Thousand jobs in august, the smallest gain in years. This could mean the fed waits before tightening policy. Over 700 billion of fixed income from blackrock. He is here to share his views. People saw an immediate reaction. Except for the headline, Everything Else was pretty good. Themployment rate dashboard improved. We saw hours worked unchanged. Longterm unemployment went down and the number of people working parttime. Federal several prominent researchers said that a secular because so many people are retiring from the labor force. That is not the position janet yellen has taken. Within the fed there is a growing recognition that that is the case and we are not going to see a big rise big rise. Are people going to come back into the labor force . What you make of all this . Take a caveat and say there are things that are really good. Every single piece of Economic Data has been positive. Adp was really good. I sm. If there is something worth thinking about. To 17 have disappointed and 12 to 14 have been revised higher. There is a seasonality to this. August is a weird period when it toto hiring you hiring. Some of the retail data was surprising. Analysishere was some that has to be done on that. I think you have to think about we are still growing at a pretty good rate. Does it change your view about when the fed may shift policy and when we may see Interest Rate hikes . We have been adamant about the fed moving faster than people think. I do think that piece coming out was significant. We are in a period of transition. You cant him nor the fact that you cant ignore the fact that the 0 fund rate is not an emergency condition. Aboutple are talking should the fed raise rates and arguments lead vehemently about that. We are not in an emergency anymore. Things are Getting Better an. What you are seeing at this level is distortions and asset allocations. Companies are using the low rates because their stock prices going up to buy back stock and to increase dividends instead of making profitable allocations to Capital Spending that will be profitable down the road and create more jobs. In some point at some point the fed will make it turn. The ecb is turning in the other direction. What is more important . I think yesterdays news is a pretty significant piece of news. It is difficult to unlock. You think about japan and europe and where rates are. It gives the fed and easier runway because you have such low rates. , is he the wizard of oz . Mirrorsmore smoke and nobody knows how he would go to about buying sovereign bonds . Fact is dubious given the that, can you buy in covered bonds . How much can you buy an asset backs . It is questionable what you can do or should do. They are calling out for physical movement because Monetary Policy can keep it. What can mario draghi do . How do you keep real rates so low . Yesterday your fellow member of the Advisory Panel told stephanie that the ecb move and what drug he said about future moves constitute the beginning of the end of the bond market rally. Do you agree . We think the curb is going to flatten. Todays number doesnt suggest it is tomorrow. We think the curve is going to flatten. We think rates will drift higher. We also think there are some value in the fixed income market and i think rates are capped. We will be a low Interest Rate environment for some time. Do we have to be a 0 funds rate . Does the 10 year have to be under 250 yield . It is cheap relative to the rest think peopleyou i are going to call the bond bubble theyre calling it for five years. People have to put money to work. It also comes down to what Winston Churchill said. You have those two things going on. You have mario draghi talking. All this activity in iraq and ukraine that drives people into the flight to safety. There doesnt seem to be any reason why people want to get out of the bond market. I think there are three different ways to look at it. The timing at which you do it, the pace at which you move, and the destination you who are should layy if they out the plan sooner because it capitals confidence and investment. Lay out lower destination you had historically, there is a lower destination and the pace is going to be gradual. You can move faster to get to normal light conditions. What happens to stocks if they raise rates. . Raise rates . People look at prior cycles and the markets get hurt when it has happened. It is an aggressive set of tightening measures. I think the market will adjust downward. Very quickly people will realize this is not a fed that is changing policy dramatically anytime soon because rates are capped. The fed will be deliberate in terms of their policy and Corporate Funding levels will continue to be very attractive. Just because there is tightening happening it doesnt necessarily mean it poses that much of a problem for risk assets . I think people yell about it. As soon as the news comes out. Then you think about what this to priorto pride tightening cycles ofit could be the beginning the end of the bond market rally, which is what he told stephanie, but he also said the ecbs injection of more liquidity means higher let higher equity prices. I think that is fair. We think equity prices will continue to gravitate higher. If tomorrow we knew that geopolitical risk was doling significantly you could see the 10 year move up. But it is not happening. It ishard to say we think over and rates will move significantly higher. Thank you very much. He oversees some 7 billion of fixed income at blackrock and our economics editor right here, michael mckee. Time for us to take it to the newsfeed, the top business stories from around the world. There is a ceasefire after five months of fighting in the ukraine. Prorussian rebels signed an agreement to take the fed less than an hour from now. 100 people have been killed since the conflict erupted earlier this year. On what it could mean for sanctions against russia. Offered 9. 1al has lien box. They offer would be tough to get past antitrust regulators. Hackers attack jpmorgans computer networks. Technology leaders started leaving the bank before. Attack a new Cyber Security chief just took order. Coming up. Bp may be facing 18 billion more in fines and penalties from the oil disaster from the gulf of mexico. The company has made a lot of changes. We will be talking with the head of technology. Should parents let their kids and play kids play football . We will hear from a College Professor who has written a book. The legal battle over the gulf of mexico oil disaster is far from over. Bp plans to appeal a judges ruling that it acted with gross negligence. Cause the company to pay 18 billion more in fox in fines and penalties. Made changes to make it safer. But is it . David, there is no question bp has made many changes yet you still do underwater drilling. Could the same thing happened to bp today . Hello. Me say yesterdays judgment is disappointing. We do not think the court justifies it. In terms of your question, no doubt we have learned a lot both from that particular incident and more generally through our experiences in deep water. We have been sharing those Lessons Learned with the industry and building them into our technology programs. You address the question but i feel like i need to ask it again. Give me a sense of all the work you have done in the past four years, how that has helped make ep a safer company. Is there a profitability . Is less than 10 . Im trying to give your whole china give people a sense of the company trying to give people a sense of what your company has done. I think the facts speak for themselves in terms of safety performance. What can i say from a Technology Perspective is we have been making that the First Priority in all our investments as we go forward. Number one for the Technology Organization to improve the safety and reliability of operations. You move to cvd technology you are drilling in unconventional and risky places. A project is drilling six miles below the surface. It may not sound like a lot but it is basically like drilling on mars. Humans would die if they went down there. What technology are you using and how risky is it . Of a biggerart trend in the deepwater. 1980s, itack to the would have been considered a stretch than. We have been pushing the boundaries of an industry of the industry ever since. We are building all those Lessons Learned into the next step in the trend, which would unlock lots of reserves. Obvious a lot of operators are keen to see this trend open up. Ome of them have joined us it is a huge cost when million,tell me 300 400 Million Dollars upfront costs. Can you tell us more about that . It comes up to the floating this floating facility. T is likely to be checked down you have to spend more capital up front. That was believed the operators have joined us in the programs we are involved in. Does that change . Does the economics change . I think youre making assumptions. We dont agree with the judgment that has been made. We are appealing the judgment. As cheap oil run out . Manned for energy is growing about 1. 5 demand for energy is growing about 1. 5 . If you look at how you deliver that, a world needs all sorts of sort all sorts of energy. Development in the u. S. Will help me the deficit in terms of its imports for production and in places where bp operates. There is a need to meet this growing need for energy. What are the prospects for the drilling bp plans to do . We are obviously a shareholder. Drilling andns for the arctic. I dont know what those plans are. Given the experience that other companies have had in nonarctic waters, how much of a risk do you believe that poses to an active system to an echo system that is more fragile . Cliques we would not be operating in places we would not be a burning in places in which we couldnt do that. Assuming they want those areas to be opened up and defined the rules a bit. We deploy theure best available technologies to try to manage the risks. Let me just say we are talking about the risk associated with the gas industry. There isnt actually a riskfree source of energy in the world. Everyone has their objections. The jobs we have is to manage the risk associated with our business wherever we do it. The same would apply in the arctic. We would be working closely with the rest of the industry to develop the best technologies that we can manage those risks as well. No doubt new equipment is pivotal. If we do see ramped up sanctions from the west, does that prohibit you from importing new technologies in the future . If you look at the russia is an, extraordinary resource base, an extraordinary contributor to energy. If that is the basis upon which we are investing in the company. Absolutely comply with andrequirements people have in the future related to technology and Technology Transfer into russia. We see this Great Potential for application of technologies developing both in russia by brushing companies as well as elsewhere in the world. He is the head of technology for bp, helping the Company Meets the world meet the worlds insatiable demand. America byp, made in a chinese owned factory. We will explain when we come back. At chinese factory was a southern accent and its parts are stamped made in america. Celebrities want to walk a mile in her shoes or even more. We will take up fashion week. This is Market Makers with Erik Schatzker and stephanie ruhle. It is Market Makers here on bloomberg television. American companies have outsourced manufacturing to china for decades. We all know that. Until now it was a oneway street. After years of siphoning jobs from the u. S. To china we are seeing some created. Adam johnson traveled to the south to see this hiring in action. Welcome to Wilcox County alabama. It is the poorest county in alabama. We are desperate for jobs. Them a you may be surprised to is doing the hiring. The manufacture for high price for systems we are going to load it into the smelting furnace. The 100 Million Dollar plant just opened last may. Why would the chinese come to alabama . Wages, lowerthe energy costs, faster delivery of u. S. Customers, and the biggest in a fit, no tariffs. They save 11 on tariffs if you product is shipped from china. Now zero. It could be 30 million per year. More Chinese Companies operate in the state. The trendentley used to his advantage when he entered office in 2011. He vowed not to take a paycheck until alabama returned to full employment. The reason most Companies Come here is we have an environment that entices companies to come. Do you have enough work force is your workforce change workforce trained . They actually build facilities to train the workers and they train them according to the specification of that industry. What is happening in alabama is happening across america. Chinese Companies Invested a record 14 million last year. They employ 70,000 americans on u. S. Soil. We are in a Global Economy whether we want to be or dont want to be. Beto jim for think you would recruiting Chinese Companies . Absolutely not. Adam is back from the deep south. How was the barbecue . Incredible. That is what you are doing at night. They gave us full access. We have Chinese Companies going to alabama because it is cheaper for them to be produced. The recession has frozen wages. As he mentioned it was anywhere from 11 to 26 . Add that to the fact that they can go from order to delivery from several days versus several months. Chinese wages have risen 25 in the past five years. And natural gas is one quarter what it costs in europe. It you have cheap access to energy. Its amazing. A great story. Loved it. Our very own adam johnson. You have heard the arguments against football violence, injuries, concussions, they can all last a lifetime. In a moment the other side of the argument. An english professor writes about why football matters. President obama will be holding a News Conference live on bloomberg tv or on our website. There is a reason football inspires so much passion. Countryfrom across the many of you agree. It to discharge the date and is a voice in this charged debate is a voice. He is not a player or a coach but an english professor at the university of virginia. Mark, how was it someone like you, and english profit, and it up writing this book ended up writing this book . This book is about my own life playing football in high school. My life wasnt in good shape. My family was rough straits. I sister died and my parents were having a hard time. I was barely holding on. Football gave me a sense of current moderate, strengthen my. Ody, gave me some confidence i see there is a lot of downside the football. It isrwhelming sense of as a player and as somebody who is interested in education is gratitude and admiration. When i think about the crime , ibery the camaraderie want them to learn it on a tennis team, baseball team, not playing a game where concussions are so prevalent and they could get injured with the slightest of attacks. Fair enough. Doctors tell me there are as many concussions playing soccer as there are football. There are fewer concussions if you play tennis. Who play football and one of the things i did was make sure the equipment was good and they took care of the boys. They did not allow to initiate headtohead contact. Is that to say you believe football is being unfairly maligned . There are real dangers out. Here for kids football is almost unique among games in that it is it makes you get knocked down and stand up. And is what life is about you learn that most are medically playing football than any other game. Couldnt you say that if your kid was in a gang . If youre in a gang you knocked down you get knocked down, stay down, and died. Put yourself in a situation where you are on a brotherhood or team, you get knocked down, that sounds like a gang. Rules here andre more regulation, more oversight. The objective is not to sell drugs or mess up the other gang. The objective is to learn how to play together, get your body without ashape, spirited part. You are absolutely right. It is good to get knocked down and back up again. It does depend on who is doing. Hat knocking down the average defensive lineman they way we this is high school. Those are big kids paid for all purposes they are preprofessionals. I have questions about preprofessional kids about the one college ball. The objective is not bound up. Ith money i i think money threatens the game all the time. You have a code sitting there who makes 2. 5 million per year and he would like to keep his job and you have a boy, student 19 years old who has an injury, the coach even at the highest integrity is going to be sorely tempted when money enters the game and when an obsessive desire to win enters the game. Wouldnt it permeate down to middle School Fathers who want their boys to be the bigticket players . , in the world fama in the world i would in the world i would like to see, there would be no scholarships. You come to college and you play football because you want to. Could initiate a Development League like baseball has. Bookstead of titling your why football matters, couldnt you title it why sports matter . Knowotball is something i something about and feel allegiance to. It can teach a certain sort of boy, particularly a stubborn and disengaged one like me, things well worth knowing. What about girls . The doors toopen them. Whether they will or not in the years to come we dont know. Do they want to play with boys . Do they want to play with that play on their own . Play on theirt to own . I have seen girls play hockey. The Canadian Team is a sight to behold. The American Olympic hockey team is good. No reason girls cant play football. Game frightens me. In defense of football but hockey frightens you. Thank you very much. Mark edmondson is the author of a book, why football matters. From football to fashion week. It is here in new york city. Makinge designer who is celebrities forget about european shoes. In a market dominated by , rihanna and beyonce are choosing to pound from anment with shoes american designer. How did you get into this market . A woman from connecticut makes a giant splash in in agarde luxury shoes market dominated by europeans. My first job was working at reebok. Of thes felt like one guys. I never thought of it like a woman designing shoes or a man designing shoes. I was always very aggressive in my ideas. I never saw anything holding me back. How do you feel like you are different from the guys when the customers feel you may be different. Do you think being a female should designer helps you with an audience . They love to wear my shoes because they can perform in them. They are comfortable. They can really they can wear really high shoes but theyre also comfortable because i am a woman designing for women, i test drive and wear them. I work hard to make sure they are comfortable. Make the you need to shoes in italy . , luxury shoes is artisan work. It is the best quality, the best materials. How did they find you . Or have to be an extraordinary amount of women who think they can make the shoes. How do you get them to see and fall in love with your stuff . You have your team. People help me in Public Relations or marketing. I would say it comes back to the product. These ladies liked my shoes. They are given a whole group of shoes to choose from. At the end of the day they have to like your shoe. I feel fortunate that i have had a great shoes. I am a Smaller Company competing with huge brands that i focus on the product, the quality, the fit, and personally they look amazing. How do you feel about flats . Flats are great. Even your sneaker is six inches. I was the youngest of six kids. I think from a young age if a heel makes you taller and makes you feel powerful, i like to be tall. How did you do it . Click social media is everything to me. My brand is about pop culture. The whole point is i am a woman, i wear the shoes, someone can see that. There is no middleman. There is anink opportunity to build a luxury shoe industry in america . My friend is the only female shirt maker on sherman street, the heart of the shirt industry in britain. She opened up a factory in britain so she can make meat in the u. K. Shirts instead of having to outsource the productions to india. I would love that. I would encourage that. There are a lot of technicals. It is like making cars or buildings. It is very specific. Shoe factories take a long time to build that expertise. There are some classic brands that were made in america. The pricing was so much better. Italy will italy has always been luxury shoes. It is the romance. Something about italy. Do you want to go brick and mortar . He had so much success. That amount of money is massive. A home forys need brands. A brickandmortar homes of people can touch and smell the brand. That is my ultimate goal. I always build an outfit from the ground up and i plan on building this from the ground up. I wanted to start with some solid footing. The stores are absolutely in the plan. Was it extra bold go straight into luxury. It was a much smaller market. I had a passion for a very particular shoe that were amazing. They are going to be expensive. I wanted to build in the details. It has to cost something. How much do they cost . I do have sneakers. To it the way up can be upwards to 2000. If it is a booty or a tall boot, it is a handmade product. I do try to build in a timelessness to the shoes. If i think of one word to describe the shoe i would say timeless. You can always use a runner. We just had a major presentation. We had a live presentation and it was really fabulous. Big fashion week event. Congratulations. Good for you. Ricky davis. Y davis. Coming up, the master class with howard marks. Selects resident obama will hold a News Conference president obama will hold a News Conference at 11 30 eastern. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. Breaks out in ukraine. After five months of fighting, the ukraine government and pro russian rebels agree to a ceasefire. President obama in a 30 minutes from now. There is a new sheriff in town. The cftc has a new chairman with new powers. We have the first tv interview with him. Ask risky business. We will speak with oak trees howard marks. Welcome to Market Makers. Im stephanie ruhle. And im Erik Schatzker. There is a ceasefire between ukraine and prorussian separatists. Isombergs Ryan Chilcote outside the nato summit. Ryan, ukraines president spoke about half an hour ago at the summit. What did he say about the ceasefire . Extraordinary press conference. He addressed the press and saying there is indeed a new ceasefire deal. In other words, less than a do nice like the many guns to ceasefire just yet, but the word has been given to the general staff of the ukraine an army to stop firing on the ukrainian prorussian rebels. He also said he was glad this deal could be done while he was here in south wells at the nato summit, but he cautioned this is just the beginning. Have a listen. This is very important that ceasefire lasts long and during this ceasefire we dialogue. He political we can bring the peace and stability. While he said this deal was signed today in the belarusian sk, betweenmeanin the Ukrainian Government, the russian government, and the osce, he stressed the deal was between himself and the russian president. You will recall on wednesday with ukrainian president report he had a permanent ceasefire deal agreed with the russian president , and that he backed away and the russian president said because russia is not party to the conflict in ukraine, of course at cannot agree to any ceasefire. Trying to point out that what happened today was more theater than suspense. The deal, he indicated, was really done on wednesday. One other point he said this ceasefire is based on his a peace plan. His he said the prisoner exchanges will begin tomorrow. Ryan, what or other nato members and saying . Do they expect this ceasefire will hold . Well, they are just beginning to speak. This has just broken in the last half hour. The british Prime Minister is speaking right now. He is mostly talking about the situation with the islamic state, as you know. There is a british hostage that has been threatened there, but we have heard from the nato secretarygeneral, and he has as almost everything a leader out of the 60 years, barrvery skeptical. He says if the ceasefire does indeed hold, then that is welcome. We heard from the french president very importantly saying even with this ceasefire, it is important to go forward with the sanctions. Eu imposed ahe deadline for its own sections, he said it is those sanctions that brought president putin to the table. They should go forward. We heard Angela Merkel saying if they do go forward, they can always be put on hold or reversed if the ceasefire holds. Thank you so much, ryan. We will be taking you back to south wales and 30 minutes. President obama will be holding a News Conference. You can watch that live on bloomberg tv or streaming on a website, bloomberg. Com tv. , surely you have heard this line before. If you want to make more money investing, take more risks. Fine. Great even if you understand what risks actually means. Howard marks says most people dont, and he should know because he is chairman of Oaktree Capital and one of the greatest investors. Howard, welcome back. Your newsletter is out. Tell us, what dont people understand . People do noting understand is it is wrong to say if you want to make more money, take more risks the. This is what people say. Returns, risky investments have higher returns, so if you want to make more money, make more risks. It cannot be right, stephanie. Canuse if risky investments be counted on to yelled high returns, to yield high isurns, what we should say investments that appear riskier have to appear to offer higher returns or nobody will make them. That does not mean it has to come true, and lots of things can happen other than what you hope will happen. Is it also true that investing in risky instruments increases your chances of higher returns but also of higher losses . Exactly. That is the thing that people have to understand. Yes, when you take on more risk, you expect a higher return, but you should also understand hope for higher return. Yes, but you should also understand that the range of possible outcomes becomes wider. With corporate, there is a bunch, with stocks there is more. The more risk you take, the more inserted the outcome is, and the worst the bad ones are. You have a good illustration for this. Yes. And you show this in your most recent letter, the traditional model of risk versus return versus i will not collect marxist model, but the marks model. What are you showing us . Thank you for doing a. On the lesko you have the normal presentation, that is risk goes up, return goes up. On the right to you have the same i come up a superimposed on it at each point is a probability distribution, bell shaped curve turned on its eyes side. So you can see is the risk goes up, the return goes up, but at the same time, the distribution becomes wider, the range of outcomes becomes greater, and the bad ones become worse, and eventually on the risky investments, if you get a bad outcome, you lose money. That is what risk is. So what does this explain to us about investor behavior and the performance of Financial Markets . Explains ist it that people put themselves they try to make more money by taking more risks. When things go well, they make more money as they are now. As they are now. They tend to conclude that means producekier assets higher returns, and they go out for even more risk, and eventually they find out about the other part about drawing. What is the difference between volatility and risk . Oftentimes people lump them together and data not mean the same thing. Volatility is a temporary fluctuation. Risk, in my opinion, is permanent loss, so in other words, you know, everybody had a big decline in the crisis of 2008. By the end of 2000 nine, most things were back to where they had been. If you did not sell in the crisis, you did not crystallize that loss. You experience the fluctuation, but you did not turn it into a permanent loss, and that is really the key. Can you hold on through . Do you have the nerve, do you have the conviction, do you staying financial power, are you not going to be fired by your client tackle by . Beatility does not feel nine, but it is benign if you can hold on. You have your views on what risk is in four key points, and i thing we got them together in a graphic so we can walk through them and help people to understand. Oh, thank you. We work here on bloomberg, howard. You say the future should not be viewed as a fixed outcome but a range of possibilities. Why is that important . You should not think you know what is going to happen. A but so many people do we are professional prognosticators. Exactly. That is an oxymoron. [laughter] mark twain says it is not what you dont know that gets you into trouble, it is what you know for certain that just aint true. One more time. It is not what you dont know that gets you into trouble, it is what you know for certain that just aint true. If you think you know something and act with certitude and try not to be wrong, that is how you lose a lot of money. If you say, you know, ive not really sure, i will hedge my bets and diversify my portfolio, you are less likely to get into it. Before you never say never. Never say never and never say always. Your points more things will happen than will happen. That is the point. What is going to happen to gdp next year . Everybody will give you a number. But the point is even if you think you know what is the most likely outcome, and even if you are right, lots of other things can still happen, and you have to allow for the uncertainty that is present in the world, and you have to prepare your portfolio. The people that got into real trouble in 2008 for the people who could not hold on through that downward fluctuation and who had set themselves up for success and when a little failure showed up, they had to sell out, so they sold out at the bottom, and they did not participate some of them were forced to sell, though. So they should not have been there to begin with. That is right. They should not have had a portfolio which circumstances could force and liquidity requirements. Then you should not been in that asset class. Hey come im not disagreeing. Im just saying that there are people who make risky investments in risky assets who are forced to make in some cases monthly liquidity demands. Absolutely. That feels like a bit of a mismatch. Then they should not be in an asset class with air force to make liquidity having said that, if any, hat introduces then they should not be an asset class where they are forced to make look witty. Having said that, stephanie, do we have to be prepared every day for a rerun of 2008 . If that were the case, nobody would hold anything. You have to look at it as a probability distribution. Is that we made by point number 3 knowing the probability does not mean you know what is going to happen . Well done, erik. [laughter] i told you it was going to be a master class. And you will get a a. Know that the dow going to 2000 at the end of next year is the most likely single outcome, but still lots of other things can happen. You have to prepare for some of those. Ok, you might have to prepare for the possibility that it will go to 2300 or that it will go to 14,000, but you cant prepare for everything because then you are in a muddle. So your point number four, many things will happen, but only one will. The first quote came from a professor at the London Business school. That is risk. I like to turn it around. Lots of things can happen. Only one will. How does that guide your behavior as an investor . Lets just establish for people your track record. You started with a High Yield Bond Fund at citigroup in 1978, and now you sit atop when he was 14. How much does oaktree have . 91 billion. Mostly fixed asset, things to an unbelievable track record. So all of these rules about what risk is and how to understand and have led you to make certain decisions. What are the most article decisions having understood this . Well, the most reported being an investor has to do is to decide whether to play mostly offense or mostly defense at a point in time, and i think we have done that pretty well. What is the right thing to do now . Emphasis onore defense than offense. Really . Every investor faces to risks. You would get an a if you say the main one is the risk of losing money, but if you want to thean a , you have to say second one, and that is the risk of missing opportunity. We have thelem is risk of losing money and the risk of missing opportunity, and you can eliminate either one. How . If you want to not lose any money, go with the treasuries, but then he missed all of the opportunities. If you want to say i want to be sure i do not miss the opportunities, then you will be put into all kind of exciting stuff but no treasuries. Then youre really in the crosshairs is something that happens. So the answer is we balance the two, and you have to figure out how to balance the two, which one to emphasize. So the question is which should you worry about more today . Losing money or missing the opportunity. I put more and this is on worrying about losing money today than i do about missing opportunity because i do not see such great opportunities that i have to worry about now. Howard at 91 billion, he is figured out a few things. Quite often when you come here, we talk about the baseball analogy. We are in a risk asset analogy. The last time you were here, if i recall correctly, you said maybe six inning, heading into seventhinning. Where are we now . We are the bottom of the seventh and the top of the eighth. It is time for the seventh inning stretch. Plenty you have to have of defense on the field today, and you know most people are sitting on a lead, and when you have a lead, you send in the defense specialist. The irony of course is that paying for everybody else often means opportunity for you. Yes, that is right, and we would love to get some better opportunities to buy stuff. Today, there is no distress, there are very few defaulters, no urgency to sell, no financial pressure to sell. So how can we get any pronounced bargains . We need some of that stuff, which means we need the world to go less well. Howard, it is always a pleasure having you here. Such a treat. Todays master class was an absolute success. Oaktree, howard marks joining us this morning, that was a treat. Dont forget how to get an a and then an a . Meantime, there is a new top cop for the commodities and are of its markets, 10 medicine, the cftc tim madison, new leader of the cftc. Now he is standing by with our chief washington correspondent peter cook with his first tv interview since taking office. Peter, it is all yours. Erik, thank you very much. Congratulations on your job. Good to see you again. I want to ask about how you will approach this job really than gary gensler. He was known for ruffling a few feathers. Do you see part of your job as striking a different tone than gary gensler . A questiont really of striking a different tone, it is a different time and place. I think kerry did an amazing job did anlly the gary amazing job, and were ahead of where other nations are in terms of regulating this market, and that is a credit to him as well as the staff of the agency. We have a terrific, hardworking staff. Now we are in a different place, different time, with slightly different challenges. Now our challenges are things like as we see how these new rules affect the marketplace, we will need to finetune them in some respects. We have got a lot of work to do with respect to our international counterparts, our International Regulators to make sure the global framework is harmonious. So it is different challenges, and i will act accordingly in light of those. Kind look, gensler cftc under tim massad . , i think you have a pragmatic practical cftc. We have got four commissioners, all of whom bring very valuable xrays to the table and all of whom i think are very committed to trying to get these rules right. We all recognize the importance of these markets to a wide variety of businesses. These are markets that most americans dont touch, and they dont know anything about, they seem very esoteric, yet they affect fundamentally the prices we all pay for food, for transportation, for really all the goods we buy. Businesses,so many and i think you have got a commission that is very aware of that. Have you looked so far and a lot of rules were put into place under gary gensler. As you said, you are looking to see how they are implemented. Have you been able to look at any of the rules put in place by doddfrank that you can tell automatically we need to visit this, we need to tweak this somehow . I would say it this way, first of all, the agency did a great job getting all these rules out because they face a significant deadlines by congress. Now we are in a phase where they will be fine tuning. It is not wholesale changes can you give us an example . Sure. We are probably we have a rule on utilities, special entities, Smaller Companies where we need to make sure they still have full access to the market. We have a proposed rule out there. We will probably finalize that very soon. We have the margin roles. We will come up with a proposed rule on margin for unclear swaps where we will make a few changes to what was proposed before. There are a number of areas where we will make some tweaks to make sure things work well. And again with respect to end users, to make sure the rules dont impose undue burdens on commercial companies. We are not talking so much about the Financial Companies but the commercial companies that use these markets. We want to make sure these rules work so that they can still get the benefit of these markets. Onthere has been a big focus the crossborder rules and some of the four and regulars have said listen, the cftc may be going too far in certain areas. I want to ask you if you see on that, but take more importantly, the agency has already said that it is looking at the issue, whether banks are trying to skirt these rules and some waste. Basically skirt these rules in some ways. Our banks already cheating . Let me pass on whether it is cheating. Lets talk about it this way the financial industry is very atod at morphing, astra structuring things around regulation. We are looking at this process of deguaranteeing, and in may still mean a activity abroad bank a risk to the u. S. Swap dealers. That is why as we do this investigation, we are consulting with our counterparts at the fed and the fdic in the otc as well as the sec because i think it will raise potential issues for them. There may be a london loophole that needs to be closed . A londonnot so much loophole. The way to think about is this we have Global Financial corporations that are active all over the world, but we are regulating this market through nationstates. No nation can regulate all the activity that occurs around the world. Harmonious we need a global framework, and that is why we are committed to building that, but we will also work with bankingterparts in the regulatory agencies where we think that look, there is risk that may is beyond the risk of our authority that could affect the parents banking corporation. That may be something that they could address. And enforcement front, some in you inherited, the libor situation. The settlements there what is your sense about where the libor situation stands . Will we see morris settlements, more action by your agency . Weeksl, we did one a few ago, and we are still looking at this. There is a lot of bad behavior in this area, so we will continue to look at that. We are also very involved in the thatts to reform libor so it is more transactionbased and also to look at are there alternatives . Do you have a preferred alternative at this point . No, i dont. I think we will work with the fed on this issue of working with the industry, engaging with the industry to see if there are ways to develop alternatives that are less susceptible to manipulation as well is again to soorm the way libor is set that it is less susceptible to manipulation. In the meantime, what is your message to market to ec should they have confidence in any of these message to markets . Should they have confidence in any of these . I think there has been good disclosure about what the issues are, so i think the market appreciates that. Let me ask you about your budget. Capitol testify up on hill next week. The resources needed to carry out its much Larger Mission is it time to talk seriously about how the budget is put together at the cftc . Should we be looking at fees on institutions you regulate . I think we need to increase the budget. I do not think we have the resources to do the job that the American Public expects and deserves, and i think it is a good investment for our country. Our Financial Markets are the best in the world. They are the most creative, the of theynamic him most innovative. I think good, effective regulation is a part of that. In terms about budget, i want to work with congress to increase it however we can. Possibility. They have been proposed by president obama and a lot of president s ever since ronald reagan, so that is an option, but i am happy to work with congress on whatever approach they favor as to getting us the resources that i think we need. If you do not get what the president asked for it has budget, and it is not look like you are going to, what is going to be the impact . First of all, i appreciate that these are tight times for all of the government, so i understand that. What i say to everyone in the agency is look, we are going to remember the Teddy Roosevelt adage. Were going to do what we can, with what we have, where we are. We are not just going to complain about needing more resources. We are going to still do everything we can with what we have, and i have encouraged people lets get creative. We have come out of an intensive role writing phase. We will be more focused on compliance, enforcement, finetuning the rules to see if they still work well. How can we leverage the resources we have best . How can we allocate the resources to deal with the more important risks in the markets we regulate . Biggest issue is this issue of position limits. You all proposed position limit rules to dual with the issue of excessive speculation. Got challenged in court, brought back to the agency, now youre looking again. What is your own view . Can you guys craft a rule that will withstand the challenge . What isgress important is to get the rule right so that it works to address the concerns that , but also make sure iest again the companyoes that that use these markets in and day out. We have bona fide hedging. We have input about that. We want to make sure that people can still act in these markets appropriately while we at the same time address the concern about excessive speculation and manipulation. I will ask you one final hot topic. Highfrequency trading. Massad do on the market to oversee, and what are the risks . We are looking into this. We put out a concept release. I am also in dialogue with our counterparts at the sec. Mary jo white and i talk about this. I think a couple of things to remember first of all, our Market Structure is different than the equity markets. It is not nearly as complex. We do not have as many trading venues. That makes it a little bit easier, but we still have issues. We have a lot of automated trading, so we will be looking at that comment also because of the bond markets and what he markets and iraq, that is very important. It is an issue we are on. All right, tim massad, we appreciate you joining us, but luck. In his first interview since taking office, the chairman of the cftc with peter cook. We are awaiting a News Conference with president obama at the nato summit. Stay tuned. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. Welcome back to Market Makers. I am stephanie ruhle. And i am Erik Schatzker. It is 11 30 here in new york city. Overseas, and apparent ceasefire took place 30 minutes ago in eastern ukraine. Any minute now, we will be hearing from president obama at south wales. It in while we wait, lets go back to our own Ryan Chilcote. He has been there all week speaking to nato leaders and also reporting on the ukrainiants with president Petro Poroshenko who was there an announced today, ryan, more of the details of the ceasefire that as you told us earlier he claims conforms to his plan. That is right. There is a little bit of an argument about who owns this peace plan. We heard a initially described as a pollutant peace plan because the russian president started talking about it when he was in mongolia, but today Petro Poroshenko saying actually he authored it, this is according to his wishes. And it was signed between the prorussian rebels and Ukrainian Government today. It was really, he stated today, agreed with the russian. Resident, between him sort of indicating that this deal was really done on wednesday. Remember, the ukrainian president back then saying he had reached a deal with president putin for a permanent ceasefire, and then he took out the word permanent, and then of course we heard the russian president say well, russia is not even party to the conflict, so how could i agree to a ceasefire . It seems like today the ukrainian president wanted to thatate that no, no, no, is just pageantry, that is just a theater. This is an agreement between him and the russian president as far as ukrainian president and nato are concerned when it comes to calling the shots with the russian separatists. What are the russian saying . They welcome this. They hope it is bilateral. We just heard that a shelling in and donetsk continues. We heard one of the prorussian rebels say that just because they agreed to this is not mean they are giving up their quest for independence, but that is about it because it is only of werse about half an hour, have not heard any statements from the russian president. He is obviously the most important person to hear from to hear from on this matter and he has remained silent, so there is a cautious optimism. This is just like when i was in geneva, the last time there was a deal between the russians and ekrainians, i bumped into th Ukrainian Foreign minister, and the guy looked like he could kick himself he was so happy. Here we are so many months later, you just wonder if this is really going to stick. That sums up the concerns and literss of the nearly 60 here, though ukrainian president says he is hopeful. He thinks he has a deal, that at least he is going to try to stick to. Ryan. I never want to kick myself when i am feeling happy. [laughter] what does this all mean for russian sanctions . I never understood that saying. Just saying. He wanted to kick himself perhaps because he could not agree what he had just agreed to and what he had heard, but yeah, you are making a good point. Sanctions is an interesting one. The french president just came out and said despite this ceasefire agreement, the sanctions should go forward. Why . He says it is the sanctions that brought this deal about, and they can always be reversed if the ceasefire sticks. That is the same thing we are hearing from the german chancellor, and you know yesterday or early this morning, i should say, when president obama met with president poroshenko, it is a same thing we heard from the u. S. President , so the sentient will go forward, but there are sanctions and there are sanctions, right . There is a whole spectrum with style sanctions on one hand. If it is more of what we have artie thing, namely a restriction of asset to Capital Markets here in the European Union of russian companies. It might hurt the russian stock market, it might hurt the ruble a little bit, but it is a long way of kicking the russians out of International Financial systems like the swiss Payment System or real sick twirls sanctions. Ryan, given the fact that the shelling and donetsk continues and we have not heard from president putin, given the fact has said certain things and done other things in the past, do we not need to hear from the president first before we can even come to the conclusion that a ceasefire exists . Well, maybe, but the russian president has been very careful to say that while he is interested in what happens to the east of the country, russia is not a party to the conflict, so i would not be surprised if we do not hear from the russian president for a while, and when we do hear from him, that those words are nothing more than he is glad that the separatists could agree this with Ukrainian Government and he hopes that the reigning government sticks to its agreements, but you are right it is obviously important that we hear from the russian president. Nato says russia has at least 3000 troops in ukraine, that those troops, we heard from ukrainian today, coming into the country as early as this morning fightings, involved in in the city, four reasonable, of example, offor mariupol. With in this new conflict the south that ukrainians are concerned, and i am not surprised if that is why president poroshenko a great to this. It is not an issue for the sovereignty of the regions, but really the rebels together with russia trying to create a land bridge between russia that russiarimea annexed a while ago. Remember, crimea is a peninsula, and it is landlocked. It is surrounded by the sea and ukraine on the other side, and that has created a real headache for the russians in terms of integrating it into the Russian Federation to the extent that they can do that given the sanctions and the international condemnation. The ukrainians really want to try to use this opportunity to head that off. I think that is president poroshenkos feeling. Autonomy. If they want these important decisions like nato, maybe that could be part of this, but he just wants to hold the country together, even if they get all that autonomy, because he is really concerned he might just lose the entire east and south. Ryan, thank you very much. While we wait for president obama to speak at the nato summit, he will be inside, Ryan Chilcote is outside. We will take a short break here on Market Makers. It could happen any minute now. President obama in south wales at the nato summit, set to hold a News Conference. We expect of course comments on the suppose it ceasefire between the Ukrainian Government and the rebels in the east, and no doubt the president will be questioned about what has happening in the middle east and the trouble that the united k. Has had u. Coalition building against the islamic state. Moving on, 142,000, a big number, small, you might say. The u. S. Added the fewest job so far in 2014. Earlier on in the loop, betty took a deep dive into americas hiring picture with the people who make those decisions ceos. What did you learn . The firingng and decisions. We had the ceo of bankunited, as well as the chief executive of edison. We also had the founder of staples. I asked all of them are you hiring . The unequivocal answer is yes, but there is a lot of nuances here in this. Are they raising salaries, what kind of people are they hiring, and what departments . Tom was very vocal about the issues, the challenges, the regulation, the fight on minimum wage and how that is affecting is companies that he investing in and the board he is sitting on. I want to play for you guys one thing he is saying about the quality of the jobs right now in this country. Inwell, we invest fastgrowing companies, so naturally they are hiring, but i think you have to look at the texture of the jobs. Lot ofave not grown, a jobs now, because when you hire somebody for more than 30 hours a week, you have to provide them health care, which it costs 7,000 to 12,000. You see a lot of these jobs at 20 hours a week or 25 hours a week and they are not the same quality of jobs you would want to have in a buoyant economy. What is interesting about what he said as he is sort of putting this argument out that you have heard a lot, which is that there are more and more parttime workers because employers are perhaps scared by a obama care or they are just not creating these fulltime jobs. Actually, parttime workers, that number has declined over the last several years. In fact, it was at 7. 5 million just in august, so it has actually declined commit has not increased as you hear from some of the ceos. So what does that tell us . That the noise that we hear from , forpeople about how example, obamacare is a disincentive against fulltime employment is that just noise . Remember that obamacare has not been fully implemented yet. As you guys know, last year we heard ceos say it will be absolutely a negative on hiring. You are just not seeing that now in the numbers. They are predicting when a corporate mandate kicks in, which was put off, that we will begin to see that. Already,en you are they claim, seeing those effects as companies prepare for obamacare. It has got to be minimum wage. Minimum wage, exactly. The ceo of dominoes, his workers, by the way, have participated in these minimum wage protests. I want to fight does he hear their frustration . What he said about this. Look, i get the frustration out there. The frustration comes that there are simply not enough jobs driving income levels as it needs to comment if you get that moving better, than a lot of these issues are to solve themselves. You know what is funny, guys were quite do you buy that funny, guys do you buy that . There were the more demand for labor, and because it is a scarce resource, these workers were no longer be vying for 15 an hour . I do not buy that. Restaurantonal association, on the flip side when you talk to chief executives who actually dont rely on minimum wage workers, they are not a part of that fight, they all say i think it is the right thing to do to raise the minimum wage. Easy to say it is the right thing to do when it does not hit your bottom line. Also very real consequences and real data that shows that if you do raise the minimum wage, if you raise labor cost, it is going to affect these franchisees. It is going to affect these restaurants because they do operate on razor thin margins. And that is absolutely true. Do you like Dominos Pizza . Pizza. Ve dominos i love pizza in general. I have not had in at least 20 years, and i had it one day here on bettys show, and i thought it was delicious. It was like a cheese a stuffed crust or Something Like that. Yeah. Just saying. Stembe quickly, tom rg said another thing, if we raise minimum wage, it will push younger workers out of the workforce. Interesting. Betty, thank you so much. Really breaking down what your job report means, the valuation and how she feels about Dominos Pizza. From in the loop, our own betty liu. We are waiting to hear from president obama. It could be any moment now. The president is due to deliver remarks at a News Conference at the nato summit in south wales. He and other nato leaders have been there for a couple of days. It has been an important summit because Petro Poroshenko, president of ukraine, attendance, and he said they negotiated a Peace Agreement with president Vladimir Putin of russia. Disputes, some backtracking, conflicting analysis from the russian side for a couple of days, but it does appear as though they do have a ceasefire in place. Ryan chilcote is our reporter on the scene. Brian, tell us ryan, tell us, what are your fellow reporters waiting to hear from president obama . We expect the president to talk of the situation with the islamic state, countering the islamic state. Nato as an alliance has said that they are prepared to provide assistance to iraq in fighting the islamic state, if iraq asks for it, and of course we are expected to hear from him what he thinks about this ceasefire that the ukrainian president says he has reached with the russian president. That deal signed in minsk a short while ago. Those are the real things we expect to hear president obama focusing on when he begins to speak, and we expect a press conference to start anytime now. I read moments ago, and i just want to check this with you, that only 10 nato members of the 28 in attendance at that summit has signed on for this coalition that the United States and britain are trying to build against the islamic state. Is that correct . That sounds accurate. There is a lot of concern about getting involved in another conflict. You know, britain obviously is britain hasling said they are willing to join a coalition of the willing, to use that phrase from president bush back in the day, if the iraqis ask for assistance, if the u. S. Go on with airstrikes, britain has indicated that they are prepared to do their part. The french apparently at the dinner last night also said that they were willing, perhaps, to get involved and were pushing the german chancellor, but she was saying that she thought the coalition needed to finish a business in afghanistan first, so there is definitely no unanimity when it comes to getting involved in iraq again. You know on this side of the atlantic, a lot of people felt that they were burned the last time around with the coalition when europe got involved with a war that began in 2003, and they are very, very skeptical of what they can achieve both on the ground with arming the kurds and arming the sunni government, the shiite government in baghdad. They are concerned that government will not be inclusive thath of the sunnis, and is one of the reasons why we are in this conflict. It does not surprise me at all that only 10 of these 28 countries would sign onto this. Alliance it is a little bit like the European Union. They are very, very challenged to reach unanimity on a whole lot of issues. That is why we keep getting these coalitions with the nato to pursue conflicts. All right, ryan come i have to cut you off because the president has just approached the podium. Lets take you back to southern wales and president obama. And his entire team for hosting this nato summit in making it such a success. Ofant to thank the people newport and the people of wales for welcoming me and my delegation so warmly. It is a great honor to be the first sitting u. S. President to visit wales. We have met at a time of transition. After more than a decade, natos combat mission in afghanistan is coming to an end. Russias aggression against ukraine threatens our vision of a europe that is whole, free, and at peace. And the middle east, the terrorist threats from isil poses a growing danger. Alliance toit, our summon the will, the resources, and the capability to meet all of these challenges. First and foremost, we have reaffirmed the Central Mission of the alliance. Article five enshrines our solemn duty to each other, an armed attack against one should be considered an attack against them all. This is a binding treaty obligation that is nonnegotiable , and here in wales, we have left absolutely no doubt we will defend every ally. Second, we agreed to be resolute in reassuring our allies in Eastern Europe, including nato air controls over the baltics, rotations of Additional Forces throughout Eastern Europe for training and exercises will continue, naval patrols in the black sea will continue. All 28th nato nations agreed to contribute to all of these measures for as long as necessary. Nato, to ensure that remains prepared for any contingency, we agreed to a new readiness action plan. The alliance will update its defense planning. Highly create a new, ready Rapid Response force that can be deployed on a very short notice. We will increase natos presence in central and Eastern Europe with additional equipment, troopng, exercises, and rotations. And that the 1 billion initiative that i announced in warsaw will be a strong and ongoing u. S. Contribution to this plan. Fourth, all 28 nato nations have pledged to increase their investments in defense and to move toward investing 2 of their gdp in our collective security. Nato resources will help invest in critical capabilities, including intelligence, surveillance, reconnaissance, and missile defense. This commitment makes clear that nato will not be complacent. Our alliance will reverse the decline in defense spending and rise to meet the challenges that we face in the 21st century. Alliance is fully united in support of ukraines sovereignty, independence, and territorial integrity, and its right to defend itself. To back this up, all 28 nato allies will provide Security Assistance to ukraine. This includes nonlethal support to the Ukrainian Military like body armor, fuel, and to medical care for Wounded Ukrainian troops as well as assistance to help modernize Ukrainian Forces including would just ask and command and control. Here in wales, we also sent a strong message to russia that actions have consequences. Today, the u. S. And europe are finalizing measures to deepen acrossaden our sectors russias financial sector. At the same time, we strongly support president poroshenkos efforts to pursue a peaceful resolution to the conflict in his country. The ceasefire announced it that goal, advance but only if there is followthrough on the ground. Prorussian separatists must keep their commitments, and russia must stop its violations of ukraines sovereignty and territorial integrity. Beyond europe, we pay to all those from our missions, including more than 2200 americans who have given their lives for our security in afghanistan. Natos combat mission ends in three month, and we are prepared to transition to a new mission, focused on training, advising, and assisting Afghan Security forces. Both president ial candidates have pledged to sign the bilateral Security Agreement that would be the foundation of our continued corporation, but as we all know the outcome of the recent election, it must be resolved, so we continue to urge the two president ial candidates to make the compromises that are necessary for afghans to move Forward Together and form a sovereign united and democratic nation. Finally, we reaffirm that the door to nato membership remains open to nations that can meet our high standards. We agreed to expand the partnership that makes nato the hub of global security. We are launching a new effort with our closest partners, including many that have served with us in afghanistan, to make sure that our forces continue to operate together, and we will create a new initiative to help countries build their defense capabilities starting with deorgia, moldova, an libya. I leave here confident that nato allies and partners are prepared to join in a Broad International effort to combat the threat posed by isil. Already allies have joined us in iraq where we have stopped isils advances. Nato has agreed to play a role in providing security and humanitarian assistance to those who are on the front lines. Stand readyallies to confront the threat through military, intelligence, and Law Enforcement as well. Secretary car carry will travel through the region to build the coalition that will enable us to do great and ultimately destroy isil. So taken together, i think the progress we have achieved in wales makes it clear that our alliance will continue to do what is necessary, to ensure our collective defense, and to protect our citizens, so with that, let me take a few questions. I will start with julie of the associated press. Ask thank you, mr. President. I want to go back to the situation in ukraine. If the ceasefire does take effect and appears to be holding, would you and your european counterparts back away from these things is that you say you have prepared, or do you think it is important to levy sanctions regardless of the ceasefire agreement to go if i could go back to the rapid could you say, what contributions would be in terms of true numbers and ag in terms of troop numbers . Theith respect to ceasefire agreement, obviously we are hopeful, but taste on past experience, also skeptical on past experience, also skeptical that the russians will follow through and stop violating ukrainians sovereignty. I know that the europeans are discussing at this point the final shape that the sanctions measure. It is my view that if you look at president poroshenkos plan, it is going to take some time to implement. As a consequence, for us to move forward based on what is currently happening on the ground with sanctions, while at knowledge and that if in fact the elements of the plan that are implemented, then those sections could be lifted, is a more likely way for us to ensure that there is followthrough, but that is something that obviously we will consult closely with our European Partners to determine. I do want to point out, though, that the only reason that we are seeing the ceasefire at this moment is because of the sanctions that have already been applied and the threat of further sanctions, which are having a real impact on the havean economy and isolated russia in a way that we have not seen in a very long time. Pathast for russia the rejoin theto community of nations that respects International Law is still there, and we encourage president putin to take it, but the unity and the firmness that we are in the Transatlantic Alliance in supporting ukraine and applying sanctions has been i think a testimony to how seriously people take the basic principle that big countries cant just stomp on little countries or force them to and giveeir policies up their sovereignty, so i am very pleased with the kind of work that has been done throughout this crisis in ukraine, and i think u. S. Leadership has been critical throughout that process. With respect to the Rapid Response forces and the action plan we put forward, in warsaw, i announced 1 billion in our initiative. A sizable portion of that will be devoted to implementing various aspects of this readiness action plan. We have already increased personnelrotations of in the baltic states, for example. We have the air leasing, the activities taking place policing, the activities taking place in the baltic and the black sea, but this allows us to supplement it, allows us to coordinate and integrate further with additional contributions from othertn