Transcripts For BLOOMBERG Street Smart 20140107

There when i was a Hedge Fund Portfolio manager karen i was there when i was a journalist. Im really grateful for my colleague jon erlichmans work there, but im not there. It is an exhausting show. It was 24 7 by just got back from paris, and no idea what time zone i was in. And landed, and i burst into tears. What is interesting about , there was noe sort of retail gathering until the Consumer Electronics show again the big gathering. Now this just about selling new products, and trying to one up the competitors. Well be showing off these new products, but the thing that is run by pr people, theres no regional reason to have to have this happen there. It is just about having the media people gathered. When companies are presenting the next years think of other year after thing, all, honey booth fall, will have a booth where they will say this will happen in the next two years, and this is what is to be thinking about now. Michael bay we have all heard about it, he comes on to talk about his new movies and his agreement with samsung from a clubs it. Heidi think it will affect our viewers . Im sorry, im sorry. Adjustment, and gentlemen, think michael bay for joining us. He did not know what he was going to do for next hour, and he was out of there. Samsung has been trying to have this is this approach that would mimic apple. In products, in technology, and in presentation. They have all these hamhanded aings, everything from broadway set to tap dancing children to try to outperform apple. That clearly was not the case there. Cory is not in vegas, but here is it is called. It is seriously cold. The south pole was asked to below was six degrees this morning but chicago, detroit, cleveland, pittsburgh all colder than the south pole. Thane north pole is colder negative six. This time of year, it would be colder. This last time we broke the low in central park, i was six. Happens when you throw boiling water to cold air . Videores this amazing that has artie been propagated over and over again. This guy took a pot of boiling water it was a meteorologist who didnt. Did it. Need to talk about lindsay vonn, as she is not going to be so gl ebix going to the sochi olympics. Her going under the scope again. She heard it last year, and it was not Getting Better time, so she is going to have to go under the scope again which means dealing the end of her olympic career. Those Big Companies that have her are have backed not going to have the benefit of her in the olympics. Greg rayburn of kobe partners, he is one of the countries most spirits turnaround experts. He recently served as the ceo that liquidated the brand, but twinkies still survived. Great to have you. Happy to be here. I think that the number one question that we have is what did you learn most from that . There were a lot of lessons for a lot of people on hostess. That it is really hard, one thing that you learn is that it is very hard to predict what people are going to do, given and what you think is logical and what should happen. What do you think . Drive decision making. For unions, or credit makers . Both. One of the unions was being driven more by emotion, then maybe by their wellbeing. If you characterize what they did in terms of strikes and what going workers just didnt Washington State in terms of initially saying, no we reject, and then as of the other day, they have an agreement. They do not realize what they would have to take. It keeps jobs, and he keeps those people employed. I think the economics, they are what they are under the sea of under this business environment. I was glad that they made that decision rather than going with a more emotional decision. When it first came out faisal of interviews with them on tv, and they work saying like our workers were setting up a time. If we were saying at the time, that if we give anything, they will just go and take more. Hostess cam for you. We stocked up. Were going to check in to see our new it takes for seem to eat up the table news team to eat up the table. How long do you think . My youngest son who is nine will be disappointed if i do not bring some home. When it all went away, he was like daddy, why did you do that . Be notone wholl touching post this, because of his diet will be hostess because of his diet, will be jon erlichman. Not seeing hostess, im not think cap dancing children, im not being throw hot water because i do not think throwing hot water on the electronics would be a good thing. Were seeing a lot of stuff going on. Young the neighborhood of 20,000 products, 15 plus categories. You have the big stuff, the big debut, the curb tvs the and then you have the side stories. Not everything on the store showroom floors what you want to be focused on. We caught up with the ceo blackberry away from the floor, asking a question about the future of the device and what it looks like the keyboard, touch can, here is what he had to say. I firstly love the keyboard, so we would look to blackberry Going Forward through keyboards. I would not use the word exclusively, but we dominantly. We dominantly. Predominatly. There is a gadget you can put on the top of the iphone that has a very black hairy like feel. Blackberry like feel. I want to talk to you a little bit about black area of turnaround strategy dare. Blackberry and the turnaround strategy there. And ias a stockholder, paid attention. A greatjohn jan is choice for them, but it is a hen is a greatc choice for them, but ioitit is a classic case of leadership matters. Commercially the leadership was not working. The were talking about inability to adapt. You can always make an argument that they held onto long, but that is what founders do. They created a tremendous amount of value for a lot of people. Frankly, when they made that choice, i was Still Holding blackberry stock, and trying to get into a nap new platform, and i was eagerly waiting that. I thought with his background at siemens, and his repudiation as the guy who can keep all of the trains running on the track coming he would be the right guy. With the month of this going in, they were delaying the launch, and i just took my head. Shook my head. If youre a blackberry user, you just added a table, and everyone else could get on the internet. I didnt need a new os i do not need a keyboardless version by do not need them to catch up with apple and samsung, because that did not work. When they jumped the shark was when they made the developer video to keep on loving you. That has been killed. You covered the story quite a bit. What is the sense that you got from john chen . Known him from his previous jobs, but it seems like this was an intelligent plan. The trickiest part of his job right now is to come right out and say we are going to get out of the devices business. He is not saying that right now, but this new operating system that they have is not an operating system i can live in many different worlds. If they could get traction with that, do they have to live in the mobile world . Guy good things about the other opportunities, especially in the services. He is in a tricky position and that everyone knows of library because of the device. He sees a lot of the future away from the device, but if he comes on says we are not making the device, they cannot sell any in the near term. News cyclingof bad through, people viewed about with the committee was going to do. Were they going to sell themselves, and what does that mean for the contract i signed . That was eating into their sales, so was a very challenging part of the story to communicate. I have a samsung question for you. I saw a report you did earlier on the curved and, it seems to me that that may be a bigger problem for them than michael bay. Understand why people think we need current televisions. Americans have had enough it into a date ingenuity just to put chairs and tables where they can see the tv. Am i going to pay or money for to get curved . Argue that ifld you do that with High Definition tvs, and for that with all the partnerships that they side with media partnerships, cable companies, and amazon, netflix and then you have this arsenal of things that you can aroffer. Upgrading their televisions at a faster clip than they used to. We are moving away from smart can tv smartphone, so be the next revolutionizrer . What they really focused on was the screen quality the content deals that are there, and that is what they have been very busy with too. Busy guy there in las vegas. , afterstreet smart this break. It worked. There you go, as promised. Jpmorgan cannot seem to catch a break. They will have to pay 1. 7 the madoff victims. Guts of been inside the businesses to try to change them for the inside. That jpmorgan need a makeover . Dimon,ink that jamie with one exception that i know of, has really made all of the right decisions. I think if he could have sat todays particular day two years ago, and wrapped up all of the issues, he would have loved that. He has done all of the right things. , on come on, those were some serious things. They have multiple Computer Systems that alert them to suspicious account, and they turn them off so they could keep trading with him. If you want to put a Balance Sheet up to it, and a stock elevation up next to it meant about Value Creation when it is those numbers that are rounding errors. What he has done is after these issues have come up. It doesnt necessarily mean that these need to be unwound or broken down. Too big to fail is a whole separate conversation. I think the only time you really you hadistake was when the whale issue. A teapot, from a crisis standpoint, i go back to those being indicted for fraud. I think he handled that poorly. Would tell ceos in that situation to wait till until you know everything. Were getting pressure from outside what was your job . I was the chief restructuring officer. I was working closely with the ceo, function almost like a coo at the time. We had pressure from outside consultants and inside people aud, ande broad fr all of our senior vp people wanted to get in front of it. Sort of standard 101 of lets get in front of it, do not trail the issue. I just said no, theres a lot of pressure to get out there and tell the truth. Or just tell something . Just to say something. That is a mistake. Unless you know everything of the ceo, and all of the how wide it is, what the culpability is, i begin is a mistake just to say something. It does not matter what you say. We could have said we were looking into a more even said that we think were going to do this or do that. Until you get to that endpoint, it does not really matter. What do you really know how do you really know that you know everything . Jamie dimon facing the same thing with the trading of london well. Trading that they were trying to hide, losses that they were trying to hide. I do not know of any frauds that people have not figured out at some point. Some point. Sometimes they do not take very long. This was a quarterly journal entry. This is not sophisticated fraud. Did it take time to figure out the magnitude, yes. But you can get to that point, and you can handle that differently than either belittling it or making some kind of positive statement. Were going to go to todays Global Outlook. The trade deficit in november was the lowest in four years. The globalnging how trade works. Something virtually unintelligible unimaginable, that we would have new sources of oil in the united states. What is this going to do to oil imports . To the u. S. Being dependent on them . I do not think anything happenng today will what for will change them is a 20 year playbook. Eningis may be happ faster than anyone predicted. A couple new finds that theyrabia saying are not that they are fine. Am doubtful that fracking caught them by surprise. They have seen for decades that they need to expand the economy locally, and expand their exporting outside of oil. If you look at the investment have made over the last 10 years, that would back that up and im not an expert on oil in saudi arabia, but i do not think that the things that are happening in this year will alter much with their game plan. I have another Global Outlook story, dennis rodman. Korea, playing with the north korean fastball basketball team. Magazine a basketball a long time ago, and dennis was in our first and second is you and i spent a week with him back then. Look at that height difference. The thing about dennis is that he can shoot. I played horse with him, and he can shoot from just about anywhere on the court. He really liked to be a rebounder during the game, but he is quite a player. The point is to say that north korea is more than we think . I do not know if there is much to be said for him being there, but ive seen him engage in other things. It is a risk. What happens if he wins . You could be an uncle. Seeing the bulls play when they had a great run in the early 90s, that lasting affection for that team, and continuing to engage. He has been returning calls from north korea. And it is kim jongils birthday tomorrow. Themll be there to help bring in the next year. It is 26 minutes past the hour, and julie hyman is on the markets. Much i can know how offer on dennis rodman, but i have the markets to offer. From thatounding threeday decline that kicked off the year. Investors are really looking forward here. Theyre trained to get any insight into the timing of the tapering, and how it is going to unfold. Theyre looking at Earnings Seasons taking off, retail levers coming out over the next week or so, and the jobs report on friday. People are also looking at netflix because the shares are down. It was the best performer last year, there were up 300 or so, and now it is being downgraded to underweight to equal weight. We are also talking about something that a lot of analysts have talked about, and that is potential competition for the of amazonom the likes and hulu plus. Muppet streetore smart comes back in two minutes but street smart, back in two minutes. Our hostess table has been torn apart. Upcakes argonne, the donuts are going, im going on my next break. Welcome back to street smart. I am fascinated by the supermarket is missed. I have been for my entire life. Im fascinated because the crummy Gross Margins that result and others have in i cannot explain it. Your father and my father started in that business, bagged for the first job. In Israel Taylor like other retails it is retail like and thatail centers youre dependent on the buyer. Differentlies on some tools to offset the fees. Wegmans, the safeway you just consider what is going on in the medscape of largeformat grocery stores. We had a tenured chart of Real Estate Construction in the grocery business. Largeformat for the first five years is going like this. The chart was going like this when you added in all the cost goes costcos and other large box stores. Organic, whole foods, fresh market, smaller format. The super g, and more of the heiberg supercheap, and more of the highermargin staff. Great pun. A ofould to bring in the ceo an ordering site. What is your relationship with local grocers . We will look with a local grocers, but therell inventory on our website, and then market on their behalf. We work with the merchant, working with their brand and their marketing. We had the failures of the. Com era in chicago, but i feel like there is a lot of attention being paid to despite amazon, buy ebay, about getting attention by amazon, and the ebay, about delivery. They have a greater understanding of how the internet functions as a place for searching content and for purchase. From oblique to do it run computer, your desk, anywhere in the world. You could do it in your account, your bed. Couch, in your car, on your bed. In a higher frequency, and the growth rate of Online Purchases relating to grocers is faster than it is for other stores. Degrees below40 youre going to want to order in your groceries. It, im interested in wanted to ask them a question, because back when i was a partner with anderson, and the head of the Andersen Consulting left to go to a startup, we followed and it did not work out. It was a long time ago in terms of business. How are the hurdles different, where do they mess up, and what is different for you . Wegmans which is similar to a whole grocer, today is fresh to freshush direc direct. Our job is to take the inventory , you take the purchasing data and the Inventory Data and put on a new website and we can market on behalf of local grocers. There was often stories that ere driving around with nothing in the vans to move the money they were saving on real estate. Flow,ave a lot of cash but the margins are pretty sticky. Amazon did to the local bookstore what fresh direct is doing to the local grocer. They are aggregating demand, and we are aggregating supply. We are either giving to man, and working with the supplier of the product. There is a way for us to share revenue, and for them to be able to drive more product. They have to turn their local retail store into a distribution center, essentially. Historically we are about 10 years old when we are focused around the urban sector because the young and busy professionals needs us. We are working to get into the suburban area. Most do people by the buy the most . Things that are heavy, a big pack of water or coke, it is easier to buy that online, and have it delivered to your door. I think one of the interesting things about your business is we see these Big Companies like ebay and amazon, maybe even more so on amazon, going aggressively into different markets. The markets are different, it is different in the city then to deliver in san francisco. You know that if you drive through the city, you can build a Delivery Business that can spend a lot of time understanding that locale. No one would understand that better than the local grocer. They understand the consumer, and after getting front of them or that consumer is now, where which is online. When you try to imagine what the future but hold, did used car to look at those things did you start to look at those things, looking at how to delivery contains that . We spent a lot more time on the issues which we talked about earlier, competing with the new bigbox suppliers and the organic suppliers, and how do you make your Value Proposition in store valuable to your thatmer base to stop declining slope of customers . Getting out and Going Forward, im sure that theyre looking at that. Major games is a changer for big format stores. We have a delivery of hostess goods right now. All for me . Youre not going to make it through the commercial break. Doughnuts. We have to eat it now. Good to have you. , after the smart short, nutritious break. Has thee gambling casino moguls up in arms on how to best handle this budding business. He will spend whatever it takes to lock the blocked the rollout. And morallynst it, against it, and it will kill the entire industry. It is already doing that in europe. Willyll just allow nilly gambling online in europe without concern for the conceit asinos. Joining us, our very own resident gaming expert. Regan, making a documentary about the biggest whale vegas whale. Morally against it . Do you buy that . Not really. Pocketbook is a gifted, because he is invested in the bricks and mortar. That is like us saying we are against amazon, morally. He is looking at it, willing to dabble in it, but he was making the point of but to me, it is about the experience, coming to vegas, and enjoying everything we have to offer. Wetherbee the restaurant, the gambling, the clubs. He has a hard time understanding why someone would just want to gamble online. 520 million, that is the potential for revenue this year. Ideaople just like that that maybe you can win. Online is different. I understand what he is saying, and i get that there is experience to be had about whether does in vegas, macau, or any casino, but there are tons of people who just like to play online. They just like to gamble, it is not a Lottery Ticket the poker places. There are Money Laundering issues there as well. This is open the doors tos of the like that in new jersey, and now nevada. Upmay follow the morrow on it made our load the Marijuana Industry job Recreational Use in colorado and washington about states are recognizing the economic opportunity. I think we may start to see that more and more online, because they say now that new jersey is making the money, why cannot we . Ofevery state that i know practically has a huge liability to deal with. Issues a state to state across the country. They are all hungry for additional sources of revenue. Gley, if you just wait frankly, if you were to say that the lottery was online getting, Online Gaming is a better solution than the lottery. There was an article in the New York Times of the weekend that even though it is legal communities do not want he could see no in their backyard. There is the will, the money, but the communities do not want one. The state will find a place to put it. A lot of the story was that you owned a lot of the horse racing tracks, but the opportunity was to try to add flats to some of those tracks. What is it like when youre at a company that has gotten close to thosense, and you have that want to run those gambling operations . Maryland was actually a little bit different. We had the preakness, but if you when theyveral years, moved the colts out of town in the middle of the night, the legislature in maryland passed a kind of law that said never again to we get the right of first refusal, anything we s,nsider to be hou our and that included the preakness. What fury the colts have brought. Who is going to own a, who is going to invest in it . Every state is going to treat you basically the same way, which is the same way you would get treated in nevada. Yet if as their pretty rigorous set of standards to be approved under the casino owners, but the race industry had no choice because the traditional track business going down was like sewing. My mother knew how to sew, but my daughters do not. That does not mean that people will not bet on it. If youre going to have an online presence, you have to have a physical presence. Yet the metaphysical conceit of that you have to have a physical casino. At bingo and the power and potential of social media to play in the Online Gaming sites. Any one of these Gaming Companies have tapped into the social aspects that have a builtin presence among all of these users. We shall see. You, we will be talking pot on street smart, continue with those vices, coming up. Were back with street smart , and i want to talk about what is going on your in your world. Insanely i wonder if you are trying to run a business, create something, god forbid, free cash flow, what are the valuations . Valuations are a structure of the money supply available. The fund allocated unvested money sitting in hedge funds. Investor money, that people want to put to work. Winter but that leave that there, sorry. Continues after the break. Im trish regan with adam johnson, we are heading into the base, and we have a snap ck. Only three days, but youre right. Up more than 300 points on the dow. , thember 10, marriott tallest u. S. Hotel building here in new york city. On the corner of broadway and hotel. 78 room courtyard it is a pretty big building. Lets go see if they have a bar on top, it would be fun to see the view. , these changes were made in part because the ock wass st downgraded. This Security Company was , terms of the deal not disclosed. The toymaker may miss analyst. Rojections wait they say barbie faces misses. Some are really antibarbie. Tried to buy me a g. I. Joe. I was a lego guy. People do not like to give their daughters or sons barbies because it reinforces a stereotype . But if they wanted it, they could turn on the db, im just saying. We have gotten so politically correct, by the kid a barbie. These, irobot, up seven percent. This is the company that makes the roomba, theyve a new one that scrubs the floor, the scuba. Who has nothe guy idea what a sliver is swiffer is. Number five is apple, down. 5 . 10 million were spent in its app store last year. The top cap was mine for cap was my graft, angry birds star it cost me like seven dollars, but i paid for it. Number four is netflix, falling five percent, Morgan Stanley cut the rating on competition in the u. S. Based on products like amazon prime. Facebook is up more than one percent today, they recommend purchasing the stocks in the Fourth Quarter results with a likely solid quarter, firing on all cylinders when it comes to monetization. We know what that means. [closing bell] stock, elier two lilly, down half of one percent, losing patent protection on cymbalta, its bestselling drug, last month, leading to predictions that revenue will decline to its lowest level. I heard the bell, our number one stock of the day, down one percent. The bank has agreed to pay one point 7 billion to settle claims that they ignored obvious warning signs thanks to the bertie made up on the scheme. They agreed to pay 542 million based on the losses tied to the scheme. Signs continue to mount for jpmorgan. A good day for the markets here, looks like we are closing up more than 100 points. Of almost 11 there, managing to break almost the worst losing streak since 2005. This is the dows first triple digit gain this year. The seventh of january . The 30s seven percent rise last year was not enough . Needs more . He had good trading daily earlier, exporting more, importing last, part of that was due to oil. We also have the sectors zoom in technology tommy utilities, health care, cyclical with safety as well. Really, it is going to be about jobs. Adp tomorrow, jobs data on friday, it will be about jobs and the fed. What are we going to hear in terms of how they are seeing the environment . They have been looking out for it. You think you contrast this time compared with this 12 months ago, the settlement is i think that we have started to see a shift. 4. 1 per gdp. That is huge. The jobs data has been looking significantly better. Thanks to those emerging markets. How much of that is already his market has been so on far on fire because of monetary policy, maybe this is already in. Times earnings for the s p 500 . That is right in the middle of that sweet spot that they talk about. Looking at the individual sectors you see some things that are looking at valuations. Thes thinking of tesla, electric car company has a higher valuation than conrad, or pg e. To me that is a sign that that is what happens at the bubble. When you look at apple trading cash that is seven times earnings . With cash trading at nine times . Big Old Technology is cheap. It is new technology. You make a very good point. This is Larry Summers from yesterday, his concern was about this very accommodating industry policy. You have the potential for a speculative bubble. He did not think we were in one, but we could be, we could be heading for one. You pause. You mentioned three printing tom a one of the things we are seeing this week at the Consumer Electronics show in las vegas, the emergence of new and important sectors in technology, not just three printing, which will have a big year, 4k televisions emerging what is that . That will not be big. It is twice the resolution of a current Hd Television and it will wind up being the big theme of the Electronics Show this week. 4000 pixels as opposed to 2000, getting twice the resolution, it looks almost threedimensional, it is so crisp. Guys a samsung are betting on it. Everyone is jumping in. Speaking of, it is part of our roundup of stories that we are tracking ahead of tomorrows open. Today we have a very special ces guest with us. We were just talking about wrangler from west partner principle. Thank you. It off going to kick with the obvious. Janet yellen was obviously confirmed last night. The vote was 56 to 26 in the senate. I know that sounds good, but as a matter of fact that was the lowest margin ever by which a fed chairman was voted in by the senate. Of fact, obviously, it was worse than ben bernanke. It reminds us, guys, of how political washington is and, frankly, how unpopular qe still is, even though they are tapering it, it is a hotly political issue. A fair amount of senators did not vote because of the weather. We have been experiencing this in the midwest threw two new york. I wonder what the number would have been if everyone could have shown up . We know that the fed has a communications issue, i would say, and that investors and politicians just want to know more. Maybe they over communicate, right . There is so much transparency, maybe it is too much. They tell you they will do one thing and then one week ahead of time they change their minds. Think about when we thought we would get the taper and we didnt. They knew something that we did not, we have the government shutdown. In hindsight it worked out well, but i remember sitting on this desk that day and saying that this was a problem, one i cannot anticipate what they are going to do. The bottom line, first female to had the fed, a big deal. Economic data has been Getting Better. Her job was going to be to unwind a lot of the stimulus we have seen over the last few years. Who would want this job . Talking about jobs, the recent election happened today, the former Portfolio Manager at sac capital, his lawyers tried to ban the use of the word greed during the trial. Basically because it had an emotional connotation and did not present any facts. The New York Times says of the request was rejected. What this point set to me is how hard it is to prosecute these guys. It is so hard for the jury to understand what happened, they have to resort things like greed. It brings up a philosophical sort of a question here. Greed itself. We all know the quote, greed is good. Think about our economy. Think about capitalism. Greed is part of what fires that. When is that Tipping Point . Things withe insider, from my perspective, these guys are on the Playing Field but they are cheating. Get them off the Playing Field so that everyone can play a fair game. It is not greed that is inherently bad, it is breaking the law. There is a desire for just more, regardless of what you have got. That may be the definition of greed. In this case that might not prove to be terribly complicated. Try toss the defendants make it complicated. And they will. It is fair to point out that Insider Trading laws are not clear. There are points at which it is really clear. Absent a smoking gun, it is very hard to prove. But if they did have a smoking gun, why would they have settled . Presumably you would think that is what prosecutors would want him to do. The kinds of research that i tried to do as well, it would be to find out as much as you possibly can, no more than anyone else on wall street in a legal fashion. The mosaic. Is what we typically call it. Not being told the number. Not knowing the guy who wrote the press release. That is what some of these accusations are about. What do you have, cory . Vegas, baby, vegas. Vegas, therein las is some interesting stuff going on there, not visa which happened with tmobile. Right before ces at t came out and said that they would be lead willing to leave tmobile. Quite literally a colorful scene , he was called out as saying it was a desperate move. So, he goes to the bart at t party and crashes. He said that he got his tickets for macklemore. Party and noe longer covering tmobile, got thrown out of the party. What happened, someone spotted him . In his words a couple of goons said that he needed to speak to him over here. He was wearing that famous t shirt, exposed. What i pointed out was that it was not looking strong in the revenues and the number of users. He was very upset with this. We both insisted that is cute. Just a revenue problem. The company made two dollars per share. This past year . Three cents. Next year . . 53. He should stop going to those parties, right . A colorfuleen season. He had the michael bay thing this week, samsung trying to do apple, trying to do a big presentation and a big show. Transformers, michael , pearl harbor over here he was speaking . Got screwed up and he walked off the stage. Thanks, michael they, for joining us. Clap. Awkward basically he was supposed to be reading from a teleprompter. The teleprompter went down. He got annoyed or flustered, take your pick. And he walked off. Let me tell you, it is not easy. A lot of people had sympathy for him. They said it can be scary and leave him alone. This is a guy that directs hundreds of people, big action scenes. Same as working with actors . I dont think so. He tweeted wow, i just screwed up at ces year ago in the moment when you are having a freak out, anyone who has ever gotten up in front of people to speak, i do not care how experienced you are, we have been here. I am not going to throw a brick at a glass house. But now he has millions of people now saying they, would you do . The other thing about ces, every 13 or 14 years, it is the failed product demonstration. Those are hilarious. I cannot tell you how many times i have seen bill gates trying to demo some product, the screen goes blank, the thing does not work. We found out from freds great book about the apple iphone that when steve jobs first showed it off, he had five in his pocket because there were so many glitches. Smart. The teleprompter is not going down on me. Four hours and hours, days. You can understand why. You are going there tomorrow, we will be going there in a couple of minutes interviewing the man behind some incredible new products at corning. Jon erlichman is going to handle that interview. Amazing stuff. I am not going to give it away and i will not tell you what the latest glass is, but it will blow your mind. This is an interesting story i have to share with all of you. A couple of comments at the university of wisconsin, they did a study basically showing that investors will bets on a goodlooking ceo. The first day that that ceo comes in to be publicly traded, the stock will actually see a bump of three basis points on average based on whether or not that person is goodlooking. So, anybody 10 less good looking . They do not see that kind of bump. Remember steve balmer . The sweaty monkey thing . Jumping up and down . We know how this goes. These presentations at the breakout sessions, you sit there at the back of the room and say look at that guy, there is no way i am buying that stock. And right. This is the story, somewhere. It apparently starts with how hot the ceo is. We can go hot or not with this kind of game, right . So, marissa mayer. Hot . Apparently so. Anyone in Silicon Valley . She scored 8. 45 out of 10 points on this website. The economist went there and put peoples pictures in and look at the results. Mark jacobs actually did really well to. That salt and pepper hair . See is nice. He is. I handsome guy. There is an executive at Bloomberg Television was a big fan. What did you say . I will tell you later. Very interesting. People who rave about their beauty constantly, they have fans for a long time. Apparently it helps. Longerterm. We will see in two years. We will enjoy it while we can. Good stuff. Adam has some investment ideas coming up for us. Made in america, sold abroad. He will explain. Cheech and chong, coming up. Remember this . Hey, man. Am i driving ok . I think we are parked, man. Made in america, sold abroad. Insight in action. Let me show you the data that we got today. This is a big deal. Nearly 200s had a, billion. Compare that to where we were back in 2007, before the whole implosion. This is a very big deal. As a matter of fact, take a look at this, this is what some of the analysts have been saying out there. U. S. Chandler said that the trade deficit was considerably smaller and exports higher, encouraging economists to revise upwards the Fourth Quarter gdp forecast. Turns out that goldman did so this morning, increasing the Fourth Quarter. Printer, we got the q3 way above the estimate. Nearly double. All of the estimates are perhaps too low, going up, which is a big deal. As goes gdp, so goes stocks. I know that correlation is not perfect, but the change is in white. And then the s p 500 index. Obviously, look at what happens when it goes down. But look at what has been happening most recently, that is what i want you to focus on, right there, the fact that stocks are going up, that is exactly what you want to see and it suggests, perhaps, that exports are where you want to be. Looking at the s p 500 to figure out that there are only eight companies that have at least 80 the u. S. Ales outside cocacola enterprises, by definition, molson court, sending us a microchip on twitter, i posted these along with a few others that might interest you. Go, check it out, exporters are doing well right now. Adam. Nk you, it seems that just about everyone is coming out of the intended, topun lessen the restrictions on marijuana. One man has been added since you were a kid . Tommy chong, joining us next. The times are changing. Now, the right majority favor the legalization of marijuana. One man was pushing for this long before the firstever pop shop opened its doors. Tommy chong, of the famous duo, cheech and chong, joins us now. Welcome to street smart. Thank you for having me. Your reaction to what is ofolding on the streets denver . Unbelievable, like a dream come true. My prayers have been answered. What took so long . You know, actually, it worked in our favor. Had time all the prohibition gave us time to perfect the plant to its present form. Now it is ready. The universe said ok, now it is time to legalize it. Will it be a big Business Opportunity . You know it. It is not going to affect the black market, either. It is a winwin for everybody. I think that is an interesting theory. I would argue that if you see more and more states legalizing it for recreational purposes, it might have the effect of driving prices down. Seeill be interesting to how it does affect the black market, if you remove the criminal aspect to it. Since we have you here, a lot of , wehought of this understand that you were cellmates imprisoned jordan . We dont say cellmates mates is a little sexual. He was my celly. And i encouraged him. I encouraged him to write. I was writing my own book and jordan said what was i doing . He said he was going to write a book. He wrote a few pages, showed it to me, i told him it was very good. I told him to write the story that he was telling me every night and that is what he did. That is when wolf of wall street came out. People may not realize, you served nine months because you worse you were selling drug paraphernalia. Any regrets . No, no. It was the best thing that could have happened to me. I needed something at that time to bolster my career. My career was almost no career. As soon as i got out of jail, i became an activist and now i am on Bloomberg Television. Going to jail help . Oh, yes. Big time. And you helped to launch his success. It actually helped to turn them around. He was a criminal, you know, when he went in. I showed him how easy it is and how nice it is to be legitimate. You make more money. He caught on to it. Very, very interesting indeed. Thank you so much for joining us, tommy chong. A legend. We will be back with more from ces, after this. There is one word that dominates ces and it is probably smart. Smart phones, smart watches, smart homes changing the way we all live. Sam grobart got away from the Convention Center to a house decked out in technology. Take a look. This does not really look like the home of the future, does it . It looks like a mcmansion outside las vegas. But it has been innovated with some of the latest technology. I am going to talk to you about some of the technology bringing the home of tomorrow to us today. What exactly is smart things providing . We take advantage of a lot of these new technologies to provide something simple and accessible. I can lock and unlock doors using the app. I could do this from new york city . That everyonehing can do. We are also an open platform. There are developers building new and connected things. [yawning] here is how it works when you wake up in your las vegas bed. Lets say that you have smart things in your house, you push a button on your wristband, it will start a bunch of systems in your house. The beauty is how simple it becomes to have things become smart around you. You the house around responding to your needs. I have access to it, this will start printing the news playing the news. Good morning. I will play the local news now. Of the otherome ways the system can be used . When you wakect up, it also detects when you leave. Away from home with motion front porch, this is a motion sensor, my son could play a prohibitive sound for a potential burglar. Big dogs. So, there are a lot of companies here and we hear about smartphones a lot. What are you expecting to see this year in las vegas . For us this is an example of going mainstream. It has become easy and inexpensive enough for anyone. Of the future, amazing stuff, we will have more from ces after the break. All right, time for the scene, where we bring you the business behind media, entertainment, and popculture. A new government report has put price tag on the value of culture. 3. 2 of u. S. Gdp, it all adds up to more than the total value of the travel and tourism industry. Incredible, right . Is cruncher of the numbers from the National Endowment of the arts. I am blown away by these numbers. How surprised were you when you saw the data . Quite surprised. This is the first time the u. S. Government has put a dollar figure to the total contribution of arts and Cultural Industries in the economy. Turns out it amounts to 3. 25 of total gdp in this country, which is about more than 500 billion. Why crunch the numbers . What inspired you to do it . It turns out that both our partner, the usb euro of economic analysis, and the National Endowment for the arts, were very concerned and interested in knowing about the contribution of these industries. We wanted to understand, first and foremost, how an idea driven economy, innovation, creativity, largely service driven industries, how we can attach a dollar figure to them. I what we managed to do go ahead. Example, the Entertainment Industry has got to be included in all of this. Correct. It was a very painstaking process, where we went through a range of goods and services and identify the Creative Content in each and through that process we determined that movies were a imagine. S you can Certain Television shows, this region of cable television, and publishing, they were all leaders, but so were artists and performing arts industries, they rank high as total economic contributions. Virtue of having this account we can track things like imports as well as exports. We see that over the last decade or so, exports have steadily been climbing. Cultural exports as a share of all exports. We recently surpassed imports and are seeing a surplus when it regards exports, coming largely as you suggested, from motion pictures. We have about 14 billion in export generated revenue in 2009. Obviously we want to protect that, right . The intellectual rights to all of that. Pirating movies how good it will how good are we at protecting all of the stuff . Hope that this account now gives policymakers the wherewithal to make those decisions and decide how best to protect the rights and insure this vibrant part of the economy stays intact. One of the things that establishing this account allows us to do with the department of commerce is reagan early track not only the contributions of arts and Cultural Industries to the economy, but the health of the artists and arts workers as part of that sector. Are 1. 9 million arts workers counted now as part of this economy. However, that is half of a million short of what it was back in 2000. We know that we still have to climb out of the recession. We are hoping that stocks like this will be good indicators for us in Going Forward and tracking and ensuring the health of those industries. This being such a big part of gdp, i would imagine that if it tracks unemployment, spending in the broader conversation, what is the data telling you about the u. S. Economy . One of the more exciting things that it tells us is that arts and cultural spending has a ripple effect. Example, to, for take Arts Software that involves creative and artistic content, video design, for example, it turns out that every new dollar generated in demand for those goods and services produces about 1. 84 on the dollar in the general economy. Ripple effect and the spillover effect with jobs, two. We saw that for just tv shows, for every Million Dollars of demand created, you see about more than 2000 new jobs created relative to the total economy. What we are seeing is that the arts are not only an integral part of the economy, located in so many different industries, not just the ones that come to mind when i say arts and culture. There are aspects of jewelry making, silverware making. As i said, movies, television shows, architecture and design. This vast range of goods and services contributes directly and indirectly to the economy. The Research Director at the National Endowment of the arts, thank you for sharing the data. I imagine that many did not realize that arts and entertainment were even bigger than they thought in this country. The Electronics World is gathering at the Consumer Electronics show to show off their cuttingedge technology. Jon erlichman is in the high tech haven, checking on all the latest gizmos, including the next generation of wearable devices. Have heard of google glass, Samsung Smart watch. We are entering a world of wearables. At the Consumer Electronics show there are a lot of wearable devices, so i figured why not wear myself out . This guy here is a wearable camera. The sensors inside tell it if the light has changed or if i have changed my speed and it can take pictures when i make those changes. This one measures heart rate variability. It is about 75 for the app. What is cool about it, it knows if im ready to work out. It will say hold on a second, wait another day for your big workout. This is not on the market yet, it measures fitness, sleep, and has an emergency button that i can push or go to alert by gvs. It will tell someone i am in trouble. Text our producer, micah, if i get into hot water. This is for kids or their parents, depending on how you look at it. Additional per0 month to place calls to your parents from this or have calls from your parents to this, but you can create this gps system where if kids go outside the safe zone, you can send them a message asking where they are. For my leverage, this is a wearable device that measures how sweaty i am and my heart rate. On my right wrist, this is 50, but they encourage you to purchase two of them to help get you in shape. Talking about getting in shape, i am feeling worn out. For bloomberg west, i am jon erlichman. I am a girl, right . Big, chunky stuff. You know i do not wear a lot of jewelry, anyway. You have got the fit fit. You have got a big watch, anyway. This is how older people tell time. Would you wear it . This is the pedometer from the company. Of theseen wearing one for about two years. Are you know how far you walk in a given day . I am monitoring my calories and what i eat and looking to see that i am burning off calories through running. Do you take the time to monitor all your calories . Would it not be better to have a device that just monitors your calories . It is called the brain. A couple of core Technological Developments are happening right now and are debuting at the show. They will be the most important things out of ces this year, i think, called lowpower bluetooth. It is built into some of the iphones and it allows devices like this to maintain a somewhat constant connection with your phone. You do not have to go through this difficult syncing process. Your phone becomes the place where you record the condition. Itself has a more sensitive accelerometer and it measures these kinds of things. If youre older, if your health is not that good, living alone, this might be legitimate . Or say four instance i am in manhattan. I have lost a lot of weight in moscow ball of years and i attribute that to this as i have made a much more conscious effort to burn more calories than i consume. I recall that from my wrestling days. Losing 20 pounds in 20 days. I did not have one of those, though. We are going to talk after the show. Tips. Ure you have good pimm fox, you are coming up in 15 minutes . I do not know how to follow two men talking about their weight. That is pretty good. Coming up i will be speaking to carry trainer, the chief executive of visio, known as one of the Fastest Growing Video Service providers. Freezing across the united states. How can alternatives to those icy conditions, for example salt on the roads . Try beat juice. Yes, beat juice. It has proven to be more environmentally friendly. Who knows, maybe you can taste it. All of that and more, coming up on taking stock. More with adam and trish, next. So, every year the Technology World gathers in las vegas for the Consumer Electronics show to debut their cuttingedge products. Some have been total legends, things like the vcr and the cd. Some, not so much. Take a look at these. The phone handset is the number one weirdest thing . That is the greatest thing ever invented. No radiation. I can feel nostalgic, like i am actually on a telephone. Matt bought one of those. For me, right. He bought it and it was some neon green color. It is great. I love it. It plugs into your iphone. It is not as good as the vibrating fork. That is curious. That is a little weird. I am not sure though that would go over so well. We were just talking about cory talking with cory, could they not create a device that measures how far you walk every day . You have a device that says that is enough food . I dont know. I am kind of overall of this technology stuff. You know . 20 blocks the onemile. If you live in new york city, how many blocks can you walk . That is how far you went today. You back here tomorrow. That is it for resmart. Street smart. Is approaching 56 past the hour. It means that Bloomberg Television is on the markets. Thats take a look at where markets closed the session. Breaking the losing streak for the major averages remember, we started off the year with three, the first time that happened since two thousand five. Lets say that we snap back, investors are looking forward to the release of the fed minutes on wednesday, as well as the pickup of earnings season into next week. And of course, the jobs report on friday. Turning to another event that we are looking at as it unfolds, Warren Buffett has made a name for Berkshire Hathaway by investing in companies with strong consumer brands, like heinz and cocacola. He is now testing the appeal of his own companys name with bircher Hathaway Home Services. Noah,re i am joined by who covers bircher hathaway and Warren Buffett. This is an intriguing story to me. We all know about cold where Coldwell Banker and century 21, but bircher Hathaway Home Services does not spring to mind, get it is a huge company. This is actually a business that he bought about 14 years ago. It randomly came along with an in 2000. Mpany through acquisitions they have steadily been growing. They are in a bunch of states, they are sort of national. The Interesting Development here is about one year ago, they purchased a franchise network. If you used to drive around and see prudential franchises, they bought that network. As a result they have been slowly introducing this new that, both to brokerages they own themselves and some others that are just ranch ices. Before about one year ago, the bircher Hathaway Home Services name . It did not exist as the brand name. How are the brokers using this . When they go out and try to shop services, people certainly recognize the name Warren Buffett. One could argue that the name, bircher hathaway, is not quite as wellknown. But how are they sort of leveraging that name . These are early days, yet. I visited with workers out in princeton, new jersey. They told me that it is a nice piece of their pitch. They can bring up Warren Buffett, bring up her chair hathaway as part of their conversation. Is one of thee it largest Financial Transactions they have in their lives, purchasing a home. They are certainly using it, but it is early days yet. When i say this was introduced last year, the brand took time to be rolled out. The one in princeton, the signs started cropping up and branding did not start until november, we are just about one or two months in. What are the flipside risks . Profit from this is what, 117 million annually . That is almost a rounding error when you look at bircher hathaway. As atting this out there consumer brand, is the risk that things will not go quite as you might hope . We dont know. Certainly their reputation as one of the key concerns for the man who runs home services. But this move, this strategy also enables several thousands of people who did not have access or were not talking about bircher hathaway to get some access to it for the first time. All right, thank you so much. Appreciate it. That is it for on the markets. This is taking stock on bloomberg january seven 2000 14. We will focus on alternative ways to do business. This is part of the Digital Media revolution. They offer a nontraditional way for automakers and consumers to connect. To go out to las vegas and the Consumer Electronics show