Drive retail airlines out of business. Welcome to Market Makers. I am scarlet fu. Some breaking news. New home Sales Numbers are just coming out. Lets head out to mike mckee who is in our newsroom. What do you see . The expected in new home sales, they fell by 3. 2 . That was not different than what people thought. Is interesting that happened that january was about growth. It had been stronger than people thought going in. 455. T falls to the drop is a little less than it wouldve ordinarily been. Everybody is going to write that off to the weather. February, that a still stronger than what we saw last re wasnt a the weather problem. Rates may be more important than the weather. We may see a comeback. Tosumer confidence, we want follow this closely. If the weather had an effect, it might show up here. People get more concerned about confidencesumer rises more than expected. It is a big jump over the month. People think that things are going to get better. The Expectations Index increases to 83. 5. That might be what you are seeing in terms of the weather related affect. People think things arent great now but they will get better. Feelant to see how people about jobs. They are feeling stronger about that. The numbers overall are not bad and explainable in terms of new home sales. It is good news in terms of consumer confidence. Maybe when the weather gets warmer we will start spending again. It is not happening today for sure. We saw the the data, s p 500 take a big leap up. They came back to where they were before the release. They are up 10 points. The dow is gaining 6 10 of one percent. And the nasdaq is up after lagging behind the last couple of days. S p hadoday, the climbed for two straight days. This is a little bit of a bounce back. News, generale motors may not have recalled all the chevy cobalts with bad ignition switches. This is according to two complaints filed against gm. Gm is not commenting on these new complaints. President obama will call for big changes at the National Security agency. Theants the nsa to stop election of phone records. The phone companies will keep the records and the nsa would need a court order to access it. Surveillance is taking over Market Makers today my cohost tom keene is joining me. Up from twopsyched hours of radio. All the interviews we do our great. The reason we do this is the idea of speaking to someone like a nobel laureate. The crevice or talking to him about his rate mentor. What a privilege to talk to him. It was about carl icahn and the use of cash. We were talking about bonds versus stocks and all that. It was a pretty esoteric conversation. This is why we do this. I get to hang out with scarlet fu. Another sign this morning ist the post cold war unraveling. G7 has kick russia out of their club. The g8 is now dead. Kremlin even care that they are not a part of the g8 . Cared theyif they are doing a good job pretending that they dont. Putin presided over an awards ceremony for artists and actors. Yesterday it was another awards ceremony for people who participated in the sochi olympics. To work with the other g7 countries. There is a realization that for a while the g8 has been g7 plus one. Even the russians felt like they were the odd man out. It was not a useful place for them to advance their agenda. The g20 is less exclusive. Allies. More of their they could do better at moving things along. If they do care, they are turning a deaf ear to it all. Theyre pretending like it is not a big deal. Russia in the g20, has any of that changed . They have good support when it comes to the g20. Im not sure the chinese are happy with what the russians have done in ukraine, but they have not been very critical. The resilience of not been overly critical. The russians still feel that they can do a lot with the framework of the g20. It wouldve been nice to host everybody. It is not more important then taking crimea was. Been so much criticism against president obama. He did have sanctions against russia. One of the consequences so far . The sanctions that have been imposed thus far, it is arguable how much affect they have had. The threat of sanctions does look like it is going to undermine it confidence. Money is flying out of this place. More money has left russia in the first two and a half months of last year. Esther was a bad year. 62 5 billion have left this year. 65 billion of left this year. The economy was not a good shape before. If we see more money leave, they could be looking at a recession. It will be hard. I think you get the impression. About capitalng flight is a lot of this money was leaving the money before forces surfaced in crimea. You could say the same thing about the depression of the ruble. The stock market has had a good week. House,en to the white remember that you might be hearing a little bit of spin. Take that with a grain of salt. Thank you so much for the report from moscow. We just saw him. They are in shock over the new sanctions. More could come. The president will have a News Conference at the end of catchclear sublet. Eating that on bloomberg television. He is scheduled to start speaking at 11 00 eastern time. Has seen thesney future and it may be on youtube. He will tell you about their latest acquisition. Airline pilots are making more than minimum wage, the wonder there is a shortage. This is bloomberg television. Disney is acquiring maker studio. The price tag is 500 million. What will disney do with its new vast digital audience. Here d erlichman is Jon Erlichman is here. What is this latest say about disneys longterm goals . We recognize that our consumers are going more and more online. Theyre watching more video online. If you look at the internet and internet advertising, what are fastestgrowing areas is online video. They are saying that their customers are going there. They know the ad dollars are going there and we have to have a play there. They buy maker studios. Over 380 million subscribers. This is a great way to step into this business. Is youtube a success . It is making more money than god. They have 6 billion in revenue for google. There are a lot of users in revenue. There are no real profits. Maker studios is one of the largest layers in terms of youtube. It is not making money. It is losing money. Amazon is building revenue and has little profit. One day there will be profit. Maker studio will be housed in a disney. Youtube is part of google. Similarks made a investment as well. Tell us about that and how fits into a disney is doing. They bought awesomeness tv. There is similar thinking. Youtube is a massive place. Lets make a destination on youtube so anybody who is making some random video somewhere in texas caneurope or all find a home and we can find a way to brand all that. They have similarities on that front. You have layers from inside awesomeness theyre having some influence in dreamworks. The deal is about how this works as well as the economics of the business. The idea of figuring this out. Sweeney, does the Media Industry have time to figure all this out . Spend billions of dollars and you dont know where the payback is . These companies are walking a fine line. They want to preserve their existing business which is extraordinarily profitable. Everybody is making money. They need to preserve that but they need to recognize that consumers are shifting their habits. Youtube watchers teenagers . These may be the people who are not paying comcast. They are consuming their video in different places. I am sold. How will disney use maker studios . As a brand extension . Will create content for youtube . I think the marketing is the biggest opportunity for them. Staryou think about the system and what they have been able to do over the years with disney channel. If you can find talent through maker in get excited about it through that platform and bring it to other disney channels, that is a potential when. Disney. Star wars at there is great marketing opportunity. Disney may focus more on that as opposed to the economics of this business. Advertisinge the dollars with youtube. There is a trend of video advertising. Struggledlike maker to get paid big ad bucks for every single video. Go, who is ben sherwood . Is going to be the new head of Abc Television reduction. It is a huge job. They come set of abc news where he had a nice and successful run. He turned around Good Morning America. It is another example of a strong bench. He would make Good Morning America and younger and hipper. They did. Today has owned the morning. Get 14 mentions of bloomberg surveillance. Does this mean that been sure what is being groomed for the c suite later on . He is in the running. Disney loves playing it this way. You have all these potential players. It you can keep his name in that hat for sure. Thank you, Jon Erlichman. On Market Makers they put a scott a shot of scotch in the coffee . Up, a big change in the ranks at carlyle group. Who will tell you about it when we come back. The usual team is out vacationing. There was a shakeup at carlyle group. They have a cochief operating officer. He was a top deputy at jpmorgan. Lets talk with mr. Kavanaugh. Was he thrown out the door . No one is ever thrown out the door. Seen isains to be banking guys like this land very nicely a private equity firms. They get a tremendous amount of money. This guy dealt with the london whale investigation. Now he is going to a place to does not exist under as much government scrutiny. There isnt that much regulation. You know where everybody is going. It you fall off the chair . Im expecting senior guys to take a big jobs like this. That said, it was a bit of a surprise. To wonder why they needed a guy like this right now. They havent done a fantastic job articulating why this is the right time to add a senior person at the top of the organization. Three founders are not exactly young. One thing that many people do is realize about carlyle it a growing industry. Each one of those functions like a mini business in of itself. You have 118 funds. The thing is huge. They try to institutionalize it. They want to put this younger guy in charge of it. They are splitting this role. They are saying there is enough work to go around. We are such a sprawling organization. I think they are wondering if anybody gets hit by a bus, we have of backup. They are getting older and doing their charitable stuff. Are 64. F them David Rubenstein is one of americas great philanthropists. It is part of institutionalizing. One thing that they have done that is interesting is they have a committee called the management committee. It was historically the place where reporters would go to figure out who was in power. When they hire a new guy they put him on the management committee. It is now 16 people. Jamie dimon going to retire anytime soon . It has been a rough time. They probably want some time to sit back. That was part of it. That job is done. It is tough to gauge when he will step down. I dont think he is being hurried out. If he is going to do it on his own time. We had to look at the markets. Is time for us to go on the markets. We start with the major equity indexes. Rebounded. S p the dow has gained 100 point. Nasdaq is gaining the most. Bio techs are among the big decliners. Is speaking int the 11 00 hour. The russian ruble is doing better today. Lower means stronger. That is what prudent gets today. Nevertheless, some real Economic Impact this morning. We really underscored the flow of capital that we see. We have a lot more to go. Rush is headed toward recession even without the sanctions. The first he was of big investors after the fall of the soviet union. When he put their money his money there now . We will to you the story of cloak. Welcomes Market Makers. I am scarlet fu. I am tom keene. We are here for Erik Schatzker and stephanie ruhle. Vacation withn a children. What is that about . Things between the United States and russia are heating up. Depreciating, jay jordan is here. Known for investing. Until two years ago, he was able on russia. Wonderful to have you here. Would you invest in russia this morning . No. We camewent in in 1998, in and we invested in russia heavily. We built the largest Cable Tv Network which we sold in 2006. Since then, we have look for opportunities, but we have backed away because of what we are seeing in russia. There is no rule of law there. We are very howhe critical question is should we treat the oligarch . How should we as a public treat that . They got control in the early 90s. They got control of the russian thets and absconded from russian people in the public. You have to treat them individually. When food and came into when putin came into power, he had a mandate that said stay out of politics, pay your taxes, and we will leave you alone. Some of them began paying taxes. Of course he was the one that decide who can. What would it take for you to invest in russia again . What did you see when you went . It is the same old same old. Went in, itinally was under the banner of jordan industries. It is now the jordan company. We would never put lp money into russia right now. Friendships in russia and we were successful. I dont know if you are familiar with the 60 minute piece bill is a friend of mine. I had reference with him in london. They just stole his business you have been one of the great forces behind one of the great cities in america. You have done this for decades. Heres is a photograph of me and scarlet fu in a gorgeous wedding. Owntown in chicago what did it take to rebuild . What was the social force that reenergized downtown chicago. Kniticago has a close Business Community. It is not fractional eyes. Everybody is together and on the same team. Coalesce all of the forces in the corporate sector to rebuild the city. That. Re continuing on it has to do with the unification of the Business Community as one that the, i was there of the parade. Black hawks. Thes there the day of parade. How close to chicago to being a detroit . How can they escape a bad urban outcome . Question of the day, decade, when you have you what have you. Ron may have to do that in chicago. The state of illinois may have to do that. It is a poorly run state. It is drastically underwater. 140 billion or 150 billion dollars underwater. I do not know where the money is going to come from. You sounded your own pe firm back in 1982. You are seen as a pine air in private equity. What is the biggest change you have seen since you started in this industry . It is somewhat cyclical. It involved evolved where a number of players were not able to sustain themselves. Funding sources are putting more money with fewer lp firms. Transitionn that take place. We have been lucky enough to be one of those firms. We began to build our enterprise and there has been a transition. Has been there has there been too much money . Absolutely. Depending a what marketplace to serve, the big guys can you come back . We are getting honest answers. We have been able to provide better returns in the single digits. The real key is how much money can you return for a respectable irr. Were initially focused on irr. That does not mean anything if you do not get your money that. Please come back. I would love to. We covered detroit, private equity, chicago. Thank you so much. We will talk about notre dame next time. Coming up, they keep it safe at 30,000 feet. Wait until you see how little some of the Airline Pilots make. Airlines are desperate to find men and women with the right stuff, but who wants the glamour of life in the cockpit when the starting salary may only be a few dollars above minimum wage. A government study says that almost every Regional Airline fell short of its hiring targets last year. Helene, what is causing the Pilot Shortage . The starting salary is low, but it does get higher. Term, new pilot rules went into effect january 4 that limit the amount of hours that pilots can fly. The need for 5000 more pilots. All pilots have to have 1500 hrs of experience. That is about four to five years to get that level of experience. Because Major Airlines have not been hiring for most of the past decade, or have not been a lot ofguys and gals coming out the military going into the profession. Decade, the world moreneed half a million pilots. 50,000 to. Alone, 60,000 more pilots. What about how expensive it is to train to be a pilot . We estimate it is about a thousand dollars an hour. 1500 hrs is four to five years of experience. You need to figure out a way to fly to get that level. The old rule was 250 hours. That was not picked by accident. Most kids i came out of a fouryear University Program came out with a couple hundred hours and they could get the rest with a reasonable cost. Now, it is costly. I remember when pilots made a ton of money. They worked the shortest hours and there was a prestige to it. Is that gone . Yeah. Even in a big plane . The senior captains are up in range. 350 to 450 are the ups and fedex pilots. The kids that are making 22 and 25,000, that is a joke. Why should those pilots fly for delta . Can they go to emirates and do better . That is what is happening. Theyre fine for International Airlines and emirates will start them at 82,000. American delta united will start their pilots in the 60,000 to 70,000 range. The guys and gals flying for the theonal airlines, connector. Are they safe . Are they certified . Do you feel comfortable . They are trained. They should be earning more money. I believe that over the next 45 years they will have to in order to attract people to the present to the profession. Your Party Started to see a lot of the big airlines work with universities to establish training schools in order to help these guys and gals. What does this mean for the Regional Airlines . They face a Pilot Shortage and they are finding a hard time getting anyone to steer the planes. What do they do . Memo they are shrinking. Theyre going to bigger planes. We are seeing a lot of the 50 seeders going away, being replaced by 70 and 90 seeders. Seaters. We do not have enough pilots to hire. Tal