These are the top stories in business and finance at this hour. China is given Global Markets a booster shot in a surprise move, Chinas Central Bank cut is bench mark Interest Rates for the First Time Since 20 12 the one year lending rate was reduced to 5. 6 . China is on track for its slowest annual growth in more than two decades. Stocks around the world shot up on that unexpected move out of china and comments from the e. C. B. President. He said Inflation Expectations in europe have fallen to a excessively low level and the e. C. B. Must find a way to get prices rising as quickly as possible. The inflation situation has also become increasingly challenging. Headline infrustration has fallen significantly over the last year. Last november it still today as 0. 9 . This was low, but it was generally expected to rise safely above 1 by now. Draghi is trying to keep europe from sliding into a japan style deflation anywhere spiral. Hours after his speech, the e. C. B. Said it is the gun buying asset back securities, major European Bench marks stocks are up as much as 3 on that one two combination from china and the e. C. B. The biggest apparel focus in the United States cut its full year profit forecast. The gap is being hurt by lower sales and its name sake brand. The auction houston sotherbys is looking for a new c. E. O. Theyre stepping down after a proxy fight. Sotherbys agreed to appoint him and two other candidates to his board of directors. In another victory for his firm third point, he reached an agreement with dow chemical which will add four independent directors. Theyve been criticizing dow for missing earnings target. The stage has been set for a battle over immigration. President obama in a prime time address last night told americans he has no choice but to use executive authority on immigration. Congress he said had its chance and repeatedly failed to act. The executive orders lift the immediate threat of deportation for about five million undocumented immigrants and the visa process will be streamlined for Foreign Workers and their employers. Texases im taking are not only lawful, theyre the kinds of actions taken by every single republican president and every single democratic president for the past half century. To those members of congress who question my authority to make our immigration system work better, or question the wisdom of me acting where congress has failed, i have one answer. Pass a bill. The immigration debate has far reaching consequences for american business, and of course its far from over. The c. E. O. Of International Real estate brokerage. This is an issue about which you are passionate. Why . Well, you know, most businesses are all about talent. The ability to attract talent, keep talent, innovate, create, and the u. S. Is the single best destination in the entire world. When we look at locations to move business, the first question we ask is how big, how deep is the pool of talent. Thats what makes markets do well. Thats what moves companies to a location. So, the element of immigration bill that has to do with the visa continues to be an incredibly important issue to technology companies, to all kinds of businesses in the u. S. So, if you look at what the president said last night, the action he said hes been forged to take because of inaction by congress, what do you say . I say it was a bold step. Something needs to done, congress, both the house and the senate have been talking about an immigration bill for years, every year its going to be done when the democrats were in charge, the republicans in charge. They both talk about getting it done but nobodys been able to get it done. The left and the right holds good parts of the bill, like the dream act, the visa act, increase hostage to an overall immigration bill, but nobodys willing to step up and just do their job. Why then do you think americans on the whole dont approve of the course the president has chosen to take . A majority of americans in survey after survey want something done about immigration reform. They Want Congress to take action, but there isnt a plurality of americans who think that the president should exercise executive authority. Well, people are always afraid of the executive branch having too much authority, but you know most Companies Operate if all Companies Operated as a complete democracy, probably nothing would ever get done. Its everything that a company did in order to move forward, had to be taken to a board vote, then companies would be stagnant, and thats a lot of whats happened in the u. S. You mentioned that this is an important issue to tech companies, certainly h 16r7b v visa is important. What about your business, youre in the commercial real estate business, you operate in how many cities around america . Were in a hundred markets, we have a hundred offices in the u. S. , were in 30 markets in the u. S. , but were in south america, were in europe and asia. So does this issue effect you directly . My number one job at the company as c. E. O. Is acquire and hire talent. Every business focuses and functions on the basis of the people that work the company, so from my perspective i go looking for the talent and ill move where the talent is. If theres talent some place, ill go open a business around the talent. So what about the nonvisa aspects of these executive orders. In a short term, or perhaps longer term sense, do you feel as though if its not amnesty, at least the relief from deportation from undocumented immigrants is a good thing for the American Economy . Well, nobodys demonstrated that it hurts the u. S. Economy. Were going to get a million i will greel immigrants regardless of what they do, so what the president did last night doesnt really change much. These immigrants are here, theyre working, theyre living, theyre taking care of their families, this keeps their families together. It is certainly not a negative. This country has been built on immigration. Probably 40 of the fortune 500 companies were started by an immigrant or their children. Half of the companies in silicone valley that have been created have been created by immigrants. Its astounding the amound of nasdaq based companies that were started by foreigners. The opportunity to innovate and create new businesses, which is good for the general work force because when they come in and innovate and create a new business, they create jobs for the rest of americans. So there are, maybe not lots, but there are some Corporate Leaders who say this issue wasnt important enough for the president to take executive action. What do you say to those people . I say its wrong. There are other issues as well that go along with that, that we are getting no action out of washington. It is about time that congress does what theyve been elected to do. And the people may be upset by it, but for the most part, what the president did was really keep families together. It doesnt impact anything, these immigrants are already here. The concept of kicking them out of the country is ludicrous. The republican side of the aisle doesnt want the word amnesty to be used in any context, and on the other side of the aisle, most people agree on attracting invasion and technology and smart people to america is good, but for the most part even though that people believe are holding that part of the bill hostage to an overall immigration policy and amnesty. So whether its on immigration or any other number of issues, many people believe that the shift in power in congress has set up the mother of all battles between the Republican Party and the president for the next two years. Do you believe thats whats in store or you perhaps more optimistic . Well, congress has confounded me throughout the last 10 years, so its anybodys guess as to how theyll respond. So they could either pick up their toys and go home, or what they can do is take this as an initiative to pass a bill. The Senate Passed an imdepration bill which is come hence yiff. Theres a bill in the house that could have been voted, in fact probably would have been voted if it got out of committee. They just sat on it with the concept ok, this is all political, this is all the polar zation that exists in washington, this is good for america, perhaps now its time for the republicans to really show that they can take initiative and get an immigration policy thats comprehensive and i think that the democrats would now go along with a comprehensive bill, with compromises, that will be good for everybody. So bottom line, short of that, what the president did last night was the right thing. I think so. All right barry, thank you. Good seeing you. Coming up here on market makers, Risky Business you might say, the head of new york fed says theres a danger of becoming too close with the banks and supervisors. Plus b. B. T. Is on a buying binge. Well hear from the c. E. O. On why his bank has been making so many acquisitions, well, at least compared to the other banks out there. Can the Federal Reserve be trusted to police wall street . Today the fed is under new scrutiny for how it regulates the big banks. The senate paneling is examining whether the new york fed has become too cozy with wall street. Whether it has been captured by the institutions it overseas. The series was prompted by allegations from a former new york fed official who said her colleagues were too deferencal to goldman sax for the president of the new york fed wants more. Lets bring in andrew, hes worked at the fed and now hes a senior fellow at the rutgers business school. So you were a Bank Examiner at the new york fed. Yes. My last time i was a quaint tel avivive user for the fed, but before that i was a team leader in the Regulatory Department and i oversaw market liquidity risks of the big banks. So share with me your observations, when you were a Bank Examiner, what was it like. I would say the issues that were seeing today are very typical of the issues that i saw before the crisis. I think one of the tragedies we have here is that, i think the crisis in 2008 revealed a lot of things. One of it was that the fed, and other regulators werent pushing back hard enough on the banks. And after that, nevertheless, weve seen very little change. Your last guest talked a lot about congress. Again, watched it in action. It hasnt really addressed the fundamental cultural issues on the regulatory side. So what the senate is investigating today and what carmen has alleged took place at the new york fed as it concerns j. P. Morgan, what the Inspector General of the fed found in connection with its, you know what the central bank did or didnt do, the j. P. Morgan trade, this is consistent with your personal experience . Yeah, i think basically what you had within the fed was about a 20year period before the crisis, during which wall street got much bigger, much more complex, regulation also changed. Regulation went from being going in looking at loan books to actually having to go in and look at how banks thought about risks. How their models worked. And regulators ultimately become overmatched. And basically in some ways, because they were so reliant on wall street to explain themselves, they began to see wall street even more through the world through wall streets eyes. What weve seen post 2008 is rather than dealing with the cultural issues on the regulatory side, we saw a bill that basically passed thousands of pages of laws, put the onus on the regulators to create new regulars, and basically made their jobs much harder without addressing the fundamental issues. Ok, youve raised two key aspects of regulatory capture. One is that the regulators in your words were overmatched. Yes. When you say overmatched, is it because the banks and the bankers whom they hire an employer are just too smart. Is it because the fed cant effectively recruit smart enough people, cant pay people enough money . Whats the root of that problem . Theres a part of it for sure, is the sort of imbalance of compensation. But again, lets think about where banks were in 1987 versus 2008 or even today. In 1987 you had the top 89 banks controlling assets equivilent to 30 of g. D. P. Today you have six banks controlling assets equivilent to 60 . Youve had a huge explosion, too big to manage banks. So, i think we are asking too much of regulators to go in on some level and understand concept banks, which i would understand j. B. Morgan, lon dan whale as a prime example. The banks themselves often dont understand how theyre working effectively. So the second point your raised, that the bankers have been co opted, is that because they so often, im sorry, the exammers in, right, the Bank Regulators, is that because they step inside the bank . If you regulate j. P. Morgan you effectively work at j. P. Morgan, you eat lunch with other people there, you badge in and badge out with people at j. P. Morgan, the same applies with bank of america or citigroup or whatever the case may be. You have exammers in that are in the fed and other regulators that are on site and responsible for managing the relationship. You see people every day you have these relationships. Thats an issue that carmen raised. Of course. But i also think theres a bigger issue. Ultimately the complexity of banks has made it where, especially with the complex bank regulations, the private market for x Bank Regulators have grown, especially the technical ones. Theyve left behind in the fed, and other regulators, technically savvy, left their mom reliant on the bankers to explain themselves. So these are smart people. Theyre very capable of deals and of explaining themselves in a very persuasive way. I think on some level it is easier now for the banks, especially with how big and how complex they are to convince the regulators to go along with the view of the world. So if youre a smart regulator, and there are smart regulators, do you share his point of view that the best way to deal with this problem because you cant manage everything is just to raise Capital Requirements and just provide enough of a cushion for the rest of society against potential for disaster and the Banking Industry . So, i think hes a really valuable voice inside the fed. If fed is again well intentioned smart people. I actually dont agree with the capital argument. I think thats a piece of it. What happens is when things get more hairy in the economy, regulators pull back on rules. I think the only way to deal with this problem is to break off the too big to fail banks. We cant have this Banking Cartel at the top of the economy. We cant have these rank banks that have grown 40 since 200, that dont understand themselves that well, and dont do a good job of managing themselves. I think you need to get to the point that if banks blow up it doesnt blow up the rest of the economy. I think the way you do that is by decreasing the size of banks, because the banks are very off balance accounting, sort of using their own models to calculate capital levels. Theres a lot of ways did you feel this way before the financial crisis . I did. So youve spoken up about it. Youve effectively apologized to the nation for it. Why didnt you speak up about regulatory capture . So my story is that i was a regulator at the fed. I left the fed and went to work on wall street. A large part because of morgan stanley. I was very demoralized by what was happening to the fed and i left to go to wall street, looking to see something different. If you cant beat them, join them. In 2009 i was asked to come back to the fed. For me, i thought that what we were going to do us was hopefully stabilize the economy, whats been so demoralizing for me and why i apologized, about how we havent made the changes we need to make. Andrew, thank you. Forer a Bank Examiner and a the new york fed. Coming up, a rally on wall street, bloomberg takes you on the market to have a look at the numbers. We are approaching 26 minutes after the hour, time for bloomberg on the markets and scarlet is here to tell us whats going on. Its all about china and mario draghi. It is risk on right now, whether its executives or commodities, government bonds in europe in the u. S. All rallying because theyre signaling go on stimulus, even as the fed has ended the easing and to normalize Interest Rates. Having the biggest jump, or i should say a 2 increase to an almost up 3 . Its come back a little bit. A lot of people say the next step could be kwan tay tive easing. He is going to raise expectations as quickly as he can. According to the tenants of what hes able to do the euro weakening against the dollar, also against the yen as well. That is the biggest drop against the yen in about 12 weeks. Oil prices are also moving higher. You would think a stronger dollar would make lower oil prices, not happening. I wonder if this impacts that idea, its a stronger chinese economy would mean more deand in for oil. Also opec meets next week. Theres a real divide whether well see Production Cut there at the opec meeting. Saada arabia and russia have agreed to cooperate. Scarlet, thank you very much. The latest from our chief market correspondent, coming up there is no wall street envy at this bank. Why his bank is doing better than the other guys. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. Youre watching market makers. If you think we need more of americas 7000 banks to merge, youre not alone. Do not accuse bb t of not doing something about it. This bank in North Carolina has been one of the biggest acquirers recently but when i sat down with ceo yesterday i is willing tobb t go where other banks for your to tread fear to tread. We really believe that we need more scale. Announced acquisitions, we are about 210 billion worth of the u. S. Banks. But what is happening to our industry is the huge investments we are trying to make in technology, the digital space, regulatory costs, the cost of all sprays and going up exponentially the cost of operations is going up exponentially. We feel we are very good at it, and this is a good merger partner. It makes sense. Are other banks also in the market . Have you run into confrontations for the assets you bought . Not really. On the larger scale, like the recent one we did, it was a negotiated transaction. It really was not a process of a lot of bids. On the smaller one we did in kentucky, there were a number of parties that were interested. What youre seeing today is there is a lot of merger activity in the under 10 billion size, because a lot of the ceos and boards are recognizing that there are issues. Above 10ou get billion, there has been very little activity. I think it is a function of two things. Of the sellers are still kind of hoping that they can get to a higher level of generate a, maybe higher price. And some would be buyers have just said they will not do m a now. That there isis too much risk, and the asset structure of the company. Of would be acquirers are very concerned about Compliance Risk of the inquiry. Quiree. Do you expect to see more . I do. I think you see all of the companies that are probably 50 elite dollars to 200 billion 15 billion to 200 billion will begun to get active. They will get all of the attention of the regulators, and not large enough to know the scale. I do not think you are going to see 20 deals a month, there are not that Many Companies of the site out there. There. His size out have regional banks like yours fared matter or worse better or worse then those like jpmorgan or bank of america . The wall street banks we have fared better because banks like ours have een veryalways b liquid and highly capitalized. You did not see real problems with banks like ours. Everybody was challenged in the crisis, but we made it all the way through the recession without losing money a single quarter and so forth. The wall street banks, in general, did have more challenges in that they were more dependent upon capital markets, shortterm funding. They had to make adjustments. Im sure they would disagree, but they have had more adjustments under doddfrank. You are living under some constraints. That puts a cap of sorts on aro roe. That is exactly right. That is the key question. We will be talking about exactly that. What is the new normal . What can we expect from banks . Normal Interest Rates, norma credit cycle all that normal credit cycle, all of that . In two or three years we will have a more normalized economy. We will have a more normalized Interest Rate yield curve. And we will have a more normal margin. Roesl be able to produce instead of thee 10 range. That is important because half of the banks today are not covering the cost of capital. I think it is going to move in that direction. We hope it does. Where do you see loan demand the strongest right now . Cker for your industry geography or industry . Real estate,it multifamily. It is very strong in the energy space. With all that has been going on with shell gas and so forth. Small businesses very soft. Those who are able to compete internationally have strong demand. It is a bifurcated economy. Of it likenk mainstream companies are still struggling because they are totally dependent on the u. S. Economy. While it has improved, it has not been very good yet. So you look at my aggregate gdp of 2. 5 . Made up by the Largest Companies that are hispanic internationally. But the gdp for the Lowes Companies will be flat to 1 lowest companies would be flat to 1 . Coming up, the head of the finance section bureau. Washington is full of agencies that oversee the Banking Industry. Theres the fed, under me today. Today. Tiny discretehave responsibilities, so some things fall through the cracks. Itsthe cf tb has turned attention to the payment system. I spoke to the director here yesterday. I asked him why payments . We need a faster payment system, and that needs to be faster access to peoples money so that the benefits flow through the consumer. It needs to be realtime account information as well. Protection against rod, and it needs to be disclosed so that consumers can do so from your perspective, there is not enough of all of those . There is a lot of potential for consumer confusion. Somewhat embarrassing that we are lagging behind the rest of the world in this area. At the same time, as you build a realtime payment system, there is a lot of competition for that. There is a lot of competition outside of the normal channels that is being developed including Digital Currencies and other elements. It is very important that Consumer Protection be very right and center in peoples minds as they ship the system shapre the system. See alternative Payment Systems in development. Does that encourage you or scare you . It neither encourages all nor scares me. It tells me were going to get the faster payments, and we need to keep up. Theseers can benefit of greater transparencies and controls over their money. But it is a very important, whether it is that the Banking System or by alternative that the proper Consumer Protections be laid on it. You believe the innovation we see in financial services, particularly in the start of community is good for consumers . I see financial innovation across the spectrum. Some of our largest innovations come from our largest industries. There are startups that are trying new things that will work and will not. They can greatly benefit consumers, they can make things easier, less sleep, more accessible. But it is very important that innovation, which can be in we hadother good or bad, a lot of innovation in mortgage before it all crashed, whiskey that mindset Going Forward we have to keep that mindset Going Forward. One of the interesting things about the Consumer Bureau, one of the effect of things, is we can regulate the entire market. Whether you are a bank or a nonbank firm, we can oversee you either way. We can plug that gap for only part of the market was being regulated which was never going to be a recipe for success. They need to compete on the same terms, fairly, or consumers will never benefit. If you are trying to root on bad behavior and so many kinds of financial products. Where is the problem worst . I do not know. There is a lot of work to be done, i will say that. Some of this has been neglected for too many years. There is an Important Role for the Consumer Financial protection bureau. But there are problems in every market, some greater than others. The Mortgage Market is the largest market. It is the one that crashed the economy a few years ago. So we spent a lot of time fixing rob lives in the Mortgage Market and creating a safer margaret Going Forward. Run into thisy we across the spectrum, we tried to prioritize, and we tried to deep in my what will best protect gainst thea greatest amount of harm. We continue work on servicing worthy price has been right four. Servicing where the price has been right. Theres a great amount of work for us to do. We also get thousands of consumer complaints every day. People can tell us if they think they have been mistreated on bank accounts, student loans, auto loans, credit card mortgages, and we will work to get a solution for you. Great where d you find your self uncovering the most bad act is . They Small Companies that add people in big organizations, or the bad organizations that bad to the core people in big organizations, or bad organizations that are the core . To throtten to we had a cash grab scam recently. It was 100 million over 15 months. These are significant things. If the culture of compliance is not strong, and of revenue drives the train and then of thinking about longterm relationship with the customer, that is a problem. There is a lot of work for us to do. Consumers need to be put first, and we are working to change that attitude throughout the industry. On the big eggs doing a better job now or the big banks doing a better job now . One thing i think they have gotten the message is, this Consumer Bureau is going to pay close attention to what consumers tell us around the country. Thehe banks themselves, and institutions need to Pay Attention to their customers and figure out how to resolve the problem, how to identify issues, how to treat the customers bailey. Fairly. One reason he is so concerned payments, nonbanks are springing up everywhere offering consumers cheaper and more productsconvenient than they can get at the bank. Is caching thing of the past . Thing of the past . You can read a Facebook Like your friends transactions. That is kind of weird. To tell us more, Felix Gillette is here. He is the author of our cover story. Lets bring back that cover shot of business week. What is that . A wallet getting caught in two. The wallet is screaming. Is the wallet dying . People have been predicting this for years, that we are going to get rid of archer looks, our credit cards, our cash. People the United States have been very slow to make payments with our phones. To your point. I am old. We are out of the demographic. The question is will it st spread . Why would you want to see your transactions and share them . Eight dollars for a dinner. There is a humorous aspect to it, people can make a joke about what they are paying their friend four. R. But it is reassuring, everyone has is the the about hesitancy about using their phones, and this makes it feel more reassuring. What our paypals plans for making real money . All of the transactions, all of these payments are for free. You can pay your friend money and once you have it in your wallet you can send it to your bank and cash it out. And their strategy is basically to extend the universe in which you can use it. In that mobile universe where you are hopping your phone to different apps, they want you to be able to pay for your uber or venmo. With pitch is the e merchant will pay for this is that eventually the merchant will pay one for this. You do not have to reenter the information on your phone every time. Spent some time at a big groups conference yesterday. By paypal. Attended this is an oldschool banker group. They have finally woken up and andl the threat of apps things like bitcoin. You thaturprise they are racing to try to cover this . Text messages, we would hear about people in europe sending text messages, and then here in the united eights all of the sun and it happened. But right now it sounds a little but for them, why would i want to do that little bit for, why would i want to do that . Do they feel about the idea of storing money in a paypal as opposed to a bank account . Real disruptive threat. If you do not need the bank account anymore, then you do not beat banks need banks. They do not really differentiate. So it is easier for them to use, it is faster for them. It is more natural to them. Is acannot imagine it platform for that many , it is very yet small. The first of to getting you to pay for missing us with your phone. First step to getting you to pay for everything with your phone. Thank you. Check out his cover story on businessweek. Com. It is 56 minutes past the hour which means that it is time for bloomberg on the markets. In the broad markets, we have a rally again. There are two reasons for this bump of about 30 percentage points. Almost at the same time, mario draghi speak in europe saying the ecb needs to do everything in its power to be late inflation to stimulate inflation. It is on the cusp of a deflationary spiral. The dow in the s p 500 are on track for the best day. Live from bloomberg headquarters in new york, this is market makers. A backlash over baggage. Jetblue scraps its free checked luggage holocene. The cfo is geared to defend it. Conference call on hold. Business travel is bouncing back. That means more no vacancy signs from hotel owners. Flywheel is flying in dubai the fitness fad in the middle east. Stephanie ruhle is on assignment this morning. I am Erik Schatzker. We start with the top stories at this hour. In china, a surprise move by the central bank to boost the domestic economy. China cut Interest Rates for the First Time Since 2012. China is on track for its slowest Economic Growth in more than two decades. That move boosted stock markets in particular around the world. In the United States, the s p 500 and Dow Jones Industrial are trading at record highs right now, set to close at new records. Mike its also much higher in muche markets also higher in europe. Mario draghi said the ecb central bank needs to do everything it can to battle inflation. The battle over immigration fully joined. Republicans promising to do whatever it takes to stop executive action. The president has lifted the threat of deportation for about 5 million undocumented immigrants. Here is House Speaker john boehner. You cannot ask the elected representatives of the people to trust you to enforce the law if you are constantly demonstrating you cannot be trusted to enforce the law. The president never listens. With this action, he has refused to listen to the american people. Republicans are split over precisely what to do. Some say the government should be shut down over the issue. Startup that tried to disrupt the tv industry, aereo, has filed for bankruptcy protection. It was agreed their streaming service violated copyright laws. Was backed by billionaire barry diller. The uber executive who suggested digging up dirt on journalists who wrote quickly of the company is not going anywhere. He has been crucial to growth at huber. The huber ceo is fully behind him. Stephanie is out. I did not feel like sitting here i myself for two hours, so asked my friend tyler norris to join me as a guest post. He is the founder and ceo of ncr development, which owns hotels in 17 american states, including the boutique Highline Hotel in new york city. He is a protege of barry sterling. While he may not be a billionaire just yet, he is well on his way. I would like to begin with immigration. We just heard john boehner responding to what the president had to say last night. Immigration seems to me an important issue for the hotel industry. I presume that you employ a lot of immigrants. We do. I think this is great for working class folks across the country. I am not sure i agree politically with how it was executed by the government. Some say if the president wanted to get it done, he did not have much choice. If you look back, reagan did the same thing 25 years ago. I talked to a lot of immigrants who were thrilled in 1985 when reagan made the change. That is what makes this country great, is the inflow of people. If you look at the population of the United States, in 1968, it was 200 million, and now it is 300 20 million. That creates gdp growth. More people shopping in malls, staying in hotels, riding cars, buying gas. Despite the bad political precedent that it sets, i think it is a good thing for the country. You and i have talked offline about the challenges you face hiring people in some particularly hot markets. There are some very hot markets in this country, a lot of industrial activity. Hotels are completely maxed out, like west texas. These 500 Million People who will not be deported they are not becoming citizens, but will get Social Security cards. And that is going to make them feel a lot better. A lot of our staffers are not comparable with current Government Policies and are afraid of being deported. Is this a new labor pool for you . I think so. To can go all the way back the italians and polish immigrants that came over to the country in the early 19th century. Their first generation works extremely hard. They are building a new life in america. They are ready to get to it. They do not want to be afraid of the government. Giving them a green card or makeenship makes them their life easier. Cap rates, which is a way of looking at him unlettered returns in commercial real expressed as a yield. You can compare it with treasuries. Spread over treasuries is pretty tight. What does that say to you about the pricing of commercial real estate . The yield environment is very low right now. If you are an investor with a big pool of capital, where are you going to make outside returns . He risk for your rate on treasuries is extraordinarily low. The bank rates are terribly low. They are not paying you to keep the money. You canover here, if buy commercial real estate on a low cap rate, it is still better than the alternatives. The risk to commercial real estate is, when the riskfree rate goes up, which could be sometime before that happens when that goes up, that could whoosh cap rates up and drive the price of commercial real estate down. However, there is a tsunami of money on its way into the u. S. Commercial real estate market. We have been talking in recent days, including jonathan gray, your friend and rival at blackstone, about the fact that blackstone is raising new funds. That is going to be tens of billions of dollars. The norwegians want to invest in the u. S. Real estate market. The singaporeans want to invest. They are not looking at blackstone buying individual homes. They are looking at buying buildings. This does not speak to calpers are looking for longlived assets. Everybody is looking for yields right now. You see the developers in new york are having a frenzy right now in trying to attract that foreign capital. You are seeing a lot of highpriced condos in the market right now. Year, 58 apartments in manhattan sold for more than 10 million. There are currently 685 condos on the market for more than 10 million dollars. The Developers Think this market is deep and going to continue for a long time. Supply,10 years of based on 2013 transactions. I think that is a bit crazy. I do not think the market is that deep. 10 million is a lot. You can go to dallas for 100 a square foot. You can go to los angeles for 300 a square foot. 700 10you cannot sell million condos in new york city at 4000 a square foot. You buy limited Service Hotels. Select Service Hotels. I got it all right. Why do you like that class of hotels . I think there is a shift on the part of the consumer to a select Service Hotel. You run hotels for those brands. We all know we run 30 marriott hotels, 30 hilton hotels. People love the reward points by stating at a residence in, a hampton em. 125, you get free wifi, free parking, free breakfast, free coffee. It is a great value proposition, versus paying 400 and staying in new york city or San Francisco or miami. The big problem with fullService Hotels is the capex. The capex basically eats up all of your return. You are constantly renovating, constantly redoing the restaurant. And the customer is very fickle. The customer is a high touch individual. Unless you continue to pour money into the hotels, they complain a lot. The select Service Hotel is the hotel you have to stay at home because you are on a business trip, as opposed to the hotel you want to stay at. Or corporation set up a rate with marriott or hilton. I say, you got to stay at this hampton em or this residence. Gets theler or guest points. They take their family on a fabulous all expense paid vacation. They use the points on jetblue, on american. The use of points to stay at a ritzcarlton in miami. Everybody is happy at the end of that. We are going to take a quick commercial break. Tyler morris invest in select Service Hotels. Do not call it limited service. End toup, and and an free checked luggage. Does jetblue worry what the passengers think . The ceo will be here to answer that and more. We will see if anything is lost in translation. Most people, when they think about global risk, they think about what they read in the newspaper. They do not make the link to their own individual business. The abilityity to raise capital due to macroeconomic situations, and the combination of economic and environmental changes when an economy is suffering in session and also suffers severe water damage. When these things were combining together, it made people realize how systemic global risk is. The flipside of risk is opportunity. I think the way Risk Management is going nowadays is to really understand the uncertainties associated with any particular trend, or even a trigger event. We can make better decisions if we really understand the risk we are dealing with. Investors love jetblue possibly just move, charging fees to check luggage for the first time. Travelers, not so much. Jetblue is not just charging baggage fees. It is also reducing legroom. Jetblues chief my guest officer, and is here as well. Mark, if you do not mind, i am going to begin with a bit of jetblue customer reaction. One tweet just heard your plan. Bag fees, less legroom. Sounds brilliant. If you need me, i will be at the American Airlines terminal. And, what happened . Answer margarets question. What happened . For ourwas preparing investors this week, i was presenting this dress rehearsal to my wife and two dogs. Heart t to the seat that is where the magic happens, in front of my wife. When i got to the point about more seats and the bag fees, even my dog started to growl. Realized, i talked about the slimline seats. It really gives back an inch. In addition, you the new configuration will have power. The attributes. And i go, by the way, you flew it. 320 we flew to california. I got a look like, why didnt you say that in the first place . The product is quite good. With the product attributes including the wider tv and on and on, it is by the way, it is still more pitch then you are going to get. You can explain away the legroom issue clearly and persuasively. Checked bag fees . Not as easy. It is actually quite easy. You are paying for it right now even if you are not checking a bag. We have to pay for that whole baggage structure, right . At least 50 of our customers do not check a bag. And yet they are paying for it in the ticket price, because they have to pay for the whole other passengers, right . We are are doing is, providing those customers that do not check a bag to actually book into a category that does not charge for it. Those customers that do, do pay for it. Over time, we will see jetblue ticket prices that do not include a checked bag drop . I am not going to talk about where prices are going to go, but you will see a difference over time. Tyler, feel free to jump him, because i may need some ammunition, back up reinforcement. If the whole point is you are being charged for the privilege of checking a bag anyway it is in there. We have to pay for that structure. If you take that away, the ticket prices will drop . Pricing, there are federal rules on pricing. But you will see three different types of fair structures on any given route. Will include a fair that does not include a checked bag. As a former baggage handler at l. A. X. , this is very close to my heart. Seriously, you were a baggage handler at l. A. X. . I was. Amazing job. Amazing job. In l. A. , too. That was your first job after working for barry sterling . That was before. Barry did not trust him with bags after that. How is this going to impact the Customer Experience at the terminal . Going to change at all . How much are you going to charge for the bags . It will be in the ticket price. Youll make clear when you buy the ticket, the bags you are going to have. Your argument,o if this whole thing were revenue neutral, we are already paying for it anyway, investors would not be so delighted. You need only look at their delight by looking at your stock price. Up 6 . Those passengers that have , which does not include the bag, but show up with the bag, have to pay for it. It is that element. I am trying to avoid getting too close to the pricing issue. The bags included in those attributes,ther mileage and whatnot. There will be a product difference between all three buckets. About the more Customer Experience, what else of you guys done . I know you just opened a lounge much to the fanfare of Vice President biden and governor cuomo, that highlighted you guys is opening a spectacular new terminal at jfk. They did not ask us to take over laguardia. Ways about other i could do a better job with laguardia. To improve the Customer Experience. Example ofjust an we firsteally since were born, 15 or so years ago, we were not an international carrier. Roughly a third of our revenues now caribbean, latin america. T4, you have to go to which assistant which is distant and not easy to get to. We put it all in one terminal called t5i. A beautiful experience. You and i have talked about hotel tonight, and how Hotel Operators like yourself feel about hotel tonight, it offers consumers cheap rates on hotels if you are prepared to wait until the last minute. Now there is flight tonight. How does jetblue feel . What is flight tonight . Hotel tonight only opens at noon the day of, and is for super lowprice is that night. Here we have flight tonight, the same thing for sameday flights. Excess inventory that has not been sold. Hotel operators love it, right . [laughter] as are veryot profitable. We put up the capital for the building, the staff, and the team. As the economy gets better, we generally get to push those guys out of the business, because the customers become loyal to us as our capacity and utilization rates go up. Are you sure this will work the same way in airlines . Try to buy a lastminute ticket if i walked up to a jetblue counter in jfk to buy a lastminute ticket, it is not going to cost me less than it did yesterday. It is going to cost me more. But you do not get the points. In the hotel business, if you use expedia or hotwire, you do not get the rewards points. And that is what keeps them coming back. Our planes are 50 million each. We want to take off. Mark powers, the cfo of jetblue. Big moves inback, global stocks after that surprise rate cut from china. We are approaching 26 minutes past the hour. The european markets are about to close a big day. In london, they have more for us. Of a friday bit feeling in the markets, as we know it is being driven both by the rate cut in china but also by what mario draghi said in a speech earlier. We are seeing the stoxx 600 rising to an eight week high. The suggestion this is largely being driven by china, a cozy Industry Groups leading those games you are looking at commodity producers, oil, and gas companies. Terms of mario draghi, ecb president , his speech he did not say anything that new, i did reiterate the ecb needs to raise inflation more quickly. He said the ecb could broaden its asset purchases. The big question is, does that mean quantitative easing . Does that mean buying government bonds . The euro is heading down against the dollar and has dropped the most in 12 weeks against the yen. If you look at european government bonds, you are seeing borrowing costs come down pretty much across the board. Tenyear yields in italy and ireland, in france they have dropped to record lows. Thank you. That is may reach a hitch that is a wrapup of the european close in london. Manan into a contender, the trying to turn around shock hq. Live from bloomberg headquarters this is market makers. I am eric schatzker. Is getting a digital makeover. It has been number three in the industry for years. It is a mounting a new challenge. A battleon group won ceobrought in a former hsn since june. Shares have risen and it has a new name. Mark, welcome. What does it stand for . , fresh brand we came up with. Ve ande up with evine li we love the name left. We think it is much more alive than the digital space. Of going to your phone ordering at 25 off. What are the keys to be a competitive and Home Shopping on your tv . Not a Price Comparison game because amazon and ebay have that market cornered. It is about programs. Exclusive brand you cannot buy anywhere else. That is the value piece. You want to offer at a great price. It is the notion you cannot buy anywhere else. There are so many sites you can go to to price compare before you make the click and make the order. Our whole game is about developing far greater depth of those. Are you really a merchant . Or are you a manufacturer . We are a little of both. The exciting part of being in retail today is you can create great friends instead of just going to a consumer electronic show or home show at picking out the best holsters or vacuums. You get someone like mark cuban and bring entrepreneurs from shark tank. We had that in august. It sold out within the first five minutes. It was the most watched show in the history of our company. We sought if we had the entertainment aspect and exclusivity you could really reposition yourself as a brand, thats not just a distant third place tv shopping. It makes you part Entertainment Company as well. Can you compete in the same league as qvc and hsn . Nicki ms hsn has inaj and we can compete with them. We have to step up. You have to crate the launching digitization. Ason we are a distant third and we cannot compete with our direct competitors. If you produce in the right way, you can be very, very competitive. You are not competing all logistic . . Ou are not a soul. Com challenging amazon in terms of Top Shelf Logistics . If you look at shopping at entertainment, will refer to it as entertainment center. The consumer wants more than the lowest price in town. Is great to have value but the whole experience with shopping and sharing, we that experience of sharing that kind of newness and discovery and great new brand you cannot find anywhere else still really matters. It used to be women would go to the mall and was a great experience able go to a movie and lunch and go to a store and lot mores become a deluded these days. On television, we are on 87 million homes. There are Ecommerce Companies that would pay a lot of money to have access to 87 million homes. Is anpositioning of evine interesting play and the opportunity to reposition instead of just being thirdplace tv shopping how do you reposition . The barriers to entry are lower. Not everybody can get cable carrying and 280 7 million homes. That is difficult. A huge barrier to entry. The relation with your customers are totally different. Watching tv is a passive experience. If i want something, all i have to do is pick up my phone. Ecommerce, i have to proactively go to your site, go to your app and scrolled through things to find something i might like. It seems like a completely different business. It is almost completely different. It is a real opportunity. The leverage you have when you are in 87 million homes and having that many eyeballs. We have 87 million uniques. If you look from the commerce space, a unique visitor is not much of you have to go to your shop first. And you have to find them. Being on television is a much easier way to attract people even without spending a lot of money. You are an 87 million homes, is powerful. You have to have a differentiated product, right . Hsnways think back to the bathamatic. Remember saturday night live skit . Wolfgang puck got out with a new up and. Came out with a new oven. I launched Wolfgang Puck on hsn back in the day. Is that your plate . Taking procter and gamble and putting a twist on it . You want to make it an entertaining offer but you want to have great products. Is not just the entertainment piece of this, but what is that uniqueness you will offer . We are not big fans of the celebrity or product scenario. We like to refer to them as personalities. Is a Makeup Artist a celebrity or a personality . A little bit of both. We would do it little bit of that with some known personalities and so we will crate hours else for there are opportunities. And some we will create ourselves. There are opportunities. What are the most Amazing Products on sale at evine live . The week after thanksgiving we will announce one of our first evine lives products and you will hear more about it. [laughter] thank you. Thank you very much. Mark bozek is the ceo of evine live. Coming up, a new york exercise studio to the middle east. No sweat. Well talk to the woman who is doing it. That inline the online fitness has been bulking up. They have expanded. You can find one in of all places, dubai. The other location outside of the u. S. To tell us more is our correspondent. Amira, spinning which is used to describe the category is a huge fad and you could take you anywhere in the world am a wide dubai . I grew up in dubai. My family is still there. We felt there was a real space in the market for this type of business. Theess where you walk into doors of a studio and you are experiencing it right in. High customer service, high results. Dubais fitness world is actually quite sophisticated but we did not have anything like that there. How is it going . Is doing amazingly well. At opening000 people up our second studio very shortly in about a month or so. We are doing very well. Popular household name we revolutionize the fitness world because there was really nothing like it. I have not spent many time in the middle east. My impression of the place for what i do know after what ive been told is it is hot. There are three things you can do. Drink, orop, you can you can work out. Does it make dubai potentially a better market for a product like yours that even new york city . New york city has unseasonable weather. Cold winters, summers can be difficult. That is the beauty of our business. It does well in those unseasonable places. Our summers are hot and people still want to break a sweat while exercising. In dubai, who are these spinners . A very good question. I get asked all the time. An amazing mix of people area we. Ave a key target but a lot of europeans and americans. We have a growing group of local and variety of people. Iratean people. We have culturally sent it sensitive classes for women. Ensuret in short that our instructors are professional and a doubt to the cultural norms. What are the expansion plans . Were opening a second studio in dubai and we are hoping to grow very soon. And with perceived a lot of interesting interest from other countries. Website arabia, lebanon. We are still in negotiation. In each of those countries, their distinct cultural norms. Very true. Region andn in the coming from a very mixed background, i really feel like to be able to handle the different cultural transitions of the countries. When i was in dubai, we went skiing edit went to seattles best coffee for a latte. How are people find out about flywheel . We use social media trends growndously and that has our clientele over the past year. We started off with advertisement. That is what really helps us is word of mouth. We work with editors, who are faithful clients. Once you have devoted client the same when i was in new york and the reason i wanted to bring it to the middle east, that is your biggest. Being a western brand, is it a positive . Absolutely. Dubai loved western brands and western press love to establish themselves in dubai. It is the leisure capital. Why is ais at boutique a better alternative than a traditional jim . From a business standpoint . Much realnot need as estate. You are very focused on 2 very specific that you do extremely well. We focus on high customer service. Truewe establish is a experience as soon as you walk through the door. You have a customer service, pleasant and therefore you. Your shoes are waiting for you. Could you can get it through an app. It is a huge asset. What is the price of a class in dubai versus new york . We charge the same. 35 for one class. A lot of people look at spinning, it never took off of the way it has over the past few years and say it is a fad. Well, you know, i cannot tell you if it will last forever. Studioeps us apart as a is the technology. You can really adopted with it. Our classes each might is set up with proprietary technology. It tells which resistance and speed to work with. You tend to peak in a camaraderie type of way. All of that lens to being able to grow and adapt. We are very goal oriented. Each class sort of grows into the second class with progress and you know, you have monthly challenges to react challenges. It can grow into something bigger. A mountain bike, your blazing trails but it does not apply in this case. Amira, thank you for being here. The crater director of flywheel middle east. Tyler morris is still here. We will be back with the final thoughts in a couple of minutes. A real estate investor. He has been my guest host for an hour. Tyler, you own the 70 hotels. Some of your hotels are killing get. We talked about it. Your business your business is dependent on the American Economy which insulates it from a lot of what is going on beyond this countrys borders. When you look overseas to china and to europe, what do you think . Our business is doing great right now. T will be up 7 revenue per available room . Customers are saying and the hotels are full. The United States is full again. The whole industry runs on the gdp growth cycle. My concern is do europe and china bring down the United States . From our perspective the United States economy is doing great. You see it . We are in 17 states area parts you never heard of like allentown, bethlehem which are doing great. You heard of them because they are a billy joel song. We are in alabama, west texas. , so 50 ofnd china the United States gdp is good sold overseas. If china crashes, you are seeing some cracks in china right now. Europe is a real debacle. Can they pull down the United States . I hope not. Is that all we have to go on. Great to have you here. Tyler morris. I will be back with you in a couple of minutes. That is going to do it for market makers. Have a great weekend. On monday, taking the tv public. Going to the digital stage. Is it possible . We will speak to the ceo of pbs. Hour,utes past the Bloomberg Television is only the markets. Here is scarlet fu. Thank you. I watched downtown at bp bank is in the digital age. Downtown abbey. They are set to close out a fifth straight week of gains. 0. 5 . Good for a gain of todays catalyst is china announcing a surprise Interest Rate cut. A europe saying it is ready to take additional steps to stimulate the week you he was coming. Joining us is a chief strategist. The sales behind us, the wind behind our sales. As we head into the weekend. What is the setup for the new week that we have a holiday shortened week and perhaps less participation . You hit the nail on the had. You have wider markets, more erratic markets. Like you said about the ecb, it is going to be up. Trade might be trickier because of all you will not be as high but the general trend is to the upside. We do that Economic Data including home cell numbers. Largely speaking, itll be quite what are you anticipating for the fix . Has been tightut between 13 and 14 level. It has been really tight. The new norm over the last six weeks has been about 1317. Lucy a very, very low decline into the mix. Very, very lowa decline into the mix. Too much news with opec. I do expect it to hold her even tighter hover even tighter. One stock we are keeping an eye on is intel hitting a high. The revenue outlook came out above wall streets consensus and boosting the dividend. What does it look like on intel today . It is very bullish. A lot of call buying. The public was very encouraged not only by the revenue and andnue guidance but the g a expenses being cut. They are saving a ton of money. The dividend increase, their boost. People want in on the stop. It is bullish. Got you. Iffany, the retailer what is your strategy here . Beforeke this stock even the news out of china this morning. With earnings coming out and 96. 5 level really being supported, i want to sell at least 97. 5 and by the call. I can do this around zero. It does not cost me anything. If reside want to do this is we get tiffany going back down, i will buy the stock anyway. Type of trade,s it gives me pretty much unlimited insight. I would buy it anyway. I really love the setup going into earnings. A leveraged way for you to playoff and tiffany following the result . Exactly. I am doing this because i would buy the stock anyway if it declined to the 97. 5 level. Because of that point, i have the leveraged way of getting it to the upside on the earnings call. Thank you. Scott bauer joining us. We will be back on the market once again in 30 minutes as we get ready to close out the week. We are looking at games in the dow and nasdaq. S pcan see that the dow and up by at least 0. 6 . Gain for the dow. Money clip is up next. Welcome to money clip, where we tie together the best stories and video on business news. I am Mark Crumpton in for olivia sterns. Heres the rundown and nation, president obama and speaker bank are good and Speaker Boehner go toe to toe, and verbal fists fly in our own bloomberg debate. , wallace, help and mel is leading a cashless world. And the maker of the candy cross game wants to give you a new sugar high. And