Transcripts For BLOOMBERG Market Makers 20141003

To tremble atd his name now they will not give ben bernanke a loan to refinance his home. You are watching Market Makers your coat i am Erik Schatzker. And i am stephanie ruhle. Market makers. I am Erik Schatzker. And i am stephanie ruhle. The Unemployment Rate dropped below 6 for the first time in seven years. The Labor Force Participation rate dropped again. A superstar is back to talk about this. Theader overseas about jobs and pumped about orioles. It is a good jobs report. The most important number, the jobs came in at 240,000. There are some pluses and minuses. I think you have to look hard to find the minuses. Wage data is still below where it should be. There are two significant things happening. Very consistently you are seeing the survey suggest we are going to see an increase in rate in wage. We are seeing some areas of the economy with significant wage pressure. We live in a world with technology where technology and change is creating routine jobs. Things Like Business Service is up 81,000 jobs. Pretty powerful. Is that to say when you talk about wages lagging, when wages do start to pick up, which could be a few months from now, and maybe even sooner, it will not pick up at the same rate the Unemployment Rate is dropping . Think that is right. We have a bifurcated economy. We analyze aggregate data. You look at some of it going extremely well. Population t of you are still going to have a bifurcated economy. On have significant rags inflation today. Much of the discussion about growth in this economy, there is a lot of structural reasons for that being the case. We have an economy that we think is going quite strong. The number comes out, it is a positive one, do you just step on the gas or do Something Else . We have been stubbornly adamant on this show. We think the fed is going to move faster. I think the data is going to encourage the fed. How much more data, the six month moving average of payrolls we think they are going to move faster. We like the backend of the but we do not like the front end of the yield curve. What you were saying before holds true, structural changes reduce the pressure on whilees that mean the fed may raise rates sooner than anticipated, does the fed maybe not have to go as far as it used to in the past because the growth in the economy is not being transmitted down to labor . Howhere are three forms on the fed moves. It is the speed they are going to move that, the pace they are going to move at i think we should start moving with the speed. The speed is going to be faster yet the pace will be slow and the destination will be lower than it has been historically. As the fed articulates that the curve will continue to flatten. The Economy Today versus 10 off of longpivots and interest rate. It used to pick off the front end. It is now the Housing Market that needs long rates to be down itf the curve flattens as should and long and Interest Rates stay relatively contained that is much more important to the economy. , when you look at the volatility we have seen in the past few weeks, whether it is high yield or Investment Grade spreading widely, do you see this as a buying opportunity . I think the highyield market has some pretty attractive levels. We were at some pretty heavy levels. Think about what happened in the past couple of weeks. We have the highyield market treasuries are going to stay low and drift a bit higher but it is 6. 5 is not a bad level. If you had geopolitical risk you cant back up so much. Investment rate is more mixed. Risk ase idiosyncratic it are still pretty tight. That there any truth spreads are widening in the past week because the market believes it was bill gross . I think there were a number of people who were trying to get in front of whatever those flows could be. I thought the Market Reaction was great. All of a sudden there were people in buying. We thought it was an attractive level. Coveringou saw a short on the backside of what people are trying to find on that. You got some attractive levels based on people trying to anticipated for us. Bills name wasrs synonymous with total return. Now thatt that blackrock has a return fund. Fund hasnt return just outperformed this year or one year but three years over five. Here you are versus another guy with a total return fund and pimcos return fund. What kind of response has billrock had since announced his departure to janice just a week ago . We do not talk about daily flows and what we see day and and day out. I run thisand together and he has some pretty incredible calls. We have been very happy with what with how flows have been. It would be surprising if low stay consistent. Said no biggie, who cares. It is a great firm and pimcos going to run a lot of assets going forward. You think how big the fixed income market is, it is 38 trillion. People focus on what is going to happen coming out. Fixed income markets are not going to go away. Is whatring assets pimco does for a living, what blackrock does for a living, what you do for a living. Has there ever been an opportunity like this to grow assets in this asset class that exists right now . Fixed income people are trying to work through today. They invest in the equity market. What do i do with my fixed income . Today we believe you have to be tactical and how you use it. Iamb thinking about the money that is coming out of pimco. , tcw, is fighting blackrock. What is it you personally and your firm could do to win the greatest share of those assets that may be looking for a new home . Our whole business is performance. I think we all work harder than we did 25 years ago. It is a constant challenge. I think that is the whole gig. Europe or u. S. Today . It is not a question depends on what you are talking about. Draghi is not going to move for a long time. We think growth in europe is a struggle. We like some of the riskier assets. You cant just put Monetary Policy and hope that liquidity you have to create aggregate demand. On jobs day rick reeder had seen fundamental income. Coming up, and is not all about doritos. Menu for theon the restaurant chain at chipotle. And trying to topple another type of king. The fast casual chain has been slowly expanding become using its model to sell other kinds of food. Carol masters sampled some of their latest offerings. How was it . It was good. It is jobs day. You have a chain that is expanding their brand. They have to hire workers to build and construct a new location. Have done good. Today they have eight of those. They hoped up with two very well known restaurant to worse in boulder colorado. What they are going to do is open a second Pizzeria Location in denver. A crust made of build and ground flour. Tomato sauce made from whole tomatoes. Big for two minutes at 1000 degrees. This is chipotles take on pizza. We are growing faster than they did in chipotle days. They partnered to launch a fast casual pizza restaurant in denver colorado. The goal is to bring it to a city near you. Patterson and stuckey will open their second casual location this weekend. Further plans are in the work. They want to keep the food as accessible as burritos. Prices are competitive. A pizza will cost you 5. 75. A salad, 3. 50 to five and a half dollars. Patterson and stuckey are sticklers for details. Every pizzeria locale includes a prosciutto slicer from northern italy and a unique oven. We created it to simulate the perfect spot. You designed it . We designed it. Was a mill that was handbuilt in austria. Even the environment is a priority. This is a temperature controlled no room. They will set a target for. Izzeria locale he is excited by early results. Heard a lot of people say pizza could be bigger than chipotle itself. If that happens, great. At two newis looking markets outside of colorado. You could expect to chf poli shop house and a pizzeria in the same neighborhood. Is this a Restaurant Business or a business . It doesnt feel like im having business mario batali experience. It seems like he is a franchise monger. None of these are franchises. This is a guy who is a shaft. He cares about where the food is coming from. Talking with these two guys to create a pizzeria locale in a decade. He waited to see that there was thing that would make sense. It is meticulous in terms of the details they are concerned about. Line for five bucks. Bucks w i wine for 5. You can make a quarter Million Dollars for making a speech. Former fede, the chairman cannot refi his home. That man, ben bernanke. He said in a conference yesterday he tried to free not that refinance his Washington Home but did not qualify. How is this possible . Michael mckee has been trying to figure it all out. Why is this man trying to refinance . He just refinanced his home a couple of years ago. When heon capitol hill and his wife moved to washington. About 839,000 of it 839,000 in 2004. According to his Financial Disclosure forms he refinanced taking his Mortgage Rate down to 4 from 5. 375. He couldnt shave much more off of it. At a conference he told the , i recently tried to refinance my mortgage and i was unsuccessful in doing so. Lie . He doesnt have steady income . It is all computers. It andputer looks at says you have had a job for 11 years, you are unemployed. We are wondering why he wanted to refi. There is no reason to assume he will not get that for several years. Maybe he anticipates he can do it off sooner. The d. C. Property records shows that he was down to 600 72,000 on his mortgage in 2011. That is to speeches. He paid the whole thing off. What is the real take . We are going to have a tighter Housing Market. Banks are not making loans. They do not want to hold more capital. Fannie and freddie will not buy the because they do not want to send him back to the banks. The two sides conspire to make it difficult to get a mortgage these days. People are not getting paid to give a speech. Four. 22 rate percent right now according to bank rate. Com. He saved three basis points. Did anybody call and offer him refi . He was not taking questions from the bloomberg reporters. He refused to answer. Thank you. The coming up he is making the trains run on time and a whole lot more. We will speak with the ceo of one of the most Efficient Railroads on the continent. Vladimir putin will talk about a former chess champion. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Lets talk about the ceo handpicked by vista investor bill ackman to get Canadian Pacific back on track. So far he has been doing just that. In that industry where cost matters most he has become they have become the most Efficient Railroad in north america. Stocks are up. Is ceo of Canadian Pacific here with us in new york city. Good to see you. Another 4 put a smile on your face. What you have major mark doing is costcutting. How much more work is left to be done . That was step one of the plan. We are probably 80 of the way. What is left . Velocity andabout with philosophy to further term assets. It gains market share and lowers costs further. There is a lot left. You said you want to retire by 2015. By 2016. The clock is ticking. I think i can get it three quarters of the way through. If we further lower the operating ratio, then into the low 60s we produce free cash flow. Asset utilize asian is really important. What about fixed costs . You have been able to make the operation much leaner. Is there room to do more of that . We have taken out about 5000. Most of it has been through attrition. Be anotherprobably 1000 theyll come out. Most of that is through attrition. There is still a lot more to do in the story. Was the bill ackman property fight good for Canadian Pacific . It was. I think organizations have to go through a cleansing. This organization had gotten in a rut. The organization or the industry . , the organization. Clearly the board of directors went to sleep. We are not taking care of the shareholders interests. It became clear to bill that if you looked at two large railroads in canada and one was performing excellent and the other one was not, what is the difference . I was brought in as a result of the proxy fight. If it was a mess before you got there, is there a suggests is there a secession plan . He was probably one of the top operating men. The succession plan, we are ready for me to go and move for move forward. You had a great track record. Do you and he talk about other things, some of his other investments . I stick to railroads. About one lunch together and made a deal and shook hands. One lunch . And that was it . One lunch and two books was enough. We just hit it off. There was a certain chemistry there. It has been a good ride. Beyou said there would former consolidation in the north American Railroad industry. How would that take shape . Line you look down the there are not more railroads to be built. We have to start doing more with less. Can look at any eastwest combination. Tricky to comply with the law and stay within the bounds of competitiveness of the act. That would create a lot of capacity. Room for a Canadian Railroad to merge with an American Railroad . Canadians and americans dont get along like you and i. Is the Keystone Pipeline bad for your business . I do not think so. The total industry is struggling to move all of this. Think eventually there will be pipelines. There will be difficult for difficult hurdles to get over. They can do it safely, we can do it safely. And we have to do it in the most efficient manner. Have you had conversations about a potential deal with Warren Buffett . You know i cannot comment on that. Me ask you this way, what would it take you take for you to entertain an offer . Are you prepared to talk turkey go or do you want to way to we have always said we are ready to talk turkey. If some but he comes to us with a good deal for the shareholders we will take it under advisement and react accordingly. If you get a good deal who would not entertainment . Just saying. Thank you so much. The ceo of Canadian Pacific. Yes turned that a railroad around. Blue piercing eyes. Champion he says saysamir putin he Vladimir Putin is playing poker while the rest of the worlds of the world is playing chess. It is like 1917 all over again. He told charlie rose russia is approaching an economic crisis that could lead to an uprising that uprising much like the one that brought let into power. He ran afoul of president Vladimir Putin. Now he says he cannot go back to russia. The russian authorities put me under house arrest. Extend theonths they term of the investigation of one of the many criminal cases. I understand that if i returned to russia i will not be free to act. You can watch that interview tonight at 8 00 right here on bloomberg television. He is another one of Vladimir Putins highprofile critics. He is with us now this morning. Do you spend any time in russia now . It will be a oneway ticket. Do people realize that . Putin inof vladimir terms of foreign policy. I wish all russian problems would be not able to come back. Vladimir putin is a oneman dictatorship. Is most dangerous and unstable form of governing. Today we have one man in power. You compare it to nazi germany . There is probably somewhere Vladimir Putins troops are ukraine trying to seize part of the territory of the neighboring state. Do you expect his behavior and strategy to change as the sanctions the west has put on russia begin to bite . Flat amir putin does not have many good options. He must stay in power at any cost. That means he must present franks to his subjects, to the russian people. Any sign of weakness to the dictator is the end of the story. I have to agree that we might be approaching another 1917. Nobody knows and that is quite tragic. Springs or arab other revolutions, you cannot pull any timeline. Policy in your dealing with putins rain . Vladimir putin was our problem. If president obama were sitting right now saying help me, what would we are advice be . He had six years. He did a lot to destroy the credibility of the office. That is why today he must come up something very serious. Something very to maddock to get his attention. For him it is all temporary. Putin believes winter will force it is like game of thrones, winter is coming. Boot and sells putin sells 80 of gas to europe. If we were to take a dispassionate look you are emotional about this. If you were to look at what Vladimir Putin has done for the annexation of crimea, it is kind of really and, isnt it . It ruined the system of security. Back hink going it was as much interest to russia as the west . Why wouldnt he want to ruin it . Orthe annexation of crimea you said survivemir putin cannot in only the muddy waters of geopolitics. He is doing everything to undermine nato and the european union. Are there going to be muddy waters . Yes. We need some cornerstones and integrity of ukraine. There was nursing a case of annexation. From 1945 to nowadays. To analyze putins strategy as if he were a chessmaster , it is not chess, it is poker. He is playing a very different game. He always raises the stakes and blocks. Bluffs. He has nothing to lose . For him power is not an option. Time putin has a parent of tens, no matter how strong the car in the hands of obama, they blink. Five years from now lets talk about five months from now. We are a pace of historic wheree Historic Events thinking five years ahead would be counterproductive. Ago, the 10 months annexation of crimea was in february or march. Dontctions dont 6 sustain if the west survives and dont blink we may see it begin rush. Gerrish become gerrish. Problems,l the whether it is isis, al qaeda, ebola, it will be costly and dangerous. Vladimir putin has nuclear weapons. That is why there are no military solution. Do you think he will use him . He can blackmail you. The whole point find the black war was a mutual blackmail. They have the responsibility for the system. It is very dangerous. At certain points his survival becomes paramount and Everything Else is secondary. Congratulations on being so bold. Thanks a lot. World chess champion. Agenciesther of all ad , wait until you see its client list and headquarters. Are watching Market Makers here on bloomberg television. Some exciting changes starting monday afternoon. The authors of game change hosted bloombergs new show about politics. Pimm fox will join you at 5 30 p. M. Eastern time for taking stock. That is coming on monday. It is an ad agency you probably have never heard of. It has been the Creative Force behind some of the biggest brands out there. The him work . I went inside the new York Office Space to find out. Welcome to mother, one of new yorks hottest advertising agencies. Manhattans health kitchen, mother hq is nowhere near madison avenue. This is one house of creativity. It is not like your normal office building. Nothing is normal. It has its own art gallery. And there are shrines to former employees. Gabriel had to move back to sweden. He was known for his great demeanor and his mustache. When he left we took his mustache. That is disgusting and amazing. Mothers quirk showcases the firms creativity. Its layout reflects a designer collaboration. There are no window offices. Everybody is mixed in. It doesnt matter if you are an intern or have been here for 10 years. We work without walls. This is work in progress for our clients. Everybody sees what is going on at all times. He just gives a sense of the collective spirit. Inthe heart of the office is the kitchen where the employees do their best rain storming. Mom is always watching. Is this all the mothers of all of your employees . Yes. I love her hat. Is everybodys moms picture on their business cards . Yes. I need a mother business card. A mother is somebody who champions you, who is in your corner. We are that way very much for our employees. Is there are ways around it. There you have it. It is such a departure. This is the first the furthest thing from a madison avenue had agency. Nextu want to grab that generation, that different demographic, it is so much more creative. Bringing on guys with hoodies. Everyone in that Hall Building is so much cooler than you and i. Heartbreaking. Damien hirst hanging in the wall. Market makers will be back in a couple of minutes. I sat down for an interview that covers many topics. ,mong then, Digital Payments apple pay, and bitcoin. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker stephanie ruhle. Enoughrtisers cannot get of these the we will talk to the head of one of madison avenue half biggest agencies. Bill gates sounds off, talking about apple, bitcoin, and bringing Financial Services to the world core. Hollywood goes literary. Superheroes are not driving this movie books are. Welcome to the second hour of Market Makers. I am stephanie ruhle. And i am Erik Schatzker. Time for the news feed, top is his stories from around the world. The Unemployment Rate has only 25. 9 , the lowest in six years. The unappointed rate has fallen to 5. 9 . Wage growth remains stagnant. The governments new rules aimed having anversions are impact. A Pharmaceutical Company has called off and merger with an italy Pharmaceutical Company, to targetgulations Companies Moving overseas to gain a tax benefit. The cyber attack on jpmorgan is one of the biggest ever. The bank says hackers accessed million household businesses. N small they broke into a jpmorgan server by exploiting an employee password. A picture is worth a thousand words, but what is a picture valued when tweeted or put on instagram by a brand and then retreated over and over . We have global eeo for an advertising giant, y r. Welcome here were talking so much about the value of social media, and you are wearing a pin leading the Campaign Click and shout. In the beginning, people thought all you need it to do was click, share, give a thumbs up. But that does not do anything. It is you off the hook. It is an easy way to engage the request i like that but i am not buying it. Quite exactly. We want you to go out in the streets. We want you to click and we want you to shout. Look what happened with Michelle Obama when she tweeted to save our girls. What happened . Nothing. Hundreds of millions of tweets, but when i tried to get a rally in new york, 10 people showed up. In washington, no one came to we believe it is a social movement, but we think also relates to brands. You asked the question earlier and all you do is tweet, it is like broadcast tv. Youre going oneway. Ts arewe retwee critical because you cared enough to share it with someone else. It is easy enough to like it, but Something Else to say you will spend some time on it. But there was the ice bucket challenge. They raised a ton of money. Which is awesome. First of all, we do know that but doople participated talkalk about als, do not about the cause, do not know anything about it. When you look at the number of people engaged versus the amount raised, which was amazing, but if everybody really participated, they would have raised four times the amount. I think they were going in the right direction. Next year will be the big question. Did it make enough of an attack . Did i understand it and emotionally connect to als . Quite what is a successful click and shout . I think theyre definitely going in the right direction, no question. I think a great click and shout is going to be when twitter and button starts to work and that becomes something were used to do that will be a Good Opportunity to understand it, and fact, that kind of sharing an actual buy and engagement. It is something we experiment with every day. Of the day, what is social media . It is the watercooler on steroids. We have always shared. Sharing is in our dna. When adam and you shared the first apple, sharon became part of our culture. To click and shout it we need to get this into peoples minds that sharing alone is not enough. It might be good for the brand and might help us get information out, but at the end of the day, if i do not get people into the streets, what is the point . If every tweet i is designed to drive me to buy something, i will be spending a lot less time on twitter. I will be moving to another social network. That is there because people have grown tired of the commercialism of twitter and facebook. And the narcissism. Separate the narcissism of all social media. It is narcissistic, my 15 minutes of fame. I post my picture. My beautiful wife, my beautiful kids. Quite exactly. Not every tweet, just like not every advertisement, drives you to buy a brand. Our belief is if you really want to make an impact in the world, you have to think about the click and shouts. You are right, it is not every single tweet here just like not every single conversation we have drives to a particular outcome. But we think this is critical to the future of social media. Which social media offers the best advertising platform . Interesting question. I think it is still up in the air. Facebook is doing an amazing job on trying to work with video in understanding how that impacts you as a viewer, as a watcher, as a user. Ask yourself, right, when you see that feed them down, how many do you mess and how many do you actually see . Unless youre sitting there all iy, youre not seeing think were still experimenting with that. The more sophisticated facebook gives a more controlled by algorithms, should we be concerned is social media is becoming the ultimate big brother watching and controlling what we see and what we like . If that is what they are doing, they are creating a selffulfilling prophecy of de bt. If all i am doing is going in a circle and not exposing you to other things, if i think the algorithm is going to tell me what you like and i will never show you more, you will never discover the next thing. I was reading in the british papers, there is a new website called linx, and it is genius. The person that sent it out for the problem that we have today on the new web and with Digital Media is the serendipity of shopping is missing. Yes, it is. Quite right, but that is because were using an algorithm just to show you what you like, as opposed to showing you other things. If you go into a store, you walk down the aisle and find the things you want to see. Wedding you agree with this i now shop at more retailers than i ever did but only because they know what i like, so i basically by the same items from 15 stores as opposed to four stores . I completely agree but am not as passionate about it. I agree. I love ties, right . If you only look for ties online, you are limited. And you just see the three you like or the colors you like. Store and you discover something you did not see and you want to buy it. That is just a fact. It does not make digital shopping bag. It just means that we lost that serendipity. We need to find it. Ther example, warby parker we know it began as a completely Digital Business to that is how they raised their money. What are they doing now . Opening up bricks and mortar stores. The reason they are doing it is amazing. Think aboutd it because it had to have happened they ran out of inventory once. That makes sense because theres any everybody bunches of pairs of glasses. So their friends are calling asking if they could come try glasses on. So they invited them into their living room. And he said, you know, i noticed it was a completely different experience. Like, hello . Your friends are there. Youre looking in a mirror. That is why they are opening stores, because they get in. It is not make their digital model bad. It just enhances it. We need to learn how we take the real world and the digital here we call it digital exponential. Digital world should make our Virtual World or our real world that much better, exponentially better. Involvede a deeply person and unicef. We were talking before about als and the ice bucket challenge. How do you take what you learned from that experience and apply it to unicef, health unicef capture the lightning in the bottle . They are tell you what doing without me. They did a test and sweden that was brilliant. They ran a campaign on facebook ikes are not good enough and we need your donations. They are talking about testing that around the world. They have got all the likes. Another opportunity trick and treat for unicef. I grew up on that. It is not yet had the same experience online. Because the experience of going to someones house, cute little kid with a little box, is not the same. Question is how do you link the two . The good news is kids still go trick or treating. That is not virtual. They do not do that online or on skype. They come to your house and knocked on the door and want you to give them candy. It is incumbent upon us to find a way to merge those two. To take that experience of knocking on the door, cute little kid, you feel good, with the online experience. There are experiments with these things. The good news is it is still so early in this game. You were not being so, but we are. We are early in this game. I love it because everyday is a new opportunity to try to experiment. If you look at what happened, amazon is a great example. About a year and a half ago, amazon and announces that they are going to use their algorithm to create television shows. So theyre going to do better than house of cards because they have a better algorithm than netflix. Do you ever anything they produced . What did they last year . No one does. Year, and fact, in august, the head of production at amazon said something close to this what do you think is going to happen . And out pop rates they show . No, you need the creativity. Quite mustsee tv, primetime tv, is that with a bit grant should still be advertising . Even when i am watching scandal , geoeye still do not see commercials anymore. I speed right through them. We always do. There is such great content happening. I do not look at these things and say, oh, my god, netflix is going to happen next crouching tiger, what does that mean . I think, of course they are going to it is brilliant. How do i cap internet and make it work . It is fabulous. Quite a few just asked for it i think you are fabulous. Rank you. Eo of advertising giant y r wall street is not paved in gold. It only seems that way. So why are the costs so high . He worked for media, duated in 1970 in illinois that is all our producers are telling us about what . Your book to appear at it is friday. Tweet as your guesses marketmakers. A bloomberg terminal, you can send it right to us. Who is that woman . End the week on a topic erik and i never agree on . Wall street as it is not the most popular place in the world. One reason is their skyhigh pay. When you move from another industry into finance, your wages jump by an average of 37 . Smith has a column not on bloombergview about this. Com he says these people are always an hour away from losing his or her job. There are personality conflicts that are frequent. Salaries could be high to make up for that. Erik . Bs. Bs. Danger pay . Purchase pay on wall street . What a load of i am going to agree with you on that. On one hand, listen, if you are responsible for bringing hundreds of millions of dollars of profit into your banks, sure, get the millions and millions of dollars. Longterm profit. But if you mean to tell me ist he caused a trader screaming at you and clients are going about getting zero allocation, you should be getting paid 4 million a year sorry. I am guessing emergency or doctors, people who clean mcdonalds bathrooms in times square on new years eve. Our producer. Click our producer. Those are stressful jobs. So yes, if youre making longterm profits for your company. What i want to know is how many people on the street actually agree with noah smith. I doubt you are wrong. I used to treat this cruelly. 100 or listen, it is a very stressful and intense job. It is 24 7. You do not have a safety net or you could be fired on a whim. But you have a chance to make a ton of money, be around extraordinarily smart people, and if you succeed, you should be paid a ton of money. But if they are just filling a seat at goldman sachs, goldfish. When we come back, oneonone with bill gates. We will bring you the best moments of our conversation. Manill gates, the richest on the planet, is trying to solve some of the worlds biggest problems like polio, education, child mortality, and banking. The bill and Melinda Gates foundation is getting involved in Financial Services as a means to end poverty. But its all that Technology Poses a threat to the establishment. I sat down with bill gates in boston. That, typically through the cell phone, you should be able to send money to your relatives and track money coming in, set aside money for the next year. And there are countries where this is beginning to take off. , then let even somalia, maybe the last country you would expect. In somalia, almost half of the gdp is done digitally. I do not need to tell you that the poor have been unbanked as long as they have been banked. Poorest have stored gold or put her and see under the mattress, but theyre getting cell phones. Cell phone capability, identifying who is using the cell phone, looking at the spending patterns, that is going to be common sense. People are going to have health and lots of are going to have help and lots of products competing on this platform. Digital money helps to increase access to Financial Services at the same time as it lowers the cost of delivery. Why is philanthropy needed . Quite philanthropy should be here to bootstrap this. You have to understand how regulations can make the cost of remittances, sending money back to your family and your country of origin, right now there is about a 5 overhead on it. We think we have a role, particularly for the smaller transactions, to make sure regulations do not impose those very high cost. Once this gets going, we will step up to the applications to see how a savings application helps a mother make sure the money is focused on the kids or how it helps them go to school or set money aside for the uniform, good future planning. Some of what you just described, the need to move money from place to place. The cost of doing so, the overhead, makes me think of bitcoin. Some people have said bitcoin is the answer to those problems. Are you a believer . Bitcoin is exciting because it shows how cheap it can be. Physicallyhave to be in the same place. For large transactions, currency can be inconvenient. Bill gates on bitcoin. Him about apple pay. He thinks apple pay did you say cutie . Yes, you heard it here first. Cutie. Professor that amazed you and he is totally rich. Gregs anyhow, his comments on bitcoin were fascinating, especially juxtaposed with what he says about apple paid. Apple a is going to help to spread technology, digital ayments, but mainly to wealthy clientele. Right . If youre using an iphone 6, you are probably among the worlds poor. Be in thel be poor claim and the bitcoin gain . Were not talking about it as but itrnative security, can be moved around cheaply and securely with a minimum of friction. That is important to the world poor. What people do not necessarily understand about the big name backers of bitcoin, they are not smitten with bitcoin. It is the disruption. It is like burying gold in the backyard. It is those saying it is time for a new way of thinking and living. Guess what else it is . Friday, time for the yearbook to anchorage works in media. Graduated in 1970. For anyone who continues i do not even think she was alive tweet us your guesses. Live from bloomberg headquarters in new york, this is Market Makers. Welcome back. I am stephanie ruhle. I am Erik Schatzker. Lets talk about brazil. Stocks have been plunging and so has the currency. Growth is stagnant and inflation is surging. And lets not talk about the world cup. The president hopes voters will overlook all of that this weekend and reelect her. Areave reporters here that covering the election for a spirit you are on your way to brazil this weekend. I expect to see a lot of very sunday. Tes on the first round is on sunday. The polls show the incumbent is well ahead of her two major rivals. That is a major change. It looked like there could be an outright win or runoff. August, there was a surge in the polls. She is now 16 points behind. What happened . She came in promising change. Different type of politics. She is and how her and has the whole party behind her. She has five times more tv time than her opponent. She is attacking inconsistent policies and a lack of experience. You aree are saying making promises with no evidence to deliver. Exactly. Market, this change of fortunes for silva is not been popular. There have been plunges in the market and the currency while she has been in charge. Is there an irony to that inasmuch as silva is coming into the left with dilma. Not like brazil is moving towards rightwing candidates. , sheom what i understand is more marketoriented, considered more the grownup i investors. She talked about giving companies more space to grow. She is much more positive about the real right wing candidate is effectively out of the race. Yesterday. Ut that may mean he gets into the second round in october which could change things dramatically. Does the structure of brazilian voting favor the incumbent . Yes, it does. It would be a big game changer lose. Ma were to the tv time is crucial in u. S. Politics. Dilma has a huge coalition and a huge amount of time on tv. Is that lazy . It is that crazy . It is very different. It is such an advantage in terms of reaching voters. If 74 of brazilians say they want change but are not voting that way, does that make sense . Exactly. They want change, but what are you changing into . So what they are doing is just coming back to dilma. They know her policies. That they do not like them. They do not like inflation and slow growth, but they do give Something Back to wages are still up. Unemployment are still is still at record lows. Lifted 35grams have million brazilians out of poverty though. She may have a way to change the mandate were hearing about. I will be putting together some stories about what this election means to people there, looking at things like infrastructure spending. That has been a real drag on their gdp over the last few years. They should be building new airports and things like that. Looking forward to that. Thank you for talking to us about the brazilian elections. Likely be a runoff. We will have live coverage from results starting monday. When we come back, hollywood is betting on books and not comics. Were talking about the real ones, actual literature. Is the jobs report just what the democrats needs . Whatfers some proof of president obama has been saying, the economy is improving, rapidly, in fact. Politics more on the behind all this. It is not quite so easy, is it . It is not. This is certainly a net plus with the Unemployment Rate below 6 for the First Time Since july 2008. Has somereport still numbers and information under the surface that is not so good, and that has to do with the fact that there was not any wage growth. For a lot of americans, they do not feel like they are sharing in it. They are not feeling it in their wallets. The president touched on this yesterday. Take a listen that ourindisputable economy is stronger today than when i took office. By every economic measure, were better off now than we were when i took office. Alsoe same time, it is indisputable that millions of americans do not yet feel enough of the benefits of a growing economy where it matters most, and that is in their own lives. I think the report today is a reiteration of what the president said. A lot of those people do not feel better about their own lives or about the economy, and those are some of the same people that democrats hope to get to the polls come november. Nets this jobs report a positive for democrats heading into election in november . It is for those democrats in blue states. But there are questions for democrats running in red states, some Senate Democrats are challenged to win in states that obama lost in 2012. A lot of those races will be decided on local issues, maybe the local economy. Those democrats saying about the speech . Some are thrilled. This is the kind of speech that nancy pelosi and Democratic Leaders in the house have been urging the president to make around the country. They want to get the attention off of foreign policy. They want to get a back to the u. S. Economy. This is a populist message that will help a lot of those democrats, at least something they can refer to as they campaign. If you are running in arkansas, louisiana, or alaska and the president says my economic policies are now on the ballot ame november, that is challenge for you as you try to distance yourself from an unpopular president and those states. Should we expect obama to do a lot of campaigning between now and november . The trail be out on but maybe not as much as you might expect. There are a lot of events happening overseas. He will be raising money in illinois. You will see him in blue states, not in red states. I know we will be grinding it out here working over the weekend. What are you going to be doing this afternoon . Nationals. Where else would america be at this moment in time . Washington nationals, game one against the giants this afternoon. Hope you are watching. Were still rooting for the orioles in the world series. Called . Would that be not a subway series, orioles versus nationals. What would you call it . Some say beltway series. Sounds like an invitation to go to sleep. Are you kidding me . Someone i respect greatly and these things suggested something tied to the chesapeake bay, and old bay series. How about that . Kind of spicy. Good luck. Ray miller, remember, Bloomberg Politics is coming to bloomberg tv. With all due respect starting october 6, just in time for the midterm elections. Pimm fox is still here. Taking stock will now be on at 5 00 p. M. Eastern. Summerng up, the blockbuster season is over. The new crop of movies is based on, get ready, books. What a novel idea. Welcome back. Hollywood is hitting the books heart this fall. Is out today. It is based on a 2012 bestselling model novel. We have a look at why movie producers are spending so much time at the bookstores. It is not just that movie. More than two doesnt book titles are hitting theaters this fall more than two dozen hitting titles are theaters this fall. There are timeless classics from the concept has been around. It has proven to be profitable or what is new is the volume of books being turned into movies. Addicted, so the best of me, and before i go to sleep. On movie is being introduced october 10. I spoke with the director and an actor from the movie to talk about this new era in hollywood. Synergy with people reading the books and expecting it to be a movie. We saw that with hunger games. It is a new era. The challenges you cannot fit everything into a movie that is in the book. You want the fans to be happy and make it work within the movie. That is definitely the biggest challenge. I am going from a 95,000 word book to probably about a 20,000 word script. How much collaboration is there . I was very respectful to what she wrote. There were things we were doing and changing, but we would talk to her to see what would work. She was so wonderful with it. I am very blessed to have had her involved in that way. So i know i am not messing it up. We kind of collaborated a lot on that. Even casting. William levy is in the movie. He is cast it as a character that is africanamerican, but i asked if i made the guy latin and if the fans we care. Sometimes you think it does not matter but it does matter. People get attached to a book. You think people that attitude had changed . I hope so. I have always believed that books would make the best movies, only because the characters are so deeply developed in books. I am glad to see hollywood has opened up that gate to be able to see a lot of books turned into films. You wrote your book more than 10 years ago. 50 shades of gry , is that good or is it stealing your thunder . I do not think it is stealing my thunder. I think it is great when anybody can have success doing what they are passionate about. I am blessed to do the things i am passionate about. There is enough room for everyone. Not reflect on me or take away from what i am doing. I have been doing this for a very long time. What has the internet done for your industries . Has it brought them together . It is an opportunity to reach a lot of potential readers. We can go on extensive bookstores and drive people to individual websites. Social media has afforded people the opportunity to reach and interact with a lot of people and basically for free. And you have to worry about stuff getting out on the internet. Everything gets out there immediately. It is a doubleedged sword. Immediately when i finish editing a movie, when i go to search on the internet, i am coming up with all these links saying you can see the whole movie. So a lot of things have changed. I think the technology is great and the way it has advanced allows people to become filmmakers even more. They talked about technology little bit. There are downsides. But these guys are also promoting this movie like crazy. She got a million facebook followers and is posting relationship tips on social media. They do not have as much hype as girl. It has so much hype it would be hard to get that amount. But i am dying to see it. It is the mustsee movie in your household . Like with your dog in your son . Where i fit, i am dying to see it. The others, they are not that into it. We can go together. There you go. Youre back game time she works in media. Graduated in 1970. She went to high school in illinois. That is all we know. Tweet us your guesses at marketmakers. We play the yearbook game on fridays. Media executive, graduated from high school in illinois in 1970. Before we give the answer and congratulate that person, those who guessed Arianna Huffington have you ever heard her accent . She grew up in greece. That is not her. It is not janet yellen. She does not work in the media industry. Mayer,hat else, marissa i do not think she was born yet, so she cannot graduate school then. This executive is a true chicagoan. The winner goes by the name of crunchy buffalo and must be a playboy fan. It is the current chairwoman, christie hefner. There you go. Today ined miserably the game. Few women to choose from. That brings our show to an en d. Thanks for watching. Guests today. T have a great weekend. Bloomberg television is taking you on the markets with scarlet fu. Getting a boost after the stronger than estimated jobs report. The economy added 248,000 jobs while unemployment fell below 6 , the lowest since 2008. We have a derivatives strategist joining. Digitw has had triple point moves last week and twice this week. Four instances included doubledigit declines. Indicate aboutns whether this volatility will continue . Were still in this volatility event. Yesterday was an oppressive reversal. Anre is yesterday was impressive reversal. We have had followthrough today. More than index is up 8. 5 since the beginning of july. That triggers this process of volatility. We treat this more as a tradable bounce then we would at the end of this volatility event. Does this have any impact on hyg . It is a big trade that went up this morning. Somewhere buying some options calls. 2 million in premium. That led u. S. Equities lower a few weeks ago but let them hire this week. Very shortterm. An interesting trade in that regard, clearly bullish. Looking at the 12month performance, and they made a complete roundtrip. Started off low and climbed high. In the pastebounded week or so since june. Lets get to your trade of the day. Ticker is c. A. R. We are conscious the want to be aggressive in fighting situations where stocks have been beaten down too much. This is a good example. The stock gained almost 25 from a couple months ago. Oath our analyst is very bullish. There is a little bit of weakness in europe. But the story here is that are pricing, up 3. 5 . We expect that to continue into next year. That will drive earnings. It trades 14 times 2015 consensus eps. We are going to get long here. On the way out in february of 2015, with the stock around 54, 57. 50. Out and were comfortable selling some downside puts. You theoretically get way down, amost 20 lower, and then 10point spread. Thank you for joining us from mkm holdings. Money clip is next. Welcome to money clip, where we tie together the best stories, videos, and interviews in business news. Im adam johnson. Kong protests attacks protest difference sites. And bill gates talks about ebola and his latest project. And jpmorgan suffers one of the all tim bcks of