Transcripts For BLOOMBERG Market Makers 20140910

News. We have a great lineup today. These are the most important businesses businesses. The present the president is planning possibly an airstrike in syria. President will address the nation at 9 00 p. M. Eastern time. Microsoft is in talks to buy the maker of mine kraft. Than 2t might pay more million. Netflix is among 100 sites, internet slowdown day. They are intentionally intending to slow connections. Providers i am going a little downmarket but still big dollars. Todays rival Dollar General is taking its bid directly to shareholders, lower bid from a different competitor. Dollar tree. This is confusing. A lot of twists and turns in the threeway takeover battle. Olivia sterns is here to walk us through it year it helped me. Dollar general, dollar tree, Family Dollar. I am looking forward to zach posing for dollar tree. That would be huge. This all got started this summer when nelson carl icahn said they had bought up states in Family Dollar. Thirdy, dollar tree, player here. Three weeks later, Dollar General offered to buy Family Dollar, so they countered a couple of days and Family Dollar rejected that. September 2, Dollar General made now,ond bid, where we are 9 billion, also adding safeguards, saying they were at at a more stills more stores. Dollar general is going hostile with a 9 billion bid, trying to take it directly to shareholders we what ist is the latest we have heard from the house a month on . They made a lot of money. Shocking. Kind of annoying. June, if youack in look at that date compared to the latest icon filing, he was up about 23 and now has a 4 stake. The biggest shareholder is nelson. What is the argument against Dollar General . What is all of this about . Dollar general is the biggest dollar store and then Family Dollar is the secondbiggest. The two of them are very similar. They sell primarily low items. Dollar tree caters to a more middle income consumer. Dollar general and Family Dollar are very similar. In a lot of neighborhoods across the country, you see them right next to each other. A lot of regulatory concerns they would be stepping on each others feet. Walmart. T is walmart has been pushing into the smaller marketplace format and that could actually be competition. Are small and walmart ever in the same sentence . Yes, now. Amazing. What they are trying to do is back all the regulatory concerns. They hired the former director of the bureau of competition for the federal trade commission, for the sec. A very wellknown law firm, and he is confident they will get they will get through the antitrust hurdles. Shareholders will be a lot less interested in the politics of situation. Now people are saying the Family Dollar tree has to come back with an offer. The market is not betting that is happening now. Down a few pennies. Where is Family Dollar it now . Above 80. Down again. There you go. Thank you for the latest. We need you to get on location. I need to see all three stores, the pros and cons. A good idea. Thank you. We need to talk about another company. This year. Alibabas coppers will be full of cash. What could be on their Shopping List . Not Dollar General. Snapchat . That was pretty good. Lets put this into perspective. Ipo, alibaba, chinas biggest ecommerce company, could see an extra 8 billion of cash enter their bank account. Bending capabilities could 15 billion. As they look to grow their presence here in united days, they will acquire. One analyst tells me the best way to do that is to acquire, acquire, acquire. Acquire what . Take a look at snapshot. Millenials, mobile penetration. It is huge. Facebook already wanted to tap into the company and snapchat said no to 3 billion offer your this could be huge. What is interesting is sources say conversations will continue after they stalled a couple of weeks ago, after the ipo. Bobs competitor in china actually owned a small stake in snapchat. It will be interesting to see how they navigate those letters. Another analyst is telling me alibaba needs to be everything to all people on the internet, away from mobile, you can imagine they will enter internet tv. One company that will be on sets topless makes top that go on top of tv buses. They can also look at another long speculated target, which makes the internet work faster. Interesting one, chew on this, yahoo . Think about this. State. Already own the you can see the confusion. There is a lot of confusion. An interesting point. Yahoo currently owns a stake. They will delude themselves to 16 . Theyey sell those shares, will have to pay taxes on that. All bob alibaba buys yahoo , they do not have to pay tax. My question is, many people have been saying the most valuable thing at yahoo is there stake in ali baba. Alibaba,o is without what is alibaba want with yahoo . To sources talking in hong kong, they would say to me, the worst thing that happened to alibaba is that yahoo invest in it. They do not like yahoo . There has been a lot of confusion and debate within management that yahoo was an investor. They want yahoo out. This is an elegant way of alibaba buying back shares. It is an open question as to whether alibaba wants that. The market does not put a particularly high value on it. Once alibaba succeeds in going public, what happens to alibaba and orissa meyer . They become a minority shareholder like everybody else. Degree, it does not care as much as it cares about employees. They are in line with the rest of us. Melissa meyer and yahoo by that point. I would not disagree. I think that inaccurate. Reflective of what ive been hearing on the street. Thank you. The latest on alibaba and what it might buy. When we return, the mobile payment resolution. Apple plans on being the ringleader. We will speak to one of the partners. Economy. The apple there are plenty of winners outside. We will tell you who they are. Is it really time to say goodbye to your wallet . Tim cook is betting on it. No more cash, credit, or debit cards. Ort a wave of your iphone your apple watch. That is why apple pay is potentially the most interesting and promising announcement to come out of yesterdays extravaganza. No mistake, if there is a game changer here, it is apple. Macys,s, starbucks, target, or some of the retailers that will except apple pay. Behind the scenes are some other familiar names. Running the Payments Networks, taking the cash out of your account. Consumer, gavin mitchell. Good morning. Apple pay work and what what isan che jpmorgan chases role in it. Whether that be in a physical branch . None of the account information is stored on the device. Represents that information that exchanges with the transaction. It is taken out of the device and is useless. And we start to see customers touch to pay. Why is chase cooperating with apple . Or do you have no choice really in the house of apple . When apple contacted us about the new system, we can see it has the potential to be a game changer. Way back in 2008, we were the first major bank to release our application into the app store. Since then, the platform iphone has become incredibly important on customers. You can see it would be a game changer and we started to jump at the opportunity. Few understand Digital Payments as well as chase does. I do believe apple is going to be a game changer. Massively going to be successful the way google is so far, ebay with paypal, and square have not yet . Is wet is different started to think about how we the easy. Is we started with Customer Experience and then we know that is one of the number one barriers to adoption in this sort of Payment System. We started and put security at the heart of the Customer Experience. We are in a unique position we are able to both help consumers adopt a new technology and help merchants accept a new technology. Emergencetart to see come on board. What is different this time is we have got a great Customer Experience, which puts security at the center of the solution. We build an ecosystem around the Payment System. We are starting to see a massive shift to mobile in our customer base. One of the fastestgrowing channels to mobile banking. Industries have to do business with apple, whether we are talking music, books, apps, they all live to regret it. Isnt it tough to give apple such a big the dealot talk about construct. We have a Great Customer forrience, a great way merchants to accept new forms of payment. What we see is an environment where rising tides, everyone wins. Now, whatrs from percentage of purchase transactions by chase customers do you expect will be done through apple pay . It is difficult to predict the future. What we come back to is being where our customers want us to be with their payment, whether that be in wallace such as the one announced yesterday, or other forms of online payments. But we are seeing is a trend where customers are wanting to spend more online. As we look at the mobile device, we needed a Customer Experience that made that conducive and easy for customers to execute here that is what we have seen. How about Security Issues customers are more and more worried about . Is the biometric authentication make us not worry anymore . Is it a Problem Solver . Are using thiswe token, a representation of credit card information so what is exchanged with the merchant is not the actual information, but a representation of it. If it is taken out of the system it becomes useless. This is not a solution developed specifically for apple pay. It is a solution the Financial Services industry has been driving for a while and this is the first application. Thes one of the banks on right side of the interchange know how bitterly merchants complain about the 2 fee they have to surrender to participate in the Payments Network system that we currently have, and given the fact apple pay in theory makes things easier, is there an opportunity in the future to reduce that 2 fee, or perhaps to shift the burden of payment onto the consumer for the convenience of just being able to wave an apple phone . I am not talking about the construct. Im just asking you whether, looking into the future, this is not about chases deal with apple. Merchants,er or not because of the virtues of technology, because it makes. Hings easier costn collectively cut the to drive more merchants. What we are seeing when we start to look at how merchants is tothe solutions is, take the technology in front of customers. It is looking at both sides of the equation. Starting with the customer and merchant experience and how we join those two together. What happens from that is we start to see Consumers Want to use the technology. That will shape the future moving forward. What is it you are offering and creating that is so different from a paypal or google, where they have not been as successful as you hope to be . When i look at what is happening across the payments space, what is important to us is we have our credit cards amongst a lot of different systems. What were trying to do is be where our customers want to spend. We look at a variety of different systems and make sure it is easy for our customers to participate. Apple pay is significant in that the easeofuse and the security elements we have taken into account, what were looking at is, how do we work across a wide range of players . Thiswe see as exciting in one is that we have really started to look at the holistic payment experience, the consumer, the merchant, and bring the ecosystem around the conservator around the consumer. It is simple and it ran away. Digitalilblazer in banking. It is good to have you displayed why you have decided to partner with apple pay. When we return, walmarts most important focus group. I wish i called my kids for this one. Stay with us. Welcome back. It is more than three months until christmas. Already, you know the big retailers are well into their plans. Is using allargest outheir tools to figure what toys will be top sellers. Experts to determine its top released today. Twice there she goes. Air storm fire tech bow. Oh. These are just a few of the chosen bylmarts kids list. Light up very, air storm fire tech oh. Snow globe, outfit all. Few of the toys on walmarts choose by kids list. For the second year, walmart invited hundreds of kids to dallas with one important but. Un we voted on their favorite. The worlds is largest retailer used to rely on an army of toy virus to pick hot items. With the kids in charge, they discovered what they wanted. Creativity and crafting. Hot licenses and entertainment. One word frozen. Remember hot wheels . How about a remotecontrolled flying car . Walmart uses the list to market the toys as chosen by kids in stores and online, touting them as a way for parents to get insight into what their kids want. With just a wave of your hand. We have never had one in the marketplace. Realized we needed to have more to really satisfy everyone. This event helped us really do that in a way that the buyer sitting at their desk would not have known. Live, this is Market Makers. I am Erik Schatzker. Eu members are meeting today to consider tougher sanctions on russia. Truceg that uneasy between ukraine and prorussian separatist. Many sanctions can have a boomerang effect and can come back to hurt eu, especially in if russia retaliate. The European Union trade commissioner is with us here on bloomberg television. Mr. Commissioner, thank you. With this question. How difficult is it right now for the eu to speak with one voice on the subject of russian sanctions . It has become easier recently because as oppression went up, we realized, ok, we have to make a decision. Packages have been prepared by the commission. Friday, the last package, not that difficult at all. It is going well, i would say. What about the objections of countries like finland and hungary, which, as far as they are concerned, stand to lose more visavis the relationship with russia . We have been preparing those relationships. One of the guidelines, preparing are hurting all Member States more or less in the same way. You can never have that in an identical way. We always had it in mind that mobile should be singular eyes. I am in a somewhat special position. Of course, Member States all agree we have to take these sanctions. In the last package, we have decided it. We publish is depending on what happens on the ground in eastern ukraine. We keep it as a leverage so that putin has to demonstrate in the coming days. Let you expect to happen in this afternoon . What do you expect to happen this afternoon . Practice andipment i would not expect they do it immediately now, as long as the ceasefire holds and provided putin is ready. Is it a foregone solution that sanctions would be imposed if the ceasefire breakdown . Yes. That is an absolute certainty. Is it possible sanctions would be imposed even if the ceasefire holds . Yes. Why . It is not only about the ceasefire. It is also about what comes next. To what extent will the russians really respect ukraines sovereignty . That remains to be seen. You look at what is happening in east of ukraine, it gives the impression they are construing what they call the frozen conflicts. Facto, would mean that you do not respect the sovereignty of ukraine. Were are not going to introduce sanctions. It is about the broader picture. Trade with russia is two lace. Russia exports, principally energy, to the eu and exports, other things to russia. But it is not just about energy. What degree does the standoff with russia raised the importance of trade negotiations eu is conducting with the United States . Does. Obviously, trade is very geostrategic. This puts very much into the picture. Much moreuld be Energy Independent from russia. That is why having the agreement with the United States, a dedicated chapter on energy is very important, that we are packed in that. Our negotiating prediction is for acessarily easy number of historical reasons and also because on the other hand, when youre the biggest client, you also have has the United States demonstrated a willingness to make an agreement part of that . They should. We have a common interest. It is not only about sugar. I think they understand they should do so. It is not only about europe. It is also about Strategic Interests of the United States. You should not forget the United States are the main partner in nato. Guarantee incurity nato. As thecurity agreement president reminded us in his trip last week. When will it be done . It feels like negotiations have been dragging on forever here it when will they finish . They have not been dragging on forever. It just feels that way. It feels that way because everybody expects it to happen overnight. Normal. It is we do not take very political decisions. The midterm elections in the United States, the transition of the European Commission in europe. I would say the best window of opportunity to come to grips with this is next year. I have always said from the start, you need a lot of clinical steering to get to that agreement. We will have to demonstrate that in a couple of months. Polls suggest at the moment that the scots are leaning toward independence. What would that mean for trade . Not have any Immediate Impact on the trades. For thewould it mean eu . There is something else. Serious be a very question. It would be a disaster, i believe. Selfdetermination, that is what the ukrainians want. Also, european, because there are that kind of tendencies. It would really have a bigger impact on europe. It was set a bigger president for basques . In my country in belgium. The figures, if you have one more minute, the number of two separate its in scotland have not gone up. Vote many other reasons because this result of the crisis, just to name one, that is a big risk of this kind of referendum. Populist backlash. In the wider europe, it will have a dramatic impact. Does the eu believe David Cameron is doing the right thing . The eu does not think anything. Believe David Cameron is doing the right thing . That is not the point. You talked about determination. This is a very beautiful principle third one should not forget stability in europe is based on order, which means National Sovereignty. Countriest other taking the National Sovereignty of ukraine. Thank you. A pleasure to meet you. The trade commissioner for the European Union. When we come back, and apple economic stimulus every time there is a new iphone. Countries get to cash in. Plenty of other countries get to cash in. Welcome back. A big win for apple, could also mean a big big profits. You could call the iphones economy. Smartphone accessories and david, the ceo of electronics tradein and recycling service. Are, the announcement was yesterday. What is trading in and what is trading yesterday . A great time of year for all of us here. Of predominant number iphones have traded in now, the iphone 5, followed by the iphone 4s, a lot of iphone 5 s, believe it or not. Iphone two oree three generations traded in. So, the mother of all upgrade cycles are good because of the tradein traffic it drives. What about for tech armor . Research indicates the smartphone Accessories Market will grow from 20 billion in by2 upwards to 38 billion 2017. When you couple this with Research Estimates that apple is 7080. 70 280 we expect to see huge growth for all smartphone assessors. Do you already have the accessories made . How early does apple give you the specs on, say, the iphone 6 . To havee fortunate assessor is already in our we are not our warehouse and in route to us. Providees not really much data. We triangulate a lot of data from various sources, from rumors and leaks, and work with and try relating the date on a consistent date basis. If you are not getting it exactly right from apple, you could be out there producing things that can begin a fit. Absolutely. That keeps us up at night for sure. A huge risk, but big rewards. For accessory makers that have products, great products, at the time of launch, he will be in a great position to garner market share. We take calculated risks and we have been wrong before. I am sure we will be wrong again in the future. 6fortunately for the iphone and six plus, we have got everything right and we are getting ready to enroll for next friday when the products are available. Your business depends in failure toon apples itspeople to want to buy new phone, in the sense that lets take the iphone 6 for sample. It willhave apple pay, work with the apple watch, it will do things that the five s and the five and the 4s cannot do. If apple is successful, everybody will want the iphone 6 and nobody will want old phones. You think they will be successful . I think evil will want the new phones. Just for betty back better battery life. Apple has created a wonderful product line, a wonderful ecosystem. It has become a fashion accessory. It is the hot thing to have. Certainly, the secondary market, residual values reflect that. So you think people are going to want the phone for those reasons and others. What does that ultimately me ultimately mean . More volume of five s and five, or less . Im trying to understand the dynamics of your part of the business better. Sure. I am an early adopter. I need the latest and greatest. Apple has sold old generation phones with new ones at a discounted price point. A Broad Spectrum of users, whether you are an early adopter. The five s is still a wonderful phone. A lot of people are probably still using the for and the 4s is. Pretty much free. I think there is a huge demand. Mean to what does it your business that now the likes of at t, verizon, and sprint now have their own tradein programs . . It is huge. The demand for these phones are we canrger than what supply. Certainly, there is more competition coming into the marketplace. Last year, we saw that as walmart and some of the other folks start to enter the marketplace. Is certainly more supply. That will drive down the prices in the secondary market somewhat. Our tradein prices reflect the secondary price at the end of the day. What is the most popular accessory made for the five s right now and what do you expect for thethe most popular six . Screen protection. We have sold over 4 million Screen Protectors to date and we are the number one branded Screen Protector online. We expect to see that for the iphone 6 and six plus as well. A lot of pentup demand, as david mentioned. Users are looking for new hardware design. We are super excited what the iphone 6 and six plus will bring. We are especially excited about tablets, the cross between a phone and a tablet, and the fact that the Samsung Galaxy had little competition to date. Having apple come into the segment will help validated. In the asian market, where bigger phones and tablets are extremely popular, it helps apple. Apple did not splurge on a higher piece of glass that is more scratch proof and shatterproof than what will be in the six . We were pleased to see that. We expected to happen over time. How do you adjust . If that happens, is that not a jack for you . Users, we have seen video of people using sapphire glass. It does protect it better, it is still brittle because of the layers and the production process involved. This, but thek to trade in values are very important. People want to protect their investment and make sure they keep it rand new. Brandnew. We hope it proves well that the iphone 6 will do well. We Love Companies like tech armor. Thank you. Thank you this morning. We will let you go. This is a very busy time of year. Thank you both. Eric is the cofounder of tech armor. David chen, the ceo of net worth. Coming up, burger king has a whopper of a problem. You might say the decision to move its headquarters to canada may be turning off american customers. I say no way. Welcome back. Economic nationalism may be rearing its head here it burger kings decision last month to buy tim hortons and move its headquarters there for the lower tax rate in canada. I dont buy this. Please walk us through it. In the days after the deal was announced, if you went to the face the page on burger king, all kinds of protests showed up on the feed. People were slamming burger king for making the move. The risk that burger king may lose some u. S. Customers, according to a survey conducted, Consumer Perception of burger king, what you call the buzz score, that is the white line for burger king has turned south. Dramatically. There was a slight lift in tim hortonss buzz, the blue line. Tim horton only has 800 and 30 stores in the u. S. And mostly in states that border canada. A lot of people do not even know it tim hortons is. When people are in the mood for a whopper, they are thinking about National Pride . Less people have not been in the mood for a couple of months now for a whopper or a big mac. When was the last time you ate a whopper . I do not remember. People are going to shake shack there it i have not had a whopper junior in 25 years. 14 years. Count that. Would my daughter was in the hospital and she was a year and a half old. Burger king was the only guys stealing food selling food. Isnt that ridiculous . People have been moving away from fast food restaurants. They do not even like to call themselves fast food. Burger king call themselves a Rapid Service company. Of course, they want to be called something else. Five guys, aaa. Watch what people do and not what they say. What do they do . Say they the surveyed would not consider going to burger king. Versus 32 in late august. That is the lowest. That gives you an indication people are not going to follow through. Have senators coming out like sherry brown of ohio saying, boycott burger king and go to wendys or white castle. If youre not going to buy a whopper, perhaps you should not drugs people are thinking more about a whopper. Scarlet, thank you. Market makers will be back in just a moment. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. Extremists in the crosshairs. President obama will outline his plan to defeat the islamic state. Likely to include expanded airstrikes. With us, former Senate Foreign relations chairman richard lugar. Appleile payments, teaming up with a restaurant reservation site, the ceo of opentable. Couture to willinbasement, zac posen be here. Welcome to Market Makers, we are back. You are joining us for our second hour. I have a feeling it is going to be good. I am Erik Schatzker. We are going to find out what president obama plans to do about the islamic state. He is set to deliver a speech at 9 00 p. M. Eastern time. It will be nationally broadcast and you can watch it right here on bloomberg. We expect the president will detail plans for defeating the extremists who have taken over chunks of syria and iraq. Including air raids inside syria. With us, former republican senator richard lugar. He spent three decades in the senate and was chairman of the Foreign Relations committee. He runs the lugar center that focuses on nuclear proliferation. What, in your opinion, does the president need to do and say this evening . What plans does he need to detail for the American People and more importantly, for congress question mark the president will have to indicate a strategy. He has already said he will do so. The strategy is unlikely to be complete tonight. He is going to talk about airstrikes, which we have already seen on behalf of the Kurdish Forces in northern iraq. He will be outlining the fact that airstrikes are going to get her airstrikes are going to occur on the syrian side of the isil situation. He will talk about the fact that the Iraqi Government is coming together with unity so that all. Arts of iraq become one nation specifically, the sunnis come in ther with the shiites government, as the new government of iraq, so they can be on the ground doing boots on the ground combat. Boots on the ground with regard to the syrian site will require the arab league, which voted last week to be supportive. There are very diverse opinions among the arab League Supporters as to what to do. Furthermore, it is not clear exactly where the arab league is against a side, the ruler of syria currently, who could be attacked by isil. But also can be attacked by some of the arab league members. The president will have to outline all of this, the thought that this might take some time. He has already intimated it might be as long as three years beyond the time he is in office. Of this thusll far, however, the american thec, as evidenced by Washington Post polls and the New York Times poll, indicated that they strongly support airstrikes. It is really quite a turn of events. 30 support on the ground, boots on the ground which the president says he will not call for tonight is one thing to do the right thing. There are some questions about whether the president has the authority to do the right thing. Does he have that authority . To conduct airstrikes inside syria using the 2008 use of force resolution. Does he need to go to congress . Eventually he will need a congressional vote of support. I use the word eventually because presently, leader mcconnell in the senate would like to have a vote now. It appears that leader harry reid, on the democratic side, does not want a vote. That might also be the case with john boehner, speaker of the house. He will have to speak for himself on this. It is a situation with the election coming up in which the leadership apparently does not want to subject the numbers to a vote of this friday and maybe many other votes. At the same time, an increasing number of members want to have a vote. In reasonablyis good shape. It is apparent that the majority of votes are headed his way given the majority of the american public, 71 , will want to do airstrikes. M dof those two sides, who you support . Do you agree with harry reid or Mitch Mcconnell . I agree with senator Mitch Mcconnell. Simply because i believe this is the most important issue facing congress. Congress is taking the position that they will only be here for maybe a couple more weeks. Then they are gone. Off to the election. Election period. What about the risk that with midterms looming less than two months away, the vote over the authorization that the president would want becomes politicized. And america does not get the answering needs. The vote could become politicized, as could almost everything currently. I would suggest that this vote is so important in terms of the president s message and in terms of the outlook, whether it be isil or the arab league or the unity in iraq we are seeking. All of these things really require every bit of confidence that the president is speaking for the American People. Furthermore, that he is likely to be backed up by new appropriations in a defense budget. This is going to be a reasonably costly endeavor. That needs to come forward rapidly. How do you attack isis in syria without helping president assad . Well, temporarily, president assad might be helped. All the emphasis would be on isis. This isame time, something were going to have to work out with the arab league. And with our partners, the socalled boots on the ground on the syrian side. They had differing views about the future of that situation. Many are talking but i think in vague terms about a successful war against isis that will lead to political negotiations in syria about the future of the country. That remains to be seen. A remains to be seen whether we can find a so called moderate support theia to struggle. They are against a side or a part of the political solution. Many people inside your party, the republican party, say the president has lost the nations confidence. What do you say . The Republican Point of view, clearly, is backed by polls that indicate that the president s popularity is down and the confidence is down. I would say that we are at a the president is going to be speaking about the security of our country. All americans take that seriously. The president hat will have a very good viewing by the public as a whole. That his message will be supported by congress. Quickly rather than in due course. And that there will be more confidence around the world in american authority. How about yours . Has he lost your confidence . You are a good friend to him in the senate. I have not lost confidence in the president. I would suggest that he has moved ahead at least in many ways that have been successful. On the other hand, there are on which wetically have differences. On which i voted on the opposite side when i was a member of the senate. Dowhat could the president to bridge the divide between the republicans and Democratic Party . If you were in the senate, what would you be advising your colleagues to do . What would you be asking of the president . The president made a good start yesterday having to leaders of the house and the senate in the oval office. He had a meal with a distinguished group of foreignpolicy specialists that have a great deal of weight and im sure gave good counsel. The president will have to reach out more extensively to the membership of congress. This is a president who has not ithat much attention to would not say courting members of congress but at least hearing them out. Having opportunities to be with them. Hes going to have to do more of that. My impression is he is prepared to do so. We thank you. Former lugar is the republican senator for indiana. Tune in tonight for live coverage of the president ial adjust. President ial address. 9 00 pm eastern time. Apple is bringing something new to the table. Partnering with one of the biggest restaurant Reservation Services. Speaking with the ceo of opentable when we return. Always in fashion, that is Market Makers. More on new York Fashion Week, here. Sen will be Market Makers on bloomberg television. Bloomberg. Com tv, on your tablet, bloomberg tv plus. We are streaming on apple tv and amazon fire tv. Welcome back to Market Makers. I am stephanie ruhle. Check, please. Iphone 6 and apple watch others will be able to use their devices to pay for meals at restaurants. The tech giant has partnered with the Reservation Service opentable to serve up mobile payments. Here to talk more is matthew roberts, the ceo of opentable, with us from san francisco. Was anyesterday it exciting day. Have you sold your soul to the devil getting in bed with apple . It seems that they always win in any partnership. Workinge thrilled to be closely with apple. It makes our opentable process more seamless. Thellows our diners to skip step of adding their car to a profile and they can touch and pay. It is a fantastic win. Is apple pay an enabling technology for the inapp Payment System you have introduced in opentable. Are you in competition there . Enabling. We already have the most elegant solution, when you walk into the restaurant, you can simply sit and order and enjoy your meal like you do normally. When you are ready to go, you review the menu and add a tip, swipe and pay. In the future evil touch and pay. Will in the future you touch and pay. What is the difference . They firstrs when set up their account, they do not have to enter credit card information. It makes it more seamless and elegant for people setting up their accounts. How is this going to make you money . Overall it is a free Service Diners ands restaurants. Were focused on becoming an experienced Company Versus a transaction company. Payment is the perfect example thatat we can do to do during the meal. We have all experienced the hassle of waiting for a check at the end of the meal. That is what we are aiming to eliminate. How do you ensure that the diners follow through and execute the transaction on the opentable platform. I can make a reservation on opentable, and i do quite often. Can separately use my iphone 6 or apple locks to make a payment outside your network. The value for the diner is to have everything in one app. Damagessome unique in that are allowing us to be successful. We have the technology and the restaurants already. We do not have to add new technology. We have our application as the Largest Network in the world and in the hands of millions of millions of diners. It is a seamless experience and they are sitting at the table. They are ready to get out, they swipe and pay. Restaurants are confusing and hectic places. How can you ensure we are not going to see a dime and dash epidemic. Piloted thelready product for a while. We have looked at and focus heavily on making sure the experience really works for our restaurant customers. That it fits into their service and they are able to see great benefits. We are pleased to say that has been the case. Yorkunched recently in new and we are expanding to 20 other cities by the end of the year. When we do something, just like we did with avoiding the hassle of calling a restaurant and making reservations, we focus about what is the right solution for our restaurant customers and for the diners. For restaurant customers and the diners . That is the same person. What about for the restaurant . Our customers are the restaurants. For the restaurants and for the diners. Solutions that work for both, that is the key to a great dining experience. You already know a lot about me because i use opentable to make reservations. He loves wild boar. What are you going to do with the information you harvest once i start using opentable to purchase my meal . Isa nice opportunity for us to help you remember what you ordered so the next time you go to the restaurant, you can take a look at a dining diary. That helps you in the discovery phase of the next time you go out to eat. Cool. I get the idea. , if you are not paying for the product, you are the product. What are you getting . It is a winwinwin. S, is a fantastic experience. You discover a place to eat and you have experiences in the restaurant. You can use that to share your experiences and record your dining diary. Incredibly valuable repository of data, you know what i have eaten and how much i paid for it. You even know how much i tipped. Am i going to be getting advertisement for wheels of cheese . Outside companies will know what i like. We focus all the information it is aboutr helping you as a diner get the most out of your experience. Helping you figure out which restaurant should i go to and what should i order . These are the things were focused on. For a restaurant customer, helping them tailor the experience to delight you. I love this. I may diner. Who is paying . Restaurant customers pay for the marketing value that we provide by helping fill seats when they would otherwise be empty. That is our primary Revenue Source and has been since we founded the company. Now that you are offering more services, are the restaurants going to have to pay your money . No. We have made it a free service and it continues to be a free service for diners. Ourfocus is for us belief is as we expand to be experienceining company, people will be more inclined to use opentable for all their dining needs. When do we see the value of the priceline purchase of opentable start to become more apparent . I get the idea that priceline would want to own opentable. What happens next . It is a natural fit. Things have been going fantastic. Travel and dining makes a ton of sense. The values we see going forward, they are great at international expansion. We are currently in six countries. We look to see us go broader from a global perspective. That is a key benefit. Is there going to be integration . To bid on aneline Airline Ticket to atlanta, will there be a followthrough and a click through to opentable where i can book restaurant reservations . That would make sense. Is it there . Thoseare working through point of integration. We want to make sure there is integrations and lays that make sense for you as a user. There are plenty of points of integration that can add a lot of value for you. You are traveling to london and you land, where are great restaurants in london near the hotel youre staying at . We could not agree with you more. We are working hard on what the price points are. When are you going to start pushing suggestions . Opentable is good about following up. I have not seen opentable say herere in london, eat based on everything i know about you and how much you like to spend. If you do decide to do that, there is a fine line you have to walk. Suggest a number of restaurants through email communication today. We are looking to expand that to make sure that inapp suggestions and tailoring results you see would be best suited for you. Of linking it to travel is a whole new opportunity for us that gets tremendously expanded as part of priceline. Will you sell that as a service, is that going to be free . Will restaurants have to pay you to be promoted . No. The promotional aspect, we are already the best marketing vehicle for restaurants today. It continues to be part of our economic structure. Thank you, ceo of opentable. Can i tell your restaurant i do not want a table at 5 30 or 10 30. Back inet makers is two minutes on blaber television. Whose instagram feed is as as his dresses. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. Welcome back to what i think is going to be my favorite moment on Market Makers. I am stephanie ruhle. I am Erik Schatzker. One of my alltime favorite designers, zac posen. You know him from the runway and now from project runway. Because talk about fashion week caters to all the new hot looks for the ladies. What about the men . For a look at what is hot in mens fashion, i went to bring in brian, ceo of a shopping site for men. Boxes full of clothing for men who do not want to go to the mall. He is joining us from chicago. Filling in as anchor and will have questions for you. Men whoting next to two know how to dress. You are sitting with the experts. I think most guys have a harder time figuring it out. The great thing is we take away the hassle and the headache and make it easy. The business works like this, we sang you close, you keep what you like, you send back what you do not. We keep doing that until your wardrobe is as close to complete as possible. You are matched with a stylist in one of our offices l. A. Go, dallas, d. C. And sometimes a customer will come visit us and we can work with you face to face. Gist of it is guys hate shopping but love to look good. How do you get a guy to go from slipping on the cargo shorts and a tshirt with perspiration stains and feeling like that is ok to realizing that he needs to check out from club trunk club. How do you acquire the customer . I think guys are paying more. Ttention in America Today it is a little less difficult than it might have been a decade ago to battle the apathy. I wear cargo shorts. Encountered frequently. What is happening is we are able to get through to these guys and say this could be fun. Ou can be successful has nevershort guy enjoyed shopping. If we can make this process of discovery, trying new things, tightening up fits and moving into a slimmer, more pleasing aesthetic. If we can get the clothing on him, he knows i do look a lot better. And i should care. It is conjuring the initial reticence it is countering the initial reticence. Onhave an almost 300 people our sales force, our stylists are very proactive. Trying to help guys. Have a business question. What is the commission that the personal shoppers make . In each sale versus working retail . Great question. Without getting into the details of our complicated compensation plan. Is paid a base salary and can earn commission in different ways, but largely based on doing a great job for the customer. Is going to stylus make a lot more than a retail associate. They will have to work a lot harder and build longterm relationships. It is a career, not an hourly job. Say it is analogous to being a broker at a place like charles schwab. Really . Ly . Who is your customer . Cargo shorts to somebody buying custom clothing, that has got to be high end. First, yes, the clothing is higher and. Woven shirts, for example, 200. From 75 to back to the analogy, the point about comparing our team to Wealth Managers is not we can make as much money as you could if you work on wall street elling stocks. It is more the idea behind being a really good wealth manager. You take good care of your clients. You listen to them and solve problems. In that case, financial landing problems. For us, it is wardrobes under management, not assets under management. Where do you advertise . All over. They are everywhere. We are on npr, podcasts, facebook has been a great partner for us. About half of our business comes through wordofmouth. Each week and each month. It, the stylists are doing such a nice job for their members, the trunk club members, they will tell their officemate or the other partners at the law firm or their Dermatology Group or where ever they were. Wordofmouth has been our number one source of Customer Growth over the last four years. What is the sense from your perspective behind the nordstrom acquisition . A hedgeg trunk club against the decline of foot traffic into Nordstrom Stores . Is there something happening on the back end that increase your margins because nordstrom has inventory. Nordstrom has logistics, they can do things that were difficult, i would assume, for a more asset like company Like Trunk Club to do. It is much more the latter than the former. I think when you get to know the Nordstrom Family and the management team, they are rock solid. I dont think they are concerned at all about foot traffic in their stores. They are aware of secular trends. I think that is why you see nordstrom. Com performing so well. And the Tremendous Investments they are making in digital assets. At the same time, the reason why we did this partnership was exactly the things that you mentioned. Access to inventory. Strength and logistics. Capabilities that the Nordstrom Company has built over 114 years of being amazing. Are you able to use their shipping facilities . Heres the best example. The day that we became fully partnered with nordstrom, we had access to their shipping contracts with ups. That is going to save us over 1 million between now that is a big issue in ecommerce, the return rate. The teammportantly, that runs logistics at nordstrom is amazing. They have spent a ton of time with us over the last eight weeks helping us plan what our next three years to five years of growth and Logistics Development look like. I have solved these problems before and we feel like this is a marriage made in heaven. There is so much we can learn from them. They hope that shoring up our back end and supporting us financially will help us reach our goal of eating a billion Dollar Company five years from now. Be addinghat, we will to nordstroms market value as well. Glad youre taking guys out of cargo shorts. Ceo of trunk club. A lot more with the one and only zac posen. From hollywood a listers to first ladies, zac posen has designed for the best of them. You do not need to afford a has designed a line scores hearted and davids bridal. What does that do for a fashion house brand . Zac posen and marie claire editor and chief. Now that we are wrapping up fashion week, the busiest week. Lets start with you. What is so important about this week . Is my week. We run around and we look at all the trends. We look at all the designers. I had a great time at zacs show. I just came from michael kors. New York Fashion Week is just the beginning. I go straight to london, i go to milan and paris. It is really after all four cities that we can digest and spread everything out and decide what we are going to presume for the magazine. Zac, the effort of putting on a show. How long is a show . 10 minutes max. Is it worth it . The Business Case is that you are selling your new look. You are presenting a message for your brand. That message has a large effect of relicensing over your licensing. It gets the message. It is a form of advertising. There is a commerce level. You can put together sponsorships that pay for your show. Fashion week has become a corporate player. All the big companies, from beauty, food, electronics, are all presenting either in collaborations with brands to or tohipper market value make products and launch them. How intensely do you feel the competition with other d esigners. Huge. Huge, thenot competition is high. Every season you have multiple new designer showings. That saturates the market. Retail does not have the capacity to hold all of this. When you are a new designer starting out, you become fashion equity for that rit that a two yearor about eigh retailer. Zac, i still render your first season. People were buzzing about you. That is the genius of fashion week. How much buzz you can build around your show. How many people you can get talking immediately. Media has become an incredible player. People can present their message now them selves. How do they want to be seen . That is exciting. A new creator can create their own voice. Is there a risk that you yourself could saturate the market . As a luxury command when you collaborate with target or the woman who, wants you to dress her for the met ball does not want to be a woman who shops at davids bridal. Been very smart. We see everyone doing it. I just got an invitation to Alexander Wangs line at h m. Those are brands that have an enormous amount of funding. This guy is delivering. As a marketing force. It is seen as talking to the masses even though other have funding and do not need these collaborations. They are using it as marketing. That is pretty cool. For me, im interested in dressing a lot women. I do not believe in the snobbery of price point, i think every woman should feel beautiful, no matter what size, color, and background. I want women to feel their best and that is how i will achieve that. Anne, do you run the risk of editorial saturation . Have the likes of all of these young startup bloggers everywhere. What has that done for your business . Fashion week was purely about the editors and the buyers in the Department Stores seeing the closing. No one else saw them until they were on the racks and in the pages of the magazine. The larger conversation about fashion spreading through not only the fusion brands but also through shows like project runway, the democracy of fashion. It is fantastic. Theres a larger conversation about fashion around the world. That is fantastic for a brand. That the kidsee are gravitating more towards the like and not magazines yours, you do not want to follow your audience as it ages. You want to capture as young audience as possible. Younger than light teens. Buy the blog . Our audience is growing. We think about it as enlarging our conversation and enlarging our audience. A phenomenonis from about four years ago. The fashion enthusiasts really appreciate the curated our picks and who we choose, and who nina garcia chooses. The pages ofe on our magazines. Anfashiontainment is entertainment medium in itself. The tutorial world is in printing that the editorial world is embracing that. On instagram, you are offering pictures of what you are making for dinner. Does offering your lifestyle broaden your brand . They are both using your hands. That is a really human, visceral thing. That is the success of martha stewart. She got people to see the process. Ow it is happening in fashion it is a lifestyle. If you can get a little glimpse of it, that is intriguing. When is it too much and when do you cross into the line into kardashian territory. When you have nudies. Bloggers are now part of the conversation. We post pictures of what they are wearing. When it comes down to getting your September Issue and getting the magazines and seeing what wear, into terms of the authority and the curated look and distilling the trends and deconstructing them, there are only a few authoritative sources. Beginningblishers are to experiment with commerce. They are saying we can be a portal for purchasing in addition to informing people about what is hot in fashion and what you like in fashion. Doesnt that turn a magazine into a catalog . Zac, to what degree does that endanger the authenticity . Is very risky. It is an important step for the future of magazine groups. But it is risky. Thet of people a lot of magazines are also dictated by who is taking advertisement pages. Online directs what is for sale, that can be very dangerous. It a rich mans game. That is not necessarily fair. It also gives the opportunity for the Editorial Community and the Publishing Group to promote Young Designers to a wider audience. Core business is our editorial and advertising business, we will always stick to that. Acs core business is designing clothing. They are becoming better about telling their story and how they cook dinner. I love seeing that dinner, but im not going to be buying kitchenware. Is your first season third season. I screwed up is incredible. Why . We are able to watch young creators and new creators present their work in a very competitive, high paced environment. We have the ability to potentially launch new careers and give a voice to them. That is very gratifying as a designer to be able to give back. Are you running the risk that you are pricing yourself out of the market and you are bringing in the new zac . No. Never. Anne. You are wrapping up fashionably how was your biggest take away . Came from michael course, he showed going on, i will buy givngham. Can your reader pull things from a runway, do we need zac to have a collaboration with target. Our reader is really inspired by the show. We help our deconstruct the trend and show her the bag or the dress to splurge on and what else she can put together. Is instagram the best social media for fashion . Right now. Tomorrow, there will be something else. It is visual, you have movement and sound, it is interactive. That is radio and television at one point. Visual and social. Congratulations, fantastic having you. You probably need a break. Thank you so much. Zac posen and marie claire editor. We need to take a break to talk about some breaking news. A few moments ago, engrossing santander banko named a new chairman, ana botin will succeed her father, emilio botin. The Second Largest Bank in europe by market value behind hsbc. This is a passing of the torch. Ana,o botins daughter, takes over as chairman of banco santander. Now we from the breaking news, we remind you that coming up at the top of the hour is money clip with adam johnson. Somethingtephanie, that was pounded by the fact that Philip Morris International Announce a very large Dividend Increase last night. That is the impact of dividends on total return. If you had effectively taken all of the dividends that you got as an investor in the s p 500 since 1980 nine in reinvested them, your return would be really double what it was. We are going to explore Dividend Income and some of the other companies that are forecast to increase dividends over the next couple weeks. As an investor, how do you play it . It will be fun. Adam johnson with money clip. That will be it for erik and i. Fun show. Tomorrow, i am very sad, youre not going to be here. It is going to be even better. A special hour with the one and only then silverman, former head of nbc entertainment. With him, a couple friends. Founder of relativity media. Ryan kavanaugh. Tinder. Stay with us. Newsroom. Ut to the julie hyman is on the markets. Are diving into derivatives. Time for todays options insight. Is baycrestith more partners Anshul Agarwal. Not much action overall in terms of movement. You are looking at the vix. Interesting trade. The vix has been picking up. Not really surprising. We are heading towards the fomc meeting next week. It is not surprising, the jump from 12 to under 14. There until the fomc. An interesting thing that happened this morning, someone was selling the vix september 18 x, an etfting the vx that loosely tracks vix, and b uying the 88 strike calls. Why . Vix options expire wednesday morning. Selling those options that do not capture the fomc. In strike,re equal he is buying those and not paying any money. It is an interesting way to capture the fomc spike. Which tends to happen. More volatility around those announcements. Another stock that has been volatile is ebal. Is ebay. That is because of the announcement of apple pay. Investors questioning what is this going to meet for a company like ebay, which owns paypal. How is the Options Market reacting . A lot of positive sentiment giving the stocks selling off a lot on ebay and paypal potentially getting devastated from ebay. The stock rallied and at that point we saw last week people buying puts in ebay. Puts that expire this week. They were anticipating. Today, we saw with the stock down as much as it is, people buying some call spreads in september to play it from the upside. A lot of twoway flow. Maybe the thinking is it is accounted for now, this competition from apple. Now people are looking for to come back. Correct. They might be adjusting their books, but i think they are playing a range bound trade in ebay using options and some decent volume. Another tech company you are looking at is yahoo yahoo has been on the move because of alibaba and the anticipation it will be selling shares in the ipo and raising money. You have a bullish strategy on yahoo are seeing the Investment Community next. Questions about after sells the stake, what . Talk me through what you are doing. I am buying the october 45. 50 call spreads in yahoo for around . 70. Stock trading around 41. Where it is trading right now, it seems the current alibaba ipl valuation is fully priced in. What i am doing, looking for further upside, it is a derivative plight on derivative play on forced alibaba ipo spiking up. As alibaba shares spiked, that could be good. That is still a huge component for yahoo s valuation. I want to go to october. Quite high,ties are but october captured earnings for yahoo , too. Ofthanks, Anshul Agarwal bakers partners. We will be on the markets again in 30 minutes. Money clip is next. Welcome to money clip. We tie together the best stories in business news. Here is the rundown. Says that the way you buy stuff is going to change forever. Offering a twopronged plan to Keep Companies here at home. In the world, meanwhile, David Cameron is using saucy language, trying to guess get scotland to vote no on independence. Getting into school has never been harder, unless