Customer service, just a corridor away. I will introduce you to the robotic bellhop that is already transforming a hotel into a hightech haven. Fast casual dining. This is a category that has been dominating restaurant growth. We are going to meet to experts who want to transform your night out. First, lets get headlines from su keenan. We start with bank of america. Shares gained more than 4 , the largest increase since may of 2013, this after the company agreed to pay 245 million on s p allegations. And failed to disclose mortgage losses. That resolves part of the 16. 65 billion home depot has named its next ceo. The homeimprovement retailer says the new ceo will take over november 1. Craig has overseen the companys online businesses. Finally, old navy seems to be steering the gaia the sales shipped for cap. Gap. That is the latest. The s p 500 gained today on economic reports, as well as Federal Reserve minutes released for july. Janet yellen is going to give her firstever speech as Federal Reserve chief tomorrow at the jackson hole wyoming symposium, entitled economics reevaluating the labor market. Mike mckee is there, and he joins us now. Tell us what we can expect. This is sort of an academic conference. It isnt clear how much detail she will go into. It isnt clear whether she is going to talk about fed policy. She may outline the latest thinking on her dashboard, where we are with the Economic Indicators out there, but odds are she are she isnt going to say anything that will move the market. Todays Market Reaction after yesterdays hawkish minutes, also important. I was talking with the president of the kansas city fed, the host of the conference. She said they are keeping a close eye on Market Reaction to what they say to make sure that once they do Start Talking about raising rates, it doesnt throw markets off course. Here is what she had to say. It looks like so far between communication from the committee, the market has responded, and the fed has not reacted to the movements in data we have seen but kept a more longterm focus. So far, so good. When we move into the next phase of our stance of monetary policy, there could be some volatility. We have been at a low for a long time. It will be important to communicate and to be communicating how the path of Interest Rates will go. Of course, george dissented seven times last year when she was a voter, hoping to raise rates earlier. Now she says she is on board with consensus program, and she will wait to see what happens with the economy. Michael, are all of the Federal Reserve chiefs of their . Chiefs there . Are they all singing from the same hymn sheet . Charlie plosser was the dissenter at the last meeting, and he eggs the fed should move sooner that he thinks the fed should move sooner. Those who really matter, janet yellen, bill dudley, they are still mid2015 or later depending on how the economy develops. Drew matus made in important point on Bloomberg Television this morning. They are talking about why they think rates should be lower for longer right now. It next year and see where the economy is. Weve got 12 of the 17 members here. We will have no shortages of opinions. We will be following your coverage. Bloomberg economics editor, michael mckee. You can check out the latest economics data on bloomberg. Com and read more stories about the s p 500 rising to a record amid optimism that the Federal Reserve is committing to supporting a strengthening u. S. Economy. From the question of when the Federal Reserve will raise Interest Rates to wall streets own pay raises bank of america said it is going to boost salaries by 20 next year for junior staff and their trading and Investment Banking divisions. Goldman sachs is said to increase salaries for its junior staff. Paul sore barra is the president of alliance consulting. He has joined me to discuss this issue of pay raises. Why are wall street firms raising the pay of their junior employees . Its mostly about retention and being competitive. We side with Morgan Stanley last month for some midlevel bankers. Raising base salaries. Its also about cash flow. More bonuses are being deferred, even some of the junior level. Higher salaries allow these bankers to have a more predictable cash flow. You know, some kids coming out of college want to go into the tech world. Banks are trying to be competitive. Is this about competition or is it about the changing way in which people in the Banking Industry get paid . Its a little bit about competition, and i think its also a little bit about getting back to normal. For a number of years, the training programs, the analyst programs were either scrapped or greatly reduced, and therefore, the bench of talent and the people who have normally been recruited at the investment banks and banks, its not with the traditional levels were. The bench is much weaker now. They need to rebuild it and attract people. Is that because they have laid off many people as result of the 20072008 financial crisis . It is because of layoffs, and it is also because of not doing the campus recruiting in the same quantity as they did in the past. Michael, you mentioned competition for qualified individuals, particularly with from technology companies. With a typically pay a higher salary, or is it the luer of Stock Options and potential for outsized riches . I think it is the luer lure of the riches. Wall street trying to counteract that with a more stable steady salary. Is there a possibility that you are going to see an even greater increase in salaries from other banks . Everybody can just pay a dollar more, whether your bank of america or goldman sachs. Somebody else can come in and say, we will pay you 5 more. [laughter] i think there will be some race, but thanks for still under significant cost pressure. I dont think you will see its viral too far out of control. Also, the other factor is the buy side. Hedge funds and private equity firms have been very aggressive in pushing people from the banks. What is the buy side doing . They are hiring talent from the street. It is a great place for people to be trained, coming out of the university. They work for a few years for a great bank, and investment banks give great training. At that point, hedge funds, private equity firms, and to some extent, the tech world, people are lost by the banks. What kind of money are we talking about . It varies greatly among individuals. Im talking about entrylevel. Youre talking about a 20 pay increase on what kind of salary . I believe the salaries are in the 70,000 90,000 range. Is that what youve heard, michael . That is what we would say is typical for somebody coming into one of those positions. I want to thank you gentlemen very much. Thanks very much for your insight. You can checkout the latest Economic Data on bloomberg. Com. A reminder Janet Yellens first speech as fed chair at jackson hole, wyoming symposium will be tomorrow carried right here on bloomberg. Coming up, the gentleman known as the wolf of wall street will be joining me, and Jordan Belfort is working to repay millions of dollars that he defrauded from investors. Find out what he is doing now. Does Customer Service really need a human touch . Get ready. The robots are coming. To a hotel near you. The man known as the wolf of wall street says hes turning to repay investors he defrauded. Jordan belfort is embarking on a motivational speaking to her, and he says all the profits will be used to pay back his victims. Jordan belfort joins me in the studio, along with keri geiger. Just bring people up to date on what it is you are doing. For the last six years, ive been traveling the world and doing speaking, some motivational speaking. A lot of it is more about strategy for entrepreneurship, sales, venture capital, things like that. As you said, now im embarking on a massive u. S. Tour, about 5060 cities over the next 24 months. Im giving all of the profits back to investors who lost money 20 years ago. That is the story. Im really excited about that. A lot of discussion that weve been having today is, why over the last several years has there been no criminal prosecution for the top ceos on wall street . You went to jail for financial crimes, and obviously paid the price. What is your take on that . Banks are paying huge fines, multibilliondollar fines, but we are still not seeing criminal prosecution. I think that the problem is is that a lot of the laws that were broken are in the gray and difficult to prove. What happened, you have this incestuous relationship between the government and wall street. People on wall street went to the public sector. They changed the rules and allowed these loopholes that people on wall street jump through. While there was certainly a lot of illegal action, a lot of it was more taking advantage of loopholes. It was in the grave. There were crimes committed, for sure, but very difficult to prove. The government, rightfully so, has to pick their spots, and they dont want to fight losing cases. Should some people go to jail . Im sure. A lot of those cases are difficult to prove on a criminal level. The burden of proof on the civil case is much easier. You see bias towards bringing the civil cases with large fines, versus wasting resources on kernel cases. You spent 22 months in prison for your actions. You have spoken about reform. Im wondering if you could give us some thoughts as to what that was like, and what did you decide was a good way to reform yourself . My past was different from most. What happened, if you saw the movie or read the books, i had a massive drug addiction. I wouldnt say the drugs caused the activities that happened on wall street. I started off doing things right and then started breaking the law with stock manipulations. When i got sober, i kind of looked back in fridge out at some of the things i have done. I got indicted a year later. When i went to jail, that was certainly a point where you get to examine your past. Then i started writing a book. When you write, it is almost hyper therapy where you get to reexamine your actions from above and kill back the motivations and see what was driving you, the good, the bad, and the ugly. I was able to get a wholly different perspective on myself. When i emerged from jail and finish writing this book, i was to the point where i knew i would never do anything again that was in the gray. I was raised by a great family. I didnt go out into the world to commit crimes or fraud. It was easy for me to come back to the person that i originally was. Was there a Tipping Point . As you said, you didnt start out wanting to commit fraud, but was there a point that you can recall was the left turn to albuquerque . It started with one gigantic rationalization that it was ok to hide a trade that didnt make sense on paper. It was an older person who was around for many years. In my heart it was 28 years ago i knew it was wrong, and they shouldnt have done it. I said, i will never do it again. Once you take that first step over the ethical line, what happens is your line moves. The next time you step over, you step over a bit further. The next time, further. Before you know it, these tiny imperceptible steps, you are doing things you thought you would never do. You are associating with people you never thought you would associate with. There was a point when i realized that things have spiraled so far out of control, and at that point, it got away with me. The firm was massive. I left the firm in the end of 1993. I lost control of it. It doesnt mean im not responsible. Im the first person to take responsibility. You get so deep in something sometimes that the abnormal seems normal, and the normal seems like a distant memory. Can you stay with us . Sure. We are going to have more with Jordan Belfort and keri geiger. Coming up, we will talk about using the internet to help brands connect with celebrity endorsements. Youll meet the chief executive of the company and the recording artist kendall schmidt. Thats next. This is taking stock on bloomberg. Our guest is Jordan Belfort, the focus of the movie the wolf on wall street starring leonardo dicaprio. He spent 22 months in prison for defrauding investors. Joining me also, bloombergs own keri geiger. You have been able to see wall street as someone who ran a firm. You have been able to see it as somebody who was convicted and sentenced to prison. Youre now able to see wall street as somebody who has come out the other end. What is your description of how wall street operates today . I think things have changed fundamentally since the gsc. I have friends who work at some of the big firms, and i know there have been massive changes in the compensation plans. Places like goldman where they hold back a huge portion of commissions to make sure the trades end up working out over the fiveyear horizon. I think that is a really good thing. I think there is more work to do, but again, i think the danger is that in the beginning, when there is a cataclysm, everyone says, we are going to focus on ethics and retrain everybody. They slowly start to forget, and stepbystep how stepbystep, it is back to the way it was. There needs to be some vigilance. When i give these talks around the world, i say to people, what you hear every once in a while doesnt really make that much of an impact on you. When you hear every day, that makes a massive impact. Repetition, learning, focusing on ethics as well as making money they will always figure out how to make money focus on the ethics, and the balance will be in the good stuff. Wall street to set a trend over the last week. Up to 20 pay increases for midlevel and junior bankers. Obviously, people still go into banking because it is a great way to make money, something that attracted you to wall street. Now we see people, there is a lot of competition for talent a lot of these pay increases are related to people going to Silicon Valley and sexier industries to make just as much or more money. If you are entering the workforce today, would you be developing apps and trying to sell them to venture capitalist, or is that an industry that you think would attract you . It is hard to say. Anyone who was born after a certain date will never truly understand the internet. Im too old. My kids intuitively understand all of the apps. If i was that age, i probably would be looking at that internetawebsite driven businesses. The upside is so massive. Listen, i always think theres going to be amazing money made on wall street. There is nothing wrong with that. I dont think anybody in the u. S. , regular citizens, the grudge bankers making a lot of money, provided they create value. The problem is, they make money and they blow up the economy. As long as they are doing the right thing and creating value, there is no issue with brokers getting paid a lot. It is only when they are making money and not creating value. As long as the focus is on that, i think its ok. Cant avoid the idea of restitution and paying back. You are going to use the profits from your speaking tour to pay back the investors you defrauded. Where are you along in that . How long is this going to hang over you . I have paid back a lot, and i intend to pay back an awful lot over the next way for months. I hope to pay it all back. I wish i could project exactly how many people will show up to all of these talks you have already paid back millions of dollars . Tens of millions, 1213 million so far. The book and money and movie money is going to investors. I want all the money from the u. S. That is not part of it. The overseas is separate from the u. S. . Its a separate tour. I should live a good life and payback. I think that is what redemption is all about. I dont believe people should be with and flawed. I am thankful. Im grateful that ive been able to build a business to where it is not. I can do so much business in the u. S. And give the money back. I want to thank you very much for spending time with us. Jordan belfort as he begins his motivational tour. This is taking stock on bloomberg. This is taking stock. I am pimm fox. Lets go right to my colleague su keenan in the newsroom. Lets start with argentina, a plan by the president to exit default is getting some pushback. A u. S. Judge has ordered argentina not to take foreign bonds locally. An emergency hearing was held in manhattan today. What the judge would do to enforce the ruling is less clear. The country could simply refuse to pay. Stay tuned. Defense secretary chuck hagel says u. S. Airstrikes have helped iraq he and Kurdish Forces regain their footing in iraq, but he expects islamic militants will recruit and stage a new offensive. General Martin Dempsey says it is possible to contain the militants, but he says it cant be done permanently without going after the group in syria. Finally, both u. S. Health workers who were infected with ebola in liberia have been released from Emory University hospital in atlanta after fighting off the potentially deadly virus. One of the victims cant brand play called it a miraculous day. He said he is thrilled to be a live and be reunited with his family. Thanks very much, su keenan. Automation, efficiency, accuracy. Information Technology Infrastructures are run by automatic learning Technology Rather than by people. The idea comes from the founder and chief executive of ip soft. He joins me now. Thank you for being here. Give us an example of how learning technology can be applied to the world of business process outsourcing. That is very insightful. The fundamental question of that, when you are running your processes, they should be run by people. Outcomes should be provided by robotic, automated process processes. The entire platform for delivery of these processes is shifting. It is shifting from peoplebased delivery to cognitive, agentbased delivery, so much so that the infrastructure of tomorrow is going to be managed not by people but mostly by expert systems. Similarly for business processes, youre going to find cognitive agents are going to take a predominant role. Give an example for people who may not be familiar with business process outsourcing. I know youve got clients all over the world. Youve got clients in government, i. T. , health care, media. What would be an example . If you take the largest investment house, you think about its trades, its Financial Advisor help desks, and you think about claims processing, one of the largest insurance companies, or a Large Media Company and you think about its Service Desks you can see that there is a shift happening from people. Replacing people with cheaper people. This decade, the trend is to replace people with expert systems. That is the only way you can get consistent and sustainable value creation. For an Insurance Company and an individual wanting to file acclaim, they would go online, and rather than speaking with an individual, there would be a stepbystep process that would walk them through the claims trajectory. Based on their answers or the various information that they give, then what . That would send you in a different direction, and that would tell you how far along in the process you have come. Exactly. Why do we find ourselves yelling with representatives . Operator, get me out of here he sensually is walking you down that tree and not really understanding or learning from the interaction. That entire paradigm has shifted. I isbr i cognitive agent mimics how a brain thinks and mimics how synapses are formed in the human brain, and it tries to be able to learn from the experiences it has had. The Customer Satisfaction you will see that is derived out of such cognitive agents is, in many cases, superior to the Customer Satisfaction derived out of the manual transactions. Who is amelia . Amelia erhardt was one of the first pioneering women. Amelia is a cognitive agent. Amelia is the encapsulation of a virtual agent who can mimic the human brain and can do the business process tasks you assign it to do. Amelia is designed to be, if you permit me a moment of immodesty the purpose of amelia, machine has to free man monday and chores. It has to be the most faithful servant known to man. Amelia will allow man to be able to indulge in more creative forms of expression, such as what you are doing right now, as opposed to doing the routine business process tasks. I want to thank you very much for sharing your insights with us. The rise of robotic labor is checking into hotels, and this week, a robotic bellhop called butler is starting shifts at a hotel and slept in valley, california. For more on the Company Behind the butler robot, im joined by steve cousins. He joins me from san francisco. Tell us about this robot. Who came up with the idea . Weve been working for the last maybe 68 months refining this idea. We knew that robots were able to be around people, and we think we are finally ready to move the modern factories where they were not necessarily safe and kept behind the cages, and be able to come out and help in the real world. We have demonstrated this over the last seven years, and then we started this company to commercialize this idea. What does this robot butler cost . We havent announced pricing yet. Where is this robot made . We have been making the prototypes here in silica in valley and trying them locally at the cupertino loft hotel. Give us some idea of the tasks that is automated butler, this robot can perform. This robot butler is an extension of the front desk staff. The staff are usually busy and get calls to deliver all kinds of things to rooms, and the robot butler takes on the delivery part. It takes a toothbrush if that is what somebodys asking for, or a bottle of water or a sandwich, and the front desk agent will take the call, put it inside the robot, put in the room number, and say go. The robot will call the room and tell the guests at the deliveries outside the door, and when they open the door, they will deliver it. What about the training that goes into maintaining this butler, this robotic device . The device is actually pretty simple. Its job is to not hit anybody, not hit anything, and not get lost. To train it, we have to make a map of the building and teach it how to avoid obstacles. The avoiding obstacles part is something we on we refined, but it is a pretty well understood technology. Each robot is in a different location. How do they talk to each other . The robots dont name each other. The marketing executives get to name the robots. Do you have a specific example where you have used his butler to help you do something . I havent stayed in hotel where there has been a robotic butler. This is the first one of its kind. How does it get program from one location to another . There are different requests from different guests. Once you have a map of the building, we have labeled all the rooms, and we can tell the robot, go to room 305, and it makes its way. The learning of the building is a onetime task. Instead of hotels, is it possible this robot would go into such places as Nursing Homes or other types of care facilities . Absolutely. Anyplace where there needs something to be delivered on an ad hoc basis is an opportunity for robot. Thank you very much for joining me, steve cousins from san francisco. Coming up, using the internet to help friends connect with celebrity endorsements. Have you had a rough day and are looking for some comfort food . I will talk to the founder of milk shop on why its comfort food its comfort food is running all over. Ford motor companys as it has a better idea for revving up the sales of its luxury lincoln brand. The automaker has signed a twoyear endorsement deal with Actor Matthew Mcconaughey for ads that introduce lincolns new mkc sportutility vehicle. The business of celebrity endorsements is being changed by the internet. Ted murphy knows all of this to well. He helps link celebrities with brands. Celebrities such as recording artists kendall schmidt. You may know him from the nickelodeon tv show big time rush. How does your company work . It builds a Technology Marketplace that connects brands with people who are creating content through social media. If you are a blogger or tweeter and you are creating content, you have the opportunity to get paid to talk about anything from makeup to cars to soda pop. Or to music . For to music. How did you end up meeting ted . We met about a year and a half ago. He knew what i was doing as an independent artist. Big time rush is signed to a major label. Sound amp is a way for companies to connect with artists or bloggers, stuff like that, anyone who has any sort of social influence, and even fans who have a big social influence. It allows them to connect and have them advertise something from their brands easier than having to go through 10 different people. They can connect to the person via email. They can Exchange Words about what they think theyre tweet is worth. This is almost like trying to create an ecosystem where wordofmouth is turned into a product or a service, but it uses the internet to connect people, so it doesnt matter where you are. Yeah. Hes got 2. 2 million followers on twitter. That reach is incredibly valuable to advertisers. They are willing to pay thousands, tens of thousands, hundreds of thousands of dollars to the right people to talk about their brand and to share that. What happens is, once they put it out there, it gets reshared and retweeted and reposted and favorite it. Is what advertisers are looking for. They want to be part of the conversation and social fabric. What kind of money are we talking about . There are a lot of people making pretty good money doing this. When you first start up and youve got 500 followers or 1000, you are going to be making lets say you have 2. 2 million. What is someone who has 2. 2 million i will let him speak to that. Is it a significant amount of money . It definitely is significant. Im doing everything independently as an artist. I am a oneperson business. I know record sales arent what they used to be, and it doesnt translate to the money that an artist needs to continue their career. Being independent, i need other avenues of income, and this is one made one way for me to get income to get a whole album mastered. These are things the huge company was doing, and now i need the resources to do it myself. Does this get rid of the agent to a certain extent . Wasnt the agent the organization who was going to connect with bigtime celebrity endorsements . I suppose, but i think if something was overly complicated, they would want to connect with somebody representing the person. For a simple deal, and its not even just one tweet it could be a months worth of content i would imagine if it was a large thing, there would be contact with representation. Especially with a really big artist. You mentioned some artists youve worked with, kim kardashian, for example. What makes someone worth being a celebrity in terms of brand . You mentioned they dont necessarily they have to be an artist. It is really about, how big is that audience . How big is that fan base . What is the engagement like . When kendall doesnt tweet comments not uncommon for hundreds or thousands of people to retweet at and click on it. When we did our campaign with kim kardashian, it was for armani jeans. She actually crashed the server. That is the type of thing that brands are willing to pay up for. The great thing is that its marks these new threads of conversations that you arent going to get from a banner ad. Thank you gentlemen very much. Ted murphy is the chief executive, and my thanks to kendall schmidt, recording artist. Coming up, we are going to talk about fast casual dining. It is a growing trend, and we are going to meet forward five brands. 20 fast casual restaurants, looking to add more to its portfolio. Coming up on bloomberg west, how about using your smartphone to pay for some of that wonderful food . The battle to own the mobile payments world is heating up. Amazon is getting into the business, and ebay possibly spinning off its paypal division. Find out the latest at 6 00 and 11 p. M. Eastern only on bloomberg. This is taking stock on bloomberg. I am pimm fox. Restaurant chipotle hit a 72week high today. 700 a share, highlighting a surge in fast casual dining. Im joined by managing partner john reid goes and by spencer rubin, the managing partner of milk shop. It is a fast casual comfort food restaurant. Lets begin with you. This idea of fast casual, why is it such a growing trend . Is a very exciting space to be in right now. Like every industry, things are evolving. In the fast casual space, even at a more rapid pace than most. Consumers are becoming increasingly aware of what they are consuming. Over the years, we have been eating processed foods and not thinking about what goes into our bodies, but as awareness increases, people want to know where it is coming from. Everything matters from start to finish. It also matters how much you want to pay the workers. Fast casual is defined as you go, you order it yourself, you get it however you want it, but there is no table service. That cuts out a layer of cost. That is one of the most important components to the expense side of the equation. A consumer is comfortable paying a premium price for a quality experience. Quality transcends everything that we do. The quality of the product to the experience you have with our team. It kind of permeates throughout everything we do. Spencer, you are a valuable member of johns team. Redo the idea for the melt shop come from where did the idea for the melt shop come from . We saw an opportunity for a better quality sandwich product. Grilled cheese was the perfect canvas to allow us to do that. Better bread, butter cheese, better cheese, that is really what got our brand going and got us thinking about a Grilled Cheese fast casual concept. In addition to meeting a lot of the Grilled Cheese, how have some of the other brands i eat our brains although time. I need there almost every day. We have over 20 places in the city. I like the idea of being able to walk wherever i am one of our restaurants. The Common Thread is it just has to be great. The ingredients have to be top talent top quality. We are not concerned with calories per se, but you know what you are eating is highquality. You have five guys. Feels good chicken. Where did you come up with this . Did somebody come to you . It depends. We saw there was a Movement Towards healthier, more quality whole foods that people want to consume on a fast casual basis. You want to get great tasting food beautifully presented. We wanted to be part of that movement. Melt shop was a concept we approach spencer approached us about. We believed in him. Fields good chicken, the person who came up with the concept is actually named fields. It is a much better Quality Chicken in terms of how we prepare it. You can get it in a bowl. It elevates the whole chicken experience. All of this is in a fast casual environment where traditionally the party of the food has been a bit lower. Spencer, what advice or guidance can you give to people who take a look at you and say, this is a really great idea, im going to get into the restaurant industry. It must be a lot of fun. It is fun, thats for sure. I would say, be ready to work really hard. What is a typical day for spencer . Right now, my days are all over the place. Some days im on bloomberg. How many hours are you working today . When we are opening up a store, if the 18 hours a day, seven days a week. When things hit cruise control, maybe its a 50an hour week. Its a really exciting time with somebody new stores opening. We are touching down in a new market in d. C. What is your favorite sandwich . The buttermilk Fried Chicken sandwich. I can see johnny salivating at that. Thanks, gentlemen. Thank you for taking stock. I am pimm fox
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