great to have you here. time for theis newsfeed, the top stories from around the world. in india, a historic defeat for the family that has governed the country for most of the past several decades. outsition bloc led by modi that the congress party. raul gadhi conceded defeat. modi promised overhaul of the economy. uber in talks that could end up tripling its valuation. according to people familiar with the matter, it is trying to raise more money in a round that would value the company more than $10 billion. uber thus far rolled out its service in 115 cities around the world. los angeles clippers owner donald sterling is fighting back. according to "sports illustrated," he reportedly told the nba he will not pay the fine from last month and may sue the league. nba banned him for life for racist remarks. leagueow shot -- the itself cannot force them to sell the clippers, only the owners can. >> it is amazing, his resistance on this. really interesting to see if he will succeed in fighting that fine that they levied on him. another big story we are watching this morning has to do with the restaurant business. darden restaurants is throwing my lot the back into the sea. he is selling the seafood restaurant chain for a private equity firm after two of its biggest shareholders pressed darden to keep the struggling brand. let's bring in a restaurant industry analyst for miller stay back. is the big shareholder that pushed the company to keep red lobster but to restructure in other ways. is this a loss for them that they succeeded in selling red lobster? what's i think for star board -- >> i think for starboard the battle is lost but i don't think the war is over. there are still call for a special shareholders meeting. it is supposed to close in the august fiscal quarter fordarden. i suspect the focus of any special meeting to replace board members of garten. a peer firm bob evans -- and i would not be surprised to see something similar happened to darden. getting good value for the franchise question mark >> fair valuation is in the low to billion dollar range we were looking at for potential sale price. roughly eight to nine times trailing ebitda. within that, and includes a little over $800 million in implied real estate value from the company-owned restaurants. >> you see a lot of the red lot there's may be shut down or sold? >> they have experience in the restaurant area. they own california pizza kitchen, on the border, macaroni grill. they will go through all the company assets and see which ones will be closed and engage in its own turnaround operations. the good news is darden already completed a lot of the requirement. d restaurants over the past four years. >> but it has not turned around and sales. really abysmal sales. eight of the last minute quarters. and red lobster, it is not exactly a desirable brand in terms of its image. >> that is absolutely right. if you look in relation to some of the other darden brands, red lobster is the one failing really to attract younger customers. as well as those who make higher incomes. starboard explicitly said it wanted darden to hold a shareholder vote on a sale or spinoff of red lobster. why would the darden board and management turnaround and effectively pulled them in the eye and say we are doing it whether you like it or not. >> i think darden was facing thature to show up with balance sheet. their focus right now is really trying to turn around the olive garden brand which, i mean, it is the flagship brand. it really has to rely on olive garden to help finance some of the newer brands. >> those all fair points, of course. sale to golden gate would not have been possible after a shareholder vote? they need to shore up capital, sure, but presumably there is interim financing available. if golden gate was interested today presumably it would be interested two weeks from now. >> that is also a valid point. ard was what star bo after with a more comprehensive break above darden. the larger brand of specialty restaurant brands. but our concern but that proposal is restaurant food brands -- if they had gone their own separate ways they would have to arrange their own financing in their growth would have been compromised. >> i want to ask a broader question -- this is a segment that has -- is troubled broadly as well. of fastthe upper end food. we've seen rapid growth of chipotles and five guys of the world. what can the olive garden red lobsters, what is the outlook? >> what you really have to do is focus in on value and some core menu items to keep customers coming back. but also what you have to do is try to attract the younger customer as well. things like having post dinner entrees or small plates, that gain younger people. what chipotle has done over the past couple of years -- that is something they have to look at as well. >> stephen anderson from miller québec, thank you so much. appreciate your time. retailtime, talk about therapy. some good news for the folks at jcpenney. the struggling retailer reported its first quarterly sales game in three years. jcpenney are still losing money, but less, however, van analysts expected and investors this morning are rewarding management with a 16.6% increase in the stock price. let's bring in an analyst with imperial capital. mary, you have been very bearish on jcpenney, $2.50 price target. based on the results, are you thinking about changing that? >> well, actually, to be fair, we have been very favorable on the turnaround at jcpenney. unfavorable on the shares. that is absolutely true. when you look at the first order, the first quarter came in in line with expectations in the sense that we were expecting the company to gain traction. our comp sale estimate was up 4.3%, the company came in better metric,but the ebitda more important, came in -79 million, a big improvement, and theestimate was -119 and consensus was even more negative, negative 170. we were more bullish and certain respect on the turnaround from that perspective. and we do, we still expect ebitda to recover significantly this year. we see good traction in q2 and q3, but the key is when you look out to 2015 and you assume ebitda improves from a run rate right now -- or i should say ltm of negative 434 million, with the thinking we could get close to 600 million. but even if it gets to a billion, then where the shares are trading today, the company is being valued at right around point ofebitda at that time. if you look at macy's, which execute very well and generates they ebitda margin nearly twice the what jcpenney could get to at that time, 2.3 times consensus estimate for 2015 to me you would have to say jcp citrate actually at a discount. that is why our underperform rating and we are looking at option value on the shares. >> is to clarify -- and i am glad you made the point -- when i say bearish, you mean on the stock price. and you remain in that camp that mike ullman is doing a good job, jcpenney is turning around, but it is just a valuation problem. that the stock is not worth as much. >> that is correct. that is because the company has a hefty debt load. foure about 4.6 billion to point 7 billion net of excess cash on the balance sheet. however, with the favorable operating momentum we are seeing, we think the company, if the shares continue to rise, could take advantage of the increase in the share price and do another secondary offering and reduce the debt load. i think that would be a very favorable move for the company. >> i want to move away from the finances of the company in a moment to the store. who is shopping at jcpenney now? who are these customers question mark are they people who are coming back? are they new customers? and is jcpenney just turning back the clock? back there turning clock, the business -- people forget, it was not so fantastic free ron johnson. it got worse obviously. but it was not like they were doing so well before he came on board. they were say probably treading water before ron johnson came on board. the core customer is a woman who is about 55 with a household income somewhere in the $35,000 to $50,000 range. and so, the core customer has come back. i would say that is where the majority of the sales are coming from. but as the company indicated on the call last night, yesterday afternoon, they did see some new customers coming in. so i think the company is starting to attract a new work customer. and again, we will continue to see the traction. but this is a very moderate consumer looking for value. and this could explain why we saw that the client at cole's .ank k --ohl's incipientplains this turnaround most clearly? is it the ability of mike ullman? is it the enduring allure of the jcpenney brand? or is it may be mistake that so many people made calling this company among the walking dead just 12 months ago? i think the really key point here is the company's private brands resume in a very well with consumers. and because they brought the private brands back -- st. john's bay, worthington, and also with their exclusivity with liz claiborne, they own the brand now. now that they are improving the assortments, they have the right sizes, the consumer has come back because both the brands that resume. if you look at the composition of their sales, about 50% is private brand and/or exclusivity. that is what is driving the traffic back. but remember, we are also going against some very easy comparisons. and the first with the comps of 6.2%, that is against two-year stacked the kleins totaling about 36.5%, and for the balance of the year the comparisons would be easy because we are going against two years stacked declines of over 30%. >> a great perspective on jcpenney. the turnaround is underway. the stock, however, overvalued. bullish.ome back -- we will talk about some big names that are still betting on the embattled company. >> and some new ones. ♪ >> we have been learning this week about what some of the biggest names in finance of buying so far this year. hedge funds have to disclose their positions each quarter. so we now know what they bought and sold in the first quarter. though we don't know exactly when they traded, and what they have done since april 1. but still, lots of interesting stories pop up and stocks tend to react or do to help us break it down let's bring on -- our friend, a former fund of funds manager and bloomberg contributing editor. good to see you as always. interesting thing stuck up. herbalife shareholders adding to their positions at a time the stock was falling. during the first order, it was down about 27%. we got a lot of regulatory risk hanging over it in the form of a probe from the fbi, various states, etc.. why take on more shares of the company at this point? >> i think at this point it will crystallize into the true believers and the momentum players, the guys who are looking for short covering, rally, and the generic sort of quick traders are in and out. by now you've got the true believers, those who believe it will make its way through the end. i think to prove they are the true believers, if you look at the last earnings, not much in the way to price action. it is really not about earnings anymore but whether this is a going concern, will they get shut down, are they owing to end up in a situation likenuskin in china where the chinese act on pyramidunder chinese rules. there are all of these regulatory issues globally but at the end of the day, if you're in it now, you are into the end. >> i am fascinated because herbalife is also indicative of the trend you see. there are so many stocks out there, so many companies and so many stories and you see people piling into particular names. especially one like this one, where there is such an overhang and a potential risk. why do you think this -- you get this sort of mentality on the part of some hedge fund managers where they all cluster in particular areas? >> they often have done their due diligence. they have done a deep level of due diligence. you can speak to 10 lawyers and five of them say they are all going in orange jumpsuits and another five will say, you know what, the ftc brought 23 different actions on various pyramid selling situations and they have not acted on any one of these. they could've easily at the herbalife. there is nothing new there. why now? and it is a great buy, you are selling powder through a distribution force that loses money. >> and we do not know what they were doing during the quarter. this just shows a point in time, march 31. it would seem to me that a stock like herbalife, from top to bottom, 40% move during the first quarter is a great training opportunity for an active long short equity manager. >> an interesting point for viewers of that are interested in the use of these sorts of silence. there is the 45 day limit. what you'll find is, any manager has got over $100 million has to file one of these reports. you will see different kinds of names. when you see something like stevie cohen is in there, that is a different situation than saying richard perry at 7.7%. all of which is true but which may not be -- you have to know something about the managers and not just recognize the name. some are quick traders who are in and out. relatively quickly out with a good slab of his position but richard perry actually, of the hedge fund managers, as reported, he is the largest percentage holding, larger than icahn. >> what does it tell us about ebay, or, speaking of carl icahn? >> people follow him into -- >> there you see is a fascinating prospect -- this cross-section of people who followed him. it is not just the day traders. it is not just the activist. it is really a combination. you've got carl icahn in the obviously. but you got jim chanos on the long side, and he knows an awful lot about stocks. you've got the activist barry rosenstein as well as richard perry -- long-term holder. leon cooperman, tremendously, but. he has taken it up -- taken up to a two percent position. it means something in his portfolio. these are long-term guys. >> when we look at a guy like jim chanos him a can we assume -- we can certainly ask---can we assume that that is just a genuine long position and not tree.ind of a pear >> you can assume it knowing his per fully over the years which is overwhelmingly short. when he goes long -- i will tell you this in the general case. and this is not to offend my long-only managers, but the guys who know the stocks best of all are the short managers. they have tremendous conviction. they know their stuff. and jim among them says i'm a look, it has been tough to be a short manager in this space. >> when you get the 13-f filings, people chase it. you get regular investors chase it which is why we see the stock reactions. is that a good idea? it is a snapshot. is it a good idea if you are an investor to come out and buy when you see the guys are buying? ison the 13-d's, which followed ever they go over five percent, much more alive. if it is a stock with good momentum and you see a bunch of stock traders going into it, 45 days later that moment it may have already petered out. it is a bit of a waste of time. look at activists -- look at a --his per fully about two percent of the company but over the course of the same quarter we saw steve mandel take two percent, john griffin, leon cooperman. long-term holders all moving into that name. it looks a lot like the name that was held by -- it looks a lot like being allergen position. there might be something going on. >> there might be something going on but also could be herd behavior. are we seeing too much of that in the long-term managers? >> in general, among the retailer and you will absolutely see herd behavior among activists because they're all after the same thing. exposed --has been sell paypal. not a dumb thesis. in that respect it makes sense. following day trading and hedge fund managers, bad idea. psa from savio. former funds of funds manager. >> a hot horse. we will see if california chrome can give a boost to a sport that badly needs one. ♪ >> coming up, it hasn't happened here in more than two decades. a big bank pleading guilty to criminal charges will settle an investigation. >> plus, something that is happening. glacieroppable melting in antarctica. it may not be too late to stop some of the potential disasters. we will talk to the head of the environmental defense fund. on bloomberg television and streaming on your phone, tablet, bloomberg.com and streaming live via amazon fire tv and apple tv. ♪ live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> welcome to "market makers," everybody. i'm erik schatzker. >> i'm julie hyman in for stephanie. >> on the verge of a multibillion dollars settlement with credit suisse over allegations it helped americans evade taxes and in addition to go quickly it would pay two $.5 billion to the department of justice and other regulators. our reporter has been following this story from the outside -- outset. $2.5 billion, that is new. >> that is new. it is a lot of money and it seems to be welcomed be the starting point of pretty intense negotiations going down. although we do expect it to be coming around the corner really soon here. these settlement negotiations appear to be very complicated and of course, we don't know everything that is going on behind the scenes. there he incremental progress. all of a sudden -- >> you have a number, right. we have seen with some of the other cases where we are really close to getting a deal and one of the regulators in the department of justice decides they want to change something or throw kind of a wrench in the deal. than expected.er but these negotiations are tough. there are a lot of people at these tables want to see certain things happen. one of them is google to play. what is and just think about what we found that recently is what we might be asking for -- the parent company -- the kind of shield the bank from larger damages. >> at the same time, there has been so much criticism that no banks have been prosecuted broadly in the wake of this financial crisis. is this the thing that satisfies critics? it definitely seems like a tertiary issue, right? definitely not something directly related to things that happened in the financial crisis. and talking to people on the administration side, on the critical side, isn't this the thing that is going to be the red meat? >> this is an interesting case and i think you bring up a good point. it has nothing to do with the financial crisis, and, two, it is a foreign bank -- and how much does the average american care about a very small fortune of credit suisse's business which is the private banking unit. case in particular is under a lot of pressure on washington. there was a congressional hearing on this. the ceo of credit suisse had to testify at that. there are questions out there in the market and definitely with a lot of the people i am talking to is -- is this the case that will really give the adjuster to -- justice department but they want, coming hard -- coming down hard on the banks? what if nothing happens? what if we get the goat the plea them business goes on as usual and credit suisse does not have collateral damage, what is next for the justice department in terms of how they will create more equilibrium between the law and the banking system which a lot of people say we don't have right now. >> there is some speculation, probably unfounded -- i am skeptical, for 1 -- that credit suisse might turn around and say, fine, if that is how you want to do business we don't want to do business in this country? do we take any stock in that? >> that is always a possibility. the u.s. is a pretty big market. it would be hard to walk away from this market, as it will be hard for bnp paribas, which is having a similar -- >> credit suisse gets him as a third of its revenue from the americas -- including business -- in latinrica america, but primarily in the u.s.. >> and there are employees and big infrastructure. thousands of corporate clients across the country so it will be very difficult for the bank to walk away from the u.s. but they really did not have many options. the bank has to deal with the justice department. they really just have to go along with what the justice department expects of them. >> who gets the money? what it -- where does it go? does would go to the -- the department of justice, the department of financial services, which is the new york bank state regulator, and also some of the money will go to the fed. >> does this give us any idea of the numbers of the other banks as relevant to the size of wrongdoing in each of the cases? >> bnp paribas looks like it would -- could probably pay around $3.5 billion but it can be negotiated. pretty significant sums. jpmorgan paid out almost funny billion dollars in fines over a period of about a year and the stock price continued to go what -- paid out almost $20 billion. it will be interesting to see this case, with a guilty lee, with the fine, if it changes the dynamic typically of what the outcome of these cases are. >> great to see you. suisse storycredit and also bnp paribas. will the justice department be able to extract these guilty pleas from foreign banks? >> eminem, laying on the climate change agenda for the white house. laying out the climate change agenda. ♪ >> breaking news here. it has to do with the general motors. the company is being fined a million from the department of transportation in collection -- connection with the safety failures of the chevy cobalt and more importantly the company's failure to report the defect to the federal government and what they term a timely manner. >> this is the maximum penalty the government can levy on the company him and the national highway transportation safety administration is going to be holding a press conference at 11:15 to give more details. at the same time, the department of transportation is urging congress to support the grow america act which would boost penalties that they can levy to $300 million from $35 million which, still, if you look at gm as a whole, it is not huge but more significant than $35 million. almost $40 billion in revenue every quarter. >> g.m. yesterday brought the total number of recalls to $11.2 million and it involves just -- a lot more than just the cobalt. >> worth noting it is not just the money. gm -- and this is perhaps of more interest to mary barra and the board of general motors -- a company has to submit to unprecedented oversight by the department of transportation as part of this announcement. the factseveryone, may seem overwhelming. this week, scientists say there is no way to stop the melting of the world's biggest ice sheet in antarctica and as a result sea level will rise by as much as four feet. president obama has promised to make climate change a key part of his legacy. we are asking, which issues should be at the top of his list? we are putting the question to the environmental defense fund president fred krupp. thank you for being here. climate change is a big topic. the president says he cares deeply about it. -- howy tackling -- tack city tackling? ? he should continue on the path he is on. last week he really got out there on the national climate assessment to educate the american public as to what will happen if we continue to pour the solution -- pollution into the sky. and on june 2, the epa is planning, with the president's support, these rules on power plant emissions. they are the biggest source of carbon dioxide in our country and right now there are no rules and no limits on how much can be thrown into the skies. that's got to be number one on the agenda. >> there are no limits? >> no limits whatsoever on how much co2 can be put aside. >> what about other chemicals question mark >> there are limits on sulfur, thankfully, those emissions have come down and we have used the market system to do that. we could do the same thing with carbon. >> what has taken so long? we have these reports coming out that look very dire. did we need that to finally press for more dramatic action? and is the action we are announcing on the part of the administration dramatic enough? >> it is a great first step -- >> show on the first that should have happened at the beginning of the administration instead of this far in? >> you know, you've got to give president obama and the administration credit. they did tackle the other big source of, dioxide. the first few weeks of the administration, they doubled the fuel economy standards so now we are all benefiting not only from lower emissions the lower amounts of money we are paying at the gas pump because our cars are not scheduled -- are scheduled to go twice as far on a gallon of gas. i would say this -- i think one of the reasons we have been stuck for so long is that there is an insistence that people say, yes, global warming is happening. it is good enough for me, julie, if you other technology -- not that you have reservations -- just that we buy insurance on our house not because we expected to burn down. we should buy insurance on the health of our economy and human by reducing these pollution emissions, whether or not we are sure it is happening. i am sure it is happening, but we don't need to be in order to want to buy insurance. >> you sound reasonably pleased with the actions this administration has undertaken under president obama. there are a lot of people who believe in climate change and i should add there are lots of people who don't. but those who do say the president and his administration have not done enough. what are you saying? thef course, we want president to do more. the power plants is the first that. the second step the president could decide to take this very summer is clean up the emissions of methane from natural gas. the terms out half the climate change we are experiencing today does not come from carbon dioxide, it comes from the short-lived pollutants. and the most important one is methane. even though natural gas burns so just aeaner than coal, few percent of methane leaking into the atmosphere -- >> leaking into the atmosphere from the well? >> not only the well site but the gathering and processing lines. thelittle pipes, distribution system in our cities. beenf these leaks have not measured here to four and therefore never been managed. we need to get on this in order to harvest the crime and benefits we could get from natural gas and we were doing a good job reducing emissions. >> is there any movement on that front? dides, the white house announce just in the last six weeks that they will have a methane land and the epa has released five white papers and now the administration has a very important moment coming this summer when they will decide whether or not to regulate natural gas industry. and i certainly hope they will do what colorado did -- governor hickenlooper -- and put in place rules to limit emissions of air pollution. >> does the epa have the same court sanctioned authority to act on methane as the one it is using to act on co2? >> absolutely. and remember, when you act of methane, the other emissions near the well head are toxic chemicals. one colorado at it it reduced not only 100,000 tons of methane a year but also 100,000 tons of volatile organics. these are chemicals that are increasing the size of the brown cloud over denver. >> fred, as i alluded to before, climate change is a polarizing issue. there are lots people in america who continue to be epic, disbelievers even -- skeptics, disbelievers. recently, one of the leading contenders for the republican putnation 2016 marco rubio himself firmly into the disbelievers camp. what does that mean for you and your efforts? depoliticize this issue. but as i said before, we don't have to get people to cry uncle, it is happening. we just have to have people understand that if they see any risk of this happening, that the price is so catastrophic that it is time to buy insurance. but i would love to have a shot at talking senator rubio and all of the contenders -- >> have you had any -- or seen any effectiveness on that front? have you approached some of the folks who are still resistant to even entertaining the idea, and what have they said? have you entertained any of your -- >> i think more republicans are now talking about clean energy. and you will see a change in the republican party over the next couple of years. and the reason is this -- when ageoll americans under the of 30, 85% of them want controls on carbon pollution. so if the republican party or the democratic party or any party wants to have a future, they have to respond to that market pressure this like they have to respond on issues like immigration or gay marriage. >> if that is the case, then the way the president is approaching it may beion, counterproductive. i say that only because -- i am putting this to you as an idea -- if americans as a group one action on climate -- young americans one action, they want to see that action taken by their elected representatives and not as an exercise of executive authority by the white house, would you agree? >> i would say americans want action anyway they can get it and in this case, the epa of the white house responding to the supreme court direct the -- >> some authority. >> but more than that -- the supreme court said the administration has to go forward to regulate dangerous air pollutants. so once the decision was upheld the carbon dioxide is one, they really have an obligation to go forward. at their discretion, the speed at which they go forward. >> and what rules they adopt. i would like to see congress act, too. >> fred, we thank you for joining us this morning. fred krupp, the president of the environmental defense fund with some ideas on what the administration and government can do about climate change could >> coming up, jumpstarting the sport of kings. we will talk about the chief operating officer of the breeders' cup. ♪ --t kentucky derby winner >> kentucky derby winner california chrome has not been feeling great this week but it does appear he will be running the preakness this weekend. staring up hopes to be the first horse to win the triple crown in a generation. if it happens, will it provide interest in the sport of kings? let's ask bob elliston, chief operating officer of the breeders' cup. how much of a boost is it for horseracing to have once down in -- excuse me, one horse win the triple crown? >> it is a huge push for the industry. winning the derby obviously creates this or rough -- aura about resources. the preakness tomorrow, 100 39 years. if california chrome wins tomorrow there will be a whole lot of folks getting very excited about horse racing that don't do it that often beyond the kentucky derby. there's a lot of folks that have a lot on the line in terms of winning should this great story and is california chrome his connections take care of business tomorrow and head to new york. >> you just hit on a big problem your industry faces. a whole lot of people who don't take interest in and outside of the kentucky derby. what else can be done other than relying on the chance of some horse winning two races in a row or possibly three in a row to revive interest in horse racing? >> it's a great question. four majors., have with the triple crown races -- the derby, preakness, and belmont -- and in the breeders' cup hosted in the fall. the three-year-old races that are the triple crown are more of a domestic excitement that builds around that. when you get to the world championship, the breeders' cup, you bring an international component to it. but that is fundamentally the problem -- not all of races but racing across the board day in and out. the events are not a special as the big four majors, if you will. if there are folks working on it. -- theys best racing are really working across north america to bring millenials into our sport because it really is a sport of luxury, a sport of excitement, entertainment, fashion. it has all of those pces to it. and it has quite a bit of celebrity associated with that as well. we've got to do something more than just four days out of the year to create excitement and a lot of folks are working into that. >> what other kinds of things you are doing? as you say, you are trying to reach out to the millenials, because the sport traditionally has been older and wealthier people. looking at california chrome's twitter account. the horse is tweeting. g on int else is goin social media outreach to get them interested? >> think about owning a sports franchise. there are 32 national football league teams, about that number, i guess, in baseball. let's you hockey and less in the nba. the nba.n hockey and everybody has a shot to own a major sporting franchise in horse racing. think california chrome for a minute. these two individuals who own him, they put $6,000 at risk by buying his mother and then they put $2500 at risk to send the mother to the father to produce california chrome. $8,500 -- i am talking to you about their horse on bloomberg. that is pretty cool. at the other end of it, you got celebrities involved in this. we at the breeders' cup have really spent a lot of time cultivating this audience that is drawn to us. when you see folks from entertainment like bobby flay and elizabeth banks and kate upton, folks like jim rome and stephen jackson. there's all whole lot of folks that are in the sporting world and the fashion world and the business world who are drawn to this sport, and i think it has a lot of aspiration to it. we are reaching out to those folks. we are demonstrating what a cool environment it is at the racetrack track, particularly the big event a's, and folks are showing up. >> is part of the message that you, too, and on a racehorse? >> that is exactly how i got in the business. i was an investment banker in cincinnati, ohio. about six guys got together and we bought a horse for about $1500. do the math, about 250 bucks a piece and then a cost us a couple hundred bucks a month to keep the horse in training. 150 first horse won about grand and i sold him for about seven times more than i put into it. that can happen all day long every single day all across north america. it doesn't mean you are going to win the kentucky derby -- >> i was just going to say, it can happen every day all across america but it does not happen every day across america. ella ford mccrone -- it sounds like you made a great investment. california chrome appears to be a genetic freak of sorts. i wish we could continue the conversation but we're right out of time. thank you much for joining us. bob elliston, ceo of the breeders cup. enjoy the preakness. we will be back in two minutes. ♪ >> general motors pays the price. the government finds gm 35 million dollars for delays in recalling cars with faulty ignition switches. their funnyks lose bone. fewer comedies. >> we do not have to tell you to drink up. the surprising change at the top of the global wine consumption rankings. it is friday here in new york city, you are watching "market makers." --how much wind consumption do, haveumption do you you contributed? >> yes. you do not have to choose, you can just drink them all. let's begin with the newsfeed. these are the top business stories from around the world. shares of jcpenney are soaring. the stock has been up 18% after they reported its first quarterly sales gain since 2011. what a long road back. still losing money but the first-quarter loss was smaller than expected. darden restaurants has agreed to sell its robots their seafood chain for $2.1 billion to golden gate capital. they had been looking to spin of the business for some time. same-store sales were down almost nine percent last quarter. 2.1 billion is a fair price, according to an analyst, and this will help them to turn around there all of darden restaurants even housing starts rose last month to their highest level since november, led by a 40% rise of construction in apartment and condo buildings. gm has agreed to pay a record $35 million fine for how it handled the ignition switch recall. the automaker recalled 2.5 million cars because of the faulty switches. at least 13 deaths have been linked to the defect which caused cars to turn off while driving. a formal announcement will come in a few minutes from the department of transportation. in the meantime, let's bring in our peter cook and our auto reporter jamie butters. gm is not only agreeing to the fine, it is also agreed to more oversight. what exactly will that entail? >> the department of transportation, national highway traffic safety administration called this agreement to start. first of all, they will have to pay $35 million, the maximum civil penalty possible in this case, a record amount, according to the department transportation. the company will admit it failed to room -- notify regulators of this issue in a timely fashion. that is the issue, the timing of the response. them toalso require make internal changes in how they handle safety-related issues going forward. its review of safety-related issues. this will be an ongoing scrutiny of gm by the federal government. the maximum they could have gotten, $35 million. the administration wants to raise that amount to charge and automaker $300 million. in a statement today, anthony fox stead -- said -- some of what we will hear from the transportation secretary in a moment here in washington at the news conference. the department of transportation refers to unprecedented oversight. $35 million for a company that generates $40 billion in quarterly revenue seems like a slap on the risk -- wrist. is the oversight a bigger deal? >> it could be. toyota, after their fines and settlement last year, were put on kind of probation. it is probably a little more extreme than that and therefore unprecedented. the idea is completely unprecedented, but gm has already done a lot to add more people to elevate the role of the safety investigators in their team in the company. they have already done a lot to address this. the stock went up when the release came out about the fine because it kinds of brings a cap to it. while it is the maximum, it is not a big dollar amount for them. there is not some extraordinary other thing to it. it was probably a relief to some shareholders because there is certainty to it. the timing was is a prize. people thought it may have come later after gm concluded its internal report, but for as peter said, he wants to raise the fine to $300 million, so he will do the maximum, so why not do it now. it actually gave investors a bit of relief, that they are starting to resolve the issue and move on. >> this has to do with the cobalt. can gm still be fine for other recalls? >> it has to do with specifically the department transportation. as we have reported, the justice department is also looking into this situation. you will recall the record amount that toyota had to pay to justice over it safety issues with the sticky accelerator, a $1.2 billion fine. sotice is to look at this, there is still plenty of pain potentially for general motors from washington. this $35 million could be the start of what could be more .unishment to come there is also a congressional investigation, so the problems are far from over. >> jamie alluded to the idea that congress is being pushed to raise the fine to $300 million. how likely is that to go through? >> it is part of a much broader effort dealing with highway funding that i was not walk through the numbers here, but it is likely there will be some effort to raise the number but nothing is easy to get done here in washington right now in this midterm election year, so i would not hold your breath, especially if it is tied to a larger issue of highway funding. >> beyond the investigations, fine, there is the hit to the gm public image that all of this has created. what are you hearing from your reporting in terms of how that is playing out? is that improving, the outreach that gm is doing to work on that? >> there are some things that they had done to address that. as peter outlined, there will be more headline trauma, more critical questions from congress, the justice department investigation, probably some settlement with customers, the families of crash victims who would have been otherwise excluded -- that gm would not have to pay because of the bankruptcy shield. there will be a lot of costs or gm and headline trauma that goes along with it. mary barra is trying to bring moreof -- and bring culture change to gm, to put a higher priority on safety, and to put the customers ahead of the shareholder when it comes down to it. if you don't come it will come back to hurt the shareholder in the end with big fines and all that. and they hurt to the reputation. at this point, we do not see a lot of change on the showrooms. sales are going fine, but these are cars they do not sell anymore. if this had become a repeated problem, this would hurt their confidence with customers. walking you so much for us through this $35 million fine for general motors. >> in the meantime, gruber is uber isready to -- getting ready to join the $10 million value group. puts it in the company of some very select startup companies. $10 billion is an awful lot of money for any startup. >> it is an very few companies are in that class and those are palantir.opbox,, and valuation, ithe would trumpet its valuation from the last time it raised financing at $3.5 billion. >> $10 billion for uber. on a personal level, i think it is overrated. but if you think about the black car industry as a whole, it is a luxury product. how much reach is there? ofyou think about the size the black car industry, as a whole, doesn't even approach $10 billion? a luxury product actually. they have a wide offering. in new york, where taxis are ubiquitous, and then you have an uber only when it rains and ships are changing, in a lot of cities like san francisco, uber has a lot of offers. in new york you can also get taxicabs which are under -- >> it is never available when i tried. >> in a lot of places, it cost less than taxis. it is not a luxury service. it is an alternative, which you want, when you cannot find a cab. >> is the taxicab industry a $10 billion industry? all, yes, if there is probably a bit of a bubble in u.s. tech, including pinterest, who announced it is raising $200 million. they do not even have revenues. has revenues,er they take 20% from the drivers charge. >> unless it is uberx. 10 billion be worth if investors are willing to go with that valuation. to be bettingave more on just taxis. there is a business model effectively that they have that could be applied to other industries. >> exactly and they are now reaching into delivering goods. that could open up a huge market for them. they can even have deals with retailers to deliver goods in cities like new york or any other city. they are trying to raise less than a billion, which is a huge amount of money. >> enormous amount of venture financing. why not go public? >> another good question. first of all, u.s. tech stocks are very volatile. tech ipos are being delayed. are often opting -- we saw facebook do this -- delaying to go public to avoid public disclosure, which being public requires. they also tend to delay profitability to continue to finance growth. uber is on a huge growth trajectory. to be sure, they need the money. unlike many tech companies which are very nimble because of the cloud and the mobile platform, uber has huge operations. they are now in 115 cities around the world. need in they open, they office because they have logistics, drivers go there to get their commitment and stuff. they also need insurance for liability. each car is covered with $1 million liability. so they need money. >> $1 billion apparently. thank you very much. great story, congratulations. if these value wishes make you laugh, you might not want to last much longer, also if you are not watching television. , he does not seem to be a priority for the new that the tv schedules. >> it is friday. time to take a look at the yearbook game. he is a publisher and graduated from a chicago area high school --teen ♪ >> now that the tv smoke has cleared from the networks, they are getting to launch their 2014 lineup and it looks like, these are out and new series are in. the director of research at horizon media now has a preview of the upcoming season. one of the things that characterizes the season it ntizing?ke is -- eve they have made up this word to describe what they are doing. pan. will see peter nbc has also contracted the rights to the music man. that could be in 2015. right?k you "glee" that is right, but their population is dropping. they never mentioned idol or gle e. this is the first time since 1983 that nbc has cut back or thursday night comedy block. i think that is a response to thursday night football. cbs is cut back their monday night comedy block. moonves spoke directly to that yesterday. let's listen to what he said. >> we shifted down from it, needs to six comedies. afterl still have 4 football is over, but having thursday night football gives us some flexibility. we will open the season with big bang, normally on thursday, on monday night. >> they have a longer drama series. it is sort of like, do not look over here, but look at the football. is that the right strategy, do you think? >> it is because of the numbers football skit. some of the football is the highest rated show on television for the third straight year. the problem with football, once it is over, it is so hard to replace. viewing patterns have been set and you can never get the ratings boost that football will give you. in this case, it is eight weeks. they will move "the big bang theory" to monday night and then set the comedy block. does tell you a lot about how the television industry is changing. the more event programming, that is a theme, change in the focus on comedy, what else? >> more miniseries, limited series. effectively copying netflix and hbo? >> i think the poster boy for that is "breaking bad." the rating skyrocketed and brought in younger viewers, which are things that the networks want. the strategy changes. abc will run 13 episodes of a show and then they will have a 10 week miniseries and then another 15 weeks of the same show. >> if there are so many miniseries, how many viewers can you get? >> there are dvr's and you can also watch streaming. overnight ratings do not mean anything anymore because there is so much on-demand viewing. particularly with miniseries and limited series runs, you can watch when you want. it is serialized. it is like watching true detective or something. >> i see evidence of this every day. my kids are binge watchers. they do not watch appointment television. >> doesn't then increase the pressure on the network to improve the quality overall? if it will be viewing that you can want any time, not appointment viewing, doesn't it mean that the quality has to be better to really get people in? also when there is so much competition for our attention which is not tv. >> they have to go out and find something that is unique and good. fox is very good at that. they have a show called "empire" .bout terrence howard he has kids and wants to pass the business onto them. that is something that has not really been done. we are also seeing a lot of comic book shows, like marvel's "agen carter." shield" haven't they not performed all that well? >> they bring in mail viewers to abc. abc is mostly female driven. they do not rely on live sports. packagenot have the nfl that nbc and cbs now has. it is a very female driven network. they are trying to get more mail viewers. >> julie brings up an important issue which we have not discussed until now, quality. how good is the stuff? >> that is up to the viewer to decide but there has been a change. it is a little grittier, they have taken a page from a cable has been doing for years. kind of like the antihero approach. something that advertises will support, particularly if they can get younger viewers. advertisers are prepared to support it now, but one of the reasons podcasted that do this before is because they were not prepared to support it then. >> this can now be serialized on netflix. they do not repeat well. there is no financial incentive to do it. that is why cbs, the smallest big company of the networks come and they put on a lot of procedural dramas. an over a billion dollars in syndication globally. now you are seeing the paradigm change a little bit because these shows can be financed online. >> what do you think the best new show is? >> i like some of the stuff that fox is doing "the red band society." a comedy show about a writer on snl. i think martin short plays a comedian. we will see. >> yes we will. we will be watching. director of research at horizon media, thank you. >> when we come back, something that you might want to toast, a shakeup at the top of the wine fighting rankings -- buying rankings. ♪ >> it is 26 past the hour which means it is time for on the market. nordstrom topped estimates help by sales at its rack outlets. the share is up 12%. coming up, no fancy watch, no problem. we speak to the founder of a place where you can rent a rolex. it is friday, so it's time to play the yearbook game. graduate of aher, chicago high school in 1944. i have my guess. they have not told me if i am right. this is "market makers." streaming we are --streaming on your tablet, phone, bloomberg.com, apple tv, and amazon fire tv. we will be right back. ♪ >> welcome back, everybody. you are watching "market makers ." >> it is almost noon. >> you know what that means, cocktail hour. specifically on this friday, wine/ . i love it. americans drink the most out of any country in the world. sorry, france. christina mario monti is the third-generation proprietor and also one of the largest importers of wine into the u.s. christina, welcome. >> thank you. it's a pleasure. >> you make wine in tuscany, one of the great growing regions. >> i think you know a bit more about it than i do. >> i have a question about tuscan wine. i know this is one of your finer wines. this is called the alle mura. it is a great one from a great year. why does a one might does not sell for more money? it has permit -- perplexed me for so long. justllo can be had for $95. and a protrudes will send you back $45. both are made with the same degree of care and love. many americans are familiar with opus one. $235. what is going on here? >> it is important to make sure that they are approachable and have good value. it is up to the winemaker. it is one thing to make a small batch that is hard to find. when we have tried to do with banfi is make wine accessible to people all over the world. we sell to about 90 different countries. if we overprice them in the market, and less people will be able to enjoy them and ellorience what a great brun could be. >> but shouldn't that be held in the same regard as a great bordeaux? they are different experiences, so this wine will not be the c,, but they are great. s are thek thebrunello' best of italy. speaking from the tuscan perspective. really, these great wines are very valuable in their price. some of these growths hold a special spot in a fine audience in the world of fine wine drinkers who will pay a lot. >> as eric mentioned, you have been in the business for a long time. have you ever considered coming out with an even higher and boutique wine? reserve that we have limited quantities of, which we sell for about $150. that is about as high as we go, and of course we have some of our older vintages. >> i want to ask you about technology. to what degree can technology help wine? a huge factor. a lot of it is natural from the earth, the vines, but once you bring the grapes into the winery , it is really technology that helps us produce wine in the cleanest and most natural state. >> are you looking for taste or consistency? >> to be honest, both. if you want to be a global ground, you have to have both. most important we are looking for soft tannins and a full, ripe flavor. we experiment with hybrid tanks that are half would, have stainless steel. these are some of the state-of-the-art stills used and patented by banfi. so we have the old world mixed in with the new world. >> is there another new technology coming down the pipe that you are excited about? at theonstantly look filtering processes, we use a lecture dialysis on the line to ionize different particles. the most important thing is to stay in touch with the winemakers across the world to see what the new mist is. we are constantly experimenting. there you also preventing sum of the older, unconventional techniques? biodynamic winemaking is very trendy but inconsistent. interestingnewly finding and filtering techniques, with green tea, for example. >> we have not tried, but as far as biodynamic and organic, banfi is one of the greenest wineries in italy. company called the pacific rim which is focused on biodynamic, particularly the rieslings. we also represent the largest biodynamic organic garden -- winery in the world in chile. those are wines that we really learn from because then you can look at the ancient techniques and see how you can use them to benefit more modern winemaking today. >> you are big landholders come a you own a lot of vineyards. you mentioned buying a company in the pacific northwest. the program, we were speaking with the head of the environmental defense fund about climate change. is that entering into your real estate, agricultural decisions yet? if so, how do you make those consolations? so.ery much we invested in land in the pacific northwest because of the climatic change. the tradition the cooler climates are now producing much riper, better grapes. we also see this in tuscany. it is hot year in year out. we are seeing strong shifts in the global climate change, extremes from one vintage to the next. how we play as a global player is to really diversify our landholdings. we ensure that we are hedging -- >> you are diversified. >> exactly. >> nice to have you here. the co-ceo of banfi that there is. if you do not know them, check it out. it is good stuff. will be talking about deutsche bank. it is selling a las vegas casino that has been a money loser. >> if you missed any of our interviews, you can watch them all on amazon fire tv and apple tv. ♪ bank is saying good riddance to vegas but it seems blackstone is happy to take their place at the table. blackstone is paying $1.7 billion in cash for the cosmopolitan hotel and casino inch deutsche bank bought 2008 after a developer defaulted on a construction loan. deutsche bank was never able to turn a profit on the property leaving observers to wonder if blackstone will have better luck. our deal supported cristina alesci has been looking into the latest deal. arefolks at blackstone pretty shrewd investors. they see something here. if you value this deal on a backward looking basis, looking , ithe trailing 12 months looks a little expensive compared to the other casino stocks, especially mgm. i use that as a comp. thisooking forward, company is generating good growth at the top line revenue. last year was a record year for the cosmopolitan, generating about $630 million in revenue. will go higher. if you look on a forward basis, it is actually cheaper. if you compare it to mgm, they have some lower quality hotels in the mix. this is a pure play premium asset. and let's not forget, the cosmopolitan also has a revenue stream that is very diversified. you will not see a ton of growth in terms of gambling because that is a very mature market in the u.s., but you will see growth in the clubs, restaurants. they have a club, marquee, the franchise opened here in new york, but they have it there. that is tied with the wynn's c lubs as the top grossing club in the u.s. >> if it is so awesome, why didn't deutsche bank want to keep it? >> their ownership was struggling under a lot of debt. the company is now debt free from this deal. that is how you generate value from day one. it does not have a debt burden anymore. on paper, they are still not generating a profit, but they will be down the line. furthermore, casinos are not really the kinds of businesses bankinc. investors -- investors want to have, and regulators. not under orders of the volcker rule, banks are supposed to be getting out of very capital intensive businesses like real estate. >> absolutely, nonliquid. so what will blackstone do with it? do they have to put money into it? >> that is the beauty of this. the length of the blackstone had in this asset -- i should say, auction -- they had a check up. $13 billion to play around with in its real estate funds, probably more if you look at the european and asian money they have. that made them a very compelling fire for this asset. there are not too many people that could put down $1.7 billion. they had a lot of leverage here. i rarely say this when deals are announced, but this actually looks like a good deal for blackstone. >> and a good field trip for cristina alesci. >> the right amount are wrong, i think, is the slogan for the company. sounds fun to me. >> appreciate it. when you are out of time, this is the place to go. the company that will rent you a luxury watch. ♪ >> welcome back, everybody. you are watching "market makers ." who would rent a rolex? you might be surprised. a company allows men to do that as part of an extrusive membership program, a privilege that cost thousands of dollars a year. the founder is here with us. let's start with a who question. when i heard about your company, i thought, renting a rolex or a hillipe, that is not a classy thing to do. tell me why i'm wrong. thanks for all, having me. we are excited to be here. fundamentally, we are an annual membership program to enjoy luxury watches. our members are budding or well-established collectors who have a passion for watches and put a premium on variety even that is what eleven james allows you to do. you can wear three to six watches a year at the fraction of the price of buying one. if you have already collected six or 12 or more watches, and you realize you cannot possibly own as many as you would love to get your hands on, or someone who is a brand loyalist and has ever only worn rolex or patek, but purchasing them is a step too far. this allows you to try before you buy in an industry that does not have that. >> who are your customers? can you give us an idea of what kind of life they come from, what they do, who are these people? >> the obvious common thread is any interest and passion for watches. our product has been resonating with established senior executives, financial professionals, you name it, who have a great collection at home. perhaps they have grown apathetic, the more they had, the more they realized they were wearing them ever less. we also have budding professionals, 35-year-olds, athletes who become a part of the experience generation and realize that enjoying an asset like a watch without owning it is an interesting and exciting thing to do. >> i get that. what percentage of your -- i guess they are not really to some guyould go who just wants to impress a girl on a date? >> the romeos, as it has been called. in reality, the vast majority of our members where the watches because they appreciate it. whether you work in hospitality or you are single and try to help yourself socially, there are a lot of people who wear watches as an extra no clue. one of the few things that a medic and due to differentiate themselves and their sense of style. most everyone who wears a watch does that. the majority of our folks are doing this because they are fashionable about watches. guy who is not like the goes out and leases a pariah because he wants to be seen driving the ferrari, even though he could not afford one with cash. >> it is much more like the individual who would join a classic car club or rent a house for tens of thousands of dollars -- tens of thousands of dollars in the hamptons. they would have the means to purchase the car or house but likes the fact that they can have it in cars, or in the hamptons case, a different house every summer. a premium on variety. the am curious about broadening potential of something like this. i know you are a young company right now focusing on watches. what about jewelry for women, for example? >> is this something that you want to scale into other products? watches alone there is short of $5 billion of new watches transacting in the u.s. every year. the number doubles if you have others. that is a healthy opportunity to attack first. we have been fortunate to attract interest from julie, women's products, other ancillary lines where we know we can grow. power --hat 10% of a power web traffic is coming internationally. there are areas everywhere. the key as it on jupiter and marketer is the balancing of going after everyone with the need to not get too far over our skis and not do anything that would dilute our service. >> would gave you the idea, and what does eleven james mean? -- a former former worker at marquise jet. we were surrounded by people who loved watches. you kept on hearing refrains, the first year i had it, the second year i liked it, by the third year, it had been replaced. you also hear that no matter how wealthy you are, you look down and you see underutilized assets. you want to take advantage of it. we had done this for planes, others had done it for other asset classes, why not do it for a product that is near and dear to my heart? >> these watches are owned by other people? >> the donnelly d are owned by the company, eleven james. as far as the name, i heard a story years ago that on a set of bond films, they would give him 11 different gadgets and watches. >> there you go. the founder of eleven james. ♪ >> it is friday, time to play the year but game. this publisher went to high school in jakarta go, graduated in the class of 1944. we have asked you to tell us who you think it is. >> you got hung up on the publisher, thinking newspaper islisher, but the key is it not a newspaper publisher but a magazine publisher. a very well-known magazine publisher. hugh hefner. there he is, then and now. the founder of "playboy." let's take a look at who got it right besides me. i am a little bitter. >> sean coughlan got it on the bloomberg. some people are not allowed to tweet on their jobs. we got a few messages. so congratulations to gustavo, followed by a bunch of numbers, sean coughlan as well. that is the yearbook game. >> play with us next friday. thisat will do it for weeks and today show. coming up on monday, card technology and the healthy food movement. change your grocery stores and the whole industry. >> i will be here. you will be on assignment. i will be with stephanie talking about the grocery industry. >> you will find that what i'm up to next week if you follow my twitter feed. thanks for joining us. it is 56 past the hour, have yourselves a good weekend. before you do, stay tuned, we are going on the markets with scarlet fu. >> it is the calm after the storm. treasuries rallied today. major indexes are little changed. mixed economic data that is dead -- adding to the lack of direction right now. an unexpected drop in consumer confidence on setting a jump in april housing starts. what does the trade in options us about where the market is headed? joining us is jerod leavy, the chief risk strategist at the chap would fund. good to see you, jerod. thanks for joining us. choppy trading this weekend in equities. the rally in equities is on pause. a kind of option do we have for how much risk investors are willing to take? >> what we have been noticing, the trend over the first quarter of the year, volatile decreasing. cautione signs of building. first of all, in the nasdaq and russell 2000 am a we know technicals have been breaking down, and importantly, the options in those indices are showing some fear building to the downside. it is different in the s&p. the trend is bullish but it is trying to hold its 50 day average. options markets in the front month, up until june, are not predicting a major catastrophe. going out in time, mainly in august, that is where options traders are lacing more of their bearish it's. like some of the big investments to my there is caution out there. we will probably see a drop but not sure when. in this case, looks like later in the summer. >> you have a trade on universal display corp. sony said that it is halting oled television development. why is this good news? >> sony is chasing earnings. we know they have lost their way in terms of being a leader in the industry. actuallyly, oled, they are looking for a big deal from lg, and they supply other users. the bottom line is, this company has a lot of growth potential. several analysts have it right, targets of $40 to $45. oppenheimer among those. i am looking at a september 23 26 call spread. one $175. i am reducing my risk in a market that is uncertain. , $1.25ake a 71% return on the trade. all it has to do is stay above $26, which i think it can do. >> 54% chance that you will make something on your trade. thanks for joining us. on the markets again in 30 minutes. ♪ clip," we to "money tied together the best stories, interviews, and video in business news. i am adam johnson. es once a les moonv 24-hour news network. this is a bloomberg exclusive interview. adidas versus nike. the rivalry is heating up in time for the world cup. the fcc puts a green light in the fast lane. not sitting well with the neutral internet. why saab's jet might be too expensive for t