Transcripts For BLOOMBERG In The Loop With Betty Liu 20140102

And deferred stock. I am joined by laura. T does the stock surge banks really outperformed as a group, the s p 500 last year. What does this mean to the average banker . They are pretty happy today if they got a deferred stock bonus three years or five years ago. A lot more value. Years or five years ago, they were probably annoyed. Now it seems if they could hang in there, it is a pretty good deal. And a time you cannot get cash right away, you might be a little cranky. As one of our consultants said. Worth sat on it, it is 30 more. In Morgan Stanleys case, 60 more. Morgan stanley was up 60 . All of this came a little bit as a theme of the aftermath from the credit crisis, bankers are making too much and have high bonuses. The have to have skin in game. So these plants came into effect. Regulators were pushing banks to pay with stocks, they want bankers to have skin in the game and dial back risk taking. When you have more stock, there is incentive to do the smart thing. This is your average rank and file, still part of the 1 . Business leaders, goldman sachs, lloyd blankfein, jamie dimon, any other page 6 names . Blankfein, 62 of his pay package for 2012 was restricted stock. As shares increased, his package is up 3. 4 million. With jamie dimon, almost all his pay was in stocks, 11. 5 million pay package, 10 million in restricted stock. The price index for the banks, the s p 500 index, both outperforming the s p 500. Some analysts say if you think this year is the same as last year, you are mistaken. What does this mean for pay . Our banks going to be paying more in cash . We have seen a couple banks revert back to cash. Our pay consultants says a lot of bankers are still sitting on value. Once we see an uptick in shortterm interest rates, that to be a boon to read it. There is room to go for bankers to sit on value. Thank you, laura on anchor banker pay. Breaking news, Martha Stewart leaving on the media Martha Stewart and macys have resolved a legal dispute. We will bring you more. Slosing and shaking, Ford Alan Mulally unveiling a new concept car next week at the Consumer Electronics show in las that, a plug in hybrid uses solar panels to recharge. Max solar energy and it could lead to mass produce rechargeable cars that do not need to be plugged in. Includes a car parking structure that uses lens to focus light on solar cells. Matt miller is with meet with more. I know you are watching that ford story, you are also , agreeingayak fiat to buy the remaining stake in chrysler, 4. 4 billion. A victory for sergio marchionne. This is an alan mulally moment for marchionne. You can see his prowess as a brilliant ceo. He wanted to pay close to 4 billion for the rest of chrysler that fiat did not own. The union wanted more than 6 billion. If you recall, both sides were threatening an ipl. An ipo. Just to all along was use that as a negotiating tactic. In the end, not only does he pay closer to the price he wanted the unionake from trust. He also gets chrysler to put up most of the cash. One of the amazing aspects of this deal. Fiat will pay 1. 7 billion in cash to the voluntary employees benefit Union Association that owns the stake. Chrysler will put up 1. 9 billion in a dividend and paid the remaining 700 million in 4 installments. It is a great way for marchionne to bring these two companies more fully together. You can see these brands. Fiat, alfa romeo, lancia, maserati, chrysler, dodge, jeep. He will be able to build cars. You are looking at one of the first attempts, that is the dodge viper with a lot of ferrari in the interior. He will start using jeeps to suvs, hemaserati will save money and get his hands on chryslers cash. What does this change for competitors in the auto sector . He is going to invest more than 12 billion in an italian plant. The time when european carmakers are struggling, the worst time for car sales on the continent in the last two decades. He will be investing and trying to make some headway there. Bee in the u. S. , he will bringing over cars that are going to challenge the big luxury sports cars you may have thought about buying for less money. The alfa romeo 4c. 450,000, people say it is more beautiful and filled with passion compared to the porsche cayman, the equal flight german car you could buy. Handles better but maybe it is more fun to drive. He will be able to offer a wider palette of products on both sides of the atlantic. Matt miller, our auto expert. Drive,r kind of car you you may not want to be out there this morning. A blizzard warning issued in areas of the northeast. The region preparing for a winter storm that could dump more than a foot of snow in some areas. We bring in bonnie schneider. How serious is this storm shaping up to be . We hear a lot of hype, what is going on . This is a lot more than that. We are already seeing impact. Many flights have been canceled. Chicago was impacted by the same storm. 70 million americans will be system fromthis one the midwest to the south and the northeast. Notice flight cancellations, 14 . 24 in advance. Winter weather advisories. The blizzard warning is for nassau and suffolk counties. A widespread area of Winter Weather warnings. Snow and wind. Blizzard warnings are where we are going to see zero visibility tonight. Not an eye to be traveling after 6 00 in the new york area. Foot of snown, one expected. A big snow maker. The reason we are seeing this, a dome of High Pressure in the midwest. Systemwpressure develops off of the carolinas, it is coming into that cold air. A perfect storm. Seeing cold air, moisture, timing and a longerlasting event. Most advisories go through 1 00 tomorrow. This will continue into friday morning. The question is who will get how much snow . Notice how many states are impacted, as far as virginia. Heavy snow in massachusetts. A foot or more, even into sections inland. Heading into southern new hampshire, heavy accumulations. We could see 8 inches or 10 inches in parts of the city, long island. New jersey will be shoveling. A huge windmaker. Coastal regions under advisory for beach erosions and strong winds. This is a dangerous situation wind,now, blowing snow, bitter cold temperatures. Kendrys numbers in terms of temperatures. Tonight in new york, it will feel like zero degrees. Thank you, bonnie schneider. Get out your snow boots. When we come back after this quick break, one. 3 million americans lost longterm jobless benefits. A look at the chances that they will get than that and we ask gene sperling. And its encore. Details ahead on a potential new pricing model. Profits going up in smoke. What happened in stores in colorado when it began illegally selling marijuana for Recreational Use for the first time. Stay in the loop. Just Getting Started this thursday morning. In the loop will be right back. The fight to raise minimum wage is heating up in d. C. , due to the work of the Economic Policy institute. The group had been pushing for the government to raise minimum wage to just over 10 holiday say doing so will create 80,000 new jobs. Theing me from d. C. From Economic Policy institute, the vice president. Also with us, Phil Mattingly. Echoing moveon capitol hill to push for an increase. What is behind it . Uc democrats latching onto an argument they have been making, the income inequality issue. Of their coreone proposals. Barack obama said in february of 2013 this was something he wanted to consider. It is being backed up by policy proposals. Listen to what he said december 4. That there are airport workers and fast food workers and nurse assistants and retail sales people who work their tails off. [applause] or are still living at barely above poverty. That is why it is past the time to raise a minimum wage. [applause] it is below where it was when harry truman was in office. States is an issue that and localities have been leading the way out. The federal government has not done anything on this since 2007. To move thisosals on capitol hill. House republicans, who hold the majority, not into it. Democrats have latched onto this issue i think it needs to move. It is very unclear. Abouts is not just policy. Always politics involved. Where the push and pull where forces . Push and pull there are some politics. In the states, you have seen governors in primaries latching onto this because it is a popular issue. There was a November Gallup poll that said 70 of people approve of the idea from raising the minimum wage. That said, you find people on the other side who are very opposed. One of whom we spoke to earlier this week who made very clear this is not just about policy. I would expect a vote will be held, i dont think democrats expect it to move or are interested in and moving. They went to keep it around to use it as a wedge issue and try and change the conversation from what the publicans want to talk about. What republicans want to talk about. There is policy and then there is politics in washington. Very much. U Phil Mattingly joining us from d. C. He is going to stay with me, continuing the conversation and bringing in Economic Policy Institute Vice president ross. How does the u. S. Compared to other industrialized countries when we talk about minimum wage . The minimum wage is different all over the world. England has raised their minimum wage, they did not have one atil 1999, it is now about little over 10 an hour. Germany has a minimum wage, Angela Merkel has just agreed as part of her new government to raise the minimum wage in germany. The u. S. The problem australia has a 15 an hour minimum wage. We are way behind that. The problem is the u. S. Is that little to live on. 7. 25 is low. In other countries, a few you mentioned, there is an infrastructure for health care and pensions, a social infrastructure that we do not have. Current minimum wage is seven 7. 25ars to five cents, the proposal is 10. 10, how likely is it that this gets passed . Instead. Thority i worked for senator kennedy in 1995 and 1996, the odds were against it then that we managed to raise it. It is certainly possible. The biggest thing is that it is possible. If enough people write congress and raise a ruckus, congress will have to respond. Part of your argument, ross, for inflation adjustment, the rate is basically what the u. S. Had in the 1960s . That is right, the equals of 1968. As far as worker demographics, is this geared toward getting young people employed or towards older people were fourth of 40 years old who are not participating in the labor force . This would allow them to get in. Abouts is not so much creating jobs, although there is a small job creation impact. The people who will be most late 20sre in their and 30s. The median age is in the 30s for people earning minimum wage. This is not about teenagers. It is people who need this income to survive. Phil . Hey, ross. The talking points are always going to be thrown out by the other side. Jobs, they feel like the Economic Research if it is not 100 conclusive, there is plenty that will show that this will cost jobs. Your folks do not believe that. How do you counter that argument . The weight of the evidence from looking at years and years of these increases at the state and federal level is that there is no job loss. That is a red herring. Giving people more money, putting money into the pockets of lowwage workers means they will spend it. They need to. That stimulates the economy. It does not cost jobs, there is no evidence any more than it does. There have been people that have spoken out saying it costs jobs and therell be smaller businesses that cannot afford to 7. 25. 10 as opposed to the 10. 10 happens over three years. It is gradual. The kinds of businesses that are paying 7. 25 an hour mostly international. They are not competing against countries where they will be undercut. This is hospital workers, restaurant workers, people working in hotels. All their competitors have to pay higher wage, too. It takes a little bit out of the profits of people who, frankly, have done very well. Thank you very much, glad to have you. Economic policy institute bright breyice president ross eisen and Phil Mattingly from d. C. An Insider Trading trial has focus. Ohen in the latest case from the u. S. Government. To another,lionaire Warren Buffett missing the mark for the first time in 4 decades. Keep it here in the loop yuriko in the loop. You are watching lululemon. Lives on Bloomberg Television and streaming on your phone and at bloomberg. Com. I am Deirdre Bolton. 26 minutes past the hour, time for bloomberg on the markets. Looking at features of this morning. Au have been indicating slightly lower open. Last year was a recordbreaking year for stocks. The dow up around twice six percent, s p 500 up 29 . Analysts are saying youre not going to get those returns this year. Some are optimistic. Tobias from citigroup saying the s p 500 could go up 7 , the most bullish out there. He says there will be some bumps along the way. On the markets again in 30 minutes. Here are your top headlines. Martha stewart living and macys have resolved legal disputes. They are pleased to put the matter behind them and look forward to a partnership. Sentiment does not affect macys versus jcpenney. Google expanding how it sells google glass, sending invitations to Wearable Technology to u. S. Residents who use their Music Service. The service is a subscription that makes users makes music available across multiple devices, now including the 1500 glass. Toronto mayor ron ford running for reelection. Expected to be the first candidate to file papers today. Registering him as a candidate in octobers elections. This comes after a year when he was stripped of his powers after showing up drunk at Public Events and admitting to smoking crack cocaine. Speaking of big headlines, and theg steve cohen trial surrounding sac capital for months. The government has shut down the has not been charged directly. Joining me now is sheila car shelia. You have been on this for much longer than a few months. There is a key trial starting monday a key jury selection for mathew martoma, a key witness. He is a former or fully at manager at sa he is a former Portfolio Manager at sac. The government believes that he had a conversation with steve cohen in july 2008 in which he may have said something to him, illegal or not, that prompted cohen and sac to liquidate a huge position in these stocks. Martoma says he is incident but his says hes innocent, his trial starts monday. Stocks, 2008, this was a cursed year for the hedge fund. It was a pivotal year. The firm started in 2008 at the peak of its powers, 60 billion in capital with 1200 employees. Ineral years 16 billion capital with 1200 employees. The financial crisis hit and things went downhill fast. There is the serious questioning of how the fund kept its edge. Sac capital charges well over industry practice. This is being put into question. The government took a look at ders and Portfolio Managers did over the summer of 2008. The doctor of the brother the backdrop of the broader market, they were getting desperate. Market had ended and they were doing anything to make money. Were charged with Insider Trading based on trades they made in the summer of 2008. My feet Michael Steinberg who andconvicted in december mathew martoma. We now have weekly jobless claims. In. 000 came futures lower ahead of this. In the same range. We will get you to the newsroom with julie hyman. Coming in better than estimated, the prior week was revised higher. Worse than the initial read. The continuing claims overcoming in lower than anticipated, running at that 4week average of 2. 8 million. Lower than the average estimate, but you are seeing a revision higher for the prior period. Remember the context during the holiday time, these numbers are a little difficult. Once we get into january, they will be more reliable. Bloomberg we had the measure of Consumer Confidence 4month climbing to a high. We are seeing indicators improve and will get the first jobs report of the next friday. Julie hyman with the latest reaction to those weekly initial jobless claims. Continuing the conversation with bloomberg businessweeks sheila on sac capital. A challenge for this year. It is technically no longer a hedge fund. The government indicted sac firmfrim, a firm, the pled guilty and they did not charge cohen himself. The firm cannot manage outside money and it will be a family cohens money. G a leaner operation. As you mentioned, mathew martomas jury selection begins monday. This person is pivotal to what happens next. There have been so many people saying why doesnt he flip . He has so much to lose and nothing to gain. What are your thoughts . It is a mystery. He has three children, a wife, a house. Why would he fly on his why would he fall on his sword for cohen . He hassomething happens, decided not to cooperate. People go on trial. He decided to go on trial. He may be convinced he is innocent. Cohen crossing his fingers martoma continues with this stance. How long will jury selection take . , theyusually takes 2 days, need to find jurors who have not read a lot of negative headlines about sac. Sheila, thank you on the very latest with sac capital. When we come back, the former director of the National Economic Council Making a case for why Unemployment Benefits need to be extended. Gene sperling will be joining us in a few moments. Forjuana is now legal Recreational Use for the first time in colorado. We will show you the economics behind this. Amazons drones may seem like a dream. A fleet of shark tracking drones are patrolling the worlds oceans. We will fill you in. State in the loop. The white house and democrats pushing congress to extend emergency Unemployment Benefits. More than one million americans lost them earlier this week. Gene sperling, director of president obamas Economic Council is with us. Thank you for joining us. How does the white house expect an extension of benefits to be paid for . This is a concern to republicans. Mostrst of all, the important thing is to make sure there is a bipartisan commitment to extending does benefit. Saw in december was some members of the republicans in the house were suggesting they were against it philosophically. Inshould have gotten it done december. What weve would like to do now is support the bipartisan bill in the senate by senator reid and senator heller from nevada. It for three months and take care of the 1. 3 million workers and their families who were cut off. That would give us time to Work Together on a solution for the remainder of 2014. Gene, thinking about the senate, 60 votes needed, how likely is it that those votes are there . A good question. We have all been gone. I cannot give you a vote count. I will tell you the following. Across this country, there were story after story about real life people. Not people hanging out on the couch, hardworking americans who have fallen on hard times and trying to support their family. They were very compelling stories. A lot of numbers went home and read those and talked to people who are hardworking members of their communities and their neighborhoods. They are looking for jobs. Cutting them off, whether they are democrats or republicans, is not the right thing to do. I think there is going to be a lot more support after people have been home in their communities and have seen the people who are still out there looking for work. Seek about lawmakers being closer to home and seeing what is going on, do you think that the white house is there a mistake in not going there and louder onbigger and this issue earlier . I dont think there was a statement the president ever put out about the budget agreement that was not clear that we needed to pass this emergency unemployment extension. Get done, itt to should have. At this point, we can analyze that. What we need to do is ask. Is act. Years a good new resolution for congress, make the first new piece of legislation the bipartisan reid in the senate, taking care of these families looking for work. We can figure out what we should do over the remainder of 2014. Say 1. 3 million americans is not enough. Out of the 300 million that are here. Moving the needle as far as economic benefits. How have you been crafting a message to prove that wrong . Million i am sorry, i dont understand. 1. 3 million americans have been affected by Unemployment Benefits being cut off. Some voices say that is not a significant amount of the arelation, even if they given support, it will not change anything to consumer spending. How do you see it differently . I totally understand we dont see this as a total solution. Is important for these families and encourages them to stay in the workforce and look for jobs. Pointl add a fifth of a of growth to the economy. We need to get demand and job growth going, that could include grand bargain on jobs. Combining an infrastructure passage and infrastructure package with Corporate Tax reform. Doing more to invest in our communities. There is more on housing. This is just one piece. The number one thing we need to do is continue to get growth going. We need to Work Together and compromise in bipartisan ways on things like infrastructure and Corporate Tax reform. On investment in Higher Education and ovation. And innovation. These are the things you will hear the president talked about in the state of the union. Thank you for your time, happy new year. Gene sperling joining us, director of the National Economic council. President obamas assistant for Economic Policy. Keeping you in d. C. , the u. S. Health care Service Officially transformed. Coverage went live. The law is far from settled. Phil mattingly joining me now again from d. C. There has been some issues cropping up. A new years eve surprise. At about 9 30 p. M. On december 31, so you said mayor Justice Sonia sotomayor, an onma appointee, put a stay the provision that religious affiliated groups would have to provide birth control. You are exempt from that mandate. Forprofit companies are not. The problem sotomayor is trying to address, there are affiliated groups that are not officially run by religious groups. They had asked to be removed tom the mandate and not have pay a penalty because they dont feel like they have to provide birth control. The administration has fought this. Sotomayor weighing in. The administration has until tomorrow morning to justify this. This is the latest issue. The Insurance Industry is crucial to this law. What is your read on the relationship between that industry and the white house . Interesting. They need each other so desperately for this law to work. They have always been working to Work Together. Administration, especially with the rough rollout, has asked the industry to make changes ad hoc to make sure individuals are not negatively affected. A pushback by the Insurance Industry, we saw alabama Blue Cross Blue Shield including line items in their bill that talk about taxes and fees required by the Affordable Care act. Not totally sure if this is an intentional slight. You have never seen light items you have never seen line items talking about how one bill will affect rates. Maybe some passive aggressiveness. Entities cannot make this work without one another. There you go. Forced cooperation. Thank you very much mattingly from d. C. Onn we come back, more ads your smart phone in the new year. An estimate of how many more. And what this means two very specific businesses and their bottom lines. Number, 2 big billion. The average number of minutes per day skype users spend on the service. Many of the users had their accounts hacked last night by a Group Calling itself the syrian electronic army. The group posted messages urging people to avoid Microsoft Email Services because they are monitoring your accounts and selling data to the government here to the government. Microsoft a short users data was a safe. You may see more advertisements on your mobile phone. Ansari specializes in social media and is joining me. Great to see you. A smelly morning. A snowy morning. Phonetime i pick up my and a video pops up, who will benefit most . The Biggest Companies will continue to be facebook and google. Facebook 1. 5 years ago had no mobile ad revenue. In q3 of 2013, half their revenue came from little ileertising mob advertising. I expect them to do about 5 million next year from just mobile advertising. Facebook and google, you did not say twitter. Twitter is trailing those companies by quite a bit. They picked up a great asset, a mobile ad exchange and 2013. They are still far behind, as is apple and millennial media, pandora. Are are trading they trailing. What about Digital Advertising . There are a lot of competitors, where do they fit in . A lot of those guys have started on desktops. There are other companies that, in order to take full advantage of the mobile screen size and the fact that mobile advertising happens inside apps, they will have to evolve or pick up mobile assets. I expect acquisitions and consolidation in 2014. Desktop guys picking up mobile assets. Cargo is tricky, a lot of their clients are big fashion houses. How do you show this big Beautiful Image that normally you would see on a tablet on a smaller screen . The things i expect in 2014 is a shift towards the new advertising. Video advertising. The traditional factor has been the small banner, very ignore able. Bigger screens and hd resolution screens and fast apple,ng systems on samsung, motorola products, you will be able to show more engaging advertising. A lot of brands will appreciate that. Amran, what about the idea of sponsored content . We have to be tricked into watching something. It has been around forever. People used to call it infomercials. That was like 30 minutes of a juicer. If you did not get that was an advertisement this is trickier. They will put a small logo. On the top of your google feed, there are sponsor results. Thank you very much, happy new year. Ri, senior associate from greycroft. Was ae come back, netflix top performer in the s p 500 last year. Read hastings has a hard act to follow. A little bit more about the new pricing structure, coming your way. It is ominous 56 minutes past the hour. Bloomberg television is on the markets. Screen, a lower open. About half hour ago, initial weekly jobless claims came in at their lowest level in a month. Toyou can see, not enough move futures higher. Last years record year for equities. Analysts are saying to not expect the same thing for 2014. We will bring you more on the markets in 30 minutes. We are going to show you a rare, first a rare first for war and buffet his company falling milestone. Major a new industry in colorado. Forcash pull that legal pot Recreational Use could bring to the state. You are watching in the loop live on Bloomberg Television, streaming on your tablet and on bloomberg. Com. 30 minutes until the opening bell. This is in the loop with betty liu. The countdown begins right now. Welcome back here you are in the loop. Im Deirdre Bolton in for betty liu. The White House Says Congress needs to restore longterm jobless benefits to 1. 3 million americans. Unemployment checks cut off for that amount of people last week. The northeast is prepping for a storm that house already led airlines to cancel hundreds of flights. Massachusetts could get up to 14 inches of snow and make eight inches may fall in new york. For the firsttime marijuana is being sold for Recreational Use in the u. S. Of stores intside colorado where the new law took effect yesterday. Speaking of milestones, for the first time in 44 years, Warren Buffett is probably missing his selfimposed goal of increasing berkshires network at a faster rate than the s p 500. In oracle of omaha said march a continued rally in the s p would cause berkshire to fall short. Since then, the s p 500 has gone up, closing up 29 last year. For more of what this means, our senior markets correspondent julie hyman is with me here with me now. Sifting through the numbers. Tracking all things buffett. Just how far off the mark, his own mark, is Berkshire Hathaway . Lets talk about we will what we are measuring, book value of Berkshire Hathaway. Companiesof the working versus what the stock price has been doing. If you look at what the s p 500 has done over the past five years it has returned about 128 , and it does include dividends. At the same time, the book value of Berkshire Hathaway, according to estimates, is north of 80 but still a far cry from 128 . Warren buffett pointed out earlier this year he was not sure he was going to make it. If you look at book value through the end of september, there you have the actual number. Nose66, 80 gain on the and now analysts are looking for a gain in the low to mid 80s. Of curiosity, what is the first what does the first potential miss and 44 years mean to you . A couple of different ways. The two more important things is, one, the s p 500 has climbed a whole heck of a lot in the past five years. The other thing is berkshire is getting really he is just suffering from the comparison . Yeah, i think it is a difficult comparison for a lot of people. And just the size of berkshire. A 290 billion company, which means if you want to have the sort of percentage increases berkshire has enjoyed throughout its history, 20 compounded annual book value gains per year , you just need to create a whole lot more value every year. It is just a big number in absolute terms. Doesnt give him and julie, i would like your input, too does it give him less bragging rights . He is Warren Buffett. I dont think it takes that much away from his legacy. And if you look at Berkshire Hathaway and the folks who are investing in the company, at least people we talk to our decadelong investors, in many cases. If he is trying to attract sort of new money to the stock or newer money, then, yes, it becomes more of an issue. Affecting Warren Buffetts legacy, if you are looking on a fiveyear time horizon, his measure he is grading himself against, basically no, no way. You are really sleeping this morning, deirdre. As far as what kinds of investments he is getting into, any kind of critique we could pull away from an investor standpoint . Certainly one of the big ones people talk about his ibm. He spent about 11 billion dollars in 20 11. It lacked the s p 500 since then. A lot of people have been scratching their heads about that. A lot of analysts and investors i spoke with basically said the Investor Base in Berkshire Hathaway will be incredibly forgiving. Buffett has made them so much money over the years. At the end of the day he might be his own harshest critic. Wedding list bandit out. Any other facts and figures we should keep in mind looking at Berkshire Hathaway stock and it was up 33 . Not including dividends. If you look at purely on that level, it actually outpaced the s p 500 by a little bit last year. Despite the investment in ibm which happen to be the only dow stock that fell last year. Pick one out of 30 and you pick that one not the best one to pick. Julie hyman, thank you very much. And nice to have you both with me this morning. Google glass. Bout moving and shaking this hour, google ceo larry page getting more people a chance to own google glass, the wearable computer. Or is a catch. U. S. U. S. Medicines residents that use the all Access Subscription Service get the latest email to buy the device. It is advertised at the launch of google Music Service for google glass uses. We tell price, 15 hundred dollars. Google has intentionally kept sales of the device limited today. All eyes and cameras were in colorado yesterday. Shops opened in denver to sell Recreational Marijuana legally to anyone 21 or older. Colorado projects nearly 600 Million Dollars in sales in sales and more than 16 million in cash revenue. As to where the money will go, matt miller is with me now. First of all, who are the winners, businesswise or taxpayer wise in colorados green rush . Obviously the people who want to smoke pot are number one, first and foremost, the winners, i guess, in this situation. As far as revenues are concerned, the School Systems in colorado will be benefiting tremendously. A are going to hire 300 people at least to start with. And then a lot of Infrastructure Improvements have been done, especially in the small towns that have them of these dispensaries already open. Just so you know, there are going to be more than 300 new shops aroundots colorado, about three quarters in denver. Right now we have about 18 open in denver, about 24 around the state. Not everyone got their paperwork in on time, a little behind in that, to open up on the first day. About 60is expecting far as in revenue as taxes. We heard it could be up to 100 million in the first year. It depends on whose estimates you by about who is going to buy the week. Here you see the legislative councils estimate, 600 million in retail weed sales, 67 Million Dollars in taxes, which will go to funding the construction and also the regulation of the industry. When you talk about the industry, is it going to create a lot of jobs in colorado . Depends on whose estimates you buy. But at least 300 and the school system. To start with the ui people being hired i think 22 are going to be hired to start out in the new regulatory tax collecting system. But obviously you are going to have a lot of growers, farm operations, retail operations. Right now they process about 120 license applications a week for people who want to work in these stores. You have to have a background check. That is expected to go to about 200 a week. All of these state legalizing marijuana, starting right now obviously with colorado but a little later in the year Washington State will join in, the choir all of the weed that is sold in the stores to be grown in the state. That means more farms and more the bug pickers bud i guess joined rollers would be a new job although people have been doing the 60sst since illegally. It is expected to add a lot of dems basically an expected to boost the economy. One thing, tourism. So many people are planning on going skiing in colorado this year, they also want to smoke weed in colorado so there are new touring Companies Formed to let you ski, i dont know while after. But before or i personally can attest to the fact that skiing is dangerous enough as it is. , racecarchumacher a skiing accident. But i think people who are high probably will not be skiing as fast. Matt miller, thank you just a guess on my part. Matt miller joining me on the Green Economy in colorado. With a quick break to take. When we come back, Musical Chairs in the c suite. You if this year looks likely to be the same. Also coming your way, netflix fighting off competition and trying to add to its bottom line as well pit of Largest Online streaming service considering widespread pricing deals. He tells coming your way. Back in just two minutes with more. Details coming your way. You are watching in the loop live on Bloomberg Television, streaming on your tablet and bloomberg. Com. 2013 the year of the shakeup in the c suite, switching ceos in the fastest pace in five years. Microsoft, jcpenneys, groupon to name a few. More on how changes in leadership can affect the companys brand. We have reputation dr. Mike hall, president of mgp associates, apr and represent Reputation Management firm. He has worked with athletes, government officials, corporations including oldman, United Airlines and dunkin donuts. I have to imagine you have had the craziest year because there have been many people who needed your help. It has been a wild year and looking forward to 2014. One thing i want to know is how do you see good leaders . Everybody says leadership is important and it is kind of a dull conversation until you have a horrible boss and then all of a sudden you realize how important it is. One of the things we certainly see is not just the trend, what we call the walking the talk we heard a lot about compassionate leaders versus the bully boss. The bully boss still exists. What happens is a lot of them make the front page of the newspaper with issues in which they are getting an crisis. When you say front page of the newspaper, is it because maybe people outside dont realize that person is a bully and maybe that person is being , leaner andauded meaner. Exactly. That model, postworld war ii. What we are finding is more ceos he have to walk the talk. Emotional intelligence is extremely important. Not just quantitative goals but qualitative goals. We are a much more Global Corporation these days obviously, so you have to understand different cultures. Diversity is important. Women who are also not only making it into the c suite, many of them are making it to the ceo levels much more than before. These are all positive things. G. M. Is a recent example. Social media changing the landscape, how they deal with customers and employees and vendors they have. When you go in and you give your advice which is, this is how to be a little bit more in touch with your employees, this is out to be a better leader, are people listening to you or do they say, this is great, we checked out the box and we have a conversation and now we will just keep slashing and burning . One thing i am proud of that unknown for the business of being a counselor. What concerns me and i say this often in private meetings that many of the search firms unfortunately seem to be more transactional. They need to be counseling back to their client. Lets say, for example that alan mulally, looking at potentially to be going to microsoft. Some people in the search business say, auto guy, thats tech, it will not be the right fit. Wait a minute. Theres a lot more we need to do here. It is not just a transaction. Is he an accident leader . Is he a motivator . What was his success at ford and how does it translate to what microsoft needs today . A much more deeper analysis. But the biggest case, the biggest thing that is needed is the ability to counsel back to your client and say, i know you are looking for a farmer to farmer change or auto to auto or health care two health care there are other leaders that would be excellent change agents, other lead deciliters that can help your organization with some of the issues he had with employees, with the changes that are needed in products and services. Dont just look at it transactionally, but look at it as a relationship of being best be open to be counseled that. He you are not the expert you are hiring someone to come in to listen more i think listening and being open minded are good skills no matter your position. Are there any ceos he met you see out there where you say, this person is doing right. This person is respecting his or her foot is your responsibilities but also creating a positive t cells ethos for his or her employees . I personally think alan mulally is an excellent choice. I mentioned him for a reason. Ive gotten to know him, i have met him several times. His leadership is something that an example i think for the globe to look at. And i think we will be seeing more leaders like him. In are several leaders someone i know really well who has done an excellent job at american express. The reason why he is there. And i think it is an attribute to him he is not leading from the perspective of just being a black ceo but just a good ceo. Thats when you say you know you found the right person and that person just happens to have x, y, n c heritage, qualities, gender, does not matter, right person for the job. Mike paul thank you so much. President of mgp and associates. With a quick break to take. Will we come back, snap chat having a major security breach. More details coming your way. Also the days of the phone bump may soon be over. Here are your top tech stories on the bloomberg west radar. Snapchat facing a massive security breach. User name and phone numbers for as many as 4. 6 million accounts have been leaked by hackers. The attack comes months after the photo sharing site was warned the data was vulnerable. A new website for all things tech. Former editors of news corp. All things those quote will unveil re code that will cover tech news and conferences. Closing the doors. Toallows smartphones Exchange Information by tapping them together. Catch all the latest in tech and media every weekday 1 00 p. M. And 6 00 a. M. Eastern time here on Bloomberg Television on bloomberg west. We are jet back in just two minutes with the opening bell. Welcome back. You are in the loop im Deirdre Bolton in for betty liu. 26 minutes after the hour, which means Bloomberg Television is on the markets. Heres the latest on futures moments before the opening bell. Screen,them on your indicating a lower open. Keep in mind last year a recordbreaking year for stocks. The dow up around on a six percent, s p 500 up 29 the dow up around 26 . Analysts say dont expect this year to be the same as last year although one of the more bullish once saying, well, the s p 500 could go up seven percent from here but not without a few bumps along the way. Vkovich. E we will bring you more on the markets in about 30 minutes. Meantime, the only trade he need to know about, your top 10. Senior markets correspondent julie hyman with me as well as matt miller. I will kick it off with top 10. Rising afterpany receiving notification from the fda the partial clinical hold on the blood cancer drug is been removed. The company can resume all studies currently underway. Campbell soup, the company voluntarily recall is in recalling cases of prego additional italian sauce after spoilage was discovered. They say no illnesses linked to the recall have been reported. This ocean Cargo Transportation provider says it will resume sales of its previously announced 200 million equity offers. Dryships issued 6. 9 million shares in the program. Las vegas sands and macau casinos hitting the jackpot, revenue of nearly 19 from a year earlier. It is the dominant u. S. Player in that part of asia. Hotel rooms, shopping malls and entertainment show to attract bitter visitors. Will not be a day in the top 10 without twitter. The price targets raised from 52 to 70. The expects wouldve to benefit in the surge of online video advertising and reiterated its overweight waiting on the stock. Rtz car rental considering a sale or spinoff of the Equipment Rental unit. The news comes after it reported the poison pill upon seeing unusual and substantial activity in its stock. Number four is apple. Wells fargo downgrading the stock market before saying Gross Margins may come under pressure later this year. Benefit and may benefit from new products like the iwatch. Electronics, the worlds biggest maker of smart phones and televisions is focusing on cheaper devices in emerging markets, part of a push to maintain growth. It is urging workers to adopt new ways of thinking and move beyond focus on hardware. Number two is netflix, the Subscription Service had a monster year. Surged obviously 300 in 2013, making it the s p 500s biggest gainer by far. It celebrated a successful year by announcing a massive pay bump for executives and plans to experiment with new pricing plans for consumers. That weumber one spot are watching for you today, macys. The retail giant announcing it has settled its legal dispute with Martha Stewart on the media omnimedia. Terms are confidential but it does not affect the outstanding claim against jcpenney. That is the opening bell. You can hear it for yourself. We will take you from new york to chicago. The cme. Capitalr of kenai management. First trading day of the new year. What are you looking for . Right now i am turning into a big commodity bear. The main reason is because i am very friendly the dollar. Where it comes from is being negative ons. I think by the end of the day end of the year you could see the 10year treasury exceeding yield of 3. 7 , even four percent. That would be very u. S. Dollar positive and i think it will be negative for commodities. Most notably because i am not a believer in the china story. I am very skeptical. You can just build infrastructure for ever. You have to have a functioning, good, solid economy to see the growth levels they have seen and i just dont see it there. China, in my view, is a big risk. Where will ripple through the markets . It will happen and commodities. Copper, crude oil, things like that. I want to be very careful. As long as i am positive u. S. Dollar, not interested in being long commodities. What about the growth story here in the u. S. . Wont that be supportive of oil and some of the other commodities . In my opinion number one, i am reasonably skeptical of the growth story in the United States and if i am right about bonded you take rate up and at the end of the year you are at four percent, that is certainly going to curb any or all forecasts of improved growth in the United States. Thanks very much. Happy new year. The owner of kenai capital management. We bring in brian jacobson, chief roof of your strategist at wells fargo funds management. His call stop waiting for a pullback. Get out of cash and get into global equities. Glad to have you with us this morning. When you say that, i dont know how medieval you felt were in cash last year, but global equities, where are you looking for the most acceleration . The think most of acceleration we will see is actually in europe and selectively in the emerging markets. I actually havent overweight europeanations to both equities and emerging markets that are not necessarily, to be dependent. Your previous guest was talking about how it is a stronger dollar could lead to weaker commodity prices, and i agree with the seat thesis. I do not agree necessarily with the magnitude of the move, the 10 year treasury he was forecasting, but i think the story is some emerging markets will probably have tough times with currencies. But if you are in those emerging markets, like china, some of the peripheral european and other asian economies, i think you could actually have decent gains next year. Holdingser about cash who do you see holding the most cash . S p 500 companies have about 1. 5 trillion in Cash Holdings and that is a record that has been increasing decade to decade. Who else have you been talking to when you say switch out of cash and into stocks . Havent most individual investors already done that . Sadly, no. If you look at Money Market Fund holdings, according to the ici data, it has come down from record levels but still at 2. 6 trillion in cash or Cash Equivalents couldnt a lot be Corporate Holdings . Well, a lot of that you break it out into retail and institutional, that would be one way to do is to go into a little final detail. And still when you are looking at retail holdings, it is significantly elevated militants and some of the longerterm trends. You have been taking a look at industrials. What have you found . Industrial brolly did quite well last year, here in the u. S. Funding to say last year because it was just two days ago. Funnier to say last year because it was just two days ago. At caterpillar in particular. This is a company that struggled last year in part because commodities were not doing so great though so the stock was only up 1. 3 . As this Company Looks forward to 2014, it is not feeling so fantastic. The ceo in the most recent Earnings Report said in a statement that there are encouraging signs for this year, but also a good deal of uncertainty worldwide as we look ahead to 2014. So, i little bit harkening back was talking about is not a lot of knowns in terms of how much demand for metals is going to expand. Had a pillar many very reliant on miners for their equipment. Industrials may broadly do well in the economy but still equipmentin the industry. How will industrials perform in 2014 . I do think industrials will have a pretty good year. One of the areas we are recommending an overweight two. Three areas are industrials, information technology, and energy. I agree some companies will probably have a little tough go at it because perhaps they are too focused on a particular sector or a particular geographic area. One of the reasons why i think over the last year you heard some of the narrative change on some of the Conference Calls with ease companies, where they have been stressing how diversify their businesses are, where they are not just one trip tonys, where the one trick ponies. But generally speaking global industrials, provided we get positive gdp numbers globally we will see that area continue to recover. So much forank you the time. Brian jacobson joining us, chief portfolio strategist at wells fargo funds management. When we come back, shares of netflix up 300 if you look at where they started the year last year. More than 40 million subscribers were added. Tons of hit tv shows. We are going to take a look at the path forward for the online streaming servers. And relief coming to the 52 passengers stuck in ice for more than a week in antarctica. We will give you details on the rescue mission. Just a few minutes into the session. We will be back with trading updates. In the loop continues in just two minutes. More than a foot of snow expect it in parts of the northeast tonight with a blizzard warning for some regions. There is bad weather in the midwest as well. One of 1000 flights have been canceled as of 6 00 a. M. This morning. With more on the storm we bring in a bloomberg meteorologist bonnie schneider. Is this no going to show up . It is, deirdre. This height is worth it at this time. What we want people to do is not be frightened but to take preparations now before the snow comes in. And it will come in. Look at all the moisture across the Carolina Coast Land as far south as georgia. It will ride up the coast and come into some really cold air. And only that, we have another storm across parts of chicago and into the midwest pulling down much colder air. When you have cold air and then a lot of moisture, you can get very heavy snow. Lets take a look at what makes this storm unique. Looking a very strong winds. That is why a blizzard warning is in effect tonight thomas through tomorrow at 1 00 or long island. We are expecting some really fierce winds. 45 mile an hour wind gust third visibility at zero. For new york city, under a winter storm warning and that means we will see near blizzard conditions. Low visibility with heavy accumulation. Millions of people affected by the storm. Some of the heaviest snow will be in boston. Actually i think just south of boston, plymouth, massachusetts, 15 inches plus. There will be blowing and drifting snow making for dangerous travel. As we move on, you will find we are also watching the advisories. The blizzard warning i mentioned, also seen over parts of the cape and the island. Fierce winds, that is what is making the storm unique. As new yorkers, people think just a few inches of snow, eight inches. But it is the wind and wind chill. I was checking the natives numbers. Tonight in new york city, how your body will interpret the temperature will drop down to zero. Tonight in boston, it will feel like 12. Long island and east hampton, it will feel like 10. This is a dangerous situation and people need to take it seriously. We have already seen flight impacted. There have been many cancellations already at the airports. Some of the airport to think would have cancellations, like in boston, not seeing as many just yet as people trying to get out before the storm hits. But we are seeing numerous cancellations, well over 100 in chicago and places already impacted by the storm. Thank you very much. Donnie schneider, bloomberg meteorologist, joining us with the very latest. If you are stuck at home am a you may want to get caught up on movies or tv you want to watch. Speaking of that, netflix had a banner year, at least if you judge by the stock rights. As for the path forward, we will bring in our senior west coast correspondent Jon Erlichman from l. A. He is not worried about snow. But as far as netflix goes, this year is going to be a pretty big spending year for the company, right . Definitely, deirdre. If you think about 2013, a very important year for netflix. A year you saw the brand a lot more focused did in the sense that netflix was viewed as the tv and movie buff at a certain price point. , a legitimateut must the tv spot. They rolled out new shows and they continue to cut deals where they will be the exclusive home to certain movies after they have been in theaters. That is why they cut a big deal with is me. Theyve got important art is like the weinstein company. You take that and you couple it with changing the pricing laws where they have multiple price points depending how many are using it in the home, and you are talking about a shift in business lately and a trend that will continue in 2014. Which is costly. Numbersook at the netflix talked about in terms of where it will be spending money this year, 3 billion going toward all of the content they are making available. Another half billion dollars on the Marketing Campaign of what netflix is. And a lot of it obviously introducing the brand overseas. Of usen, of course, ease is so important so technology is where they spend a lot of money, too. It is one of the things that made netflix as powerful as it is at this point. You take all of that together and, yes, you are right, it will be a pretty big spending year for netflix. As far as this new potential pricing model, netflix had a huge pr issue last time that it tried to tweak its pricing model, differentiating the disc from downloadable version. Frankly i am surprised they are going down this road again. I think they did learn some lessons from that, for sure. Find am, theyve got to way to make sure they generate enough revenue from each of their users. There is a difference between the number of subscribers theyve got, in the neighborhood of 40 million around the world. And the number of people actually using the service. They have been pretty flexible offar with that ability people to share different accounts, but i think given the content they have to figure out ways to generate more revenue for every user. And there is a lot of competition. Lets face that fact, two, deirdre. Cable still has sports, which netflix does not have, and hbo is doing very similar things and always has been doing similar things to what netflix is doing with the original series and exclusive film deals and has with the studios like fox and universal, and then obviously amazon and hulu and the international players, too. You think about who their competitors will be, you have to think of markets like the nordic region, europe, latin america, all those areas where there are local services. We dont talk as much about but were netflix will be going head to head, the same way it is going headtohead with hbo here in the United States. Thanks, as always. Senior west coast correspondent Jon Erlichman joining us from l. A. Catch him and all the latest in tech and media news every weekday 1 00 p. M. , 6 00 p. M. Eastern time right here on bloomberg west. Keeping you on the west coast, researchers in california getting close to releasing an unmanned fully autonomous open ocean vessel powered by wind and solar. It basically completed a record trading voyage crossing 2100 miles of the pacific, san francisco, to hawaii. The first admission, tracking sharks off the coast. The first big mission, tracking sharks off the coast. When we come back, if you plan to purchase ecigarettes and italy, people. Today more for that. Also there are some passengers who had been stuck in ice on a ship in antarctica for more than a week. Their nightmare is filed now over. We will bring you more on the story when we come back. Time for the global outlook. Japans Prime Minister Shinzo Abe Abe trying to get the economy growing again after the economy fell by the most on record last year. It includes boosting consumer demand and paying for rising welfare costs. All 52 passengers from a Russian Research ship, one that was trapped in antarcticas ice has been rescued. An australian helicopter airlifted the people out to deliver them to a chinese icebreaker. The ship has been stuck for more than a week in the ice. The crew, by the way, is staying on board, waiting for the ice surrounding the ship can be broken up. In italy, the government may introduce an 80 tax on the sale ofecigarettes. A liquid in these little bottles called Propylene Glycol is the billowy stuff you see in theatrical specialeffects. Now it is used to give smokers than nicotine hit minus the cocktail of cancercausing chemicals. In italy, one million smokers have taken up ecigarettes. Market researchers estimate industry will be worth 7 billion by the end of the year. Ais factory belongs to turinbased company, last year it earned six 7 billion selling liquid nicotine and its own electronic cigarettes. They feel under threat. Efiguring makers will have to pay 85 of the revenue and taxes. The ceo says the growth of the industry meant big losses to Cigarette Companies as well as the government. Business, there are huge interests. Pharmaceutical lobbies, tobacco lobbies, the state monopoly the cashes in 14 billion look 14 bureau euros 14 billion euros just in texas. Tobacco cigarette sales at the lowest in 15 years. In the u. S. , big tobacco has started to market its own ecigarettes. Bloomberg industries analysts calculate global ecigarette sales may soar to 2. 3 trillion by 2050. A significant shift in smoking habits and revenue. Back in justop is two minutes live on Bloomberg Television and also streaming on your phone and bloomberg. Com. We are on the markets next. This afternoon on money moves i will speak to the ceo of a wall street journal top 50 start up keep holdings. In the meantime, it is 56 minutes past the hour and we are on the markets. Take a look at what is going on. You see stocks lower across the board. The dow, s p 500, and the nasdaq all in red. Completely different color than what you saw last year when the dow closed up 26 and the s p, 29 . A few stocks we are following. Martha stewart living settled a yearlong dispute with macys. The retailer claimed Martha Stewart breached exclusivity by selling certain goods at jc pennies. Terms of the settlement not being disclosed but macys said it does not affect the outstanding claims against jcpenney. Staying with retail, watching shares of arrow. Ale downgraded by jefferies. Deteriorating fundamentals and the turnaround taking longer than expected. From retail to autos, americans snapping a usmade cars last year. In fact, boosting the market share of all three detroit automakers. We bring in Bloomberg News auto editor. Jamie, what is behind the surge popularity of americanmade cars . Good morning, deirdre. A lot of this is spiraling. A lot ofly improved it is spiraling. There really improved. Detroit has dominated pickups the 80s and the 90s when they became common. Now they are providing better quality and value and better looking cars like the fusion and fords lineup, and really all of them, chrysler and chevys, better than what they used to be. From yourking this research. Fifth year of growth and maybe even 2007 levels surpassed . Get the finalll results tomorrow, and it will wrap up the fourth year of growth. What we are looking at more growth next year. Not at a robust back above 16 million. We will get really close to the 2007 level, so we might get close to 2006 or even further back. But the record is 17. 4 so we know were nowhere year near that but at that time they were practically giving cars away and it was not healthy. Now there is a better balance between consumer demand and how many cars they can make. Will unveilat ford a new concept car in Las Vegas Next week. It has a solar paneling on the roof, and you are not obligated to plug it in. That is a concept car. But ford in general has been gaining traction and has had a record year, right . Fantasyis still sort of at this point, but it is exciting to think about a car that is both electric and free of a plug. There are different ways to go at that. But for what they actually have on the road, 2014 2013 was a great year. S series up to 100,000 through november, that is all the fullsize trucks toyota sells. Fusion sedan, up more than 50,000 sales. Big gains. Suvs, small fiestas, they have really pushed the whole brain. Of course, lincoln still is not doing rate and they dont have all the brands they are used to but alan mulally has focused or their work and they made it a winner. Our editor joining us from detroit. Were on the market in just 30 minutes time. Market makerskets again in just 30 minutes. Market makers starts right now. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. Ciao, chrysler. Italian carmaker fiat buys the rest of chrysler. We will take the new company for a test drive. And getting home, a massive storm is coming. We will talk to an entrepreneur whose black car app will surge pricing. Vintage 2014. Champagne glasses are back on the cupboard shelves but theres more where that came from. We will take a cross of the hightech future of winemaking. Happy new year, everybody. Youre watching market makers