Trend. Is a global we walk in this morning and futures are soft. I would not say they are down. They are soggy. In the u. S. , Producer Prices come out at 8 30. Earnings after the bell. Pretty quiet until we get going in october. Note,ouple items of president obama announcing expanded efforts to fight ebola. Whats the number . Under 2500. It is growing. It is not going away. There is a reinvigoration of what the u. S. Will do. Point 500 deaths. The u. N. General Assembly Begins a meeting in new york city. Talking about ebola, syria, isis, isil, is. A major issue with the u. N. Is can get three limousines . The traffic. They have one lane, elaine for the horses, one lane for th lane for horses, one lane for the rest of mankind. Day one of the fomc meeting. Futures nowhere. Nymex crude gets my attention. Vix, showing some of the sogginess. Continued weaker ruble dollar. Canada weaker. This is a log charg. Only in september. Of Johns Hopkins university would get this. See the gentle curve . That is not gentle at all. In a currencyove against log axis. You are scaling it to show percentages. So you see reality rather than emotion. Just 4 and change. It still has a radical curve up. Toi will not compare zimbabwe. Getting the elements of currency depreciation. What was it . 15 years ago, five rubles to the dollar, now 38. You have your morning must read involving nato. The front pages are fascinating. We did not even know where to begin. Up where you left off, according to the oecd, world economies face a triple shock. Cutting growth forecasts for the biggest developed economies. The reasons why are what you just showed us, increased risks in ukraine, the middle east, and the scottish vote. The backdrop is subdued european inflation. Is theres interesting is no front page on any of these topics. Cameron is blathering about scotland. The news is there is no news as we watch the global economy. Weve gotten so used to the news that nothing is that surprising. The oecd scaledback euro area gdp to 0. 8 from 1. 2 in may. U. S. Growth goes to 2. 1 from 2. 6 . Adam, would you discuss would you suggest the discussions in paris were problematic . One to dotries or 50 something. The question is, what is that . We do not know who among the arab countries have signed up. A photo on the cover of the wall street journal does quit the foreign minister for saudi arabia. Faisal, he looks so much like his grandfather. It is a royal government. They have to do with a view to the east. Let me point out the headline, the oecd lowers its growth forecast. The imf has already twice this year lowered its own growth forecast for the world. It is yet another data point. It is at odds with the equity markets. Certainly in the u. S. Speaking of equity prices and asset prices come our second story covers the u. S. s Largest Pension Fund getting out of hedge funds. Planning to divest 4 billion it has in hedge funds. Calpers says it has nothing to do with performance. Stop performance has trailed against benchmark indexes. Calpers says they are too expensive and too complex. 1100 basis points. 130 5ers said it paid million in fees in the most recent fiscal year. Versus 18 does not work. Will other Pension Funds follow suit . With a vengeance. Last frontpage story. Alibaba raising the amount of money it hopes to make in this weeks ipo. A range of 66 to 68. When is this done . A prices thursday. We will have to talk about it friday. Where will it open . How much public at . How much pop will it get . It would raise 20 billion, almost a world record. Chinas Agricultural Bank raised more. It is not 19 99. Even better, it is not 1984. Fred lane was a young lad. Of return to normalcy. Mr. Lane is vice chairman at Raymond James. He can get me shares in alibaba. A remarkably changed world. I was thunderstruck yesterday to of anclass officers initial Public OfferingCompany Holding a press conference. At all the rules changed on wall street . We have full disclosure. It has kind of taken the fun away for analysts and smart investors. Presshing is subject to a conference. Everything has to be you cannot really talk to individual investors anymore without hearing some liability. Do roadshows matter . Do not go to roadshows anymore. They are useless. They basically tell you what is already in the prospectus. If you skim the prospectus, you have learned as much as youre going to learn. Frankly, busy investors find a free lunch and a summary of what the offering is all about to be attractive. What does the pageantry of this really achieve . Helps them build momentum. It helps them build more excitement. That is one of the reasons the price has increased. One of the things you was assed in your years terrific research capability. How would you presume the global researchlondonbased companies cant analyze alibaba . Is there enough visibility and transparency to understand the first Conference Call or the eighth Conference Call . That is a fair question. Without more access to management, you are going to analyze what they give you. That is all you are going to get. It is a more managed process. Imperfect be an process. Those who were personable and persistent, those who were charismatic. Is Raymond James involved in the deal . Raymond james is an underwriter. This will be a little circumspect. I want to give you some numbers. Alibaba announcing a market valuation of about 160 8 billion, 20 nine times earnings for the next fiscal year. Other chinese internet companys, baidu has 34 times multiple, 10cent. 37 times. Times. Is 29 more conservative. Pricingre involved in dozens of deals. Why would you price a company like alibaba, whose sales are more than the combined sales of amazon or ebay, why would you price that cheaper than competition . They have a disadvantage of having earnings, which amazon does not. It is really apples and oranges to some extent. I think alibaba, on a crumpled the basis i think alibaba on a comparable basis does not look ridiculously expensive. Doesnt merit a higher price . Are they leaving money on the table . They may very well be. To the extent that they are, i cannot say that they are not, to the extent that they are, that is a point for followon offerings. Another story we are following. More problems for the nfl for domestic abuse. The Radisson Hotel chain suspending a sponsorship deal with the Minnesota Vikings. It has to do with Adrian Peterson, arrested and charged with hitting his fouryearold son with a tree branch. He was held out of the game on sunday. I want to make a joke but there is not much its not funny. Nothing to say. The vikings say he will play at next sundays game. The front office at the nfl is doing damage control. Lee commissioner Roger Goodell naming for women to work on the policies against Domestic Violence and sexual assault. He has been under fire for the way he handled the ray rice incident. One of these women headed up office for the manhattan das office. It is not just peterson, greg hardy of the panthers. Ray rice. Mcdonald. That is a long list. That is just recently. Anyway, we will follow those headlines as they come out. Yes, we will. What are we talking about . Calpers. We wanted to let you know that the calpers cio will be joining bloomberg Market Makers at 10 00 a. M. Eastern time. 10 burns will be joining us in the next hour. His new documentary series the roosevelts. Our twitter question of the day, what should be the subject of ken burns next documentary . Tweet us bsurveillance. Good morning, bloomberg surveillance. At the ceremonies for september 11 at the world trade center. Very emotional ceremonies on the 13th anniversary. George pataki, former governor of new york. 8 00 a. M. , in the loop with betty liu. This is bloomberg surveillance. I am tom keene. With me, scarlet fu and adam johnson. We are talking beer. Never too early to talk about beer. Trans atlantic m a as well, especially the Beer Industry. Had again turned down as to be downb heineken turning an sab offer. Matt campbell joins us. Rs are getting back to valuations seen before the financial crisis. Beyond this sector, compare and contrast the pace and the tone of dealmaking overall with the height of the last bull market in 2007. I think getting back to the ancial crisis is the theme before the financial crisis, i should say. Deals are hot. Everyone who has a big transaction in the works seems to be moving forward with it. That is partly down to strong corporate earnings, corporate confidence, economic recovery, low Interest Rates you name it. Chief executives and boards are willing to pull the trigger on big m a. Andhen you talk to bankers lawyers, what is the level of urgency to get deals done before the macro environment changes . Whether it is the fed or the boe moving on Interest Rates . There is some urgency. That is borne out in the headlines. We had a pretty extraordinary merger monday yesterday. A number of very significant deals. Not just sab miller and something with cognizant in the u. S. I dont think there is a sense of panic this has to be now. I think we are heading to six months or 12 months of robust m a activity, barring some economic calamity. Where are we not seeing the m a you might have anticipated . Is thatis interesting energy and commodities generally are pretty quiet. Look back a few years ago, Financial Services and energy made up Something Like 30 or 40 of m a volumes. They are down to pretty much zero. Energy and commodities are really very surprisingly quiet. Weak commodity a price environment. Part of that is feeling burned by bad deals. Campbell, thank you for providing us with context on the dealmaking. , fred laneus on m a with Raymond James. Every cycle is different in mergers and acquisitions. If you look at the transactions, the connotations occurring today. Is it about cheat money . Is janet yellen to best friend . A lackluster economy. Capturing revenue and the lack of organic growth in our economy. The Beer Industry is a great example. There was a beautiful column in the ft looking at 7 synergies. You do the transaction and you know you are going to get the proverbial synergies. How critical are they right now versus other cycles . They are very critical, that is what we are seeing with the ft rw. We are seeing all these class savings and potentially Revenue Growth. Try think these deals. In the absence of organic Revenue Growth. In a traditional industrial deal, i think of the danaher transaction yesterday. How much growth is picked up . From 3 to 5 topline growth . Not in my opinion. It is on the cost side. Thank you. It means cutting jobs. Think about how concentrated our economy has gotten, three primary airlines. Three telecom carriers. Three primary beer companies. What is left . Always stuff left. The truth is, if Financial Services are still relatively diffuse. There are a number of sectors. Business services. We have ken burns in the next hour. Andrew mellon, david canadays fabulous biography. A financial crisis, we are beginning to recapitulate the accommodations of the late 1930s. I think of samuel insell. I do notn tto want to equate it. A redux, almost, of the late 1930s. Theres been talk about crony capitalism. Frankly, these large, nations being approved by the ftc and justice speak to that point. Is happening all over the world. It is a reflection of lackluster economic growth. And lackluster company growth. That is what i mean. The top line is driven by that. It is always the Revenue Growth that drives longterm value. Cost savings compensate you in the short term, not longterm. Coming up in the next hour, we are joined by rhett wallace. Some Excellent Research coming out. He reads the prospectus he reads them with a pabst blue ribbon beer. He does. This is bloomberg surveillance, streaming on your tablet, phone, and bloomberg. Com stop good morning. Bloomberg surveillance, i am tom keene. In morning must read, ken burns theodore andour on franklin. This is where Franklin Roosevelts life changed. He got up and gave a lengthy as far awaye got from washington as he could. This is the famous Commonwealth Club speech. Which laid out his call, bringing the new deal. I remember parents and grandparents with one too many scotches in them screaming about this speech at dinner parties. Way back. This was the pivot. Well said, this was the pivot for fdr. Lessms plenty end plenty is so eloquent. You cannot help but draw a parallel to today. It talks about american exceptionalism. Where is our exceptionalism right now . I am a libertarian. I have to show my liberal stripes at times. I must say that we have we had in the 1930s and 1940s and a certainexplosion of culture. We are now think about all the technology that is changing. Not just technology. Take fracking. That was made possible by technology. We still lead the world, in my opinion, in technology and creativity. Media producer, the content producer for the world. That is the advantage. The big issue is the division in the class structure. That is the huge smoking gun. A theme on surveillance. Ken burns is coming up to discuss his new seven part documentary series the roosevelts an intimate history. It is gorgeous in washington this morning. The sunrise is front and center for the president of the United States. How the u. S. Will apply itself to this growing tragedy in africa of ebola. This is bloomberg surveillance, i am tom keene. With me, scarlet fu and adam johnson. What do we have . I will start with nato. Three natoiers soldiers killed in afghanistan nearly u. S. Embassy in kabul. The explosion sent smoke into the air. The nationalities of the victims have not been disclosed. The u. S. Is leading the International Effort to fight ebola. President obama will announce lands to expand medical and systems. 3000 u. S. Troops will provide logistics, training, and engineering. The outbreak has killed nearly 2500 people. More than 3 million comments, that is how many the fcc has on Net Neutrality. Most of them oppose creating fast and slow lanes on the web. Some of the largest isps urge a soft approach. It boils down to if you go to netflix and you want to download the movie and it takes too long, in theory, you want to be able to pay more so you get that fast lane. If you do that, it means you are creating slow lanes for others. That this issue has not grabbed my attention. If you and i were having a pabst blue ribbon and talking about this, i would not know what Net Neutrality is. You do not mind buffering when you have had a palace blue ribbon. If you want to be able to download the movie faster, great. Ivar disparaging other people. I just want to watch game of thrones. A churn to the market. Fed meeting today and tomorrow. And lower yield. Thats important, 2. 60 to 2. 56 . Going to lose hedge funds. Their return is lousy. They have got eight other reasons and excuses. Fred lane is at Raymond James. He has heard the excuses justifying sub performance. We have been in a bowl market, hedge funds are supposed to give you consistent returns. Are the hedge funds guilty of being in a bull market . They are guilty of charging too much money. Fax it is about fees, not performance. Our fees arent close to 3 and our return was a little bit over 7 . We will do scientific framing. And as, 30 basis points percent. Equities, you make more money. That is the difference. Is ept that the problem lower your pinky. Hedge funds have not been making the cut. The eensie weensie spider so much trying to hedge. If they are trying to hedge, their performance is justified. The first hedge fund that n, hedgedof youpen, against the market. No one is using that kind of leverage any more. I think the majority of hedge funds are also driven equity funds in drag. The fee structure. Cannot translate . They act like mutual funds but want 3 times the fees. . Calpers return go is 7 theybroke the story are all in bull market returns, 18 last year. Away from smoothing things out. Repeat that. Percentreturned 18ish last year. The hedge funds in invested in only returned 8 . Their bogey is 7. 5 , they did 7. 1 . Will others follow . In hedge funds is a small percentage of the portfolio. This is symbolic. Is the symbolic rebellion against fees. If this rebellion is being made public by calpers, is this the kind of move that will prompt hedge funds to adjust their structure . It is. We go from 2 and 20 to what . 1 and 15 or 10. Jargon alert. You make 2 per year on the year, a hurdle rate of 7 , you make 20 of the excess gain. Fee. S an Old Mutual Fund mutual fun fees are now 60 basis points. Have we had a guest on in the last 90 days that is more jargonladen. Hes charming. Hes a harvard man. [laughter] ok. Welldeserved. I know Erik Schatzker will join us later. Its the end of an era of trying to find not a sneaky way theres got to be a better way to make a hurdle rate. More and more towards the mutual fund structure. Use as the going rate for the internal rate of return for private equity m a . The days of 20 are over. 13 or 14 ,vestors, institutionale investors looking for. The private equity firms do not work at that. That is the silent conversation. Low double digits. We are going to get into this. Net clean. Is a bunch of jargon with the man who booted the funds out of calpers. Ted eliopoulos, chief Investment Officer of calpers. He is actually the temporary cio. Cio, died in february. Coming up on bloomberg surveillance, a battle brewing among the biggest brewers. Our single best chart is next. Tom is rooting for pabst blue ribbon. This is bloomberg surveillance peter cook it is a busy tuesday morning. We welcome all of you. Adam johnson and scarlet fu. Our company news. Lets start with radioshack. More blows, the ceo resigns after less than a year. Last week, the retailer posted another quarter of mounting losses and plunging sales. It is working with creditors to raise capital in a bid to avoid bankruptcy. Another struggling retail borrowing from eddie lampert. The companys ceo and top shareholder. Ands has been selling spinning off assets to raise cash as losses mount. An apology from Urban Outfitters. The retailer was criticized by Kent State University for selling a sweatshirt bearing its logo and what appears to be splattered blood. Oh, my god. Urban outfitters has hold the item. Can we get on a senior officer of Urban Outfitters . I dont think anyone is talking. State. Ft kent i remember the silence. Fred lane with Raymond James. Back in 1970. Kent state was the site of a shooting. Hockey game at kent state 24 months after this. The campus still have not recovered. People had to sit at a conference table and say here is an idea for a sweatshirt. We will create a sweatshirt like this. I understand somebody coming up with a dumb idea. Where is the process to vet . Toi think they were trying be ironic. Maybe someone who did not have a sense of historical perspective. In a time when there are shootings in connecticut and colorado and on and on, someone would do this at a National Chain . Are you kidding me . To make a scene and to kind of be exceptional, even if it is in bad taste. That is mindboggling. Thank you for pointing that out. I did not even know that. We are seeing this for the first time. Photos, what do we have . Seeing some things for the first time, here we go. Fighterseshmerga against isis in northern iraq. It is incredible to think we sit around in suits and ties and are talking about all sorts of business stories. There are people dying over there. Times theyew york have a fabulous turkish recruiting article. Really worth reading. How they are bringing in 1000 or so turks to fight for isil. Paris john kerry in yesterday trying to assemble that coalition. Between 40 and 50 countries. I believe we are looking at boots on the ground. Nonamerican boots on the ground. Stay tuned. Our second photo, images coming out of mexico. Cabo san lucas, it really bore the brunt of hurricane odile. 100 mile an hour winds. 30,000 tourists had to go to shelters and leave their hotels. I have been to that peninsula down there. Why am i not shocked . Did you use my Vacation Days . I went in 2010 when they were trying to get people to come down and hotels were discounted by about 70 . That, thereid all has been a lack of hurricanes so far. I know were getting into the period where it starts to stir up. Noname hurricanes in the atlantic so far this year, that is highly unusual. Our final photo . Sir robert geldoff. Bob. A sir. The Better Together campaign in trafalgar square. He has been trotted out, too. David beckham yesterday. Big guns. Fred lane will be out this morning. The oddity here is the idea of what will the currency will be. It matters hugely. The idea that somehow scotland is going to be welcomed with open arms into the eu. And everybody is going to want to support them and having the euro, i think it is very strange. The latest polls in scotland put the no campaign in the league. In the lead. There are so many polls. 4 polls over the weekend. Three said that the union would stay together, one said it would not. My take away is that 25 of the to anotherording poll, 25 are undecided. Im finishing the wonderful book about henry viii. Ne is all i and bolyns fault. He had 6 wives, how many did he kill . Good anglican. Fred lane. By the way, i am an anglican. Y withdiscuss craft brewer the founder of brooklyn brewery. Not as good as pabst blue ribbon. Next on bloomberg surveillance. This is bloomberg surveillance. I am scarlet fu, here with tom keene at adam johnson. Single best chart. Never too early to focus on beer. Putting into context the headlines we have gotten that sab miller is pursuing heineken. V might be ab inbe targeting sab miller. In the u. S. , anheuserbusch and miller coors make up almost three quarters of sales by volume. If you add number three, number 06 . That is the whole corona deal. Look at the far right, craft beers making up 7 . Their growth rate is pretty parallel, production up 17 last year in 80 of the past five years. For more on why a concentrated Beer Industry is looking to get more concentrated, we bring in craft brewer steve, cofounder and ceo of brooklyn brewery. Welcome to bloomberg surveillance. The Beer Industry is pretty highly regulated. Stands to get bigger. What does that mean for other craft breweries . I dont think that is a bad thing for craft breweries. Weve been growing in double digits for the last five years. It pays is increasing. This year it will be closer to 20 growth. 7 last year. Is a very exciting moment. I dont think the megamerger is going to have much impact on craft brewers. You have to ask yourself, i am not an economist or a money guy. Is this good for beer . Since the wave of consolidations began five years ago, the big guys have lost an incredible volume of beer brewed in the u. S. They make it up by buying smaller breweries. That does not make it up, really. Them, the duopoly has lost 3 Million Barrels in the last five years. You might not be an economist but you are obviously a marketer. You have tripled the size of your business in five years without advertising. And thing is happening behind the scenes. How do you increase without ads . Drinkers areer looking for something more from therapy or then they are getting from the big guys. Craft Brewers Alliance applying that. We are supplying a whole range innovativeiting, beers. That has captured a lot of the beer market. You have to battle every day forget budweiser. Red hook. Blue moon. Big breweryogle fake craft beers. Should there be a law . This was made by budweiser at whatever plant . Tedious. Ost devious. You have got to expect a big guys to want to get into our segment. They cannot dominate it. We go to fred lane, he is an expert on lager. Authenticity carries. I think steve is in a good position. Hooku are drinking a red and look at the label and you figure out very quickly that this is not a craft beer. You see the ab logo. Red dog, i think its an anheuserbusch miller coors. You are and position about you are an aficionado. The number of craft beer is doing so well. There is an open distribution system. In open distribution system, terms of making it so that the smaller players have as much of a chance as the bigger players. A distribution system, like the overall growing industry, has consolidated significantly. And anheuserbusch in particular control that distribution system. So they are buying distributors in every state where they can do so. What is wonderful about you, youre not a trust fund baby. Trust fund babies start jan or vodka companies. In industry and decided to get into business. Journalism . You were the Associated Press in the middle east. Good training for starting a brewery in brooklyn. What was it like your first day trying to run a real business . We made a lot of mistakes, lot a lot of entrepreneurs. None of them were fatal and we kept forging ahead. We sold 24 or five customers on our first day and build from there. That is the one thing i think you do better than a lot of i seebreweries, i think your logo everywhere. Is that how you get around not advertising . I knew we could never afford to do traditional advertising. So we donated beer to arts organizations and not for isfits and to this day this how we market ourselves in the u. S. And abroad. We are the biggest exporter of craft beer, about 30 of our production will be exported this year. That is growing very rapidly. As a former journalist, you have not cut all ties. You wrote a book called beer school, discussing your evolution and how you started your business without traditional advertising. Aperture is the dealing tenuous . It is new york. There are exciting things happening all over new york city right now. The tough economy has made young people more interested in starting their own thing. It is almost a darwinian situation. Thank you so much. Fred lane with Raymond James as well. A forex report. It is all ruble. The litmus paper for what putin is doing. And theurns joins us next hour of bloomberg surveillance. We will be right back. The president declares war on ebola. New 2500 are dead in africa. Thee funds, they are out door at calpers. There is little return, there is great expense. An ken burns considers intimate history. Good morning, everyone. This is bloomberg surveillance. Were live from our World Headquarters in new york. It is tuesday, september 16. I am tom keene. Scarlet fu and adam johnson. Read wallace is with us. Really look forward to talking to him. We need to get to a morning brief. Babiala. I like that, that is clever. After reading the 800 page perspective of alibaba you do a morning brief while i look at this. All right. Youre we go. Signs of global slowing overnight. Foreign direct investment into china falls to a fouryear low. German Investor Confidence goes to a ninemonth low and you can inflation falls to one point 5 . That is not good. One of the reasons why future is down. Not a lot, but they are down. Consumer prices come out at 8 30, and then president obama is going to announce the new efforts to fight ebola. The uns General Assembly meets in new york, friday drive and in midtown, and we get a statement from the fomc. There is a press Conference Tomorrow . I do not believe there is a press conference. Michael mckee says it is a really big deal. Let me do a data check. We have so much to talk about here at the top of the hour. 38. 52. Ruble r canada want upe losing. Lets get to company news. It is retailtheme. More woes for radioshack as the chief Financial Officer is resigning after less than a year on the job. Producerronic retailer reported yet another loss. Another struggling retailer borrowing 400 million sears getting the money from the hedge fund of eddie lampert, the companys ceo and top shareholder. The money will be used for general corporate purposes. And an apology from Urban Outfitters. The retailer criticized by penn State University for selling a sweatshirt bearing its logo and what appears to be spattered blood. Urban outfitters has pulled the item and apologize. A 1970se site of shooting that killed four students. That is todays company news. Lets move on to the ipo process will stop this is one of wall streets great mysteries. Guesstimates are made, you do lunch, and in the Offering Company coughs up shareholders and they go well, what do you think . Ali baba is different. Wallace owns this territory. He brought along today the 376 aba, should we do a surveillance thump . One more time for you guys on radio. When a pro like you reads, you are the on the one that reads this garbage, when you read this, what do you learn from Sullivan Cromwell and the others we read them for what is here and also for what is not here. A were not able to read model. Thank you. Continue. Our view is if it is not bottomup, it is made up. It is a directional bet about the Chinese Consumer economy. There are good reasons that would be a good bet, but you cannot go the model bottomup based on the material should you advise calpers or somebody retail who wants to get 1000 shares at the ipo or in the aftermarket after the pop from 68 . What we found that when we look back on these kinds of deals is there are two ways to make money in ipos. One is access and the other is picking Good Companies and what we found is that you can make, you know, four times to five times more on the access side of the accretion that you can on picking Good Companies. All the calpers of the world have access, so they are distinction themselves a mong taking a good company like alibaba. We saw a c class officer, conference. A press i have never seen that. When did this start . When officers talk during the ipo process . Technically, that is something you were not supposed to. The quiet period has to be respected even if youre talking to playboy magazine. Often you see the ceo talking to the steady cam and it is sort of like a home video, what you would get if you want to the roadshow. Not this one. They had all summer to line up the dominoes and now they are just knocking them down. Adam, did you get a swag bag . Yeah, with all of your stuff, and it has the underwriter. This is a change process. It is. This is all about marketing full stuff you said something really key, rett, and that is that you could not a model because there was not enough information in that prospectus. Correct. Wasnt typically was missing . We think of these as term models, i sent up scarlet, take her credit card number, she comes back from time to time to buy things, and we sort of wonder what it would cost to acquire scarlet as a customer and when we would get her back. Alibaba is compact enough that you have to model each one individually alibabas comp enough that you would have to model each company individually. Doesnt that simply mean that there is too much information to try to put into a prospectus because there are so many . In a this format, they could give us a really good spreadsheet that would tell us this, but in the Regulatory Regime it is difficult for them to tell us that. Also, we are in the process of finding out it does not matter. The demand is absolutely there and people do not need to know the details when you have 97 market share. And they are going on the directional bet you just mentioned. I should mention also that alibaba raise the price target here, and then there is a new range, speaking of market valuation come up up to 168 billion. 29 times for earnings. By comparison, baidu, four time. Amazon 133 times. I know you talk about a model being made up her, but there are conspiracists there are comparisons to be made. We think this is a tame valuation. A chinese craigslist. Lye multiple is not wild dissimilar from amazon. The price increase we saw yesterday was very tame compared to where can you suggest where it will open . Way outside my pay grade. Are they going to raise again . These guys are way more focused this deal is 60 secondary. They are much more focused on trade than getting the last dollar person off the table. Give me the prospectus alibaba, 370 six pages. You and i know, we each of us have a certain way we read a prospectus. Somewhere you go the third or fourth step and you look for preferred shares. Jenny strasburg and the crew at the journal today right about preferred shareholders for alibaba. Is that unusual with this transaction . Not. Tually, very much there are many things unusual about this. This deal is like the old tracking stocks where you are buying a company that has a contractual obligation to the Underlying Company as opposed to buying the Capital Stock itself, but most can have 5, 6, seven rounds. And these preferred shares are just rounds previously where they are grossing up at ipo . If the company goes bust, i have access to the assets of im an investor, but if they go bust what im hearing you say, rett, is that in all of the analysis, you are not going to participate because you cannot quantify it. That is not to say it wont go up. There is enough height, excitement globally that it probably will go up but you are not going to participate. I amcannot anyway because a registered person, but as example, another company right behind alibaba our score on alibaba is a 7 and change. Our score on london club is 8 and change simply because of the transparency in the business. We can see how the mechanics of london club works and away we cannot see with alibaba alibaba. Facebook tape with ipo. The you see that . The lessons were learned well. This is critical, folks. Were not giving a lot of blather with hoodies and grins. You are suggesting that alibaba shareholders need to be aware of. I think we saw with twitter how to do it correctly. Goldman nailed it with twitter as far as not making mistakes as far as selectively disturbing information to some people and not others, being aggressive on price when they do not have to be, and then of course the market malfunction with facebook was not easy to be predict. Thats what made it a perfect storm. Can you get me a first aid . I hurt my wrist picking up the alibaba nice try. Tonya, our producer, by the way. Makes all things possible. You just asked her for a what was it . An ace bandage for your wrist because that damn prospectus weighs so much. Los is helping the hedge funds and calpers, scarlet. Ken burns will be joining us later on as well. Good morning, everyone. Bloomberg surveillance. This matters to our guest host, rett wallace, he suggests the little guy, maybe is a pawn in the ipo process, trying to make you feel smarter about the dumb decision of being amalgamated. What is the number one mistake people try to make when they buy an ipo . The big boys have access to the deal at the ipo price and they have access to information that the little guy might not get. Information is useful if you want to make a good said of a bad call. Twitter, dont buy sabr, for example. We looked at the map and found the differential between the value of access versus the value of information, and what we found interesting is this is a look back and one slice of time. If you click all of the ipos, the tech ipos that traded in 2013, they made a 56 return. So if you got the ipo price and you traded right out of it, the value of your access was a 56 return. If you used your access and only bought the Good Companies, then your returns work 63 . So 7 ercent different differential. The little guy only has access to the big tex because he does not get the ipo price and again when we found as far as buy and hold was concerned, if you bought the good ipos at the open, you made 30 . But if you took your allocation of a good ipo and held them at the ipo price, you made 116 , c made almost four times more if you had access to the good deals that if you were a little guy who had to buy them after the big funds but i cant get the good deals come i have to buy in the aftermarket, three days after alibaba goes public. Can i play . If you do not have a really good broker who is there fighting for you, it is going to be tough and you are more likely to buy it at the open than at the ipo price. This is a critical distinction. I mean, you just cant play. Do you consider that your game is rigged . Anything that has scarce inventory has price, preferred access is valuable, so there is very scarce inventory for these ipos, which is why managers and spend time tried to figure out which ones they care about so they can try to get more. Would you purchase shares of alibaba and you told us rating on a 7. 1 alibaba. That is a very high rating. We like the company. What we find is that companies trade in correlation to their company scores, and alibaba scores very high. There are things you have to take on faith as far as the chinese structure of the company as well as the complex the of the entire animal. Very hard to model the whole thing but in general we like it a lot. All right, rett wallace with us. Coming up, we have a conversation with ken burns. Stay with us. It is bloomberg surveillance. We are honored to give you this twitter question this morning. Thank you for the great response on twitter already. What should be the subject of ken burns next documentary . You know, those of you older, know that ken burns changed the way we play the game with his silver award. And many with his silvecivil war. And many others. I think it should be on silly icon valley. Good morning, everyone. Bloomberg surveillance. I am tom keene, with me adam johnson is scarlet fu. Alibaba, he has a nice rating on it, but he has a lot of yeah, buts on it as well. We are alibaba free. Yes. Three nato soldiers killed in afghanistan. It happened in the u. S. Embassy in kabul. The explosion smashed windows and sent smoke into the air. The nationalities of the victims have not yet been disclosed. The u. S. Is leading an International Effort to fight ebola. President obama will announce plans later today. The response includes expanded medical and military systems, some 3000 u. S. Troops will provide logistics, training, and engineering. We should when up the outbreak in west africa has already killed 2500 people and there are many hundreds more who are infected. And the largest u. S. Pension plan getting out of hedge funds. The California Public employees retirement system, calpers, plans to divest 4 billion that has currently invested with hedge funds. Calpers and says it is not about performance. Oo says hedge funds are tw expensive and too complex for stop i want to highlight this. When i walked in, this was the one story that jumped out at me that we were able to get Erik Schatzker, the Market Makers those, to come talk about of you will have the cio of calpers on. Yes, let me throw this analogy at you. Calpers giving up hedge funds is like harvard giving up football. Hedge funds are not core to culprits. Only 4 billion, roughly 3 billion of assets, and many people are not going to miss those hedge funds when they are has symbolic value that you cannot understand. Imagine if harvard were to give up football. Helpers is the establishment in a pension fund business. It is the Largest Public Pension Fund in america, and as a result, it is a pacesetter. It was among the first Pension Funds to invest in hedge funds more than a decade ago. What is happening now is that calpers is like the little child in a Hans Christian andersen tale telling the emperor he is not wearing any close because the dirty little secret is that hedge funds do not make Pension Funds very much money. In the case of calpers, they paid 135 million in fees last year on 4 billion of Pension Fund Assets for a return of just 7. 1 . Here is what Ted Bloomberg west eliopoulos here is what ted one of has to say our fundamental principles is that cost matters. It is an expensive investment vehicle, especially at our scale. 7. 1 is not sound that bad, but if you go over 10 years, 4. 8 on average year after year, and that is much less than private equity and oneffectively the return, 7 4 billion worth out to about 600 million, so another words you basically pay want to make three, and that is not work from calpers point of view. They are not making enough money and they are paying too much of it. Do not forget there is a Risk Management component. Do we know where they are allocated because in most of these funds, the very good ones do much better than the average once, so it would be interesting to know who they buy from. An excellenthe nex point. There are hedge funds a standout from the crowd. If calpers was with one of those hedge funds, one would presume that they would have made more money, they would have done better than 4. 8 over 10 years. You have acid alternative funds 4 , and you have canyon valley fund 25 , and the list goes on. It is all over the map. The thing that calpers wanted to avoid in which every Hedge Fund Investor wants to avoid is just piling on vehicles that amounts to a bet on market data, which is what a lot of hedge funds are. The guys who did well during the financial crisis, that is not what they do. In many cases, some of the long short Equity Managers do not do that, either. But a lot of the 9000 hedge funds out there are just a leverage that on market data. It seems like not a lot of capital to give up on as a cast. If you only have 4 billion good managers have bad years, too. Eliopoulos explains a has to do is scale of the best. For hedge funds to movie scale, they would have to have 10 . You would be at 30 billion question. S the money widen it calpers make more of a statement put more of its asset to hedge funds . There is a reason for that. This was widely predicted by a lot of people. I think of the cfas professional journal. The mathematics dont work. Robert kirby of Capital Guardian trust said 30 years ago with sir john templeton, all we are try to do is make 200 basis points over the index. You cant do that with those fees. Am i close . All of these managers come if you ask them, they struggle. We talked before about access versus performance was up in a world where everyone has access, the martins get tighter and tighter, so it is very difficult for these guys to outperform. Tonia, can you make a note, i would love to know what Julian Robertson thinks on this. We have to take a very quick marshall break. A quickker, commercial break for stop Erik Schatzker, thank you, ted eliopoulos, calpers cio, joining him later. And ken burns will be joining us, he talks about his new documentary the roosevelts. This is bloomberg surveillance. This is bloomberg surveillance. Im scarlet fu here with tom keene and adam johnson. It is early yet in the nfl season, but the problems are mounting. NowRadisson Hotel chain has suspended a do with the Minnesota Vikings after running back Adrian Peterson was arrested and charged with hitting his fouryearold son with hre branch. For more on the nfls damage control efforts, we bring in the sports economist at smith college, and he joins us now by phone. The nfls Roger Goodell has made a couple of mistakes over the last few weeks. What has been the biggest mistake, and is it recoverable for mr. Goodell . Well, i think the initial mistake is responding to slowly and the second mistake is that publiconded to transient opinion into optics instead of to the substance of the situation. Do i think it is recoverable . I believe in redemption both for good dell and ray rice, so i do think it is recoverable. And of course the nfl also made the announcement appointing women to help them in trying to address Domestic Violence. Is that enough of a move to push back against sponsors who are dropping out . I think so. I think they have to stay the course. They have clearly tried to bridge rest their inadequacies and the initial response was up in fact, i think they may have gone a little too far and contradicted themselves. They announced a policy that there would be a sixgame suspension for a first offense of Domestic Violence, and then they ended up suspending ray rice and definitely for a first offense. They need to get out in front of this situation. They need to stop worrying about ,ptics and design a consistent effective, longterm policy. Talk about contradiction and that optics raymond donald, defensive end of the 49ers, was arrested two weeks ago, professor, for Domestic Violence, yet he played this weekend. What is going on . Issue theyther have to deal with conviction and evidence is that because there is an accusation, i do not think that they can act on an accusation. And less, perhaps, we have video that the assaulted can give to us or somebody else can give to us, but if it is simply an accusation, i think they have to go by innocent until Proven Guilty as long as once the evidence comes out, they act clearly and forcefully. Yourofessor zimbalist, as are cellaring, i cannot believe im saying this, 40 years teaching at smith college, you are iconic writing on baseball. Is football different . Are they supposed to get a big asterisk because it is a manly game for manly people . Of course not. Nt get treated with kid gloves because they have annual revenue over billions of dollars and they take part in an Iconic National cultural event in that is the super bowl, probably more important than thanks giving dinner in the United States these days. I think the media under normal circumstances treats them with kid gloves, but when Something Like this comes along, they really bang them hard over the head. The nfl is going to have to do reforming not only in this case but in the case of dealing, i use the metaphor banging them over the head. The other problem of course is concussions, and that is a longrun problem they have to do serious thinking about. That certainly is a problem here. As we look at the damage here, is this enough to tilt the balance against the nfl and its multibilliondollar business to give some of the leverage and advantage back to broadcasters when they negotiate next time around for broadcasting rights . No, i dont think so. First of all, they have a longterm contract that has already been negotiated. The problem with the nfl and media rights is that they have parceled out separate contracts for every single gadget out there you can watch the nfl on, and i think what they have done is theyve supersaturated the rights that are available. What the networks are going to start finding is that when there is a separate contracts for smart phones and other contract for ipads and another for satellite, directv, ever but he has a contract with the nfl, there will be too much product out there and it will start cannibalizing each other. Contracts come up several years down the road, i think you will start seeing smaller contracts will stop got you. Thank you for the perspective, professor andrew zimbalist. Just honored to have him on. On dollarble, 38. 50 ruble. This is bloomberg surveillance. We are on Bloomberg Television, streaming on your tablet, your smartphone, and bloomberg. Com. Here with tomu keene and adam johnson. Our guest host this hour is rett wallace of triton research. Tom . Very good. Finally and with great anticipation, ken burns tackles the roosevelts, the progressiveness of teddy, the adoration and outrageous hatred toward fdr. I clearly remember that as a kid. He is a clip from his film. And belonged to different parties. They overcame different obstacles. They had different temperaments and styles of leadership. The similarities and not the differences between the two that meant the most a history. And then there was eleanor. Ken burns joins us in celebration of a receding part of our american memory. Ken, congratulations. The reviews are what they are, just superb. What did you learn here . I think of James Mcgregor burns theing away in this 2014, great fdr biographer. We knew everything there was to know. What do you bring new here . We bring a lot of things. One of the things is we put them all three together, which seems kind of obvious in retrospect, but it has never been done before. These are three people all born with the last name roosevelt, they are interconnected. There is no franken or eleanor without theodore in his early progressive underpinnings. He sort of set the course, set a block for Franklin Roosevelt, even though they are from different parties, and i think that if the intertwined, sort of complicated russian novel of a story. We run for tonight on pbs will stop tonight is the teens and oh, my goodness, it gets more comic hated, thirdparty move on assumingess of tr, fdr assistant secretary of state 80, betraying his wife. It gets curiouser and curiouser as these episodes proceed. The pivot of fdr, i put that as the commonwealth speech of 1932. Was the nation ready for the new deal . Oh, most definitely. They were starving for a full stop you after member that Franklin Roosevelt was the Vice President ial candidate in 1920, even the Warren Harding and his team slaughtered them. Fdr had made such a good show it was presumed he would be the candidate in 1924. If he had been, we would never have heard from him again, but he was struck by and for tile paralysis. Al smith asked him to be a placeholder governor in new york, and it was there that fdr started experimenting with the only really progressive governor doing important things to sort offset the depression, so when it seemed that hoover was incapable of any sort of large federal action, the country turned to Franklin Roosevelt and was very anxious to hear what he had to do and of course not only did the new deal began to lift the country out of the depression through its stimulus efforts and all the other programs, but with his banking speech eight days into his thing was that he saved capitalism. People were not going to take their money out of the bank, they put it back in. It was one of the great acts of faith and more importantly acts of leadership. This is a series about american leadership. Adam johnson. , is that the message of mr. Roosevelt, that true leadership transcends party lines . I think that is what we are starving for today for i think we can still have an argument about franklin. Trs has got his unbelievable flaws as does eleanor. I think we can raise questions about what is the role of government . What is too much government, what is too little . I think there are times when government has to be a countervailing force, and when of incomea period inequality as we are now, as we were in the 1930s in trs time, the government has to be that force that helps level the Playing Field so that everybody, important,n critical, central middle class, has a voice and the argument, and right now, they do not feel like they have a dog in this race, and nobody cares about them. That echoes with today. We do not do this to comment on the present, but the film has ry sort of antecedents. Lets touch upon this with ken burns, the roosevelts, an intimate history. Not a comparison of the depression, scoreless, to this resin financial crisis, but enough of an overlap. I like how you put it. We do not do this to comment on the present, but it is unavoidable. History does not repeat itself, but we are seeing parallels of income inequality. Lets get two hours twitter question of the day. What should be the subject of ken burns next documentary . Tweet us bsurveillance. Good morning, everyone. Bloomberg surveillance. Night, a poll really showing how the senate races are tightening up, whether republican or democrat, they will write through each of the states and really show what a battle, what a horse race of this would be, the first and tuesday of november. Is the tide turning . Betty liu is here. She looks at the house republicans. How miserable are they this morning . [laughter] they are miserable but also realistic as well. We are actually going to focus a little but on the whole issue of republicans. The very issues that republicans are dealing with, and we are facing this reality, right, where they have got three days in the session before the november elections and they say what do we need to do in order to make sure we dont essentially ruin our own chances . Alienate more people. Exactly. We are going to go ahead and support the president on extending the charter for the exportimport bank, and we are going to support the president on aggressive attacks against the islamic militants. In fact, very likely he will get the support to arm the syrian rebels. Were going to focus on some of those he issues, get them out of the way, and focus on the november elections. We have got ken burns with us hour ass well this well, and we tend to forget that teddy and fdr were members of different parties, but progress is the name of stuff that gets lost these days. Has that soft and with George Pataki out of the political game . Was the former new york governor, the last republican governor by the republican period that held a statewide seat here in the minority. He will be joining us, and yes, he will be talking about, what are some of the issues that will bring both sides together, but i will say this with one caveat. He is supporting his chief eight, his longterm chief aide john cahill for attorney general who wants to unseat eric schneiderman. They have called him corrupt. They say he has not been hard enough on wall street, and they agt to try to win the office. Your other guest, scott rigell, congress meant of virginia, republican, what you expect to hear from him . A he has always been kind of moderate, and he has been lambasted, by the way, guys, by the Tea Party Republicans will stop he has always been a moderate republican. Warren buffett has contributed to his campaign. He supports so far with the president has done. He says the president has been above board on his fight against islamic militants and his plan, but his big question because he is on the Budget Committee is how do we pay for this. It is going to be a lot more than half 1 billion or more in order to really destroy isil. We need a rett wallace to go through those numbers. Them up until you if and score it. Betty, thank you so much. I really look forward to it, particularly with governor pataki as well. I want to talk with ken burns for stub he is coming back. We are going to put him on the hot spot. Ken burns is our guest, and our twitter question of the day what should be the subject of ken burns next documentary . Tweet us bsurveillance. Good morning, everyone. Bloomberg surveillance. Fall is upon us. More singer will join us. Us oft singer will join marvin traub associates. I want to talk about this idiotic penn state sweatshirts. Urban outfitters created a sweatshirt that has the penn state logo and that it appears using paint to have blood on it. This was the site of the Fatal Shooting of four americans by the then national guard. It is mindboggling. I think it is desperation full stop we will talk to mort singer about this post a my mustread is from the washington post. Review of ken burnsthe roosevelts documentary series the series is airing as the country seems least concerned about the common man. We are looking at fdr while beautiful neil deal infrastructure backs were up to, at teddy while our west bakes dry in a solid environment. Very putting. How might the roosevelts look upon the world today with the widening income gap . How would they perceive the common man and the struggles that he faces . Well, they faced exactly that when they were both in office, and that was one of their main agendas, which was how to have a level Playing Field. The age of the bosses and the trust for tr where he felt that they controlled and quite correctly the state legislatures were controlled by the trusts, banking in new york, timber and michigan, copper in montana, railroads everywhere, and we have got the same sort of influence in a different sort of way, so i think they would both be new trying to work to do that and say what we forgot, in order to have a healthy economy, we need to have a healthy middle class, and that was being sort of squeezed from both ends. I think they would be very much engaged in those sorts of issues. I think tr would be stunned that his proposal in 1912 for health care, which Frank Lynn Roosevelt also was not able to do, took a century to get done, and he would be shaking his head at us. The political football of it notwithstanding as we have all spoke, tom and scarlet before about that. Is amazing. Historian Stephen Ambrose safe more americans get their his story from ken burns, and this is why. I agree. If he could get the red sox out of last place one more question on the roosevelts, and i want to talk about your industry for stop i would suggest that the hatred that some americans have for president obama is nothing compared to the hatred i witnessed as a kid for fdr. Where did that hatred come from . Well, you know, he was called a traitor to his class, he was a socialist, he was a communist, he was a dictator, all of these sorts of things we see right now. I would suggest that it is essentially the same kind of phenomenon. Incredibly successful, incredibly charismatic, knew how to communicate. Barack obama also has the extra adage distinction of being an africanamerican. You remember the headline of the onion when he was an upgraded was lack command given worst job in world. Man given worst job in world. And tr with hated in his day by the interests, jpmorgan used to roosevelts because they had had runins with both of them. The length of history has obviously been very kind to the roosevelts, and you wonder when you look at president obama with a 41 Approval Rating and as we draw, how do you think the history lens will perceive mr. Obama . That we do not know, but we time and fdrsur trs time, they had congress on their side. Even Something Like social security, which is a bedrock, a sort of fundamental contract now of our political and social networks, just barely cleared Committee Even with a congress on both sides, so the progress that we think just happens from lightning bolt decrees from our leaders just is not the case, and i think we need to have, you suggest that longer view, and it will take us 20 years, 30 years to put it in perspective. There are people who hate to this president who has done better over the last four years than they have ever done at any time in their lives, so i think we might look back and have perhaps warmer feelings or perhaps even more critical, but the important thing is that we have to let time pass in order to have perspective so we are not just reflecting our own biases and our own inclinations, and that is really important when youre doing history. Ken, i want to shift back 20 he fouro dashed when years ago, you began to change helmet the nation perceives our history with the civil war and everything a few have done. I think of spielberg who barely could get lincoln into the theaters today as you launch this project. How changed is your Media Industry . It has been terrific. For me in public television, which is not an investor question but a grant funding, it is still a huge burden. I feel i get congressman out all the time raising money, but we are in a golden age of documentaries, and the fields, you know, the ratings for the roosevelts are through the roof. They are one of the highest programs this century on public television, and that is terrific good news. We had like a 5. 7 on sunday night, and everybody is just stunned, so i think there is an appetite for longform, there is an appetite for meaning that people understand that all real durationccrues in for so sure we can be add and be on our smart phones and tablets and be disconnected, but this whole Binge Watching phenomenon, and pbs is up with everybody else. You can look at it on your smart phone for free. You can look at it on your tablet for free as well as hitting the traditional broadcast mark. The dvds are available today for sub the book has been out for a week will you know, and everything is taking off, and that you have to be multiplatform. It is so radically different in the world stopping to wait for the next episode of civil war in 1990. Rett wallace of triton research, we are talking about a fragmented media market here where you have got netflix, amazon prime, video on demand. We done fragmenting this industry . Possibly, possibly not. The question is, you know, there is very good stuff that used to show up on a couple of screens where millions and millions of people if they were going to watch anything had to watch the one thing. Now people have to choose it. If you are ken burns, people already know your stuff. They know they want to watch you come us you have a huge advantage over the people trying to get an audience that dont have one. Ken burns, do you watch game of thrones do you watch game of thrones . I binge watch house of cards, and i will be with the creator, and we are going to compare the families. Oppositearities are made manifest, but it is an interesting conversation for stop we are in the same phenomenon of people overwhelmed by information and no understanding. Clear things away so they can binge watch is a way of saying i want to control my information flow. I want to spend some time with something, and i love the idea that you know, pbs is still a kind of campfire around which the hoax country gathers together, but we are inviting new people in by offering these other ways to see it on smartphone and tablets whenever they want. Ken, stay with us. We have got to make your job easier. Our twitter question today was what should be the subject of ken burns next documentary . Here are the answers how about doing a document or a on the beatles . It is the haircut, right, scarlet . [laughter] they are not american. That is the problem. Ken is mr. American for stop that is exact way right. Thank you. But you know, i have already got the rest of the decade, i am doing one at jackie robinson, ive editing the vietnam war so that that penn state sweatshirt drives me crazy thank you. X and ernest hemingway. Ken burns should next to native americans . I did that with the history of the west in 1995 and continue , you know, the National Parks committees and we deal with the west, we are also going to do with the native american question. And final answer ken burns, but you know, i like john tuckers suggestion, the history of bowties. That would be too much. Ken burns, congratulations. Obviously the numbers coming in right now are just absolutely anperb for the roosevelts, intimate history. Ken burns of course changing film history for stop absolutely. Rett wallace, as you listen to us discuss the parallels between the gilded age, what we are seeing right now, what is the story to be written about the guys in Silicon Valley . Trthe interesting parallel, was a famous trust buster, and right now, concentration, there are five banks, to airlines, three telecom companies, the market is doing the trust busting. Rett wallace, thank you for your comments. Bloomberg surveillance on radio continues. In the loop on Bloomberg Television with betty liu is next. Thank you for watching. Tom, aj, and i will see you tomorrow. Good morning, it is tuesday, september 16 and we are live from bloomberg World Headquarters. Former new york governor george attack he will be joining me in moments. Why republicans are lining up so quickly behind the president and how are they going to win a state seat in new york . We will discuss the exodus of talent after microsofts 2. 5 billion dollar purchase of mojang. Writers are now targeting the amazon board. The president of the Authors Guild will join us and just a few moments. There is a look at our top headlines policymakers of the Federal Reserve begin their twoday meeting today. The fed is winding down the Bond Buying Program and is deciding when to raise Interest Rates. Resident obama is ramping up the fight against ebola. Of u. S. Will train Hundreds Health care workers and employers to 3000 military personnel to west africa. Alibaba is boosting th