a little better. but any hope for a huge spending boom that will propel the economy is not seem to be materializing. erik: for what it is worth, no real market reaction in equities. features have been bouncing around this morning. since that data came out, they are flatlining. futures had been bouncing around this morning. erik: is it about raging economic growth or would we

rather see a steady climb? joe: i think we would like to see an acceleration from here. erik: and need to take you back to julie hyman for more breaking these. julie: the deal is done. in tell is indeed buying altera. the all-cash transaction is valued a little bit of what had been talked about. $15 billion has been talked about in recent days. intel says it will to adjusted earnings in the first year after it closes not clear when it will close. intel will be funding the deal with cash and debt. the big tip deal last week may be putting more pressure on intel to make a move.

the companies have been taught for months to get this done. there is a benefit to scale in the industry. that is what intel is looking for. erik: after the deal last week i cannot believe all tara -- altera closed at what it did last week. they could not come to terms there was a site even on friday the deal would get done. whoever owns altera is making a boatload of dellough. julie: they may have still been a level of skepticism. stephanie: thank you to julie and joe. joe, we have not seen you in ages. erik: when we come back, olive

garden undergoing an historic transformation. they are taking the show on the road. the new journey for the once unlimited that sticks. stephanie: i can't wait! ♪\

stephanie: welcome back to "market makers." i'm stephanie ruhle with erik schatzker. we have breaking news in the semiconductor industry. the largest chipmaker intel has agreed to buy altera for $64 a share in cash. the deal is valued at $16.7 billion. it is the second big deal in the chip industry in the last few days. last week avago agreed to buy another for the biggest acquisition in history. spy programs have officially

expired green the senate failed to extend them after rand paul used procedural methods to delay the legislation. it allowed the n.s.a. to collect phone records in bulk. mitch mcconnell urged the senate to keep the spy programs in place. take a look. mitch mcconnell: we should not be disarming as our enemies grow more sophisticated and aggressive. we certainly should not be doing so based on a campaign of demagoguery and disinformation launched in the wake of the unlawful actions of edward snowden. stephanie: snowden was the n.s.a. contractor who revealed details of how the agency was collecting information on americans. despite rand paul's efforts, the senate is likely to pass an extension. the bill would also remake the n.s.a. collection from records. john kerry's passion for cycling

has landed him in the hospital. the secretary of state broke his leg in a cycling accident in france over the weekend. today, he will fly to boston for treatment. the accident will limit travel as negotiations with iran inter-a crucial stretch -- enter a crucial stretch. the u.s. wants to curb iran's nuclear program and to limit sanctions. erik: today, a new olive garden makes its debut. new logo, new decor, and a new menu. let's not forget about new management. the parent company is run by the activist hedge fund. here with us, c.e.o. jeff smith

and olive garden resident -- and the olive garden president. dave, you have been with the company for some time. jeff lampooned the unlimited breadsticks in amazing 300-page presentation last september. i see the breadstick is hardly a source of weakness, it is a sign of strength. >> it is one of our most popular items. jeff look to make sure they were served perfectly every time. we want hot, fresh breadsticks on the cable at all times. -- on the table at all times. stephanie: why change things? the olive garden has a loyal customer. does it want something different? do you think different design will bring in a new customer? >> the brand struggled little bit. most of that we think was due to

the fact we may have been resting on our laurels. in the last three or four years. a new sign, a new look inside is a signal of change and evolution. we are trying to refresh the brand and continue to focus on great experiences for our guests. stephanie: why not change the name? i live in new york city where there are tons of time restaurants. it is olive garden. why will i eat there? would it make more suits to change the name? do people notice new branding and styling? dave: we have 32 years of equity in that name. olive garden is one of the most iconic and successful brands in casual dining in the history of the segment. erik: jeff, when you waged the proxy fight you talked about the importance of fixing the restaurant experience. what did you mean by that

and how are you translating that into action today? jeff's the team is doing an incredible job of putting the customer first. that is what we were talking about. and whenever talking -- we were never talking about getting rid of red sticks the best breadsticks. we wanted to make sure it would be hot and fresh and that we are following the discipline and making sure everybody is doing everything they are supposed to do so the guests can have the best possible experience. stephanie: what was the biggest change you had to make when you saw all 300 pages? what was the missing link? dave: focus on the guest and basic fundamentals. make sure the food, service, and atmosphere is exactly the way it is supposed to be.

we did not have to reestablish standards. we just had to be consistent against high standards. erik: can we address the skeptical angle? on the one hand, you are jeff smith, value investor activist hedge fund manager. what does jeff smith know about the restaurant business? on the other hand you have got the george -- dave george. the skeptic says, how much can change if the same guys are in charge of the show? jeff: usually, the answers are inside the company. we do not come to the company and have all of the answers. i am not a restaurant expert although i do enjoy eating at olive garden. it is about listening and focusing on the guest and making sure we are doing the right thing. one of the changes has been to

focus on our core guests. in the past, there was a movement to try and broaden the menu and appeal to the guests olive garden did not have. instead now we are focusing on the guests that love us. dave: the broad appeal of olive garden across all age groups and demographics means middle america is our customer base. we are focused on trying to get them to come one more time in a year. stephanie: what is your favorite menu item? dave: the lasagna is awesome. erik: we are taking a quick break. jeff smith and dave george with us when we return. we will be talking about why bill gross' terminal keyboard is going to be in the smithsonian. stephanie: i think it is more about the keyboard than bill.

that thing is magic! ♪

erik: welcome back to "market makers." today is the day america meets the new olive garden. jeff smith is here with the c.e.o. of star board value. one of the things people wonder when they see an activist hedge fund manager wage a companion -- campaign against a company like darden it is hard to do. unprecedented. you move in and take control of management. your point a new c.e.o. -- you a point -- your point a new c.e.o. what have you learned? jeff: we did not come in and take control.

the board is independent. we think the board is better and more qualified and doing a better job. there are nominees. they are independent-thinking. they are not just going to do what i say. they will do what we think collectively is best. stephanie: future control of the situation. jeff: we did. we made a change to make sure the board was doing their job to better represent the interests of the shareholders and make sure they are doing the job for the company. part of that is listening to management and along the best ideas to come through with the guidance of the board to make sure we are coming up with the best ideas for everyone. erik: what has been easier and harder than you thought? jeff: one thing that is wonderful is we realized very quickly -- every board member work inside of a restaurant.

every single board member took a night and worked inside a restaurant. it was not undercover. everyone knew. but operating with the manager of the restaurant, walking around. i was waiting on tables, surging food in the kitchen. all of us did that. it was an amazing experience. we felt we could not make the decisions without knowing what was happening in the restaurants. one of the great things we learned is the restaurants are doing a great job. the employees are working hard. they care a lot. it is making sure we are giving them the tools to do the best job succeeding for us, for everyone. on the upside you say the restaurants are great to the employees are working great. how can we make sure we are providing the best opportunity for success in the company? that means improving the menu improving the marketing. erik: on the flipside what is

tough? jeff: it is a large company and you have to make decisions. the people part is the most time-consuming and rewarding when it works. in the darden situation, it has worked exceedingly well. far better than i would have expected or hoped. the marriage between the board and management team has gone well. we spent a good amount of time with the management team. it is a good team environment. stephanie: how do you get from a religious -- relation management standpoint? one would think if you were the old board or management and you come knocking, that is a difficult pill to swallow. how do you go from that to everyone working together and choosing menu items when you have got to be sitting in orlando saying why did you come knocking on my door? dave: we realized what his team

wanted was what we wanted. to improve the experience, grow the business, improve shareholder value. we aligned early on priorities. we worked out a plan. just is saying go to work and make it happen. erik: starboard set some ambitious financial targets. for all of darden, $325 million a year in either to -- ebida. how hard is it to meet the targets? you are not there yet. what have you been doing inside to economize, eliminate waste? dave: the first thing we did is focus on the guest and make the experience great. it drives sales. the second thing was look at every aspect of the business and say, where are there ways that do not impact the guest experience?

behind the scenes, there are contracts, media spends, landscaping linen contracts, landscape contracts. we reevaluated every single one and looked at all the expenditures that were non-guest facing. we found some opportunity. erik: some of the other stuff you talked about doing was possibly spending -- spinning the restaurants off. is that going to happen? jeff: we have set our primary focus is improving the guest experience in restaurants. the business is about the guests. we have to make sure our guests are happy and coming back more frequently. we said we will also be looking into real estate opportunity. we hired advisers. that has been another goal right now. primarily because that is something we can do that has no affect on restaurant operations. erik: but could unlock tons of value. jeff: nothing affects the

restaurants in terms of who owns the restaurants, so we are working on that. as it relates to the opportunity to spin off brands, we are working with different restaurants and may acquire some brands. that is something we are holding off. erik: how many more months? jeff: we have to get our goals west in terms of operational elements. we have to improve cash flow and real estate. after we have accomplished those goals, we will take another look. there are only so many priorities you can have. we worked collectively on a five-year plan to prioritize initiatives. you have to focus on those, do those well, and then move to the next. erik: franchising also being put off? jeff: franchising is something we are looking into but is not the primary focus now. stephanie: when we talk about consumer spending, is olive garden a good reflection on the consumer to see how they are

spending and what unemployment looks like? dave: we are not necessarily seeing more visits but we are seeing more purchases on deals. less coupons and when they do come in, they are willing to get an appetizer or dessert or a nicer glass of wine. we are seeing incremental out on -- add-on sales. erik: thank you for sharing your experience. jeff smith and dave george. the new olive garden debuts today. the breadsticks are still around but now in addition in sandwich form. stephanie: congratulations and good luck. for those of you watching in new york, there is an olive garden in chelsea. take a look at this. bill gross' bloomberg terminal will be on display at the

smithsonian as part of the museum's american enterprise exhibition. or should i say one of gross' four terminal keywords as he owns four, two of which he keeps in his house. one is featured in the first exhibit on business history. one of michael dell's first computer and one of offered bloomingdale's personal -- offered bloomingdale -- alfred bloomingdale's first credit cards. erik: when we come back, more on the big deal this morning. intel finally agreeing to buy altera. it took months to work out. we will show you how it breaks down when we return from this short commercial break. "market makers" goes on. ♪

>> this is "market makers" with erik schatzker and stephanie ruhle. erik: you are watching "market makers" on bloomberg television at our new time. we are halfway through with another great hour. stephanie: what a fantastic hour and we have 60 minutes ahead. erik: we will be talking about catastrophe bonds. stephanie: we have a lot to cover in the next hour. before that, how about a look at the top news stories of the morning?

we have been talking about it for the last hour. a huge deal in the semiconductor industry. intel is buying out terror for $54 a share in a deal valued at $16.7 billion -- intel is buying altera for $54 a share in a deal valued at 61 $7 billion. we will have much more on this coming up. also, a merger in the health insurance industry could be in the works. humana is considering a sale after the company was approached by cigna. the combined company would be the biggest medicare advantage ensure and could be the leading company for medicare part d drug coverage. erik: rand paul what he got -- got what he wanted for now keeping the senate from extending spy programs. those programs expired last night at midnight. that means the n.s.a. can no longer collect bulk phone records and search them for

links to terrorists. he used senate rules to slow action on a bill that would keep the spy programs in place. rand paul: are we going to blithely give up our freedom and go along and say take it? i'm not going to take it anymore. i don't think the american people are going to take it anymore. erik: rand paul does know he probably will lose this battle. the senate is likely to approve the bill that extends the programs while curbing others exposed to years ago by edward snowden. greece and its creditors are pointing fingers at each other for a lack of progress in bailout talks. the greek prime minister says the problem is not his government's fault. a german official says greece has to follow reforms it agreed to before the party took office four months ago. greece has to pay the i.m.f. about $1.8 billion this month.

maria sharapova has lost to lucie safarova. it is her earliest defeat since 2010. since then, she won in 2012 and 2015. those are your top stories. stephanie: i'm going to take you back to the big news this morning. intel has agreed to buy altera for $54 a share. ed hammond joins us with a breakdown on the deal. also on the phone, an analyst. let's start with you. when i look at where altera was friday, why do we see that huge boom now? >> this deal has been rumored for months. it was not clear whether intel would pay the rumored price of

$54 a share, but you are getting it this morning. erik: $54 is clearly what it took to get the deal done. is it to rich? -- is it too rich? >> i think so. 17 going dollar purchase price is more like $14 billion -- the $17 billion purchase price is more like $14 billion for them. when we run the numbers, the deal looks like it is only about 3% accretive to intel earnings, which is not much. they are buying a business that has been under pressure the last few years. erik: ed hammond, why did intel feel it had to buy altera? the company was interested.

we know that. it could not come to terms on a price. it seemed as though intel would be disciplined and then the transaction took place last week. stephanie: all discipline flew out the window. ed: in this market, that is the general principle at the moment. i think intel's original offer was about the same price. they have not gone up from $54 a share. they have been able to force them to sell at the price they originally wanted. i think it is a 56% premium to where altera was trading before talks. the thing for intel worth mentioning is they are already big in this space. that defends that even more in gives them a bigger slice of the market. a lot of the deals being done

are about putting the moat about what you have and making it bigger and stronger. erik: avago has been a consolidator already. is the expectation we will see more deals? ed: i think so. there has always been a huge amount of speculation. to put this in context since the beginning of 2013 to almost the end of the third quarter this year, we have seen $1 billion of reported deals in the semi space. we have gone from almost nothing to this huge hit already. does it continue? i think so. there's pressure on others in the space to consolidate. erik: who is next? >> it is tough to speculate on combinations. we believe qualcomm needs to do a deal in this space. their core market smartphones

is maturing. they need to diversify. erik: what would make sense for qualcomm? roughly speaking and specifically? -- broadly speaking and specifically? >> we cannot comment on potential takeout candidate. erik: not individual companies, what does qualcomm need? >> they just announced a product or intention to get into the server market. the road to doing that organically would be very long. naturally if you look at other companies that have a presence in the market there is a close competitor to altera that would be a name on the list. stephanie: what do you think?

ed: in terms of more consolidation, i think it is inevitable. we are seeing this in every interstate. there is one big deal that will trigger other big deals. everyone has access to cheap cash. everyone has a shareholder base that one steals. if you are a -- everyone has a shareholder base that once deals -- wants deals. erik: thank you very much. intel and altera will be holding a conference call at 10:00 eastern time. we will monitor and bring you headlines. this afternoon, and interview on the big deal. stephanie: coming up, surviving in a field of hedge fund giants. we will look at how small funds can raise money in an industry dominated by billion-dollar funds. ♪

stephanie: welcome back to "market makers." i am stephanie ruhle. at least six new hedge funds are on track to start with at least $8 billion this year according to data compiled by bloomberg. the industry has not seen this many mega startups since 2005. how do small hedge funds survive in a field dominated by the big players? patrick is at wells fargo prime services. that is a big number to start with. very few funds have that kind of red carpet rolled out for them. funds that are just starting how do they do it today in a time when others have massive platforms with huge back offices? i do guys start with their own

farm and name on the door -- how do guys start with their own farm and name on the door? >> it is tough. it is only 7% of the industry but they control 80% of the assets of the total industry. it is tough for smaller and midterm management. you have to incentivize investors to allocate capital. you are seeing the rise of a break in fees or additional capacity down the road. you are seeing feed relationships where management gives up a percentage of the topline share. stephanie: once you get a break to one guy, everyone is going to expect it forever more. >> it is your timeline, how quickly you want to ramp up assets to get to institutional size. let's call it partnering with

accelerators. to raise capital from pension funds, sovereign wealth funds, you need to say have $100 million. many pension funds right a $100 million check. it cannot be more than 10% of your fund. if you are getting a $100 million check to give up 20% of your business, it will get you there faster. plenty of people are raising money from friends and families and past partners. it may take longer to get to the institutional level. if they are performing the way they told investors they were, they will be successful. it is just how quickly you want to ramp up assets. erik: the saying was all you needed a clever and name and a bloomberg terminal. stephanie: or one moment. -- or one woman. erik: today, what is the minimum

of assets under management you need to keep the lights on? >> there is no minimum. we tell people to have two years of operating capital to run your business. from there, it is about returning to investors what you stated you would. it is about knowing your value proposition and objective for your fund. if you are looking for s&p returns with half the volatility, go out and be successful. stephanie: our investors willing to look at startups -- are the investors willing to look at startups? the big guys keep getting bigger. if i'm the capital allocate her i know that nobody is firing me if i give money to city dell or bill ackman -- citadel or

bill ackman. how does that help the little guy? who wants to take the risk? >> their success is allowing for a second generation of hedge fund managers. a lot of the largest funds are shutting down strategy. stephanie: blue crest's doors are open for new dollars. >> if you look at tech-focused managers in multiple billions of dollars, they have to close their doors to new capital. that releases a new generation of hedge fund managers spinning out of some of the most pedigreed managers on the street. erik: the new hedge funds are coming out of those. that is one source of talent for the hedge fund industry that is not there any longer. >> a lot of the billion-dollar launches come from pedigreed

managers spinning out of some of the largest fund managers on the street. stephanie: what is an example? >> i don't know if we will mention names today in terms of hedge fund managers specifically launching because there are a host of managers launching that would not be pedigreed but are able to deliver top-tier returns to investors. those managers are going to be successful. pedigree is not a requirement to be successful in the hedge fund industry. erik: makes it easier to raise money, doesn't it? >> investors like to allocate with managers they are already familiar with. if they had a previous relationship with that manager at an established fund that had the ability to repeatedly produce, they will be more comfortable allocating at an earlier stage. stephanie: i'm guessing if i were a long-term investor of david tepper and he has a guy spinning out, i would probably be interested.

>> others would too. stephanie: patrick mccurdy from wells fargo. erik: to washington and the debate over government spying on american citizens. that is what we bring you after the break. ♪

erik: you are watching "market makers". i'm erik schatzker was stephanie ruhle. -- i'm erik schatzker with stephanie ruhle. phil mattingly is here to walk us through it all from d.c. let's talk about the things most people want to know. what can the government no longer do as of this morning? >> the three programs

technically were allowed to expire. the most notable, section 215 the ball collection of telephone records. what edward snowden we doubt -- leaked out turned into the major issue of the day. roving wiretaps for terror suspects that use multiple phones, they do not have to get a new warrant for phones and also wants on individuals suspected but do not have a direct connection to one of the known terrorist groups. what happened last night is not a huge deal. law enforcement still has the ability to do much of what they lost. on the bulk collection, there is a grandfather clause that any investigative started before june 1 can continue. this is a huge deal because of what it means on the political side and in the debate. the fact that this has moved forward is almost stunning when

you look at where we were five or 10 years ago. erik: at the end of the day, what is going to be renewed and what is not? phil: what will happen by about wednesday is the senate will take up the house bill and move that forward. that transfers the 215 program, it transfers the holding of those records to the technology companies. the n.s.a. would not be able to hold those records. that would be the major change. the other two programs would be extended. erik: thank you, phil mattingly live from d.c. stephanie: we will be back with more "market makers" in a few. stick around. ♪

erik: we are minutes away from the opening bell in new york city. tracy is here with the c.e.o. of a farm in the e.t.f. business.

tracy, you are here to tell us what is moving markets. tracy: it is a massive week for markets. you have to greet deadline on june 5. erik: i knew you would start with greece. tracy: it is the i.m.f. deadline, a soft deadline. then we have a slew of u.s. economic data coming out including payroll on friday. everyone is going to be looking at that to get some clues as to where the federal reserve is going to head with interest rates. it is a big week. people are excited. barclays is calling this a pivotal week for markets. stephanie: they are kind of in the business to do that. what about number two? tracy: number two is stock market valuations. everyone is talking about it. it is like everyone woke up and decided to talk about it. goldman sachs published a huge

note over the weekend where they had robert shiller and jeremy siegel both arguing about whether or not we are in stock market bubble territory. erik: peter lynch? tracy: it is peter lynch 's favored measure. not him personally. erik: we have been talking about valuations for months. is there any reason all of a sudden? here we are. multiples have been climbing. over the past few weeks, they seem to have stabilized. tracy: we could argue it is connected to the economic data that will come out. people are wondering if stocks have divorced from fundamentals. you are watching the economic data, consumer spending for instance. they are not starting to wonder that they are thinking more about it. stephanie: even if people

fundamentally agree, they don't want to underperform the index. erik: let's hear from bruno. bruno: our smartest investors, it is a most unanimous they all seem to think the u.s. market is overextended. it has not been anything pivotal. we hear more about valuations going up. we are of the opinion that the markets are overextended. there are better opportunities in global markets. a lot of it is related to interest rates. if they keep where they are there's not much of a market on safety. erik: the stock market remains close to a record high. where is the money coming from? if the smart money is doing what it says and finding opportunity elsewhere, who is the dumb money? bruno: it is interesting because you are right. you cannot underperform the market significantly. that is keeping money in the

market. you are starting to see retail investors starting to come in. that tends to be a countercyclical measure. as you said valuations are healthy and there are not a lot of alternatives but global markets are a good one. tracy: one more thing is oil. we have a big opec meeting friday. oil jumped almost 5% friday. it is down 1.5% now. erik: it is a big week. tracy alloway, thank you very much. julie hyman in the newsroom what is the story? julie: we are talking deals again this morning. one of them we have been waiting for is intel agreeing to buy altera. we have been talking about the victim this morning. $16.7 billion. altera shares are rising even

though the price has been talked about at $54 a share, shares were not trading at that level. they are rising toward that level now. $54 a share is what intel will be paying for altera. we have a deal in the specialty chemical industry. it is omg. it is a specialty chemicals maker bought by apollo global management for $34 a share $1 billion. issa platform specialty products buying -- u.c. platform specialty products buying another business persisting billion dollars. citigroup is being upgraded to buy at goldman sachs. goldman sachs thinks the market is being too pessimistic. the bar is set low for results and citigroup has been doing well in terms of growing earnings and slowing deleveraging. for that reason it might be

able to beat estimates and boost shares. stephanie: thanks, julie hyman. bruno is still here with us. e.t.f.'s are your game. last week you launched an alternative energy e.t.f. bruno: it is an alternative energy play similar to others. they focus on alternative energy companies solar panels, wind farms and they have long-term contracts and pass the income to investors. it is interesting because it is more of an infrastructure play not highly correlated with equity markets. erik: your e.t.f.'s are all passive?

bruno: yes. erik: there is a question of whether it has a place there. what is your view? bruno: pimco has been successful offering actively managed e.t.f.'s. they make sense for fixed income. some active managers are great. it is difficult to do consistently. very few people can do it. active management generally makes plays, it is just difficult to do. stephanie: why would you not want to? bruno: it is difficult. you are seeing smart data in the space. it is a form of active management we have seen for some time. ego into certain factors -- you go into certain factors that have demonstrated they do better than the market. value investment, small caps,

low volatility. it is a passive way to put these factors into an index and e.t.f. and blend components of active and passive. stephanie: how -- erik: how do you decide what e.t.f.'s to bring to market? bruno: a lot of it is driven by research and clients. we want to add value to our clients. erik: is that something you developed as a customer demand? did you think there is enough here finally there is enough of a market for us to overlay it with e.t.f.'s? bruno: in this case, it is the latter. this asset class has been bringing many assets to market recently. there is enough skill to develop an e.t.f. around it. it is a class we like. you put the many package to diversify. you are exposed to 20 companies

with projects around different asset classes and different geographies. stephanie: your social media e.t.f.? bruno: that was developed in-house with a similar concept. the idea is to diversify so you don't have to pick the winner in the social media space. you can diversify across a number of properties in the u.s. and in china and other markets. stephanie: is there a social media company people do not like? bruno: social media interesting because it is a winner take all kind of business. we have seen the professional space, it is linkedin. the differences will be in the markets you are not allowed to enter like china where u.s. social media companies cannot participate. erik: do any of your e.t.f.'s have built-in leverage? bruno: no.

you have to be careful with leverage in general. the ones that exist are often well understood by the retail investor. erik: the retail investor does not understand anyone promising three times the s&p is not giving you that for nothing? bruno: a lot of the leveraged e.t.f.'s changed daily. it resets the leverage every day. that is not well understood by retail investors. they are available to sophisticated and retail investors. we want to make sure it is easy to understand by the retail investor. stephanie: thank you for joining us. bruno del ama, the c.e.o. of global x management. erik: coming up, hedge funds.

stephanie: and pension firms piling into catastrophe bonds. some are asking regulators to make sure they are not the next subprime mortgages. investing in capt bonds next. ♪

stephanie: welcome back to "market makers." i am stephanie ruhle with erik schatzker. june 1 is the first official day of hurricane season. the national oceanic and atmospheric administration predicts there will be fewer storms than normal this year. the forecast calls for zero to two major hurricanes. david has details. david: noah is saying there will

be warm temperatures in the pacific. when the forecast for a below normal season, it can be inaccurate to is just a forecast. the best example comes from 1992 when hurricane andrew a category five storm, hit the u.s. and caused a tremendous amount of damage, more than $25 billion worth of insured losses. that was the fourth costume is -- costliest disaster in 40 plus years. more investors are paying attention to hurricane season and pouring money into cat bonds alternatives to traditional reinsurance. if there are no major hurricanes, the investor will get a good return in the low yield environment. if there are catastrophic storms, they could lose tons of money. investors like these because of the returns they could get and they are not correlated to the stock market. they are correlated to the weather.

there has been double-digit annual growth, $22.1 billion worth of cat bonds were at standing -- outstanding at the end of march. they are popular with hedge funds and pension funds. not everyone thinks the surge in popularity is a good thing. there is a new book out by three business school professors arguing these are risky. as the risk is spread around maybe investors to not fully appreciate how risky they are. just to recap how these work if i'm a small business owner on the carolina coast, i take out insurance for the hurricane. the insurer goes to the reinsurer to allay risk. that is farmed out further to investors. that is the way these cat bonds are working. stephanie: thank you, david. for more on investing in cat bonds, we are joined by the head of insurance is securities at willis.

for people watching not familiar with these bonds, when they hear about securities being sold by a reinsurance guy they start to get concerned that those of the problems we faced in 2006 and 2007. >> we have an institutional product. there is not a high net worth participation. it is a small group of about 20 specialist managers investing on behalf of pension funds around the world. most of the principles are split between people with reinsurance underwriting background as well as people with a fixed income background. stephanie: legally, those who can participate, do they have to have those criteria? >> they have to be qualified institutional buyers. depending on the product, it is

up to whether we will have a suitable product for retail or high net worth. that is not where the market has been going the last 20 years. erik: they object to the idea that they can be included in insurance-linked products correct? >> i cannot comment on their current views. they have been a big user of the market as well over time. erik: going back to stephanie's point, is there a parallel to be drawn between the qualified institutional buyers, but as we learned, some were institutional. stephanie: that is a huge basket of investors. erik: is there any parallel to be drawn? william: restores be cautious as things evolve and as the market changes. right now, we have complex

problems insurers are facing that are dealt with with complicated structures in the traditional reinsurance market trade in the ils market -- in the ios market, they are simpler at this time. erik: if a retail investor is sophisticated enough to want uncorrelated risk, should he or she have access to this market? william: there are plenty of managers they can participate through. mutual funds have been set up in your and the u.s., so they can participate that way. the current products i don't think they are suitable for retail investors. stephanie: the atlantic hurricane season starts today. what is that, $22 billion cat bonds at risk? what are we going to see? william: we have had good

issuance this year so far. investors tend to look at the forecast with a grain of salt. while there are modest adjustments of physicians, -- positions there is no wholesale movement toward taking more risk. we have seen spreads for the hurricane-related deals, which is about 70% of the market they have been plateauing the last six months. i think we will see more of that. stephanie: bill, thank you for joining us. here is a look at the top stories of the hour. berkshire hathaway has replaced the c.e.o. of its troubled air travel unit. adam johnson will be the new chief executive. the company has been locked in a fight with pilots overcompensation. netjets cells fractional ownership to wealthy individuals

and corporate clients. enterprise is buying a texas pipeline corporation from pioneering natural resources and reliance industries. the price? $2.1 billion. this deal calls for pioneer and reliance to use the eagle ford pipeline system for 20 years. eagle ford is the most prolific oilfield in the united states. next month, the latest version of microsoft windows operating system. windows 10 is being released in time for the back to school personal computer season. it will be available as a free upgrade for people using windows seven and 8.1. those are your top headlines. erik: we are taking a quick commercial break. coming up, olivia sterns and i will be joined by drew greenblatt to talk about manufacturing.

is the manufacturing industry in america alive? if so, what does the trans-pacific partnership mean for manufacturing? ♪

erik: you are watching "market makers" on bloomberg television from new york city. let's take you back to julie hyman looking at early session movers. julie: we have been talking a lot about the deal in the chip industry today. there is another one that may be happening. it is the subject of a triangle. integrated silicon solution's is the subject of interest from two different buyers. cyprus raised its bid to more than $20 a share.

it says it will be in discussions with cypress. there is another company attempting to buy it so the socket is continuing. this was upgraded to outperform from neutral. analysts are looking at increased optimism for a recovery in las vegas and stability in atlantic city. juniper is going in the opposite directoion. those were downgraded to sell. maintaining the $22 price target. it says that and a potential acquisition ignore the multistep network that includes fewer routing nodes and fewer opportunities for juniper's business. erik: we have been talking about intel and altera. we are going back to that to

point out that even though intel has put $54 in cash on the table -- altera stock is trading at a discount to that price, which may explain -- answer the question we were asking earlier which was why the stock was not closing -- trading closer to $54 on friday because everybody knew that was the number on the table. it should not be affected by intel's cash price -- stock price because it in this -- it is an all cash deal. it is not that big of a deal. perhaps there are regulatory concerns. we saw in a slightly different industry, chipmaking equipment, applied materials lose its opportunity to buy tokyo electron because of concerns. i have not heard anybody talk about antitrust is a big risk to this deal. but there appears to be some risk or it should be trading close to $54. julie: it is not the opposite

risk of someone trying to buy intel or you would be seeing it trading. -- trading up. erik: thank you, julie hyman. stephanie: picture this. i love this. m.i.t.'s robot cheetah can now jump over hurdles as it runs. it has gotten more exciting making it the first four-legged robot that can move over obstacles. the robot is able to see with an onboard visual system that uses reflection from a laser to map terrain. it can clear obstacles up to 1.5 feet tall, more than half of its height, while maintaining an average running speed of five miles an hour. erik: "best of show" will never be the same. stephanie: if anybody saw

"tomorrowland" and said you cannot fall in love with robot you can. stephanie: 92-year-old harriet thompson became the oldest woman to finish a marathon. she ran the race in seven hours 24 minutes, 36 seconds. while this was her 16th marathon, she did not start running until she was in her 70's. incredible. she's a cancer survivor and wanted a way to stay active while supporting cancer research. congratulations to harriet. stephanie: absolutely outstanding. anyone who thinks i cannot change my lifestyle and get fit this woman is 92 years old. erik: there people half of her age who probably could not run it. stephanie: i am probably in that category. that does not mean you cannot start today. 92 years old, what an achievement.

we talked about bill gross' term in this month -- terminal in the smithsonian. i say to put her sneakers in. i am signing off. we will be back at our new time at 8:00 with more big interviews including the former head of the u.s. treasury auto task force. stick around. we have a lot more to cover on bloomberg t.v. thanks for watching. ♪

olivia: manufacturing rebound we have seen a sharp decline in factory activity over the past year but we will get the latest read in a few moments and we

will hear from a manufacturing ceo. erik: fixing the olive garden with breadsticks. my conversation with the ceo jeffrey smith. olivia: south carolina senator lindsey graham is about to become the seventh official republican candidate. he will make his announcement this hour. olivia: good morning and welcome to the bloomberg market day. i'm olivia sterns. erik: i'm erik schatzker. manufacturing and construction. julie: these numbers looking better than some of those we saw earlier today. the personal spending numbers that came in worse than estimates.