Ask your girlfriend to marry you. Good morning. It is not just a tuesday. I will not get it wrong today. Actually april fools day. Maybe the baseball arenas are understand itguys might cost a lot through propose in a stadium. It costs a lot to get married. To be married. We understand it might have Serious Business to attend to. Isufacturing index officially in. Who better to break those numbers. Though the headline does not match expectations, we thought it would go down to 54, but 50 32 in february. It is still an improvement. We seem to be gaining strength. In thean increase production index. The only disappointment is the Employment Index falls a little bit. See asmean we will not strong a snapback. Inventories, according to purchasing managers out there, are too low. There was concern we had a big in this build. Will starto low, we seeing additional production out there. Exports are picking up. There is concern about what is going on in the rest of the world. As we get into the spring, it looks like from this report there are signs that could have been. Thank you. China for the newsfeed. Top business stories from around the world. The General Motors ceo has explaining to do. A committee will question today about the faulty ignition switch linked to 13 deaths. Newly uncovered documents show gm rejected because it had too much costs associated with it. In manhattan, the Residential Real Estate market is whitehot. Since 2007. Sales rose 35 in the third quarter. It was up 19 . Crazy. Another reason for ukraine to be pushing for an international bailout. Russias National Natural giant it says ukraine owes 1. 7 billion dollars and is not paying for current supplies in full. Debt. S serious ceo isGeneral Motors getting ready for a grilling. At 2 00 p. M. This afternoon, she what sheestifying on downright ignored for almost a decade. The top regulator is also there matt miller is on with a on look along republican candidate. Representative murphy, thank you for joining us. Let me first of all ask you what your main question is going to be when you interview married today. I want to hear them explain why they accepted this start or switch. It requires a certain amount of strength to turn on. They accepted it anyway. When it came time and i realize they put them in new vehicles and not old ones. What was going on and why were people not communicating . Why were they not saying this was a safety issue . A supplier said gm had no problem even though they knew. How high do you think the knowledge land, that there were problems with the switch . It seemed that she was saying she did not know. That is some of the big question here. Was this communication that took place at all . Were people communicating with each other i do notalso know if there was much communication. This submitted about 6000 documents to your subcommittee. Why have a knowledge into this further . Issue at aware of the least once in 2007 and again in 2010. They said they could not find anything here. What i have been in a power point presentation they reviewed, they never asked the question about what scott. They looked at the assessor he switch and the same problem came up later. I am not sure they went in the right direction when asking questions. I now fear they would say, i am a new director and i did not know what was going on. Lets blame someone else. They have tumors and death they have to take responsibility. People were put in place to start to trust. They did not have oversight here. When we hear this is a new gm and the old gm, prebankruptcy, the claims are without, what do you think about that a man . The issue will be up to decisions made by that. With regard to culture, that is the question taking place. They had a culture where they did not want to hear bad news. They have the right people on board to pass information on. Important questions to find out what was going on then and now. Said she put in certain things like a Vice President in charge of body. Ideally, she would have been in charge of quality. In her previous addition, she is looking into this and she has an outside inquiry into the issue all . Re you satisfied at whene worst thing to do you say, it is not my fault and that is the end of it, we have seen that is before. Looking at this directly, sharing this with the public and congress, that will also be trust. Al to build up i wonder what you think about a company that has safety issues and then certain managers do not sell bosses about it. Possible . Do they have a system in place where people are encouraged it is Something Else i want to ask her. What is the culture within gm . If she did not know, the car czars did not know either. Ron bloom and steve ratner before him were there representing treasury as the majority shareholder. What are your thoughts on the governments involvement with the company it owns, failing to recall cars. Anthis goes back to important point. Are the people who are involved understanding about automobiles . The answer is i do not think so. They just looking at finances . I am sure there were a lot of dresses at the time, but the people on the board, do they know how to make a car . To review that is well. Question will make the case to review it this year. When you say gm has to take responsibility going forward. There is talk about a 3 million fund. Gm has to find out where it failed. It is not just the airbags that failed. It was people and engineers looking at it. Selling a switch to did not expect and they spend their time saying, can you just accept this instead of fixing the situation . That is the responsibility on want to see. Goes, gmee where it establishes a fund for that. Probably a good idea to take care of those things. Overall, someone standing in front of the American People saying, we will fix the problem. It makes sense to you they accept financial somehow. That is the question we will carefully review what of his what exactly this will allow them to do. And seellow the facts what occurs in terms of the reasons why information was not asked on. Was it sloppiness . Who knows what it was. Criminalg there was liability. 1. 2 billion. Do you think we could see that . I do not know yet. I want to be agnostic and follow the facts there is someone do the wrong thing, we want gm to be honest and straightforward. Failed. O know why they we want you to get the best response you possibly can. Thank you for joining us here at tim murphy, congressman from pennsylvania. Will be interviewing him today. Sharing the hearing, thank you very much and matt miller in washington. Eastern. T 2 00 p. M. Full coverage of the testimony before tim murphys committee. You can watch it streaming on your smart phone. The fbi is looking into whether high traders broke any laws. We will speak to a guy who used to run one of the biggest around. Newhares of marriott at a new high today. Market makers on bloomberg television. Has everyone on wall street and main street talking. Tosaid the system is ready against normal investors because highfrequency traders know what theyre doing before they do it. I want reaction from someone who truly knows the issue well, the former ceo of get go, a highfrequency trading firm. An enterprise that describes itself as a way for investors to trade without having to worry about highfrequency traders. He is with us now from chicago this morning. Welcome. It sounds a Commission Statement for your new business really is almost an attack on where you came from. I could not quite hear your question. Explain to me exactly where you work now and how this connects to where you came. Get go froms in 2000 and thousand five, the very earliest it early days of highfrequency trading we have a different market do isure, and what we cause the order coming into us and we make algorithms compete to fill the order. It turns the highfrequency tables on their heads, so to speak. Think. Us what you stephanie described Michael Lewis cause his book as broadside trading, dark. Economic structure. Do you think he has it right . It is a hyperbolic phrase to help book sales. It is working. I know it is working well. I tip my hat. Andad his book yesterday spent my morning on it. An interesting book with three theerent sections where it issue i have is it does not make a deep dive into the marketplace. Talk to other highfrequency players. He portrays the story, an interesting story. He is an excellent writer. It is an old is only a partial picture of the marketplace. I he acts orr other speed bump Like Services slow the trading down, truly the answer, when you guys on the market now . You do not. Pdq is not that big. It is not getting that much business. We have grown. We were up over 100 last year with our business and are very pleased with that. We are telling our story. It is an education process. The market is so fixated with speed that when we come along and say we have a different process, people say, that is interesting that house how fast are you . Process. Ate the floor the easy way to tell the story is back in the day, a good broker would ask the specialist what the market is and he would then get a response to gather information. That does not exist in the. Arketplace we are introducing that. It is part of innovation in the market based. The current regulatory rules have allowed. Are you bummed michael basically picked ies to partner with your . Fallout of the book could be huge success. Youre not getting the benefit. It will give them a lot of exposure. As a Market Structure person, it is not clear to me that is the solution. Vote with their orders when the time comes. Like any startup, they are going to the start of days. Pdq went to that. We are now successful and profitable. It is a question of the market becoming educated. I retired from highfrequency trading eight or nine years ago and it is out since it is to be a new business. On wallation cycle street can be pretty long. Michael writes a very entered winning book. His knowledge of the Market Structure is nowhere near the common understanding of a small when he wrote moneyball and some of his other books. Do you think it is almost laughable . If the business has been in existence for eight years and Michael Lewis comes out with his sunday night at midnight, how about the timing . April 1, april fools day and now the fbi is doing an investigation. Dont they look like chumps that they needed Michael Lewis to take them to the water . The highfrequency guys . No, the fbi. They have to do what they have to do to protect the system. There ise surprised if anything obvious. My experience has been most of the market manipulation issues have come from people and not from algorithms. The algorithms are trying so hard to make an efficient market that their biggest concern is competing with other algorithms. On trying tous keep their head above water. It is so competitive. S michaels book misses is the dramatic decrease and the dramatic efficiencies in the marketplace. Maybe that is not a fun thing to talk about. It is not as exciting as understanding the characters that form their experience it is an11, but important part of the equation if you will take on highfrequency folks. Qwest would it be better if we tweaked or overhaul the market of orders,got rid got rid of maker takers and got rid of rebate on what appears to be healthy but the people have all kinds of issues with . Class when you heard pundits talking yesterday, everyone admits it is cheaper and better and more efficient, and then they go to stick some of the issues you talked about. Comfortable if the regulators, particularly the sec, listen to the problem and analyze data and comes up with data, that that would be a step forward. Im concerned if the politicians get involved and they think they need to solve the problem, that will probably not be beneficial for the markets fear there was an excellent quote in michaels book. He said something to the effect that all the current loopholes were created i regulations formed to try to plug a former loophole. You need to be incredibly careful as you start to cook tweak things. Maker taker is really misunderstood. It is a way of rewarding people for posting their orders. Was introduced, the thought was everyone would want to post their orders and the display market would be bigger. Qwest all right. Thank you so much for giving us your perspective today. You clearly understand your business. Thank you. Qwest coming up, we will talk about a growth spurt. It seems like a hotel chain that is expanding everywhere, the ceo will be with us. Onst time for bloombergs the markets. This is no april fools joke. The s p 500 is trading at or very close to a new record high. The dow is just about 38 points away from a record high. Indeed it is. When we come back, investors are checking into marriott. The stock is hitting an alltime high. Ceo, justeak with the wrapping up a big deal in africa. As this is Market Makers with Erik Schatzker and stephanie ruhle. Look at marriott. The Company Shares beat the markets two years running with a new record high this morning. Investors like many things, including the growth they see in as the companys his most recent acquisition, a 200 million deal closing today that almost doubles its rooms in africa. To missus from watch morning is the ceo, arnie, good to see you and thank you for spending time with us. Met me ask you about buying and selling. It buys a bunch of stuff. It also sells a bunch of stuff. Asset sales on a regular basis. Are you more of a buyer than a where or vice versa given we are in the hotel cycle . There is a big difference tween by one company and buying a single hotel asset. The assets we invest in, we invest in them temporarily. Almost all of them, we will turn. Round and resell our business is not to be in the investment business, but to be running hotels. Comparison, were buying operating company. It manages 116 hotels. We are thrilled to enter that market in a big way. And we will never sell it. Their assets we will keep forever. With ianrtner schrager . When i think about what he is done to the industry, he figured out how to lock in the lifestyle. People want to hang in his hotel. Upriotts, people want to go the elevator and get to the room. They seem like very different brands. We have got 15 brands and we want to make sure we are playing in all the important places for us to be and. History, and our we built dominance in strong service, genuine welcome, could, room, for, a large example, making sure we have products wherever people wanted to travel, a high level of credibility and consistency. The publicwatched involved, including folks like you, we seepect increasingly that people want not just that, but they also want a deep experience. They want to be able to brag about what they experienced. We want to make sure we are playing with that lifestyle space. The trigger is the most significant entry in that brand. Brands like the one in europe opening this year. Lifestyleng in that space. We think it is an important place to be. He point out it has all of these brands and they all operate in multiple geography. Could you pinpoint for us what you believe is the single best Growth Opportunity the company has today echo is it luxury with jwn in china marriott or ritz carlton, or is it Something Like limited suites innd fairfield suburban america . Yes, an important question. One of the interesting things to me is you have got in the u. S. The fourth year of a strong economic recovery. It is not nearly as strong as it has been coming out of prior recessions. It has been steady. We see our business as an industry growing at five or six percent year on year. We see that continuing for a number of years yet to come. There will be Growth Opportunities in the United States for existing assets and new hotels mostly in suburban and secondary markets. Whichke ritzcarltons, by and large are not being built in the United States today. You go around the world to different markets and what you see is apt salute boomed in the growth of the middleclass. The middleclass, once you get to the point youre not worried about food or health and housing, youre not worried about education, one of the next things people want to do is travel. We see absolutely exploding numbers of chinese wanting to travel abroad. And within their own countries. The growth statistics are really exciting. Subject ofon the travel, the Airline Industry is clearly back. The Airline Industry has Pricing Power again, which is important. The more the airlines raise prices, the less money people have in their pockets to spend on hotel rooms. How does that affect your business . It is not really affecting at the moment at all. What we see is hotels are a less expensive part of travel than an Airline Ticket in most stages of the economic cycle. We are probably reverting to that a bit. We see good demand growth for travel. Consequentially, we are at. Ecord in the United States you get outside the United States and what we see is a notably different kind of airline competitive environment where, unlike u. S. Carriers, International Carriers are adding capacity. Forget to buy and many markets in asia. The airlines are buying planes and adding routes and additional flights. Were not seeing the kind of growth and airfares there. Together,se things the approach in and outside the United States, are driven into the demand. That is great for us. Is room service dead . I was never allowed to use room service as a kid so as an adult, known mostly 22 trees burger than me. Om more my unlike most travelers right now . Many travelers still like room service. The busiest time is precious and not the burger late at night. But the burger late at night is very popular. Room service is not disappearing. Im sure we will see its carlton in the urban markets. We will see room Service Continue essentially forever. Customers staying in that level to have really expect those options, whether they were deprived as children or not. It is a great thing to experience. You get to the next tier of hotels. Suburban be fullservice hotels and limited service hotels. We will increasingly see trends toward more casual dining, more grab and go. It will be something that is more prominent fixture in the future than Room Services would have been in the past. What does that mean practically for marriott . Will it require a Huge Investment in converting fullservice suburban hotels . They are not urban centers or resort centers. They are fullservice hotels in middle america, the food in the restaurant is pretty terrible, it is an experienced people are not looking for and functionally, they seem obsolete. Let me quibble with you a little bit. I think it has improved a lot. To onee i have not been lately. There you go. To be fair, the restaurants are not typically filled by neighbors coming in using those restaurants. Not really the tradition in the United States, unlike in many other parts of the world where the Hotel Restaurant is the place to go eat. Hotelsurban fullservice still perform a really important purpose. Bar mitzvahs, weddings, family ceremonies, family reunions, the ballrooms are used, high school proms. Is prom season. Exactly. He spaces can be a vibrant part of the community and i think they have a strong future ahead of them. I have to talk social media strategy for a moment. Marriott has spent tens of millions of dollars over the years on advertising and marketing. On social media, you are turning to employees to do it. How will it work . Clerk ear front desk hotels have to be more active and they already are. Historically, what we let that customersformation and said, how was your stay and answered a number of questions. Were still doing that. Using this to essentially comb through all of the social media sites and see what theyre saying about us. They respond to those customers whether they communicated to us formally or post something on a social media site. We are in town dialogue with them to understand. And to respond faster. That also means we are in the definitely onthem the hotel team. It is not something on bethesda for around the world. Genuine conversation with our customers. That is a fun thing. We have to leave it there. O doubt, friday night you, the ceo of marriott. Lets remind everybody, weddings, bar mitzvahs, proms, arnie has not forgotten about it. Hes your guy. Coming up, i happen to love it dollar m ms out on the minibar. We come back, does amazon really need its own counsel . We may find out tomorrow. Hat is amazon up to . It is holding a press event and there are rant that they might unveil a new product . Perhaps a Gaming Business . Here with his own thoughts and of alation, the cofounder company that provides Data Management and analytics for major tv networks, movie studios, and distributors like comcast. What do you think amazon will do . What should they do . It is either something to do couch andg but it had popcorn. You do not have to be sherlock holmes. We break it up into what they think theyre doing. I think the main announcement tomorrow will be announcement of a set set up rocks console. That sort of allows them to better conclude their own experience the way theyre doing in their own tablet as opposed to the way you might get amazon overwrote two. Get amazon rocha, game consoles, connected tvs. You are at somebody elses disposal. Box, it allows you the moment you embark upon games, you need to actually control the hardware. The double helix, the game studio, therell they are already doing well with the video and music. Games are the next frontier. Guess is that it will be something along those lines. I think they should also seriously consider if theyre not doing so already, launching a free service that allows them to stream content the on what they are doing. More like netflix. More like hulu plus. They also have a premium they already do with prime. What you think theyre doing tomorrow. What is your opinion . They might alienate current partners like rogue who a little bit. Met just a few times and he is not the kind of guy scared of anyone. That is probably the way they will go about it. If you look at the analogy and parallels on the device side. They already had distribution to leaders and apple, but they ended up launching their own device, which gave them a lot more control. If you look at the device itself, the browser that tracks where youre going, every breath your take, every move you make, ill be watching you, the police song. I love your rest your references. , if you look at what happens they are controlling the hardware that allows them to do a much better job. Does that give them additional power . If they were to create more toenue, excuse me, avenues generate revenue beyond what they already do, maybe they could have more money into content and go headtohead with netflix . Netflix and amazon are playing a very different game. Before hbo becomes netflix. And walmart and apple and comcast, all of the above. They are playing a different game. Hbo and netflix have subscribers. They want to be all things to all people. The more distribution they have, the better they are. To the degree amazon is successful being all things all people, including video streaming, that could and perhaps should come at netflixs expense and ixia hbo causes expense. The day, end of content is king. If you look at netflix with house of cards people would find house of cards anywhere. You cannot and that is what amazon is doing with alpha, beta, and the other show they just launched, Market Makers. They are launching their own shows. Amazon is spending a billion dollars on programming. There is a lot more room to grow. Lets say whatever it is tomorrow, it is successful. Whose expense is it coming from . Class in general, people are spending more time on content. Household, i get cable, satellite, verizon, amazon, as well as netflix. Cable, satellite, files. Fios. I have a lot of time. In general, consumption is going is going up. To watch the programming where you want to watch it. I cannot find house of cards anywhere else so i have netflix. Game of thrones, hbo. He gives me the option to watch the programs i want. Thrones . Watch game of i love it. Thank you so much. Of media morph talking to us about amazon and the big announcement tomorrow. It is crazy everyone is so public that they love it. It is a show for people who love twisted plot, violence, and naughty stuff. What is wrong with that . Coming up, nothing says letting like a majorly a small stadium. We will show you what it costs repose at at the ballpark to propose that the ballpark. Welcome back. It is finally starting to feel a little like spring. Baseball season is officially underway and love is in the air. For those of you who cannot have one without the other, scarlet fu has a great off the charts today. Give it to us. Class if you feel the need to propose marriage to your loved one at a baseball stadium, we have broken down how much it at any of these Major League Baseball stadiums. A surprise for me was that you cannot even do it at five different stadiums. Proposed in a big way. Class you could do it they are so busy winning games, they do not want to lose test lose focus. They do not want to lose focus. The team is, some kind of messages displayed on the board. And a mascot will sometimes be among it as well. Maybe helping out. Seriously. Guess which places the most expensive . Stadium ankee dodger stadium. Upgrade. An it is cool there. The most expensive is 2500 dollars, were the proposal is featured live on the board. There is a limit so you cannot have two during the game. You could pay 75 and get your messages displayed on the school board like everyone else. The yankee stadium, it only also 100. Qwest 75 at dodger stadium. When you pay 2. 5 billion dollars for a sports team, you have got to get aggressive. The best value is the phillies. You get a live post on the video board, four tickets, and a commemorative dvd to take home with you. And Cleveland Indians will let you do a proposal with the fireworks. That one will cost you, the Cleveland Indians, 400. A relative bargain. With the exception of our friend here in bloomberg, i do not know of anybody with that. Live from bloomberg headquarters in new york, this is Market Makers. Calls it the year of the alligator. We will talk to an investigator investor about the surprise performance of the bundle five. About thetalking investors in health care. General motors dented reputation, can their ceo fix that on capitol hill . Back to Market Makers. I am stephanie ruhle. Of course, this is my favorite fool. That would be me. I am Erik Schatzker. These are the top business stories from around the world. Increased for the fastest pace. It is recovering from the harsh winter weather. It jumped to the highest level in almost three years. That is something to take note of. Ford and chrysler beat sales estimates. Suv is on fire. It willmotors says report sales later today because of the impure problems. Their ceo is going to testify at 2 00 p. M. Janet yellen told the story of the three people who cannot find work in this economy. This is crazy. Two of those three people had a prior criminal records and may have hurt their chances of getting a job. One was for felony theft and the other was a recent convection for heroin possession. She knew about the records before making the speech. It makes me scratch my head even harder. Me to. O. I love ford f one 50s. Do you . I like being behind the wheel of a pickup truck if im on a trip to go fishing or Something Like that. , ikup trucks in the city dont see it. I want to move on. We have a great guest. One of my favorites. We will talk all about the news of the day. He is the ceo of morgan creek capital. They do money managing of their own. I have to start with your tweets. All week long you were talking about edge. I think that is a dicey thing to talk about right now. Whether we are talking about insider trading, edge gets connected to that. Well, that is a good point. You tweeted that. Is it unfair advantage . I think it is a fair advantage. Edge to me is what do you do that is differentiated. A negative edge. That is like tax avoidance and tax evasion. One you get in trouble for and the other is good business. Summit couldnce legal similar to what is but some people think it is unethical. You wouldnt want to pay more taxes than you owe, right . You would take your mortgage deduction, you wouldnt walk away from your mortgage deduction. As long as you are working under the realm of the rules, that is ok. The people who crossed the line it should be where they are, in bad places. The first wall street movie came out, that was the bad kind of edge. The movie came out in 1987. That was about getting information ahead of other people through illicit means. Edge was about0, access. People did not have a bloomberg terminals on their desk. If you had a legitimate way to answer questions and did your homework and talked to cfos and asked them hard questions, those were edges. Today information is ubiquitous. It is always there all the time. You provided in realtime. It is hard to get ads from access of information. Today it is a synthesis of information. Do you have the wisdom to decide what isnt important. That is probably more important than trying to figure out what is important. Is that putting investors in dilemma . . L it was about getting information first. Now that we are getting this information at the same time, our investors under the gun and underperforming . How to they find that edge . The edge comes from do you have more experience in a certain area . I met with a manager who has been working in the commodity space for years. He had better relationships with commodity producers and suppliers. He had better insight into things and go on in the iron ore industry. Better information not from illicit ways but from working harder and knowing the right people. There is a guy that used to trade National Natural gas. He had a childhood friend who works at a natural gas company. He can get better knowledge. Likeat sounds like awfully inside information. It is the same kind of information. Impossible for me or stephanie to say whether that is legit or not legit. In some cases it is very close to the line. There are clear lines. If you get information from a current employee of a company that is not available, that is inside information. If you have a retired ceo in an industry who gives you insight on what is a good restaurant chain or a bad restaurant chain, that is fair. How does somebody who wants to launch a fund to get in the business if they dont have 25 years of experience or cant bring on a former ceo of Darden Restaurants on to the board o . I am giving the keynote address on that topic. I did not know that. There is a conference on emerging managers. My topic is precisely that. How in this world of the big getting bigger and the big having all the resources and all the experts and the ability to hire that ex ceo to be on their board of advisors, how do you get that edge . One of the problems is it comes from experience. I have one thing in common. ,ulia roberts and george soros those guys are wildly successful. I am fine now. Common. Ne thing in they started their businesses right around a 50. I am restarting my business from an allocation business at 50. That is very cool. At 50 you have relationships and wisdom. A 35yearold that wants to start a new hedge fund, or getting edge is going to be hard. What if you have an idea to build a better mousetrap . If you have a better model or , if you have a better mousetrap you can understand eight complex business better than most people. Most people dont have a clue. They are not can the griffin. Not canhave he is griffin. Ken griffin. He does not have a track record yet. No truly new idea can by definition have a track record. We have made our best money historically investing in people who are brandnew. Were branded names, who had a work ethic that was really good who were building edge by building that network and working hard. I will say and this is one of my working harder and doing what everyone else is doing is not an edge. You have to work harder and do it other people arent doing. If you are buying the internet stocks because everyone else is, that is probably already in the price. If you are making a view on iron ore prices because you have spent time going around the production facilities in brazil like this guy was up to this morning, you have a view that prices are going to fall and you can get an edge. What is your advice for 35yearold who has a different idea and can create Something Special . Do you say put up shingle and i will give you some money . Is the right thing for them to platform . Isting many of those 35yearolds think they are the Second Coming and scratching their heads thinking that they can do it but do they do it on a platform and give away a huge percentage of my business . What is the right move . It depends on your entrepreneurial spirit. Those that believe in themselves are going to go out on their own. The guy i met with this morning is going out on his own in his young 30s. He has 100 million from some seed investors. He is going to be great and fantastic. A guy who doesnt have those platforms, they are great. They give you lots of great insight across all the Different Industries that you can talk to people. It is like what julie the build. He ceded all of these guys. He is a tech guy. I think they are doing right. We have a lot more to talk about. Mark is going to be us when we come back. This is Market Makers. You are watching Market Makers. We are having a great conversation with our buddy mark. We were talking about edge. I want to talk about japan. I. R. Number last year. The only person more excited you. Japan was we are brothers. What is going on . Elaborate. It is technical. I have been dead wrong on japan in the first quarter. Dead wrong. We were right last year and made a lot of money in japan. We made twice as much money in japan as in the u. S. If you look over the whole. , it has still done better. In the first quarter, i was dead wrong. Uptakemissed was the from the Pension Funds in japan and the Retail Investors still had 50 of their money sitting in cash. The yield of equities was now two and a half percent. Investors sold and would push them into this forced quarter. First quarter. They wanted to avoid taxes. They wanted to push them one more year and push the agenda. Selling would accelerate when they did not get the trigger on the bazooka before the attack site. It goes into affect today. Everybody is worried the gdp will collapse. It will slow, but it will not be a collapse. It is not like it was in 2000 and five 2005. It sound like you are just as much of a believer as you were before. By the end of the year, i think japan will be the u. S. The return will be better than the s p by the end of the year. For sure. I have 12 points to make up already. The first time we invested with John Griffith of blue ridge capital. He found 12 . He was on vacation and he was down 12 . Analyst came and said i cant believe we did this. It is going to be terrible. I bet him that john it would be the s p. He beaded by almost 20 . I think the trend is still there. Theve japan because in 1950 ratio was one. And thehe super bubble ratio was 112. And trough margins multiples in the u. S. Excited aboutt japan. That ratio fell to five. It is now back to eight. We think it goes to 25. Japanese equities will be u. S. Equities by two to three x. You are paying the multiples in the u. S. In the next 12 months, i do believe that over the next decade it is a nobrainer. G and i have to bankwo times book for u. S. They are the same business. Take japan out of the mix. What do you think of u. S. Equities . Cell and go away would be good advice. He asked me what would i consider to be a good performance. Flat . Pretty good is a one. I think this could wind up a negative year. Theyre been 17 years with the market goes up 25 since 1900. Since 1900 there been 17 years total . I got it. The next year the average return is six. Six of those times, it went up more than 20 again. The other six times it went down to double digits. The average is six. I think will be a meandering year in the United States. Is going to be very volatile. He will have to pick your stocks. The average investor made nothing in the first quarter. How fun was that . We overweighted some industries that i think will do really well. We underweighted some things we thought would do poorly like retail. Another person who thinks youre going to have a good year. Thank you so much for joining us. He is a true authority. The man is an animal on twitter. Up, playing the obamacare trade. Were going to tell you how some investors of artie cashed in. We have a lot more to cover. Stay with us. There has been a huge surge in enrollments out healthcare. Gov. It looks at initial target of 7 Million People has been hit area nobody wouldve guessed that after the disastrous rollout back in october. Here is the question we are asking now. Investors . For we have more on the winners and losers. We know has had a huge year. We are talking whether there is a bubble in biotech. If you break it down, you will see the reform law has had an impact. Called to see what investors are doing with equities. Care and oneat is, that is repeal obamacare. He has hospitals and generic drug makers. He has Electronic Medical records. Since the inception, it is up 90 . Senses pretty good december. Of sox will do well because the cost controls in the law and reimbursement. They will have to give services for free but now the government is going to pay back the services. In the repeal obamacare basket you have medical devices. There is an excise tax on a medical devices. There are Nursing Homes and assistedliving houses. Everybodys trying to figure out now that the deadline has passed and we are living with obamacare is whether the opportunity is already priced in. Is up 90 already 2012, areinception in people making money . Onre is 45 times more money the obamacare side of the trade than there is on the repeal obamacare side. Everybody in live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. We are here on april fools day. I am todays court jester. Motors is having a tough april fools day. Their ceo is testifying this afternoon and their woes get even worse. Congress is going to grill her on why it took more than a decade to recall over 2 million vehicles after a faulty ignition switch was linked to 13 deaths. 700 ve recalled almost 7 million vehicles worldwide. Miller andring matt card euro bureau. Car guru. What do you expect this afternoon . Answers are not what to expect. There has been a lot about who knew what at the lowest level. Why is still very much out there. Based on her transcript, theyre not ready to answer that question. They have an internal investigation and they are looking at it. They are saying as soon as we know we will you know. Answers are the last things we will get. We will get discussion and a lot of questions. You wont understand what happened to gm 10 years ago that kept him from fixing the recall back then. What are you doing down there . Jeff is spotll, on. General motors knows who the person is at the highest level w. At new kne and am looking forward to congress putting that person up there to testify about why nobody higher was told. In how manyterested how she plays this forward. This is incredibly tragic. She wishes she could change them. She has to make restitution. She has to fix the problems so that this kind of thing doesnt happen again. She has to get it quickly out of the public eye. She is to convince americans that gm is about quality, even though the old gm had these errors. I want to ask a question of you. Knewidea that gm knows who. And they can tell us if they want to. How high up in the organization did this knowledge go . That . Be certain of i am dubious. It seems there are so many other things that they did not know which are being uncovered by analysts and journalists who are going to the stuff that gm has been forced to put in the public record. You would think they would know better. How muchnot clear yet gm understands about how it went from a low level engineers to mary barra in a short. Of time. It is not clear what they know about what happened. They are digging into it. Hopefully, they will fill in the links. Mary says they are not ready for that. They are trying to figure out. Based on what you have seen up to now, what you have heard from General Motors, how much confidence should we have that gm itself to get to the bottom of this . Maybe the report that is coming out will explain it. Do you think we will get the story at the end of the day . This is knowable. , whoid the guy who knew did he tell . If you dig deep enough, that is what is supposed to be happening. This is a noble thing. I dont think its a known thing you may be right this minute or it is becoming known. I dont think this was a known thing it two months ago. It is knowable so instantly. Does it take a few hours or a few days . Arehey dont know now, they dragging their feet and not being forthcoming with this committee. Matt brings up a great point. That is exactly it. You can break down pretty quickly who knew what when. What is the freaking hold up . There as a department of justice investigation. I want to see if anybody has long eared up. They are only calling america mary barra. Theyre calling nobody else at this point. She needs to protect herself and her company. I would be finding out who knew what and today which has the chance to represent her company, she should give those answers to america and the world and to the government. She is not going to do that. It is unfortunate. She is definitely not going to do that today. She needs to risk to manage . It is about Risk Management to them . You mentioned the lawyering up, we know that General Motors erased inwas all but the bankruptcy. To what degree is individual liability still there . Is that as much on the table as much as it ever was . Probably not civilly. Passnally, nobody got any by the bankruptcy. If some he wants to put somebody in jail, there is nothing that the bailout would prevent. If they think there was criminal negligence or some kind of fraudulent criminal act involved in this, somebody can go to jail. It is easier for summit to go to jail now. Look at what happened with toyota. The judge wanted to see if somebody needed to go to jail. That may slow things up a little it in terms of how much do you want to say that my could you in jail. Do you talk without representation . Hold on a second. Theyll have some liability here as well. 70 could go to jail. Go to jail. Could 13 lives were lost. It is time to start telling the truth. Thank you for giving us the latest. Todayn today at 2 00 p. M. For mary barrows testimony. Be streaming on your tablet and smartphones. We will be here after to break it all down. Is investigating High Frequency trading to see if any of those hft firms broke the law. Is the system itself the real problem . We will be investigating when we come back. Dont hate the player. Hate the game. That is a people are saying about Michael Lewiss book. If the system is rigged, the system is whats to blame. That raises an important question. If youre going to fix the game or the system, do the regulators need to step in and regulate highfrequency trading. That is what is being investigated. She is a former regulator at the cf. He would be ok with the idea of regulators taking a hard look at equity Market Structure and making some adjustments and tweaks. What terrifies him is allah tensions motivated by Michael Lewiss book fixing the problem themselves. I think that is a great point. There are three issues at point stake. Re is liquidity and steep stability and fairness. Michael lewis opened up a can of words warms. What we are concerned about is the idea of stability. Of 2010ack to the crash , that is what regulators are focused on. Are they late to the party . Regulators are always late to the party. Faster thany is regulation can keep up with. That being said, part of the reason that highfrequency trading persists and indoors and has become a vibrant is because of the regulatory environment. It is because of the game and the rules. They were put in place by regulators. Needs to ask themselves how to balance the new market share and the provision of liquidity with stability and fairness. That is the key question. Is it fair to say new market share at this point . This hft see business is eight or nine years old. Should the regulators be looking at this new technology . It is not that new. It is progressing. It is innovating. There are some glitches in this plan but have not been remedied dating back to the flash crash. We saw it when the options exchange. We sought with goldman sachs. Over, we are seeing these glitches that threaten stability. Let us put aside fairness. Stability is key. Theres been no regulatory response and that is a concern. What could regulators do to improve the existing system . Overall. Istead of have heard that they could change the access fee cap. Or regulators should penalize firms for posting phantom orders. The key distinction here are regulations the target or those that are good for all traders in general. In addition to those lost trades, when an andy trades with themselves because of algorithms that are multifaceted and there towardconomic regulation an audit trail. You can see inappropriate or erroneous behavior. This is particularly true of hfts. Regulated them have the money to put to that. There are a whole host of regulations that could be enacted if there was the will to do so. Thank you so much. It was great seeing you this morning. I think Michael Lewis may have helped with that. We are going back to class. Has an ipad. Dent you are watching Market Makers on bloomberg television. Welcome back. I am stephanie ruhle. How do you take a countrys secondlargest School District age. The digital in los angeles, it is all about the ipad. Giving an ipad to every one of their students. It is costing billions of dollars and causing headaches. Witham excited to be here you. Are you ready to receive your ipad . It is a bold, billion dollar initiative. Every student in los angeles will have an ipad. We want that fundamental civil right for every student to have technology. With thene will come common core standards. Before the kids get their hands on the tablets, teachers got to look through training sessions. In september, the ipad rollout began in 47 schools. I we are going to learn. We are going to work on math. We are going to learn how to write our names. Are you going to put your ipad in your backpack . No do you sit on them . No older students got creative. With a week, 300 students in high school reconfigured the device. They wanted to customize the device. They wanted to have their itunes and their facebook and their youtube. Those are things we are not currently committing. Students can now no longer take the tablet so much. The superintendent insist that these are manageable bumps in a highstakes transition. We are tying to make a alternative to books and paper. Textbooks and those items are static. We want students to have current on tent versus static content. That is what they will face when they get to a university and college and the world of work area when the plan is complete, and l eight usd will be the biggest district in the cap country to equip each student with an ipad. There you go. And aldren go to a school are given ipads. They get to work at school and you can easily do it at home. Up from a green perspective it is great. There are some oldschool benefits. I see the negative in that. Mike kids are terrible spellers and their penmanship is terrible and they have no interest in fixing it. I love the ipad. I think it is a limiting device. There is a limited amount of creativity you can bring to an ipad because everything is preprogrammed. Your kids to get every piece of information by googling what is this. That is just reality. I love the world book. We will be back with more in just a second. That is going to do it for Market Makers today. Tomorrow we have an allstar cast of characters. Michael lewis will be here to talk about flash boys. The changes about that have taken place in the last 20 years of writing about wall street. Barry diller will be here. He is one of the big investors in areo. They are headed to a big Court Showdown with the broadcast networks. It is going to be a big day. It is 56 past the hour. We are taking you on the markets. We can use some of that intel. Olivia sterns is here. We are diving into derivatives. Inside stocks are rising. The s p is hitting a new record. Vvix is edited to month level. Allen, break it down for me. What is going on . What do you think is keeping it in that range . We have been able to close below are 14. That is important. It last year, it was between 14 and 12. I want to look at this on a weekly basis. We are at two and a half month lows. Did not make any lows. There is still downside. Paperg at trades, we saw trade at 5000. They sold those at . 40. They had to keep that raimi him, 200,000. Atthey can take a discount 3460. Newhe fda approved a version of the da vinci robot system. What are the Options Markets leaking of this . Theres been concern about the stock over the last year. It sold down to 350. Now it has broken an upside. The option sale that i saw was selling 600 options. That is not a lot. It is a 500 stock. Call, they sold that for 1350. They take in money and give themselves upside. You are watching barrett gold which is down 35 over the last year. You say this is a time to buy. Value ink there is gold. Between 22ading and 14. We are at the midpoint. Lean on that 18. I think it is an in the money call. Below on the year is 1350. It is not been to 13 since 2000. It will cost about 550. It has an 85 delta. We will look for this up to 30. If that happens, this will gain. The breakdown the risk reward. Now it is five dollars in the money. It gives you . 50 the time of value. You are risking essentially 250 on this trade. The upside is to break out and get to 30. Gold is trading below. Oid want to trade . I think it is a better value. It is down more than the market and the sector itself. I look for that to rebound. 1300 is an important level to watch gold on a weekly basis. But assume we can do for the rest of the week. Thank you for joining us. We will be on the markets in 30 minutes. Lunch money is coming up. Welcome to lunch money. This is the best. General motors announced another recall. This is for a bumpy first quarter. Richard branson and chester cheetah, they get into the spirit. Of the path, it is to recovery. We are going off to school in the classroom of the future. Finally, in sports, a 2. 5