Police say asouri, man was critically wounded after he shot at police. Which get down. Erik they had been tracking the he open fire. Donald trump will not apologize for comments he made about making kelly. He phoned in to deny he did anything wrong and says he has no problem with women. I have had an amazing relationship with women in business. Yousay that about a man, if say that about a man, it is a great honor area it is also a great honor when you say it about a woman. Stephanie Hillary Clinton will roll out one of the big ticket policy proposals of her campaign. A 350 billione plan to make college more affordable. We need that. A pair of suspects fired shots in is american consulate simple. News agencies say one of them was caught. No claim of responsibility. After jets arrived in turkey. Erik Frank Gifford being remembered as a star on and off the football field. He died yesterday at 84 years old. He had a hall of fame career for the new york giants. He was very call him. He was a calming presence. A man of style and class. A great guy to work with. Erik dead at the age of 84. Those are your top world and national headlines. It was described as Kathie Lee Gifford lost her husband. Erik added value. Stephanie now, time to get you to the top five things in business. Erik we will talk about the big deal. Berkshire hathaway adding another company to its portfolio. They are purchasing Precision Castparts. Michael moore has been following the deal. Stephanie clearly you had a party weekend. Deal why is this important . Inhael it shows the shift berkshire of that Warren Buffett has talked about from a stock to an industrial conglomerate. He assembled manger he assembled manger Manufacturing Companies under one roof. That is a call on what he has said about the u. S. Economy, how strong he feels about this country from an investment perspective. Wonder if its me is partly because it is a matter of fact that almost nobody in the world could be as good as picking stocks as Warren Buffett or that the era of stock picking is over. Areead, the prospects business. N building a it becomes harder to become a stock picker when you are as big as berkshire is. Erik the other thing that struck me, Berkshire Hathaway went into the weekend with 65 billion in cash. Using barely a third of that for the acquisition. Michael he says he likes to have a lot of cash on hand, in case another deal pops up. They were at 40 billion three years ago. They have added 25 billion from the businesses turning off this much cash. It will grow more. He will probably do another. Erik it makes me wonder why he is including more leverage on this deal. You would have to take away from that some of the Precision Castparts. Stephanie we have to move on. Michael moore. I am going to give you number two. The u. S. Economy is near full employment, even as inflation remains low. Those are the words of Stanley Fischer, who just spoke with tom keene. Employee has been rising fast in relevance to previous performance. Inflation is low. The situationout is not to move before we see inflation and employment turning to more normal levels. Stephanie that is not all. Alan greenspan pointed out a picture that points to. American productivity is not different from zero growth in the last six to eight quarters. The cause of that, if you work backwards, it is Capital Investment has been inadequate assets you amount of need. Erik what is in your field of vision . I am looking at oil. Trading ating nearly the lowest level in nearly five months. This is the response to whitening concerns about excess supply and weak demand. Since theumped 25 peak in june. Is still drilling more. The trend has been mirrored by what is going on in europe. I want to point out something that might not cross the mind of the typical american. What this means for norway. They are a big oil producer. Norway has been a standout economy during the era of High Oil Prices and they have been able to sock away hundreds of billions of dollars, turning it into the Worlds Largest. Norway may have to do what it never thought it would have to do, dip into the rainy day fund. The yellow line is oil money spending. Lines are about to cross, which puts norway in a. Ifficult position they are possibly faced with no choice to do so because the rnative is going to the are shanghai index. It saw its biggest gain since july. Beijing plans to consolidate numerous state owned enterprises. Investors, many have stepped out. They are saying hate the game, not the player. Given the swings we have seen, the massive amount of world changing and government intervention, how can one invest in a responsible way. Erik talking about bond spreads. Widening at a time when stocks remain near record highs. The spread has expanded almost half a percentage point from almost a year ago. The market almost always leads the stock market. Investors should have the same view as corporate america. Earnings power is accelerating. You have more money to pay off interest and principal. Starts happening, spreads climb at a time when the trend for stocks is up. It raises questions about the sustainability of the stock trend. Stephanie in the credit markets, maybe this move is being led by a liquidity crunch. If you think about the investors who are pushed because of , becauseive easing they are searching for yields, those are investors not used to trading in that space. When you could not get out of those positions, there was a liquidity freeze. We are not necessarily in crisis mode, but there are liquidity issues. Erik a surge in deal making could make for another record and mandate quarter. One area appears to be getting less behind. A glimpse into the psychology of the middle market. What keeps the companies on the sidelines. Stephanie it is time for our top stories. The Worlds LargestBeverage Company is trying to change the debates over obesity. Health experts say that code is trying to deflect criticism about the role of sugary drinks in obesity. So states are set to challenge epa limits on power and missions a group of state attorney generals will fall will file lawsuits. One issue, whether the epa exceeded its authority. Fantastic office, four, a flop. The reboot of the franchise took in 26 million over the weekend. Well below estimates. The number one movie for the second week in a row. The film brought in more than 29 million bucks. Those are your top headlines. Erik stephanie, i need to change topics. A record year former jurors and acquisitions. Totals 1. 3 trillion. Look at the yellow line. A surge in volume range to date, multibilliondollar deals. Bob is the executive vice bank. Ent of citizens he is here to explain why deals are not getting done. I want to begin the conversation with an excerpt of a bank that does middle market financing. We are concerned about the economy and the lack of gdp growth. They are worried about health care costs. We still have one of the highest Corporate Tax rates. Theyre worried about the cost of regulations. They are not being aggressive in terms of borrowing money and expanding. He raises good points. Seeing is clarity and concern. Companies have seen the results for four or five years. They have decided to break. They will get into the acquisition game or they feel they are going to focus on their customers and they do not want to put that at risk. Is i am seeing a good demand curve for my products. Processwant to enter a where my customers are put at risk. Stephanie what is going to unlock this . There is a link between a sddle market, baby boomer age, when they want to sell this. When they were in their 40s, the snowball was not getting pushed. Erik are you talking about private companies . Yes. We were client who talking about making certain acquisitions. When he saw the Purchase Price multiples, he said now is a good time for me to exit. Now, we are pursuing an opportunity for him to sell his business. Stephanie these companies can ofnd an enormous amount money. If i may midmarket economy, i do not have that cash. Ongoingo you meet the a study on middle market and mandate. You can find it on the internet. Stephanie will only come back, the tugofwar in silicon valley. Welcome back. We are taking a closer look at oil prices. At its lowest level in almost five months. West texas intermediate futures were little changed, erasing an earlier drop. Oil trying to avoid a fourth straight consecutive in the red. Me is chris. Director of strategy at bell curve capital. Thank you for being here. Oilsare many reasons for decline. Week data out of china overnight. How nervous are you about what is happening over there . Chris i am not nervous enough to believe the situation will go below the 42 handle. Individuals think that as a baseline level. Parting that we are losses overnight from the horrible china number makes me believe we are seeing a bound. It could fall through the session today. U. S. Producers are returning rigs to the fields. Theyre up for the fifth time in a sixweek in six weeks. Rigs backcers sending to the field at this time . The key is who is sending the rigs back . It is the big toys. You are seeing a lot of aggregation in between the big ones, going back to the shell market. We believe chevron, bp, and fizzleyou will see them out as the d leveraging a small guys are going to get out of the market now. It is a push to eliminate competition, we believe. How can investors take advantage of what is happening . The fact that you see such a movement, you do not want to get in front of this train that is going down. High dividend has not hit a bottom. You want to see it hit a bottom before you make a move. Especially into the futures. Stick to the equities and the etfs. Thank you very much. Erik thank you. It is time for our top stories. Warren buffett has made one of his biggest deals ever. Berkshire hathaway agreed to buy Precision Castparts. The price, slightly north of 37 billion. Greenspan calls that one of the most serious challenges. Low productivity has become a huge problem. To tom keene. Tom american productivity is not significantly different from zero growth. Because of that, if you work backwards through the chain, it is Capital Investment has been adequate to fund the amount of assets you need. Erik greenspan also said we have a pending bubble and the bond market. Stephanie the epa says 3 million gallons of toxic wastewater has spilled from an abandoned gold mine into the animus river. That is three times the limit. Supervised crew was at the minds. I am so proud of our nerds. It was wait until next year. We finished second over the weekend in wall streets midnight madness fundraiser. Steve kunz of pine River Capital topped thetalked 21team field. More than 3 million were raised for charity. How cool is this . A Scavenger Hunt around new york city, true problem solving. Like super nerd meets i love new york. I love everything about it. I am proud of us for coming in second. Coming in second hurts worse than losing. Erik come on. Stephanie it does. Erik he would not want a silver medal at the olympics . Stephanie i would, but i am just saying so close. How about the e. P. A. Story . Horrible. Erik time for agenda items you want to put on your calendar this monday, august 10. Before we get into this, it just occurred to me today is my 17 year 17year anniversary at bloomberg. Stephanie happy anniversary. You have been here almost as long as mike bloomberg. Erik this morning, the Labor Department starts public hearings on the standard rule. The proposal is intended to reduce conflict of interest among brokers working for retirement accounts. Stephanie at 1 30 this afternoon, Hillary Clinton unveils College Affordability plans of event in new hampshire. The later this afternoon, maker of grand theft auto reports earnings after the bell. Stephanie weve a lot to cover today. I dont know what is more exciting. Greece back in the headlines or hans nichols in new york city. He is bringing us an update on europe when we return. Stick around. I want to talk more about colorado. Over the weekend, i took my kids to a nature reserve. They said this is amazing, it looks like another planet. No, kids. It looks like earth. We just need more planet protection. Ominous clouds over london this morning. Further south in europe, negotiations to secure a third wheel out for greece are underway. The greek government is hoping to conclude talks for a rescue program by tomorrow to avoid defaulting this month on bonds held by the European Central bank. Hans nichols gracing us with his presence. Euros. T is 86 billion Erik Stephanie why are we having the conversation in english . S everyone says we are any positive place to proceedings negative in a proceedings or any positive environment and we have to be clear we have not heard anything from the germans. Until we hear from the germans stabilitye european mechanism. We have the International Monetary fund, the european civilian mechanism. We have someone from the European Commission and someone from the European Central bank. The new entrant is the european stability fund. Hans we will talk about that later. I can see what is on your screen. The camera cant. Erik by shouldnt we be why shouldnt we be optimistic . In theory, the hardest part is done. That was getting the greeks to agree to the demands. Structurally, you have the german saying they will not do a deal unless the i. M. F. Is on board. The i. M. F. Says we will not do a deal until later in the year. Ask anyone who follows this in athens. Can there be a deal without the i. M. F. . Erik remind everybody why the i. M. F. Has not been defaulted on. Hans they are in arrears to the i. M. F. There has been nonpayment. Germany wanted the i. M. F. To be a long. My pessimism is because structurally, i cannot get there. I see sides too far apart. I still dont know how you get around the fact the germans want the i. M. F. To be involved in the i. M. F. Says they will not be involved. Erik at this point, surely it would feel like cutting off ones nose to spite the face is nothing could be done. The hard work was done last month. Everybody knows greece needs more money to pay salaries, pensions, and payback creditors. Hans im hearing the voice of a man who wants to seal the deal. That is what the markets wanted all along. Whatif there is a deal, happens when there are new elections in greece and you have a new parliament . Structurally, they are far apart. They can gloss over differences. Paid,f we get the e. C. B. Even if we get the European Central bank paid on august 20, what do you do in 2017 when greece is still digging themselves out . Erik again, in theory, if for six or seven months under the auspices of european monitors, maybe enough goodwill will be generated for the germans and others to agree to a little bit of debt relief. Whatever form it takes. Hans a little bit of debt relief to a is like telling an alcoholic they can have a little drink. To them it is not something you should try because it is not allowed in the European Union rules. Stephanie we are the ones you make the rules. Hans you have to go back to countries and rewrite treaties. Bore youhink i now, wait until i talk about rewriting the lisbon treaty. I will get excited about it. What am i not telling people . Stephanie keep going. Deal or no deal, what is the timing . Hans deal, september. Fall apart later. Erik what happens with the e. C. B. . Hans no one knows. A deal this week, and it gets done. But eventually the structural problems stephanie hold on. From the markets perspective, doesnt the market just need a nondisaster . The market just needs things to be kind of ok because from an investor standpoint, are we really digging into think about the wellbeing of your average german citizen or greek people . No. We are saying, is there an island in the southern part of your that is going to blow up from an economic standpoint. If not, ok to be long and strong. Hans then i am with you. And apply the expression. You are familiar with flying commercial. Stephanie i think we have to turn to one in a moment. There is a lot we can cover with you this week. Erik we will call it a conversion on the road to athens. Coming up, a talent tugofwar in silicon valley. We will find out where top tech recruits want to work and how those companies are winning them over. Next up. Erik welcome back to Market Makers. I am Stephanie Ruhle. There is a tug of war for talent in silicon valley. Google and facebook are not the only copies fine for the attention of College Grads from elite schools. They are taking advantage of a new platform from a company aimed at connecting students with desirable employers. How does a startup retain and attract star power . Lets ask the chief Business Officer and the head of university and diversity appsitment programs for dynamics. We think of traditional recruiting from Big Companies and superstar students. It is about having a relationship with five or six great schools, doing campus events, spending time, shaking hands, offering stress balls to the students. Has this changed . It has not changed enough. Shockingly, the way most Companies Recruit is the same way they recruited me 15 years ago in college. Ofre has been huge amounts technology that has come out in 15 years that enable those relationships to scale. We believe companies leave 95 of the value on the table by just going to the five or 10 schools that their founders went to and that are close to them. There are hundreds of schools with fantastic students that companies are not reaching. Erik i remember when i was at deutsche bank. There was a time when i ran nontarget school recruiting, which meant if you were outside those five or six schools the bank had a relationship, your resume ended up on a pile about this high. And it was categorized not even by your name but if you had a referral. If you were a superstar student at a nontarget school, you were somewhere in the bottom of the list. Chances are, it never got looked at. That seems to be the case in the financial industry. How has this changed in your world . I think it has changed because you are able to target proactively who you want to talk to and get ahead of them before they come onsite or before you go to the career fair. It is definitely a competitive advantage that levels the playing field. Erik i guess what we would like to know is whether you are peopleto hire or find who either are not interested in working for Larger Tech Companies or dont want to work and wouldompanies rather work at a Smaller Company. I think we are looking for somebody who wants to get in there and make a huge impact. With our engineering culture, we are run like a startup within a startup area i have a fresh grad that graduated from Carnegie Mellon in december. He has already thought of the feature going live with our next product release. He started in april and has already made that much of an impact. If you are hungry and want to make a difference, going to a Smaller Company is the way to get that done. Erik how many new College Grads are you going to be hiring total 2015 . 2015. We do it more on the schools schedule. Grads, i hope to hire 20 or more people. Jessica, what does this mean for companies and schools who have spent a huge amount of money building relationships . If i run campus recruiting at harvard, one of the biggest i can say is no one can place you better than we can. We have the relationships. Jessica we have a formal a toptierp with Computer Science school. They came to us because they said you have more information and relationships with students. We have an incredible amount of information about students that Career Services dont have. I would say we are not competitive with Career Services at all. We are very additive. We make every caps visit better campus visit better. Standing at a career fair for eight hours hoping students come to you is not the best way to find the right students. It is not the best way to find students interested in you. That is what piazza does. You are reaching out to students before you get to campus. You are finding the right students in a relevant way. You are reaching out to them personally. Youre getting them excited about your company so when you show up, it is not about who has got the selfdriving car, it is about who is solving problems you want to solve. Erik heidi, 20 to start using the platform . Ago and started a year was one of the first 50 customers. Erik how many kids have used it to higher . Heidi with just sourcing, we have hired at least five. City 1 of the students i met last year on campus 61 of the campus i met with students i met with on campus we interacted with on piazza. Are noie students longer having many different experiences before they go into the workforce. In the last 10 years, we have seen students getting internships from the time they are sophomores in high school every possible year because the best companies seem to be insistent your resume needs to look like internship, internship, internship. When those people enter the work force, their problemsolving skills, this is all they know how to do is be on the recruiting track to get a good job. Heidi right. It is competitive. Students will have 5. 0 g. P. A. s from m. I. T. With four or five internship experiences by the time they graduate. It is hard to make a name for yourself. Piazza really helps with that. Companieshat a lot of are looking for is not just the work experience. They are looking for passion. We hear from Companies Find me the students that have won hac kathons, built their own apps, going above and beyond, because those are going to be making the biggest impact and are not just in it for the money. Stephanie of all the internships i have ever had, and they were useful, having been a waitress and dealing with seven different tables and the kitchen on fire prepared me for work or than anything else. Thank you both. Musk goes wingn walking. You will want to see that. Stephanie welcome back to Market Makers. I am Stephanie Ruhle. It has been a rough ride for one of americas most beloved stocks. Apple shares have fallen nearly 10 over two weeks. But analysts are coming to the tech giants defense. Ramy inocencio joins us with analyst action on the street today, specifically involving apple. What are they saying . Ramy you can see apple is up in the premarket by nearly 1 because of three analysts saying they will be bullish on the stock. Bernstein, bernstein says apple iphone sales could rise in 2016. We got bad news on july 21 from apple when it missed sales targets by 1. 3 million devices. Bernstein is saying apple can take Smartphone Market share from samsung. Is is apple could gain from more customers eligible for upgrades as well as rising incomes in china. Looking to oppenheimer, oppenheimer also bullish. They say the decline is unjustified. They say apple Growth Potential is also in china and some of the devices we have been talking about are underappreciated. One of them is the apple watch. It does caution the biggest risk to investors is they might switch from smartphone stocks to tech stocks. They are keeping a price target at 155 per share, the most in the three analysts weighing in on the stock. Finally, apple is being defended by number of nomera who says the Bear Sentiment is overdone and they could take market share. They are reiterating a buy rating and 145 price target. How about the Digital Treasury secretary carl icahn who is a big fan . Erik thank you. It seems elon musk still likes an adrenaline rush even on vacation. Here are pictures of elon musk and his wife wing walking in england. In a photo posted to instagram, he says he went for a nice wing walk adding, what could go wrong . Erik we stephanie we will be back with more in a few to talk with Warren Buffett. Stick around. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and Stephanie Ruhle. Erik good morning. This Market Makers on august monday. Wake up. Im Erik Schatzker. Stephanie and Stephanie Ruhle. I think we should kick it off with top stories. Erik it is one of the biggest deals ever for Warren Buffett and Berkshire Hathaway. Berkshire agreed to buy a company that makes equipment for the aerospace and in the the mesh energy industries. Lowprofile but the price anything but. 37 billion in cash trading inastparts line with the premium this morning. Looking for clues as to when the fed will raise Interest Rates . The fed vice chairman said the United States has almost reached full employment. He said that is not real issue. The problem is not with the part that is unusual in the deal mandate, mainly employment, that is doing fine. It is with the inflation part. If we adjust inflation target is, we would be in the same situation. We have to be doing more possible. Many factors contributing to low inflation are temporary such as the price of low the less oil and commodities. Hillary clinton will start rolling out one of the big policy proposals of her campaign today. In new hampshire, the candidate will propose steps to reduce the cost of for your public schools, make to your Community Colleges free and cut loan Interest Rates. New hampshire has the lowest student rate that the country. Stephanie a highlevel source tos a letter has gone out team owners last night announcing a partnership between under armour and the league. We thought it was only nike and adidas. But that is not necessarily the case. Under armour will be the title partner of the combine and presenting partner of the youth basketball program. It will also team up with the nba to launch a fit mobile application. You will see under armour logos on son nba merchandise. We are going to break this down. We heard this last year. There was a big rattle because adidas was pulling out. You got to think this is as much about adidas as it is about nike and under armour. In the 1970s when adidas point out, they were underestimating the power of what nike could be. It seems that is the same case. Before nike, it was adidas versus puma. Stephanie they made way thinking who will nike beat . We were talking about adidas as james harden was a free agent. Adidas paid up just like nike paid up for kevin durant. If you ask yourself to name and adidas athlete who won a championship in the last year, it is tough to do. What have we seen happen to adidas . They lost michigan to nike. They lost notre dame to under armour. You are scratching your head saying what is adidas strategy . If you are nike, you have all the money. It comes down to who can spend the most, it is nike. Under armour having to finance a partnership with the nba, again this is a case where you will see under armour, nike on the same playing field. Nike rarely wants to even acknowledge them as a competitor. Guess what . They are all in bed together. Erik i want to take one moment to give some credit to kevin plank because time and again, it seems as though plank who runs a much Smaller Company the nike and adidas, does these deals, outsized in dollar value or personalities whom he has identified as the next under armour ambassador. This is not a personality deal did think of jordan spieth. There is something about him to give him rare insight into the marketability and star power of young athletes. It is also a way to get into the leak without paying top dollar to get in the front door. You are getting in the side and back door. Having a partnership with youth league is connecting with their consumer, kids, boys who want to wear the logo. There you go. Speaking of leaders, this guy knows a few things. Warren buffett, his Berkshire Hathaways 37 billion deal to reduces itsn reliance on insurance. Berkshiresone of biggest ever. George, what do you make of this deal for potential deal . George very interesting. Try tos like warren is get exposure to the aerospace business. It seems he is a believer in the aerospace cycle. That is more demand for travel by air. Populations in developing markets, especially asian, income is rising, they will demand more air travel. With laura lower fuel prices, there will be more demand. He seems to be going for that exposure. Erik there has been consolidation. Warren buffett has bought Company Three businesses. Is there anything precision cast parts could become part of or where there is synergy opportunity . George besides dairy queen, i dont think theres anything you could attach it to. This is a very different kind of. Usiness he holds right now these businesses are very related to the engine. They build components of aerospace engines. There is a lot of technology in the processes, high barriers to entry. I think he is going after that kind of business. Various to entry, good margins. High barriers to entry, good margins. I dont follow Warren Buffett a lot. It was interesting the transaction they announced over the weekend. But i dont really follow warren a lot. Erik you mentioned high margins. Has done castparts margins north of 30 . How is it possible in an industrial business to generate that kind of operating income . On the contractor side, im looking at lockheed martin. Lockheed martin has margins have thought. Half of that. It is very complex and few companies can do it. The ones that have the technology to do it earn a higher return. Lockheed has a lot of other stuff in their portfolio. Erik i just threw that out for comparison. Who does Precision Castparts compete with . George the barnes group is another competitor. There are a lot of smaller competitors, some not even public companies. Erik thank you, george ferguson, on Warren Buffetts latest big deal. 37 billion. Coming up, a media meltdown. We will talk to immediate investor on where he is finding opportunity. Stephanie welcome back to Market Makers. I am Stephanie Ruhle with Erik Schatzker. It erased a cool 41 billion in market value. A drop in ad sales and concerns about sustainabilitys affiliate fees triggered selling. Greenwood chief Investment Officer walter todd joins us. He is an investor in disney and time warner. 49 billion in market value . Ouch. What do you make of this, walter . Walter it was an ugly week. When stocks go down you have to assess why. Is there a change in investment piece . We believe there is incredible value in the content of these companies regardless of how people watch media, they will still have to pay for the content they watch. Erik if you are looking at it from an investment, clearly the content revolution is not going away. It is how it gets to us that is in question. Do you feel after the selloff, a stock like time warner trading at 17 times over earnings is a good buy . Walter if you look at traditional media and disney and time warner, they are trading in the mid to upper teens which we think is a great value given the Growth Profile they had despite concerns around ad revenues. They will be growing in the midteens as well. You can contrast that with netflix. Granted, they are growing faster but not 400 . Stephanie is the traditional cable bundle dead . We thought the one Thing Holding it together was the power of espn. We have seen maybe that is not the case. Even admitting they have had a notable slowdown. Is this a sign the bundle is over . Walter i dont know if you can say it is over. This is an evolving situation. For us, whether that bundle it evolves or disappears, the owners of the content have the value in our opinion. Espn, disney, whether they go direct to consumer or do that through netflix or another medium, it will still have to be paid for whether through the traditional cable bundle or not. Clearly, it is any falling situation. Some investors got scared clearly, it is an evolving situation. Some investors got scared last week. Top is here tohe stay in the cable bundle begins to unravel, does that endanger or put at risk the predictability of the revenue and earnings stream . If it is goingd to change the way they make the majority of their money. That is something we will have to evaluate as it occurs. People are going to have to pay for those assets regardless of how they consume them. The makeup of what that is in the future may change. For us, the content is where the value is. Erik may be one of the question marks is around how much is being paid for the content. Over the past few years, you have had the situation where the netflixes of the world and amazons have been competing with the Cable Companies for content. If the cable bundle begins to unravel, there is perhaps less rivalry and maybe less money going around. Walter it could force consolidations. You mentioned h. B. O. , which time warner owns. These companies are testing this overthetop platform. Espn could do that in the future. We will have to see when that time comes and what the dynamics and economics are. Clearly, it could force consolidation in the industry. Erik what is your favorite pick . I know you dont own netflix. What do you own now . Walter i would put disney at the top of the list given their unique assets. Think about the assets, pixar and marvel. They have seen the value of content and aggregated that. We think they are very wellpositioned. Stephanie thank you, walter, for joining us. Chase after the bell, the rise of the burgers. I loved it when they brought back the curly fries. We will see what is cooking at shake shack and what investors need to watch out for when the Earnings Report comes down. Erik here is a look at headlines. A man shot by police in ferguson is in critical condition. Officials say the man was wounded after he opened fire on officers in the st. Louis suburb. This happened on the oneyear anniversary of Michael Browns death. He was the unarmed black teenager fatally shot by a white officer. Coca cola is reportedly funding diet studies that could deflect criticism of its products. The New York Times says cokebacked scientists blame lack of exercise. Target will stop separating many childrens items by gender. Toys and betting will no longer be labeled for boys or girls. The move follows customer complaints. Those are some of your top headlines. Shake shack is reporting earnings after the bell today, the closing bell. The Second Quarter since going public. Leslie patton is with us from chicago. Thro seems to be the issue for growth seems to be the issue for shake shack. Leslie in the u. S. , they only have 42 restaurants. 450, to is to get to grow by more than 10 times. That is a lofty goal. Can they reach it . We will have to see. They have not given a timeframe for the goal. Some analysts have told me it is a stretch. Stephanie are there enough locations geographically that would welcome a shake shack . Not to say that all over america people do not love fast food, but it is a high price point with a limited menu. Leslie it is hard to say. Can they generate the same sales in the midwest and suburbs . Probably not as high average store sales. To thewth prospects, sales are not going to match what they have in new york city right now. Erik is there any reason shake shack cannot expand as widely as in and out burger has . Reade it is hard to say they do have brand excitement in new york city beloved by the east coast. Can they do that in the midwest and west coast . It is hard to say. They are pricier than competitors. I guess it comes down to, do people see shake shack food is better than other Better Burger chains . Stephanie i think it is. Leslie, thank you for joining us. Our own leslie patton. Erik, you like the fries. I like the burgers. Erik lets be clear. I like the experience overall. I like the fact you can get beer or wine. Shack is like starbucks. There is a welllocated shake shack not far from where ever i am in new york city. Stephanie you could get five starbucks coffees in a day and not blink. Nobody is going to shake shack three times a day. If they are, not for long. Fisher. N, stan stay tuned. Erik that is washington, d. C. It is an august monday morning. What better way to talk about washington than with tom keene, who you will see in a few minutes . He spends the morning in washington talking to Alan Greenspan, stan fischer. We are minutes away from the opening bell in new york city. Tracy alloway is here with the three things you need to be looking at today. Lets start with stocks. I want to look at the vix index. It has been stubbornly low for some time. It is annoying because we know investors are nervous about bubbles, but the vix never seems to move. If you look at calls and puts on the vix, the cost of protecting against a rise is the most 2006 relative to puts. It tells us people are preparing for stock market volatility by buying these calls on the vix. That is one way to hedge your portfolio. Stephanie and an inexpensive way. You dont have to change your overall positions where you are putting the lump sum of your dough. Put five participating in these options which are relatively lowcost, you are at least acknowledging but by participating in these options which are relatively lowcost, you are at least acknowledging you want to speak their. Erik costs are rising. Tracy the highest since 2006. The bigs is not moving much. If you look at options, you can see investor nervousness coming up. Erik what is number two . Tracy i have another interesting market number. From stocks to credit, take a look at the difference between European Investment grade credit versus u. S. Investment grade credit. The difference in terms of since is that it highest december of 2009. The u. S. Market is trading at a premium to europe. Erik qe has to have something to do with it. Tracy the u. S. Is moving further was away from qe. In europe, they are still firmly stuck in that qe stage so spreads are compressed. In the u. S. , you also have the energy story. A lot of u. S. Credits are exposed to energy. There has been some pain there, even in Investment Grade credit. You are seeing it filter through to i. G. Now, which is kind of worrying. Stephanie think about where default rates are. Pretty much zero. Erik apart from isolated examples. They are not in Investment Grade land. One thing we brought up earlier which i am sure you are familiar with is the widening of credit spreads, Investment Grade credit spreads, when we do not see any sustained sign of weakness in stocks. Stocks have been range bound trading close to record levels. Tracy in the market, there is that saying that says the Credit Credit guysually are usually smarter than the stocks guys. Im going to say we should all be worried about what is happening in credit as an indicator. Stephanie i agree. The fact we are again late to the party makes you wonder if people are truly king attention to the markets. This time is different. Tracy last one. Every day i could talk about pain in emerging markets credit. I try to play it differently each time. Here is malaysia. Stephanie a bear has been spotted in malaysia. Tracy malaysian stocks are officially in a bear market. Erik last week, we were talking about it. Stephanie that graph is boring and depressing. Tracy it is terribly predictable. Malaysian reserves is at the lowest since 2010. We are seeing fx reserves across malaysia get depleted. China reserves were down. Erik present it also happening in latin america isnt it also happening in latin america . India, china. Some places are showing more resilience but this is an overall trend of depleting fx reserves. It makes you wonder how much firepower these emerging market economies have to pop up currencies and stimulate the economy if they have to. This gets back to what we were talking about a week ago. There is a point at which depreciating currencies become a pain rather than a bonus. Erik especially when it comes to dollardenominated commodities. Tracy exactly. We have enjoyed having you here so much we will not let you leave. The bell has rung. Lets see what stocks are moving. Ramy is back. What are you looking at . Ramy looking at media first and then netflix. Netflix is up by more than 2 they are raising the price target to 143 from 128. They are optimistic about the u. S. Businesses and think they will hit a total u. S. Subscription of 80 million subscribers through 2024. This is higher than the middle point they are expecting. Stifel is keeping a vibrating. Net s default is keeping a buy rating. Stock flipside, the next is cap down by about. 8 because it was downgraded to underway from neutral at j. P. Morgan. The target price is down to 29 a share. This is from 40 a share. They are saying competition from h m and others are giving cap a run for its money. Was saying they will close one out of every four stores in north america. That is not good news for this company. Seeing good news, up by 2. 6 . This is good news because barehands says barrons says the shares could double to 30 because of costcutting efforts. In june, the c. E. O. Said they will have 300 million in cost cutting. To thisgiving a bump stock. Stephanie thank you. Erik knows i spend a lot of time talking about gap, h m, and other fast casual lines. Thank you. The fed reserve chair Stanley Fischer says dont get used to low Interest Rates, sitting down with tom keene earlier this morning. Mr. Fischer says we have to look to the future. Stanley fischer a large part is temporary. It has to do with the decline in the price of oil and raw materials. These are things which will stabilize at some point. We are not going to be as low as we are forever. We need to be looking ahead as we go. Stephanie tom keene joins us now from washington. You must be rolling around down there in all your glory. Good morning for you. What was the standout from your talk with stan . Tom i think the conversation was important. What i will tell you is the markets moved a little bit. A little bit of a take of a dovish vicechairman this morning. Clearly, like what we heard from the bank of england last week, this idea that you can talk all you want but vice chair fischer needs to see inflation before he can act. That is what i took away. Tracy, what did you think . Tracy i thought it was interesting. We have all these different voices from the fed. They are all supposed to be guiding the market. We did see the chance of se go up totes ri city percent. That is still 60 . That is a long way from 100 . Im wondering if having different voices saying Different Things is more harmful than helpful to the market. Tom it is about Community Edition as well. I thought the vicechairman stepped carefully. We did not talk about september and december. All in all, it was someone looking for data dependency and to see inflation. Weve got to see it as we go to the next jobs report. Erik i know you talked to stan fischer about comparing what is going on in the American Economy with what is going on in the u. K. Heres what he had to say. Stanley fischer we are not alone. The behavior of the british economy is similar to ours in terms of inflation and unemployment. There are fewer and fewer growing decently. Erik fewer and fewer growing decently, which is to suggest in the developed world, america is leading the way. Britain perhaps is following. I guess beyond germany, very much . Tom germany not doing bad. To bring those to get together is the price of oil and renewed negative Interest Rates we saw in europe. The back story last week and as we begin monday is lower Interest Rates in germany and a negative Interest Rate for the swiss 10 year yield. That is a different get difficult know you that is a difficult environment for them to act in. The world speaks to janet yellen through the markets. Stephanie it is easier to opine on the sidelines. You had a chance to sit down with Alan Greenspan earlier today. What did you learn from him . Tom he is concerned about productivity. The headline was his comment on the bond bubble. I would emphasize how chairman greenspan is taken aback by the lack of efficiency in the American Economy and the core idea of where is the weight growth for too much of america wage growth for too much of america. Erik one thing that caught my attention was the pending bond market bubble. Was greenspan talking about the treasury market bond market and in its entirety . To what degree is it a matter of Interest Rates and bond prices . How much of that was due to technical concerns like liquidity . Tom the answer is both. I would go less liquidity and more the real economy effect. I heard tracy mentioned the idea of the energy market, debt market. Clearly, Alan Greenspan is looking at the full faith and credit on market. You have got to look at all of the fixed income market as part of the bubble. Frankly, if you get some form of tantrum, how that knocks on to the equity markets and m a as we saw with mr. Buffett this morning. Sense for you get any mr. Greenspan as to whether he thought an Interest Rate rise was an appropriate way of popping a bubble or whether like janet yellen he favors macro tools . Clearly, the chairman does not talk about the policy of janet yellen or ben bernanke. I did not ask him about gaming the system. But he made very clear he agrees with stan fischer, his good friend, that they have got to relieve the distortions in the market. Erik thank you for bringing us both stan fischer and Alan Greenspan this morning. Tom keene is in washington. Tracy alloway is with us in new york. Thank you for the three things and more. Stephanie when we return, Warren Buffett becoming more of an industrial guy. 37 billiontts deal when we return. You are watching Market Makers on bloomberg television. Erik this is Market Makers on bloomberg television. Im Erik Schatzker with Stephanie Ruhle. Agreed tohathaway acquire Precision Castparts in a deal valued at 37. 2 billion. Buffett is no stranger to big transactions, but precision is noteworthy because it pushes berkshire further away from two things buffet is famous for. Insurance and stockpicking. They were the companys growth engines for most of buffetts 50 years in charge. Noah covers Berkshire Hathaway. Give people a sense of why it appealed to Warren Buffett, why he was willing to pay a 21 premium to fridays closing price. Noah that is a great question. You have to look at a couple of things. This is a classic berkshirebuffet acquisition. It has big margins. It is a company that makes a specialized product, which means it does not have a lot of competition. It has one of those moats buffett looks for in a business. You hit the nail on the head in the intro. Buffett has been making this effort over years to build his company into Something Different from the insurance, stockpicking driven enterprise he is identified with. Over the last couple of years, he has built the Energy Utility business. They bought a number of other more industrial type businesses and built that part of their balance sheet. Stephanie by most, you mean businesses that have no real competition or none within an arms reach . Noah that is the idea. Precision castparts makes turbine blades, they make rivets. My understanding is they are not the kinds of things an airplane manufacturer would want to skimp on. They are high quality. There is not a lot of competition for what they are making. Erik we talked about this earlier. I know you have more insight into it. Is the shift away from insurance and stockpicking a result of the fact that berkshire is so big it is difficult to move the needle on the bottom line and topline without owning larger businesses . Noah absolutely, without a doubt. How many stocks could warren 30ett invest in and put billion or more to work in . It is a short list. A couple of years ago at the berkshire annual meeting, he called what he is doing now phase two for berkshire. It is the buying of operating businesses and running them for the long haul. It is basically a different buildup of value from what he was doing earlier in his career. Stephanie why not use leverage here . Noah that is a great question. He gets asked that every year at the annual meeting. He is resistant to it. It is surprising given how low rates are. The other thing that has to be said is the other operating units at work sure are spitting out cash. At the end of the Second Quarter, he had more than 66 billion on the balance sheet. He is always looking for ways to spend that down. Erik i was looking through bloomberg data. We have been calling it one of berkshires biggest deals ever. Going by the announced value, it is the biggest deal buffett has ever announced, bigger than heinz for example. Noah it sure is bigger than heinz. The real question comes if you are going to include that debt in the equation. The allinclusive price was bigger. Erik it is either one or two, possibly three on the list of berkshires biggest acquisitions ever. Noah exactly. Erik he still got 40 billion of cash. Before aboutked how that seems to be a number buffett is comfortable with. He wants these freedom and flexibility to go after another target of this size if it becomes available . Noah there are two reasons. One is he likes to keep 20 billion on the balance sheet. Even though we have been talking about berkshire getting away from insurance operations, they still underwrite a lot of risk. There is the potential for them to have to pay out big insurance claims so the qb big cash cushion of about 20 billion for that. He likes to keep his options open. You see his classic deal playbook is waiting for a stock as we sawown or during the financial crisis being able to put aliens billions to work with others are fearful. You can do that because he keeps the huge cash balance around. Erik conglomerates typically fall out of favor. People begin to raise questions about whether the conglomerate structure is appropriate. At what point is that skepticism going to be visited on Berkshire Hathaway . It will happen the moment he is no longer around. There is no way of avoiding that. He has done a great job at convincing people berkshire goes together. The moment he is no longer there, people will be asking that question. Erik thank you. Stephanie wall street pulls an all nighter. Im not talking investment bankers. This time, it is for charity. We will bring you an inside look at how some executives spent their saturday night. Stephanie welcome back to Market Makers. Im Stephanie Ruhle with Erik Schatzker. Wall street pulled an all nighter over the weekend. Charity. , it was for elaborates most Scavenger Hunt wrapped up raising over 3 million for the new york taste charity new yorkbased charity. Was the first to reach the finish line followed by cantab capitald partners. Bloomberg took a look inside the 16our contest. The nature of midnight madness is one solves a puzzle. The answer reveals a location. One goes to the location where he received the next puzzle. You saw that in turn. We have raised 3 million today for poor people in new york. Hailing all the way from england, the imitation game spurs. Imitation gamers. I am team captain. We are used to working together in an office environment. We are not used to scurrying around new york at 3 00 in the morning. A minute before sunset, good luck and see you at the finish line. Are they in order . Weve got to get to the museum of the american indian. Listen carefully. I have something important to tell you that will prove invaluable along the journey. Every time you see yes, there will be something important to us,n every time you see there will be something important to learn. He told me there was a small scavenger thing he needed help with. He lied totally. I got sucked in after the first year of doing it. We started 10 months ago and we are giving birth. I know exactly what she is talking about. It has been one of the most meaningful experiences i have had. A very much wanted to create something outside, all night. It was exhilarating to finally get here. How did we do . [applause] hectic. We have been doing it for 16 hours. It was good fun. That was exciting, annoying, fantastic. Really fun. Stephanie i saw sleep no more. There were some attractive performers. I dont think that is the case when wall street is up all night problemsolving. Erik lets hope those people were not running around in the nude. At 8 00 eastern tomorrow on you will want to tune in for the economist on an extensive conversation about the labor economy. Matt 10 00 in new york, 4 00 tokyo. You are watching bloomberg market day. The dow possibly going to break a Straight Days of losses. We are looking at what to expect ahead of a possible five great heist. Rate hike. Erik has brazil hit the record it . A lot of investors say cant get much worse than this. Tt we will talk to men who invested in tesla. Who hacked into tesla and will tell us how to do it again. Matt good morning. Im matt miller. Erik i am Erik Schatzker. Matt taking a look at what is making news. Warren buffett, big headline. The price of little bit more than 37