One company will focus on hardware and services and the other are personal it is and printers. The wild weekend. The Virtual Currency plunges to its lowest level in a year. What is behind the fall. A professor who says an elite education is not worth the cost and those goals are creating a generation of religion career zombies. There is one sitting next to me this morning, olivia sterns, and erin wegraduate have a great love show graduate. We have a great show tonight. Bitcoin is follow falling on its own. Time for the newsfeed. The top is stories from around the world. Hotel, andelling a the buyer is a Chinese Insurance Company paying almost 2 billion. Hilton says it will use the money to buy other assets. Agoon bought it 42 years and will continue to manage it and the hotel will undergo a major renovation. A new report underscores the risk of a slowdown in the worlds is largest economy. On especially fell the most since 2009. German Economy Ministry blames the geopolitical risk and a slowing economy. Speaking of bitcoin, gold is up slightly after hitting its lowest place this year. It fell before rebounding. Dollars are getting stronger. Firsts heading for its backtoback loss since last year, the most in three decades. Thehe vague story of morning, hewlettpackard is breaking up. One company will focus on products and services for corporations. Hewlettpackard enterprises, the part that the ceo will continue to run. She will also stay on as chair of the printers. Joining me now is cory johnson come outside the companys headquarters. Good morning, cory. Thank you for joining us. Forecessor has been calling this for years. Let it take womens so long for this to come around . Interesting. Make suggested this could be a possibility someday. At the same time, saying she was not going to do it. Worrying one of the reasons she got the job was that she screwed up the job so poorly by announcing it before we had somebody ready to buy the company. It is a reflection of the markets here. Hewlettpackard has been here for decades. The spinoff of 1999 is forgotten. That was supposed to be the change in hewlettpackard was going to secure the future, focusing on the pc and the printer. Now make his announcing there really is no other idea for the company. They are not able to do buybacks in the Conference Call they have this morning. So they could not do any buybacks and would continue to be unable for the rest of the year. They face a big pile of debt with all of these acquisitions, they have spent tens of billions of dollars in acquisitions over the last 15 years or so. Revenues barely budged in the last few years, trying to find a way to gussy up the company into because no one else is willing to buy that pc division. Poorly executed. They lost a billion dollars on that one. You want to talk about autonomy. Forget autonomy. Contact at 25 billion. Companies like snap fish, threepart, Electronic Data Systems for 13 billion. They have acquired Companies Like tracy and yet we have not seen Topline Revenue growth yet let alone it is always to come it always next year. They announced a 600 Million DollarRestructuring Program today. In other 5000 people will lose their jobs. There will be more opportunity for more layoffs here. It is a sad day for the workers who have made the company. Not for shareholders. The stock has kicked absolute but not only this year but last year as well. Love with ac. Today is no different. Promises keep coming and investors keeping the stock up. The results are what the results are and it has not been very good for the company, whether it is topline or bottom line. Theyve reshuffled the debt as well on pushing the got up. Cory johnson, thank you for joining us. Our bloomberg west editoratlarge. For more on what the breakup thes for hp, lets talk to president of Market ResearchFirm Creative strategies, a. Onsultant for hewlettpackard he joins us from california via skype. Let me ask you first about this strategy. It seems like the decision could have been taken much earlier with an earlier ceo. Digg meg whitman take too long with this idea . She had a huge task to turn things around after leo left. The company needed to be stabilized. That stabilization has somewhat taken place. As she said in her call and the material this morning, there was a lot of work that had to be done to lay groundwork for Something Like this. A bigger question i got when you look at Something Like this is, will it work . The division is obviously still strong. There is still great demand for building on a next generation enterprise. The printer side of the business and the pc side of the business, that is where growth has slowed. Sticking it out does not necessarily mean it will be successful by itself. It needs significant investment and a tremendous, strong strategy. Their competition right now has gotten stronger, especially with what lenovo and dell has been doing since they have gone private. It creates, i think, a lot of interesting new challenges. The other thing that is interesting is potentially, it sets the company up for maybe this merger at the enterprise level and potentially, maybe some of the other pc companies who actually want to own a greater piece of this, maybe now more interested in the pc division. I do not know. Survivede pc business by itself . Does it have to grow or is there a way to get rid of that after the spinoff . It can growly in the sense that he sees are not going away and there is demand. A lot depends on what the roadmap is. What other products to they have in the pipeline . In that context hold on a second, sorry. Context, what you have got is a solid base to build on. Again, printer sales and pc sales stabilize and are not growing as fast as they have in the past. That is a challenge. Ibm put up their business in 2005. They sold from tuna lenovo. Are they putting the business on the block . That is not the intention at the moment. If someone came in and offered them a significant sum, i suppose they might do so. It sounds like at the strategic level at the moment, that is not the case. They really want to see who will be the new ceo of the pc division who came from a nobel and is a verys smart guy, can actually not only keep the Company Growing in its own right, but growing it. Enormouss obviously an company, north of 300,000 employees despite all the layoff meg whitman has seen over the past two years there. Of the new think Leadership Structure . Does it make sense for women to maintain the role as ceo at the New Enterprise this is that also saying on a chair . A very good question and i was wondering the same thing. Is the point of splitting up the company to give these managers time to look at each business separately so they do not have as full a schedule . Liked myappy you question. I was wondering the same thing. Yes and no. It is still an hp company. She still has a chairmans role. In the context of guidance, she is not an executive of the pc company. That is a legitimate role to play. The bigger question is how she drives what goes on with the enterprise. That will be a real daytime job. Time will tell. At least in this transition time, it makes sense. That, they will have to give great assurances. When are the next elections for the governor of california . A lot of people are questioning whether or not it makes sense here it she will have to spend some time as chairman of the pc business and that time is what to focus oneeds enterprise business. The chair of the pc and printer legacy business. Go ahead. Again, she is a nonexecutive. That is more of an oversight position. I think he is so good, and he it around him, i think they will be able to solidify the business by themselves. Thank you so much for joining us. Creative of strategies, he has consulted hewlettpackard. Coming up on Market Makers, a story matt miller got out of bed for. Are talking about a surprise in brazils president ial election. Brazil has his business candidate has made it into the runoff. And bitcoin bounces back, the Virtual Currency rebounded today after his biggest all in almost a year. Just fall in almost a year. Stay with us. Investors are cheering results election results. It would be the best performance for index since 2008. A second place finish. He will face off now with the incumbent in a runoff later this month. Us. He ground for us, tell who is this guy . Why do investors like him . He is one of those people who talk about the idea of things like centralbank autonomy. He says he will get inflation under control. Tosays he will bring it down 4. 5 , more in line with what the Administration Currently says it should be aiming for. Those are the kinds of things investors seem to be happy about. Sawry lastminute surge he to get to 34 yesterday. Polls thatago, i saw said it had a doubledigit lead and then here comes out of nowhere, second place. Yes. I was looking at some charts today. Fascinating, showing how low his support was, his probability of winning the election. One thing to bear in mind is late august, when she died in a plane crash, she saw a huge surge. She was experienced as she flipflopped. Number two is also on the attack until last week or so. That may reflect a desire to win her voters over in the next election later this month area what is next . When is the next round . The 2010 election and she came in third with a similar portion of the vote, 20 . Four years ago, she decided not to back one of the other candidates. Whether she will or not is an interesting question. A lot of proposals she put forward, the other candidate said there were very similar proposals to it he made. They may feel they could win over some of the supporters and help repel him toward victory in late october. How is the economy faring under the rule there . Been a pretty shocking result in terms of stock crisis. In terms of the lowerclass, they have seen 36 Million People pull out of poverty over the last 10 years for the last question he is and especially running around 4 annually, now much lower down around zero and to the negative numbers in the Second Quarter of this year. We will leave it there. Thank you. Ben bernanke, he has spent years defending the aig bailout. Necessary to save the financial system. Chief washington correspondent peter cook has more on the case. Take the stand this morning . Were has taken . Yes. He has taken a stand. It has been interesting to see him live relive the financial crisis one more time. You can see the anguish back in his face as he remembers all the choices, including among those bad choices was the decision to bailout aig. Getting into a just as i was leaving the courtroom some of the details there. You can see him arrive earlier this morning in the white house. The famous litigator, what he has been doing so far is get paulson to showcase the fact that others see financials at the time. Trying to engage hank paulson with the notion there may be other options out there. To chinese were prepared invest in aig and hank has been challenging that notion, saying it was not a real offer from the chinese. Hankwonder what greenbergs presence has been like . He is the impetus for this question mark for this . He was not when i was in there a short time ago. E was last week we do expect at some point during the trial. All ofhe focal point in this. Hank paulson was asked about the relationship with Hank Greenberg and said he had a very high regard for him. He asked why he did not take Hank Greenbergs call at that time because it was Hank Greenberg arguing he was trying to relate information about china wanting to invest in aig again. A possibility of another option. Hank paulson made it clear he is not seeing other options. Thank you very much. I am jealous he gets this courtside seat. Follow be incredible to and we will continue to have peter on to talk about it. Thank you so much. By the way, we launch our brandnew political show tonight. , you very first guest might remember him, he ran for president. His name is mitt romney. We have exclusive reporting about jeb bush. We said hes not running. I am almost more excited here, john and mark talked about politicsnpolitical with mitt romney. Talk to him about other and more fun stuff here it is looks like a great show. Including whether or not he will back jeb bush, not running. That is more the political stuff buried i am looking forward to, for example, his car collection. Coming up, man versus machine. Will a problem for equities. Is it coming to the bond market as well . Stay with us. It is time for bloomberg on the markets. If you take a look here, you will see at least a couple of the indexes gaining right now. The nasdaq is down. The industrial average is up as we see a slew of corporate deals. Two weeks of declines on the s p, still only up three points and the dow up 40. Will we see triple digit swings again this week . Presley got a nice bump in equities overseas. Hong kong trading higher after it was like roughly restored to the streets. A rollover in commodities. Look at the gold trading below 1200. Trading below 1200. West texas trading below as well. Slowing growth coming out of china, and in particular, we have got a very excited matt miller because platinum prices are going down. They will be cheaper. That is right. We continue with combustion engines and we talked to coins bumpy ride. The currency following the most in almost a year before bouncing back this morning. Live from bloomberg headquarters in new york, this is Market Makers. Welcome. I am matt miller. Bitcoin took a dive over the weekend. The price fell over 20 yesterday. Thisin bounced back morning, but still near 2013 lows. Many people are wondering what is going on. Why the incredible crash . Lets bring in a Technology InsideBitcoin Conference in las vegas. I imagine everyone there is a , gossipwith excitement about what is going on behind the crash. What are they saying . The day. S the talk of most of the discussion is about some of the shorterterm drivers and the fact that the Network Knows to support the bitcoin infrastructure, the one referred to as miners, the escalation and have beensing speeds so pronounced, they have to sell more of their bitcoin to cover those costs. That puts downward pressure. There is also good reason that the price is going down. More people use it for paying website. A transport of u. S. Dollars for retailers. Additional supply coming onto the market. Those things are driving the price down right now. It could very well continue for a while. Eventually, as consumers use up their bitcoin, they will start replenishing and there will be a rationalization of the miners, some capacity will go out, remaining miners will be more sufficient. So are you optimistic . Investor. Bring in an bill gates last week was talking to Erik Schatzker about bitcoin. Bitcoin is exciting because it shows how cheap it could be. Bitcoin is better than currency in that you do not have to meet physically in the same place and for large transactions, currency can get inconvenient. Am i the only one who heard that last week . I was impressed a guy with 85 lien dollars is out there preaching the virtues of bitcoin and we still see this incredible crash. Keep point to what is really important and that is technology and what it does. Technology will make it possible to do 12 . Nearly zero,ts at and then there is farreaching complications. One in the latest line of technologist that believe in it coin. A short little to do term. Just believing in technology, the price will follow. In the short term, convert it could be worth 1000. That is just the base of transactions happening today. Longerterm, it is applications of technology that matter. Tried to convince me bitcoin is selling off because the dollar is getting stronger. That is one of the reasons. That is no longer expanding its balance sheet. The u. S. Economy is relatively stable. The dollar is getting stronger. There is no reason to run for the hills. That is all true. Does that issue put any pressure on bitcoin . Lot of othera additional factors, concerns about the health and wellbeing. F the u. S. Economy that could lead some people to sell. Sure. Having other highgrowth assets like alibaba probably lead some people to sell. Factors and at of lot of these factors are shortterm. Price fluctuations will be great. I do not think that will change. Is more important is Venture Capital and Software Engineers continue to invest their time and money in these technologies, and we will see great results. I wonder about regulation and how much that is suffocating the utility of bitcoin. Some of the officials in the state of new york seem to be stuck in the 19th century. But there has not been regulation yet. I wonder about the possibility of etf trading. Breathwaiting with david to see when the etf will be approved and then start trading. Do you think that kind of thing is important . Surely the liquidity will help us far as adoption. Yes. Absolutely. Make accessible in a direct Way Investors and Retail Investors and to the extent it does pass and they approve it, it will have a very positive impact. Regulation is limiting the ability of companies to grow. Regulation right now is a limiting factor. Even more so, the draft for the regulation for the license in new york is scaring a lot of people. Some of the requirements there are so onerous that a lot of people who would otherwise start or expand a company are hesitating to do that. Time theytant by the are finalized, they get scaled back to reasonable levels. Otherwise, that will scare activity out of new york state and possibly out of the u. S. What about the issue of cyberattacks . There have been three breaches at target and home depot. Cases earlier this year were people literally had bitcoin stolen as it just vanished from their online accounts. To what extent do you think that is spooking investors . And mount docs. Gox. What happened . They could have been selling anything else. It happened that they sold bitcoin because there was a lot of excitement about bitcoin. These were just people who defrauded other people out of their money. It has nothing to do with bitcoin. It was weaknesses those companies control. As a consumer and an investor in bitcoin, you have to realize the companies you invest with, you have to have some level of do joel jones. Due diligence. You should not be sending to japan for a Company Called magic the gathering online. Thank you so much for joining us. A pleasure talking to you about bitcoin. For 800 andirst my last one for 600. Come, we are nowhere near done yet. We will tell you how bond traders are losing out in a half 1 trillion a day bond market era stay tuned. We will be back. Human trainers are losing out to machines as investors increasingly embrace electronic trading. Lets ask the head of Market Structure and Technology Research which commissions this new study looking at each rating in the bond market. I am excited because i work in the floor of the New York Stock Exchange for years and a lot of guys who work hard and understand the markets are sort of threatened by the specter of Computer Trading coming in and taking their jobs and really changing the whole Market Structure. The question, which you would think is very bad for nightclubs across manhattan is, our human bond traders a dying breed . Andt is certainly changing there is no question. Our Research Shows half of up just 30 ng is from 32 years ago. Is a big change to the market. There is no question. Bond traders are not disappearing. They are not disappearing, but they are changing a lot. What they need to know and what we need to understand, that is changing dramatically. They need to adapt to technology. Nearly half of all bond trading in the u. S. Is done electronically. What is driving the trend . Regulate then to it is to regulate human . The changes are a lot more organic there it we look at equities and there are a lot of regulations forcing those changes over the years. The cost of capital for the banks and the money they need to help clients do those traits is way up. It is a lot harder for them to make money trading those projects, the 10 year bond trade. It has not been so bad. It makes it more efficient. Let the humans handle the more complex stuff. I think a lot of people would argue, a pretty negative effect, a harmful effect, on the equities market. What you have with super treat electronic trades is to put 2000 orders and canceled them. It does not really help anyone, certainly not the u. S. Economy. You do not really have a human touch on the other side to do with markets in a freefall problem like you did here it that is debatable and probably for a whole other show. Bond markets are different in that they are largely institutional. We all probably have Treasury Bonds somewhere in our portfolios, our retirement funds, somewhere. You and i can go online and trade. That is a big part, not in bonds. You mentioned treasuries. Electronic trading is a lot more prevalent in treasuries trading than it is in corporate bonds. A great point. Treasuries are super liquid right there. They are very standard. It is government debt. There could be, upwards of 300,000 different bonds there it look at ibm and the stock market. One common share. Be 50 different issues. It makes it really hard to find a buyer and sell that match perfectly at any given time. Out where those matches are. In the past government has been the dealers who have said, we will take your bonds and do with them later. I am guessing they are the same way because it is a much more complex market and the issues are not as uniform as treasuries. Another interesting point is the Mortgage Market has seen a electronic trading as well. It is liquid, it is standard, it is backed by the u. S. Government, it is huge. Pension funds, insurance companies, that are more likely to embrace electronic trading than others . Fundsoften look for hedge and in this case, it is more the big asset manager. Set ofunts of complex transactions to get through everyday and electronic trading help them automate the process and make it more efficient so they can do more with fewer people. Initial investors was still speak with someone that they know and possibly trust on the other side of that. Sure. We have to remember we are talking about institutions. These are people who understand the markets. The Retail Investor at the end of the mutual fund being treated election traded electronically, this is great, great way for them to get quick and good pricing very efficiently. What does it mean for the overhead of the bank . Bond trading, in less profitable, more profitable, because they can keep the computer going and do not have to pay a human body . Fixed income revenue, the bank up and down pretty sharply really across the board. What they should ultimately do is lower the expenses, automate the simpler flow, if you will, and let humans handle the more complicated stuff. Move the market starts to this is probably why they closed originally. No bond traders to drink. I would be very concerned right now. Thank you so much for joining us. We will take a quick break and when we come back, i bet you have never heard Ivy League Students described like this. Career zombies trapped in a bubble of privilege. It does not actually seem that strange to me. I would argue you are the one who showed up for this show in a green striped tie. I do not know we will talk to the former ivy league fencer who came up with that line. Stay with us. College costs are rising. Dont forget, it also includes access to a fivestar jim. Is it worth it . Our next guest says it costs a lot more money than that. And yell professor and the way to a meaningful life, he says ivy leaguers are selling their souls. He is with us now from skype. Thank you for joining us. Lets start with the basics. It was a phrase a student of mine used to describe herself. Very good at being a student, atting the 80s, jumping jumping through hoops, and they often look for other hoops jump through, like go will go to wall street. A lot of kids with a lot of brain power do not know what they will do with their lives. That is true. They are young. Would like tothey make money. Does that not make sense. I went to a big school. Graduated come everybody and their mother was trying to get into goldman sachs. The banks are paying less and they are now moving to Silicon Valley. I love that you referred to it as a Feeder School for wall street. Theater school for wall street. That pretty much makes your point. No it doesnt. It is fine to want to have a decent living. Preciselye problem is that they are never given the idea that there are other things worth doing. A lot of kids from what i have been told and from what they tell me, they do the high many things because they cannot think of what else to do. Whatect kids to not know to do with their lives. Some sense of inner freedom that after graduation, work a job, look around, figure out what is out there for them to do in the world. Why are the half half of the kids going to Ivy League Schools going into one of four professions . It is a waste of talent and a waste of their lives. What has the response been like . , you are a columbia professor of Ivy League Schools. A large portion of your friends went to Ivy League Schools. What are you hearing from people . They have accused me of benefiting from a system i am now criticizing. If i had not been a part of that system, people would say you do not know what youre talking about and that would be a valid treatises appeared i have it on the inside. The book did not come from me from nowhere. The students sense of directionlessness. It has been a good and bad response. Privately come ive heard from hundreds of people saying, thank you for writing the books and thank you for expressing this. Thank you for helping me do Something Different and do something i really want to do instead of what the world expects me to do. Has the financial crisis shifted the path of these sheep at all . Has it changed what they will go out there to do . No. This is not a story of the last six years. This has been going on for decades. The financial crisis may be increases the pressure, but if you go to a very selective school, your Career Prospects are really good anyway. It is not like you have to do x or y in order to survive. This is a problem of the way we educate kids and train them, a problem of social values. This is not a problem of a financial crisis. I agree with you. I have a degree in history and that has a degree in essentially medieval fencing. He is not denying that. I take your point about liberal arts education. They think it is absolutely ridiculous people Walking Around at age 20, not having a specialty area in england and france, they make use back shies specialize much earlier on. We have a the reason dynamic economy. We always had an idea of education. We do not make people specialize. More chance to explore, to become an intellectually wellrounded person and become a behind come a big idea liberal arts education. Change careers a few times. I changed careers and went in Different Directions a bunch of times before the age of 25. It is part of what makes america a better system and not a worse one. The labor market is only getting more flexible. Thank you so much. I will get that book for you. You are dressed like an ivy league zombie. Look at this. Ice coming up, youre not paranoid. Really is watching you. Find out who. [laughter] live fromrom bloomberg headquarters in new york, this is Market Makers those quote with Erik Schatzker and Stephanie Ruhle. Ball into itsing, lowest level this year. Is there any reason to be bullish . The surveillance economy, someone knows where you are. If the cameras cant find you, your smartphone phone might give your way. Court,in the supreme justices might decide how far a company can go when rehiring workers. We have a great show. Topnt to get it off with news stories from around the world. Hewlettpackard is the latest tech company to restructure itself so it can remain competitive. Hp will split into two companies, one to focus on corporate hardware and the other two service the slower growing personal computers and printers business that still brought in 56 billion in revenue last year. A big takeover in the medical services industry, megan hasinson has dickinson agreed to buy care food and. Carefusion. Kind of going the other way of hewlettpackard. A fullpage ad in the Financial Times dating we are pimco, the Global Investment authority. Pimco lost 20 million the first day that bill gross announced he was leaving. But i believe his unconstrained i believe his unconstrained bond for dennis is about 25 million. It will be interesting to see whether or not bill gross can draw all of that capital that left pimco. And whether or not he can bring talent with him as well. Im not sure how focused he is on talent right now but no, hes very much looking forward to not having to deal with hiring, and just running money. I came into the newsroom this morning and you were sort of crackdown falling asleep over your Financial Times and that is how we found that advertisement there. Thanks for that. Yes. Gold has fallen to its lowest level this year. Analysts say the reasons are the strengthening u. S. Dollar and the economy seems to be headed toward an actual recovery. Genuine stability year. Jim rickards has been one of the most outspoken out there. Reaction tout your that statement, that the economy is stable, at least relatively. Are you encouraged by the jobs numbers we saw last week echo not at last week . Not at all. What janet yellen is looking at are the real numbers. She is concerned about inflation. She wants the easy money to create jobs until she is worried about inflation. She is worried about real wages. That means people start to get rate races. Start to get a raise. Real wages are going nowhere. She has no inflation concerns at all. I dont see them raising rates. Is the real wages number of demographic issue . Do you see people getting paid more and retiring while people starting at a lower wage coming into the labor force . Somebodys demographic and some of it is structure. The answer is that it is a little bit of both. But regardless of the cause, that is on her dashboard. Onhave 50 million americans food stamps, 26 million americans unemployed or underemployed. 11 million on the support on disability, which is kind of a unemployment. The economy is still weak. Yellen is trying to address a structural problem with a creative solution. They wont work, and that is why the fed forecast has been wrong five years in a row. The imf forecast has been wrong five years in a row also. They lowered the forecast, but Christine Lagarde was actually candid about it and saying that it was getting warring that they were wrong every year. On bloomberg surveillance this morning, we were saying that we were actually turning to Alan Greenspans oasis. This divergence, the u. S. Economy nearing stability while the rest of the world slows down and i since jim said we are in a depression to mine going to say that he disagrees with that. First of all, it is slowing down. Japan is slowing down and china is slowing down. And look at the numbers out of germany. It is obvious that the world is slowing down, but the u. S. Has been kind of pulling the world up. Gold has not changed much in real value in about 5000 years. When people say it is up or down, if the dollar is the new measure, yes. But gold is constant. Compared to the price of gold, the dollar strong. But we have is a strong dollar right now. The u. S. Is bearing the entire cost of the global restructuring. We cannot afford it. We have thrown japan a lifeline with a strong dollar, but we will have to pull that back. The United States and germany have been the only two countries that have reduced their total debt to gdp in this crisis. What about an american revival in manufacturing . The labor market here is becoming more competitive. Everyone in washington is highfiving because the they cut the deficit in half in the last couple of years. That is true. But the debt to gdp ratio is still going up. That is the one that matters. The reason it is going up is that the numerator is going down, but the dominator is going down faster. The debt is growing faster than the economy is growing. The deficit has come down, but the debt to gdp ratio is still going up. Weekse report couple of ago showed that. There is more debt, more leverage, more basically piling on of debt globally than ever before. I would be most concerned about household debt, though will stop you want to see how the people about household debt, though. You want to see how the people are doing in the country. Historically, people tend to take on a little more debt, but that has been moving giveaway recently. Are saying gold is stable and its the dollar that moves. How does gold look when you value it in terms of euros or the yen . In terms of euros, its been looking good. Figure itself is going down. Here is how the world is set up. Rateone expects the fed and Interest Rates in 2015. The big debate is whether it will be march or july. That is nonsense. They cannot possibly raise rates because the econo is weak. Janet yellen is not seen anything on her dashboard that seeing anything on her dashboard that would indicate that. The commercial that you hear on the radio telling you to go and buy gold because the feds Printing Presses are running nonstop, it makes sense. But when the fed Printing Presses stop, does the trait turnaround . You are saying they are only on hold . Right. They will have to keep printing. They are using a liquidity solution for a structure problem. It wont work, but they think it does and they will keep trying. Thats the bottom line. We have the most hawkish fomc that you can imagine. There have been vacancies on the board of governors. Youre overweight on president s. One more vacancy will probably get another dove. And then the two president s are duds, and janet yellen, it took a while to get her feet on the ground. Shes the new kid on the block. Youre not going to blow up policies in your first meeting. But by january, the governors will be at full strength. The president s will be dovish. Yellen will have her feet on the ground. And heard dashboard is still not looking good. At best, not raising rates and probably go to qe4. You are saying no rate raise for all of 2015. Not in my back yard unless they make structural changes. You cannot solve a depression by printing money. You have to solve it with structural changes. At the beginning of world war ii, we completely restructure the economy. Im not rooting for war, but im saying it will take that kind of drastic approach. Upmacare, regulation, raking the banks, these are the things that would get the economy moving breaking up the banks, these are the things that would get the economy moving. Is at these levels, it would not be surprising to see the retail customers, particularly asian, coming back. Why isnt that activity moving the price of gold . You have two things going on. You have the physical market and the paper market. The places are not wildly different. Look at the physical demand of china having out of shanghai. I have talked to hong kong. ,he chinese are bringing gold basically off the books. 3000 4000acquired tons no last five years. 10 of all of the official gold in the world. These are enormous acquisitions. He goes from a warehouse in london to a safe warehouse and shanghai. . Hat difference does it make the total has not changed. That is true, but the supply has dropped. The gold available to support the paper market is shrugging. Jim richards, author of the death of money. Also, not a proponent of bitcoin. As a currency, no. But the technology will be around. Thank you for being with us. We will take a quick rate. After the break, the mayor of Silicon Valley is trying to expand his footprint. You want some of those hightech jobs in his hometown. And on the frontlines lines of the fight over illegal immigration. As a brooklyn hipster. One smalltown mayor wants a bigger hand in tech manufacturing. Bill harrison is the mayor of fremont, california, a city just four miles south of San Francisco. Its already home to a tech manufacturing land, but the mayor is hoping to bring even more to fremont. He wants tech innovators to lay down roots in his city. Bill joins us now from San Francisco. Thank you for joining us. I can understand why you would like to brand your city like Silicon Valley. The thinking there is that money can grow on trees in the valley. What are you doing there . Think you for having me. Im very excited about that. Fremont has a great story to tell and this is one of the ways we are getting our stories out to the Tech Community and telling them that fremont is a great place to locate your business. Does tesla create a huge draw as it is . When i think of tesla, i think of the fremont facility there. They have done an credit an incredible job turning around that business, which at one point was basically abandoned. Do they bring in other business as well . Absolutely. People want to be near tesla. Tesla has such a great buzz and they are such an Innovative Company doing great things and people want to be around them. We have had a lot of companies locating around them in the battery field of hightech and other industry. But its not just that. People just want to be near creativethey are a company doing awesome things in Silicon Valley. And alternatively, solyndra plantated near the tesla as well. Is that a problem . Actually, they have now been placed by another company in fremont, another brand name that everyone has known. Are bringing in several hundred jobs and creating more buzz within Silicon Valley. It is one of those companies in manufacturing that had an existing footprint in fremont theiren expanding presence, taking over that former solyndra building. Im thinking of the giga factory. Elon musk had to go to nevada to build that, given all of the strict environmental laws there are in california and a high cost of living. Can it really be a competitive hub for manufacturing . I think fremont is a competitive hub for manufacturing. We have 900 companies employing 26,000 people in advanced manufacturing. We just last friday celebrated National Manufacturing day and had the opportunity to attend several events at several local companies, everything from a company with 25 employees all the way up to several hundred. Everyone is focused on the giga factory and where it was going to go. We were dealing with tesla at the time, helping them expand their plans. Matt mentioned the former site. When newman left him a 4700 people lost their jobs. There are now over 4000 people working at tesla. We are happy to have been in our hometown of fremont and happy to help them as they continue to grow. What kind of growth are you seeing there in fremont . I know you went to Public Schools there and are active in the qantas clubs and about 1000 different organizations, and very active in charities. Is all of this growing in fremont . Absolutely, its growing. We are moving forward to my with the whole bay area with us. We have a plan therefore barth, the Bay Area Rapid transit. Its expanding into warm springs , 7900 acres around the tesla site. We are seeing tremendous buzz about that. We are planning for about 20,000 jobs in that area and we are building it as a Transit Oriented Development that will allow people to live, work, shop, and play in fremont. And to create that buzz of employment and job center in Silicon Valley. What is your metric for success . To have a sitcom on hbo named after you . [laughs] i dont know about that. Being able to see our budget grow and see resources restored that we had to cut. Hiring more police and i are fighters and paving new roads. You see from positive growth you can see positive growth and we are excited. We are coming after the Great Recession everyone keeps talking about. That is great. I didnt know people went to the library anymore. We wish you luck. Free wifi at the library. Well, thats a good reason. I was in california this week and outside San Francisco and napa. Do you know how hot it was . 100 degrees. That drought is very real, it turns out. We wish them rein in that case. We will take a quick break. Coming up, do you ever get the creepy feeling that youre being watched . No. Well, you are. Its not my tom keene, but the surveillance economy. With all due respect airs tonight. But it is going to be a fun show. It will replace the void left when jimmy kimmel and adam corolla left the stage. Like that is a great promo. I hope so. Its time for on the markets. Take a look at shares of Hewlett Packard upon news of the split. I was hoping one company would be called hewlett and the other packard. , but no. Hewlettpackard enterprises. They need to work on that. They need to work on this. Obviously, this was suggested by many for years, including meg whitmans predecessor. But now they have decided to move ahead. She will be the co of the faster growing more lucrative the ceo of the faster growing, more lucrative business. She will stay on as chair of the other brand. As matt said, its approaching 26 past the hour. Lets get over to julie hyman, who has a check on radioshack. It has been plunging even after getting new financing. David any two separate into radio and shack, i dont know. Theres not much to help them at this point. We got the news on friday that the company had gotten 535 million in the Credit Facility refinancing from a group led by standard general, which took over that facility from General Electric lending arm. Terms, of the borrowing radioshack may be able to close some of the stores that they had wanted to, but had been prevented from doing so in the agreement. Certainame time, conditions have to be met my january met by january as part of that. That also is leading to the decline in the share price. Its a bit of a comp located agreement, but essentially it will give existing shareholders the right to buy additional shares at . 40 apiece. Obviously, that additional dilution could be feeding into some of the declines we are seeing today, as our concerns about the fundamental business. This refinancing is essentially aimed at letting radioshack stock its inventory through the holiday season. The fact that it needs this is a warning sign. And a lot of folks are saying that. One of them is David Strasser over at Jenny MontgomeryJanney Montgomery and he said that this is a sign of desperation, its either this or bankruptcy. That does seem to be the prevailing feeling and another reason the shares are under such sharp treasure today. Just a note here, the company has cut has changed the way it does its financial county are financial calendar. But you can see the declines in the comp sales have been getting worse and worse. And reiterating a zero dollar price target on the stock. Its close enough. Its a penny stock. I wonder how little Equity Investors really play a role in the companys stake once it becomes worth less than one dollar. Its still exciting. And i think they should change their name. To . The drone zone. Cases before two the permit the Supreme Court that the Business World is watching closely. Live from bloomberg headquarters in new york, this is Market Makers those quote with Erik Schatzker and Market Makers with their chapter and Stephanie Ruhle. Welcome back. Erik are happily in for schatzker and Stephanie Ruhle today. We are going to talk about the surveillance economy. Wherever you go today, you are being tracked somehow. If not my phone, then by cameras that are becoming more and more ubiquitous. Over the weekend, the nta in new york announced it is buying 1000 cameras to install in subway stations across the country. Pimm fox was thinking about some of the implications of this. Could it be more ubiquitous . Im not even going there. Either it ubiquitous or its not. Yes. Here is the launching pad for all of this. The metropolitan transit authority, which is in charge of the subways and buses, has announced that its going to install 1000 cameras in subway cars in order to monitor the behavior of what goes on in those subway cars, specifically things like sexual assault. And it got me thinking about the idea of cameras and the ring of steel that exists in london. I think there are Something Like london,000 cameras in one million in the actual environment. Track all ofng to these kinds of things, what kind of connections can you make echo and i was thinking about the movie this weekend called gone ,irl, which stars ben affleck and he is the suspect of his wifes different disappearance. If you have a camera on a lot of these things, a lot of these stories will change in the future. And with the installation of cameras in public places, the connection of all of this information using software that allows you to track such very specific things as your license plate, the color of your automobile, the color of your dress, the color of your tie, so that not only is the information being controlled and stored, but it is gettable in realtime. The new York Police Department already has a system that allows for various precincts to tap. Nto this network of cameras surely, you are not advocating for this kind of brave new world. Its already here. I was going to start out by saying, do you feel safe in a public place . The governor of california, jerry brown, has just signed legislation that talks about consensual relations on campus, saying there is a form 11 needs to be followed. By the way, my alma mater, antioch college, they are contentg its sexual policies. My question is whether you feel free in a public place. Im not willing to trade all of my freedom for a certain amount of security, and that seems to be the trade that is happening. That train has already left the station. Yes. I used to live in london and i think i feel safer in london. You never have to worry about an attack or petty theft on the street. Police wearinge cameras themselves, that doesnt exist in your because there are cameras around town. Who will profit off of the . That is interesting. Youve obviously got go pro. And are more into Action Sports and videography. But microsoft is a big player because of the software behind this that links all of these things. , couple of companies, three vr backed by Kleiner Perkins as well as another Company Called iq tell, which was founded by the cia in 1990s to support technologies. This could be, for example, in a public park. Lets say, theres a report that something untoward happen in this park and someone said, i saw someone wearing a yellow rain slicker. They can call up all of the people wearing a yellow rain slicker between a certain timeframe, and thats the kind of thing it does sound creepy, doesnt it . Enemy ofgoes back to the state, the classic will smith movie from i guess, the early 1990s. And the point where you were going with gone girl is that drone stole my wife. But i guess so. I guess so. The license plate of almost every vehicle entering and leaving the city of new york is tracked. They can connect that with outstanding violations. Im sure you dont have any. But also things that i like to buy. They can show me an advertisement. We will worry about that later. But right now, they are just designed to keep you safe. Will just have to trust big brother. I will put my faith in big brother. Thanks, pimm fox, with the alternate route there. King stock those quote taking stock moves to a new time and has an awesome new billboard. I love that. Big brother is watching. Taking stock at 5 30 p. M. , and all new time. Today, singer Melissa Etheridge is pins big guest. Pimms big guest. And she has a new album out and for the first time she owns her own music. For the first time, and shes got to be at least 44th of its been a while shes been in his career. 40, so itsat least been a while shes been in this. Areer coming up, amazon workers get their day in court. It will have huge implications for any company that has hourly workers and keep them waiting for half an hour through security on the way in and out of the building every day. Today, chief Justice John Roberts kicks off its 10th year on the Supreme Court. The high court will hear at least two big cases this year and big business is watching closely. Greg is here to tell us all about them. These our Supreme Court reporter. Lets start with these amazon cases about what to pay hourly wage workers. Workers are arguing that they should be paid for the time it takes them to get in and out of the building through security. Walk us through the potential ramifications of this. This is whenarify, they are leaving their shift. Amazon, like some other retailers, have the workers go through a metal detector and backchecks to make sure they are not stealing something. Question is whether they are entitled to be paid for that time. The amazon workers say that they could send as much as 25 minutes in that mind. And they say that under federal law, we are entitled to be compensated for that time. If they dont compensate you, its almost like they are kidnapping you for that time, right . Company could literally hold you for two hours unpaid and not let you leave. It doesnt make any sense to me that amazon would even fight this. I would not use the word kidnapped. Workers feel like that is time that is being stolen from them. The Supreme Court has said at least among court has said, not essarily the Supreme Court going totime you spent and from your workplace in your car, you dont get compensated from for that. If its just a few seconds, just checking a bag in and out of the one thing. That is what makes this potentially different is that it is a significant chunk of time and something that the workers say is actually quite affordable. You did an incredible piece on Bloomberg Radio. I recommend that everyone listened to Bloomberg Radio on serious. Youirius xm radio stop talked about the fact that this serious xm. You talked about the fact that this law has changed incrementally from when it first was elected to today. This could a be a further step in evolution. Exactly. Dealing with what happens when workers have to change into safety gear before their shift, do they get compensated for the time spent between when they put on the safety gear and walking to the workstation . There are lots of iterations of this thing. What makes this case very interesting is, one, the fact that it is amazon, and two, that it is a significant time and the workers are making the allegation that amazon is in no rush to get them through there and they ought to be compensating them. The company says they could have broader implications for other companies. I also want to ask you about the big news today from the Supreme Court rejecting this latest case on gay marriage. They said they wont hear this week. What next . Good question. There are a couple of others, appeals court, that will be ruling at any time. So far, all of them have said that gay marriage is a constitutional right. If one of the appeals courts goes the other way and says its not, that changes the calculus. In the Supreme Court will almost have to get involved. But right now, is waiting for the decisions from those courts. And gay Rights Groups are going to are excited that there will be marriage in as many as 30 states now. But really, there was the expectation that the phone that the Supreme Court would get involved. It is a big surprise on both sides of this issue. But they are leaving it to the states. Thanks so they are leaving it to the states. Thanks so much for joining us. And by the way, a new political show at 5 p. M. Eastern. And theyre very first guest, past and maybe future residential candidate, mitt romney. I see what you are saying. He may run again for president. Interesting. Coming up, on the border and how federal agents are trying to stop illegal immigration. Stay with us here on bloomberg. Immigration may be a big driving issue in next month selection. The big fight will be about the immigrants that are already here. How are federal agents protecting the border today, especially from those carrying drugs or trafficking humans . Drones and radar sensors are part of that operation. I spent a day on the u. S. Mexico border with Border Patrol agent to check it out. Drones, style surveillance towers, night , securing nearly u. S. Mexicolong the border is an enormous task combining infrastructure, manpower, and now technology. Where the predator comes in handy, because you can wherethem all, coming they are. It is homeland securitys virtual Border Protection system. Groups being tracked in realtime across the open desert in southern arizona, remote and rugged terrain. This is a group of smugglers that a remote camera had tracked. The border for troll then came out here. But how long have you been in the desert . How many days . 10 days. 120 foot steel towers outfitted with sensors that allow Border Patrol agent to detect and record the movements of smugglers. Cameras are mounted to detect, track, and identify those crossing the border. The towers monitor the area lined with massive fences. Typically, these larger fences like this can range from 18 to 26 feet, and are found closer to the cities, such as nogales, where you have seconds to make that apprehension. With the added technology, the cameras and whatnot, in addition to the fences, it allows an agent the time to respond. Data from the border surveillance post is wirelessly routed to the Central Control room. We have some radar with aircraft in the air. If anything is crossing the border, we have camera feed into the ports at the station. Highquality longrange day cameras with night observation systems that have thermal imagers. Its the same wavelength as the tv remote control. Up on yourshow eyeballs. And eyes are in the sky, too, as predator drones fly 18,000 feet above the border. Our drones fly strictly along the border. Its extremely helpful, because they can stay in the air for a long time. But at the end of the day, does the Technology Work . And is it worth the huge price . Is kind of the belief of, are they outsmarting us, or are we outsmarting them today . Beozen helicopters would cost effective. But that is hard to gauge, because we dont know how many get away. That is hard to gauge, because we dont know how many getaway. All we know are the ones that we catch. That is a great story. Yes, it was incredible to see the huge machinery at work on the border. I dont think a lot of people in new york understand how many people are coming over and what kind of effort the u. S. Has mounted to try to stop it. But its big. Still tens ofre thousands of children down there waiting for some kind of action. Will they be deported . Will there be Immigration Reform . All of that remains to be seen. All of that surveillance is not a replacement for a fence. Its in addition. Thats true. In most places, there is a physical fence. In some places, there is just or aence or barbed Wire Mountain ridge. Incredibly interesting, eyeopening experience for me. But thank you for that. Yes. Dont go away. That is it for Market Makers. It has been a pleasure hanging out with you. I love your work on the border peace. Thank you so much. You will not be with me tomorrow, unfortunately. Erik schatzker will be back. Speaking of the man show, we will have our own dude thing going on here. And you will have a third dude joining you. An economist. On bloombergbe surveillance tomorrow morning. A lot of great stuff. Im looking forward to the great show with all due respect, at 5 00 and taking stock at his new time at 5 30 p. M. You can not only watch it on linear tv, but online on your tablet, and at bloomberg. Com. It is 56 past the hour and that means its time for bloomberg tv to go on the market. We will hand it off to our colleagues, julie hyman. It is time for on the markets. And its time for todays options insight in particular. Joining me for todays version is derivatives strategist at an. M holding jim, we have been talking a lot about volatility. That is your bread and butter. I want to talk about currencies in particular. The dollar has been such a big topic of conversation, and its rally has been such a big topic. What are we seeing in the volatility measures when it comes to the dollar . Interesting things about the dollar and the dollar index specifically. Over 9 m its up since july. Ironically, up over a percent from last week at the same time that u. S. Equities surged higher on friday. There have to be greater repercussions them in our view, cross emergingmarket pretties before this is over. Index, theity jpmorgan index, it got up to about eight. A little bit of a spike, but if you go back to june and july of 2013, it was up around 12. In our view, we have not seen the magnitude of volatility in currency markets, and specifically emergingmarket currencies that you would expect to see, given the moves of the dollar. What far as applications, does that mean to you . There should be a direct move to u. S. Equities as well. If we see higher emerging markets, the currency volatility, and the stories about outflows from etf, it is already seen there. We think it should impact u. S. Equities with higher volatility, higher fixed. Radioshack,ning to its getting new financing, but the stock is punching the stock is plunging. People are just not very optimistic about the business. What are the options for radioshack echo friday, for radioshack . Friday, they announced their has beenthere it significant downside. Someone came in and sold in october 31 expiration one side calls with the stock trading around . 90, a hugely volatile stock. With realized volatility above 100 50 . This is all over the place. Above 150 . This is all over the place. It may not be that risky of a bet, given what has been going on, perhaps. I want to get your thoughts on ford. Its not doing so well. You think we could be in for a bounce. As much as we are broadly cautious, we also want to take the opportunity to come into single names that have been beaten down. Car,week, we talked about getting that stock down almost 21 . And ford is another one. Lastly, they came out and said september sales were soft and took down guidance for the full year 2014 earnings. We wanted to come in and take advantage of that, particularly having it stephen. That puts us in the position to buy calls. Just quickly, what is the strategy . We want to sell january puts and by and buy calls. Thank you very much. We will be on the market again in 30 minutes. Welcome to money clip, where we tied together the best stories in video, interview, and news. 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