or retracement, we got that with the latest rate of 24.5. a little bit higher than what we got in october and september. but again, that was a one-off. in terms of leading indicators, this is better than expected. zero .6% gain in leading indicators for the same time, we need to caution that the previous month's dane of 9/10 of 1% has been revised lower to 6/10 of 1%. forad gains of 6/10 of 1% leading economic indicators. in a little bit weaker than anticipated. in terms of market impact, we lowers. stock coming off than expected. 30 minutes of trade. do not look for that to hold, necessarily. the 10 year yield of 2.1 percent. >> lesbian bloomberg's own economist for some analysis of the numbers. carl, what do you think? >> we expected a pullback in the november print was off the radar so we knew it had to retrace. what is important here -- >> why? >> because it is not consistent with what we are seeing, improve, but still a slow moving economy. what is important as we look at the retracement. most of the components in the december pullback are still above the average proceeding, so this is still positive. it is easy to misread the headlines and say, all these components of the survey are plummeting. taken in the context of where we were in september and october, and it still looks pretty decent and is still consistent with the manufacturing sector shaken off all of these concerns about development. >> how relevant is the philly fed index when you consider the broader economy, and if we are thinking about in those terms, how to relate it back to yesterday? >> it is a regional survey. we have to keep that in context. i will be looking forward even more to the chicago pmi coming out a little bit later. that tends to be even more highly correlated with the manufacturing i sm. it shows the economy is on decent footing, and, not too hot and not too cold. just right. hikes aredyear rate very much -- >> lies the fed using such reluctant language? >> the fed is sensitive to the the considerable language dropped out, there was a potential for markets to freak out, for lack of a better term, especially at this time of the year. having outside reactions. the safest in possible way and did not mean to signal any change to the timing of rate hikes. they very successfully accomplish that yesterday. >> what you think of the dow and s&p up 2%? >> they effectively maintain while replacing it with new words. what was even maybe more dovish in the statement was the fact that they now seemed to have heightened concerns about low inflation which extend beyond oil. we all know the effect of oil on knock on the effects to core inflation. the fed hinted other factors there also concerned about. a more dovish committee next year, and now they are increasingly concerned about lower inflation. there is a debate between june and some point after midyear. yesterday'statement said, someally, the june call-up ground. >> pretty think the fed weighs inflation relative to the other thing it is looking for, job creation? >> right. they have the dual mandate between the level of the unemployment rate and the level of inflation. the are getting close to unemployment rate target. they seem to be losing ground on the inflation side. a far way off from where they need to be in terms of hitting the uhl mandate. what is important, the fed says we have an equally weighted dual mandate between the two factors, one factor drives the fed much more significantly over the last 30 years, and it is the unemployment rate. the unemployment rate is twice as statistically significant as the inflation rate in dictating fed policy response. you go. all right, carl. thank you very much. >> the hackers win. i do not know how else to frame it after sony has cancer the release of "the interview. sony had little choice after they said they would not show the phone because of threats to the u.s. public or the u.s. government included north korea still movies and delete confidential documents and e-mails. now what? phil mattingly is here in new york city. isare all wondering if this state-sponsored cyber terrorism. how to do this? >> is important that likely today, u.s. officials will announce investigators have identified north korea as being behind the attack. fbi has concluded that and we will get the announcement today. we react? there are two tracks here. processed her's are actually -- government officials, officials a couple of months ago in economic espionage. unlike the china issue, will the individuals ever be brought to the u.s. to see a courtroom? very unlikely. the intelligence community has been batting it around for a long time. how do you respond when the state actor is perpetrating these types of attacks on u.s. citizens and u.s. companies? do you respond with a cyber response and something along those lines? what is the response? there are no kinds of international norms here on the cyber front. >> doesn't he want the attention? three weeks ago, he was not on my mind. >> this is the diplomatic side that plays into all this. if you want to figure out how complex this is, north korea craves confrontation. this is what they love to do. the idea of the u.s. not only publicly shaming them, but then announcing some type of action against the government of north korea, that is essentially diplomatically at least historically what they want. all of this is being weighed right now. you will see a step-by-step process. publical avenues and shaming today. there will be continued debate inside the intelligence community of how they respond. respondt just how you to north korea. it is them figuring out some type of -- >> who exactly? they do not take it that way. had an impact in china. it was not a permanent impact and did not swing things in any major way, but officials i spoke to that after they brought these charges, after the indictment, they actually saw an induction for a brief time activity that they assumed was coming from the chinese government related into d's. -- the entities. it is a change in posture. meant to satisfy, as much as anything, the american public -- maybe political agencies, because ifies, america wanted to respond, it could do whatever it wants? you probably already is. >> they have done on the cyber innt as reported with iran the past. there is absolutely an element of that. if you talk to the intelligence community, they would like for none of this. they do not feel like we need to give an idea of who the u.s. is actually tracking here. so yes, there is a political component of this and a recognition inside the white house in the ministration that there needs to be some kind of response here, starting with public shaming. maybe that will appease the american people somewhat. but you're stealing our laughter and the holidays. kim jong-un is stealing our laughter and the holidays. that is not a good storyline. >> i do not know if the movie is actually that funny, but there is an element. >> the trailer is still funny. >> the trailer looked pretty funny. >> it is amazing. in the middle of this whole thing. >> he will be joining us in the next half-hour. >> phil, thank you very much. our own phil mattingly. when we returned, the world according to vladimir putin. he will tell you who's to blame for rock -- for russia's economic crisis. ♪ ofin the meantime, a lot western companies have had it with the ruble. what they are doing about it. ♪ >> the russian president is pointing his finger at the u.s. and european union. he could not help his annual press conference in moscow. today, he accused the united states and europe of trying to undermine the russian economy. situation has been provoked by external factors first and foremost. donelieve a lot has been .y us >> in the meantime, u.s. stocks are soaring. putin spoke for less than three hours. brian has been watching from his home base. you are such an astute observer of the russian president. i'm dying to know what he found most interesting. weekend of the currency crisis, it is the first -- i was listening to hear what he had to say about what russia can do to fight it. one of thegot biggest in the world and he made it clear he does not think the reserves should be spent to prop up the ruble, while it is ok to use those reserves to meet state commitments, budget commitments, like supporting teachers and doctors. and importantly, the police and military. have a listen. >> no way they can charge the social undertakings based on the concerns we have, which have grown over the past year. the four to 19 billion u.s. dollars. the central bank is not going to waste those reserves. >> he in fact criticized russia's central-bank for spending the reserves he arty hat, saying they should have stopped earlier. i think he is comfortable with where the ruble is right now, with roughly 60 to the dollar. makes it easier because of russia's oil and gas exports to make sure they are able to pay pensions and pay for the military, all for people who support the russian president. >> does he get a bathroom break during those three hours? >> he does not. and three hours is quick. his record is over four. maybe he did not have much to say. the whole idea is wherever you are in russia, you can ask your question of the russian president. if you are lucky. there are 1000 people in the room. and though he was there for three hours, how many questions can you answer? that is the whole idea, that he can tackle any question, even questions about the ruble plummeting this week one point on one particular day, -- >> chris christie thought he was great for having his bridge gate press conference for an hour in 10 minutes. that is child's play. how do the russians really feel? >> he still has a great deal of support. a poll was done and they found 80% of russians still support vladimir putin. he said, that is crazy, really? life in russia, for most of his role, has been getting better every single year. they annexed crimea and that is a very popular step amongst russians. only tough year was 2008 and most russians feel vladimir putin is doing a pretty good job at that. 1998 is the bad year. if -- that is when they defaulted on debt. that was a big issue they had. obviously, the currency problems could be an issue for him. about 10-15% of the russian population mice to travel. they like their imported goods. come springtime, when wholesalers start restocking, everything will get a lot more expensive. we might see a little bit of his support get chipped away at. >> you mentioned that no topic was off the table. bitnt to hear a little more. i only saw the headlights look you said about his love interest. he says someone loved him and he loved someone else. >> are they two different people? >> no, it was a weird, reflexive statement. >> what exactly was the question? ? poor are from a town south of -- >> asked him reporter from a town south of moscow asked him. russia'sis considered -- he said yes, he love someone and he loves -- she loves him. he did not give more than that. one of the best-known secrets in russia, that he does have a .irlfriend >> a special lady. >> yes, a gymnast in the olympics. he is the first russian leader ever to publicly divorce, something he did at the ballet actually last year. is actually official. he said many times he will not remarry until he has seen his former wife married off. .e gave us a little bit there i guess it sort of feeds into the alpha male personality. >> just to wrap up quickly on a this currency crisis and potential economic crisis could last for another couple years? >> yes, he said he did not know how long, but he thought it could last two ears and it all depended on external factors. perhaps things could get better by the beginning of next year. get better inot russia, people know who. >> thank you. ryan in london with the latest on mr. putin. >> called the latest tween consumers and retailers. russian consumers want to snatch to homething from cars appliances before companies raise prices or stop selling altogether in response to the collapsing ruble. it may be too late. here with us, shelby, it sounds like some retailers have already completely. >> yes, retailers across all it.stries are addressing how rapidly they respond is another thing. 40-60%. we have seen luxury companies. upury companies, gucci is 6%. there are also companies that cannot hike companies immediately. we heard an hour ago that ikea is not going to be selling furniture. andlked to them last night they are being tightly lipped about what they will do. they do not want to jack prices. acrosswere lining up russia at stores. they knew this would happen. a new prices would go up and it is inevitable. >> that is because so much of what is coming into russia, whether it is ikea -- >> yes. question exactly. same goes for the automobile -- >> exactly. same goes for the automobile industry. >> you are also seeing automakers, this is actually really interesting, a terrible year for automakers until about a month ago. then russia started snapping up luxury cars. upes for the porsche were 60% in november. sortsis seeing the same of numbers. this is not good for car companies. one man said he went to buy an audi. he went to the dealership and bought it with the equivalent of about $27,000. they also don't trust the ruble. they're putting the money in big-ticket items because they do not trust the currency. >> thank you. "market makers" will be back in just a moment. we have a lot more to cover. ♪ >> welcome back. we are approaching 26 past the hour. bloomberg is taking you on the markets. the dow is up more than 525 points in the space of two days. if you measure the gains, we're looking at the best two-day 2013.since january it is almost two years, it has been almost two years since we saw the rally. in classically dovish fashion and giving people no reason to believe -- >> one of the reasons is, remove or where we are. many have closed their trading books. they hate when the market goes up in their face when they have shut down. going intos to trail the year. that is for sure. >> no. >> stay with us. ♪ live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. >> i'm erik schatzker. >> i'm stephanie ruhle. >> stephanie, is life really so bad for america's banks? >> no, they are cried berries. -- they are crybabies. >> at least according to the benchmark index, bank stocks are up 4%. revenue growth in the third quarter was the strongest in five years. how good or bad is the outlook for the fourth quarter and beyond? this morning we are asking a one-to combination -- a 1-2 combination. men, answer the question. is it really that bad for banking? >> i will start. it is a mixed blessing. the regulation continues to rise, the goal post keeps shifting driving capital markets to have a lot more capital, but if you look at how the banks and kind of shuffled optimized things over the last few years, they have managed to keep their heads above water despite the higher capital requirements. and in terms of what is going on right now, the fourth quarter is usually not a great trading environment seasonally, and with oil prices in russia erratic, it quartera weakish but not a travesty. >> can you make the case that regulations have forced the banks to do what they should have otherwise, which is to be more efficient and make tough decisions about where they should and should not be investing capital? >> that is a good point, and i made the point to a client the other day when we were talking about current exposures and the fact that the banks do not look like they are doing too badly, that may the regulation has saved them from themselves. >> when you speak to people who work on the street, it is just crybaby soup right now. everybody is fine, nobody is taking their kids out of private school or leaving the hamptons over this. but if you go to anybody working sell side, -- on the they are crying about this. >> if you look at the banks, they have missed revenue growth for the four straight quarters. everyone thought this would be the year that we would get back loanrmal and have 6% growth. >> but the economy is not back to normal. >> but at the same time they are still doing with regulation and run off portfolios. this is where some of the squirming comes. the typical bank will tell you that revenue -- if you think about how difficult ismakes it to cut costs, it three points of expense growth before you can start. you have to cut 5% of everything else to get expenses to go down and it is hard to do that. >> where there -- where is there emergence? where is something either working to the benefit or against the big capital markets franchises like jpmorgan a citigroup, foror example? is there not solidarity in the banking industry. >> i will start with universal banks. the very low interest rate environment, which is one of the pressures on depository a business mix issue. it is not as big a deal for them . the other thing i would add on regulation, $250 billion has become this arbitrary line in the sand. if you are bigger than that, you get full fab regulation. if you are less coming you get light regulation. yous how much liquidity need versus full month liquidity. one of the places we see impact is the loan growth status growth at 6%. you see loan growth -- >> how much inside banks, do individual traders and sales people care about the overall mission and success of the bank beyond let's hope no group lost money because i don't want my bonus to get touched? >> there is always a lot of that. to brian's pointed couple of minutes ago, let's face it, when a large percentage of someone's income is a discretionary bonus, a lot of that pressure is on those bonuses in order to get the cost structures to where they need to be. >> what about shadow banking? with all, obviously the regulatory pressure, business is being pushed outside the banks, but there is still business to be done. so you have the lending club, the ipo's the last two weeks. the ultimate examples of these theshadow banking, taking place of what the banks do not want to do anymore. for the growth in these businesses, to look at all of the marketplace lenders as a group, in the u.s. and the u.k., it is up 150% year over year. if you look at the business models, it has been interesting. financials investors get nosebleeds looking at these things because they are trading price to revenue. it is not the environment investors are willing to play with, and it is the tech phenomenon. the whole theme of the shadow banking reemerging because business is being blocked out, it is just getting started. >> is that one of the reasons people like private equity so much? >> it is. and guy can speak to it in great detail. you are seeing it through direct lending, shipping loans, energy investments. >> can you help me understand lending club's? gekkovers lending clubs it is it -- is it a financials analyst or a tech analyst? has written about them, and obviously all we do is financials, but we do a lot of work in payment technology and everything else. >> where do you get the lending club to fall? >> i put myself in this camp. it is a tremendously innovative delivery system. the product is as old as the day is long. i was at the museum the other day. they had the old ads for households from the 50's. the same thing that households were doing in 1952 when people were coming back from the war. it is an effective delivery system. banks will look at it and say a financial technology company might trade at 30 times earnings. some thing that trays at that -- that trades at 80 times earnings, they cannot get their arms around it. an opportunity to just place a large capital markets franchise? >> to a point there is. that does not necessarily mean it happens outside institutions. >> cannibalizing themselves, in other words. >> goldman sachs, morgan stanley, all of these firms have substituted a lot of what used with computers. >> but goldman still wins. their individual employees might not win, but goldman as an end to shen -- but goldman as an institution -- >> absolutely. >> to the degree that those are --rs >> that does not mean they are -- there is not emerging room for growth companies. have grownike that very rapidly but also very small based. things, they of are still very small. we did some work earlier this year that showed in the fixed income world, for all the growth and all of these electronic intermediaries that they have had, they are less than 2% of the total revenue generated. >> i think because they came out of nowhere, those who look at market access or market partners think, the restored ordinary success is amazing. >> it is. look at the totality of it. it is still the big five to 10 global players. >> gentlemen, thank you very much. >> guy moszkowski and brian foran. more coming up. >> when we return, companies that engage in blatant blacklist blatant blacklisting. we will have that when we return. ♪ >> welcome back to "market makers." i'm stephanie ruhle. imagine if a company could choose who is allowed to buy its stock. it is happening in the $8 billion market for leverage loans. market for letterman -- $800 billion market for leverage loans. our guest is here to explain. what is a blacklist in terms of buying leverage loans. that has alist number of people on it who cannot buy your loans. market is unregulated. it is a private market, and it as a borrower can decide who will lend to you and who will not. >> why? do they believe that some possible investors are fast money and will not hold on? areome borrowers competitive because they do not want competitive to have sense of the -- to have sensitive information. situation,cturing some are seen as risky. >> in the secondary market, i can see why -- in the primary market where the loan is being underwritten and syndicated, you might have some authority to decide who does and does not get to participate in the syndicate. but after that -- >> that is the most amazing thing about it. borrower gets to have a say on each deal, so you need the borrower's consent. >> every single trade, you have to have the borrowers consent. are there investors that are blocked out of the loan market right now? >> the craziness of the market is that an investor might be invested in a deal of a private equity company and that is fine, but that company goes and raises money for another company, for another portfolio company. in that instance as well, private equity -- >> there is a trade-off here. in certain cases there are only so many investors willing to participate in a certain kind of loan because perhaps the loan may be super risky and offer a high interest rate in return, but nevertheless, there are a lot of portfolio managers who cannot set up for a loan like that. -- cannot speak up for a loan like that. >> and that is a problem because it ultimately reduces liquidity because the number of buyers is smaller. >> but the company deciding who is and who is not on a blacklist, they get what coming -- they get what is coming to them in that regard. trade-off.the >> if i am a potential leverage loan investor, do i devote time to kissing up the companies because i want them to like me? >> it depends. do you want to protect your investors rights or not? sometimes people can have that reversed and you might call that the company and say i am going to be nice to you, please do not do this. that has happened. >> how long has this been going on? >> forever. the market has been a private market ever since the laws were drafted. >> ever since hedge fund started taking control of committees, the restructuring process, this has been an issue? >> yes. the particular blacklisting, in the late 1990's, when companies started blocking investors. >> the more people are aware of the blacklisting, is this another sign that the leverage market should be regulated? >> the sec does not regulate the market, and trading in the market, and that is the problem. you are starting to see this pushback and say i do not want to be part of your deal if you are going to be blocking lots of people and rejecting my ability to sell. >> that is crazy. thank you for joining us. ahmed's first visit to market makers. i hope she comes back. >> coming up, tracking down the bad guys. finding those responsible for a multimillion dollar scam. ♪ >> welcome back to "market makers." investors were suckered by a website called secureinvestments.com, promising guaranteed returns while masquerading as a managed forex fund. vanished,n may, it along with millions of dollars in customer deposits. bloomberg markets magazine teamed up with willem marx to track those responsible for the scam. >> beyond this fence -- beyond this fence is a financial wild west where a multibillion-dollar fraud flourished, far beyond the reach of financial regulation. it created a site called secureinvestment.com, persuading investors to wire millions of dollars for massive returns in forex trading. >> what was clever about it was not only did -- the way it was not taked, they did money out. >> monday night. >> david kane had been a day trader for years when he opens an account with the website. he was instructed to wire $2500 from his bank, wells fargo, to in cyprus. then he watched as his virtual profits grew online each day. but then in may of this year, investment.com vanished. along with his investments. >> so everything was a lie. >> it had to be. one of the best ones ever. >> we wanted to find out where his money ended up. our investigation led us around the world. the most directly was the only named director of a holding company. his home address was 5.5 thousand miles away in europe. a lawyer from latvia listed this building in the latvian capital as his address. but according to his landlord, he has not lived or worked here for well over a year. declined toy it.uss secure investments operators also exploded latvia's own banking sector. we found at least two bank accounts that received tens of thousands of dollars from for -- from defrauded investors. if -- ito the point, is much more wide open. >> a global affairs professor at nyu studies crime in former soviet states like latvia. >> latvia is one of the easiest. someone can come along even if they have no stake in it themselves and open an account. >> an account linked to secureinvestment.com, foreign deposits are 10 times larger than domestic ones. the account became active weeks after latvia joined the eurozone in january. >> it was potentially a big opportunity for the criminals and money launderers. the holy grail is to get the money into the most dissonance financial systems. >> the accounts were opened by citizens of another nearby former soviet state that plays no part in europe. we are east of riga driving to the border of belarus. this is the end of all the financial regulation that goes with it. the journey is short, but this border fence marking the served as of a pariah a barrier for our cameras. crossing to and from belarus has rarely been so easy. these roads into latvia and lithuania are a backdoor to europe for men, material, and money. ahead of financial regulators in latvia have us denied that his country has become a hotbed of criminal activity. would you choose latvia because it has a light regulatory touch? sense to thee criminal. try and you will see the results. >> laundering significant sums of money and innovating detection. >> those who are on the front line, they come up with new invented schemes. >> one recent scheme, to cross the front line into this distant corner of europe, was secureinvestment.com. regulators are finally investigating. amazing. talk to us about the experience. >> very exhausting, because -- >> why? >> you are trying to catch these guys who are good at covering their tracks. so you have these guys using fake names. of the documents in hong kong had a director's name on it. it was a woman in south africa. we found her. she had never heard about any of this it is listed on 60 different court documents as a director, meaning someone stole her passport. >> do you feel sympathetic toward regulators? seeing how exhausting the how much doesyou, this affect regulators, who have stacks and stacks? $10,000,people losing one hundred thousand dollars, but that is small. this for people to sort out themselves? >> to what degree -- >> that is kind of heartbreaking, though. >> it is, for people who lost their life savings. no one deserves it to be stolen from them. likeu have seen materials -- >> some of them are not great. say greed ord desperation took part in this. if this is hindsight, it is a stupid thing to do. >> what reputation does latvia have with the global bank? great. easy to opentively a bank account there. they rely really heavy on these foreign deposits, and they are desperate for new business. a lot of it comes from russia and other cas countries. to speak totried people in russia and latvia, what did you get? >> a lot of no comments. >> we will be back. next hour. ♪ >> live from bloomberg headquarters in new york, this is "market makers" with erik schatzker and stephanie ruhle. is big,e advertising and video is getting bigger. our guest host, the ceo of bdo global, andrew robinson. >> and what happeext after canceling the release of the movie "the interview." >> it is not your shoe polish anymore. china will a sow's luxury inola sells luxury watches, too, and you will not believe where they are made. >> let's begin the hour with bulletin. as of the top stories in business and finance. aside the economy is picking up speed into 2015, the index of leading economic indicators rose for the third month in a row. the bloomberg consumer comfort index tied its highest level in seven years. underwaya global rally in stocks. u.s. stocks picked up where they left off yesterday. .ow industrials up 228 points the s&p 500 up 1.2%. the nasdaq leading the pack. janet yellow and her fellow policymakers can take credit. that's -- janet yellen and her fellow policymakers can take credit. this is how traders are interpreting it. stay.asy money is here to that is where it is going on in europe, where the markets are about to close. foods, chairman john gaeta will take over. craft sales have been flat, and is expected to drop 31% this year. vladimir putin blames the united states and europe for russia economic crisis. he had an hour-long press conference today, and in it he accused americans and europeans for trying to undermine russia. at the same time he tried to in the face ofns the collapse of the ruble. >> in the worst possible scenario, it will take two years. after this, growth is in evitable. this is also because external economic factors will change with the growth of the international economy, requiring further energetic resources. >> a continued to criticize the central bank, that he could have acted quicker to defend the ruble, and it was not a good idea to spend russia's foreign-currency reserves. and larry summers got a $28 million payday, and he can thank senator elizabeth warren for that. last year she led a senate uprising to prevent him from becoming chair of the federal reserve. he went back to teach at a startup lending club. it is valued close to $28 million. >> do you think he will be writing her a thank you note? maybe not? >> i would also suspect that is not his style. >> and i would highly think it is unlikely to see larry -- that she would like to see larry get a $28 million payday. robertsonor -- andrew is the ceo of one of the top advertising agencies on the planet. it is part of ad giant omnicom clients of whom are fedex, exxon, ge, png, and so on. congratulations on the win, the suit, the year. >> thank you very much. tell us, what was so special about bbdo this year? >> we were recognized as the network that produced the most credited workmost in the world. we kept most of our clients and at a great new ones. >> what were you most proud of? what was a standout? >> i cannot. >> i do it all the time. with my daughter. no favorite?ere is we have never created something like this before, this is a new world of advertising? >> what is most unusual, we did a great campaign for lows -- for lowe's. howix seconds they show you to fix something in your house, and the campaign has never stopped improving. we have produced these fantastic short six second videos. >> that is where people are putting their money? vines? knowears ago, did you what a fine was? >> no, it did not exist. randall stephenson is one of our clients. >> we have heard of him. talking of 2013 he was to one of his officers. he had been the ceo of at&t for six years. when he took over as ceo for at&t, the hottest selling devices were palm, blackberry, and no kia. in -- palm, as in a palm pilot? >> yes. apple was a $19 billion communal -- $19 billion computer company. there were no apps. now they exist. if we look forward, what does this mean for us in terms of selling products in building brand, i do not know exactly what it looked like, but i think i know roughly what it looks like, which is all of the screens in our lives, including on ones that we see the show our wireless. they will be connected to each other and the other important devices. then we will be dumb. nothing will be stored on them. creates a whole new world of fantastic opportunities because the leveraging communication is in, targeting context, message, and creativity. we will be able to target much more precisely, reach people, the rightpethey, re in the right frame of mind at the right time, and we will have other information. >> is that to say there is more value for your client, lowe's, inanother client, in 86 -- been onecond vines cable television? spend everything, but you can optimize the mix. what is required is smart planning of how you are going to specific messages and to work in sequence. >> when is the last time this happened, when television came on the scene? is that the last time people had to evaluate a new medium? >> it missed the scale. in.arrest came now we are in a situation where we have these huge platforms delivering massive audience -- facebook, 1.3 billion users per month, 860 million per day. and clicks are truly translating into dollars spent? >> clicks are a primitive measure of what may translate into sales. >> what is a better measure? thehe good news about all data that we have is we are getting much better at actually effect based sales on behaviors, consumers' behaviors. >> are you consumed -- are you concerned in any way -- we love to complain that facebook and amazon and google know too much about us but have not change their behavior. like you to don't have all this information and consumers will want it to stop? >> i do not believe that. if we use it well, we are making all of the messaging we deliver to consumers more relevant and useful and interesting. >> every time i log onto a computer and it asked me if i want my belly fat removed, teeth whitening, or botox, none of those things. >> you have obviously displayed tty, sweaty -- some slu dodgy practices. -- they are all with lower growth environments, increased on winning new customers for their brands and customers. that means in the context of all of these things that people can do, you have to be able to provide ever more effective work. that is what they need. >> are they shrinking advertising budgets? they are not shrinking their budgets. the split will evolve television getting a chunk of 43%. digital is 25% and growing faster. print is 21 and will drop a bit. the mix is changing. they are investing the money. if you look at what is in aggregate, consumer spending has not grown that fast, even in the emerging and developing markets. share becomes the big focus. >> are your clients scared because they do not understand this new media? whether it is social media or vying -- or fine, perhaps? the 26 euro loves that into web. >> they are not scared that the 26-year-old loves that inter-web. findingare not scared, the things that you should do, not just doing a bit of all you can do is an important part of this planning process. what do they specifically -- give us a good example like you did before of what you are doing , but a challenging assignment that a client has come to you with. how did you respond? >> honestly, every case is different, and the answer is different to every case. completeogether a program, as you have to run them now, the way consumers live, which is not in 13, 14 week periods and figuring out what we need to deliver them and when in that purchase process, and then serving that up to them. that is a complex process for all of us. >> so right now, chief marketing officers -- are their jobs easier than ever because they have more data or harder? >> both. they are easier and harder. because if you can use the data smartly, you can target is nicely and reach people in a better context, and you have better information with which to define your messaging strategy. you have all of this information to deal with. >> we showed some charts about forecasts for -- you mentioned internet ad spending is growing quickly. holdingpending is steady. and the internet will overtake television in roughly 2019. could it happen sooner? >> i don't know, but it is going to happen. 2019 is not that far away. >> why is tv so sticky? >> because people like watching video. i have been watching one all morning. >> that is what people like. they spent hours and hours a day doing it. total viewing is still huge. we run the risk of extrapolating from our lives onto everybody else's, and none of us has the time to watch the shows we want to watch. there are huge chunks of the 5:30ation that get home at that have eaten by 6:30, and they have four hours to fill before they go to bed. that is a large chunk of the population. >> i want that schedule. coming up, is the most talked about movie that we will never behind sony'ss decision not to release "the interview"? ♪ >> sony is pulling the plug on "the interview" after major theater chains decided not to show the film. hackers government believed to be acting at north korea threatened violence against fans who were going to see the movie. care to offer his opinion it -- opinion --er his matt, your e-mails were among those leaked by the hackers, so you know what it is like to be in the midst of the scandal. but let me ask you about sony and open to the interview." hollywood, broadly speaking, caving? what do you think? is hollywood caving in? >> i think it can be perceived that way. --ever, sony was basically had its hand forced by the theater owners. sony says we are going to release the film but the theater owners started to get nervous after the threat was made against moviegoers, and one by one the theatergoers said they would not be showing the film. then they were forced to say we are scrapping this. so, yes, sony did cave, but they were essentially pushed off the cliff. >> as i understand it, it seems to me it is a simple decision as a theater owner because the of something terrible happening is awful, and you will probably get most of the money back because a lot of people go to the theater and decide what they are going to see. in my reading that right? >> i think that is correct. if you are a publicly traded company, which most of the theater goers that the theater owners are, when they knew there is a threat, it is too great to risk on a film like this. the christmas-to-new year week is the biggest week of the year. there is a risk that people would stay away from all movies, not just this movie, for fear of something happening at the multiplex. for theater owners, it was a fairly simple decision, but it does strain their relationship with sony because sony says they were pushing forward with this, the theater owners said no, and that is something everybody would understand why they did this. >> what is your takeaway going to be? it sounds like you are saying this is totally rational, but is your headline going to be north korean terrorists beat sony? >> the hackers certainly have won in this situation. from the beginning of the hack, they have been messages saying stop this movie, do not release this movie of terrorism. from the beginning, the goal has been to stop the movie. now that goal has been achieved, so the question is, what will happen in the future? are the leaks going to stop? they have been coming quickly since the november 24 hack. are we going to see more of them? secondly, what precedent does this set for other groups that may not approve of movies, television, other media? will we see more threats, more hacks, more leaks? the slippery slope is amazing. >> we know that sony has said to the general media what they want us to do and not do the -- and not do with the information. reporter, whatod has it been for you the last five days? >> it has been crazy. this is the biggest story to hit hollywood in years. the impact will last for months if not years. there are going to be lawsuits. there have always the -- there have already been two lawsuits .gainst a studio there will be a repercussion effect on the talent community. the talent will be less likely to go to sony with movies because of what happened. the ramifications will be large and ongoing. >> what was it like seeing your e-mails in print? little scary. i have to thank bloomberg news for that. i think everyone in hollywood is asking that question -- what did i put in an e-mail? thankfully for me, they were all professional and cordial, but i am thinking to myself, man, there are thousands of e-mails out there. i am e-mailing studio people all the time, asking for stuff, and they are pitching me stuff. you wonder what is out there. >> you have to be looking at twitter and this massive hollywood reaction, the outcry following the announcement. i am looking at michael moore. him thatu described how do you describe him? do you describe him? famed documentarian? here you go -- rob lowe -- "i just saw seth rogen at jfk. both of us have never seen anything like this. hollywood has done neville chamberlain proud today. is this tone deaf movie stars who just want their name on the concernen and have no about the ramifications on movie screens and movie theaters? >> this is an artistic freedom question. it is a first amendment question. it impacts every person in the media, in the artistic community. what we have seen is a country that does not like their depiction in a piece of media or entertainment, effectively being able to stop that from being distributed. the ramifications of that are large. >> how much will this affect that other movies to get rain that? >> i think it will be tremendous. people in hollywood are already saying north korea is out as a villain in a movie? who else is? china, iran? >> matt -- quickly, why didn't sony just release straight to pay-per-view ? >> i think a lot of people are speculating about that. one theory is that the insurance ramifications. they have a better likelihood of getting paid if they completely scrapped the film rather than if they released it in a small way. i have also heard that there are other pay-tv distributors that are afraid of what might happen if they take the film on. we do not know for sure. >> matt, thank you very much. is the ceo of >> much more to cover. don't go away. ♪ >> coming up, the monster eating television's advertising pie -- you know it, the gaping malw of the internet. >> we are looking at a watch company that has made the motor city home. >> live from bloomberg headquarters in new york, this " with erikmakers schatzker and stephanie ruhle. >> our guest host this hour, andrew robertson, the ceo of bbdo. >> it was a very big year for big-time media. we saw distribution mergers like comcast and time warner cater -- time warner cable, and so we are the -- we are looking at the contact producers. paul sweeney, as we look ahead, what are you most focused on? more m&aht see some activity in 2015. we had a lot of consolidation on the distribution side of the media equation in 2014. a lot of investors are saying maybe we are going to see a commensurate level of m&a activity and consolidation on the content side, so maybe we will see the cable network companies, smaller companies or smaller tv studios get together, try to get some scale so that they continue to do business with the comcast and at&t's of the world. >> paul, what about advertising consolidation? andrew saw it from the inside and bbdo. why don't you ask andrew about it? >> why didn't that deal happen? i am guessing the issues there , a love culture involved, so i am guessing that is a key challenge. >> the deal did not happen because both parties agreed it notd be impossible -- impossible, it was going to be extremely hard to sku -- to execute well and fast enough. important?peed >> execute really well, fast enough. if you -- >> if you cannot make the extensible benefits of such a combination realized fast enough, is it worth it? >> any great concept or strategy is only good if you connect and executed well. , that is what happens. >> why realize that after the fact? know whatnot always is going on up front. you really cannot. there is no way. think we will see more consolidation in 2015 in your industry? sure you will see more consolidation. i don't think he will say that he will see anything like that? agree with him there? >> it shows the complexities of putting two large agencies together, but perhaps we will see the smaller agencies get together, whether it is an ipg or something like that. continue to see the big holding companies like omnicom, like ibg, like wpp, continue to acquire smaller agencies, ones that are strong with digital advertising, internet advertising. those are the ones who are coveted by the big holding companies these days. >> if digital and internet advertising is where the focus will be, what will tv advertising numbers look like next year? ad spending has been the great growth story. a gross 15% per year versus 4% to 5% for all global ad spending. the internet has been taking a lot of share of ad spending, mostly from print media -- newspapers, magazines, and radio. now there is concern that for the first time the internet may take some share from the broadcast and cable television networks. upfront ad sales last spring for the broadct and cable networks. the current scatter market does not look great for the tv networks, so going into 2015 tv adis a concern that spending will come in below expectations, primarily due to losing share to the online video players and the internet overall. that has investors on the edge as we head into 2015. >> do you agree? >> from meyer person -- from my perspective, i am trying to deliver advertising to consumers. video, i do not care whether the consumers view it on a closed digital platform on television. >> here is the thing. you have to know how they are consuming it. one of the things we have spent a lot of time looking at over the course of the year with paul is over the top. hbo is going over the top, disaggregating hbo from the cable bundle. 2015hers follow suit in and over the top becomes reality and you can pull the plug as long as you have broadband access, what does that mean for viewing patterns and habits and how you deliver advertising to these consumers? isin the end, all you can do take the perspective that the viewer and the consumer -- what consumers want is to be able to watch the programming that matters most to them when they want, where they want, and on whatever device. >> doesn't that mean they want to skip right through an advertisement? >> that is where the burden of creativity rests on us. that is where our job is to deliver nonstop creativity. >> i am waiting to see it. >> come in one day and i will show you. >> the goal is for the advertisement to be as entertaining and i'm going to want to watch it just as much? >> yes. our advertising is competing not just with the other advertising, it is competing with every other former content out there that you could spend your time with. >> hasn't always been the case? >> it has, you just have way more options than you had been. you used to had to go switch to the other three channels on the four-channel television. now you need -- now you hit mute . >> how does over the top change the relationship between the content creators and the distributors? >> it is very much a balancing act. the current ecosystem, where there is a big bundle of pay-tv channels on your cable or satellite system, that is a great business model. making money. content owners are making money. that has been the model. however, consumer tastes are changing and people are consuming more and more video via the internet, over-the-top, outside the pay-tv bundle, and the content creators have to go where the audience is going. everybody in this media universe has to walk a fine line and preserve as much as they can't really existing ecosystem, which is so profitable, but at the same time they have to build and invest in new business models, whether it is netflix, hulu, hbo go, because that is where consumers are going. they have to go to the new business but at the same time they have to protect their existing ecosystem. it is a fine balancing act. >> paul sweeney of bloomberg intelligence, and andrew robertson of bbdo. they will be back with us after the next break. >> when we read turn that when we return, motown becomes watch town. ♪ host, andrew robertson of bbdo, is here with us. one question we have not asked. we have broached some modestly , talkingable territory about the merger that never happened. , now that itnicom remains a standalone company. do you want to run it someday gekko >> you have not met my boss. he is not going anywhere, and i have a great job. >> do you think you can still be super effective being part of a mega-company? , andcame out of nowhere there is a sweetheart, a darling, and everyone desires. how do you maintain the desire if you are the big guy? >> you run the risk of becoming stodgy, and you really work hard at not doing that. i think the end. i think that the empirical evidence is that an agency like ours is capable of producing creative work that is at the leading edge of what is being done around the world because we are really focused on it. you have to do it every single day on every single client. >> specifically about vice, is there any nv, resentment -- any nvy because they have been able to brand themselves as annuity organization when in truth, all of their money and more, they probably lose money on advertising? >> i do not think there is any envy. we partner with them on a lot of stuff. .t is so fragmented >> what do you mean? >> if you take the conventional concept of an advertising agency, there are literally hundreds of them. principally because of two mine oncea friend of said, the great thing about the advertising business is that any two fools with the telephone -- >> low entry. >> and frequently do. and there is competitive conflict. you can only work with one soda company, one beer company, so you end up with lots of individual agencies, and then surrounding those are lots of , andnies that spring up there are hundreds of them per year. some survive, some do not. some of the ones that survive go on to thrive. a lot do not. it is a very darwinian system. >> i know we have to go to the break. what do you make about radio advertising? we are talking about things that spring up and things that die out? what do you make about radio advertising dollars? >> we live in new york. radioe not aware of advertising the way you are if you live in l.a. or atlanta or any of the other big cities around the states. people spent a lot of time in their cars. still huge radio audiences, and it is a massively underutilized medium because people do not think to use it. >> thanks. i thought i was talking to bob pittman for a minute. andrew robinson will be back with more. you are watching "market makers ." ♪ >> welcome back to "market makers." we are back with andrew robertson of bbdo advertising agency. we like to torture people. with word games, word association. we say something, you respond off the top of your head. ready? snapchat. >> my daughters. >> really? do you think it will be a medium that matters to you? >> it already is. i have to go where the consumers are going. a lot of consumers are going on snapchat. >> where will they be tomorrow? better for met is to be fast that first because i cannot tell you with any precision where -- it probably does not exist. we had a meeting in l.a.. we spent half the day, half the first day talking about myspace. there, mark were zuckerberg was sitting in a dorm and inventing facebook. we had no way of knowing it was happening on the other side of the country. observe what consumers are doing constantly. when you start to secret eagle mass in any one platform, -- critical mass in any one platform, that is when -- if you try to predict it, you will spend a lot of time getting it wrong. have some principles you stick to, but move fast when you see things getting -- left wing, though. >> snapchat. -- les moonves. >> snapchat. >> les moonves, that is your next once feared -- that is the next one. cbs. dr. doing ok. >> "american idol." >> slowing down. many years itow did that, but i feel like it has been around as long as i have. >> that does not always happen, though it there are all brands that seem to have infinite longevity. what is "american idol" losing that successful long-lived brands maintain? >> the really successful long living brands constantly innovate. every iteration, they are improving what they are offering viewers, and i think it is hard to keep doing that with shows like idol. other things pop up. it is still a great franchise. i wish i owned it. >> what about the brand that we love to hate that keeps growing? ?ardashian it is a major brand at this point. >> it is extraordinary. i am sure you are a regular viewer of "chloe and courtney take the hamptons." everyone underestimates fame. the single most important brand is fame. because we all make decisions in a very nonrational way. spock, to think with much more like homer simpson. we are doing a really interesting piece of research, on the generation of oxytocin by -- as stimulated by advertising. >> what is the timing on it? >> we will have the results back in early january. andrew robertson, that was a great conversation. " will be back in just a moment. ♪ >> that is going to be it for "market makers," but before we go, we need to wish a very happy birthday to the one and only dan loeb. you can tell this guy grew up in california. a surfer at a young age. that hair is outstanding. this is probably when he was still in the surfing/skateboarding mode before he became the transcendental meditation/yoga guru. >> meantime, we will also be talking about blackberries. a new phone, and to stephanie's delight, a keyboard. you will be hearing from the ceo . >> now it is time to take you, where else, on the markets. we are approaching 56 past the hour. julie hyman has more. >> i really enjoyed the picture. that was like a late birthday present for me. let's take a look at what stocks are rally at. after the fed comest patients, they say that interest rates will likely not go up until after the second half of the year. sebastian is joining me from chicago at the cboe. in terms of what options are pricing at, as we see the big what are wecks, seeing in options that are either supporting the rally or saying maybe we will not keep going? >> you know, we saw the fix -- the vix extremely elevated. it was the highest settle since november of 2011. volatility was as high leading into the fed meeting. it has dissipated substantially. noblex is at a much more -- and much more normal level. 13 into the it at holidays as people take time off and the market slows down. >> one of the other areas we're yields, andtching particularly one comes to options, i am looking at the ishares treasury bond each sheet -- treasury bond etf. what are we seeing on the etf in options on the back of the fed? up into the fed? it is nice for the fed to come out and it what the rest does that really rates are not going anywhere. rates are back up to the 10-year yield at 2.2%, mostly just from panic that got into the market. it is settling into that 2.2%, and if yourange, look at a straight tlt, watching the fed and their rate policies is a lot like waiting for the cubs to win the world series. constantly wait until next year. happens nothing going to in rates anytime soon, so tlt got bid up. i think it will ease back to the 120 range. not a lot of crazy activity in the options themselves, but we are definitely seeing that etf ease off. rates, rates have a lot to do and a big influence on the housing market. you have a housing related stock that makes sheet rock, and you are bullish on this, which is interesting. what are rates going up going to mean for the health market? best for the housing market? rates are not going to go up. we have fannie and freddie eating restrictions, and we have the 10 year yield in the two-to three range. every house that gives bill needs -- every house they gets built needs should rock. -- needs sheet rock. paying for it by selling near-term calls. the first near-term call i would sell is the january 29 calls. i do well as long as usg makes a slow run higher. that is what housing will do in the next six months. >> mark sebastian, we will keep an i on it. we will be on the markets in 30 minutes. "money clip" starts now. >> welcome to "money clip," where we tie the best tories, interviews together. vladimir putin says there is -- -- too soon normalize relations does not mean you can order cigars just yet. today's wildcard and we follow the trail of a global scam in the forex market. then it is the time of the year for prospective college students, but is it worth it? a person wants iv

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