i'm stephanie ruhle. erik: im erik schatzker. big names on our agenda this morning. stephanie: bill ackman to kick it off. stake, like about $5 billion. john -- will be here at 9:00 for an extended conversation on the agenda. fed regulation for sure. bassist damocles important financial institution. plus, acquisitions and why more of them are not on the horizon. stephanie: maybe there could be one on the horizon. it could happen. turn to somecally of the top headlines at this point in the show. feel like taking a $5.6 billion stake -- stephanie: if you think about

what bill is trying to do here, it is still early and you cannot tell. just like we have seen, these are the higher-margin products. ,ou are buying oreo cookies ritz crackers, so you have got the high margin. lower productivity, lower margins than its peers. 3g doing their operational cost cutting overhaul was able to take this company 40%, take that

drive powder, get into the transaction, and now that it is trading at the preview -- trading as it is, the verdure, potentially with pepsi. erik: what i am trying to understand, and maybe you could is why does bill ackerman see a need? is it a bet on nelson? peltz is in there on the board. is he'll dissatisfied with what else is doing or does he believe that what peltz and his people are already doing at mont elise a window? he has been in that position and then the company for many years. when you want to get this kind

of cost-cutting or a major move, can you really do it with management? bill ackman to do that with burger king, d remember the massive cost-cutting and operational changes? erik: is there room in a company two as large and stature as peltz and acumen? what if they disagree? a potentially -- dynamic. stephanie: either one of them could be ceo of the company. i do not think they'll is looking for that or knows peltz. they're looking to make a ton of money. buffett liked this kind of business. we know what bill things of 3g. erik: a fascinating development. let's move on to other top

stories in business. from the bank of england this morning, including the decision on interest rates. live in london, let's talk about the super thursday. why is it such a big deal? >> for the first time ever, the bank of england released not just its rate decision but also the votes in the monetary policy , and inflation forecasts, and we will get a press conference. we are getting a press conference at the moment from mark carney. what came as a surprise is the dovish start of the bank of england. a record low. what was unexpected was only one member of the monetary policy committee actually voted for a rate rise. economists had been stacking at least two to vote for a ride.

the bank of england has attributed this slightly more dovish stance to lower energy prices and a stronger pound. it cut its near-term inflation forecast because of that. listening to mark carney give his press conference right now. erik: thank you. we are looking for more headlines from the governor of the bank of england. in the meantime, the bank of america is pulling from one of its headlines. also, reviewing another one of polson's funds, liquidity. ,he bank is telling financial $80 million because of liquidy investments and volatility. a spokesman declined to comment. adidas golf business is hiring a bank to explore options. adidas slashed its forecast

after revenue fell 26%. -- daily show's john to it stewart is -- jon officially signing off tonight. he aired 2600 shows in 16 years. for people who want news with a comedic spin. the museum in washington says it daily showve his set. those are your top headlines. if we call some cable news news, it is deathly fair to call him news. erik: fair point. we already told you about number one. taking $5.6 billion stake in mondelez. let's move on to number two. stephanie: the fertilizer

industry this morning, the illinois based industries will require the european and north american nitrogen fertilizer assets, and $8 billion to create a global player rivaling the industry leader. the transaction is a fallback deal after discussions to merge with europe fell apart in october. we did not think we would see the deal and now it is back on the table. it is m&a 2015 across the board. it is not just take pharma health care industry. credit is cheap here those who think the window is closing are slipping through. erik: furthermore, there is an increasing appetite, strategic deals. it is not just purely opportunism. they now have, with the economy improving, a little more confidence in the corner office. more boldness on the

part of those doing these deals. tophanie: is a great way distract people if you have a ton of money on the balance sheet. acquire some and people will not pay attention for a couple of years. julie hyman has number three. julie: in focus this morning, tesla in particular. the stock is plunging. that is after the carmaker -- teslaf vehicle brought a range of forecasts from 50 to 55 vehicles. he called it very sculptural. on the flipside, good news over at mercedes-benz.

the environment in china continues to become more difficult. stephanie: financial firms are back on topic. the biggest u.s. company in terms of market cap, jpmorgan has surpassed walmart with $254 billion in market cap. that puts them in the top 10 ranking after a five-year hiatus. berkshire hathaway's fourth and wells fargo sixth. financial stocks hold three spots. the most since 2006. does that make you nervous? not guess who is looking most closely at this. elizabeth warren. if you needed more ammunition to argue banks were too big, look no further than the size of

jpmorgan and wells fargo right now. stephanie: we will hear from her. erik: we have been talking in the last few days about the plunge and shares at apple. 16% so far dropped this year. weakening demand for its products in the second quarter. stephanie: everyone's margins are terrible compared to apples. apple's. on, time warner cable and disney. viacom is also joining the pack of disappointing results. the bloomberg u.s. media index has its biggest intraday decline

in almost watch her years. -- in almost four years. let's bring in paul sweeney. what do you make of this? paul: a media meltdown particularly yesterday. it started with disney. what investors are getting concerned about is the long-held barricades for media, always simmering under the surface, which was, this whole bundle of people paying 300 channels every single month, that bundle is at risk. ecosystem, pay tv are really at risk. also, content companies, which have been considered a safer place in the ecosystem, disney, viacom, time warner, that affects their affiliate revenue.

we're starting to see that earnings results. erik: we know aside from viacom, it has been extraordinary. viacom, the s&p 500 is up. look at time warner and fox. stocks run for this long for everybody to come to the conclusion that you just shared with us, which we have been talking about for the past four or five quarters? , when bob talks about how they lost viewers and therefore they have to take down their income, that was a wake-up call for everybody. if the unbundling of media business could affect the dominant player, everybody else

has to be at risk. that is the canary in the coal mine. stephanie: until now, everybody said, everybody wants espn. demand for sports, you cannot touch them. maybe you can. paul: it is over $7 billion in revenue. it is difficult for you to think, that model is not my model. the call defense espn and defense the bundle. that is flying in the face of what some investors are seeing out there. the reign ofis end content, you have this situation netflix and amazon were competing for content and you have the security of the bundle

also paying for content, if the bundle starts to collapse and the market fragments, is there is much money to spend on content? paul: this is coming to the surface now. what media companies have had to do is walk the fine line of protecting the core bundle, so many tens of hundreds of billions of dollars of value every year while trying to go where the consumers are going, online, direct to the consumer, to netflix. doesn't that prove the point? viewers are going wherever it is. paul: there is so much money to spend. erik: i am questioning whether a collapsing bundle would spend as much -- if there will be as much money to spend on content. stephanie: if you are bob iger, i am not worried about you having enough money. you have got enough money. paul: a themepark business,

which has been gushing cash in the past four or five years, and i also have a film studio that has marvel and the pixar movies on star wars spirit a lot is therefore disney investors. viacom is different. for a five quarters of disappointing advertising confirmed again this quarter this morning. stephanie: star wars will be out of this world. erik: i will take star wars over nickelodeon. coming up, the race to get into iran paired firms are looking to the into the easing of sanctions. will we see starbucks? we will find out. ♪

erik: the second leg of the , $.2 billion expansion. the president will be arriving for inauguration ceremony.

the 72 kilometer channel paralleled to the existing canal. it will allow shifts to move in both directions, effectively doubling traffic on that most important of arteries between the mediterranean and the persian gulf. that will require a massive ribbon cut. it would be a big ribbon. let's check headlines for you right now. police are identifying the suspect who attacked people in the movie theater outside tennessee. officials say a 29-year-old had a history of mental illness. he was fatally shot by police unleashing pepper spray. a hatchet and a pellet gun. three people in the audience needed minor treatment. the wing part found on indian island is sparking a national

debate. the latest prime minister is declaring it is from the country's missing airliner. western officials are not yet confirming that. malaysian officials say if window and other debris, also found on the island. hitching a ride with russia, costing america a pretty penny. nasa says it needs half $1 sixion to send up astronauts. the u.s. does not have the rockets now. those are your top headlines of the morning. what the you think of that number,.? erik?ber, erik: i don't know. is it break -- bigger than a bread box? things you should be putting on your calendar this thursday. john kerry to meet officials and participate in an event marking

the 20th anniversary of u.s.-the enemies relations. he will be there until friday. 9:00 p.m., the 10 leading republican presidential candidates will be holding their first primary debate in cleveland. the seven that did not make the list, the top 10, will also be holding a junior debate at 5:00 p.m. cohosted by facebook. at 11:00 p.m. tonight, the moment of zen. his finalt does episode of "the daily show." erik: i am going to miss him. stephanie: i'm going to miss him. it will be taped today. wouldn't it be great for his final episode to be a riff on fox passes republican debate tonight? to me, that would be the ultimate daily show episode. erik: he is still a young man.

what will he do? stephanie: the guy lives in the garden state. enjoy it. ♪

erik: the scramble to get into iran is under way. a nuclear deal reached last month, economic sanctions could -- lifted asrly early as april 2015. caitlin webber is with us now. there must be any number of american companies locked out of iran for years, salivating over the prospect of getting into the country which has been shot off from the rest of the world. do they stand a chance? large number of companies

are salivating at the opportunity. is, how many of them are actually going to be able to take it manage of it? this -- the sanctions are very limited. few notable exceptions, most u.s. companies will still face stringent restrictions on doing business in iran. erik: not much beyond that? >> there are a few other industries, like medication exporters, drop -- drug companies, food companies that could sell to iran under humanitarian exemptions that existed before the deal. now that it potentially will be easier to be paid for those

sales, they can do more business there as well. but for u.s. automakers like for, you mentioned starbucks earlier, opportunities and iran will be very limited for the foreseeable future. stephanie: what about access to the oil sector? exampleis another great of where u.s. companies will be potentially at a disadvantage competitors ton chevron, exxon mobil, of course .e very interested in testing but because of the trade embargo, it is still in place until congress lifts it. they will be limited from doing any business there. andr competitors, shell companies in europe will have opportunities that u.s. companies really will not. make sure we get it straight, u.s. companies, the opportunities are limited for american companies because

inrica has not gone as far pledging to ease sanctions. the european companies potentially stand to do the best? >> exactly. releasedsanctions under the deal are very sensitive compared to what the eu and the u.n. have done. and boeing and u.s. aviation companies, a big exception to that. they will have more opportunities in iran. erik: thank you, caitlin weber. a quick check of the top headlines of the morning, top 10 rated republican presidential candidates will debate for the first time tonight. at 9:00 p.m. eastern on national tv. nine of them -- donald trump from stealing the spotlight for this guy knows how to do that.

headingminating polls, into the debate on fox. one republican strategist says his rivals must tread lightly. >> a very limited amount of time to convey to the audience something about you, your policy, and why you ought to be the next president of the united states. if you waste time going after trump, it will burn up a lot of those minutes. at the same time, if he goes after you, i do not think you can allow that to stand. you have got to demonstrate to voters that you will fight back. the candidates will appear in an earlier form. i call it the pregame, the opening act. erik: german factory orders in june up 2%. 3/10 -- expected only only .3%. .ecovery is given a boost the world's's second-biggest mining company is reporting a

better-than-expected first-half profit. falling iron ore prices. for 2.5 were looking billion. grant -- of mankind's grimaced milestones. the first atomic bomb. a second bomb, japan surrendered in world war ii. more than 200,000 people who died were honored. those are the top headlines. breaking economic news. initial jobless claims, vonnie quinn? what are they saying? forie: thousands unemployment benefits last week. that is the second straight time we have seen below 300,000. thes 2000 below, more than

previous week and we are just on target there. the continuing claims number is also coming in on consensus. it is a little below the previous week. the four-week moving average, that is a little bit less volatile of every. , 200 60 8000, 250. that is, again, 6000 better than the previous week. erik: i want to reiterate tomorrow is an enormous day. the labor department will release the july jobs report. it will give us as good an indication as we will get of how the fed feels about rates. bear in mind where we are in the year. we will not get much. it is limited and they will not be making that decision in the last two weeks of august. this data andake

make that hard decision. erik: as we have been hearing from guest after guest, that as offers forthing else a delay in a rate hike. past september. stephanie: i learn something every day here. erik: rick will be here tomorrow. vonnie: interesting market reaction to the dollar index, .2%. futures in the green anyway, so just a little rise there because earlier today, i should point out job cuts. it is difficult to say what the correlation is between payrolls data and such. increaseuts show 125% over last year. an interesting figure there. erik: thank you very much. the latest jobless claims, continuing claims. another data point taking us

toward a job report tomorrow. coming up, tire makers getting a boost. we will talk about input costs. american operations, talking about among other things what will happen to oil prices. stephanie: we will be back with more in just a few. ♪

stephanie: look at that beautiful shot. you are looking at midtown manhattan from bloomberg world headquarters roof cam. what a nice thursday morning. we have got to talk news. did you know it takes seven gallons of oil to make a single tire? one industry getting a boost from the commodity slump is the tire business. michelin north america chairman and president is here with us now. i do not think any of us that.ed

the slump we're seeing in oil prices, breakdown how exactly it is affecting you and by how much? >> clearly, the input prices, oil, prices had come down. that impacts the products. a lot of the pricing is indexed. prices have come down. oilre really in the business on the other side because tires are actually responsible for consuming about 20% of the fuel a car uses. we are constantly working on new technology to try to improve. it is called rolling resistance. trucks, 30% of the fuel is just to overcome that. substantialis a improvement in michelin's profit margins. how much of that is due to the drop in commodity prices? >> some of it is in the short term. we know these commodity prices will go back up here and we are costly adjusting ourselves to make sure we are improving our

productivity and we are able to be sick that's with any market condition. erik: tires seem to me to be, there is a lot of technology that goes into making a sophisticated tire. but the manufacturing of the tire, it supplies is me -- surprises me you employ 22 thousand people. can you not automate more of manufacturing? >> i started working in the industry over 30 years ago p or i was an industrial engineer in a plant and i worked there for 11 years. i've a big background in how we make the tires. what has been amazing over that 30 your time is to watch how jobs have become automated. 30 years ago, a lot of our people were doing manual work. today, a lot of people are maintaining, installing, and setting up high-tech equipment. a different workforce. even though the manufacturing part has become automated, it does not reduce the amount of employees you have?

>> it has reduced the number. that plan had 2000 employees and today, we have 1200. but we have a lot more engineers and a lot more -- reliability technicians. a lot are operating computers and doing very complex tasks. stephanie: given you have got a number of people doing manual ,abor, how do you feel about ceo pay should be made public because a lot of it has to do with disparity between what average employees and top executives get paid? >> when you talk about minimum wage, we saw -- we are so far away from minimum wage that this discussion does not affect us. boeing,er companies, for example, a reliability technician goes through two years of technical training and starts at michigan with full scholarships.

them will earn the engineering greek -- degree to -- through tuition and stephanie: -- reimbursement. what do you think stephanie: -- stephanie: how healthy do think we are? >> we see different aspects of the economy. new car sales are up here that drives our business. miles driven on the roads are up. 17% -- elling erik: which is a better business, new or used car? >> because the carmakers have so much need for fuel efficiency technology, we have found because we are the innovator in that sector, the companies like tesla, they are partnering with us because they have got to overcome a lot of these issues,

more tires and car specific. but how specific? if i buy a cadillac tomorrow -- stephanie: i would love to see you in a cadillac. erik: it is probably not what i will do tomorrow, but if i were to, i do not have to buy only one kind of a tire? it is not as if the manufacturer has partnered with a tire manufacturer to make one tire specifically suited -- >> it is to the contrary. we engineered and designed everyone of our tires to be perfectly in tune with each one of the different levels of the cars we are selling to. there is a tremendous amount of collaboration that goes on. hasperformance of the tire a huge impact on the test problem isla's big they have got to increase the distance and at the same time improve tire wear.

the initial tires on another brand, they roam he getting about 8000 miles. targeting now to get that up to about 20,000 miles, a lot less than a normal car. to replace your tires after 8000 miles? boy. classes exciting to work with them. they are the innovator. the challenge is not only tire wear, but we cannot compromise therolling, which affects autonomy. to work with tesla, for us, is extremely exciting. stephanie: thank you for joining us today. the chairman and ceo of michelin, north america. coming up coming here for an extended conversation starting 9:00 eastern time, 17.5 minute's from now. do not want to miss it. ♪

erik: coming up later today, heather joined our market data -- i want :00 p.m. eastern time. in the meantime, the bank of england does not see much inflation on the horizon. positively dovish this morning. eight of nine policymakers voted to keep britain's benchmark interest rate at .5%. at some point, investors will begin worrying about inflation. then what? mike is the head of an affiliate of mason. he says investors do not appreciate the nuance. what he mean? mike: essentially, when we do see a change in the inflation trend, which has been benign in the last several years, you're more likely to see that occurring through interest rates

, higher inflation, rather than inflation moving higher. we know possibly as soon as september, the federal reserve will raise inflation rates. bond yields will be quite low. our investors making a mistake in pricing bonds as high as they are and yields as low as they are? mike: right now, the near term trend in inflation, given week oil prices, concerns about a slowdown in china, and generally subdued wages, are making investors somewhat comfortable, the pace of the rate increases and the timing will be pushed out. it is certainly something push by the federal reserve earlier this year. right now, given our base

scenario that the global economy will recover on a moderate basis and inflation will remain relatively benign even and 2016, and central banks are going to continue with the monetary policy, the right strategy is to toward nongovernment bonds, particularly corporate bonds. we prefer the financial sector and u.s. investment-grade credit. happens if we see the beginnings of a pickup in growth, not just here but in europe as well and perhaps overseas in europe and japan? and we do see inflation expectation accelerate and the long end of the yield curve starts to go off? that is a key risk to not a high probability, but we do think the more likely risks, our view that central banks are successful around the world and you start to see a bigger pickup in growth and expectation.

i talked about, if you do see that happen, two things are likely to happen. nominal interest rates are likely to rise across the structure. secondly, nominal interest rates will rise faster than inflation bonds. interest rates will increase faster than longer data interest rates. a type of monetary policy. erik: under that scenario, we will not necessarily's ea's evening of the yield curve. think it will flatten. in that environment, investors should probably minimize the sensitivity to rising interest rates high reducing duration. the best place to hold duration would be the longer end of the curve. you are already compensated in that curve. the spread between five-year treasury and 30 year bonds is about 120 data points. that is historically quite high.

we could see that reduced and more narrowing in that scenario. erik: thank you very much. with us from london. media,ie: from tesla to we will get you caught up on which stocks you need to know about this morning. hint, those are not the bright spots. we will be back with more in just a few. stick with us. you're watching "market makers" this thursday morning right here. ♪

erik: we are still in the thick of it and company after company is disappointing investors. julie hyman is here to show us how the stocks are reacting. julie: let's start with tesla. we saw a big disappointment. this has a lot to do with the forecast, as it does with so many companies. the stock is down 7% in premarket trading after the

company trimmed its delivery forecast for the full year. autos delivery forecast has said the model s suv is still on track to come out. that means not a lot of sales of the vehicle in the latter half of the year. that means there is also a lot of pressure on tesla to even meetthat many vehicles to 55,000 deliveries forecast. i love the comment from elon musk. he has talked about the challenges of the suv, the second row seat. he called it a sculptural work of art but it is tricky to get right he said. stocksto look at media day to we have got earnings from 21st century fox and cbs after the close yesterday. we are seeing the same thing we saw yesterday from disney and from some of the other media companies like discovery communications, falling at stealth -- advertisement sales. the toll taken by the stronger

dollar. profits doing better than estimated in most of these cases largely because of stock buyback. there does seem to be this malaise in the media industry right now. that was evidenced by the big drop we saw yesterday in the s&p 500 media index. we saw a drop of 6.4%. -- 6.25%. that includes the stocks we were just looking at as well as advertising firms and other types of media companies. take a look at this exhibit that bloomberg intelligence prepared. you are looking at the index of these medium -- media faster --t those big entertainment that we have been talking about. this is sort of a snapshot of the seachange we are seeing in the media industry, or at least a perceived seachange in the industry. questions about how

many people are cutting the cord. the earnings we're getting seem this is finally percolating to the big media companies. discussed earlier this hour with paul sweeney. thank you, julie with some early movers. tesla way down. this, some ofture the best images we have seen in the past 24 hours. you might not have to imagine this. eleanor roosevelt on the $10 bill. in june, the u.s. treasury announced a woman will replace alexander hamilton on the bill. a recent poll ranked mrs. roosevelt as the front runner to chief and -- spent 12 years as first lady in the white house. traveled the world as an advocate. harriet tubman was the second choice and sacajawea was the third. you have got to say, you go girl. erik: when we come back, john

just completed a $3.4 billion bank deal. ♪

>> live from bloomberg headquarters in new york, this is "market makers." erik: good morning. i'm erik schatzker. i am stephanie ruhle. it is thursday morning and sunny in midtown down at -- manhattan. erik: you will hear from the ceo , whohairman, john thain just completed one of the biggest deals in the industry since the financial crisis. stephanie: how about a look at

the top stories of the morning? a consensus on interest rates from policymakers in london. meeting, there was a .ote to maintain the bank rate the committee voted unanimously. it reaffirmed its expectation that when the bank rate rises occur, it can expected -- can be expected to be limited and gradual. stephanie: saying it is muted and the recent decline will have an effect until 2016." i'm for the jobless benefit hovering for the lowest levels seen a last 40 years. the labor department says there were more than 3000 new filing last week pushing the total to 270,000. experts say hirings are down because employers are holding onto workers.

viacom is the latest media company in the blue. the owner of mtv and comedy central posted a third-quarter revenue decline wider than expected. over $3ll 11% to just billion. analysts expected $3.2 million. by conn's fourth straight decline in the u.s. in advertising sales. maybe it is a positive that less people are watching teen mom. ackman's square has purchased a $5.6 billion stake in a snack maker, the holding includes four purchase contracts , not all common stocks. it amounts to 7.5% of the maker of oil -- oreo cookie. than black rock, a 6% stake last.

daily show host jon stewart is signing off tonight. 2600 shows over 16 years, reaching viewers who want their news with a comedic spin. a sign of this show's impact, the museums in washington say they will preserve john stewart 's daily show set. stephanie: the fact that foss is broadcasting the republican debate, i really like that. which one is considered real news? erik: both. our next guest just completed , $3.4 the most -- biggest billion purchase. he also has had a front row seat to wall street's transformation over the past order century. lynch, sachs, merrill and now, the ceo is back with us, john thain.

how are you? how does it feel to finally get year?al done after a john: it took longer than we thought it would take. now we can focus on growing the business. stephanie: it seems straightforward paired why does it take such a long time? the regulatory process is a time-consuming one. this is the first time they are ever permitting a new one to be created. it probably got a little extra scrutiny. a republican from alabama wants to raise the threshold. to $50 billion. john: there is no question they should raise it. companies our size, it is not

really systemically important. we proved it could go bankrupt and go through the normal bankruptcy process. it makes sense to raise it. at least you are front and center with this acquisition. when you look at the litigation costs these big ask have to pay, they have the money. but what is it like for regionals right now? erik: -- john every bank has to have state-of-the-art compliance who canstephanie: afford that? john: that is why they should be consolidation in the banking sector. anytime you can create banks where you really do not impact systemically important, there should be more of that. it takes a year to get a deal

done, that is one thing. regulatory hurdles are big obstacle. john: they have not permitted much of any consolidation. you will now start to see more. whenanie: you said earlier we were talking about jpmorgan's market cap and how big it is, elizabeth warren, does not like to see banks taking the top a gift positions out there in terms of market cap. from $2lot different trillion. that brings me to a question. the anchorednd to see. you came in after that. a bank like jpmorgan, or citigroup, or bank of america? there is a dance that the banks and their boards and their

departments are doing with the regulators when it comes to the resolution, that a bank that large could be unwound, wound down, resolved, in the event of a crisis and a subsequent collapse. a fiction?t could you ever unwind jpmorgan? john: it is a question of how you unwind it. the idea there is no longer too big to fail, it is not true. you cannot allow jpmorgan or city or goldman sachs or morgan stanley to go bankrupt in an uncontrolled well it -- uncontrolled way. them over time? of course. it would take a long time. you have to be able to stabilize. no question you have to have the capital and the liquidity to make them be stable and have the time. erik: do these big banks come

i'm talking about the biggest ones, have the funding advantage by virtue of the implicit tax support? john: absolutely no question the biggest banks are still too big knows that.ryone it gives them an advantage in the marketplace. compete with the biggest banks. we do not compete with jpmorgan. what about the fact we're seeing hedge funds and ?ending john: it is a cause for concern. they areappening is pushed out. if you wanted to worry about the next crisis, you would worry about that. stephanie: automated lenders lending and doing it based on

out rhythms in less than two minutes, are you concerned? on one level, it is great we are on thepeer-to-peer, but other hand, i am worried about the subprime. john: we have not see what happens. the online guys are not keeping any of the risk. they are pushing all the risk to someone else. stephanie: the guys who are completely screwed seven years ago? buy: maybe they should things they do not understand but i do think the model will come under stress when we come into a negative credit. the: i want to hear more, idea the next crisis might be in the shadow bank industry. john: it is hard to tell, but if you look at where the biggest all in thethose are

unregulated part of the market. people who say no big deal, hedge funds lose money and they will be shut down, look at who has invested in the hedge funds? its pension plans and retirement funds, niagara falls, and teachers association. john: that is why we should be worried about this. is those who are invested in the hedge funds. .he guy in the yacht positions on loans, they will have to sell stocks to remain liquid, to remain solvent and

perhaps meet redemption. we will see the crisis show up in public markets because of the fact they will raise money. john: we saw this in the time frame. they have to generate cash and sell assets. >> it is a self-fulfilling prophecy. john: exactly. these are publicly traded companies. public shareholders are the ones who will suffer. we have to take a quick break. we will talk about it when we return. ♪

stephanie: welcome back. back with us is the ceo and

chairman john thain. we have been talking about this acquisition for the last few minutes. it is over and done with. what are you most focused on? are you that focused on a fed hike? john: no. i do not think it will impact the economy. i do not think it should surprise everyone they will just get it over with. i got the same answer with the same expression. no. if we're think, putting too much pressure on the data points, saying this will have such a few -- a huge impact, should we be so concerned? john: rates have been zero for too long. if anything, they should've already raised rates some. i do not think they will negatively impact the economy. for the financial sector, it would be better.

erik: all of the money has pretty in,ump look making it difficult for guys like you to originate new credit. john: that is true. we hold a lot of cash. more money in a higher, short-term environment. erik: that is organic growth. if you can originate new credit thanks to the cheaper funding you have through the deposits, that is a great thing. but people want to see you grow factor -- grow faster. they wonder how you do it here it said you're not really in buying more banks. some people wonder why. who better than john thain? demonstrate too the regulators our bank is twice as big as when started. ashave to make sure we are

good at managing that structure. that is the first things. integrating about it we do have opportunities to grow. ago, weyear and a half look at a space where all of the banks have lost a lot of money. we have started lending against ships, lending to people who own ships. that is a business we're growing portfolio. do you think banks could get back into that space? john: they could, but you need expertise. the shipping prices today are very depressed. erik: what about buying portfolios of assets or businesses that they are spinning off as part of

dismantling of ge capital? john: we have looked at it. if you look at the prices the most recent piece traded the canadian spot, he traded at a price that would make no sense. mean?what does that how do other financial institutions coro if the real money buyers are paying such high prices? john: it needs -- it means we have to grow organically. there is opportunity there. one of the negatives is the fact the u.s. economy is not growing as robustly as it should. get 2.5 percent gdp growth, it means we cannot grow faster than that. stephanie: when we see the price tag the private equity giants pay, can we do that because they have got some much money it does not matter? john: yes, they are just putting

money to work. but in principle, should they be willing to pay higher prices? understand,hard to some of the prices get paid from our perspective it we look at some of the returns we get from our shareholders, we cannot justify those prices. erik: they're not in a dissimilar position than your shareholders? we have seen some enormous deals, pharma: you. that is not where you are playing? why hasn't there been more?

to middle we talked market companies and the people who run them, they are still concerned about the economy and the lack of gdp growth. they're worried about taxes, which we still have one of the highest corporate tax rates. worried about the cost of regulation. they are not being aggressive in terms of being willing to borrow more money and expand. erik: they face the same challenges take company ceo's his face. they are emboldened. john: i think it companies are very different. ways to deal with their tax rates. they are also better able to deal with the regulatory environment. big companies. today, as we look at bill

ackman, when nelson is already there, do you think this is healthy for business? times --re are two kinds of activist. improvemanagement to your returns. i do not think it is fair to combine all activists in one group. activist not in your door? john: yes. after they decided they were not going to be a will to get a quick slip, they left. erik: who was it? john: it is not necessary to name names. that isw did you know what that activist was after?

john: the whole game plan was to sell the company pair that was not my job to sell the company. my job was to fix the company. selling it would not have maximized value. the market value is $4 billion greater than when i started. how much art or your job today? john: it is not that much higher. -- harder. . lot of things are wrong it is in good shape now. feel about what was just decided yesterday, that you will be forced to compare your salary with that of employers? john: it undercuts its credibility. his is not something

shareholders care about. as a political statement. think about this. what the we disclose top facebook player makes versus the guys who sell hot sauce in the stadium. it is a purely populist, political move. benefit to shareholders. they already know what i get paid. erik: we thank you very much. the ceo of the cit group. a big week for him completing the acquisition. stephanie: don't go away. when we come back, the opening bell in a few minutes. ♪

vonnie: a deal to let you know about. a $1 billion deal. dollars andeven

cash, a 32% premium yesterday. merge a software allows medical imaging. it had put itself up for sale in september. it had a depressed valuation. it has fallen to ibm, .6% in the premarket. thank you. a few minutes away from the opening bell here in the u.s. you know what that means. tracy is here with three things you need to be looking at this morning. also with us, the founder and president of global strategies. kick it off. aboutve been talking apple. if you think apple is bad, take a look at shares of samsung p or they are down 18% so far this year. samsung plagued with slow growth

around its galaxy phone and things like that. it is amazing how much more attention apple gets in that space versus samsung. apple you could argue is a huge weight in s&p 500 and deserves the attention. the entire index is almost built around it at this point. it is close to you in the united states and you pay a lot more attention. commonality is they are affected by china because both of them, the apple stock is falling, china because it is a big market for sam's -- samsung start offare finally, in terms of the model -- you

have a lot of things going on in common. is telling you what is going on in the markets. everybody's concerned about demand. is a knock on effect? what if demand slows and apple is not able to maintain its pricing power, which is what it requires to keep its credible margin? that is a much bigger risk. requested is a risk. you're talking about having to remain high, and it has for many years. longer beer will no supported. the high-end supporter, it is not supported well. stephanie: number two is emerging markets again. remembers wall street, these were the high growth

countries for returns over the next three years. look at the chart. emerging economies. they're going back down to zero. they will grow at the same rate here that means wall street is no longer in love with them. potentially years. let's bring the chart backup. red.e measuring this outou were to take it out of the category any longer, is rush anything like china? is brazil anything like india? >> it has not the right i have been to each one of these this year. i can tell you some opportunities are better than other places.

the russian problem is one of sanctions and oil prices. brazil is an immense economic mismanagement. china is essentially, the workforce is topping out. they want to maintain economic growth. in the indian case, you have a lot of demographic advantages. they are very different. having said that, they are still brazil, a country i have been going to for 35 years, never stays down for a long time. take a look at russia. they will not deprive foreign investors of the property. treating it as an emerging market crisis.

are prepared for sanctions to continue through the end of 2017. a very cautious attitude. they will come back. the valuations are very low. great companies selling at less than 10 times the stock exchange. finally, you come to india and you're talking about a country has note prime minister done as much as foreign investors want. it is probably the younger population, the average age is 26. they have a lot of -- a long amount of consumer spending. that is a common point. fromrent as he said to her the investor viewpoint, you have to think of something, a common thread running through all of them. you need get jim o'neill p are not would like to see both of you. three, i get really excited whenever there is fixed income that comes up.

aig is selling $300 million backed byonds insurance written. aig is selling a type of insurance instrument or yes. iscomes as higher yield or have securities. stephanie: aig selling -- >> the u.s. government is doing the same thing. they also have risk transfer deals. it does come from aig. peter is famous and is now the ceo of aig. fun there.

erik: month -- not the monster inside. question investors are getting complicated for taking that risk. like we had last time, securities, a major part of the problem. we do not realize that until after the fact. here we are saying investors search for new more yield. and 2007, >> you are spot on. the problem is with the overall economic policy.

what are they supposed to do with zero inches traits? stephanie: in that economic policy, any major overhaul in the last six years and improve the way they conduct their business, why be more confident in the rating system now than we were then? >> we're going to have some kind of a major correction. that is when the fed increases interest rates. you probably have a turn taking place. but then, why single one particular thing that affects high-yield bonds. several asset classes when that happens. eventually, it will happen. this is an asset classes and a top-down macroeconomic problem.

thank you very much. stephanie: julie hyman is with us. julie: what we were talking i want tot earlier, talk this morning, u.s. been talking about it, the shares are up about 3%. this is the play vick -- the act of its playbook. he wants to see the company cut cost. who could be a buyer? maybe kraft tines and 3g, which controls that company, reuniting elise -- andt mondelez. we shall see if that comes to pass. beanticipation there will changes coming to the company, we will see shares move higher this morning.

we have got to talk about another bill ackman that. his billion dollar short bet against herbalife. up 11.5% after coming out early. second-quarter sales were down 11%. the economy is seeing strong sales in china. they rose 39% or you will like this. let's look at my bloomberg terminal to see how herbalife has done. i went all the way back to the beginning of 2012. even though act and did not announce his position until the end of the year, he announced somewhere in here. we do not know exactly where it was. we assume it was somewhere in the $60 range. with the stock trading of the $63, you can draw your own conclusions. 80 looking ath as

early 2014. it has come way down from those to allegehe continues that herbalife is a pyramid scheme and the company has fought back aggressively with its own pr campaign. that is where we stand. i finally want to take a quick look at fitbit as well. this stock has more than doubled in the near less than two dozen months. today, when you have a stock performance like that, earnings better deliver on every single little line item. there is one, the gross margin college construct -- which contracted. the company has been ramping up production as well as marketing. that spending is taking its toll. thank you so much. fitbit is down and herbalife is up. julie hyman is giving us the latest. capital,n venture putting money to work.

a staggering case. where are all those big dollars going and what trend might you be able to harness? we will be back with more in just a few. we're not letting you go anywhere. ♪

welcome back. 2015 promises to be a banner year for d.c. inc.lobal venture capital to over 1800 deals, raising $32 billion in the second quarter. of $1ions in excess billion doubles in the second quarter through 24. insight venture partners putting dollars to work here the managing director joins us. i feel like all we keep hearing about is how much money

companies are raising. we are talking very little about how much money companies are making. why is this and when will we start to see the conversion? where exactly are you making money? >> probably more than half the companies are profitable today. we are primarily a later stage investor and not an early-stage investor. driving thehings losses you are talking about is unprecedented growth rates. effectively, if the company is able to grow at 600% year-over-year, markets are willing to tolerate making investments in sales and marketing. mature, public investors and private investors actually demand -- --you are talking about there are concerns and we have seen this play out with public at traded companies.

>> the markets have been very for companies to be able to raise significant amounts of capital. there are huge differences in how effective that is being deployed. >> are also facing an immense amount of cash in hand. you have to put them because the people have invested and are looking for returns as well. what are the chances a huge number of them do not pay off? the more and more cash you have on hand, the greater the dentist to pick investments not quite up to par. i like to think when rates go up, and money is no longer a cheap, is when the time runs out and you will ask who is >> lie would say is, you look at any market, a low rate or a high rate is a game that a

small number of companies are driving the returns. that was true 20 years ago. if you look at when google is created, it was a huge driver of venture returns. the returns were significant lower. that is not unique today. is it easier today to be able to raise capital for making significant investments in makinglike marketing and it more excepting a firm race today? the answer is yes because technology is one of the few areas where public investors can find significant growth. there are very few vertical markets today where there is actually organic, systemic growth. that is one of the reasons why. the day that private investors will not be able to make those bets, it is the same time when they stopped by initial public offerings. if got a market looking for growth.

rememberld enough to 1999. was what used to be said in 1990 nine and early 2000. wise today different story? today a different story? >> if you look back in 1999, a lot of what would happen is companies were raised venture backed money and basically investing it to buy products with other investors. ourvested in your company, financials both look good. today, that is not the case. if you look at the customer base, companies your viewers had all heard of, fortune 500 companies. there is no higher enhancing investment companies can make. in the business

of is liquidity, selling the companies or taking them public. are you finding you are having more success? historically, half of the events have been ipo's and half of been sales. and slanted in the last 18 months. the public markets have been strong. these are common cycles. you have markets where m&a, you saw ibm bought another software business. it is a large strategic same challenge. they need to find growth. m&a, both in technology and not technology, and the day, because capital is cheap, it is very effective for them to drive. i do not like to treat one better than the other, but one of the things we are seeing is

software affecting every industry. increasing productivity in every industry. today, you look at the wall street journal. significant issues with compliance around customers they brought into the bank. there are new regulator laws -- the banks have a much better understanding of who the customers are. there is a huge regulatory burden. cio told me compliance budgets the next year is $859. compliance for large banks. that would be an example. another one would be education. investedver $1 billion

in software companies and education. it is historically underinvested and is now catching up. they are creating an analytical platform to make sure teacher quality and technology in -- implementations are all better outcomes. you can make lots of investments but outcomes are what matter. individual schools used to make sure, and things like common core coming to the four, it becomes more important. a company founded by richard in healthe talk a lot care about how to treat sick people and what about making consistently healthier? to basically make sure they are in fitness. insurance rates for the companies, fitness programs through competitions and other

solutions. a bloomberg television fitness challenge is going on right now. thank you for joining us. you're watching bloomberg television. ♪

stewart is signing off as the host of the daily show. we wanted to take a look at the most scathing jabs he took at the world of finance. exactly how he feels. take a look. jon: welcome to the daily show. the economy. financial markets. the 50 day moving index. [laughter] yesterday, the dow industrial , following the

largest bankruptcy in america has. the lehman brothers collapsed after leaving it in the hands of the youngest lehman brothers, bongo. accuse of advising people to buy billions of dollars worth of shares in companies they knew were failing. i believe the word for it is fraud. everywhere you look today, financial catastrophe. let me get this straight. wall street does not like the particulars of the $1 trillion bailout of wall street. let me briefly explain the rescuer, rescue we relationship. we just bought an insurance company. we are broke now. we just paid a lot of money for someone to [beep] us. toy one guys brought the economy to our knees and that is why we don't need reform? everybody has got to

walk through a metal detector? i am sorry i committed systemic fraud for 10 years. how about i give you a carpet? i know you are a busy man and your time is valuable so. here is a little something for your trouble, you know what i mean? there is a simple credo that exists to cover up any wrongdoing. that is what the money is for. [laughter] it is that old saying, do not do the crime if you cannot pay the nominal fine. let me see if i got this straight. the only people who fully recovered from the financial meltdown are the ones who caused the financial meltdown. by recovered, i mean apparently ind dipping their balls gold. i actually give up her u.n.. the banks lend to we are waving the white fyke they're just take the money. i do not care at this point. take the flag here and i do not care. just go. take the money. the rest of us will start a nut-based economy.

we are just going to have to pay nobody on wall street is a squirrel. [laughter] stephanie: that was amazing. is the cannot believe it last night of "the daily show. a big lineup or for more, alan krueger and tim kaine. of of course, the leader black rock and what it means for investors there in atlanta, the economic view. stephanie: i will see tomorrow. ♪ -- see you tomorrow. ♪

matt: bill ackman has a craving for an or you. billion stake in

snack maker monda leads in a push for a deal with craft. ipo is atet fitness' the top of the range and we will have an interview with the ceo. matt: there are other ways to invest in island of puerto rico and its potential recovery. matt: good morning, i am matt miller. erik: i'm erik schatzker. look at theh a news. filings for u.s. unemployment benefits are hovering your the lowest level in four decades, a sign of a strengthening labor market, poss