Bloomberg television. Welcome back. I was on assignment for the week. Week but i didly not have a lonely week because so many people stepped in. Bill cohen was here. Was going to say you just made a fat joke. I was going to say i did miss you and i had an exciting week. I missed you too. But because i had help i wasnt lonely. It is great to be back. Today. A lot to cover lets start with the Global Business stories of the morning. Firmup led by the british bc partners has agreed to officially by petsmart. The deal is valued at a whopping 8. 3 billion. Out apollo beat global management. Petsmart has been hurt by competition from amazon and other retailers. Still boomingis in the u. S. Economy. Industrial production rose by the most since may of 2010. Reduction of consumer goods did even better, rising by the most in over 16 years. And a dubious record for the ruble. The russian currency was trading more than 60 to the dollar. This month it has fallen 18 against the u. S. Dollar. The central bank is under an enormous amount of pressure to do something to stem the default. And sony is in serious damage control mode over those leaked emails and documents. The company is warning news outlets not to use any of the by thetion revealed computer hack. Lawyers say the data is stolen and should be destroyed. Among the information disclosed is salaries among them uv unit among the movie unit. Number of embarrassing emails between the sony executives and hollywood producers. 20th century fox, exit us, gods, and kings. In second place, the lake the latest hunger games movie. Have you seen either one . I havent. I want to check out exit us. Us exodus. Xit i suspect i will end up seeing mocking j. Mockingjay. Siege isdney hostage entering its second day. We do not know how many people are being held by a gun man, who forced his captives to display a flag with arabic lettering. What do we know about the hostage taker . Is there any connection with islamic militants . Or does it appear to be a lone gunman . I think it is becoming more evident this is a lone gunman. Arece have indicated they not too worried about any other developments. Cafe, centered on this where we believe around 15 hostages are still spending the night. Is into its 16th hour. It started at 9 45 a. M. Media outlets have released the name of the alleged gun man, because apparently police have known about this man for a number of hours. They havent wanted to release the name. The city herald claiming it is man haron monis. 1996 asto australia in a refugee from iran. He has a string of of fences behind him. He has been convicted of sending ofensive letters to families soldiers killed in afghanistan. He has 50 counts of sexual assault. Foras also on bail accessory to the murder of his exwife, which was allegedly carried out by his current wife at the time. Certainly all of these allegations very disturbing. This man may be acting a load and it is not part of a broader terrorist threat. What is it like in the central city . Are people evacuating the area . Home early at year we had a lot of evacuations coming through from the offices around that side. A couple of blocks around it remain in lockdown. Indicated that anybody who works within that zone should remain in thats own tomorrow. In that zone tomorrow. Train stations underground that cafe. The City Transport system remaining as normal. Thank you very much. Working late into the night in sydney, covering the hostage situation. In the u. S. , we are saving the biggest for last. Petsmart has agreed to sell itself for 8. 3 billion. It is a huge win for hedge fund. Ana partners Stephen Welch is covering the deal from detroit. What does bc partners see in the come any in the company . , they see a company that was probably undervalued by the market. The company had slowing growth. Thought the internet was taking a big hit out of their sales. Bc figured it was a good way to jump in and by this cheap. And by this cheap. It is hard not to come up with cops from petsmart. One done in the 1980s. Look we come up with look favorable. At these petsok deals, this one seems a little pricey. There are a couple of ways to look at it. In 2006. Lbo was petco if you compare to other specialty retailers, they trade around 12 to 13 times. Did pay a good amount of money for this. They felt come for the company has a strong cash flow. They also believe they have incredible strategy to fend off online retailers. Who loses here . Who is this not a great deal for . It looks like to me everybody made out pretty well. Nearly a 40 got premium on this thing. Janet partners jumped in quite some time ago. Bc partners and the rest of the consortium can get growing again, this could be a good investment. They have been pushing this for quite some time. Why did it take so long . Is the question why did it take so long to get this done . , yes. A couple of things going on. When you have three large private equity firms and there you are going to have a aggressive auction. All the different bags were involved. They are leery about going with this much leverage on the deal. All three were in there until the weekend. It wasnt until saturday that d. C. Partners that bc partners invested in the other two rivals. Someit was maybe a staying and some going, and you have to can everybody down. That is one reason this took so long. If there is a red flag, is that it . I have heard some people say that many of you start to see private equity firms competing with each other in public auctions for Public Companies, you have to worry that the market is getting a little bit frothy. Repeat the question. Were privatehey equity firms competing with each other to do a leverage buyout of a Public Company may be a sign that maybe valuations are getting a little bit frothy when you see that behavior. Seen very many leveraged buyouts. There were not a lot of assets out there for sale that private equity thought was cheap enough to go after. They pointed out online sales were taking a bite out of the growth and potential for s potential for petsmart. Is it a red flag . Possibly. This is one of the few assets they saw cheap enough to it cheapbidding enough. It ended up bidding quite cheap in the end. In the choice. Elections in japan give Prime Minister shinzo abe a something to cheer about. Black friday comes to the energy sector. It may lead to plenty of great deals for investors. Premised her shins of all they has pledged to make japan a more appealing place to invest cuts, aporate tax stimulus package, and more economic reforms. Lets talk to a man who is already invested. He runs the japan for japan portfolio at cumberland advisors. You are an investor in japan. Yes. Bulls are hoping they will what doesslide win. This mean . Reforms are historic. For the last two decades, japan has been the place where International Investors went to die. Wants a place you did not to be. Because of the deflation that is going on there. These reforms are the important part of moving out of something nobody wants to see again, which is that deflationary spiral. This election result does is it reestablishes in the minds of the electorate and japanese citizens the need to continue forward with these reforms. These reforms are only halfway done. Shinzo abe wanted to reestablish the momentum to move forward. Is that mean it is time to double down on japan . We are very constructive on japan. We are managing the international portfolio. Have been long japan for a wild. So i think you have to look at the fundamental perspective, which is related to the policy move. You also have to watch the ebbs and flows. Goes, we doubling down think you need to look at the , just as important as the overall market. It is the difference between a successful portfolio and having a loss. We need to take you to australia, where there has been a shooting at the site of that hostage scene. There was something akin to an explosion. Were seeneeing running out. Some kind of alarm went off. Very patchy details. People on the street can hear gunshots. We dont know if any person has been shot. Seem likethink things have gotten chaotic. You can see members of the swat force gathered around this area here. They pulled the trigger, went in and try to free the hostages, whether something happened inside. Clearly Abc Television is reporting police have stormed that cafe, the site of the hostage siege, where approximately 15 people were still held inside. Five or six hostages did run out. It does seem like this was initiated by the police force taking action. Until then it seems like somewhat of a waiting game. Here is a hostage being escorted out right now. I wish we had more to go on. People are being carried away, seeking medical attention from the scene. We dont know if anybody was shot or fires or if shots were fired on a warning basis. These people have been held for 16 hours. We dont to know what is behind this man who is a hostage taker. We are speaking to a correspondent who is giving us background, but it doesnt seem like this is tied to a broader group. Those were the initial flight initial fears. Conclusions, make the assumption that there is some kind of connection, a direct connection between the hostage taker and what is going on in the middle east. From what we can tell he is acting alone. He has a very long rap sheet in the past. You can see more activity going on. People are inside but nothing is happening. People were seen. Hostages seen fleeing the cafe. Abc is the Australian Broadcasting organization, as opposed to the abc news we know here. Time for us to take a break on Market Makers. When we return we will be speaking japan. The siege had entered its second day and local news, the Australian Broadcasting company reporting that police have stormed the cafe. You can see people in that shot. It appears it is a Police Worker bringing out a hostage. Itaos we are seeing appears it was started by police. They stormed the cafe within the last 10 minutes. Hostages have been brought out. We saw one hostage being carried by police just before the commercial break. If have been there a total they have been there a total of 16 hours. Alarms going off, gunshots heard. The stretcher is there. That is a difficult calculus for the police, went to make a move . Getting information from people inside . Several of the hostages have escaped over the course of the hostage taking. They at least had an idea of what was going on inside. There are still people inside. I guess it is a slight positive to know there are six people who are out. We are awaiting further details. You can imagine the australian media police appears to be the charging and rushing in. Lasttook place within the half hour. In,ce officially stormed charged into the cafe where this single individual has held at least local news reporting they fired stun grenades. That was a tactic they appeared to have taken, as opposed to firing on the hostage taker. This is all breaking news. The hostage situation appears to have been broken up in sydney than 16a after more hours. Sydney police broke in, fired stun grenades, enabled the hostages to flee. We saw a woman being carried, seeking medical attention. We are awaiting an official word on what happened to the hostage taker, this 49yearold man with a long rap sheet, who had styled himself as an islamist sympathizer. But with no apparent connection to what is going on. One of the reasons this immediately became an International Story was because of the flag hung up. A rodarte be tied to islamist message . The same question we were asking when that man was killed on canadian parliament. Gunman . E a single was he affiliated with Islamist Groups in the middle east . The answer is no. It appears this is the same case here. Picture ofhowing a downtown sydney, where that cafe is. It is 2 00 in the morning there, so it is nos price the streets are quiet. We will be back with more. You are looking at a live shot at this moment of Sydney Australia. It is 2 30 in the morning. That is the hostage outside of go, you arere we looking at more hostages. This is over the last 10 minutes. Holdingle man has been a number of hostages by gunpoint. Over the last 20 minutes we have seen the police force charge the building and a number of hostages have made their way out, some aided by police. Some just running out the door. Stun grenades were used to get in. To hear gunshots and explosions. You can see some smoke in there. It looks like smoke illuminated by one of the police flashlights. That is the Current Situation in sydney. Still awaiting details on the hostage taker himself. Man who wasyearold known to authorities. He had a whole list of complaints and violations. Now we are waiting to find out how many people were actually inside the cafe, how many of them were able to escape, if any of them were injured. What do we know about the hostage taker . Born, selfproclaimed cleric. A long rap sheet is an understatement. Not the kind of guy you want to meet in a dark alley. Nor in a chocolate cafe in sydney. Of 16 hours ago, when you were getting a cop of coffee. Cup of coffee. Is to goal for the police get all of those people out of the building. Remember, it is 2 30 in the morning. To sky news, four people were injured. Beingdid see one woman carried out. Were they injured in the course of the police storming that cafe . Or did something happen inside before . Injured in this broken siege. We are going to take you back there when we have more development. We are going to turn our attention to the u. S. Economy. Of course it is recovering, but you cannot say it is booming. One reason is ceos remain reluctant to invest. They would rather cash buildup on a balance sheet. Ofid thomas, the research Carlyle Group has been taking a closer look at the problem. One area of comparable strength of Business Investment has been the energy sector, so much on it being poured into shale drilling in north dakota, texas, other bouts of the south and midwest. What is the outlook for that . Is interesting you mentioned oil and gas because oil and Gas Investment accounts for 70 of the net in Industrial Investment in the u. S. Since 2009. That is after depreciation. This has been the lone bright spot in Business Investment. It is a relatively low share of the overall economy. He should likely offset the decline in fixed investment and energy, and lead to slightly faster growth. How will we see that play out . Investment, the largest number what could get for fixed investment and Energy Exploration activity, it is about 245 billion. If you expect this to decline slightly more to part proportionally, the offset is a little small compared to the household sector that is going to get an effective tax cut in the range of 110 billion u. S. Dollars, once the client once the decline and gas prices flows to the pump. The money is being spent in a different way. Consumers are going to buy gs the corporation the Business Investment problem remains just to that, a problem. It does. This is the loan portion of the economy, where you have genuine investment. How we are down about 25 in relative to the precrisis peak. Extent will is what the oil Consuming Industries offset the decline . Other large consumers could see their fixed investment pickup. Is it possible those two things might not be simultaneous because drillers have raised the money they need to spend next year . Will we continue to see moretment in energy stay or less stable for the next several months while the consumer focused industries benefit from these oil prices . That is certainly an optimistic assessment. When you look at the financial selfts, it appears to be a first, ask questions later mindset. That could have a greater negative effect on the short run. Assetsseen some of the some of these assets oversold as Oil Prices Continue to decline. As far as lack of investment in businesses, what to you point to specifically from a macro standpoint . There are two main drivers. To zero, a price down there are a lot of investors that are from start to yield. This increases the valuation on dividend paying highyielding stocks. They distribute more of their current income rather than reinvestment. Tes has had in ra some reverse incentives. I think there are still the scars of 2008 still visible. We had cash among nonfinancials increase 150 billion since 2008. You also see a desire to increase returns. Its a desire to return to reduce the denominator through buybacks. It is a mechanism to increase your returns at lower risk. Diversion is playing a big role here as well. How responsible for some of that is activism . In some cases i think it is a desire to shake things up. Especially in a lot of corporations you have orphaned divisions. They just managed to hit cash targets for distribution. There are businesses that could be spun off and managed more eternally. More internally. There will be a reset of priorities when those businesses are detached from their corporate parent. Just more focused management. Looking at what is missing in the u. S. Economy. Argan hunters hit the energy sector, how to make money off the crash in oil prices. Police have stormed the cafe in the central part of Sydney Australia, where a lone gunman was Holding Hostages. The siege is over. Juliet, what can you tell us . What is been happening what has been happening . It seems like police decided to really get this situation to a head. We had a number of gunshots. It is alleged there were some grenades thrown toward the cafe. A large number of explosions heard just past 2 a. M. We are heading into what would have been the 17th hour of the siege. Video coming through of police storming in and taking out some of those hostages on stretchers. Some people like may have been injured. They were held that kathy for 17 hours. Police rescue held in that cafe for 17 hours. Police rescue is on the scene. Dont really have scenes like this. We dont have guns in australia. It is a frightening situation to unfold. It looks like police have decided to try to end of this. No sign of the gun man yet. When the Police Rushed in, to the best of your knowledge it was not response to anything h