Reaching this reality and yes, cinnabon, you know, cinnabons, the smell of all of that frosting and cinnamon. Talking about how to avoid the same fate as the gorman gourmet cake maker crimes. First headlines from su keenan. Earnings season. Wells fargo came out with numbers this morning. Profits increased 4 on lower credit cost. Wells fargo pershare earnings failed to top the preceding quarters for the First Time Since 2009. Has agreed to delay it started in new york until monday. The court has granted an injunction against uber. Lebron james is returning to the Cleveland Cavaliers where he started his career. Cavaliershe cleveland a billiondollar franchise, double what the team was worth without him. Those are the headlines. Thanks very much. And his on lebron james to surgeon to return to cleveland. Joining me on the telephone is some of his clients include players such as richart tony felton. Great to have you on bloomberg. What does this mean for the future of the nba . I think it is great for the nba. Togives everybody something look forward to and i think it is great news and i think everybody is a winner, except for the miami heat. What do you think the deal will cost the Cleveland Cavaliers . You know, he is going to do a max deal regardless. Of value is worth hundreds millions of dollars to have him. He is a worldwide icon and i think this creates even higher push for him and his value. Do you think the cavaliers have to give up their firstround draft pick . What it is looking like. If they can pry kevin love from minnesota, it will be a win for everybody. I know as much as they dont want to do that, it is going to take that to get some inside presence to get a post player which will enhance lebrons game. What about the way he went about announcing this on Sports Illustrated online, an article he penned himself . It was done correctly this time. Last time there was a lot of bad feedback the way it was handled in this time he did it the right way. From being in the business, the all kind of felt he was leaning to cleveland because of the fact he was taking a long time to make his decision. If he was going to stay with the heat, i felt like it would have been done right away. It was like having a jury deliberating for a certain time. The longer he was out, more people got on the bandwagon he was headed to cleveland. What about the owner of the cavaliers. He made some harsh statements when lebron laughed and in the heat of them when he left and in the heat of the moment, they have patched that up and i think it is good. It goes to show no one is perfect and we all make bad decisions at times and in this case, they were able to heal their wounds. Does this do to clevelands chances to take a championship . You know, i think they are very close. The question is going to be how quickly they can mature and play as a unit. Probablyty is you have one or two guys who have been through that championship run. They are going to have to add some pieces. At the end of the day, for the next several years, they are going to be in a position to compete for a championship. Salary for the broncos to 72 million. That is the estimateto. Tony, anything the heat can do to respond . Theyre going to have to reload. Theyve got a climb and you always try to have a game plan in place for plan a and plan b. A lot of the chips can fall. May be headed to houston. It has been a great run for them. Is one of the great basketball minds. I am sure he will put it together. Thank you for joining us, tony dutt, joining us from michigan. Lebron james returning to the climate leaders. Reynolds tobacco is looking for some returns by trying to acquire another company andining the brands creating a major competitor for the industry leader. Byh details i am joined carolina chapelle and i want to go to robert proctor, joining us from stanford, california. His book is entitled golden holocaust origins of the cigarette catastrophe and the case for abolition. Tara, i want to begin with you. What do we know about any potential combination between them . We know the company has confirmed they are in talks. Sources are telling Bloomberg News the agreement could be announced as early as monday. Isdition American Tobacco going to somehow participate in this deal. They would be willing to keep their stake at 42 , helping the deal go through and we know that Imperial Tobacco in london is going to be a part of buying the assets that are going to be divested to appease regulators that will be concerned about come addition issues. Has anolds American Market cap around 33 billion. Lorillard 23 billion. Reynolds is the second biggest in the u. S. And lorillard the third biggest. Trying to compete with philip morris. This is coming as smoking is declining in the u. S. People are spending fewer dollars on cigarettes. The companies are trying to broaden their horizons and get into markets where smoking is a growing market. , if this dealtor does come to fruition, what does this mean for the liabilities a company like lorillard has assumed . A sense in which reynolds is buying a certain amount of risk. The companies they have absorbed over the past 15 years really made most of the cigarettes for the first to 60 or 70 years of the century. Phillip morris is pushing overseas and reynolds has sold their overseas business. And parthunkering down of that is from the fact lorillard is a menthol cigarette company. That is risky because we dont know if the fda is going to ban menthol. If we do, that will be bad for this merger. If they dont, it would be good for reynolds. Described the link between the cigarette companies, their liability, and the bonds that have been bought by investors linked to payments from cigarette companies. Is differentre types of risk in this business. Ultimately, these are shortterm investments. The industry is not strong over the long term, but theyve got for all threends of the big three now. And those are going to continue for a while. As far as the financing, no issues that would be presented to reynolds . It does not seem that way. They need help in order to do this. That has not come up yet. We will look for the deal terms on monday. Are we going to hear the word synergy as a euphemism for job cuts . Absolutely. The neighbors the companies are neighbors. They can consolidate operations and employees. What has been the attractiveness of tobacco stocks . U. S. Is hard to say in the because smoking is down. These companies are looking to new ways to grow. The dividend yield was one of the reasons why. That is a big reason, for sure. The last point having to do with this combination, antitrust rules, would they apply in the same way to Tobacco Companies as other Companies Given it is shrinking . Of course. And would make a duopoly that is one of the reasons reynolds would probably sell some of their brands over to Imperial Tobacco so they could threee some semblance of parties. And remember the history of this has been one of consolidation. Ever since the 1950s and 1960s. There are going to be some antitrust issues. What about the tax revenue collected on cigarettes . Is going to be imperiled by this combination . But that isure, definitely a topic for debate right now among the analysts talking about this deal and its implications. Thank you very much, my thanks also to robert proctor. Up, crumbs bakery empire has shuttered its doors. We will talk about how a food chain can avoid this situation. Weve got the president of cinnabon about keeping the business fresh and you will hear from the governor of north dakota on how oil has changed the states economy, giving it a fresh new look. This is taking stock on bloomberg. This is taking stock i am pimm fox. The Booming Oil Industry in north dakota. Megan hughes caught up with Jack Dalrymple attending a meeting of nations governors. She asked him about the prospects for the republicans in the november elections. I think it is going to be a very good year for republican governors on the ballot. I am one of the few that is not running this year so i am having fun observing. The issues are right this year. People are very concerned about what is going on with the federal government and republican governors should do very well. What do you make of Chris Christies leadership in terms of fundraising . He announced record fundraising for the Second Quarter after the bridge scandal. How do you rate him . He is a very effective guy, popular. I think he has great connections. I think and is an advantaged to be from a larger state. Probably from the east coast and he does a great job. The topicove onto right now in north dakota, the oil industry. North dakota is number two to texas in terms of oil production. This is a state that has seen a lot of poverty and that you have incredibly low unemployment. What is the prospect for the future . Where do you see growth . I think were going to continue to grow very nicely. We are the fastestgrowing economy in the United States for each of the last four years. The Fastest Growing population in the United States. And i see no end to it. We will continue to move forward. It is not just oil. Other industries are doing well also. Technology, manufacturing, agriculture, all of our industries are doing well. Are some problems with oil and gas. There was a Pipeline Leak over the weekend. Problems with trucks and farmland. Youve got flaring you can see from space. What is the state doing about those problems . We have big challenges, no question. When you are expending your Energy Production at the rate we are, we have gone from 100,000 barrels of oil per day six years ago to today one Million Barrels a day. So that is very rapid growth. And we have to invest a lot in order to keep up with that. Highways, law enforcement. We are doing the things we need to do to protect our quality of life. A new state gas capture plan that requires everybody to have a gas capture plan before they drilled. You said there has been too much flaring. The new gas capture plan is not entirely popular with the industry. They may find they cant get a permit if they do not have a plan that is ready to go. For a few, it will be a challenge. 2020 we will be capturing 90 of the gas in north dakota and that is as it should be. Whene have to keep in mind you are growing that rapidly, we have to build the infrastructure from scratch. We are not like oklahoma and texas that has had infrastructure 50 years. We have to create it as we go. We are catching up to it. We will take care of it. President obama is going to hold an Energy Summit in your state. What should the governments role be, and has the white house done a good job . Really the states have the growth of energy development. They are the ones who have embraced it, or not embraced it. But we have to keep in mind that really the right policy for the nation is in all of the above energy policy. Huge growth in Wind Development in north dakota, biofuels have grown rapidly. Industry vibrant coal that produces electricity for the nation. We cant just pick out our favorite form of energy to the exclusion of all of the others. Your vision for building on the oil and gas boom you have seen . You talked about corporate partnerships, ge. Where is your vision . The exciting parts, utilizing and taking advantage of this incredible resource, natural gas is going to be plentiful and affordable. We are going to be able to use liquefied natural gas to power a ,ot of things in north america vehicle fuels will change. It is a great opportunity for the country. Thanks to megan hughes reporting from the governors conference in nashville. Coming up, i will talk to the president of cinnabon on why demand for the 800 calorie cinnabon is still growing. And amazon wants to expand its testing of drums that will deliver packages to your door by air. Has some safety questions. Weve got the latest next. This is taking stock. I am pimm fox. The smell of a cinnabon, cinnamon, frosting, cinnabon has expanded to 1100 locations, 52 countries but cinnabon is not content with sweet treats outside the home. I am joined by the president kat cole. Thanks for being here. Of the bringing some samples, you have made everybody here at bloomberg, their eyes are watering. They are smiling. How did you get into the cinnabon business . I have grown up in restaurants since i was 17. Luckily as an employer, the food low barriers to entry and a lot of good people start in entrylevel positions and work their way up here it i found a home in global franchising and continued to move up and they also benefited from a lot of the restaurant associations that provide leadership and mentoring that put me in a position to be able to run such an amazing brand. You put that together with an mba from georgia state. Sellingame year we were my previous company, hooters restaurants, i was running the Georgia Restaurant Association and was getting my mba. Nights, weekends. You mentioned nights and weekends. These are fulltime jobs. You breathe and eat. Absolutely. Especially when you are global, and you have a franchise base. Investors,couple of but hundreds of Franchise Partners all over the world. To 24 hoursds exist a day and you have to build a team that understands that. One of the things we dont necessarily need is an 800 calorie cinnabon. And us how that came about what things you are doing. Cool story is such a of entrepreneurs getting it right. They started the brand and partnered with a baker and chef and came up with the recipe. They stayed addicted to quality, expanded it and started franchising and grew all over the world. Cinnabon has had four owners in its 28 years. To have been successful through that many owners is interesting. A few things have driven the commitmentthe roll, to quality, and actually menu extension. Made us famous, but it is only a portion of the menu today. Bites are so tiny and cute. That type of variety along with the beverages have helped us keep people coming back even though we are famous for the big one. With your Business School background, do you think crimes is going to be a case study in why you should not have gone public or you did not expand in the way that would be successful in the marketplace . Crimes will be an interesting case study. It is a sweet brand, even though its Retail Locations were only in 50 spots. That is not large by most that national standards. Pop have such a place in culture. Despite a popular brand, it does not mean the economic model is working on the inside and just because you have gone public does not mean it is something that can be a concern. Kat cole, cinnabon president. This is taking stock. This is taking stock. I am pimm fox. Lets go to su keenan. U. S. Budget deficit so far this fiscal year was the smallest since 2008. A stronger economy bolstered tax payments by consumers and businesses. Another deal between drugmakers. Scheier has been negotiating after itago beginning raised its takeover offer to 51. 5 billion. A stock was suspended from trading appearing to have no members, no revenue, no assets and only one employee. The stock has risen as much as 36,000 percent from midmay. Those are the top headlines. Back to you. Very much. Amazon. Com knows how to sell a lot of stuff and now it is trying to sell the faa on a plan to expand the testing of its delivery drones. Amazon says using aerial vehicles is one invention we are incredibly passionate about and we believe customers will love it. But will safety officials love it . Joining me is michael toscano. Thanks for being with us. Exactly what the current rules and regulations are governing the use of Unmanned Systems. L, right now the faa does use ofor hobbyists Unmanned Systems but there is an opportunity from a commercial technologyake this co and use it in a different way. The 13th entity that has asked for an exemption from the small Unmanned Aircraft systems that is being proposed to utilize ander demonstrate and test to see if it can be utilized in a safe manner. This has been used by utilities to by check transmission lines or to do testing work. Is that the first step in general approval . There has been certain cases where the faa has had an monitoringor certain capabilities. For the most part, what you are seeing is earlier this year the faa voiced and made it public they would be entertaining from the small Unmanned Aircraft system rule that is going to be coming out in november. Once they put that out, there will be a 90 day response willand then they adjudicate those comments and come out with a small rule. That may be a process that takes up to you and a half to two years. So not to lose the momentum in the possibility of using light utilizing this technology, the faa said they would entertain exemptions that can show a safe case to utilize this technology. 13 exemptions have been filed already with the faa since may. Is the 13th. Amazon is looking to be able to take the technology they have right now and demonstrate at their facility in seattle it can be used in a safe way to allow the delivery of packages that weigh less than five pounds. You mentioned other countries have rules and regulations governing the use of these devices. Where should we look for some guidance . Canada,rope, australia, and actually some places when the monsoon season hits, 85 of the roads are wiped out. How do you get medicine and food and logistics to those people who have been cut off from society . This is one technology they are looking and to do that. Some of thed be parameters the faa would have to put in place to make sure this is safe and viable . You hit upon it, safety. For any unmanned system. The question is how safe we can we do it and what are the environments which has the aptitude for this to be utilized . You look at the movie industry, agriculture, power lines, gas lines, you look at what amazon is looking to do. The systems do well for the four and Difficult Missions humans face every day. It allows those men and women to do their job best and in a more effective than lifesaving way. Estimate for the value of this industry in the United States . Association did a report a year and a half ago that said within the first 10 years of will able to fly, we create 100,000 new jobs and have an 82 billion economic impact. I think those estimates are actually low and as we started to feel this technology, we need to feel the technology to be able to understand the things we dont, just like with cell phones. Who would have known apps would be a sixfigure salary. Theichael toscano, president of the association for unmanned Vehicle Systems international. Coming up, the california trout d the u. S. D crushe almond supply. And i will speak to one lawyer turned famous chef and er on what it takes to succeed in the big apple. That is next. This is taking stock. i am pimm fox. The price of almonds has jumped 75 and is expected to go higher use 70 ofond farms californias water and if you have been paying attention, there is a drought. Im joined by the owner of nonstock, and our agricultural expert. To have you. Tell us about what is going on in california. You have a state that is in a forght and that is bad news almonds. Almonds are the most valuable tree nut in the United States thecalifornia has 82 of almond crop and just at a time when they are becoming more you have exactly the weather conditions that discourage them from being grown. Recipe for price increases and that is what you are getting. Is that what we are going to see . I am not so sure. This is going to be the biggest crop ever. I am hearing pricing is going to be flat and the crop is going to be up over 4 . Will there be any longterm damage to the crop . It is hard to say. Nobody knows what is going to happen to the water supplies. They are at their lowest level ever. It is hard to say. Almonds, it use of is used now to make milk and other kinds of food items. Is that having an effect on the supply and demand . Well intod it plays the point about the large crop. Even though you have an increase in supply, you also have a bigger demand that has been pushing up these prices. They are used in china, india, people used to not like almonds because they were considered high in fat. Fat is not considered to be bad anymore. What about the farmers and the cooperatives that manage these almonds . There is a lot of incentive to keep growing almonds. They take a long time to grow. You take a look at some of the francisco, in san you have seen editorials talking about these crops take a lot of water. Why cant you grow some vegetables . Jeff braverman, as the owner of nuts. Com, what are the trends . Isthe most popular nut probably almonds. Almond flour has been a huge driver of our growth along the lines of the gluten free wave. We see that continuing. Think there is going to be any substitution from any other part of the world . Said if you have a drought in california, youre going to have a difficult time sourcing almonds. 80 of the crop is from california. They are planting more and more acres and the yields are up. Whenever we think of agriculture, there is a supply chain and part of the cheney involved bees. Yes, part of the chain involves bees. Yes, colony collapse disorder has been in the use. About half of all u. S. Commercial beehives converge in california in the year. As you have seen drops in the you have seen, Pollination Services become more expensive and that plays into the supply chain in a minor sense. Almonds are a good bellwether to see about how that is doing. Jeffank you very much, braverman, the owner of nuts. Com. From famine to feast, who wins the trophy for meatballs . Chef a judge on iron and has a line of appliances. Donatella arpaia, thats him. Thank you for being here. Ares talk about where you in the world of meatballs. I did not know you could get a trophy for meatballs. Ive got two. The new york food and Wine Festival and i developed a line of frozen meatballs which i sell on hsn and they also serve in my restaurant in the hamptons. Popup restaurant. Is a shorttons season. So it is a way for restaurants to go into a space and create an environment. With my team for the like myaking my food, meatballs and we are having a great time. What are the glam pops . Desserts need to be playing full playful and fun. This started with my original restaurant i had and i created the cheesecake pop tree and glam pops. So my executive pastry chef makes these beautiful cake pops and we serve them. Might bethe food playful, the Restaurant Industry is anything but. You are involved with three restaurants. Yes, the upper west side, a greek restaurant. It is very popular and successful but because it is priceline conscious and we do a lot of highvolume and are looking to expand. I also have siena and heartwood, which was donatella, and that is still happening and it will happen in a couple of months in outside of new york and inside new york but in a more iconic location. Iconic location. What does that mean . You know, looking downtown in the World Trade Center area which is going to become something significant and i definitely want to be part of i am a new yorker attitude. So definitely there. And a store on 34th street. You might know about a store that is famous on 34th street. I am moving into an upscale Quick Service model. Upscale, Quick Service. Why is that the future . People dont have time . Yes. It is a busy society and economy. Very big. Ity is people of the lower economic scale want to eat and they want good food. Look at the success of chipotle. Fresh, fast food. That is one example. With also have sued due what you are doing with Home Shopping network. Can you tie that together with books, this ise an empire. Building a lifestyle brand. Last time i was singled, i am now married and a mother. And you havenges to make it to deb and i saw the trends of the restaurants. I have been doing restaurants 15 years. To age myself. I started when i was 12. I was a boy are briefly. You need to be just to be in a lawyer briefly. You need to be to be in the restaurant business. Backgroundwonderful for me. I am building a lifestyle brand. I am on facebook and twitter and how teaching women and men to cook and do it with confidence and ease. It is really a Good Business model for me and i am having fun. Traditional dining does not mean appetizer, main course and dessert anymore. Sharing, and quick serve. Has then changed the kind of recipes youre going to make . Who thought you could just sell meatballs . Meatballs are one of the most iconic foods out there and they are poorly executed in a lot of places. I beat out many top chefs, many of whom are my friends. With my mother, hi, mom. Her recipe. So the meatball business is a huge thing and it took me two years to create it. Is extremely high quality. It tastes as if you are cooking it at home. I tell women or men to take credit because you would never know it came out of a box. They are fantastic. Hsn is a wonderful place. Ssman is very vested in building brands and believes in my brands and i am all about bringing Authentic Products to men and women who dont have time to cook, and i am one of them. You use your own frozen meatballs. I do. It is my husbands birthday. I dont have time. Youre not supposed to tell him that. Happy birthday to him and congratulations to you. Go ahead,arpaia, meatballs. Looking for a little privacy . Look no further than an office. For introverts are next, creating space for some undisturbed quiet time. Next on taking stock. This is taking stock. I am pimm fox. Open Plan Office Space is great for collaboration and having a community. Where do you go if you need solitude to create and think . Latestg privacy is the of the etc. Section and joining me now is great that it who wrote the story and katie hasse, of the Office Design firm steelcase who has a quiet space units. Great to have you here. Quiet spaces at work. This does not seem to go together in the same sentence. Open planin an office. Most people i do. The reality for most american workers. And it is not a perfect Work Environment for a lot of people. Workers have never really loved this and there is an increasing amount of data that suggests it is bad for productivity and peoples happiness and health. Helpedlcase, which design the open plan 100 years ago, he is getting into the business of creating some refuges. Lets talk about what you have done with this idea of office quiet spaces. We have at steelcase been studying Human Behavior the past 100 years and what we have found in the past five years is privacy has become the number one issue. 95 of people say they want places but only 41 of people have them. Have beensame time we studying privacy, our ceo met the author of quiet at ted and realized she was studying a specific group of people that needed privacy, introverts. They found they had many synergies and were able to come up with the spaces by steelcase. Drake, what kind of human experiment did you get to conduct with yourself in the world of a quiet space to work . I went to chicago where they just rolled these out and they have them in their display area and so i worked in one of the spaces. I used one of them to decompress. I had a small meeting in one of them. Did a little yoga. You did some research for a story. Do some yoga. Something i am not comfortable doing in my openoffice. Did you feel better . Obviously it was staged. Yes, it is nice to have privacy. The one thing i will be curious to see is whether offices will install enough of these that people arent fighting over them. I can see them being popular. Is this expensive . Yes, absolutely. So they start about 15,000 but the thing to remember is it is allinclusive. It includes the state of the art wall system, the furniture, lighting, the surface materials, everything. And they are designed to give introverts choice and control over where and how they work. So when you think about that cost versus the cost with your introverts not being able to reach their potential, it becomes equal. Katie hasse, thank you very much, from steelcase in chicago. Privacy in the workplace is the focused of the latest edition of bloomber businessweeks etc. Section. I am pimm fox. Live from pier 3 in san francisco, welcome to bloomberg west, where we focus on innovation, technology, and the future of business. Im emily chang. This hour, we take you inside to look at a Ride Sharing Service in new york city. Cars thatmous for its was supposed to start its service in queens, but that is not going to happen. They claim that lyft