Largest ecommerce be the in what could most valuable tech company. Meanwhile violence in ukraine is spreading to other parts of the country, alleged prorussian separatists killing ukrainian troops. Aev says it is turning into real bore. All of that ahead on street smart. Lets look at these stocks were watching as we head into the close. I want to go to julie hyman. I want to start with pfizer. We have seen so much activity in the drug sector. They failed to make more than estimated. The ceo talking about what could happen if you see that big pfizerastrazeneca deal go through. They are talking about the implications for any potential rake up of pfizer. The Company Thinks it would possibility. Our lesley they would have to reject or how that would be done. Obviously they would have to the way that would be done. And foreign sales were influenced by an outbreak of bird fuel and china. International chicken sales really felt the pain from that. And finally we have the potential deal, looking for a deal in the aerospace industry. Airplane seats saying it has hired an advisor to study options including the sale and the flows of surprise, and those shares are trading higher. Ok, lets move on to our big story. Targets reputation redo. The companys ceo has stepped down. You have the chief financial officer, John Mulligan, stepping in to serve as the interim ceo. This comes five months after the companys massive data breach you all remember that. Happened around christmas time. Hackers store the guard data and personal information from as many as 70 million customers. Changeanagement influence confidence . I have it all covered with my panel. John rico from the atlantic group. Good to have you all here. What has it done, really to the company and the company business, the fact that this happened . To me as a consumer i am less likely to shop at target now, even though i may not be more vulnerable there than any place else. How has this affected things . We know that target rockets fell off meaningfully in the weeks after the breach. When theyted that reported their fourthquarter results. They also reported that sales would bounce back not to prior levels, but they did bounce back. Inget has many other issues addition to the credit breach. My suspicion is Gregg Steinhafel leaving the company is the result of all of those issues. All of those . To me, this is any ceos worst nightmare. You look up the next morning and you are reading the headline in the papers and online, all about how your consumers were effectively violated in this situation. Thiset me point out could have been prevented. The company had mechanisms in place to forget Something Like this and didnt. Scott, are we seeing, scott, the fallout from this . And will it change Going Forward . An excellent point. After this breach, everybody is revamping their plans, saying, hey, we have to put things in place immediately so this does not happen, so we are not the next target. One of the complaints that i hear, john, a lot, when it comes to security spending and ip spending, it comes after the fact. Money ond to spend something that is never seen as a profit center. It is a drain, because youre putting money in. Will that change . I think it has to. You see a lot of searches for i. T. And they always seem to come after the fact, dont they . Then they try to fix the infrastructure. If they win out in front of it, i think that would help. Big securitya conference around this time last year. One of the things that the people on the panel were communicating, sometimes you are in situations where ctos are not necessarily the best communicators with ceos. They are tech guys, right . They have a different way of talking, a different way of presenting. What if the things i heard was if you have ctos who can put the stuff into basics, that makes a difference, because then ceos get how important it is. Good point. They have to simplify. If they talk techy, it will never happen. Target says they are committed to spending 100 million on technology upgrades, Cyber Security protections. It is late in the game. We are talking five months ago this breach happened. Companyentioned this has a lot of other problems, too. Some of the other problems include very weak, to say the least, start to their business in canada. They opened their stores a year ago, well, well below land. Five quarters of negative traffic in the united states, prior to the breach. This did not help. This was the nail in the coffin. Will a new ceo reverse this trend . Consumers have many years of good experience with target. They have had articles in many weeks about how targets handling the crisis they have done such a great job of communicating to consumers. I think that is an exaggeration. There is a reservoir of goodwill towards target i dont know about that. I did research into this. If you go back to 2007, it happened before. In 2007. D a breach you know what . They did not tell me one unsold 2009. Part of that is the way the current law exists. Retailers are not required to tell customers. Maybe that needs to change. Right, stock scott . And look at the timing, going into december, the shopping spree. He could not have happens at a worse time. They were slow out of the gate to inform consumers. Their point off are upgraded. They were very slow to react. This was first reported by someone in the blogosphere are and then they had to confirm it. It was not like target came out and said, hey, this happened. I think they were thinking other corporate interests and wanted it to go away. If they could have, they would have. But in fact, you have a bigger problem by not communicating. We certainly saw this with gm. 10 years sitting on information that could have saved lives. Lets talk about the ceo position. We have an interim ceo. What is going to happen now as they progress in the search . Its going to be interesting. They are going to have to find someone who is up for a challenge. Inthey already have someone the security field. Someone who works in security now coming your reaction to that . My reaction is, i met him years ago when he was at home depot. Presumably he knows a lot more about all of this than the prior person in charge, who was quoted in a trade publication a few years ago in minneapolis saying you do not need to have a tech background to be cio. Ouch. Oakleys coming to the table with a little bit more. He is 63, and i believe the retirement age at target is 65. The last ceo retired all, a mandatory retirement age. Ok, they are looking for someone younger. I think they will go to the outside. Someone who has maybe handled some crisis experience. Mining Companies Short certainly has challenges in front of it, most importantly restoring consumer trust. If anything, i think it highlights how important security is. Thank you to my whole panel. The most highly anticipated ipo of the year and alibaba could price any day this week. Should you be bidding on shares of you have the chance . And one of the most persistent and forceful buttocks of the federal reserve. Forceful critic of the federal reserve. Jim grant is going to be joining us. We will also hear from bill ackman. Very big day here. I will be right back. All right, this is street smart. I am trish regan. This week Chinese Internet Company alibaba may file its perspectives its for an ipo. It is going to be big. Potentially the biggest since facebook in 2012. It has a lot of users. 500 million at the last count. Alibabas ipo is worth paying attention to. It has huge significance. It will be critical in terms of the test of the chinese economy and most important, Investor Sentiment amid another tech boom. I break it down for you and my column on usa today, why alibabas ipo is such a big deal. Here with additional perspective, we have michael block, david rito, our bloomberg reporter, and our bloomberg west editoratlarge, cory johnson. Great to have you all here. Lets start with evaluation. What are you hearing, leslie, in terms of what this might go for . We are told this is the biggest ipo ever to hit the u. S. Bigger than facebook . Bigger than facebook. With a 12 slow that is the 12 they will sell in the ipo, billionlots 20 ipo. Facebook was what question marks about 18 billion. This is pretty big. But if you look at the evaluation, drew cory johnson, and compare it to, i dont know amazon, which is trading at a pretty high pe, it is not worth as much. You are talking about a company that would be worth far north of 168 billion. Really know yet how solid the financials are, even what profitability there is to the company. I think first of all, any conversation that begins with if we compare the evaluation to in the you are already wilderness. Amazon has a crazy valuation that is a thing unto itself. But we are talking about amazon combined with ebay combined with google. What this represents maybe something much bigger. I will throw in twitter for good measure. And weibo. It is unique. It has a very different structure, unlike amazon for example, not needing to take ownership of the inventory and have those relationships. It has more than ebay like relationship with suppliers. Very different. I think some of the Big Questions are going to be how ist is a growing and what the Free Cash Flow . We know it is growing fast, michael, and we know it has a tremendous user base. At 500 million that is the economy that, while it has load, is growing north of where we are growing at it. Do you think there is a discount at all because it is chinese . I am not sure there is a discount. There is global demand. Talking about the evaluation, that number could be dwarfed by what happens. There will be demand all over the place. Whatever valuation metrics to use, that would give buffett nightmares. You want to save ballpark, 500 billion next year fine, slap a 50 on it. People will not be looking at it this way. Would you buy this . My concern would be Corporate Governance. A funky structure where you have minority shareholding but majority control and you are investing in a contract which is in terms of the variable interest entity. So, i think the operations are great. I think the Market Positioning is great. The evaluation could be whatever. But people have to stomach that you are buying in a legal way to skirt state and chinese law back it up. If i am an american investor, i kind of like the idea it will be subject to american rules. Lets face it. Our Capital Markets last time i checked are still pretty supreme. Part of that is the transparency we offer that other markets just dont. To this point, you will not be investing in this company directly. You will be investing in a Cayman Islands sunseri. And not even a Cayman Island subsidiary of alibaba, a subsidiary of the hong kong subsidiary. You are so far removed but they go public in hong kong, right . That is the thing. Even by hong kong standards, the notion the u. S. Is the best market for the best Corporate Governance is just not true. Here we have the Hong Kong Market applying a higher standard. Alibaba has been public before. It did not do so well. Did not do well. Listed in hong kong, only the adr traded in the u. S. , and the pull boxes the ipo on the pennies on the dollar. Now he is offering again at a higher price. Does that make you reluctant and anyway, knowing it they go public before, was not a Success Story . He is trying again. By the way at a time and what leslie will tell you this the ipo market has been on fire. Stocks have suffered, but certainly saw a huge growth boom. Are you concerned . My concerns are more what this means for the chinese stock market and Global Stock Markets in everything else. We have seen china come in based on this huge ipo backlog being improved at approved. There is this vicious cycle where the weaker market does not mean it will be interested in the stock. Im not worried about the interest here. Im worried about the reflexivity. Thank you for all of your perspective. Leslie, cory. David and michael, you are sticking with me. Is it time to bail on china, or are the chinese pockets of opportunity there . Thats coming up. Talked of the slowdown in china continues. Today marks the fourth straight month that production in china has actually slowed. Our growth concerns are theremate threat or are opportunities in china . We want to welcome michael block and david reidel. David, i will begin with you. Report after report after report. It seems that china is slowing down. It seems to be going through an important transition, but it is is it a transition nonetheless . As workers demand more in terms of wages, etc. What is your feeling . They absolutely do have to go through a transition. They have the fastest aging population in the world. They can no longer be the low cost eber leader in workshop for the world. They have to go through this transition. They go through it with considerable assets and strength. They have a tremendous warchest. They have complete control of the Banking Sector and the ability to implement their plans. But they definitely will hit these air pockets of growth and air pockets in terms of momentum. A differenting to china. Infor all of the pluses china, you are still dealing with a society that is highly bureaucratic and highly corrupt. As an investor, how do you think about it, michael . Here is the thing. David talked about the word control. Lets focus on the word control. I have always said if you are talking about the chinese central bank, they have tremendous leeway to do what they want with the economy. Do you like that . Im not saying i want to live there, but as an investor, it is interesting. Look at a place like singapore. A different animal than china altogether. But guess what . They cut the economy going by turning things the way they wanted to. You look at this number. Low is the fourth month the 50, which means contraction. China wants to spur gdp. What are they do . They can build some more, right . There are cities there no one lives in. Part, trish, that is the i of that equation. Atyou can throw money people, but its a sectoral change. You cannot get them to spend. It reminds me of older relatives who used to send me five dollars bills. It sounds like the u. S. Economy. How do you get corporations to spend when they do not believe in the recovery . Is exports. Saying that they are going to debase the currency. Unfortunately am coming up against a heartbreak. David reidel, thank you for joining us. Next up, we are talking to an outspoken critic of the federal reserve. Jim grant, coming up on the show. All right, it is time for the hnth annual phone so conference where investors gather to exchange ideas. We have heard from a number of different speakers today. Iselieve bill ackman speaking right now. Among the big calls we have had, one of the interesting ones Larry Robbins talk about the essential for a company like monsanto. He says the demand for organic food, there is not enough to meet it, so thats an opportunity. He highlighted humana. You tend to see reactions and stocks the day off. On the day itself, you do tend to see reactions in these stocks. Jeff gundlach talking about the Housing Market and the era of homeownership in america may be coming to a closer turning a corner in which it is not as affordable for people to buy their first home. Hb,recommends shorting the x the homebuilders etf. We heard about buying liberty global. He thinks that vodafone will make a bid for the company. Pretty market moving . Pretty market moving. I was looking at the record of some of the people from last year. It has been a mixed record. One of the better performers, Jonathan Jacobson recommended a short of realty trust and the shares are down 20 . Another said sure aaa and that stock is up 30 . You take the good with the bad here. Much, julie very hyman. I want to go to Market Makers anchors Stephanie Ruhle. Hey. Horn playing extraordinaire, jim grant. I had to start with that. Jim, you made news, you made waves on gazprom at a time when National Resources in russia, many people are shying away. Why are you in . It is the beginning, middle, and end good things happen to cheap stocks. By acclamation the worlds Worst Company managed by the worst click of kleptocratic ever assembled on one continent. So and jay carney, the president s own press secretary, as a nation to go sure this stuff. So how can one not investigate the contrary side of that proclamation . All right, so you investigated it. First of all it is a huge company. They are in a lot of money. Even after stealing, they earn a lot of money. They pay a five percent dividend. As recently as 20 oh six, the stock changed hands at 10 times the estimated earnings. Is that 2. 5. Why is that . Because people know there will be even more extreme and costly sanctions imposed on russia. They know something terrible is going to happen with the ukraine election in a couple weeks, and well it might. There is certitude about outcomes that is notable, given that so few people saw the current set of outcomes approaching a few months ago. Addition to the epigram that good things happen to cheap stocks, i will offer this epigram. Too, will pass. Really . What is the time arise in . For time so what is the arising . For those so panicked about russia, ukraine . You cannot care about the time. You cant care about the time . If you are not in deference to the amount of time, you must profess to be. We do not know when it will work out. But we do know i think we do know solvay companies, are you ok . Companies are you ok . Solids a terrifically balance sheet. There is not a clock ticking on ,he business by dent of debt and we think that solvent businesses do not trade at 2. 5 times forever. In the fullness of time is my time arise in. You wrote about puerto rico. What is your current view . We are a little embarrassed. We started out a year ago jim grant, bearish on puerto rico . We started out a year ago saying, how is it this thing trades above par when so clearly our fundamentals are cracking . Then the bond market, somebodys alarm clock went off and said, their credit is terrible and indeed it was. We have analyzed the new perspectives. We have looked at the rumors and substance of the talk of restructuring. We think there will be restructuring of one or more puerto rico issues and this bond market is, let us say not the most wideawake branch of the credit markets. Oh, really . When the news hits the Municipal Bond buying uggla, it will be six weeks after it happens. When that moment of actualization happens, people will not be happy. Is in theirackman speaking right now. Last week he was all over the news for this partnership bid let me talk about the valiant debt. It matures and the year 2020. In the year 2020. The bonds are rise that five percent. This is weak, middling junk credit, i think. The bonds are priced at five something to majority, for something to be first call a few years before maturity. Something great conceivably could happen with respect to the proposed merger, which may not happen. Going to cure cancer. All of the guys they have not fired yet i dont know if they are going to cure cancer. Maybe theyre going to cure ugliness. All of the people they have not fired yet in the white lab coats, they are going to cure ugliness. Thats great for stockholders. What is in it for the note holders . At a foursomething percent is thewhat possibly upside . The bondholders are the tools. They are being used by the corporate financial engineers. Itsve issues with valley s acquisition, is lack of sanctioned earnings ike, butd the l with respect to the credit aleant, to v debtholders, what is in it for you . They do not seem to be paying attention. They are shortterm investors. I know. They should be listening to me. They should be listening to you. Finishing up, tearing american ugliness. I like that. We will have more from the congress later, trish. Thank you so much. We will be right back with more street smart street smart coming up next. More headaches for General Motors as they announce another recall. We will have details including the legal battles the company in our faces. Will they survive it . We will discuss. All right, the headaches continue for General Motors. The engineer involved in the ignition switch controversy has decided to retire. This says the Company Announces another recall. Several also facing lawsuits. Can the new gm be held responsible for the problems of a bankrupt old gm . Joining me to break it all down brian johnson, the Deputy Editor of matt miller, you know him, and bloombergs bankruptcy columnist who was a Bankruptcy Lawyer for 35 years. I will start with you, bill. Do people have any recourse to go after the old bankrupt gm . Are they responsible for what happened . Unless they can prove something to the bankruptcy judge. First, you have to get beyond having a claim against the law old gm which may not be worth anything. That went out the door in 2009. The first thing they have to do is establish they have a claim at all. Bankruptcy wipes out claims. It may not be so terribly difficult, because Bankruptcy Law for about 100 years has said company orpt individual knows somebody has a claim and do not tell them they have a claim, then that claim rides through the bankruptcy. Aha. Alone plus a dollar and a half will not get you on the new york subway. If you have a claim against gm and they did not tell you you had a defective auto, you have the claim against all gm. You do not have a claim against new gm. It can ride through bankruptcy . It does, but so what . That just gives you a claim against the old gm, the company that dont got any assets anymore. The other effort you have to undertake, is to transfer this claim to the new gm. Ways to doeveral it. Prove that new gm is the successor to all gm. Isnt it . It has the same employees, the same company not. Ybe yes, maybe it may invoke a question of perhaps, 50 different states laws as to what is and what is not. It all over the place document say the new gm is not the successor to old gm. Assuming, brian johnson, you can go after new gm for old gms problems, what would that do to the company . We hope istaken what a conservative estimate of the 3ages, around 2 billion to billion, around wrongful death lawsuits. These socalled Economic Loss lawsuits. You know, for a company with over 30 billion of cash, where the market value is down by far more than 3 billion, we think that is a risk investors should be willing to take. It almost does that matter. These big cases are decided by the court of public opinion. The people who were injured or suffered losses due to the ignition problems, they are going to be paid so much they do not have to work for the rest of their lives, guaranteed. The people who did not have serious injuries, they may get a little money, maybe not. You dont think it is going to matter to the company . Do you think it is going to matter to the company . Forf you get to a jury economic damages, and if a jury or juries leaves there could be fraud, who knows . There could be large punitive damages. Does that kill gm . I dont think so. Isi will agree, too, matt right. You are going to get the money out of gm but they will survive this . End of gm, no. E this could put the banks out of business. Could this put gm out of business . It does not seem any of you think so . I dont think anybody is putting the banks out of business. The government will find a way. It would be a weird twist of irony if the government did everything it could to save his company and it ends up getting plates with all of these fines and not being able to exist come and now that we have an incentive to keep it around. What is the next step . Final word to you. The bankruptcy judge has to can go. Far these people first, can they get out of bankruptcy work with a claim that is worth more than peanuts. The important thing we bankruptcy judge can do is decide if he wants to open the floodgates for an investigation. That is not good for gm if he does because they will trot a lot of perhaps 30 laundry out say somethingi for your show tomorrow . In day. I am going to detroit tonight. Fiat is going to unveil their new plant. I cant wait. I cannot wait to have out, romeo eo there. Om brian, i will see you there. And trish excellent. Thank you very much for teasing that. Next, attorney general eric holder and the Justice Department do not seem to agree when it comes to pressing charges against the worlds biggest banks. We will have details after the break. Attorney general eric holder is signaling he might be ready to press federal charges against in theks, in a shift Justice Department policy. Phil mattingly joins me from washington. Lets go through this. This is a pretty big step, phil, and theres a lot of concern if you do in fact that criminal charges, you could be putting the banks entirely out of business. For attorney general holder, that has been his concern for the entire time he has been in office in the wake of the financial crisis. This is the same attorney general told lawmakers at a that heional hearing thought banks were in fact to big to fail. He made this statement on a video posted on the Justice Department website. A Law Enforcement individuals says that those are for Credit Suisse and bnp paribas. There is something going on behind the scenes as to why attorney general holder is making this public shift. Does this department Justice Department officials tell me, they are trying to make sure that these companies do not implode. This is something that did not exist in 2013 and that is what the attorney general is willing to make these public statements. What is the timeline in terms of when banks will be charged, might actually be charged . Were talking weeks, not months. Wow. Thats right. The Credit Suisse investigation has been going on for a long time. The bnp paribas as well. Weeks, not month some potential criminal charges. All right, coming up next, we will have your top 10, your top 10 stocks you need to know. All right, i am trish regan. Headingstreet smart into the close. It is time for your top 10. Companies solde the most in three years. Responsible for widening losses as an outbreak of bird flu affected shyness fails. Matt . The company was recently rejected by astrazeneca and a billion takeover. We will have more on pfizer later in the wrapup. Excellent. And number eight, the manufacture of nonwoven decking products nonwood decking products reported that revenue missed analyst estimates. Ok, moving on to number seven. Jpmorgan down almost two percent. Assets dropping of the most in almost a month after warning a deepening trade slump may last into the second quarter. This as they face lower client activity levels. Number six, lot linkedin, up a miss two percent. Barclays will be giving up 60,000 square feet for the online version old networking site. Number five, amazon. Amazon and twitter have teamed services,roblogging allowing users to shop directly using tweets. Item just bythe replying to the hashtag amazoncart. That is cool. Note here . Ve a would like to give the definition of what the company is. Twitter is a microblogging site. That is drilled into our heads. Whatf you do not know twitter is, you sure as hell do not know what microblogging is. I find that more confusing than twitter. I find it more confusing than twitter as well. Is, i do not know what it dont know how to describe it to you. [laughter] is as a pa,ur falling nearly four percent. They announced their longterm tech had is stepping down. They are continuing their organization, setting up for the next generation leadership team. Aerospace. Hree, the the maker of commercial and Business Jets up the most since 2011. They have hired financial and legal experts to study options which include a possible sale. Number two, siemens an order to provide 100 40 when turbines for a wind farm in ontario. Also selling is logistics up on ourht, coming number one stock of the day. You guessed it. Our big story, target. Target falling more than three percent. Is steppingeinhafel down. This after the retailers struggled to recover from slumping sales after last holidays season hacker attack. The cfo, John Mulligan is going to step in. There is the closing bell. There we are, up 20 points on the doubt. Up to three and change on the s p. The markets cinco de mayo. I love that. Band. Otti we are doing a line segment later in the show. We saw being held higher eye utilities. Being held higher i utilities. There are some positive data here in the u. S. T balanceike i everything out. We are pushing forward. A bit of a comeback. It is always nice to see that. We go to matt. Had every search for Bloomberg Television. Head of research for Bloomberg Television. Warren buffett says he is confident the lender will overcome a counting mistake that forced them to payout to shareholders. He said the error does not bother me. He is willing to pay for if you are a huge investor, if you do not publicly deride them, i called them up and gave them a talking to. It is the biggest investment. Cannot get out. It is an investment of 5 billion. It is not a recurring error. It is a one time ever. It will not change the revenue Going Forward. It makes a difference. Still. I would be angry. What difference does it make . Really rich guys, i have some people who own shares in the microblogging website. You may have heard of it. It is called twitter. Some of the biggest investors are hanging onto their stock. Evan williams, jack dorsey, and dick costolo are keeping their stakes. They are already superrich and they want to show a vote of confidence in the microblogging site as it grapples with a 39 lunch in the stock this year. Plunge in the stock this year. They have to do this or everyone would fail on the stock. Basin we are getting out while we can. They say we are getting out while we can. An their stock was at alltime low. Everybody got out. Here is the problem. Number of users. Was up. It was yearoveryear. Should you be looking at that . Facebook you want to use the monthly after view number. And what are you do not need to. We are all the audience of twitter. We mention it on television. It gets everywhere whether you use it or not. You want people using it or otherwise what good is it . It is an Application Service for media. It does not matter how many people use it if they get out there. The stock market has told us they are looking at that number. They are punishing the stock. Erica is very confident in the story. It could still have legs. The market does not seem to think so. Yet to be careful what you post on twitter. You have to be careful what you post on twitter. You have to be careful, especially if you are an executive. [indiscernible] angry tirade, this is a euphemism. He was tweeting back and forth with her. Just at her. He said duck you. This is not a guy i think he was doing it on purpose. Word, mostse the f telephones will correct it to duck. Did you not know this . I have not tried to type it into my own. He said he had a new phone. He meant to but them [indiscernible] hes two months into his job. Aig out. It looks like the numbers eight estimates. Earnings per share, a dollar . 21. The other is the combined ratio. The company says the value per share was at 6 compared to the First Quarter of the prior year. That would appear to be a good metric hearing the company said that 1. 7 billion of cash dividends is what its all in the First Quarter of 2014. Youre going to keep looking at this and let the people who do so. Ig aig is pretty dumb when it comes to earnings reports. We will see how this moves. Ok. Nokia. The selfis jumping on jiving car. They want to spend 100 million backing companies that develop intelligent cars like the likes of elon musk and google. It is meant to support nokias digital map this nest and the revamp after selling the mobilephone unit to microsoft. Arts of the business dont exists. Business willbat compete against rivals like google which you use as a default. Goesey said their data into four steps of card navigations. Her carmax, they are the big layer. Four car maps, they are the big player. If you buy a new car with a navigation sensor and a has a gram roram i still get to my phone. I think what julie does a lot of people do. They have navigation on their phones and they ignore the navigation that came in the car. I tend to use both. You want to make sure youre not stuck in traffic. They cut 7 billion for their mobile business. This is just a small fraction of the investment they are trying to do. They have a capital alarm for 7 billion. We may see more investments like this. They have a big phone equipment business. Of course. Maybe they can move this up from a car. I recall a time when nokia was the dominant phone maker. Remember that . We digress. Hollywood stars mingled with bdc and immediate elite at it this weekends nerd prom. Joe mikell followed president obama at the podium after president obama poked fun at healthcare. Gov. This is my favorite. These days, the House Republicans actually give john boehner a harder time than they can mean. It means orange really is the new black. That is good. Starred ine dreyfus a video with the joe biden. She was also seated at the bloomberg table. Im so unhappy i missed that. Producer wassenior with me there. I saw a picture of the two of you. Im surprise you only have this one. I saw numerous pictures of you and isaac last night streaming across on facebook or twitter. You both look gorgeous. I look so gorgeous. He steals the show a little bit. Thank you. Julie loosestrife is listening at your table . Yes. And . Do you got anything for us . She is lovely. She is fun. One of the funniest episodes i have seen so far and it is very good. She is terrific. Her husband was a saturday night live actor. Now he is a show runner. He was wonderful as well. It was very good company. 30 years ago none of these used to show. The started in 1987. You sound like al hunt. He had the year model that messed up gary harts president ial campaign. It was the debacle. Started inviting this. Angelina jolie. The point is to bring together the media and event. Ton and this big then you have a little bit of the hollywood thing thrown in as well. Media and the politicians can hang together and blow up the steam and make fun of each other. You hang out the president on saturday nights . Just a couple of beers sometimes. Thanks. Were looking forward to hearing reports. Have to go to detroit. I will see later. Ok. Have fun. Is on the rise. What could hold the key to pressuring russia to hold back . Street smart street smart is back in two. It is going from bad to worse in cream. Dozens of killed in odessa. The troops were killed while trying to take the city. Rebels. From prorussian they said the situation is turning into real war. Joining me right now to discuss this, the former adviser to the u. K. Ministry of defense. The endowmentthe carnegie for international peace, russia, and eurasia. I will start with you. Walk us through what is actually happening right now. It seems incident settling down, this situation is growing intentionally increasingly tense. It will get into recently that it will get increasingly more tense unless the paradigm is resolved. Over is a symptom of what is going wrong on the political level. Ukraine has basically had corruption running through the Parliament Like a cancer. Is 144 out of 147. Where not going to see this until we have parliamentary elections. The west understand how you move forward. Are they trying to undermine the process . Is that his goal . Therefore it becomes a more susceptible region for you . Absolutely. The government is going to extend it. They have had a tremendously worse in their lives. Yes. Forcescally, the special and military were destroyed by them in order to make it weaker. If the ukraine is going to the eu and becomes a bigger economic force, it is right nextdoor door to him from a territorial perspective. You have this. Son int his pakistan they will have it. It will give them hope. What does this mean . Is this going to boil over into real civil war . That is the danger right now. Justwere going to see is more of these thoughts of instability. Towill probably make it next real election that could somehow legitimize the government. And the circumstances, putin does not need to invade ukraine. Hes going to be looking at more sanctions. Ukraine has this in 2016. It has and downgraded. This is nonexistent. They also falsify the debt downgrade as well. This is the last thing that he wants. How are they going to do the eastern and western facing society . One aspect is the 17 billion in loans. They are look at the trading partners. I am sorry. We are coming up against a hard rate. We will continue this conversation perhaps tomorrow. Thank you. Coming up next, bill ackman joining us from the phone conference. Going to head back to the conference aired Stephanie Ruhle is here with a special guest. Here it is going to be as long. We believe this is the precable mortgage. It is critical. We think the only way to do it is by preserving fannie mae and freddie mac. Are they were really great institutions that took very low risk. We think the right answer with fannie and freddie is in some sense we should wind down the old fannie and freddie and rebirth of them as new fannie and freddie. They go back to the old business. It is just being a guarantor of mortgages, winding down the business of fixed income arbitrage focusing on guaranteeing middleclass or worse. Interesting enough, the taxpayer makes about 400 billion. The taxpayer owned 79. 9 . That is what i dont get. They have a massive amount. That is right. Assuming they are worth 40 bucks, that is 320 billion of taxpayer money. If they went away, it would be wiped out. Why dont more people care about that . I do not think people have or even focused on it. All we have heard from washington is that were are going to wind down fannie and freddie. They were pretty abusive in the way they walked the halls of congress and through their weight around as lobbyists years ago. That leaves a lot of people with that taste in their mouth. The 12,000 people who did not cause the problem have real jobs. The government looked at the companies, took stakes in them when things are bad and when they turned around and things government then sold into the Public Market and made a ton of money. Why have they not done that here . The same playbook at aig. The same playbook at citigroup should play here. Maybe it is undercapitalized. Maybe they cut into businesses they should not have gotten into. You think of the volcker rule. They should not have been in the business of a lot of proprietary trading. He is going to hold more capital. They are being overseen much work carefully. We being the same thing applies here. The government is the largest show holder of these companies. It to get them out of the high risk businesses. Over time, they should sell this into the markets. The taxpayer makes hundreds of millions of dollars. We preserve the Housing Market for people. Originalve the shareholders. Hold on. Is the holdup than that it just seems like the base of rich Hedge Fund Guys versus the government. If Richard Perry wins and it is deemed illegal, what is going to happen to all that money . Are they going to come back and give it back . They have another 35 out of 20 . 80 of fannie and freddie are owned by the taxpayer. The notion that the taxpayer should throughout the 87 does not make a lot of sense. I do not think it is that. Fannie and freddie have one of the most democratize the shareholder bases in the world. I get calls from a woman who retired in florida. Dont take my call. You take her calls . These are people we are working on behalf of. That grassroot support is very helpful. Litigation is to take place this fall. Do you think the government will wait long and let a judge decide here . Will they settle before . I dont answer that question. We are not lobbying at all. What are you doing . You are just sitting here watching this play out . Or no view is there n viable alternatives. We are publishing would hundred 10 slides that lays out the actual cost for the facts are ended there is a viable alternative. The bills would have been proposed are very vague. When you do the math, you realize it is not a viable alternative. This is a natural oligarch. Guaranteew they can closed mortgages. You cannot guarantee a mortgage for 60 aces points when youre taking the risk of default if you run a tiny enterprise. The cost is way more. The other point we make is you could have a private sector alternative, barely. The cost of mortgages would go basis points, three and 50 basis points. On double the cost of your mortgage payment if the proposed solution gets there. They have never commented publicly. Why question repair the regulators. Why . Regulators. A lot came from the fact that originally the government rejected capital and they will never get paid back. It is one of the great investment by all time. The government puts a 185 billion. But by selling the stock and the ongoing 15 billion of taxes they will take out every year when caesar recapitalized. Iant, the only people who are calling this legal from running are the ones undermine them to do it themselves. Where do you stand on this . Give us enough it. An update. If i were on the board of a company that received a proposal like this one, the first i would do is study the proposal, make sure i understand it, and see what other alternatives exist in the market. The only thing out again is doing that we would not is that we wouldve made it we would immediately engage with valeant. He did not say no. He so we are prepared to sit down immediately and negotiate a deal. He would pay more . It is a very attractive transaction. It benefits both parties. My sense is theres more in his pocket. His incentive for making a better deal gradually goes away when no viable alternative emerges. The likelihood of a large farm accompany staying in and saying what is likely a dumb price is remote. What i would do is i would engage with valeant right away. The best thing they do is find some better alternatives. You do not want to talk to all the other players and then find out they are not going to bid and then come back to valeant and they are in a parking position. I think they should sit down with valeant and neatly. We are you with eric kravitz right now . We cannot comment right there except to say we agree that it has been a very long time since the search for a ceo has started. We do believe there is at least one very talented candidate who can take the job. Our hope is that the Company Fires the candidate as soon as possible. , im havingweekend kumbayah. B the different approaches to a strategy. There are a lot of opportunities to create values in corporate america. There is a lot of insufficiency in the way it is delegated here it is some directors are not paying as much attention as they should. Carl and i have different approaches to strategies. There is a lot of confusion in the market. What they talked about is how short a resume about how bad. Er activism is we believe there is some very construction or very constructive longterm shareholder action. We think it is very healthy for the markets. Reason example, they could do nothing about it. We recruited the best of all time. The pension plan was underfunded. It now has a 600 million surplus. Eric deals with all of the unions. Employers are buying homes. That activity is healthy for the market. Are you working on anything together . Would. Tonight the news, we are looking at sothebuys. Fighting back and forth, litigation. Now dan and harry wilson are going to get here. I did not get here. They are saying now we are working together. Activist was so aggressively coming after a Company Joins the board, do you believe they start to Work Together and have a common goal . Do you think you cannot put the pieces back together . Likes it depends on the circumstance. There was some noise in the market. He is a major art collector. He knows a little bit about the business. When everyone sits down, they realize the shareholders are voted this is what they want. Everyone works together. This is not the greatest meaning of all times. That board works they that board works today extremely effectively. Today we hear the target ceo stepping down. Is that a chance for them to put out there . I think he has done a very good job at target. Our big issue was target is the one of them to exit. I like camilla. I like him a lot. You do not like herbalife. What do you recommend . The story has been a wall street story. What we have done is we have produced a documentary where we interviewed 16 former herbalife distributorship they could talk about the experience. You can watch it in an hour and a half interview on her website. Anchor tuple to watch it. Encourage regulators and government officials. Thank you. I encourage people to watch it. Encourage regulators and government officials. It is about time. It is about time for sure. It. Ppreciate lets focus on what they were just talking about. You did hear some discussion about the battle between dan othebys is coming to an end. It will appoint three nominees. Has been reporter looking into this for us. What is the next move here . Going to have to do a lot of work to implement all the changes that dan loeb wanted. Has been a seven month long battle despite the fact that bill ackman said it was not that bad. It got ugly. They said the ceo had out state is welcome. Attack toothebyys dan loeb saying he did not know anything about art. It to get ugly. This is a sick this against this is a significant victory. Is credited with turning around gm. As to put in context, the company was scheduled to have a Shareholder Meeting tomorrow. It suggested they were nervous about moving the vote. That, they sued sothebys and the court sided with sothebys on the defense. You think sothebys would have had the stronger hand. It is tough when you have one of these guys breathing down your neck all the town. Then low, bill ackman. Been loeb, bill ackman. They have added three seats. Any boardot fire members or vote anyone out. They just added three more. How did that change things . From an activist in point, it is always better to have this to replace what you want. Did speak to some people around the situation who told me at the end of the day and low loeb will have a powerful position. Is he agreeing to that . Then he has leverage. How excepting is he going to be . Im sure as soon as we can know about it we will. Thank you so much. Thank you so much. Is there one of the next goal million for relist the next gold mine for Real Estate Investors . Hiking prices when it comes to warehouses. Later on, the margarita is the number one cocktail in the usa with 185,000 consumed every hour. Goodness. Be crucial ingredient may missing from your margarita. You can find out which one it is later on street smart on the cinco de mayo. Collett the Great American marijuana real estate boom. Growers are clamoring to find space to grow their product. Paul eisenberg says you need to be conscience of buyers and renters need to understand the risks involved. Polished joining me from miami. From d. C. We have heather who covered this story extensively. I should also point out that mr. Eisenberg is based in colorado but is joining us temporarily from miami. I am sure the weather is very nice. I have done a lot of reporting on this myself including two documentaries and a book. I noticed wasngs pretty incredible over the time that i did this reporting was that colorado started to become increasingly more popular. I can remember first hearing from some growers that this is unbelievable what is happening. There are warehouses we can go amazing marijuana. Everybody was clamoring for warehouse space. I understand it today, it is pretty difficult to get it. It is true. These buildings are in such high demand people will line up to buy them if they are listed on the markets. For were traditionally used industrial purposes. Now they are selling them in less than 24 hours sometimes. Ofone of the reason so many these growers told me they like these warehouses versus say growing in parts of Northern California were traditionally a lot of this had been done is that you were able to control the environment a lot more. They really like it. Colorado then followed suit by legalizing marijuana for Recreational Purposes. Tremendousw this boom in that part of the economy. What has happened with real estate prices for warehouse this . Increases incant pricing. There are buildings that when they have the market have four fight contract four or five contracts on them. There are properties owned. The industrial warehouses are zoning that will only allow this for the industry. It is challenging to. As exciting as this may be from perspectivee boom as multiple bidders come forth, if you are the landlord for one of these where horses warehouses and you people growing marijuana, are you not vulnerable because this is still against federal law . Risk ofave a very minor retained outside counsel that has given us criminal guidance on how to to keep from becoming subject to a Money Laundering indictment, had to pay for your rent. No percentage rent. You still run the risk of a tenant or his employee behaving badly and thereby breaking the federal laws and the state laws and being subject to federal focus. Reasons weone of the are seeing prices increase, not because of demand but the risk that some of the landlords are taking on . Prices have grown four times in the last year. The rents that people are charging double the market rate. Investors are taking a big risk of becoming landlords to these tenants. Things are not comfortable lending it. They still account for that. Paul, youre going to jump in. The rents have probably tripled. The value of the buildings themselves have probably more like doubled. Youre seeing people investing in buildings. If they do not get the tenant, their investment is not going to make any sense. What . Y need to have that that was the medical mmj business, mmj real estate. Is very dynamic. I read in your story that Heather Rhoda bestie will have bought buildings in sarasota. Concerning would be that they are out there and not knowing the zoning. Of a play right there. People are looking around the country saying he was actually going to legalize this for medical purposes . Who might legalize it for Recreational Purposes which might take it a step further . You looked into washington. What is happening there . A similar story. Real estate prices have gotten so high. Just buyingrs are properties and building warehouses. It is interesting. It does present a whole lot of different variables. You are dealing with the weather in bonds and all that stuff. You can control a perhaps a little bit weather and blogs and all that stuff. You can control perhaps a little better. Thank you very much for joining me. Coming up next, notice a good day my own celebration is complete without a margarita. Consumers will have to settle for one without a lime wedge. We are talking about the commodity shortages affecting the spirits industry. We have cartels involved in this as well. Next. Me shortage, to good demand can be traced back to may 5, 1862 when Mexican Forces beat the french. 152 years later, it is still celebrated as a symbol of unity between u. S. And mexico. However, a lime shortage right now could dampen some of todays activities. According to the usda, limes our pricing at . 54 each versus . 30 a year earlier. Here to discuss is the founder on. Chairman of tequila avian houses is this affecting tequila sales . You need the lime to take down the tequila. You needed for the margaritas. If we go back to the old days when i was younger, it you salt to forces and on the tequila but it is much better today. You can actually drink it neat or on the rocs. A shortage of lime is not a good thing though. And do something with vendor industry. What is going on . The shortage is a lot is a selffulfilling prophecy. When the shortage happens, d with start to hoar the thing they cannot get. Grabbing as many as they can and storing them as long as they can. Top of the cartel involvement. I heard that. I really enjoy going to mexico so i do not discuss what were hearing there making this happen. Tell me about your tequila. We launched in the u. S. Four years ago almost today. 2012 we are voted the world best tasting tequila. Truef those dream come things that an entrepreneur always hopes they can do. About 25. For then the pure expressions range from 40 to 45. 50. Is 150. Serve 44 it is very adjusting. There is a luxury market for tequila and all of these high end liquors. We are seeing more high end ill call. The amazing thing is the younger people were drinking clear spirits only. Today were seeing them think whiskeys and bourbons and so one. We are seeing that with avion. Thank you very much. Ken austin, founder of avion. That is it for day for todays issue of street smart. Orrow richer branch and Richard Branson will join us. We are coming up on 56 past the hour. A Bloomberg Television is on the markets. Lets get you caught up on where stocks closed out the session. We had a little bit of a game. It little bit of a push and they pull happening during the session between better than estimated Economic Data in the u. S. And worse than estimated Economic Data out of china on manufacturing. The ukrainian situation is in the background as well. This is not a large one. We also want to talk about Something Else youre watching all day. That was an investment conference. It was a version of that. The Cable Company controlled by john malone could top 100 bucks over the next five years. It will be acquired by vodafone. It could potentially be back by at t. Now is a look at where the market may be headed. Manager,e portfolio joining me from his offices in new jersey. We have been in the sideways pattern for a little while. The dow recently hit a record close. When you look at the Economic Data and the jobs report on friday, i know that you have a more positive reading of the numbers we have seen. What are you looking at in particular . Jobs,re looking at manufacturing, nonmanufacturing. It was very good today. We believe that overall, as the up,omy he thought heat you could see jobs on the monthly number for well over 300 houston. Not only that, we look at the equity markets. We believe that in 2014 you could have a 6 to 8 total return. That is based off of gdp growth. Mostly about 115 with the earnings. Dusting a lot of forecasting in terms of gdp growth. Youre playing that in a couple of different ways. You are looking at the small count stocks. We are seeing a little bit of underperformance recently. I assume youre trying to capture some of this pickup in growth you are expect. We are overweight small caps at this time. From a historical perspective, the are getting to the top end of the range. We believe they could outperform in the coming months as the market starts to rally. , we like the large that value companies. We can be cycle from momentum spots will continue to go from momentum to value. In that slice, we like largecap value. It is interesting. Small cap on the one hand value on the other hand tends to show the growth will not necessarily be it. The growth cap tends to do well in the high growth environment. The stocks are cheap when you compare them on the largecap side to largecap growth. We just believe in the coming months you will continue to see that cycle out of the momentum to value. On the small cap site, we would just go with small cap value. Ok. Thank you so much. Really good to talk to. Andthis is taking stock, four monday, may 5, 2014, and i am pimm fox. The twins are back in a Premium Food Delivery startup that is spreading across the united states, and we will get a look at their business. The chief executive is going to talk about how it will be for your dining dollar. Plus, we will introduce you to wearable technology
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