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Laws of any congress. 71. Thats because president obama did some work to push that forward. It was 51 at the beginning of december. Its fairly embarrassing. The janet yellen confirmation is expected to go through. A lot of stuff going on immigration reform, the debt ceiling, but the big thing seems to be the unemployment benefits. Here in newthe set york when the compromise was agreed to and the news roque. Business respective, this is a big deal. People who receive unemployment checks spend them. Break, theyple tax might. But the money goes immediately back into the economy. Book the great crash i just finished that yesterday and one of the things they talk about are these things thought of as welfare are actually great stabilizers and when they go, the economy can pay some bums. I read divergence. So fun. Thats a little disturbing. I havent read hunger games. Cory and i were Holding Hands earlier because my hands were so cold. We have flight canceled jetblue canceling 300 flights, cutting operations at laguardia. The worst part is your breakfast might cost more money. Any guess why . Almond milk prices skyrocketing . You have winter wheat prices and orange juice. Florida is the secondlargest grower and the crop is going to suffer. Days below 32 degrees the Weather Service says 15 of the crop could be damaged. Well, its going to come back up in march but theres not enough not enough snow on the ground. This obsessive focus on stock markets. I think that new yorkers think food comes from waiters and gas comes from a giant tube. Some of those things are true. These Climate Change issues are a big deal. Your dollars you spent anywhere goes to agricultural prices. There you go. Deal for hungry, cold people like the San Francisco 49ers. They are probably happy just to be out of the cold. Football andeek in it is interesting we were talking about this earlier, this becoming football is even more important and followed in this country even as the media becomes more and more dispersed. Football is when you throw the eggs ken. Yankees9ers beat the yesterday as far as you know. Its very exciting. You know nothing about sports. Im not hiding it. Quite you have to know something about sports. Starting out for the hour, Richard Falkenrath has a very big resume. Maybe he knows about sports also. He is a principal with the deputy group and a commissioner and senior fellow foreignouncil of relations. Most importantly, you are a skier. You probably ski one footed. Im not the best skier, but im doing all right. I was in alberta, canada. Lets compare these pictures. On the right, you have me skiing berkshires. In the three hats. Im wearing three hats and thats a very unhappy alix steel you are looking at. Im on top of a mountain in canada and it was great. Theseont know if we got pictures i havent been snowboarding in a few years. Couple of hours before i went snowboarding and very remarkable picture thats me a couple of hours after when my shoulder was dislocated. Getting me comfortably an mri. I thought that was the Northern Lights for a second. It is a great sport, but its a dangerous one. Schumacher, the great formula one champion in a coma right now, so there are certain risks. The changing demographics of sports, you see what they are doing, creating all of these sports that did not exist 10 years ago, trying to get young viewers adding things like snowboard racing and slalom courses and jumps. Lodge drinking. That would be my sport. Thats a traditional one. They have been doing that since the beginning. Change the subject from skiing to it going. The price of bitcoin jumping to over 1000 after zynga started excepting the Virtual Currency in some of their online social games. Wall street Security Experts are taking notice. Carter dority joins us to talk about this now. It is so easy to be a kneejerk skeptic on this great i tend to do this on everything but its interesting when you think about what bitcoin means, Even Companies as small as zynga. It is also striking that theres a lot of people interested in bitcoin for non trivial reasons. You take some of the venture capitalists, some of the early entrepreneurs. Theyve given careful thought to buildingthey are businesses that have a shot at success. People clearly see a technology there. It is interesting, this notion of the money that doesnt exist. When it starts to be used, people realize its not just a crazy thing by crazy people. Sirius companies are starting to consider it as well. The challenge is going to be convincing a broad swath of the public that this is not just a novelty that you can play around with. I think one of the novelties is to figure out can you use this technology in a way that consumer doesnt see it . Used at lowerally that brings me to you one of the things is you have to be fairly motivated to get into it. It takes a bit of work. Who is motivated to do it . You have these internet people interested in the novelty end of other hand, you have criminals who have something to hide. But it is not really Money Laundering trade its the process of hiding the source of your laundry. Bitcoin is also more. Im not going to be a big bitcoin defender. Im just trying to get over the hump of being a big skeptic. Its not necessarily Money Laundering, but its one of the things you can do with it and read it could be even more than that as a threat to government control because it creates a currency system that never touches the odd currencies. To the fact thought that i would be interested in your thoughts on this the Treasury Department said in march that you want to be a Bitcoin Company and you want to moneys, you register as a transmitter, they had to step on this really hard. They said theres more potential than risk their, so we ought to go. I think we are overplaying the Law Enforcement angle. That was a sector they were comfortable regulating. There are other sectors like the individual owner of a bitcoin of bitcoin or the girl scouts or whoever uses it where they are not as comfortable regulating the monetary transaction. That it people have is coins will never touch the fiat currency system and there will never be in exchange for fiat currency. It will simply stay case, the drug dealer sells the coke for bitcoin and spend the bitcoin on his villa and columbia which is close to what was happening. Deal you ran started to and bitcoin, they could avoid european sanctions altogether. Thats another pox ability. If you could buy an Airline Ticket with it coin and never go to dollars to do it, thats another way to travel to avoid government control and invade government surveillance. Thats the larger risk, not so much the specific transaction. This notion that bitcoin is not revel in is essentially true, it is geographically all over the place and spreading rapidly. We did a story on bloomberg west today where there was an atm or you could exchange it coin to from your phone into dollars. I used one of those once. Argentina and china, it is clear why there is demand there. You see places like china where its not an issue of controlling or monitoring currency, its the same reason you cant get on facebook or twitter this country. Over the total control transactions. We are going to leave it there. Thank you so much. Richard is staying with us for the whole hour. We are back in two minutes. Welcome back. Im cory johnson and this is street smart. The nfl is ramping up security for its big events right here in new york not here in new york. New york and new jersey are different. Saidis is a classic you new york jets, new york giants, they all play new jersey. A very different kind of outdoor super bowl, a super bowl in a city that has been a victim of terrorism like no other city in america. You have fences and an mri machine that trucks are going to go through. Here to break it down is Richard Falkenrath. We were talking earlier about how to understand security from the super bowl level. You say you compare it to the olympics. They are both highprofile sporting events and the risks they present are different. Very, very safe. If theres a bad weather event, the surrounding parties may be vulnerable and new york city and this area is very safe. The stadium itself will be super tightly controlled. Of different agencies, not just the nfl, all the different governmental agencies, the secret service and all of them. Sochi is a totally different matter. It is an active terrorist environment right now and an area of contested government for Vladimir Putin. Caucuses,the repression and Police Action against the dissidents and usual suspects. There, the risk is much higher and therell be a greater atmosphere of repression around the event itself. What does that have to do with individual attempts to try to undermine Vladimir Putin versus the super bowl . Terrorists want to get the individual communities on their side and against Vladimir Putin. Theyre not merely bloodthirsty. They seek territorial independence and to shift the Political Support for them. How do they do that . By drawing attention to putins tactics against them. Aey are looking not just for spectacular attack that resulted in bloodshed, but the repression and Police Action of Russian Forces against what are going to be innocent civilians erie much like Vladimir Putin trying to draw into a battle in the thele east erie offscreen dynamic at the super bowl are the ads everyone talks about. At sochi, its not going to be that. You are the deputy for counterterrorism in the new york police department. The city try to prepare for the risks that might present themselves question mark the nypd is involved at the planning in the meadowlands even though it is in new jersey. Is a trickledown parties. The nfl will have a lot of promotional sponsored events and those are tightly secured. The responsibility for securing them is private and governmental. The nfl and sponsors have to acquire private security guards. Does the nypd help to identify potential targets . Do you go to those hotels or events . Details assessments for the venues for owners and tells them what the big voter abilities are. All of the vehicles will be checked. There are some special technologies and its a very robust, fullfeatured program. And i will be home during the super bowl. We are talking up the middle east and the secretary of state, john kerry. Stay with street smart. A lot is coming up. In todays global outlook, secretary of state john kerry concludes his trip to the middle east. The bulk of his meeting is late and theres one thing on the agenda, its Global Warming. There was a piece in the New York Times that says john kerry has added Global Warming to the mandatory topics at any meeting . I didnt believe you. The Obama Administration is all talk, no action. President obama did it in his state of the union. I think they would like to stop Global Warming, but they have accomplished almost nothing. They find themselves bringing it note that they are talking about it. Story. Ts just a they want to be on record as having raised it. The real efforts of u. S. Energy policy is about fracking and exploring unconventional hybrid unconventional hydrocarbons. The xl pipeline is even a bigger deal for the environment. I think fracking is in the larger scheme of things the biggest deal. Its one of the great geopolitical events on the idea that the audit states could become Energy Independent in our without the invention of fracking, we can never conceive of that. About frackingk for the next 24 hours, but i want to get your take in my reading over the weekend, i heard about saudi arabia versus iran and the power struggle between those two nations transmitting itself all the way to lebanon and syria, is that true . Theres some truth to it but its not the entirety of the picture. You are reading one team that focuses on the shiitesunni divide. Around being the shiite state and saudi arabia being the seed i state being the sunni state. You can look at the last 300 years and see that as part of the conflict. Whats different now . A number of different things. Oile are other invites producers versus nonoil producers. Israel versus it neighbors, which is where john kerry was yesterday. The arab spring and the arab state dealing with lousy, corrupt governments. Does it come from religion or secular nationalism . It has nothing to do with issues in the middle east. There is something about the distributed content divided by social media that gives voices to other people and less centralized control, whether it is people having to go through the government to get their message out or a small blog having success that the New York Times couldnt because they are the thick because they are authentic. Thats technologically possible and it wasnt just a few years ago. It is 26 minutes past the hour and a julie hyman is on the closing bell. We have had a mixed picture today, kind of all over the place in terms of direction. Right now we are down, but barely. We did get an a i s M Services Report at was that initially lower. Stocks if stocks fall today, i would be the first time we have seen a three session decline to start a year since 2009. And terms of individual laborers, an individual an interesting story in the solar sector or after Goldman Sachs did it downgrade and then upgrade. Lets talk about solar city. Those shares are trading higher but first solar is downgraded. Street smart will be back with more in a moment. Welcome back to street smart. Im cory johnson. Happy monday, everybody. Our cohost today is bloomberg contributor, Richard Falcon wrath. Hes a former security and counterterrorism adviser. The latest leak by Edward Snowden revealed the agencies Quantum Computers that could read nearly every kind of encryption used to protect inking, medical and every kind of business around the world. Is this a massive spy computer question like how is that possible . Quantum computing is a theoretical possibility now. The concept has been around since about 1980 but its not developed yet. If it ever is, it will revolutionize not just code breaking, but all big data operations. The power would be so much more efficient and robust impaired to traditional binary computers. Let me bring in someone else who knows more about this almond the author of a handful of books on security and eligibles, including my Favorite Book about factory. The shadow a greater body of work. When i see these stories come out, i feel like this is stuff you have been writing about. About this quantum computing story . Thank you. Whats new is the release of these classified documents, but the fact that the nsa has been working on quantum is not a secret. It has been paying a lot of money to colleges around the ntry for open resource open research into quantum and classified research at the university of maryland, a laboratory there. Studying quantum for a long time but its a decade away from achieving any meaningful success in it. I think james puts his finger on it. This is basically an r d program, not an operation yet. One thing the nsa has had a lot of since nine 11 is money. Since 9 11 is money. They can actually take some risks in terms of r d spending on more advanced products and quantum is one. 81 million has been used for that, but it doesnt sound like enough to get it going. Im not sure how much that they arees, but spending billions on it every year for at least a decade. To show you they dont have a lot of confidence a are ready to cryptooing quantum analysis or computing basically, the nsa is currently working on a massive computer in oak ridge, tennessee, one that will do i operationsically and per second. It will take up an entire warehouse and the amount of cooling power needed to cool the computer will be about the same amount of cooling power needed to cool both towers of the world trade center. They are working on a massive normal computer that is not quantum while they are working on research about a quantum computer. I love it whenever i read about this, you read about the stocks making supercomputers and they say they are whether computers. That was the big market here is addicting the weather but the government is the enduser for a lot of these things. Code breaking was the ,riginal purposes area in 1950s the first supercomputer was built primarily to break codes. For the became used weather and Nuclear Research and so forth. Aboutave a question hacking. If we have a huge supercomputer that can hack any code, does that mean hackers can hack back . The a radically they can hack anything. But the code breaker computers are running lots and lots of copy patience to find a decryption algorithm that works for a particular encryption employment and thats computationally excessive. The first customers for supercomputers, a company that no longer exists, was the nsa. Big andll build really powerful computers. The architecture is fundamentally different, but it is very computationally intensive. They are still around. It has gone through eighth you are mutations in the last couple of years but is still around. They have gone through a couple of permutations in the last couple of years but theyre still around. Start with code breaking brute force when you try every combination to break a code. What the nsa has managed to do from the snowden documents is find a lot of backdoors and trap doors and developed weaknesses to get into it without having to break it through brute force. I know you have so many , but they the nsa feel about how do they feel about this secret work in the open . Most people i have talked to are extremely frustrated. They usually work in absolute secrecy. Their secrecy is enormous compared to the cia. All of a sudden of the sudden, to have all of this material late working on for all these years to be exposed, they are verysed to it. Its a strange world they are waking up to where they are picking up the newspaper and seeing a top secret document they worked on. It is even worse than that. This is the most devastating backl back substantial thing. This is so beyond the pale. Er in their wildest dreams its a great question and nobody knows how they let this happen because its a catastrophic failure of the internal security, no question. The worst case, how bad could it possibly get, they never would have thought it could get this bad. It is absolute lack of accountability in the intelligence immunity. And people were promoted a cousin of that. Now you have the largest Security Breach in u. S. History and nobody gets fired. The director is still the director. If that was a ship and the captain had run his ship into theres of gibraltar, no accountability in this administration or previous administration. It is a pleasure to have you. The author of one of corys Favorite Book. Coming up, we will talk about a data mining and what theyre finding out, coming up. Welcome back. Big Data Companies know when you buy your last diet coke, what kind of diet pill as you use and how much whiskey you bought in the last 30 days. You might need a supercomputer to calculate the number. They transform the data into packages and these are some of the labels they use. Barely making it, retiring on empty singles area they use this information to try to target you and market rate some of these companies here are names like axion and they logic. Joining us to talk about the security of our personal data is Richard Falkenrath, the security guru here. What is different about this than regular marketing we would have seen 10 years ago . Its far more precise and its based on information you are invited to somebody who sold it to a thirdparty. How did i do that . Like she might have posted about it. If you tweeted about it, they will record it. On facebook and click like, every brand has a like, so they know you like a particular brand and that becomes useful. We have had axiom on bloomberg west a couple of times and they gather everything on all the sources and offer it to companies that might put it to use. Its not the gathering, tell they might put it to use grade if i have a job and child, the inference might not be real. It is a business model. The fact that they can identify you is what makes the data valuable to marketers. That is exactly what they are trying to do. But it is also fundamentally pernicious. I feel like if im going to see an ad for something im more likely to use, something i might be more interested in, its as close as an ad can possibly be to a service. But its not just about a discount. If you are barely making it, you know that you will have banks target you with a high interest loan. Us that crummy track this of the bank. There are certain uses you might think are pernicious. Suppose it was used to deny you. You wouldnt like that. I figured out this person practices a higher risk. Who knows what they can get away with. You wouldnt want that area as a country, you wouldnt want that. We say its ok for a certain category of Economic Activity in those boundaries are not so clear great here is where it gets interesting. I get up in arms about certain things like the nsa infiltrating my privacy but im fine if people know what i drank and how often. This was in the washington post. Unless you camp in the alaskan wilderness for two decades, millions and millions of americans have consciously and eagerly surrendered much of their privacy by embracing the internet and social media. He is right, but nobody knew the consequences. It may be that a lot of people dont care but the consequence of that decision he accurately describes was not known when you first made the decision to do it. If you dont care or not, thats fine. Children who dont understand the consequences posting a self the of themselves or when you go before said confirmation, whatever it may be. The core legal concept is called consent and you provide consent to do this. Consent can be meaningful, it has to be informed because otherwise you are being tricked and to. The interesting question is, is this informed consent. Did you contemplate what google, facebook or twitter would be doing with your data . 2year note now . You probably dont. The difference between the nsa doing this and Health Care Companies or advertisers is there is a long history, almost as long as mankind has existed is government using information to do only the kind of things a government can do. The first is the government can arrest you and lock you up. The second is you didnt actually consent to the program. You were just born and visited america and then you are stuck with it. You didnt get a choice grade erratically, with social media, you had a choice area the Senate Committee on science and transportation did a whole study on it. Really good stuff area we are back in two minutes and we are talking football. A utahbased company has turned on a 15 million to buy pakistans with precision rifles, this citing concerns they could be used against u. S. Troops. This is according to the company. The Sales Manager writing we dont know those guns would have led similar bad, but with the unrest, we ended up not feeling right about it. Joining us is Richard Falkenrath, bloomberg contributing editor and security expert. Ive never heard of a case like this before. This is a u. S. Government program. This was not pakistan going to the company. This is Foreign Military sales for the u. S. Government divides money to a Defense Company to give goods and services to companies. Someone, if the story is accurate, actually arranged for this to happen, for advanced sniper rifles to be transferred to pakistan the company said we dont think that they wise thing to do. That is big money for bible i four sniper rifles area thought what was interesting is they really said i dont know if we are doing the right in, but this is how we feel, what do you think . Comment, people are roundly supportive of this. Military substantial aid program to pakistan. It is controversial. Some of it does end up in hands of our enemies. Some of it ends up in hands of military contractors. Does that say the u. S. Is lost when it comes to Foreign Policy and how to keep the good guys supplied without getting to the bad guys . Greats is one of the dilemmas when you deal with a country like pakistan who you need on your side. There is no country like pakistan. Egypt is close. Related calculation, where we want the pakistani government on our sites. A military a deal is part of the package but we dont like the purpose for which the assistance is used. Be more directly being used. Pakistan is the bigger threat and more complicated. If you look at syria, for example, supplying the rebels. In that case, president obama has walked back away from supporting the rebels in part because he doesnt know who they are and they are not clearly rural american. We would talkd about football. I love football. Its the us thing ever. How many points is a safety . I have no idea. What is it . Just got news that last nights game was the highest rated wildcard game ever 20 increase over last years wild card game. Illion viewers watched. Was born in wisconsin, so my family is longtime Green Bay Packers fans. I grew up in northern california, so this is the great game i was crushed not to be able to watch it. It 20 below or something crazy . I would have washed i would have watched indoors. Richard, it was a pleasure for having you. Street smart continues with trish regan and adam johnson on the next. Lex hello, everyone. Street smart is heading into the close. Stocksslightly closer slightly lower ahead of the confirmation of janet yellen. Its time for the 10 stocks of the day walgreens deigning after reporting an increase in december sales. The drugstore chain says they same store sales were 6. 1 last month as customers filled more solutions. Nine, solar state is up and first solar is down. Goldman upgrading them saying company is wellpositioned to capitalize on the rooftop market. But it could get cut based on lower margins. Shares hauling due to an analyst note, analysts say whole could befit margins increasing a discount amid higher profit margins. No discount there. Number seven is ebay, shares falling almost three percent. Getting cut to the equal weight from overweight. The mattress maker anticipates its fourthquarter earnings per share will come in below the low land of the entire forecast. Ailes from cyber monday through the end of december missed targets. Come on, people, go out him by some mattresses. Im in the market for a mattress. Number five is twitter shares dropping three percent as Morgan Stanley lowers them to underweight from equal weight. Toy say twitter may lose larger rivals like facebook. Its like a pylon at this point. Like a pile on at this point. Is tradingng somewhere around 300 times cash flow. I have to say cash flow because there are no earnings yet. Obviously this it is a contest. People wanted social media, a social media lay in their portfolio. You needed to get in. Facebook or twitter and linkedin, maybe. Those were your big options and twitter seemed like the younger, hipper competitor. My mom is on facebook. Its not hit. Is. Ut pandora rising 14 , the most in four months on listener data. The company says it has 76. 2 active listeners. A jump of 13 from the same time last year. And or also announcing the launch of an in car advertising solution. Lets talk about boeing shares up to date after the plane maker reported it delivered 648 new airplanes in 2013, an alltime record. Boeing reached a deal with its Largest Union which will allow the company to avoid disruptions for the planned 777. We will have more on the union deal with the governor of Washington State. He will join us later on in the hour. Number two, general elections General Electric down nearly 1 . They are going to expand their lifestyle life science unit. Are at our number one stock of the day it is serious ask Liberty Media onestroke wire full ownership of the satellite radio broadcaster. Lebron made an offer last week. Well give liberty access to a , we havee of capital leo hindery on hand to help. We are starting to see the final confirmation vote for the new incoming air chairman of the Federal Reserve for janet yellen. Momentarily, Larry Summers, the former treasury secretary will be joining us to talk a little bit about what we can expect in the months ahead from ms. Yellen. We want to get some additional context from alix steel. The markets were little but lower, but it is the new year about it is the new year also closing below their shortterm and the averages, eightday, 10day, i say that because you traders who are very sensitive to those types of moves, especially on a close. The biggest losers, you had materials, you and, consumer disgust discretionary, but offsetting the, home financials and angst doing rather well. In the face of any weak surface data that we got. Far, longest stretch of decline in the beginning of the year since two thousand five. Clearly, we had an awesome year last year but we had a bit of a bummer. Stories move to some were tracking ahead of the open tomorrow. Weve a special guest today, leo hindery, intermediate partners managing partner rated ray to have you here partner. Great to have you here. Lets talk about telecom deal, not the one that you thought about. Has acquired spectrum from rise of wireless for about 2. 4 million. Provide tmobile with a number of needed low band frequencies from the number one u. S. Wireless carrier, which is verizon. It will also make tmobile and more attractive takeover target. According to people familiar with the matter, sprint would try to take control of tmobile by paying cash and stock owned by deutsche bank. The spectrum story is sort of a shine so sideshow for whether or not sprint is going to buy t mobile. The analogy is it that if youre buying an apartment, and the person youre buying from buys a new washer and dryer every ui pay little more money, but they knew your self do not have to make that acquisition. That is a good metaphor. It is very interesting overall, because you think of the traditional table mechanism, the way it is distributing content, and you look at the wireless potential, and so much is happening right here, right now. It is staggering, when you think about it. What is also interesting about this deal, tmobile needs the mobile and because of the high low band because they have high pants. They need to be able to push voice and data through cities low band can travel greater distances, and high bed is better and billets band is better in buildings. That is an issue. We can watch bloomberg tv on the iphone, do you think we will be watching tv in general on our phones . I think trish alluded to a briefly combine the this is going to be a seminal year from an appliance point of view. The traditional cable boxes almost antiquated. Youre going to start using your own devices to manipulate your television. Same deviceshe outside of the home when you leave. What the phone companies are doing, theyre just balancing spectrum. What is interesting, to your earlier, when tmobile gets act will that help a sprint deal get done, or hurt a sprint deal getting done . They control about 80 of the market. A tril a dust they allow poli play . At t really do not care. They are just fine. But the way the law works, look for becomes three, becomes very problematic for the justice department. We saw that in its own way with dish and directv. When you allude that your competition is the low cost provider tmobile about seed be able to buy the low cost producer which would give them an advantage . We saw that with american airlines. Raised on what they had testified to the contrary. The discount suit saga continues. Mens wearhouse you look great. Wearhouse . Ring mens bought by joeot theyre stepping up their efforts to by joseph a bank. The hostile bid tingling a new stage in the takeover battle. Signaling a new stage in the takeover battle. Again, higher than the previous bid. It is unbelievable, urged to resume bank wanted to buy that just of a first bank wanted to buy mens wearhouse, and notice the other way around. Do they not have to get a loan . Becauseis the problem, there hasnt been some acrimonious talk from both sides. ,irst, you had mens wearhouse joseph a bank had been trading above the mens warehouse offer price. Now the higher bid has come, and they are trading below it. That seems to indicate that it is more likely now that the deal will get done at this price command the shareables will be able to come in the shareholders will be able to come in. How much room is there really . We were making fun of it earlier, but in this environment where men are nothing increasingly casual, and you have no child today tie on in moreeople are coming and more casual. Is there a space for the suit and tie company . I enjoyed your comment, there are only two players in this space. This, there with are only two of them. If i bid up, and then you are bid up, you are hurting each other. The deal is going to get done, and you are cannibalizing yourself as you profit for others. There is not a third discount suit, or a fourth this out soon founder out there. There is only two. It is just like playing ping pong with each other, and the stakes will actually give up. It will happen, just in a happen just getin a room in a room, and get the deal done. We have a lot of stories to come. This one is especially interesting, because you retailers rolling out the green carpet, as it were. I like that. It is all about the legalization of marijuana, and you rises skyrocketing. Medicinal uses will go into a dispensary in colorado, and will pay 200 for an ounce of marijuana. That price has skyrocketed to 400 dollars for recreational to users. Colorado made it legal for you to go and just walk into one of these hot shops in denver pot shops in denver, it is very hard has had aicense, it lot of obstacles in the industry to protect itself. Oryoure 21 years of age older, you do not have to show a medicinal rises license or prescription anymore. You could just buy it for a lot cheaper. It is a really interesting situation pool where if you have a prescription for marijuana, you walk in and you get the pot at half the price. From those who are smoking it recreationally. You can have three and some on medicinalt tax use. People who go to colorado who combed back on flights tonight who are coming back on flights tonight. You have a federal law that says you cannot cross the border colorado, and yet you know that in the recreational activity, of course theyre buying it. It is still cheaper than the street price of the legal illegal pot. Incredibly ever go to bank. Difficult to bank. You basically have to find a way to have your account the banks do not want to touch it. There is a federal issue them and the banks are charging a lot of money. People are going to such extremes, they will actually take their money, and put it in a bag of and then in a sealed airtight room, so doesnt start to smell. Upby the way, i am holding your book. She literally wrote the book. It is a fascinating account. I wrote two books, and you get paid exactly the same for a big one and a small one, and interest got the secret early. We have a lot coming up, stay tuned as d. C. Votes on yellen. And we will talk about the dangers of low Interest Rates. Low rates and rising asset prices, a match made in heaven above or economic hell. In an oped, published today, Larry Summers warns about stock stagnation. He joins us right now, secretary summers, the great to have you here. Here. At to have you be risk in talk about this asset bubbles. Why do you think we are potentially heading into that . Is is, our problem fresh our problem is that evil one to save a lot people want and when you of ,a savingsimbalance of ment, thatt leaves unattractive choices. It will not be such a great kind of Economic Growth, it will be the kind of guy, Economic Growth we had in the middle of the last decade. Or you couldbbles, allow Interest Rates to be hires, and have some of the leverage on the asset values. Either way, it is not a pretty picture from the point of view of the overall economy. If you do, dammed if you dont. That is what i mean by the notion of this secular stagnation. We have gotten to where the natural pattern of savings is in excess of the National Pattern of investment. Youing to a dynamic where are either going to have Interest Rates low enough that they raise real questions about financial stability, or higher, a move in which case youre going to have questions about the stability of growth. Neither are very attractive. Do you think we have Interest Rates low enough to risk the actual bubble in asset . Covenant look at lending for example, if you look at certain types of credit spread, if you look at what has happened to stock prices, you would have to say that values are more stretched than they were a year ago. In the case of some of the lending standards, you have to have some ground for some concern i do not think the one. Rn is yet a severe were not near where we were in 2007, but we are still a very slack economy. The question i would then ask is, if you imagine that we get the Economic Growth that the opt in lists are hoping for about with the current financial conditions this year, are we confident that markets are going to stay bubble free . Are we confident that reddit standards credit standards are going to be maintained . I do not think we have a basis for that kind of confidence, and that is the sense in which i worry that our problems go beyond the merely cyclical. It means that the fat has a tough road ahead. How do you think, secretary summers, that the janet yellen said will different than what we saw under ben bernanke . To describedoing predict the Federal Reserve. Set of tradecated laws that they have to manage, tradeoffs that are made much more difficult by the fiscal policy having to do what it should do in terms of providing support. We will be right back with more from secretary summers. He has a prescription on how we can get out of this mess. It involves the Government Spending a bit more. We are back with Larry Summers. Secretary summers, we are just talking about some of the tough spots the fed is in. Dammed if you do, dammed if you dont. If you have very low Interest Rates, you run the risk of an asset bubble. So what do you think they need to do, and how do you see this playing out . Well. Ope it plays out i hope that the necessary steps are taken with this fiscal policy. I hope that the steps they take with regards to the private sector turn out to be right. I hope the world will be strong in a way that will support our exports. London mentally, here is the one question that everyone should in a momentves money atcan borrow less than three percent, at a moment when the construction on a blatant rate reaches double digit, is not a moment to fix kennedy airport. When will that moment ever come . Supporting our infrastructure. It has been allowed to languish over the last decade. It gets worse every year. Could theree logic have been for the significant cutback in Public Investment that took place between 2008 and a moment when the economy is weaker than it has ever been, when the credit is problematic, how could that have been the right moment to cutback Public Investment . It does not make any sense for us as a country. Now, when Interest Rates are so low, when the risks of crowding out are minimal, that is the moment when there is a strong case for fiscal action. The right, properly designed fiscal measures would have the prospect of resulting down the road in a lower jet debt to gdp ratio. Summers with. The satellite. That happened on live television. We thank him for his time, and for giving us his thoughts. He felt like he thinks that the government needs to be doing more because the situation is one in which the fed has done all it possibly can do, and still we are in this very anemic growth stage. Making the case that fiscal policy needs to take over for voluntary policy monetary policy. They can borrow cheaper, get to the infrastructure. The fed had some unwinding to do, which it has started. We will continue to watch, but part of that is getting the growth back into this economy, and how do you do it right now . 4. 1 are sent gdp. We are getting there. Correct, we should not be so pessimistic. But itn long road back, is higher than it used to be. That is the secretary cost point. Sorry we lost them, but that happens with sound like with satellite. Coming up, 13 years and counting as until america loses its place as the worlds economic power. Tephen roach coming up global is oniberty an acquisition spree. Were going to tell you what next. Re looking at Liberty Medias in the latest move. Announced the plan serioushe last 49 of sirius xm. Put, sirius xm radio generate more cash for liberty that could be put words financing a Time Warner Cable deal. For more on this cable consolidation with alec sherman to and leo hendry but intermediate partners managing partner and founder of the yes network. I just going to say it, i see that they are looking for the sirius xmcash, but radio . It seems to me that the handwriting is on the wall for that company. Hormel next tog wilson sporting goods. It is all about the Balance Sheets. The charter Balance Sheet is not anywhere near close to pulling off the Time Warner Cable deal. But you have to ask if charter is the bright buyer, and fundamentally, it is not the right buyer. There is mediocrity and most of the charter systems, rea lating to the higher end of the market. The most logical buyer is comcast, but not even for the whole thing. Louis, the sportswriter, Time Warner Cable would be a serious, get that series complement Time Warner Cable would be a serious complement to the comcast lineup. And think comcast is looking at this, and making the calculations right now how much of this do we want. . Do it want all of it . If we want charter and liberty together interested, it will come down to will john malone do a deal with Brian Roberts . Can they come together into a deal here, or will comcast decide that maybe they want more of it then charter is willing to give up. John malones whole thing here is that we need scale. You need to get bigger. You cannot give up too much, because then you do not get big enough, but you can give up some of them to a joint deal, and comcast would guess get what they want as well. Can you really bring companies together . Is there any trust . Comcast will begin to hit a ceiling. I was the ceo of liberty for a while, and there is a dramatic inference between scale and quality. When i had the privilege of being johns partner, he is focused on gail scale. Owning a lot of Cable Systems does not mean much to me. Owning the right Cable Systems means a lot. Markets, the 27 cities that comprise the nfl. That is what we gave comcast out of at t broadband. When i say st. Louis and los angeles would be enough tract of complement to complement an attractive couple met to comcast, we owned those, and we did notm because we want to control them any longer. Who is the cat bird seat now . It is the comcast guys. The appliances are all about changing the dynamic of home viewing. Who has content . Netflix. We talk about netflix all the runningthis show, and comcast into time warner would be the dumbest thing in the world for time warner. It might be a good thing for , it is not a good thing for Time Warner Cable. They would get nothing out of it. That is why they have resisted so far. Were about to find out exactly what charters offering. From what we know, it will be less than 135 a share, and trading ablest trading there already. Where they trying to become eager, rather than acquiring content . Youre going to see netflix become the new dreamworks, 20th century fox, theyre going to start producing their own content in mass. The other phenomenon that fascinates me is broadband. I see a world of the very near term or i do not have a video connection in my house quietly single broadband. You could be watching it all right here. Yourat device would be guide at home for dv, and it would be your larger device as you walk out of the home. The cable guys have a wonderful advantage, as the broadband in your home is a wonderful service. It does not have to be as good, this sets the price for broadband in the home. When we conceived all this years ago, and i was a seller for tci, the triple play is a fantasy. It is one wire. If it was three wires, you could call it the triple play, but it is one wire. At t found a buyer and ind in at t who believed the triple play perpetuating forever. I believed that it would collapse on itself, and the home would become a broadband user. They would use it for video, voice, and data. But you came out saying that you john came out saying he regretted selling it. He is absolutely wrong. Revenues and the cash flows are the extraordinary, but the pressure from directv and dish and verizon and at t, and adams phone has collapsed the multiple of the value of that cash flow. Were definitely in a changing world, i was learned a lot when you are here. Thank you. Free. I do this for [laughter] another big deal we have to talk about, boeing is ratifying a new contract that happened over the weekend. Thousands of jobs are staying in Washington State. Taking a hard vote to keep jobs in the state, he joins us now. This thought only passed by 51 , why was it so close . This is a tough decision. Abel had to face prospect of job toand to report get rid oft, had to things they had done for decades. They made the decision to move forward in building this jet and its derivative models for years to come. It is difficult to overstate its impact on both this that and its carbon fiber wing thing beltre jet andth having this its wing built here. It was a decision to move forward to keep Washington State as the center of aerospace in the world, and with several decades of dominance that we are looking forward to. The rating agencies have said not if the machinists did ratify this and it moved out Washington State, Washington States credit lending would have been lowered rating would have been lowered. Very active in the past few months, as you can imagine. A lot of efforts in the state legislator in the state itislature to make sure that had a robust but commonsense provision that had some tax incentives i would guarantee that boeing stays here with all of the subsequent derivative models. And it was very poor that it not open a second line and divert jobs of the state. It would actually return that revenues, after all things are considered, to the state of washington. We were very active in regard to that. Robust had a very training program, so you can guarantee boeing that skilled workers, including Carbon Fiber Technology workers. We also have one of the best systems that will allow a building to me permitted in short order. Very briefly, any other companies youre trying to move right now . Yes, we are. Can you name them . I could, but i will not. Be involving confidentiality, but we have some Great Companies we are talking to. Thank you. Up, bigger than the empire state building, and can carry over a thousand elephants. We are the ultimate consumer here in america. The ultimateo be producer. It is a codependent relationship, but in the long run both parties, Stephen Roach said, will suffer. Stephen roach is here with his new book, unbalanced. Always good to see you. I was struck by the title here, because you have been such an advocate over the years for china and for all the Growth Potential there. One of your theses here is that big, itgrowth that t will not be able to handle being the biggest economy in the world. What do you mean by that . It is not just about size, it is about the mix of the growth rate. If china stays the course of being the ultimate producer, then there are problems with its unsustainable imbalance. I believe that china will change its stripes a lot, become more of a consumer like america. That has profound implications for us, because we are dependent on china staying a producer. You make us cheap goods for our consumers, and cheap capitals and the government can spend like Larry Summers wants us to do. And as long as there are surplus savings, we will save as a nation. How are we going to fund . We just find another version of china. Name one. No country with the same population potential, but cheaper goods producers, maybe look at vietnam. Vietnam is a grain of sand on a big beach. Provideas the scale to the support to us that we have come to rely on. Do not think that this rebalancing is necessarily bad for both economies, provided that we get our act gather and we change our stripes just like china is going to change its stripes. What does the u. S. Need to do to maintain a healthier relationship . Livingeed to start within our means, we need to invest more, and dare i agree with Larry Summers, that we have to have the wherewithal to increase our investment. We need to increase our competitiveness and export our way back to academic prosperity. That is with the chinese piece of the equation is so born. Chinas Third Largest and most largest most quickly rowing export market. We have one thing that they do not come and that is access to very cheap natural gas. It is one fourth of their price. Should that help . That will definitely help us, but we to do more than frack our way to press. Prosperity. Partiesiduals, both could eventually grow apart. Chinas going to go its own way. The the not respond to next china, are Interest Rates will go up of our dollar will go down, our Financial Markets that seem so perfect right now now will all of a sudden seem less perfect, and the asset dependent, well then that the market dependent u. S. Economy will be really in trouble. What will china look like . China will be more balanced and more sustainable because it will draw support not just from its external markets in the u. S. And europe, but from the internal demand of its 1. 3 billion consumers, which has been willfully suppressed over the last years 30 years. Rebalancing is something that comes from within. We have washed our model much too far washed our model to bar on relying on excess consumption. Balance is important. Thank you. Are longer, they than the drop at niagara falls, and theyre coming up next on street smart. They are massive and they are made to carry everything from oil to bananas. The Worlds Largest cargo ships. That is it for street smart , have a great night. It is approaching 56 past the hour, that means Bloomberg Television is on the markets, im julie hyman. The sessions ended down for the Third Session in a row. Streak not seen a losing like that since 2005. Part of this having to do with a worse than estimated isn services report, coming out this morning. We may be getting some more market moving reports later this week, the earnings season is starting to get underway. That this maysays be a little more negative season by historical standards. For coming in. Earnings season starts very soon, later this week. If you are looking at how Many Companies that have been coming missed estimates put and that ratio is higher than normal. Air pushes a report several times a day, showing the earnings progression, but how and the coming quarter how many copies have not been how many of those have come out with the negative ratios. Right now we are at a ratio of eight. The thought is that we are looking at a times as many copies that are renouncing with negative as with positive. Over the last 15 years, the number has been closer to five. We are well above that longer term average, and it has been creeping up over the past several quarters. That is a good thing in the earnings themselves have been improving over the past couple of quarters, so maybe you could overlook it, but then again maybe not. On the one hand you could say business is tracking worse than the previous estimates than people thought. Does this leave people any room, so they could come out and give the stocks a pop . This do you think this will happen since they have lowered the estimate . They have done a very good job of managing expectation, setting the bar so low. If the bar is so low, you cannot help but exceed that far. One thing that is good this quarter is that 5. 7 ejected yearoveryear growth, at the beginning of the reporting. That is equal to the reported percent we had the prior quarter. Usually you work low and work your way up, we are starting exactly where we ended up last quarter, and so the expectation is that maybe we add two Percentage Points or so to the estimate, when we get the reality at the end of the season. So is the earnings season going to be a positive or negative catalyst for s tocks . The trend is still your friend when it comes to earnings, you can justify the higher pe ratios, the multiple ansion that was on 12 the a sense so now in youre gting a justification. So the market will be focusing more on Global Growth and deflationary worries in europe, and whether that spread here to the guide states. What is your end of the year target . 1895. Thank you. S for on the market, im julie hyman. Th himis is taking stock monday, january 14. As it gets colder across the years we will focus on progression. Janet yellen one step away from becoming the next fed chair. She will be the first woman to lead the central bank. We discuss what this will mean for the global economy. Largest ecommerce retailer is progressing to be the next amazon. Com. And my producers will try to

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