Transcripts For BLOOMBERG Market Makers 20141119

Youre watching Market Makers. Its a wednesday in new york city. Wednesday around the world, too. Market maker im wearing pan. This is a much bigger deal than you might think. I could not find a skirt that fits. That is clearly the top story in business and finance. Here are a few others. Shares of target are rising this morning. Posting thirdquarter earnings that beat estimates. U. S. Sales better than the company itself expected. Expansion into canada is showing signs of improvement. The u. S. Is demanding that Chicago Corporation and sutomakers recall all car with these airbags. So far, only cars in states with high humidity have been recalled. Who needs taylor swift anyway . Spotify is expanding and will boost its workforce by one third. They will hire 500 more people while improving software. Artists such as taylor swift have criticized spotify for not paying them enough. Supporters of the Keystone Pipeline said the controversial project is down, but not out. The keystone came up one vote short in the senate last night. Advance. 60 votes to Mitch Mcconnell says the keystone supporters will win next time. This will be an early item on the agenda in the next congress. Im confident that senator hogans bill will succeed. All 45 republicans voted for the bill. Only 14 Senate Democrats did. The new Congress Comes in, maybe 50 republican senators. Vladimir putin has done something to shock his advisers. Hes planning to come out against corruption. , he will call for a crackdown on inspections and other his advisers have been urging such action for years. I will have to bite my tongue. That imit clear biting my tongue that putin is cracking down on corruption . There are various kinds of corruption. That is one kind of corruption. There are other kinds that might be ok. Lets move on to a place where we never see any. Washington, where president obama is set to announce a new plan tomorrow that would shield 5 Million Immigrants from deportation. It is sure to set up a major fight in d. C. That could end in another government shutdown. Lets bring in phil mattingly. Give us the details. What we know right now, as soon as tomorrow, the president is going to lay out his executive order, his unilateral action to try to shield 5 million undocumented immigrants in this country from deportation. Parents of u. S. Citizens, people on work permits, another interesting aspect, the Tech Community is going to get a win out of this. They will expand a Work Permit Program that is currently in place right now to apply to foreign graduates of u. S. Schools in those stem subjects. Tech, which has been fighting so hard for this. They will get a win out of this. Are they definitely going to get a win out of this . The president is winky face some pushback. Is going to face some pushback. Will he ram it through no matter what . He can. They have given republicans plenty of time to work through legislation on the hill. They dont have any faith that the house is going to move forward on that senate bill. They believe they can actually do this on their own. There is going to be massive pushback from the republican party. They do not need their approval and they will go ahead and move over with it. Forcet is the driving that is pushing the administration to want to push through tech visas . They are very close to silicon valley. The president has raised a ton of money from silicon valley. They have always tried to be with the Tech Industry and what they do. Has beencommunity push behindr of the immigration on capitol hill. Possibly theyre cognizant of the fact that these are people who try to help the m throughout this process. How many people are going to be effect by the expansion of visas . Its an interesting question. This is not the h1b visa program that is longerterm. Point, it impacts 100,000200,000 people. Theyre going to try to expand the program. The total size is up in the air. They want to go as big as they can on this program, as long as its within the law. Thank you so much for giving us the latest. Lets focus on the parts of this order that are of interest to the highTech Community. A serial entrepreneur of silicon ofley and the proponent diversity and shaking things up out in the valley. He joins us now on skype. What do you make of all this . I dont like it. Of studentsa number to stay wont solve the problem. There will be such an uproar, so much outrage about it. It will be the next obamacare. You will have have to country trying to kill something they dont understand. Valleyl problem silicon faces is the number of green cards. The problem is the number of the people stuck in limbo for decades. They need to become americans and so they can buy houses and. Articipate in the economy not fixing the problem. Why do you liken it to obamacare . Because its going to get everybody against it. You hear these emotional slogans about how the president is providing amnesty and all of these other things. It will be exaggerated. Remember the death camps these republicans talk about . Itwill be soundbites will damage the cause of immigration for a long time to come. Instead of demanding comprehensive, just break it into small pieces. Undocumented, providing them with temporary if you clean up we1b visa so what could have done everything we wanted if the democrats had not resisted had not insisted on all or nothing. Now they are poisoning the water with his executive order. What is the alternative . The democrats pushed for all or nothing and the president feels he is moving forward with his own plan in the absence of action from anybody else. Its not a plan, its a bandaid. What happens to the longterm problem . We are not getting more h1b visas were more green cards. This is a bandaid. It will not fix the problem. It is better than the nothing, but the president could have done this for years ago. This is something he should have done coming into office and then negotiate something more sensible. Why dont these hightech companies have the talent pool here in the United States . All the bright people we can get for innovation. Tech is booming right now. We are developing technology that can solve the worlds biggest problems. We need every smart person we can get. Bringing in more skilled immigrants is a good thing. We also need more manual labor. There arent americans we can educate to fill these positions . Im sure there are plenty in need of work. There are unemployed americans. Whenever we talk about immigration, we get flooded with messages that say employ us first. Most often, those skills are out of date. They happen to be in kentucky or idaho or some well somewhere where there are not tech companies. Here, there is a dire shortage of labor. Its a regional thing and a skill gap. Withannot take any person some computer training and say you can network for facebook. Its like thing anyone can be a broadcaster. Its not that simple. You have to have specific skills. Ts where this debate thank you for giving us your perspective. , tell the come back truth. How often do you use a low your own house zillow your own house . Amway ramps up manufacturing in this country. Whats behind its made in the usa plan. Welcome back to Market Makers. Top european investors are in london today. Fund managers are talking about some of their top picks and big bucks andin the funding goes to fighting pediatric cancer. Caledonia has more than 2 billion under management. He joins us from london to talk about his big idea, zillow. Why zillow . Thank you for having me. We have been the loudest investor in property pools like zillow globally for the last 10 years. Its a dominant market leader. You see a real network affected continuing to reinforce the market leaders. That is what we are seeing in the u. S. With zillow. Lots of people love zillow. It makes sense. What is so special . There are not too many against it. Its just a giant market we are talking about. U. S. Housing is 1. 3 trillion each year in transaction value. 73 billion in agent commissions. 10 billion of asian advertising. The company with 73 of the audience on mobile. The share of ad dollars to match up with the share of audience. 10 billion of agent advertising. Isnt zillow fully valued . They are investing away had the curve way had the curve. Way ahead of the curve. Most of the company globally went through a phase like this. Once the cost basis settle down, you see him committal margins. You normally seasick present normally. You see incremental margins. You normally see 60 normally. We see that coming through attracting and mentally. We think they will catch up with their audience share. Of iton in terms does not end at agents. Andes mortgage advertising 11. 3 billion. Rental properties and 2. 5 billion. New home builders. The list goes on and on. Is there an opportunity here for a pair trade . Long zillow and short Something Else that will be eaten by zillow . Not really. Currentlydvertising by agents. The thing that has changed in the u. S. Is mobile. It has been the complete game changer. People are flocking to zillow and we think the ads will follow. Whole category online how sensitive is zillow to real estate prices . What if the bottom falls out . Its a second derivative. You have agents advertising and agency commissions to advertise. The experience we have had in other countries is the structural growth is so substantial that it can really overwhelm any kind of moves you see in the market. Similar in will be the u. S. What is the biggest risk to your thesis . If thebiggest risk is audience moves. That is something we have studied in depth in most of the g20 countries. , thethe audience moves market leaders get stronger and stronger. In. Productivity loop kicks the 20 examples we have data for show the market getting stronger and stronger. There is no precedent for. Think you so much for joining us this morning and raising money for pediatric research. Thank you so much. The hottest new cars and the wheels of the future. They are all at the l. A. Auto show and you will hear from the ceo of volvo. Welcome back to Market Makers. Earlier today, we read you the top story. My pants. Now, we have to move on to something more important. Jerry seinfeld said at last week. He weighed in on a very specific piece of fashion. Men who wearink interesting socks are not working hard enough. Them. Tner wears these are the least interesting socks. What do you think about him saying work harder . Im not sure what he is implying. What does it say about men who wear uninteresting socks . It takes too much time. Dont think jerry works that hard . Thats not a joke. Its not funny. Dogging on erics fashion. Your joke was not funny to eric. I dont mind it. She teases me all the time and i enjoy. Are you saying my jokes are funnier than Jerry Seinfeld . There approaching 26 past hour. Time for bloomberg to take you on the markets. Paramount group started trading today after the biggest shares up 4. 25 . It has the stakes in some 12 office buildings. Getting a little upside. There you go. In the green. When we come back, amway getting back to its roots. The direct sales giant is in the midst of a huge expansion in the u. S. We will be speaking with their chairman. A new way to help homeowners underwater . Eminent domain . Really . Live from bloomberg headquarters in new york. Withs Market Makers Erik Schatzker and Stephanie Ruhle. Welcome back. Amway has seems sales time to record highs. They are in the middle of a major manufacturing and r d expansion and most of that expansion is right here in the United States. We have with us the chairman of amway. Why are you asked handing in the United States when the majority of your sales are over these . The great thing is we have a Manufacturing Base here. We export all around the world. We continue to do that. Ok, but why does it not make sense to manufacture only locally, manufacturer american to meet american demand. You do not have to pay much in the way of shipping costs. You do incur significant shipping cost if you are selling to china, india, for example . We manufacture right here in the United States for United States. But our expansion is in five different places around the world. We have 10, 15 different manufacturing sites. 10 of those are in the United States. As you are going through this major overhaul, do you think you need to change the name or the brand of amway . Because it does not have the best reputation. Going for 50been years. When i was in the direct selling industry, i think the direct selling industry as a whole is agood position area good position. People are looking for more certainty in their life and i think the direct cell industry, including amway, can give them that certainty. Ftcow much does the investigation into herbalife hurts . Every industry has its critics. The critics are looking at the stock price rather than the business. Has 21,000usiness employees. Thousands more come in every year. Though atible the very least it is possible, is it probable that regulators will respond to criticisms that people have raised about herbalife and other direct telling models will put constraints on your business and make it harder to operate in this country . We go around the world and look for direct selling legislation around the world. I think the u. S. Has rate direct selling legislation. They have for a long time. The great thing about the Business Today is the opportunity i was just talking about. We have been releasing our amway global entrepreneurial reports in that looks at how people look at our industry around the world. It looks at how people look at Business Owners around the world and what is it like to be an on your an entrepreneur. I think it shows that people are very interested. How has this herbalife saga affected you . Are looking at stock price. That is different than looking at the business. But for you, all of these herbalife headlines have to have affected you . Recruiting, for example. Is it harder to recruit people because there is a stigma attached to direct selling or what someone call multilevel marketing . I look at the distributors we have. For the amway business, people are looking for more certainty in their life and the amway business gives them that certainty. They are able to take that business, set their own goals. They have the independence they are looking for. I think that really gives them what they are looking for in the future. Have you picked up distributors who were ,nthusiasts for direct selling who left because of herbalife, but believe in the model . Alle pick up people for kinds of reasons, but the real reason is they are looking at doing something for themselves. The report i was talking about, there are two. Reasons people go into business for themselves. Primarily it is because of independence. The ability to set their own goals and do their own thing. Those are the two primary reasons we see people come into the amway Business Today and i think those are the primary reasons why people all around the world are going into the direct selling business. Direct selling is a high hedge business. Does that make technology your friend or your foe . Think about it. Our business has been a social network for 50 years or it when you think of social networks, you think of it in the context of technology, but really the social network is connection people have with each other. What technology does, it really enables that communication are many able. We see technology as an enhanced rent an enhancement to our business. It helps that social network communicate. We are looking at ways to bring the amway business online, to make it mobile. How you bring it on line and still maintain the connection to the salesperson . The way amazon does it, i go to amazon and buy what i want. It seems that they usually lose money on that deal rid seems thats, it they usually lose money on that deal. Nevertheless, it is cheap for me. Product, yous should go try it. That touch, that connection is what makes a difference in our business as well. Those personal connections are the ones that really enhance really do the buying process and our business and the technology really helps that along. You mentioned earlier, you look at legislation that is direct selling friendly around the world rid what is growing a business in china like . Is a greatit business. It is unique. When you go into china, we spell chinese amway with two characters. When prospectors or customers look at our business, they think of it not necessarily as an amway business but as a chinese business. I think that has helped us as we have developed along the way. Regulatory standpoint, what jurisdiction around the world is most friendly to direct selling . Every country that has direct selling legislation they cant all be good. They are all different. I do not know if they are necessarily good or bad. If they understand the industry and set the industry out from some of those from some industries that claim to be arent, thatg, but is a great way to operate, to have a platform you anothert it to way. Where are you most eager to expand . When we look at the amway business, it is available to 70 of the world will population. We are everywhere except the mideast and north africa. I think eventually we will look at that. Sell the most off . Everyone knows the brand, what amway does. What are you most successful at selling . We are truly a Global Health and beauty company. We also have a water filter system. Those are the ones we really focus on and they do very well with us. If you think about the nutrition business, if you have someone to talk to about nutrition, you can say, here are the kinds of things that might work for you that are a great addition. Quick question. You are the chairman of the executive committee of the u. S. Chamber of commerce. There is a shift of power coming in congress. What do you want the republicans to make their legislative priority . What people around the country are looking for is certainty in the more certainty washington can create for them for their future, i think it is great. I am always looking at the future optimistically and i would look at the same thing there. Thank you so much for joining us. Great having you. We come back are we going back to the bad old days . The risky mortgages . Two yearsdifference makes. The great mortgage meltdown has housinghe great recovery. Mel watt wants to relax lending standards and a Banking System that is still broken. Joining us, a mortgage investor, a Founding Member of jeff dunlop. I do not think we will get private capital anytime soon and to be honest we have yet to fix some of the basic concepts and precepts of our business. That trust issue, it is not there. Who does not trust him . Nobody trusts nobody. Why are the lending standards loosening up already . Not due to investor demand, trust me. Having said that, think about the amount of origination that happens and think about a downward spiral, 40 in volume. You are going to have to loosen it up a little bit or you are not going to get any volume rate that is what the volume looks like currently. Who wants the volume. He wants the volume . Take a look at the banks [indiscernible] then what is mel watts motivation here . You would think the government would want to keep things as tight as possible. The banks do get blamed. Let me say this before we go further. Everyone was to blame. Everyone people lying on their mortgage applications. Not look who did closely enough, originators are relying, yes, there is enough lame to go around through the blame to go around through the system. Sayou were going to originators to have people lie on their applications . No, [indiscernible] it is one thing to have mel watt relax lending standards. It is another thing to have municipalities explore this issue of Eminent Domain areas Eminent Domain. I am not going to dispute there are all still a lot of people underwater mortgages, but the National Figures have improved dramatically. Not just from where it was two years ago. Last year. This is from pro logic. You know these figures well, i am sure. Negativemes still have equity. It is the pain of my existence, i will tell you. For the past two half years, the association ofe mortgage investors, which i am the president of the board of, with the number of other organizations this is probably one of the worst ideas what keeps it kicking . Because no one in the administration has stood up and said, if you bring this along with Eminent Domain we will not insured by fha. Why . Somehow i do not know. You have to ask mel watt that or mr. Cap start. There are opportunities, surely for these people to find relief through mortgage modifications. There are definitely ways to find relief through mortgage modification. But it is apparently not happening. Say that. Ot there have been hundreds of thousands of mortgage modifications, of course. If you look at the numbers let me give you an example. Two years ago, there were a number of investors around the table at Alliance Offices and when we got there investors . That is correct. Pimco, when co. , black rock, bernstein, all sitting around the table. They been proposed, hey, u. S. 10,000, we will pay you 5,000 per loan. This will still be budget gap, ok . What happened . It was a terrible idea, ok . If you walked out of the room they said, hours, ok, you guys are right. This is a terrible idea. One of the things we may not while investors certainly would face losses under a scenario like Eminent Domain, those issues are still highly localized, fairly small, not being debated on a nationwide basis. At the same time anyone involved in mortgages consistently they bought them at bar and roll them back to 60 and they are back at par. Did anyone actually write it out that long . I dont know. I truly do not know. But that is the reality. But if you bought them at . 25 on the dollar and now they are . 50 on the dollar, you did very well. Thank you. We will have so much more to talk about. We will return. Coming back we will take you back to the los angeles auto show. Our matt miller is there. Were not going to let you leave. Welcome back to Market Makers. Im Stephanie Ruhle with my Erik Schatzker. The los angeles auto show. Our own matt miller is there areas is there. Xzwe are in front of the new guess you are hoping will help the volumes you do in the u. S. . We want to get to 100,000 as a midterm goal. This is part of that revival. It brought about a revival when it first came out, but that was over a decade ago now. Glad. Are very this is also one that we had developed 100 at volvo. This was sold from ford. This is the relaunch again. Show isalk of the really the issue toccata taka tas having. I thought, this must be bad for volvo, too, because they are the only airbag supplier, but i was wrong. We do not use their airbag. And you are building on the reputation volvo has from the the 1970s0s and the 1980s. . Basedhink this is [indiscernible] we have the knowhow and the experience to deliver on that. The vision has to be going in that direction. We do need more technology. More active safety features. You have to avoid the collision at all. Have 360 degree sensors on the car that give you a way out, and is gave it from an escape route from accident . Exactly. I think that is also very important. You still have over 400 horsepower and this is a plugin hybrid we are looking at. It is interesting. I never heard of an engine that has a turbocharger and a supercharger to push air into the mixture. Down on fuelcomes consumption. We have a two liter engine. Ou have to get air into that that is done with the compress on the turbo, and on top of that, you have the electric invention bringing the power of two 400 when you need it. A lot of power there. Everyone my age remembers the movie about an Advertising Agency that made a campaign for volvo that said safe. Boxee, but safe. Language,hat design grosse with new cars like the Cross Country every year as well . What is wrong with having a car that looks attractive . We go back to our roots. Lets do a scandinavian design. We are credible. Smartshould also be functionality. It is not just sport. That is something we really believe is going into this car right now. Lets talk about china. You were sold by ford. You are owned by a chinese company. I was the Chinese Market for you right now . We are growing very rapidly. It is our biggest market. We are selling 80,000 cars. Yous opposed to the u. S. Are building a crosscountry there now, right . Yes. It is some weeks. Very rapid growth. Very important market. It is good for the market, also. Thanks fort, hakan, joining us. The president of volvo america. I have to say i love the look of the xc90. Of your test drive. I am eager to hear the results that is matt miller with the ceo of volvo. We will be back our guest for the next hour . Gary g. Always outspoken, occasionally funny. Stick around. Live from bloomberg headquarters in new york, this with erik makers schatzker and Stephanie Ruhle. Target a new ceo has sailed and profits are rising. Is that it engine into canada looking better . We will talk about updating General Motors luxury brand with the head of roddick development. Uber. Wing pains at we will be speaking to one of investors. Y welcome to what i am predicting to be a very special hour at Market Makers. I am Stephanie Ruhle. And i am Erik Schatzker. Garyts bring in our guest v chainrted operating a when he was 18 years old. And i want to thank seth meyers. Was anight show the main event. Thank you. Should we start with bolton . Lets start with that. Ok, a promising sign to the market. Residential construction climbed to a sixyear high last month. Housing starts actually declined in october. They began construction on the most singlefamily homes in more than a year. And the end of a era for jetblue. He end of free checked luggage they will now have the choice of getting the lowest rice with no free luggage or paying the higher fares with one or two. Checked bags. Is the weather in new york getting worse. There may be six inches of snow on the ground east of buffalo and another one or two feet it is ridiculous may fall by the end of the week. It is not even thanksgiving. More weather expected in indiana, ohio, and pennsylvania. And the sexiest man alive according to People Magazine is australian actor chris sims worth. He starred in the star trek reboot and he was also in rush. He said he would like to thank his parents for putting this together. It was blind faith, a real team project, this one. There you go. People magazine making him the sexiest. Smart. E so somehow i found him very attractive. Rush. I found them very attractive. What is that going to motivate you to do . Put on the greatest hour in the shows history. There you go. Lets talk about uber. They are changing the business, not just in new york city, not just in toronto where i am pronk were there trying to kick uber out. , where theym from are trying to kick uber out. I cannot even think of how many countries they are in. They maybe got into a little hot ofer over comments that one the executives made on friday and a number of other things. Is this a situation where any pr is good the are good pr . It is a young company. Theres a lot of bravado. Travis is one of my dearest friends. I am jaded by the fact that i know him. Clearly some things are unacceptable by todays standards. People make comments all the time. Cooper is a hot topic and a hot target. Digging into journalists, journalists are not going to respond well to that. Ultimately what matters is how much consumers care about these that being said, you do not want this negativity around your company. Of that is the Tipping Point what should they do . I and nobody else can tell travis anything. Meaning, he is a very strong, hardcore man of will. There are a time of people giving him advice on vpr of will, why man doesnt he simply goes silent and not listen to these journalists who are talking . What he talked about was something he needed to address. He went out and made 13 or 14 comments what do you say it was . I think coming out and saying we are going to dig into journalists who are riding negative things about us are not a fact that a lot of people will consume very easily. Wrong thing toe say, but it clearly reflects an opinion and the opinion is not as early misguided or ms. Laced misplaced. Why not be honest and say, that comment was born of frustration. Lets not pretend that is not how we feel, because that is clearly how they feel. If you Say Something about how you feel, does that represent how uber feels . No. Well, thank you. Feels. Is clearly how he i respect that. There are a ton of people who think insanity like they like the patriots or Something Like that. I think the people watching this program are more than educated that everyone from the president of the United States to the chief of any company has sought thought and said many things. Does the public care about it . Do we stop caring what an executive does on a friday night . Alls customers bp dont of the oil in the world in dumped all of the oil in the and customerscean lined up. What about Roger Goodell and the nfl . Money talks. Our actions talk. If tomorrow tons of people theped using uber, and boycotts that people are tweeting about happen and uber saw the numbers going down, they would react, just like every business in the world. Think it kind of comes back to the question why not just be quiet about it instead of i will give you an answer. Company is getting bigger. They are probably having a meeting right now how are we going to address this . As it becomes bigger, you get slower. You do not want to. That is what is going on. Travis did not wait. He jumped on twitter last night. Are these ceos putting themselves out there too much . Before social media i did not know how ceos felt. Statement that went out to everybody. I think the statements are much more dramatic than the pr statements that we have had for 40 years. Some people go out there. Some people do not. Maybe they should go back to the pr statement pr statement. At the end of the day, all i want from number is for the car to show up on time and not have to pay four times the charge. I definitely do not care who travis is. Yes. That is the american way. We do not typically agree. When bill clinton did the is america sohis much more hang on a second, in this particular case you might say i do not approve of what bill clinton does or says, but that does not mean i hate on america. Just because of what Emile Michael says, that does not mean you have to hate on huber area but there are a lot of other things people can find to dislike about uber, and the question is, should the company care . Every company cares. There is some Tipping Point notion. There is some point in time where you build up and it hurts your bottom line. These guys and these gals they have a hat on that is called his nest. Business. Remember when everyone said if bush got elected or obama got reelected guess what . Nobody cares. Somehow i know a few people who did. Come on i need to talk to the human being. Goober is looking at their metrics. It is golden america. More people are using uber than yesterday. Just ask provocative questions. That is all. I am here to do that. I was sitting on twitter last night. Should careber about are the people theyre putting in cars when it is cold out and they did it last night without two and a half times the charge. Before we go to break, could we have a close up of the big smooch mark on garys cheek . There we go. Coming up, more gary v. E will be talking about target the Company Seems to be taking hold. A and we will talk with luxury carmaker it we will be talking General Motors with the Vice President , when we come back. s target on target . Is target on target . There are signs they are coming back. Senior marks correspondent julie hyman has more. They are saying what it likely . They are estimated to grow by 2 in the Fourth Quarter. That would be more than acceleration. We saw the first gain since the breach last december. The hackensack. And it looks like that continuing into the Fourth Quarter. The caveat is it looks like fourth order earnings could go below estimates. You do not know what discounts could be going on. The numbers look good. In particular canada looks relatively strong. They have been struggling with the canadian business, but they should be up in the mid to high Single Digits in the fourth order. It does seem to have taken hold to some degree, but we all know one quarter does not a trend make. We have to see target deliver on these Fourth Quarter promises. I think target could be. Elivering because they are expanding. Lets expand the conversation. Gary v. Is still here. Rachael is the founder of a company that has a partnership with target. The target lady to be kristin weight behind the register with a slight krist in wiig behind the register with a slight afro. Actually that is more like my haircut. We have been in sharply. Targetalways been a customer. They have something for everyone whether you are a teenager, a homemaker, a schoolteacher. It is an opportunity to access design and beautiful products and it is everything you need, whether it is for home or fashion. We were very excited to have the opportunity to go to minneapolis. I personally got to find my favorite things that target and bring them back to our store and merchandise them with 150 brands. As a longtime shopper and a regional expert yourself, what were they doing wrong . Was probably a combination of different things. The Security Breach last year impacted a lot of trust. And you cant always be cool and relevant, right . You cannot turn to ones angle retailer where they have a moment where they have pivoted and grown. It is the natural lifecycle of a company. With the team they have there, i think it is really exciting to see what is there in 2015. Gary, when your phone rings, is it companies trying to figure out how to be cool and relevant . To some degree is overspending on tactics that do not exist in the marketing world we now live in. In a world where facebook does hosts and you can target the consumer like never before, they continue to spend way too much on an fsi what is that . A direct mail to bombing on anday, coupon inc. On sunday. Is that still how much of americas getting marketing information . They can still get sally, the 49yearold mom of three, in a facebook feed instead of her going to the mailbox and carefully going through direct mail. Am i saying kill direct mail . No. But i think the way that they can storytelling get people into the target is a big factor what does target say . They are touting the partnerships they have like they have with rachel. They try to stay on the ball partnerships. Sive they have a partnership with a. Hoemaker they highlight the partnership they have with a Company Based in minnesota that makes rural products, scarves, these kinds of things they traditionally did. Having that once again, trying to get customers back in the store a rachel want to reach or toms shoes customer, they are living digitally. That allocation of media dollars has to catchup been muchumbers have better and that is something they have been criticized for in the past. That is my point. When you talk about what theyre doing better, i think they are starting to pivot toward that and that has a lot of value. Retail is trend in not just looking at merchandise, but looking at it as a marketing tool. One example is general electric, the Online Community retailer. We know that they do not get income from selling stickers, but what that collaboration did is to give them a contextually relevant way to reach a new consumer and audience. I think it is indicative of a trend we see happening more and more. Be . Ow to story come to when we talk about storytelling, that sounds like exactly what you are doing. An opportunity to be a retail media channel for different brands. We have partnered with procter and gamble what does retail media mean . We tell stories through merchandising and then we have advertisers. What that means is, if we do a story for men, Procter Gamble will have a hot towel she station in the store, but we might have a mixologist class. And the purpose is for what . [indiscernible] that is what everybody is here for. Says lets sell more stuff for cheaper prices but even walmart is trying to create defense and excitement. Giving people a reason to go to a store. The future of retail 12 of the people who come to our store yesterday i was in the store for 10 minutes. It was a limited. Retail is about community and entertainment. Are you saying dress barn does not entertain . [laughter] m going to tweak that tweet that. Map our stores. E use Amazing Technology we tell stories in different ways. They just opened a starbucks in the store. We look at it as experience per square foot. Have you priced that . We have two revenue streams. We have a revenue stream for the corporate partner. A cool concept. The target lady it is rachel . Hank you for joining us i cant believe that. Why didnt anyone say that . I look like her. Coming up, folks, it is that to the l. A. Auto show for you. One of you may have their travel books, but Lonely Planet is a lot more. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and Stephanie Ruhle. Welcome to Market Makers. Do you know what just happened . Erik pushed me off my chair. I have said before. This show needs a commercial cam. His going to pusherik off chair, but first were going to the l. A. Auto show. Matt . Mark reuss, probably one of the most car guy car guys in the entire industry here. Been a lot of stories written about whether there will be a full recall or regional recalls what is your take on the biggest airbag supplier in the world . It is one of the biggest. Know. Not we are watching as it unfolds. We will do our best to comply with the regulations of nhtsa. Look at the testing across the industry and what we have planned to test. So were going to do that. You have not had any incidents that you know of as far as takata airbags . We have not had any i can say that, but we need to see a root cause from takata. It looks like there is an extended guidelines for the recall situation. You are doing the best you can to find people and evolved. Are you working along with ken feinberg to find those people . Ken is really an autonomous activity here that reports back to us and the rest of the world. He has a job to do. He is making great calls. There is a story out there, you have this recall issue but sales are going well, the margins are strong. I think we have said publicly our goal is to get the 10 in i am not sure but we have accurately done that. We are on a growth plan to do that, and it is all about weducts and our dealers, and are on plan. We are really hitting it hard. I am so proud of the north American Unit in particular. Fundamentally, we are changing the way we engineer, develop, design, and produce our vehicles. That is a huge opportunity for us and were taking advantage of it. Everyone is pumped up for that. Such an onslaught of performance cars. To get years ago the corvette, then the camaro two years ago, the corvette, then the camaro. And is the focus on motorsports really . We are dominating in motorsports right now, chevrolet. Dna of part of the excellence. Whether or not someone uses some of the capability in the brand and in building a brand that is what it is all about. The second part is the technology transfer. I can tell you motors boards programs, we are doing very sophisticated malt is waste meant the six small cars. Cement v6 theres a ton of Material Technology we take out. Incrediblede of materials. Instantaneous power and response. Those of because of things we do get out of this for all of our models. That is not the only reason we do it. Also, again, showing a technical winning andaround transferring to our company is part of why we have been successful and what we are doing in this tough time and emerging with grout great sales and great products and great dealerships. That is part of every product we sell. Something changed for you to unleash everything as far as vehicles, as per his production goes. What about the cultural change . Mary talks about that a lot. She does. We have seen many different faces, the good, the bad, the all that. I think we are a trajectory where everybody is in. We have gotten rid of some people, frankly, who were not performing and some people who were just showing up. We are going through that methodically. The people who are there, the young people who are there that is a great sign. That is not an old culture anymore. That is a culture that wants to win. Want to win. Individuals putting in an incredible effort to want to win. It is putting us on the winning end of a Great Company with rate products focused on the customer great products focused on the customer. All right, thank you. Back to you in new york. Thank you, matt miller, at the l. A. Auto show. Coming up Lonely Planet on multimedia. You, you can ill i the can still buy the guidebooks, but the ceo will be with us. Listen up, globetrotters. Dear member the days of leaping through your Lonely Planet do you remember the days of leafing through your Lonely Planet . Tides they are going to become your best travel buddy once again. Andgary is here as well, so beware. Tell us about Lonely Planet. A wonderful time in the company history. We have gone through a large restructured. We are the largest travel publisher of books in the world, but really so much more than that and really being able to set the company up to deliver content across various platforms is something we have been working hard on. Gary, does Lonely Planet mean anything to you . I am a terrible traveler. I do not travel a whole lot. Me. El, do not be mad at every business in the world is andhe content business, this is imperative to have any sense of relevant the this new paradigm is imperative to have any sense of relevancy. That is key. Are you . We certainly are. We have had a travel Community Since before internet forums were a thing to read we have always had a strong community. We were not just selling, selling to people all the time. We were sharing content on those platforms. A question,k you daniel. Where do you sit on instagram and interest right now . What kind of distribution in the way you are building those two channels as they emerge for the future traveler . Certainly. We are incredibly active on those platforms. We just won an award for the instagram account. It is an editorial focus for us. We do do marketing of those platforms obviously, but the editorial is where the company is most going to roll into the marketing. Totagram is a great place showay our fans work, to where our authors are out on the road traveling. We go to the places we are talking about and curate the world for travel. I think your ration is doredibly important and to regeneration on platforms like the interest and instagram we are one of the largest travel brands on twitter is a fantastic opportunity for us and for our travelers while they are traveling. What does the guidebook of the future look like . The guidebook of the future is what you want when you do not want to have to worry about your batteries, you are on your digital detox, you want something physical intangible. Books have been around for 500 years. Ory is still selling them riding them. I do not think they are going anywhere. Not think about that. That has been the biggest change for us. We are a content company. Our main distribution was books, but executing through our platforms is the most important thing we have going on, too. Social how is that conversation working for you . What is your Fastest Growing revenue stream . Definitely online commerce. Our travel booking efforts in providing people the pack from inspiration the path to inspiration to where i want to go, to be able to get there and be able to share and interact with is people on the road that is the fastestgrowing part of our business. And how we have set that up to take advantage of that has taken real dedication and status towards that to be successful. To go to futuristic on you have you started talking about oculus rift and Virtual Reality . One of the things that has happened is the iconic selfie experience of being at the eiffel tower. And i get freaked out by the emotion of, holy cow, am i not owing to want to go there . I am curious. Right now with the content move 30 six months away from this kind of world. Are you guys even thinking about that or is that too far away for a strategy right now . No, we have had conversations with that and that was prompted by me returning from sxsw. We spent a lot of time i am fortunate to travel a lot. Even though you do not travel, more thanly travel most. Not everyone is that fortunate. We are just as interested in people who want to learn about the world of the cultures and things of that nature that is good for humanity, i think. Things like oculus and Virtual Reality what an amazing opportunity to have a virtual travel experience. Hopefully, maybe that is the step that makes you want to go see it in person. That is a good point. Thank you. Daniel haughton is the ceo of Lonely Planet. Will be with us after the break. People familiar with the matter told bloomberg that president hisa will announce immigration plan tomorrow night. It will be a primetime address. Primetime address always meant the muppets were getting ejected. All right, we will be back with gary. Our guest for the hour as a few minutes left, and who better to play Word Association with . Abstract. The hottest startup in the world. Taylor swift. I need to listen to more of her music. Why . Just her voice. Shake it off is what i recommend. Super bowl. They are underpriced at 4 million. I can come back to that another time. Some of the 10 second version . Everybody watches that. Life tv is grossly underpriced. This is a sport. They are trying to get attention. That is the place to do it. You are a jets to prevent. Roger goodell . I just read the key result book. Pete roselle tough time for mr. Caddell g oodell. Tech bubble . I am terrified every morning when i wake up. All right, put your pr caps on. Bill cosby. Clearly something going on there. The new york times. To me, that is a business that desperately, desperately needs to do something drastic. Ok, so lets just drink for a moment. That is what we do. I have 425 employees you out for 25 employees . I have been to his office. My daughter misha is desperately scared of facebook. Why . Shes the only girl on the planet. Thatis is the same diss Kim Kardashian had years ago . All right, Kim Kardashians booty shot . I was super interested. I love your syntax. Interested. As [indiscernible] [indiscernible] is there such a thing as bad the are pr . Yes. There is awareness. I just want to remind everybody watching when Elvis Presley shook his hips, people thought that was the devil. We of all. We evolve. That is it for Market Makers. Tomorrow the one, the only a kind. A global superstar. He will be speaking to us from a conference. I thought you were going to say spaceship. I dont think there are any ceships,erik, 56 minutes past the hour. That means it is time for on the markets. Here is senior markets correspondent julie hyman. Some of there. Declines boardcheck and small caps overshadowing 80 rally in retail numbers. Joining me, the equity derivatives strategist at baycrest partners. Looking at the moves and stocks, we have had this study, slow drift upward, with the vicks bouncing of lows a little bit, but not significantly. Does the fed change this at all . It is really if surprising. Wallmarize it this way street is scared by the market. There are not really big sellers in the market right now. The signals in the past that were for a sovereign s p [indiscernible] are using are scared that as a means to say, hey, that risk is out there. That is good news to sell off, as much as it has been the s p has to follow to the downside. Vix is marginally higher, but were still in the camp that stocks are probably moving higher. Ok, so watch for the meantime. I am watching and i know you are iron ore miner closing a mine in canada. This was acquired as part of a takeover. Iron ore is now less than half of where it was when it bought. He mine it looks like a pretty dire event for this company. Dont forget this is a 1. 3 billion company. Whyess the only surprise is the stock is down a lot more, and one reason might be the short investors are high and the cost of staying short and the stock is going up because and options, this morning for example, people are trying to get long through this dr. Options are they could shout short it. That cost is going up. The novemberers of puts. Ikep also i think some of those who were long on those november 8 strike puts are holding until april, and we saw buys all of those to sell the april strike calls as the funding of those puts. A lot of action going on and options. Lets get to red hat. Your trade is presumably in anticipation of that one month from today . I think the red hat is red hot. , want to buy more options which are actually rather cheap. They are a month away. To buy the december 65, 70 call spread. I pay around 1. 05, which is also my macs risk. Max risk. This company is really the leader in its group. Also the bonds got to leave it there. Making the case for red hat. Money clip is next. Welcome to money clip, where we tie together the best stories in business news. Here is your rundown. The senate votes no on keystone. Republicans say wait until next year. Is in the driver seat as the takata recall goes nationwide. And then lose english fight with cbs. Says they canlso learn a lot from the nba. And