This comes on the heels of the down side we saw yesterday with a loss of almost 200 points. We will get to all of it, including the weak data that came out of china yesterday that is scaring people today. Another headline we are following, in colorado,. This is huge. This is what they need to be legitimate. This is a Seismic Shift in thinking regarding marijuana, access to bank accounts, and access to lines of credit. Are the banks concerned they could be unwittingly engaged in criminal activity . A lot to cover. If the treasury says this is ok, it will be a big deal. Also, how the Biggest Technology companies spot big trends and hedge against future competition. Lets get to the markets. Havehe entire hour, we very ritz holds barry. Also, hans. You know a thing or two about Global Markets and what is happening as we speak. He has served on the Steering Committee of the private Investor Committee for greece and was the cochairperson for argentine bondholders. Barry, what do you think is behind this . People are saying it is all about emerging markets and concerns over china. Is it more than that . I think people like to tell a story. They like a narrative. They want to find something to blame for events that may have nothing to do with what is going on. We have gone over 400 days about a 10 correction. That is a long time historically. The market is up 160 from the lows. We have had 10,000 dow points gained. We are giving back 600 and people are wringing their hands. I know this is a crazy thought. Up,times markets do not go and people need to understand that. It seems we might be taking a breather. What accounts for this . The dow is heading for the worst week since 2012. What is going on . I have to agree with barry. Our world is more emerging market and international debt. There was a lot of buying going into year end, a lot of enthusiasm. It probably was not warranted by fundamentals. Our selloff is technical. The currency moves, there are stories behind those. Overall, it is a soft trade. Argentina is getting whacked today. What is behind the move to the downside for the peso . They had two Exchange Rates in the country. They are bleeding reserves by intervening in the currency market. The official rate was around 6. 5 . The blue market rate was around 10. 5 . At a certain point, they were burning reserves because they do not have access to International Markets for funding so they had to do something. The Bloomberg Global poll Found International investors are the most upbeat about the Global Economy than at any time in the last five years. Europe is so much better than they were just a year or two ago. Two years ago, we were talking about dissolving the euro. That is behind us. Emerging markets still dicey. To adjust what we were discussing, before the talk of startedr, before rates moving up, a lot of International Investors were plowing into emerging markets fixed income. Even though it was a higher risk profile, the yield was much better. Now if you could get 3 risk free on the u. S. 10 year, people are saying i will take the same yield but with much less risk involved. We are seeing a lot of money come out of emergingmarket fixed income and go into safer, than a few years ago. That is part of the turmoil we are seeing in markets. Are you worried about argentina and the effects it could have on other places . Not really. You have what looks like a rational action by the government in the midst of years of irrational economic management. This is a step in the right direction. It will take pressure off. It may be a sign they will take tough steps to get themselves integrated with the international community. Does the president have the Political Capital to do that . She reappeared after being sort of nowhere. There is a lot of political jostling underneath her. She may not have the Political Capital nor the aptitude to take the decision, but they may have anyway. Ken will i buy it cheaply and get a nice yield . Buying emergingmarket debt is not a great strategy. You have to look at the credit. If you look at venezuela, you can buy oneyear what are we seeing . Was the highyield people when it around 10 last year. Without the risks were outweighing the 10 return we felt the risks were outweighing the 10 return. The white is argentina. It is an interesting investment to look at now especially if you think it is not going to be problematic. Gary from Goldman Sachs is not worried about argentina. He spoke to our team in argentina. Take a listen. We have seen movements like this before. Onember back to what we saw the tapering speech last year. We saw 100 basis point movement. We have seen the 10year basis points move. We have seen normal reaction to things that go on in growth markets. These are growth markets. They are not developed markets. Who hasestion for hans the currencies, what does it do for the exports or the United States or china as a big consumer of their exports . Been one ofhat has the structural problems argentina has had with overvalued currency. The trade balance was getting killed. Theevaluing the chris i currency, they will get more competitive. They have been lying about their inflation for years. Who does not . Lets be honest. There is a scale of lying. At some point, they have this pentup inflation. By devaluing it, if they allow inflation to run away, that is a problem. Devaluing prudently is not a bad way to get is that to be expected given we are now in a different kind fedthreat environment environment with the taper expected next week . The dollar could theoretically become stronger versus all these other currencies. That does a couple of interesting things. You have noticed the higher yield in the United States the past couple of days. Not quite as high as they were. Maybe that is alleviating some of this fixed income trade going back and forth. Beneficial tor is the economies who export goods to us. It easier for people to sell stuff to us. We are the cleanest dirty shirt in the hamper. Argentina, the currency moves they are making, is it enough to win back investors . Good question. No. They have the outstanding judgments against them in u. S. Courts. There is the issue with the paris club. This is one step towards argentina starting to resolve a lot of outstanding issues with the international community. There is room for breakthroughs in the next few months. Certainly by the end of this year, we think argentina will have would you buy argentine debt . You are betting they will make the coupon payments. Thanks for your time. We appreciate it. Next, this unbelievable story. The u. S. Attorney general out with big headlines that could turn the pot industry into a legitimate business. Suppliers may finally find a home for all of their cash. A major step for the medical Marijuana Industry today. Attorney general eric holder said treasury and Law Enforcement agencies will issue regulations opening Banking Services to state sanctioned marijuana businesses. This is a big deal. Retailers had to operate on a cash only basis. I spent a lot of time reporting in washington and colorado talking to a lot of the people that own these dispensaries. Their biggest frustration was they had no way to transact. All caps, no credit cards. You paid with cash. They had to deal with the cash. They had to pay their employees in cash. It is not easy to keep track of. There is theft and shrinkage. Who wants to walk to the bank hearing 20,000 . There is the stigma it is like scarface. Assuming you can even open a bank account. This is an interesting tidbit. That money cannot smell, literally it cannot stink. E tone man was using febreez get the smell off of the money. If it does, it is over. You will lose your account. We talked about this issue. Let me play an excerpt from that interview. There are a lot of people basis. Ng on a 100 cash unaware people who have been through over 20 banks in four years. I am aware of people who have been through over 20 banks in four years. How many have you been through . Two. For four years, we had no problem with our bank. In may of this year, they sent us a letter saying because of recent federal pronouncements, were giving you 30 days and shutting down your account. Is it wrong i expected that to be in a smoke filled room . Do you think i would do that . After the cameras. I think that is still the stigma associated with legal marijuana, that even juvenile idiots like me are still waiting for that smokefilled room. It hass changing because become so prevalent in colorado. It is increasingly normal. How can you have a business when you cannot even open a bank account . That has been holding the industry back. You mentioned banking. What is in this for the u. S. Banking system . A lot of money. It takes something that was a oftibilliondollar segment the cash and commodity business of of the but market out the black market into the sunlight. You know what that means . Taxes. Look at how many people are in prison today and the expense of maintaining people for nonviolent marijuanarelated crime. That is where attorney general eric holder was going in his speech yesterday. Maybe the effort needs to be geared more toward violent offenders as opposed to this. Instead of being a cost, it is revenue positive because it is being taxed. I can say this will make a big difference to a lot of these entrepreneurs trying to get their business off the ground. There is an estimated 500 dispensaries in colorado. Taxes on Recreational Marijuana are significant, in the range of 25 . The state stands to gain from this. If you are in an all cash business, i am not saying they are not willing to pay the tax, but one can imagine a situation in which maybe not all of that money is reported. Today the governor of colorado put out a statement. Hes obviously in favor of this. It brings this out of the darkness into the light. As the gentleman you just interviewed, they will find some place to park their money. There are so many more issues. There are safety issues with that much money on your property. You move to checks, legitimate accounting and bank accounts. It is not just colorado. It is washington state. California has medical marijuana. We are going to see this expand across the country. I think you are right. Good for dorito sales. That is good. Time for the davos global outlook. We will look at what has been going on this week in the swiss alps as the movers and shakers meet. One of the topics was income inequality. The business in davos when we return. Welcome back. We want to focus on the World Economic forum underway in davos. Were joined for the hour again by Barry Ritholtz. The question for this segment is, is davos relevant . Y. Lets ask barr why are you not there . It is an eighthour plane ride and sixhour train ride. I have stuff to do. There are important people. You get to shake a lot of hands. Networking opportunities. Unlike new york city, where there is nobody important. Quote aboutn had a going to davos. He describes the for him as a constellation of egos involved in of self adulation. There is something to that. The filipino billionaire said something similar. He said it is loaded with bloated selfimportance. Im here to do business not save the world. If someone promised me i could hang with bono, it might be worth the trip. But im not going to spend all that roundtrip time. They have classes of areas. I am not excited about being on the other side of the velvet ropes. Theres something to be said about these wealthy people talking about income inequality. Shilleress, robert still thinks it is important. That is what he told us. Take a listen. The Business Community is not always idealistic, but the people here are on the idealistic, socially conscious side of business. That is the future, i think. We need people like this. Ok. I love bob shiller. He is one of my favorite yale economic professors, one of my favorite economists in general. But it begs the question. If you have the ability to make those changes in your company, you do not have to go to davos. Marc made a good point. He said if you really wanted to help society, why not hold it in a place why switzerland . Why not detroit . Security in davos is supposed to be outstanding. They are concerned about protests and this and that. If you really want to do good for the world, maybe you could hold it in a place somewhere the food is great. They hold the sundance film festival. They do not take that to detroit either. There are reason why these to go to why you get these exotic, beautiful places and hobnob. At sundance, they are not talking about income inequality. Some of the movies are about income inequality. A lot of deals are done at sundance. I promise you more deals get done at sundance than davos. Is just athink davos photo up or something gets done . It does not hurt for people who do not get to see each other on a regular basis who are Running Companies and countries. I do not want to be too negative. It is fine they get to mix. A lot of positive things come out of it. At a certain point, it is funny to watch people take nice planes to talk about income inequality. A little hypocritical. I will not go that far. It is amusing. That is probably the nicest way to say it. Youre very diplomatic. If i were more diplomatic, i would be there. Markets get to on the. It has been a rough day on the markets. The dow is down 275 points. The s p is off by almost two percentage points. The nasdaq is off by two percentage points. All of the subsectors are in the red led by industrials, materials, and financials, all down over 2 . One mover we want to highlight is texas industries. They are and parliamentary talks to be acquired by Martin Marietta according to people with knowledge of the matter. An agreement could be out as early as next week. Texas industries has a market value of a most 2 billion. Welcome back to street smart. 30 minutes away from the closing bell. I am mark crumpton. I am trish regan. A lot of concerns about the Global Economy causing a steep decline in the dow. China, othert emerging markets around the globe. Google announced it will pay 3. 2 billion to acquire another company. Some have said it is too expensive and evidence of a bubble in silicon valley. Can you really put a price on innovation . Just today, the ceo told why he sold to google. We have been producing new products. We have wanted to roll them out to multiple countries. There are 96 countries where we do not sell. We cannot get there fast enough. Going with google, we could get and access to resources to allow us to move these products around the world more quickly. As a small start, you have to build all of it. Of course, the 3. 2 billion did not hurt. Barry ritholtz wrote about the deal. Googletained the risk to is not the cost of such acquisitions but the potential risk to the core business down the road if failing to do so. We will hear more from barry on that. Also joining the conversation from San Francisco, cory johnson. Barry, lets get back to your thesis. What is it . Google is criticized when they do these big acquisitions. They bought youtube for 1. 65 billion. People screamed. The stock price paid for the youtube acquisition. Youtube now throws off 5 billion in revenue according to variety. We heard the same thing about google buying android. Their thought process was we do not want our core business of monetize and search with advertisement to be eclipsed by somebody else moving into the mobile space, so we want a footprint in that. This has worked out fabulously well for them. Some smaller acquisitions worked out well. Some of the more technical technologies they bought, all have served a purpose to not allow them to be eclipsed by a thirdparty. Cory johnson, jump in. The Smart Home Market is promising, but it is unproven. What is googles intrigue going to do . Is a promising . I do not think we know that. They have spent a lot of money on acquisitions. Some have worked out fabulously. They paid relatively little for android to get what they wanted. Is of googles strategies they point to a couple of successes far back in the Rearview Mirror such as youtube and so on. They say that turned into something for us. They spent so much money over the years. The other part of the strategy is they say we were not buying the technology, that was a manquisition. I have talked to the people at google about this. They tell us we are basically paying 1 million per engineer. It seems ridiculous. They all have very different ideas. What is interesting about the est d isel is n they are looking at the data that comes out of the homeal. The selfhe nest, driving car, and google glass. Two or three of those are interesting. The self driving car makes a lot of sense. I think the google glasses are ridiculous. But they all give google data about how people use information. That is what they are after. Do you acquire it or build it . That is a good question. We look at things google has tried to build themselves. The google dongle, nobody even knows what that is. You can spend billions of dollars and years building you make thisor acquisition. The guys who built nest are behind the ipod and ipad, so youre getting the cream of the engineering talent in silicon valley. That is number one. Number two, this is a known product. I agree the data is interesting. But i also think google is playing defense saying at some point in the future, smart homes, smartphones, smart cars will be important. This may tie in with the robotics acquisition they made in boston. They want to have a footprint in the future. This is the classic dilemma of build it or buy it. Google has wrestled with it. Google had a huge center in australia they shut down. Released are creating startups. I think what they are looking at is a much bigger vision of a couple of places where advertising will be relevant. They recognize it will not be on the desktop anymore. These things are going out the window. Ou have to be on phones they will try to figure it out early. This is a 3 billion selling off more than 5 billion a quarter in free cash. It is pocket money. That is where you are wrong. You are saying the nominal cost does not matter bec