Transcripts For BLOOMBERG Market Makers 20140103

Affecting global business. The new 777x dreamliner will be built somewhere. Thousands of jobs and billions of dollars in Economic Activity hinging on a single union vote. Black out. Millions might not be able to watch home teams compete. We will find out why selling home tickets is more important in the nfl than televising the games. Perkoe to Market Makers. Great to be here in the snowstorm, or as you would say, another day in winter. You would say that. She said it for me, i dont have to say it. I am Erik Schatzker, second day of the working new year. Welcome back. Thank you. It is the biggest winter storm of the year. Of course, day two. Part of the u. S. Are forecast to be left with 1. 5 feet of snow when it is all said and done. For more that has for more on the storm that has blanketed the northeast, we go to bonnie schneider. We are starting to dig out of the snow, but it is freezing out their bank. Give us an update. Chills are below zero. But tomorrow they will die down, but it will get even colder, so as people shovel out to get back on the road and back to life, i think they will be feeling that. You can see the windchill across the country. It is cold. Yeah. Have been busting bonnies chops about this all morning long because it is really not that cold here. If you get frostbite, you might change her mind. I have had frostbite before. Manitoba,innipeg in just north of north dakota, it was colder in winnipeg than it was on the surface of mars come if you can believe it. Its morning i was saying how tough is how cold is it in northern ontario . Are, onare new list the shores of ontario right humanity inhabited by and it is 40. Once you get past 15, that is when you get into the danger zones. I guarantee you the folks are not prancing around naked in the snow right now. They know better. Going into the rest of today, people have gone into the city and are at work. What are the dangers that lie ahead . Really, the wind. The eastern sections of the coastline of acid juices and Northern New England will be impacted with the snow. The coastline of massachusetts and the Northern New England will be impacted with the snow. If you live in maine, for example, you will feel it for at least another 12 hours. We have 30 windchill in maine. A lot of maine is in fact further north than parts of canada. But here in new york city, the cold is all we have to worry about. And snow and ice. Had six inches of snow, on long island 10 inches in places. Bonnie, have we over dramatize this . I got to work easily in a taxicab today. And i did fly in last night. You are one of the few. 2500 flights were canceled in the past 24 hours. Most people did not arrive so easily. What about weekend football . A lot of the games will be played in bitter cold. Only a handful have been played in below zero temperatures. You probably find that hard to believe. Other games outside will be much colder, and you can see them here. Green bay, no stranger to that. It can happen. It can feel below zero. People are worried we will have the coldest super bowl ever. We could have a snowstorm if possible. Bonnie schneider, thank you for joining us, giving us the latest. Forcingweather is airlines to cancel flights all over the country. Lucky me, i dnt get canceled. I am with erik this morning. More than 2500 flights were canceled in the u. S. , it and the ceo of jetblue joins us this morning. Rob, tell us what it is like this morning for jet loop with all the cancellations. Jetblue. For with all the cancellations, what kind of a hit will that be to your bottom line . Bottom line, this is a return trip period. It will take a couple of days longer, but we will definitely get them home. I do not expect a huge bottomline impact, but it takes us a week to roll all that information up. Good to be with you guys. At what point did jetblue make the decision that it was a better course of action to cancel flights than to run the risk of extended delays that could cost the company money, and also clearly damage its relationship with customers . It is a great question. We made our decision wednesday night to take the operation down, roughly about 7 00 in the evening last night in the northeast, and that brings us all the way from portland, maine, through the Greater New York area. We will see more cancellations today because even in new york, we were not expecting jfk to be closed as long as it was this morning. We expect it to open in the next hour, and as soon as it does we will begin limited operations. It will probably take us two days to reset an operation this large. We ask customers to be as patient as they can, check jetblue as often as they can, and we will get things back to where they need to be. Do you think jfk was ocean was overly cautious . I dont think they were overly cautious. They had a tremendous amount of wind on the airport field, and with the amount of snow that they god, 10. 5 inches at jfk, they have a that they got, and 10. 5 inches at jfk, they have a hard time with visibility. It takes them longer to get the runways clear, that we expect them to open in the next hour. How has the calculus changed over the past six years . You were at jetblue back in february of 2007. You remember the debacle that many others remember, that they were canceled for several days and did not feel they were getting a straight answer from jetblue. How have things inside the airline changed since then . We very much view Mother Nature as part of our team, and sometimes she behaves very well. Sometimes when she wants to win, she is going to win, and then we just get out of her way. Know aso let customers early as we can, which is why we were canceling flights wednesday evening for thursday and friday will stop if you cancel wednesday evening for thursday and friday, do you have to offer, do you have to offer compensation . When you do something weather related, i think customers are understanding that this is not something of jetblues doing will stop we try to give them as many options as possible as far out in advance as we can. Morning,t into this the situation is dynamic, and unfortunately we will see additional cancellations later on today and tomorrow as a result of a very slow start up. Our best laid plans, you still have to react to the conditions as they present themselves. Every time we get a hint of bad weather in new york city, anywhere else in the nation, people start to talk about the volatility of climate, climate change, global warming, etc. To what degree is jet loop beginning to factor that is jetblue to getting to factor that into its operations . Do you anticipate more storms this year and the past several years than you have lived through in the past decade . In general, whether it is the weather or any other geopolitical disruption we fly in over 16 countries, almost 100 cities right now you have to be paired for anything. In general our playbook looks relatively the same, no matter whether it is a significant weather event or Something Else with the weather. It,ss the situation, size make our estimate of what the impact will be and let our customers know what we are doing. Our general playbook plays through no matter what the incident is. To your point, we have seen a lot of significant weather, and when it all tends to come, it comes in at once, at least it seems that way the last couple of years. Rob, thank you so much for joining us this morning, rob , chiefer rob maruster operating officer. Check the airports flights are being canceled and the roads are treacherous. I was here early this morning, helping tom keene fillin on surveillance with cristina alesci. We spent a lot of time talking about a certain yellow camaro. Right outside the billing the building on 3rd avenue. To surveillance crew decided be good samaritans. After the show, a halfdozen producers were helping antonio from tennessee, driving with all tires what was he doing in new york with a yellow camaro with bald tires . Look at the producer, executive producer. This guy is going to heaven after pushing that camaro. He made his way on to warmer climes. Good luck, antonio. Glad to see the Bloomberg Team helping people out. Auto companies have been reporting december sales. Aarted with chrysler disappointing month not just for chrysler but General Motors as well. Matt miller will bring us up to date. How disappointing. Really disappointing across the board, and not just for detroit but for toyota as well. Both General Motors and toyota saw declines. Their sales fell month over month. We have not seen that for a while now. We have not seen that for a long time, and you know what they are citing . What . Cold weather. I knew it. I dont understand people who do not understand it is cold in the winter. It is warm in the summer, cold in the winter. Think of this there is a little more sarcasm and cynicism here because there was not enough already. I guess i am just filing on. Ford missed the estimate, chrysler missed the estimate. Gm and toyota as well. They are having record months for certain models. For example, ford had a record month for the fusion. The bestselling month for the fusion of all time. General motors had a record month for the corvette, the best month for the corvette since 2006. The best month of december for corvette since 2006. That typically sells well in december, but the corvette did quite well. Gm is taking a big reading because it did not miss by a little bit, it missed a. L. I a big beating because it did not miss by a little bit, it missed by a lot. What is the First Quarter outlook . How will they recover from this . I just saw a headline cross said, german car sales rose for the month of december. Everyone following the industry sees that europe is up the most in two decades. When german car sales rise, and here in the u. S. When we have a healthy and strong auto sales market, we see it drop, that is interesting. It is one month, though. The best year for car sales do we have the pricing chart . You can see what gm has done with pricing and what daimlerchrysler has done. Its representative of the entire industry. This is to show you that Ford Daimlerchrysler . Ford and chrysler can keep their prices above industry average, chrysler right at industry average. If you take a look at the graph, you will see that they go in opposite directions. Here you see gm in yellow. Prices climbing, climbing. Daimlerchrysler the big luxury mercedes, lowering prices significantly. They also brought out cheaper new models like the a class. A lot of them are getting into the entrylevel market, but carmakers arerman lowering their prices across the board. U. S. Carmakers across the board are raising prices, and maybe that will have to change in the coming months because we are looking at so much inventory on the u. S. Carmakers right now. It is seasonally a very slow time. It is cold outside. Reversal,ill see a maybe we will see these companies have to come back a little bit on their prices, although they definitely do not want to. Then maybe people in the market for a corvette or a camaro to have to wait. A good update. It is rare that we see a stock like gm move as much as that on auto sales day. I want to take you to the top business stories from around the world. A vote today will determine where boeing builds the bulk of its new 777x jetliners. In Washington State will vote today. 22 states have offered incentives for boeing to relocate production. The heat is on. A big acquisition in the Computer Security industry. Fireeye has bought closely held mandiant. The deal is theyll unite a little more than 1 billion. Protect against hackers. Builders are threatening to halt production on the Hannah Montana now. On the Hannah Montana on the panama canal. When we come back, Phil Mattingly is with us. He is a man whose pictures are it is 2014ell you, and i am excited. It is a big year for Phil Mattingly because congress has a lot to get done. That is what we will be talking about when we return. And it is a crucial vote today for boeing workers in Washington State. We will see what is at stake. This is Market Makers, back on bloomberg tv, streaming on your phone, tablet, and bloomberg. Com. You can watch all our interview streaming live. You are watching market on this friday in new york. Congress is back in session next week with a long to do list for the next year. Restoring unemployment benefits, immigration overhaul. We wonder which issues will get lawmakers attention. Phil mattingly, there was a note of bipartisanship toward the end of 2013 with the mini budget deal. Is the goodwill going to extend into 2014 . Maybe optimism says a little bit. I think there will be some questions. Read off the bat we have something things next week happening. Foremost, janet yellen will be confirmed by the u. S. Senate to be the next Federal Reserve chairman. There is no question or concern about the vote whatsoever. Have,ntentious issue they the senate will take up the extension of emergency unemployment benefits. 1. 3 Million People lost those benefits on december 28. There is a bipartisan bill in the senate. However, they need republicans to come on board. That is a question. Term, not evene the immediate term but the first day back, we will see fireworks on capitol hill. Phil, january 15 is the deadline for congress to pass a bill that would institutionalize the budget deal that they cooked up last month. Is there any risk that this will not get done . We talked to jim moran, con richmond from eugenia congressman from virginia this morning. He was certain it was going to pass. It is a pretty good bet that it is going to pass. The key part of the budget agreement at the end of last year was setting baseline numbers for the spending bill. Once those are in the can, it is a pretty good bet that staffers in both chambers will make this work. A tight deadline to have to vote on this by december 15. Age in both chambers have indicated they are making good progress. Hat will get done again, it is how close they will get to visit to the deadline. I hate to bring it up already ashwood er two days into the year when will we see washington shift into full on campaigning mode . A great question. When you look at what erik mentioned about immigration overhaul, things that are big picture items that people want to do but do not know how to, there is a small window to do anything here. By june or july, people will be wanting to get outoftown to get it to full campaign mode. All members of the house are up for reelection in november. If you want to get anything done, you need to find a window in between where the primary dates are early in the summer and before they all leave town in august for recess. Any time after that, youre in campaign mode. Notg that happens, actual substantive policy. You want to get down here and make things happen, you have to do it early, early march time. Untilt until 214 wait 2014 plays out. We are all trying to figure out unfair of me to throw the question to you because we will be back after a commercial break. When we come back, we are talking college bowl games. Over, are feeling bold there is one guy to blame and that is espn. And one state in america you will hear from its governor. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Welcome back. Im stephanie ruhle. What is the most innovative state in the country . It is not california. A new study by bloomberg ranking say Washington State has taken the top spot. We caught up with governor james sosley about why it is innovative. Innovation is our stock in trade in washington. We invent, we trade, we build. It is in our dna but also in our water. We have a unique combination and diffusion of culture and state practices and talent. I think the fusion of those three things have allowed us to create this incredible success so many innovation, multiple platforms. I think thats what its exciting about the evergreen state of washington. Aerospace, clean energy, life sciences. The gaming industry today has now surpassed hollywood in gross revenues. Creating whole new industries. It is an exciting stay, and it is part of our culture. We were having some audio problems there. That was washington governor jay inslee. Boeing is one of washington cost top employers, and today the company and its Largest Union face a critical vote on a new contract. Billions and dollars and thousands of jobs in the area are at stake. Adam johnson is here now. Help everybody understand why this is a landmark vote and potentially a precedentsetting one. The rating agencies have said that if the machinists ultimately vote down this contract, the Credit Ratings of the state of washington may actually get lowered. Important it is. Then why wont Washington Bend . When we spoke to the governor, he says we will not lose this contract. It is about the union. Boeing has already put this contract in front of the union twice, and Union Leadership has voted it down. There is the belief that the union would support it, but the Union Leadership is what is saying no. My understanding is some of the International Machinists Union Leaders are in favor of it. They might benefit. Remember, this is about keeping jobs in washington. Local unions want the jobs, but leadership is saying here is the deal if you accept this contract, you will also see boeing shift from a pension plan from defined benefits, which ultimately saves boeing money. That is why they want to do it. Some of thein sent union members, there is a potential series of bonuses, 10,000 to 15,000 per employee. One thing we have not talked ut two things, in fact the construction of the plane, the boeing 777 think of the 787 as the first airplane, the dreamliner that has the 20 to 30 fuel. They will take that technology and put it into the 777. The 787. N wider than there are already about 350 orders for this thing, call it 1000 orders for the 787. The thought is a as you have the longdistance routes, 777 becomes the more important plane. Could we see say it for me 777s. Ioduction orders gekko was in charleston this weekend and i saw all the 787s. I love charleston. My favorite american city. Cityde new york, the best in the world. You see them lined up with all kinds of different livery. Is boeing is playing hardball. Boeing has gone across america and said what ever states are interested in this business, show us a bid. Yeah, show us a bid. So it is not like a typical fight between union and employers, traditionally one side giving ground. Boeing has threatened the union, if you vote in favor if you do not vote in favor of the contract, we may talk we may take all of the 777s out of the state. The 737s. As some of which is really the workforce. Is the one that Southwest Airlines flies that you are familiar with. There is a lot at stake. It is not just boeing playing hardball, it is the union. The question is, do you really want to keep the jobs in washington . If so, how badly . If not, they will go elsewhere. This could set a precedent for corporate america. This is a very big deal. Adam johnson, catch him this afternoon on street smart this afternoon. With me. Cities, they may not be able to watch their nfl teams play. We will have more on that when we come back. You are watching Market Makers on bloomberg tv. Would Market Makers be without a Little College football . On monday, the ncaa will crown a new champion for the auburn when the auburn tigers take on the Florida State seminoles. Be good ratings for espn. Jonwest coast correspondent erlichman is here to tell us. How important are these bowl games for espn, disneys crown jewel . Incredibly important because this has been such a Growth Business for them. Espn is more than just an owner of the rights to these games, they play a big role in the bowles becoming what they have been over the years. Andaudiences are enormous will probably continue into monday night. That makes the advertisers happy. They cough up a lot of coin. In the cable providers are happy because they know people are watching espn, so the big fees they are paying are justified. Are people watching fox sports one . When it launched, there was so much fanfare around it, but i hear all year espn, espn. This really comes down to what you have got. What do you have on your schedule . You do have to give fox credit for having some pretty good stuff it is offering. Lot of College Sports itself i would say more college basketball. Bowl season,his espn has pretty much got it locked up. But there is some College Football that you will find on fox. Basketball, some golf, and ultimate fighting has been something they have been able to benefit from the ratings. But you are right. Espn continues to power ahead thanks to having these different bowl properties. Obviously they had a nice run with monday night football into the nfl playoffs, football and basketball season. You cough up a lot of money for the rights, and you can play out your schedule, and i think espn, things are playing out as they would hope. From an advertising perspective, how much more valuable is football than basketball . A good question. Espn does not share stats or numbers on the specific spots, what they can get for each 30 seconds. But there has been a lot of reporting in the case of some of these bowl games getting upwards of 1 million for a 32nd spot, which is pretty incredible if you think about it in the evolution of old games. When you compare the cost of those games, which has been climbing but certainly nothing billion getting shelled out for monday night football you will get a pretty good return on your investment. We have this changing landscape of what are the most important parties for espn . Monday night football might be of the top, but all of a sudden the bowl games, basketball, baseball, become part of this second tier. Most important becomes a talking point. Your point. Atter to how determined will we see espn be in protecting its turf . Espn has a lot of money. Collect 500 from every of its 100 million subscribers every month. The biggest game in town, you are right about that. One of the things that you see yearshese ideals i go 10 with these deals i go 10 years and beyond a lot of times you have built into the contract the ability to sort of show these games on all sorts of different devices, maybe was that have not been invented yet. That has been the legal nature of these contracts. Interesting to note that hugely valuable, a lot of these bowl games, watching them on espn, is incredibly valuable. You wiccans you would expect them to be aggressive. It is a healthy competition. Senior west coast correspondent Jon Erlichman in los angeles. When we come back, we are going to stay on football. But the professional variety. Nfl fans are calling it a personal battle. They may not watch teams in playoffs this weekend. We will tell you why. The nfl playoffs kick off this weekend. However, fans in three of the four cities hosting games may not be able to see them. Bay, in green indianapolis, are in danger of being blacked out. Our guest is with us from los angeles, and here in new york city, bloomberg sports columnist scott such neck you notice how big that smile is echo there is a. Orrelation to the to that lets start with a man who is really happy in l. A. Tell us why this would possibly make sense of the nfl to not show these games. Wouldnt it be important for all sports fans . They have had this blackout rule in effect since the early 1970s, and i believe in those markets where the games currently are not sold out, in cincinnati and green bay and indianapolis, you will see some of the local affiliates sweep in and buy those tickets because they want to make sure that they get the ratings, and their sponsors want to make sure that those games are aired as well. Scott, this does not make any sense to me at all. There was a time when the games meant that much to sports teams, but they dont anymore. One, the Indianapolis Colts had sold out. The packers but hold on, isnt that, unintended, gaming the system . Sure it is. Is ok . That from the nfls perspective, first and foremost they want their stadium sold. They built the stadiums on the premise that they had to squeeze every nickel out of the concessions, merchandise, out of the restaurants and bars. If people are not there, you dont get them. That is the premise they operate under. They need the stadiums to be full because the broadcast is there already. I guess i get it, but you are running the risk of alienating what do you think, pat . Two games blacked out this year. Thats it. Now you are running them in the playoffs, obviously. Where the temperature will be 15 degrees not windchill, 15 degrees. But it is green bay. They are used to that. That, do you want to weigh in here . There was a time when perhaps the blackout rule made sense when football was trying to build an audience. But now it is the most popular sport. Scarce, ands highly it feels more like a black male rule like a black male rule l rule ratherckmai than a blackout rule. 5 billion of that is coming from their media. If you are from the nfl, of course they want to protect their turf. Because revenuesharing is so high with respect to ticket revenues, you can see why they would want to do this during their regular season because they are spreading the wealth. One last thing on this topic yesterday he came out in sports is this daily that attendance this year was up 1 . 96 of capacity. During the playoffs, the individual teams dont get any of the gate revenue. They get to keep their concessions and parking, but the playoff ticket receipts go to the nfl directly. Have ticket prices gone up . They always go up. Prices always go up. But the nfl is looking down the road. There is a battle brewing right now for the consumer. In the otherthose sports are loving their living 100 inchause they have tvs, no line at the bathroom. There is nobody yelling behind you. People love the comfort of their living room. The question is, moving forward, as the inhome experience flip to go inhouse . But isnt that why they are building the billiondollar stadiums because they want to give consumers the luxury experiences . They want to, but are they doing it . I have been in every one of these stadiums, and there is no difference between i prefer to sit at home and watch because i dont think my 10yearold nephew to a patriot game these are the patriots, and they do it better than anybody. They do it well. By halftime, my 10yearold nephew said, uncle scott, can we go home . Commercials, a lot of downtime. He wanted to get out of there and go home. What do you think about this . Scott has a really good point. Some of these places what is it in dallas, the superdome . At t. The jumbo screen is so fantastic, youre not watching the game, you are watching the screen. Era whereliving in an we are conditioned with the red zone. People want access to online so they can follow their fantasy players, and most of the stadiums are not equipped to being able to access your digital device. It is a little more difficult for various reasons. It costs money for stadiums to upgrade. I agree with scott, there are a lot of other costs for fans going to games, sitting next to the obnoxious guy at the games. That is also a big guy, dealing with traffic. Again, i will say this. I think a lot of fans today, when they make a decision to go to an nfl football game, are saying to themselves we had better go or this will get blacked out. I dont see that as being a motivating factor. Lastly, stephanie, i want you to know that scott, erik, and i have spoken. We are going to green bay, put our cheeseheads on with no shirts on, sit in the subzero weather and enjoy ourselves. I dont want to see any of you doing that. They dont get the tailgate. Isnt that a huge part of the nfl culture . It is, and this is the reason why, again, professional football is really about is really part of americana, where people like to have a to attend sundays a year where they h2 to 10 sundays a year where they can do that. If they remove the lockout rule, i do think that what is going to happen is you will see the price of accessing nfl content with mobile devices go up. We should say that the fcc has moved to end the blackout rule, and the nfl will strongly oppose it. Lets hope they prevail. The owners say the solution is technology for tom is technology. I see people paying a lot of money to see the game at now they are watching Something Else on their phone. Now that is a statement on the culture. Is it compelling enough . Are they giving people the compelling enough roddick in the arena . If they want the arenas in the stadiums full, they have to make the product compelling enough. If they are watching Something Else while they are there, that makes that mean something. We have got to run. Thank you. Bloomberg Market Makers coming back in a few moments. Automakers finding out that style in fuel economy are simply not enough. More and more, drivers want to stay connected. We will show you how they are doing it. Live from bloomberg headquarters in new york, this is money makers. December to remember. The surprising year in Sales Numbers from the Auto Industry and a look ahead at the hot technology that will drive sales in 2014. Special delivery. Big business has billions at stake in the future of the post office. The worlds biggest Consumer Electronics show is about to get underway. We will head west to show you what will rock the floor in las vegas. You are watching money makers. It is 11 00 here on a snowy friday morning in new york. I am stephanie ruhle. We have a lot to cover. Weve got to talk about we are calling it a major storm. You know it is hitting the east coast, causing big headaches for many. It may create profits for others. Julie hyman has a look at how the wild weather Impacts Companies around the country. Eric wants to start with snow, but it makes me so angry that people rush out to buy snowplowing it is knowing. Does not just the snow, it is the cold, too. Even you must respect it is getting a little put on a coat. Canada didnt have electricity for 24 hours. He had a generator. He wasnt burning his furniture in the fireplace to stay warm. Lets talk about the cold weather. Lets talk about natural gas. Which normally would be going up on a day like this. Instead, futures are going down. The outlook for the next inventory report is there will be a smaller drawdown in inventories than is typical this year. Youre seeing a counterintuitive move. If you look at propane suppliers, were seeing a mixed picture because of what is going on with natural gas. Some of them are up on one would imagine would be increased demand for some of their product in these really cold places. As a the energy is one that tracks closely with natural gas Chesapeake Energy is one that tracks closely with natural gas. Uptickare seeing a big in generators, snowplows on days like this. If you own a home in the northeast, you might think about that a be in early december or november. A lot of those sales happen earlier. It is not just about one storm or one or two cold days, but about the winter season overall. If last winter was really cold, youre more likely to go out and buy some of these things. We spoke to one of the handful of large properly held snow plow companies what do they make . Snowplows. No, there is a snow shovel, a snow thrower for the snow plow is the thing that drives down the street. It is attached to the front of your truck. And they sell the plow. They say when you do see a what is it that they sell . Snowplows. At the beginning of the season you have your contractor to get this contract for the season. But when a big snowfall is coming like this, you might see an uptick in business and so they say there is some level, at least at the margins, of higher business. What about Online Shopping . Were going to be holed up in the house of my kids will be watching tv this weekend, and that is when i find myself drawn to the computer. Thisu would think phenomenon would be happening. Surprisingly, it is difficult to find hard data on this. One place we found it was the website to did a study in seattle. Snow, that rain. You see on the lefthand side of the screen, the cloudy side and clear on the righthand side. Yes, you did see an uptick not just in traffic, but in sales. Specifically, things like home furniture. Becausessarily apparel, people seem to prefer going to the stores, but more commoditized items did better. Well, julie, that is the story. Eric is not buying an extra edge or coat because he doesnt need one. Im not buying a snow plow. You know who might be buying one because he has a tahoe he has a driveway. Pilem going to call snow snowplow boss. Is that what it is called . I thought, why dont i have one . I need to get one. For the bad weather. It is being blamed for every single carmaker that has come out so far with december sales has missed. Toyota ton and chrysler and ford across the board. If you look at the stock prices, some guy hit hard. General motors got hit the hardest. And toyota got hit pretty hard as well. Some reported sales increases, but they were all trailing estimates. For chrysler, the hit almost six percent. We were expecting a big percent. Gm down 6. 3 . We were looking for a gain. Toyota down 1. 7 , looking for again. 10. 5 ,posted again of but we were looking for 13 . Concerning especially the detroit three is, we were expecting the detroit three to gain market share for only the second time in like 25 years. The first time shouldnt count because it was after the tsunami crashed japanese production. It still looks like ford and chrysler have a chance of gaining market share for the second straight year, but General Motors, i dont know if theyre going to do it because they were only looking to gain a tiny little bit. Aside from the weather, are there any reasons to expect or explain the drop in december sales, particularly for gm and the lagging performance of the other automakers and where theyre those trends will continue into whether the trends will continue into january and february . I am looking to get a raptor. Really . Im going to call the boss to get a plow. All i can come up with is the recent they said it was due to the weather. Theyre sitting on a ton of inventory. They havent budged on prices. In thely, it is investors interest they dont do so, but they havent moved him on prices but in fact, moved up. Aggressive the most in raising prices. In december, chevy sales down 8. 1 . Trucks, soell theyre not being quite as badly. Truck seven the bestseller. Been the have bestseller. If you want to buy a truck, buy it in december. If you want to sell one, sell it in november. No sales for oldsmobile. Oldsmobile doesnt exist who owns a buick park avenue . My mother. I did not introduce you properly, matt miller. What would you like to be called . I dont know. I was thinking executive editor no, editor at large for cars. We will give you the promotion right now. It is time for the news feed. Im going to talk about the top business stories from around the world. The snowstorm is blamed for at easterndeaths in the half of the United States. There are up to two feet of snow in some places him in more than 2000 flights have been canceled a month and slick roads for making it very dangerous to drive. Butchers in the northeast temperatures in the northeast may hit their lowest point in two decades. Jfk is open and we are seeing some flights taking off. You will be able to get cheerios without genetically modified ingredients. General mills says it will use nongmo corn and cane sugar for the original cheerios and an activist group says the company gave in to pressure from groups opposed to gmos. Apartment sales in new york city hit a record high in the fourth quarter, rising 27 . You can give credit to the prospect of higher Interest Rates and prices. Following inventory lead buyers to pay more. Condo prices were up at least million,dian of 1. 3 which Erik Schatzker, is chump change when you think about the apartment for sale you want to talk about. Steve was not one of those manhattan sellers. He has been trying to unload a 9000 squarefoot duplex which happens to be right here in a bloomberg tower. Forn listed his apartment 115 Million Dollars last spring. New York Daily News reporting he has cut the asking price to a slightly more reasonable 98 million. We should note it is in this building where bloomberg World Headquarters i did note that. As well. e has a place and the former ceo of general electric. It is a starstudded building. He is a place in the west village as well. Cohenmpted to say, steve is a career traitor. He may have sold 88 million of art, he also bought a damien hirst the last year and a 60 million house in the hamptons. Is he trying to sell this massive apartment . Sure. But on the heel of it, he could be looking to buy by Something Else. But this could have been, and clearly cohen was hoping would be, the first apartment in new york city to sell for more than 100 million, which is annexed ordinary number. You have to ask, who are the buyers . A very small pool. What pushed london prices up was international buyers. That has been happening here, too. Is it another hedge fund superstar or someone overseas . He has cut it to near 98 million. Chump change. I did not get the ford f1 50 for christmas. I dont know, tiger dog, how about the 98 million place . You did not get the leopardskin highheeled pumps, and that is my fault. And their only 800. For 98 million, that place could be mine and it would be right next my office. Back, keepinge drivers connected. General motors is doing some of it. We will show you some of the companys smart cars. Today is friday. It is time to play the year but game. Youve got to take a look at this guy. He is or was a Government Official to graduate from four stills high school right here in queens forest Ells High School in 1972. That hair is. Is delicious. Tweet us. We need to know that answer. I think ive got it. Welcome back. Would you are buying a new car, you probably want to know about fuel economy and safety. For one third of buyers, another consideration is conductivity. For transferring how drivers thought about their cars. Gm chief Technology Officer tells us why they continue to pump money into onstar during the dark days of bankruptcy. Conductivity for a long time was a. M. fm radios and cassette and cd players. When music players came out, ipod was introduced and other devices, the Car Companies in general had to figure out how to accommodate those devices and make the vehicle an extension of them. That is what started the conductivity trend that has really exploded. I think back over the last several years, the recognition that conductivity is going to be important. I dont think anyone back in lets say, 2005 or 2007, thought conductivity would go through the growth it has. With all the things that continuedo gm, onstar to flourish. We launched in china in late 2009. That is a testament to the Company Making the decision that conductivity is a key part of the vehicle. It is really for us become the key attribute of the car that makes the vehicle purchase more relevant to customers. Conductivity is right there with feel economy and safety and other things that a been historically important. Over 400 patents, for an Engineering Team that is just a couple hundred people, we continue to submit inventions on average once every five days. Doing it here in detroit in a city that has gone through its struggles very publicly, working at a comment compay that is contrary struggles, the team here has been focused not only on the technology, but also built a sense of pride around the fact we are in his car company that emerged and is forcing around the world. Onstar arguably started the trend for the hightech in the dash. Appleis like google and are working overtime to cut deals and announce hardships with the big automakers. Our guest follows every turn in the industry and with us from any apple us. Mark, when i look at these extraordinary dashes, i cant help but think this is a threat to the safety of drivers out there. How concerned should we be about the importance of technology here . Well, stephanie, that is a good question. Quite frankly, one of the things that is most interesting is how technology will solve the problems that technology has created through intelligent design we are actually seeing touchscreens become more interactive and have half the controls which gives a little force feedback. That distracting User Experience that was created a couple of years ago has the potential of increasing a better what is an example . We have voicerecognition systems and many of which have been frustrating over the past couple of model years. But as the Technology Gets better, we are seeing this become more natural. That is largely influence from google and apple with their google voice and apple siri. People are getting a lot more accustomed to using these Voice Recognition systems and they cannot improve that driver experience and create something that is a little less distracting. It is not all just voice activated stuff. A lot of it is visual. To what degree is the new car, the car of the future, going to look like say tesla is doing today . Im glad you brought up tesla. They are clearly putting their line in the sand i giving the 17 inch display in the center console. Were seeing acura and nissan and honda between displays in the center stack. They after produce more cars they have to peruse more cars and dont have the ability to store something 17 inches at every turn, but when it comes to the experience theyre trying to provide, it is a similar experience where you have information on the top part of thed ash for navigation, but your controls are in a more easy to reach area. Isnt it easy to get carried away with that . Overkill is a far beyond useful. In the case of tesla, elon musk has given a lot of thought to that display. It is beautiful. I was blown away, quite honestly, when i saw for the first time. I wonder to myself whether nissan or acura could do quite as well with it . Advantagelon has the of being in Silicon Valley. So do all of the other automakers. You name General Motors, ford, nissan, honda, volkswagen theyre all out there on the west coast trying to develop trendsogy and technology , really, that really help the vehicle either add value come at services and better content features or reduce driver distraction. We see a lot of the Autonomous Car coming out of Silicon Valley and the developments there. Are there any consumers actually basing their decisions of what car to buy on the technology . Yeah. Research has been done on the consumer side across the u. S. , europe, and china. We have seen interesting results. In the u. S. And europe, about 60 or 70 of people say it is not going to affect my decision, im still going to buy the car i want. That leaves 30 of the market who base their opinion or rather their purchase position on an application platform or some of these technologies. However, in china, interesting the numbers are almost flipped. Roughly 85 of our respondents in china said they would actually not by vehicle or sears they reconsider buying a vehicle if the system didnt have applications. When we start to see the orff whether it is next week the on tesla and some of the other manufacturers on the vanguard, is it going to be the highend marshals is it only going to be the highend models or down to the base models . Traditionally, technologies have started on the highend models. Those bleeding Edge Technologies will still be in the mercedes and lexus and audis of the world. Were seeing a massive democratization of technologies across the board. Motors, fordl Quality Systems dow has standard bluetooth. Most of them have wifi. Lcdral motors will launch and all of their cars. Theres a lot to look for in 2014. We have to leave it there. Thank you for joining us. When we come back, you might say lobbyists are going postal on congress. The fight over saturday mail delivery is getting intense. Is there a renaissance in software . We are going to look at the trends that will dominate software. Is friday. Rget it we are playing the yearbook game. Have a look at this guy. He is or was a Government Official they graduated in 1972. No, it is not tom keene. That is all our producers are telling us. Do you know who it is . Tweet us. Live from bloomberg headquarters, this is money makers. First it was cloud computing, bring your own device. Now innovation in the Software Industry could render your i. T. Department obsolete. Our next guest is managing director at being capital ventures. With us from san francisco. Tec, it is like video killed the radio star. What is going on . We like to invest in companies that dont have to settle to the cio or vp in the i. T. Group or anyone really with the manager title. We Like Companies where engineers and Large Organizations can download the software, try it out, build something with it, and then if they like it and put it in production, then pay for it. Or to not sell to the i. T. Department at all and sell directly to the Business Owner like the cmo. Do you think and five to seven years we could see fewer and fewer i. T. Departments . Those are huge areas inside corporate america. Think the power and influence of i. T. Departments in Large Companies has been reducing. In the 1990s it was the i. T. Departments bringing in the arms and bringing in the new technologies and making companies more competitive. And then the bubble happened and popped and we took a little breather. Now it is really the individuals or the Business Owners that are driving the adoption of technology. I. T. Is one step behind. It almost makes sense that they have to be one step behind because technology is changing so fast. Were in a renaissance period for technology. It is safer for i. T. To be a step or several steps behind. How viable is this for every company . We wrestle with this here at bloomberg, this idea that trying to make the decision whether to build it yourself or the very least, customizing yourself to a large degree, or by something that is effectively off the shelf . There are lots of great offthe shelf products. It is like trying to fit a square peg into a round hole. There are two ways that software is coming and organizations. When it is a technical product, it is delivered as an open source. It,neers can download integrated into other systems. Hang on one second. Now youre talking about engineers. That sounds like the i. T. Department. If it is a technical product, then it is engineers. If it is a nontechnical product, then someone in a sales department, for example, think about how salesforce. Com got started. Someone would say, i need 5 salespeople using a management system. I will get this and pay the 50 a user and when i have more engineers, i will pay for more users i mean when i have more sales able i will pay for more salespeople. The Department Next door starts doing the same thing. Those are the two ways were software can come and organizations without involving the i. T. Department. Isnt there something to be said for consistency . I. T. Department said been with these companies for decades and understand the needs of the company. To bring in these outside differently to ans would seem confusing. A role to playas to organize the access and and Large Companies, build the basics of the private cloud. But the innovation from a because amazon is executed so well and has basically made computing a low margin business, i think the interesting things are happening at the layers above, interesting architecture when everything is virtualized. The i. T. Department still has a role to play in governance and policing, but they are no longer the drivers of what is the latest and greatest. Where are you investing . What appeals to you . What were talking about is effectively software as a service, and i hear a lot of Companies Marketing themselves as Software Services companies, presumably you are training your eye on a little more special something a little more special than that. I invest in Software Infrastructure which is new kinds of databases and application architecture and Performance Management tools. Open source is one theme i focus on. And that is because these super technical products coming to organization best as open source. Software as a service will continue to keep happening. It is a viable model. It is a very viable model. I think a couple of the themes im focused on is as i. T. Gets commoditized, new application architectures become more interesting. For example, people are using memory instead of disks for their computing needs. Instead of having a terabyte database on disk, they will have 100 bytes of memory and new kinds of software to manage that as one cohesive mainframe if you will. Open source and faster of the delivery model for bringing that software and organizations. Clearly, youre a big believer in the power of software. Are there Software Ipos you think we could see this year question mark i cant get a word out today. These Large Companies like oracle and compuware and even ibm and hp have really become Distribution Channels in a sales Distribution Channels products. Innovation isnt really very high in these companies. The companies we invest in are often single product or two Product Companies that generally exit from between 250 Million Dollars and 759, sometimes more and sometimes a couple billion. They are great fit for m a for these Larger Companies that have become shells or Distribution Channels for technology. Sayingbody just tweeted the more external Applications Companies bring in, the more and more a need apps to integrate them. Isnt that a fair point that Software Integration becomes more challenging the more you rely on outside providers . Absolutely. In fact, one of the companies i invested in exist because just like you have silos inside the enterprise before, now you have silos in the enterprise and the cloud because of all of the Software Service products that Companies End up using. And those need to get integrated. That just creates the need for more open sourced software. Drivesess that is what technology. Thank you. Managing director at bing capital with us from san francisco. It is yet another firstclass battle on capitol hill. It is all about the future of the Postal Service. We are going to tell you the companies that have billions of dollars at stake. Could be a busy year for congress. On top of all of the other work lawmakers have to do is this, and the Postal Service financially viable again. The big job could mean ending saturday delivery. Companies like cbs and netflix are lobbying hard against the potential end of saturday delivery. Megan hughes is in washington. What arguments are these Companies Making . The companies are used to offering a service that includes saturday delivery. You take that off the table and they cant offer that service anymore or, alternatively, they could go to another carrier that would likely charge more. You have a wide array of companies that have a stake that will be lobbying on this issue. Ebay says the United States Postal Service handles 85 of its shipments. Huge impact. Prescription drug deliveries. Impacted. Ng to be financial services, jpmorgan chase, and American Express have to get out statements, disclosure forms. A number of companies will be lobbying. We know the Postal Service loses billions upon billions of dollars, so what these companies are effectively saying, if ive got it right, is that they should continue to enjoy this taxpayer subsidy called saturday mail delivery . I mean, essentially. The Postal Service has had huge financial troubles for some time. The growth of the internet has caused people are paying bills online, sending emails, the recession hit the Postal Service hard, they have this huge burden and his problem of health care and pension costs theyre grappling with. To be fair, they have made some progress in cutting costs and increasing revenues. If you take a look at last year, 2013 fiscal year, they had a 5 billion loss. Compared to beer before, it was 15. 90 compared to beer before, it was 15. 9 billion. These people who think it is so important saturday delivery, would they be willing to pay more per piece . They dont want to. They argue it is cutting into their bottom line. From a congressional standpoint, it still is early. You have the senate bill that is going to be marked up in january. It hasnt hit the floor yet. On the house side, you have a bill that made it through committee this summer. They are both a little different in how they handle saturday delivery. The house version would allow packages to continue come a while stopping mill service on saturdays. There are a lot of things to be ironed out before this becomes reality. I dont think i need saturday delivery, do you . No. You know were there isnt any saturday delivery canada. If you had a saturday birthday, you would care. I think i would be ok. Getting saturday delivery. Thank you very much. As you pointed out, nothing is going to get resolved soon. This is congress, everybody. Dont be such a cynic. Here you are confident in canada, docking on the u. S. Hereust glad to be back with you. When we come back, were going to talk about what happens in vegas next week that probably wont stay in vegas. The giant Consumer Electronics show. Either way, if you missed any of our interviews, you can now watch them on apple tv. A brandnew bloomberg tv experience featuring Live Streaming and ondemand videos. Its almost that time of the year again when many of the biggest names in technology to send on the city of sin to show new gadgets. Tful the Electronics Show starts next week in las vegas. To tell us perhaps why you should be there, Jon Erlichman. What is getting the early buzz ahead of the show . Is always a fun guessing game. It is an interesting time in the sense that we are getting tired of smart phones, tvs. They can bend, do a few new fun things, but everybody is hungry for that next new category. How much of a talked about wearable devices in the last year . That will be one of the trends. A great piece people should check out on bloomberg. Com that highlights Digital Health companies. A variety of devices tied to health and fitness, but all sorts of wearable devices to watch for. I think you can probably look to 3d printers as being a big trend just because it is cool to see that stuff unfold in front of your eyes. And he connected everything. Cars and everything else. A lot of buzz but what audi is going to do with google. What is really valuable . Actually making a difference you mean like in terms of changing an industry . What could we see next week that provides real value . When it comes to the when it comes to the 3d printers i think, my gosh, how cool. How much can consumer gadgets i cant think of one that provides real value other than your blackberry. Dvd player. Value . Its wasting two hours. Its not wasting two hours. How much Consumer Technology really provides value . It is supposed to be a distraction, right . Except that it can be the place where both your distraction and regular life now lives. I think the smartphone revolution has showed how our lives can change. Excellentet to an point. This is an excellent point tied to the wearable devices category. Everybody is coming out with these new devices. I dont think the world is theed yet this is the new category to go to. I think that is an important point. How do these devices change our the the fitness players or maybe getting some of the early lift from that because if theres a quick way for you to better monitor your health and fitness tied to a device, that is an easy one to sort of understand. Using you dont think come on, when they can cut your heart rate, more accurately measure the number of calories you have burned, when a connection to take your Blood Pressure and tell you things about your body you need to know a were not talking about people who are already very fit. How about people who say, im going to cap my steps, walk more, take the stairs and of the elevator . It is making a difference. Baby steps. That is affecting peoples lives. I know she loves her fitbit. Apple has proven that you dont bed to be at the show to involved. The biggest stage. If youre not apple, you dont have the luxury of being able to get the worlds attention like that. This is the place where everybody is at one time. That is why they do it. Ray to see you. Have fun. Ces alling to be at week. In a might be interesting and exciting, but it wont improve the world. It is friday. Have a look at his yearbook picture and tweak us your answer. Who is this man . In 1972. Back in high school his hair was a mess. It is jack lew. And the winner way to go. I think back then, talking about 41, 42 years ago . In hair was probably parted the same unusual place it is not, you just cant see it under that mop. If i had to guess what he looked like in high school, i would not have thought this at all. He looks pretty cool. A lot cooler than he does now. What would you have thought . A lot more buttoned up, maybe his hair slick. He looks like he may have been ending out under the bleachers, maybe smoking a cigarette. I dont know. That was his look act in 1972. On that note, we have a winner. Thank you to everyone for participating. You knew it right off the bat. I did. It has been a great week. We started the new year. Thank you for watching. On monday, looking at the big insidertrading trial getting under way next week, former sec capital Portfolio Manager goes on trial. This is fresh on the heels of the Michael Steinberg conviction and the focus once again will sac to the man who founded capital, the man whose initials are on the nameplate, steven a cohen. Participate. It to for now, it is 56 past the hour and a means Bloomberg Television is taking you on the market. Talkingman is done snowplows and now looking at the markets. For now. Taking a short break. Take a look at where the markets are trading today. After that first down day for stocks in 2014, now we are seeing another one. The s p little changed. The nasdaq down by 16. Iran into i ran into michael he saidarlier, yesterday he wasnt feeling so fantastic as we saw stocks decline. We have a long year ahead of us. Lets talk options. Todays options inside, restaurant review site yelp has seen a 230 climb in the past year despite never posting a profit. Strategist, an big factor in options pricing is volatility. In terms of how youre looking at your trade, explain how stock volatility affects the options price. The interesting thing about yelp, despite its 230 rise, it has been recently range bound. Y range i look to the volatility to see if that is conducive to the trade. The implied volatility is a forwardlooking indicator of how much the options are predicting the stock will move. In february, almost 73 . The upper decks about a 3. 8 per day movement every day between now and february expiration. That is a pretty heady movement. I want to see if the stock is moving in that kind of a range, so i used historical volatility and look backwards last 20 days. The stock is moving only at a 38 volatility. That is a pretty big gap. People are expecting the volatility to pick up substantially. They are. Looking at instead of 3. 8 movement per day, the historical volatility is only moving so us exactly what you traded. I went to february which is my sweet spot. Decay. S a lot of i sold the 47 put in the 90 call in february and took in a little over two dollars for that. I could make over 200. My breakeven i taken sorry, we have to leave it there. Thanks so much. Welcome to lunch money. Motors hitting the brakes. Carmakers slowed down in december. Phone versus plastic. With chuck wins the which wins . Crucial vote today over where it is going to make its next big jetty the 777. I hope you are you brought your new york apartment. Professional bull riders are coming right here to new york city. First up in the snow and lots of it