Transcripts For BLOOMBERG Market Makers 20140811

I am erik schatzker. For am alix steel in stephanie ruhle. It feels like a wednesday. We are just getting started. It is time for the news feed. Richard kander is consolidating his pipeline empire. The pipeline so make it easier to grow. Viral content has gotten a 50 million investment. According to the New York Times 850 values buzz feed at million dollars. If it is famous for its lists like 15 things that can improve any day. They are branching out into video. The Parent Company of Bloomberg News is an investor. John kerry has pulled support for iraqi Prime Minister mailiki. He is not among the top three candidates that iraqis want to the next Prime Minister. Is the turkish strongman who test the limits of democracy as Prime Minister. Now he has a firmer grip on power. He won the first president ial election of this weekend. The victory promises change for turkey and parts of europe as well. Hans nichols is in istanbul. Let me start by asking you this question, why are people drawing comparisons between him and Vladimir Putin . Towhat he has promised is consolidate our in the presidency. This has been a ceremonial position. He wants to make it a powerful position. This concerns investors. Lets focus on two. If this move to concentrate power in the presidency going to risk the independence of the central bank . Will he press the central bank to lower rates instead of what Inflation Expectations should be increased . We have already seen the lira react. The longerterm question gets to this food in question. Is he trying to centralize power in a way that is too authoritative and will scare off investors in the long run . He will need to rewrite the constitution. He needs a super majority in the parliament. If you extrapolate the votes that he won today, he simply does not have the votes. Elections take on added significance. The question is will there be a strong and viable challenger in his own party, to challenge him on this power grab . Will he find the votes are just increases percentage . As you said, he will be closer putin. And run into opposition for efforts to create a new turkey, a secular turkey that looks to the west. How does his election change the way he manages the country . What is likely to happen inside turkey . With his relations abroad, if he tries to combine the head of state and head of government there might be a more unified voice. That takes on significant with the middle east and what is happening in israel and the palestinian territories. Turkey has moved toward the palestinian position in a way away from its traditional relationship with israel. Ofyou look at his goal consolidating power in the next couple of months, that is still an open question. Will he be able to make these changes and constitutional changes . Will they lead to real power . The turkish ibaka see still have their say. They still may way animus. There is going to be a year of turbulence. And that time. It you are going to see the currency depreciate. You will see inflation spike. Growth inee slower part because of what is happening domestically. Dont forget, the top three and iraq are russia are at the top of that list. Russia is a big market for them. You could see how you could shave off a percentage point from the gdp. Talking about iraq, they are trying to expand a pipeline into turkey. They are making them more independent. What is the odds that turkey would go for that . The reality is that they like anything that gives the more transferor costs and more transit costs. If you look at the baseline economy, because of these costs from oil and natural gas and you there arerism, tourist boats all around us here, you have growth of 2. 5 . That would be the envy of northern europe. Hans nichols is straddling the line between the middle east and europe. Does that make it a safer bet for investors . What about other geopolitical hots pots. He joins us now from los angeles. It is great to have you here. You say bad countries are good for investing. What qualifies as a bad country . It doesnt have to be a bad country. Countries also happen to be the bad countries. The worst news flow and the worst gdp and the worst geopolitical headlines often correlate highly with the most miserable and cheapest for a reason. They have been punished a lot. Those of the markets we look to invest in. Usually, that is a great place to invest. When you see the turkey off,sh currency selling does that increase the appeal to you . We have a long time. Portfolio that we run, it balances once a year. Much of the news flow and week. O week has very little impact when you have that deep value, greece and russia and brazil, it is how the performance is going to be three or five years from now. These effects may show up. We dont look at it on a attoday basis here in what point does a bad news equal bad news . The russian stock market is fantastically cheap. They may have a recession. Companies are having a hard time getting any financing that this point. The challenge is you can never predict the future. Russia has been among the best performing countries in our fund along with brazil. Really cheap values are in europe. That is the challenge. You are buying these miserable countries, you dont want them to go down more. One of the ways we like to do it is diversification. We are looking at 11 countries out of a possible 45. It is too dangerous to pick one like greece or russia. One of the ways you could try to avoid getting hurt. How big of a role does geopolitical analysis play in your investments . Very little. Analysis,tandpoint of everything we do is clientbased. Quantbased. Everything has to be a 10,000 foot view of why are we invest in this country. Many of the variables that correlate to valuations. They correlate with really terrible gdps. Things look best. The u. S. Has a fiveyear bull market. This is one of the most expensive countries in the world. We expect the u. S. To have much lower returns. This is where things look better than europe. Considering that you are taking on a lot of risk, do you feel like you need to get paid . How important is that to you to offset the risk . We hope we are getting paid. The interesting thing is to think about risk. A potentialsk as margin of safety. If you look at expensive they have a fiveyear chance of loss. Muchhance of loss is larger. 50 or 60 . Losing it feels less risky to be buying of the u. S. And these other countries. Years,are looking out 10 it is less risky to buy cheap stocks. Has beenlobal value trading since the middle of march. Over time, how should it perform against the organ stanley world index . That is the global standard for investing. We expected to out perform by 4 year. We are very concentrated. There will be years when it does worse in years where it does better. The good news is most of the world is really cheap. We think it is a great time to be investing in foreign markets. If you are american, most dont realize that from a global index standpoint, half of your assets need to be abroad. We have a home country bias. In every country people invest about 80 of their assets in their own country. Looking from a global value standpoint, this is a good time when the u. S. Is one of the more expensive markets. This fund could easily do doubledigit returns Going Forward for the next five years. Thank you so much. Up, amazon is getting a lot of heat for blocking preorders of some books. How the company is striking back. Russia has started an ambitious royal oil drilling product with an american company. Amazon is taking on a bigger foe. Your order ofring captain america. Julie hyman is here. The big foe is disney. What do these two want from each other . Amazon wantslike what it has wanted in all of the situations. They want to discount the a biggerore and or get piece of the sales. This affects things like the captain america movie or the latest muppets movie. We are not seen it affect the digital sales. It is just affecting the dvd sales. For now. It is using this negotiating tactic. They use this against warner bros. And time warner caved area to we dont know if this will be successful. The fight is getting more and more public. Davidas talking to stretched her. Aazon purports itself to be customer friendly place. If you go there and you cant get what you want, that is the opposite of their mission statement. In a short pain for longterm gain. The strategy is to make everything is cheap as possible. David also covers walmart, so he knows that part of the strategy. Betty liu talked to an author who is representing this off as united group of 900 riders who want to put pressure on amazon for holding authors hostage. This is what she said. Everybody who makes a product should have the right to price that product where they can make a profit. Is simple ifing it you go by those terms. Douglas preston is responsible for leading the charge in the New York Times. He said that his presales across the board for a hard copy were a quarter of all sales. He is a wellknown author. If you get routed off that list. That accordings to its research if you cut the 9. 99,f an ebook to there is a 75 boost in sales. They are not showing the data behind that. She claims that if you are shopping for a book, youre not shopping on price. If i am looking for a piece of the store go fiction and something pops up that says moby i amis priced at 9. 99, not going to make that purchase. Maybe you would. That was her argument. A bookshop is not a price shop. We will have a lot more on this. One thing for bezos to go headtohead with the Worlds Largest entertainment company. How will bob iger respond . Gentlemen, welcome. What should bob iger do . I think he has an incentive to see that this is resolved as soon as possible. You are talking about the winter filmer as the number one of the Domestic Box Office this year. I do the wall street is counting on this home video release to be andrt of the Fourth Quarter into the next fiscal year. Become an important retailer. Disney needs to diverge othere consumers to sites. With the release date for this dvd still several weeks ahead, i think they have an incentive to resolve this. I think so. The dvd business is not what it used to be. It is still important. It is still a 9 billion a year business. Resolutions to get a like warner bros. Did. They can afford to hold out a little bit and get the best deal they can. What is happening for the studios is the digital distribution is becoming the growth driver for home video sales. I think therell be a resolution. How did it get to this point . Have there been months of close door negotiations and now amazon is playing this card . Have a discussion to the point that they do this right away . They have been under pressure in the last few quarters to get a profit margin for its investors. They grow the revenue 23 percent and yet there is little to no profit to show for it. When you look at their cost structure, one of the things they look at is the cost of media products. They are looking in all areas to try and improve their products profits. Their spend is a drop in the bucket for amazon. Is primarily motivated by market share. In the near term they are willing to compromise anything take ache away from away anything from being a lowcost provider. Some armeeing in twisting tactics during im surprised they are reduced to this. They have been successful with warner bros. This is the largest studio in hollywood. It will be interesting to see how far they will take these tactics. You just pointed out that they had success with warner bros. , why are you surprised . Why not extend to disney and other studios as well . That this isses hasng at a time when amazon been aggressively investing in its own prime video content. Era where you cannot have the friend amis relationships. Mies relationship. Amazon has gone too far. Having said that, things are inevitable. I think both sides will come to a resolution. Disney has 1000 titles. Are in business to a fair extent. I dont see why they would want to jeopardize that. Who has the most leverage . Disney made that streaming agreement with netflix. Cant they just go elsewhere . Do they have the leverage . In five years a we different. Hasy will amazon still leverage. They are the number one eat taylor. R. Etaile it is going to be in a potent component of the next quarters numbers. Is just a sus writing the next chapter in the clay is jeff playbook bezos writing the next chapter in the playbook . He may well be writing the next chapter. In the been prevalent Cable Television world. This may well be a new kind of paradigm in the streaming world where you have physical sales declining and companies are trying to mitigate the streaming. Declineoffice is on after two record years. Gives somet also leverage to amazon because disney is under pressure to be deliverer on the on the home video side. This will be a High Percentage of box office. The streaming dynamics make this more complicated. Point, it is a drag. It is a drag for most of the people concerned. It is a drag for the consumer because they cannot get what they want. How often are we going to have to put up with this kind of thing . At least you can go to barnes noble or walmart. I love captain america. Thingsoften do these come up . We have seen the Cable Companies and the broadcast markets. How many times as fox or cbs gone dark . As more of this gets distributed over different platforms, more agreements have to be negotiated. They will come up freakily overtime. You will see more and more of this. The question becomes who has the leverage in any particular negotiation . It is the content owner. In this particular case it looks like the distributor. They are the leading distributor of the physical dvd business. That is going away. We have seen in the digital realm, the content creators have the leverage. Paul sweeney, thank you. Thank you so much. Coming up we didnt talk about the markets. We have run out of time. With the continuing battle between distributors and content companies. We will talk about another side of the media equation. Sprints new ceo is starting today. What kind of change will he bring to americas thirdlargest wireless carrier. Sometimes it feels like it is in dead last. The price for this rare blue moon diamond. I actually held this thing. If you have to ask, you cant afford it. Maybe this is an early Christmas Present . We will be right back. Live from bloomberg headquarters in new york, this with erikmakers schatzker and stephanie ruhle. Good morning. I am erik schatzker. I am alix steel in for stephanie ruhle. Happy monday. This is the first day for sprints new ceo. This is an awfully tough job ahead. They want to turn this into a viable competitor. Verizon and at t have bigger and better networks. Tmobiles ceo is the master of mac marketing. Here in new york, john butler covers the Tech Companies for bloomberg. That is the big question on everyones mind. He has proven himself to be a terrific entrepreneur. He has grown a bright star from zero to 10. 5 billion. It is not the telecom business. He is an unknown. Of there is a . In investors minds. A doubt that he can do it. Sprint needs fresh blood and new energy to take them to the next level. The challenge was up in the technology in the network and upgrading the network. The new challenges marketing. Sprint data plans are more expensive and they offer less data and where is the opportunity for sprint to do Something Different . The opportunity is going after tmobile and at t. They have admitted that they have plans in the oven. It is just a matter of which plans and which strategies they will take. Can they go after at t and verizon and go after their plans . Can they go directly after tmobile . Is of the problems right now that their plan is complex. It is a group by effort. To explain it to the mainstream audience, it is tough. The choice ofake going up against at t and verizon directly or tmobile. Which direction do you go with . He doesnt have the network to compete with verizon yet. There is a lot of buildup to do with the structure that they acquired. This is been going in slow motion during this protracted dance with tmobile. Do you try to compete on price with tmobile . That is only going to erode your margins and to be a war of attrition between the two. There are two things here. One, the network has to go. It will depend on how much he wants to accelerate the network buildout. The jewel of their differentiation is speed. They have been touting that sense 2010. There has been the potential. Will they accelerate that . Givehey accelerate that to the speed the attention they have been talking about . Tmobile has taken share from sprint. Can he stop the bleeding . Willf the key points is they do it in the quarter four . It depends. When the iphone six comes out, capturing that is going to be an industry event. Big, going to be a momentous event for tmobile and an opportunity. That is the time where they have to get new plans out to the public so that people can understand the differentiation. That is a lot of have to. Who is in charge . I think it is going to be a partnership. Ed is what drove the choice. They have a relationship that goes back a couple of years. That relationship is based on Mutual Respect as entrepreneurs. They both built companies. There has to be a deadline somewhere. This is a marathon and not a sprint. Sprint to keep it keep it simple. They ought to go out there and realize they are in a commodity game. Wireless is a commodity business. Keep the plan simple. Bring in your self. Look at how tmobile has been able to grow since they became hot pink. Tmobile has been appealing to people on the basis of price and these rebates that it offers. They are not appealing on the strength of the network. Now that sprint no longer has the opportunity to create efficiencies by combining the two networks, wouldnt they be better off selling sprint . Im not sure dish can figure it out in the same way. If you look at what they did in gigahertzy took 2. 5 spectrum like sprint has and they built a network where they took at time of share from the incumbents. This is a man who knows. Build out have to that network at a time when their strongest competitor was undercutting them on price . Im not sure about that. That is the reality. They have to spend a boatload of money to make the most of that clearwire spectrum while at the same time compete on the bottom end. They are done with all of that. They are well into their upgrade at this point. They are in the final innings. Those technological hurdles are largely done at this point. The challenge becomes marketing. Feeding that perception of and nots too expensive a National Carrier and not a great experience, they can beat that. They need time they need a little bit of time to get that message out. Hey need the right spokesman last word to you. This is about branding. They do have the goods. What is the next branding thing you need to see . Out andnk it is going throwing marketing dollars added. Ily has not fram resonated. Punctuatehe need to the sales in the marketplace as a competitive quarter. It has got to be done. It has to be immediate. He promised something immediate. Urgent the chairman is has some urgency toward. We hope to see more urgency coming out from the new ceo. Bill, it is good to see you. John butler, thank you very much. Sanctions . What sanctions . We will talk about a new project starting in russia. The crisis in the u. S. And russia relations is not stopping plans for an oil well in the arctic ocean. Of president Vladimir Putin is going to begin drilling over the weekend. Question, it is important for both parties. How is it possible that exxon can drill the arctic right now . The eu introduced sanctions that restricted the Technology Necessary according to the sanctions for arctic drilling. How can this happen . There are an awful lot of exceptions. One of the exceptions to the sanctions is deals done it for august the first. They moved quickly to get this deal done before the sanctions actually came into effect. When the look of the sanctions they say they are a lot of exceptions. They are calling these sanction theater more than real sanctions. At some point theyre going to need more equipment. Even if they got all of the equipment before august first and the contract was signed, they will run out of stuff and then what will they do . There are a lot of loopholes. The sanctions themselves are designed to just target producers looking to extract oil. We look for oil you also look for gas. Expect a lot of projects to be called gas ron jackson where they happen to find some oil. That is one thing. Theyeepsea restrictions, start at 500 meters. This well is about half of that. The sea is shallow. This is not sanctionable. The russians that pointed this out to me say that this is a threat but there is nothing to it. They dont want to draw peoples attention to it. They dont want to provoke the west and more against them. Sanctions hurtr a project like this . I guess the answer to that is yes. Of for one thing for one technology for drilling in the arctic and shale oil drilling, this is been locked out of the bond market. This is not helpful. It is borrowing at some of the highest rates they have ever had to pay. There are ways to get at the art the ship between the companies. We are not there yet. Who has more to lose . That is a good question. They both have a lot to lose. They need exxons expertise to drill in places like this. The arctic is a very complex place to drill. Exxon really needs this as well. We saw this when they came out with their earnings. They said that production was declining. That is their big problem. That is all the Big Oil Majors problems. They need to deal as bad as the russians. Thank you so much, ryan. To ing up, this used look at that. Very expensive diamond bracelet. It looks good on me, doesnt it . The blue moon diamond is very rare and historic. Were going to talk about coming up. Diamonds are a girls best friend. Blue diamonds are a girls soulmate. The blue moon was cut down from 30 carats to 12 i the diamond maker. I had a chance to hold this rare jewel and speak to the ceo. The color is the most special. It is a size of 12 carats. Exquisite piece. How rare is a defined something that has this blue color . It is historical. It is absolutely beautiful. This is a special blue. Is that how it got the name . Once in a blue moon. That is how long the wait is. I have never seen a stone this color in my life. I feel privileged. This is the highlight of my career. You start off with the raw diamond. How does he get to be this perfect shape . Study it. Arrives we we make models out of plastic. On the rough stone you mark where youre going to cut. The reason for this if we make a mistake, it does not cost us millions of dollars. We will make 20 or 30 models and cut them. We want the stones to be flawless. That is why the models are so important. You need that 12 carats. Did he do to be great. If you wanted to be flawless. We then take real stones and market. It took months. And we areished it in august. We got the stone in february. You pay 26 million for the uncut diamond. That is huge. I think that is our biggest so far in terms of value. We have cut bigger stones. We have never cut a stone of that value. We have not gotten to selling it yet. It is historic and rare. The next step for us is to have it at the smithsonian to get scientific testing and then to the Natural History museum in los angeles. We will see from there. You have not done a valuation yet. When you take a look at the supply, you have debeers saying taken produce 32 million carats of diamonds is there enough demand for that . America takes 40 of the market. We are talking about the bridal industry. We are talking about the top houses in the world. There is always a demand for diamond jewelry. Are you scared of synthetic diamonds . We dont call them synthetic. We call it lab grown. It is like a cultured pearl. We are not scared of it. Are going to be more in demand. If a person wants something it is not the same thing as mother nature. You have to inform people that it is lab grown. It is going to be enforced. What growth rate are you expecting . What is the growth rate you can predict . Youooking at the market, are looking at a 10 increase. That is what i am thinking of. You are looking at new people coming into the market. The Chinese Market is going to take a lot of the product. Theyre starting to get into engagement rings. They want to wear jewelry. They want to be part of the process. That is going to raise the demand. This could be arranged . Rainy ring . Be a it wasnt that heavy. Be hugect a diamond to if it is worth that month. Much much. You have an action auction in south africa. This is the only company that promised they could make it into 12 carats. The others were saying 12 10 or 11. They were able to win the diamond. It was really beautiful. And is not just a matter of how much youre willing to pay. It is a matter of pride for the seller about what happens to it in cutting. You have to pay more for it. There is a monetary value. It is also what you can deliver. Does the end product make a difference . You know what you can get at the end of the day. She thinks it is going to go to someone that will keep it in a box for historic and financial value. A safety deposit box. Locked away and never see it. Pretty much. If you look at overall we are looking at 40 growth. There is a lot of production out there. We are seeing that supply and demand really do match up. There is an increase in gross and that is coming from china. They are invest interested in the colored stones. Produced the two most expensive and biggest diamonds out there. 122 rough cut diamonds. That was found back in june. It also produced the biggest diamond ever. I remember. 200 something . 3100 carats. This is a mind that turns out some serious diamond loads. Part fromgoing to the diamonds and talk about other things that might make you rich. We are approaching 56 minutes past the hour. It is time to go on the markets. You might get rich if you invest in european equities. They rallied after last weeks selloff. This is on reports that the russian warplanes are finished military exercises near ukraine. There is general optimism that the conflict is deescalating a little bit. They are up nearly 2 . That is good news. Now lets turn it over to the u. S. And show you what is happening here on the markets. S p is up by almost 1. 4 . The nasdaq is up the most, up 8 10 of 1 . Of there is an optimism that tensions are easing between russia and the u. S. American air strikes may push back the islamic state. Happenook at what will on the treasury markets this morning. 10 year yields are trading at the lowest. They are unchanged. They are trading at 2. 43 . The are selling off ever so slightly. This is the lowest level in nearly a year. It hit 2. 3 last week. That is the lowest since 2003. Market makers will be back in a moment. Were rocked byts a California Court ruling. It all has to do with a foreplay. Live from bloomberg World Headquarters in new york, this is Market Makers with etik shatzker and stephanie ruhle. A new day for the ncaa coaches rattled by the ruling athletes can be allowed to sell the rights to their name. Changing taste that you will hear from the ceo of legal sea foods. And meet the team responsible for the fight or some of hollywoods gift movies. Good morning, everyone, this is Market Makers. That looks fun, the stunt double stuff. Ther the news feed top business stories from around the world. The Largest Dairy processor in the u. S. Has redrawn its forecast. They say they are operating in the most difficult time in history. Cheers of beef are down as much 10 today. For11 billion offer Chiquita Brands represents a 29 premium 611 million offer for chiquita represents a 29 premium. For cbs and the broadcast of the pga tour ratings were up 36 from one year ago. The end of pushed the tournament into prime time. Speaking of money and sports, there was a 99 page decision that landed like a bomb on the ncaa friday. A federal judge in california ruled that National Collegiate Athletic Association must allow studentathletes to be paid for the use of their names and images, Television Broadcast and video games. It is the socalled old man in case. Of ncaa plans to appeal part the decision but the guy appears to be cast. College sports in america will never be the same. A former star student sued in 2009 after seeing his likeness in a videogame. Here is our resident expert on the business of sports. Did you get what you wanted out of this ruling . Yes. In every possible way . Basically. Even though the court found what the ncaa was doing was violating antitrust laws, it said it wanted to take a cautioned approach to how College Sports was going to change. Theres no question that the door is wide open, if not on and the fact there will be reforming college vote College Sports academically and athletically. Hashe ship at the ship sailed in a way that will mean what . People who occupied the position at obannon once had . There has got to be a more double Playing Field between the athlete, the school and the team. Make a distinction between the case of obannon and the other cases we see right now against the ncaa. We have tessler cheering all the way home. And a said is all the logic reasoning the ncaa has clung to for the rules is illegal. It does not make any sense. There are other things they can do like go about competitive balance without restraint of trade. What he is looking for is a suspension of all the schoolsat restrict, the cannot do it, the ncaa cannot prevent schools from paying players, they cannot keep athletes under a stipend. Hes looking to do away with all the restrictions. The reason i was asking whether you got everything you want and how things are going to change for studentathletes in the future is that while judge wilkins established precedents ofyour point on the matter whether the ncaa is operating as violating federal antitrust laws, there were peculiar aspects of the ruling concerning the establishment of a trust fund and how much players can get paid. Paide players were only 5,000 year for the use of their like this in a videogame or Television Like this, how much would thatt have been for at obannon . There are other parts of the decision being overlooked. First, woodward said athletes should be getting the full cost of attendance, not just the cost of tuition. In many institutions, that would be another 5,000 to 10,000. On top of that, she said they should be entitled to up to 5,000 additional. Thats the first step. I said it was cautious. She wants to see how this will play out will stop how this will play out will stop there will be our decisions based on Public School responded no much theyre willing to offer. It all effects the rights of individual players. You are going to see a competitive orchid develop as well as athletes they if im providing more value than just the other end, im entitled to more. Interesting to see what will happen in the future. Theres a difference between Revenue Generating row graham and the smaller stuff. What will happen with womens sports . We will see what the ramifications are. Lets see what changes the ncaa really makes. Lets see what changes occur. You are in you do if ohio state and have a bluechip cornerback western mark what is at value of Johnny Manziel texas a m . You can argue there will be incentives now given to the best recruits out there. The ncaa is the philly going to push back. Where does it go . There comes a time when someone has to take stock of reality and cut losses and say what do we do to move forward . Have conferences acknowledge there are huge shortfalls in the treatment of the athletes and they would like to make changes in order to add benefits to the athletes will of youot an issue there need to be changes. There are. Whether they have changes imitated to them or say that theyve got to do this. You mentioned schools and smaller schools giving up football it might even a time football but then it could move to a lesser division, a division not within the big five that exists now. Those in sports understand there are the haves and havenots. Make morecan competitive games. It was suggested that the havenots switch to a spring schedule to make it more workable. Thats another possibility. Its just a matter what the ncaa is willing to do. If the ncaa does not cut its losses, where should this case go . Should be litigated to the Supreme Court . No. But if they are not willing to do that, it looks like it might get to the point where the ncaa would ask the Supreme Court to look at this. Theirat they are resting entrenches and song is a 1984 decision that on and off the cuff remark said athletes should not be paid. Sentence, it said athletes should go get an education. Theyre not getting paid and they are not getting education. Most glaring in the testimony was athlete after athlete that said i was not a student. I masqueraded as a student, but i was there to play sports. A lot of times they dont even finish school to begin with. That was part of the decision when players leave school, they would like the language to say when the player graduates. Thats an important distinction between leaving school and graduate. If true purpose of the university is Higher Education and not athletics. What would you like to see . Would you like to see an ncaa playersds are made to and it may add up into the hundreds of thousands hours mark you are getting that now. That is why there is what they are calling an arms race where you build stadiums that are up to half 1 billion. Say come to my school, but its really come to my team that has all of these facilities. What about the educational component . If the purpose of the College Athlete is to educate the athlete as well as provide the opportunity to use their athletic skills, then do both. Or why not take College Sports out of the colleges . Why not turn it into a professional league that can do it in a way where they can be compensated . Tradition theres a where athletes are associated or affiliated with colleges. Why not throat the tradition of the window . Sports grew up in the tradition of professionals. The big ten conferences first rules when they formed was that there could only be three professionals on a team. There is a misnomer or fantasy that College Sports always evolved an athlete who academically was otherwise ill fight to be in college but then just played sports as a sideline. That is not true. It never was true. It started as a means to her fashionable players associated with the school so that the school could participate in these athletic events to the highest extent they could will not they could. When you talked to abandon, did he want to go farther . His reaction was weve done that. We have opened the door to change. Because this was an injunction, he gave up his right to claim damage. What he wanted to do was serve as the catalyst for change and the systemmake sure no longer exploits the athletes. This is an association that takes and literally more money than the nfl on and it annual basis. On an annual basis. And the team gets nothing out of that not only monetarily but from the education perspective, most of them get short changed on the quality of education they get, the degrees they get, and their whole presence within the system will stop i spoke to ed a year ago. Ive spoken to him a lot since this started all stop he said i feel like ive already one because everyone is discussing the topic of the ncaa and its rules and areas of being discussed in the public domain, on our show and other channels. It was being discussed by the general public and thats what he wants. What i still cant understand is how allowing the layers to be is going to provide them a better education. Howkeep talking about things need to be reformed in a way that allows players to be educated, but if Johnny Manziel year oring 200,000 a over the life of his college career, how does that make you a better student . You hear players talk about had about not having enough as they have no extra money and no extra time to earn money. Its beginning to address one of the issues. What needs to be addressed now is what these claims have done is open up the entire box so that it is no longer sealed. It reveals all the flaws in the system. One of the things proposed by one of the big five conferences is freshman eligibility. To give them an opportunity to acclimate will stop which used to be the case. The ability to reform the entire system so you get a balance between the at league, the education and athletics. Its no longer ok for the coach to do that. It just wont play anymore. What will . Opening the box or opening the pandoras box . It is a landmark in your favor. He was the lead attorney for at obannon in the obannon trial, a ruling that landed like a bomb on the ncaa friday afternoon. Coming up, much more on this ruling and we will look at with the colleges might do next. More now on the big sports ruling over the weekend. Thatge in california ruled the ncaa cannot stop layers from selling their names and likenesses of the founder of sports impact is with us as is Andrew Brandt who runs the center for sports law who is also an esp analyst and our. Xpert the ncaa says is going to appeal at least part of this ruling. To Division One Basketball and football . Players happens to the question mark but i dont think armageddon is upon us. Know if its going to create more imbalance that we already. Thats going to give them the voting ability the full cost of attendance. The obannon ruling is going to provide the opportunity for student athletes to cash in on their names, likeness and image. The last one is the kessler case. I dont know what the outcome will be but youve got eckstein billion dollars of media rights revenue and its hard to keep the athletes away from some of that money. What is the worstcase scenario for the ncaa . It did not get as bad as it could have been. Some would say the ncaa got more out of this than the players. So its not armageddon. Here is the deal the ncaa has these rules and these rules apply to College Football and basketball and they apply to field hockey, wrestling and volleyball. They should not apply to all. Taken last week seems to be moving toward what obannon is trying to rule on, which is more athletes with leverage in the top sports where they will get for your scholarships. None of this year stuff we have had in the past. Cost of attendance, not just books and tuition. Disability insurance, not just worrying about if you are going to get hurt going into the pros a year from now. We see a continued imbalance where the ncaa will be two parts its going to be the power conferences in College Football, College Basketball continuing this arms race. Higher paid coaches and better players, and the rest of College Athletics where we can say they are student athletes Playing Field hockey. Is if there is not a Bottomless Pit of funds, the funding is going to go toward College Football and basketball and they that may be the nonrevenue sports. Do you see this as a conflict with title ix . Women certainly do not have the marketing opportunities manhattan marquee sports. They may say what about me . I put in as much time and effort , where is my piece of the pie . Obviously going to be an impact here. You already have the White Elephant in the room with football players. No footballously with women. A bigger casualty is going to be mens sports will stop mens sports. If you have worries about revenue, its going to come from nonrevenue mens sports. I think its great obannon set the stage for less inequality, for players that are as the northwestern unionization talked about, told what classes to take, when to take them. But we focus on the ncaa so much we think its mens football and mens basketball. Ncaa is 50 sports. I just want to point that out. That is an important point to make. And he just outlined a vision in which where this ends is full tuition and for maybe some other compensation for the use of likeness is and but im a skeptic. Is that really where its going to end . We have the lead attorney for at obannon here talking about opening a box will stop i raised the question as to whether it is a pandoras box. Skeptical that it is going to end with a neatly circumscribed circle around these division is and athletes all stop going back to andrews point, because there are so many other sports in College Athletics, i dont think you are going to see the eating wars for mens soccer, mens, womens golf as you see in others. We are talking about football and basketball. Boxes youspect to the mentioned, the one box i see is a positive is if the kessler case opens the door, they are receiving money thats not coming from the university and it weighs the universities having to spend money. The top layers are the only to win that are going that money. I worry rich alum could dirty the waters and try to play a bigger role in giving kids money under the table, even more than they do now. People like you and pickens donate money to build feels terry bowden will a with 9 million to build a hockey arena. That means colleges have more influences on athletes in a negative way . I think it would be difficult president s school for a long time advocated some of the responsibility to that Higher Education mission. Lots of power has been granted to these coaches. Look no further than ohio state. There were there was a real truth to the comment that the stature of the coaches had become so great that they were more powerful than leaders of the educational institutions. Same with duke. The firepower is now swinging back to the president will stop they have ammunition and they can say you are under fire. Its time to wrestle control back and rein in control. If jeffuch will change kessler wins his case and the student athletes are effectively given the power to negotiate as if they were employees . Decisionill put this on steroids. That will be a turbocharged for this decision in terms of adding wars, in terms of paying for players. Did notnnon decision allow pay for play. Thats not what we are talking about. Fact, she said i dont believe they can get endorsements. If the kessler case moves forward, you can get that. But i think two things need to be pointed out. Nowhere in this discussion in the past half have we mentioned the value of the scholarship will stop that does have value. Lets not call that a zero value. 50,000, 200,000 over four years. It has value in the context you make later in life. That needs to be noted here would we talk about players. Thank you very much. Coming up, americas love affair with not football but lobster we will talk to the ceo of Legal Seafood. Live from bloomberg World Headquarters in new york, this is Market Makers with Erik Shatzker and stephanie ruhle. It is Market Makers here on Bloomberg Television. Happy monday, everybody. We are not a chain thats the message Legal Seafood wants to impart to stop the Seafood Restaurant with over 30 locations is on a campaign to showcase the uniqueness of each of its locations. Will customers buy it hook, line and sinker . Joining us is the ceo. Weve seen red lobster talk about change, being sold after it could not get sales up. How hard is it to be a Seafood Restaurant right now . Seafood is very expensive and is not a great deal of supply around. Unfortunately, if you look at the red lobster model, they are selling to a particular demographic and seafood rice is kept escalating the top unless you can move the demographic, thats not going to change. You have 34 restaurants, significantly less than red lobster, but it does show consistency. How do you do it . Fax we do not digital ourselves we could have a more or more casual restaurant, and that allows us to be nimble with the menu. Challenge the biggest to being a Seafood Restaurant right now . Probably seafood. Availability of quality seafood . Exactly. The northeast is an example. By the gulf of maine, they just imposed a moratorium and cut back the botta 77 . Cod . R for cod, haddock, flounder and gray soul. Yet to ship to other areas coming up to go to farmed fish and some of the Global Warming is actually responsible for some of the fish moving toward iceland. Do your clients care whether the fish or wild whether the fish is wild or farmed . I think there is a certain percentage that absolutely does care. Is the bias toward farmed or wild . I think the bias is toward wild if his is available. We started out as a retail fish market, so my bias is toward wild. It is much more expensive and thats why you need to front kinds of restaurants where people can afford to pay the higher prices. How do you end up sourcing . Do you have agreements with local fishermen or how does it go . We have to look at it globally. Northeast had the such an abundance of seafood and different varieties and was coming in in great abundance. But we do have agreements with fishermen going out and agreements with some of the countries to source great product and also some of the farms. You have to be multiresourceful. How do you aaron t the quality of farmed or imports . Just because norway says my salmon is worth dan i do mean that complies with what we might think of as organic. We look at ourselves as being a fish is this. We have a plant and we process all of our product. We test for chemicals and chemical additives. We also make sure we go out and visit the farms where they are and we make sure there are no hormones, no antibiotics. We take this very responsibly in terms of how we source and handle our seafood. If we were in the restaurant is this just selling fish, we might not be as particular. Thebecause we are in seafood business, we do it differently. How do you define sustainable . The u. S. Government under National Marine fisheries and noah has a quota system that you can only buy up to that quota and not anymore. Caughts if haddock and haddock and caught are not being landed in abundance, those prices are higher and we may have to say lets get some salmon from alaska and offset that. You talk about being in the fish business. Clearly you are the fish business when you come to Legal Seafood restaurants, but you want to make wholesale fish tales part of your business. A little bit of wholesale but war retail. Are you going to open fish markets . Actually selling into stores with our brand. We look at it in a different channel of stop we wanted to be in a different channel. That can transcend into the regional counter. What is the revenue makes you hope will be in the future . Over the course of the next five years, 60 40 restaurants into retail. I would like to see the retail figure go in terms of higher percentage will stop does it undermine your confidence in the Restaurant Business . It balances the portfolio. You can have all your eggs or all your issue in one basket. Who are you displacing as you move into retail . Thats a good question will stop i dont think right now there is a branded seafood product out there for. But there is definitely seafood. It is finding its way to the supermarket one way or another. It is more of a commodity and as seafood gets more expensive because supply goes down, its going to be more defined and valueadded. Some companies ran themselves in the same way a direct to consumers. It will be more direct to the consumer but there is not a defined brand name out there. Which the most expensive fish out there right now . Swordfish tends to be high. There was an abundance of lobsters the last couple of years and partially due to Global Warming, the water temperature has gone down and you dont see the same amount. You say Legal Seafood is not a chain but if i were to go to one and then another and the other, you made by some similarities. What happens if you find yourself unable to get certain kinds of fish or certain kinds of seafood . How do these nonchain restaurants respond to one . Ofwe might become the house shrimp or something. I dont know. 4, five years out and try to understand what is going to be out there. How do you detect your margins in this volatile as this when theres no fish is contract . What it is difficult to do. You just hope the market is flexible enough to absorb the increases. Not a know seafood is commodity and it is not in great supply full of if you want the best of all of the product, youre going to have to pay a little more for. What is your favorite fish . I like so many. Fullish will stop alaska a little bit of smoke on that all stop i am a crab girl. But thats not official it qualifies. Softshell crab. Grays old is the rollsroyce of fish in america. Sole is the rollsroyce of fish. I thank you very much. When we come back, getting the kicks the stunt performers behind hollywood buzz coolest fight scenes. Ever wonder who choreographs and designs the fight scenes instance and action movies . Doesompany in los angeles just that. They are the stunt team behind the production in many movies like the hunger games. We went to their training gym to learn the secrets behind their stunts. Being the stunt or former, you are maybe one of the coolest people on the set. To play for a living. 8711 action designs action sequences for phil from beginning to end. Fight scenes and execute the filming in the actual movies. The performers we have today are incredible acrobats, park or artist some of them have a dance that ground. You need people with extreme talent. I was a gymnast. I dont have a white background at all. I literally threw my first punch when i stepped foot in this gym. Every job is different. The hunger games is more running and jumping. It was that passion for martial arts that led me to get into stunts and to build this company. There are actors who can do 90 of their stunts and do them better than the stunt performers. I would say brad pitt and matt damon. Hugh jackman is one of those freakish at least freakish athletes. There are a lot of tricks to the trade. This doesnt double is more prominent in the film then you realize and there are ways to disguise them, the way you photograph them. A lot of our stunts are rigging oriented. We apply to green screen elements that make us look like we are in a dangerous spot. Action sequence, if you cant see the face, most of the time they are not hitting each other or making contact. There are accidents sometimes were people do get hit and you definitely get used up a lot. I have had knee reconstruction and ive roped in my wrist in four places and a couple of concussions. It is part of the job and you accept the risk when you get into stunts. That was pretty awesome. It makes me want to go work out right now. Actionthose cheesy adventure movies for the stunts. They are really amazing people. Of thell cop to the same coming up, the largest u. S. Online travel agent plans to get even bigger. We will tell you how priceline is expanding and where. Americas Biggest Online travel agent is making big moves abroad. Has announced a big asl and we think of them part of why priceline wants to go to china . China is a massive market and its growing quickly. Chinese tourists are spending more and traveling more. It could also be hard to break as an internet company, so it is wise to invest in a company that is already there. Largest Online Travel agency in china. Where do they mostly go . They love luxury shopping, sedated to European Countries and go to places where they can get visas easy. The maldives have a massive amount of Chinese Tourists because its easy to go there. They do come to the u. S. But its not their first choice. They prefer europe and they are for activities that luxury brands. What do they mostly spend their money on . What are the big ticket items . I think the exclusive activities are big. They want to do things their friends have not done or parents generations have not done. Another thing that is smart for priceline is chinese customers, especially young customers are starting to book independent trips. They are not hopping on a guided tour like their parents and grandparents. I was there last year and a lot of young people say i want to see the world for myself. Its about the experience and its also about shopping. Anything with a level of exclusivity is appealing. How are they different from priceline . I dont think they are different. They just already have the Chinese Market will stop i think they are working together and cross promoting and are able to share resources. Its not necessarily an acquisition. Help bringe idea to trips to the masses . It is. That is a good point will stop but i think theres something to being able to go online and search for where can i go . The world is your oyster. What flights can i book . Especially young people using the internet in china, more and more people have access to mobile phones and internet websites. They are able to learn more and travel more. Interesting. I was in china long time ago and it was an amazing trip, before the olympics. That does feel like a long time ago. They are very different. To be there and see it was pretty happening. Will be backers in a moment. Whats yet to find out happening in the markets. We will talk about the markets when we come back full when we come back. That wraps it up for Market Makers. I had a good time. Workedng the lawyer who for at obannon and defeated the ncaa in California Federal Court that artie awesome as well. Taking us through what the next step will be any broader implications for the ncaa. But tomorrow, we will look at the impact of Legal Marijuana in colorado. It has been around for a few months and being hailed as a success will stop as a success. Im not sold. We will discuss the implications. Approaching 56 minutes past the hour, that means Bloomberg Television is on the markets. Starks stocks are starting the week in the green following fridays rally. In the rede group is and geopolitical tensions appeared to be easing, allaying concerns among investors. Joining me is the equity derivatives strategist at mk m holdings and a frequent guest of the show. Weve still got Russian Troops on the border with ukraine, the situation in iraq appears to be chaos, yet the vix is plunging today. What is going on . If this continues, it will be another impressive low magnitude volatility event for u. S. Equity markets. We saw the pix pique above 17 and last week, the market rip higher and its strong today. Its a critical level if you go 2013. O january of your average is right around their full up given that volatility could revert back below that we would not be jumping to the absolute conclusion that upside to the market will be sustained Going Forward. But so you are not buying the dip is to mark a little caution is needed. We are not in the eye area risk on risk off your of 2012. Everything seems to be moving sideways. But the pullbacks are relatively benign. We have not had a pullback beyond the percent over the last 20 months, so its a nice time to look at synthetic exposure like options if you want to get long rather than moving all the chips back end on the long side. So because of the absence of volatility, you do want some synthetic exposure. Another stock in the news is kinder morgan, stocks hitting a new high after saying they will combine their oil and gas pipeline and storage companies. Richard kander consolidated his pipeline empire. Thats interesting because of what is going on in the oil and gas sector right now is a spinoff of the Oil Terminals and adjustedelines and tax order ships how is the Options Market reacting . There is a good amount of activity on reversal conversion. Looks like its getting someone fairly long. I think the real take away from the options is how active cm and a is and the importance of Options Markets in there if you think about last week. We talked about sprint and specifically getting long sprint and that did not work out so well. Foxnt walked away and walked away from time warner. I think wendy of people have gotten hurt in their and it speaks to the increasing need to look at synthetic exposure in some of those names. You are also watching some retailers, many of which it which are expected to report this week. We want to go all the way out to november. Worstoup is the performing of the 10 s p sectors. Its gotten better in the pullback and is actually the best performer, so there is perhaps some change momentum. We think earnings could help. We want to go all the way out to november. The stock is relatively inexpensive. Novembernt to buy 7075 call spreads and pay about one dollar 40. You can make 3. 60 with the stock at expiration. Bullish that on ross stores. Thank you as always. We are on the markets again in 30 minutes. Money clip is next. To money clip. I matt miller in for adam johnson. Here is a rundown. Is content really came or is amazon . We will tell you about jeff bezos battling against authors. The cure for the ebola. The plan to kill one of the worlds deadliest diseases. Turkeys Prime Minister becomes president even after mass protests and evidence of corruption