I never go to the movies. I did see a couple of movies. I know kate won the golden globe, but Sandra Bullock was spectacular. Am also watching bankers. Theyre getting paid less over at Goldman Sachs. I have to point this out, 12. 6 billion. That means every single one of their employees could make 384,000 a year. However, Goldman Sachs is doing pretty well compared to the other banks. Sanve in san cisco francisco, where everybody wants to work at a startup and nobody wants to work at a bank. How is Goldman Sachs going to get the best talent . Jpmorgan also has a lower top rate. All the six major firms are paying less. The question is, what industry do you want to go into . Microsoft has been going through a lot lately. They are looking for a new ceo. Our next guest will be with us for the hour. He is the cofounder and serial entrekin entrepreneur who used to work for ibm. You have been following this whole thing. What do you think . I think it is time for a new leader at microsoft. Microsoft should have bought amazon and put steve bezos in charge. About five years ago the had enough cash. It looks like they would have it would have worked. They would never have sold. It would have been a good match. What do you think of the candidates who have been thrown out there . I have not paid any attention. This sort of handicapping of candidates is not terribly relevant because microsoft is not terribly relevant. Yahoo ,hing google, facebook and twitter. But im not watching microsoft. Erlichman, you can tell us about all those candidates, but the real issue is, is anyone going to want to go out on this . We were talking about that today on bloomberg west. Out know they are kind of of the picture, they are really not at all. Do you really have the flexibility to do something transformational . You talked about the possibility s, whichg a bezo probably isnt a reality right now. Is there somebody who can think differently coming from isrosoft who can say this what were going to do, when Steve Ballmer said here is the restructure of microsoft, here is the game plan for us to stay relevant for the next 510 years. Are you in a position to move away from that . Then to get to this candidate we have uncovered over the last 24 it suggestericsson, this is somebody who is able to live within the world of Steve Ballmer and bill gates. I just think that is marginalizing your candidate from the start saying he have to this structure, which is not particularly relevant anymore. I wouldnt want to be put in charge of everything right now. It looks like a mess. Do you think it can be fixed . Parts of it can. What should be fixed, and what should be let go . They should get a lot more aggressive with search. They had some great opportunities a couple of years ago to improve search, and they missed those. I think they could do a lot more with mobile and with location. And just get the idea that they are going to be unable to sell and start making products again. A more optimistic view comes from Matthew Klein of bloomberg view. He basically writes that microsoft is an extraordinarily successful company. Holds 77 billion in cash and shortterm investments. Do you ever hear those positive comments when you are looking at ceo replacement . Sure, absolutely. They are a Massive Company and they do have a lot of cash. Of technology, which him only as every day, it moves so quickly that there is the question about what you are doing to be at the head of the table. Nobody really mentions microsoft in those conversations right now. That is the question, how do you stay relevant longerterm while you are making a lot of money . Tied to that you are so those legacy businesses that have been so profitable can sometimes make it harder to make that move. Lets talk about a company that is spending a lot of money on acquisitions, and that is yahoo yahoo Ceo Marissa Mayer made made 114on, he million just in those four months. Salary, bonus, stocks. What gives . Thats a lot of money. It is a good years work. I love about what marissa is doing at yahoo is she has modernized the company. She is focused on product. She is brilliant at that. But the numbers arent working. Is turning it around. I love what she is doing at yahoo , and i love the direction the company is going in. They are working harder. Parking garagehe and it is not empty at 4 00 in the afternoon. What she also has, im not kidding, she is hot thomas and that helps. There was a study by the university of wisconsin that said that goodlooking ceos help the Stock Performance over the shortterm. Ballmer,ook at steve he was sweating and jumping all over the stage. He was hot. You are talking about microsoft having all this cash. You are doing a set up where you my friend is overweight and boring, but he is rich. What about buying all these companies. Is that the right move . Small companies have great ideas and they are going to be putting in the extra hours. Theou plug them into resources of yahoo are facebook or google, then they can really take off. Here foro have you this hour. Thank you for your perspectives. We appreciate it. Welcome back to street smart. We want to talk about security now. There has been new information on the target breach of Customer Data and how it might of been done. Blogger that has broken all this new said that malware was used that captured the data stored on the Magnetic Stripe and it is still in the systems memory. He is saying it appears there were intrusions into target systems dating back to june. We are talking about 110 million potential customers affected here. I shop there. Must be following this. The Security Breach at target was unfortunate, but it is really not that big a deal for any individual. Wait a second. All of a sudden they are getting my bank account. It is peoples names, phone numbers, addresses. Identity theft is serious. It depends on what they have stolen. We dont quite know yet. You dont have your full identity if you just have the main medic strike. Magnetic stripe. Its a pain in the neck, you might have to get a new target card. Its going to cost them 10 to send you a new card. Its actually a good thing in some ways that this comes up, because the feds have been trying to move away from the mag stripe, so that is probably a good thing. Overall, security is not a big problem. It tends to make news when things like this happen, but the effect of any individual breach, its not that bad. 11 billion, half of that in Security Breaches and fraud losses per year. That is pretty substantial. You are talking fraud. , but it tendsblem to be laid back onto the merchants and not onto the individual. If the u. S. Was on a chip and pin system, would have prevented this . Yes. There has been the technology in the United States for the past 10 years that would have prevented this from the get go. What is magnetic fingerprinting . You take the iron particles on the strip and record those. Every time you lay down a the ironstrip, particles align themselves and they have a certain pattern which is random. It is like a fingerprint. If you read that pattern, you know which piece of plastic, which card it belongs to. Steall youre not your number, it wont match because my random particles dont match your random particles. Why dont we change to that technology . Its expensive. It would have been a lot cheaper to switch to that than to do these new meters. Market offered a solution, the Credit Card Companies and banks never adopted the solution. We could make the system much more secure if we needed to. We really dont need to. Where does this leave square . Have a reader under development. How long is that going to take . It will come out when it is needed. But countries around the world use chip and pin. But we are not processing there. It is not a Difficult Technology to do. Is that a huge overhaul if you had to go to chip and pin . Not really. I lived in china for a month trying to build the first ones, so i know it very intimately. It, but of proud of its not really what square is about. We are more about the back end of commerce and making things had beenof target using square, with the same thing have happened . No, it would not. Who knows . It is a breach. We dont even know who did it. It could have been an inside job. We just dont know. Even if you are safeguarding your home, the criminal can still get in. It is just a game. If you are moving money around, people are going to try to steal it from you. Its cool that everyone has my email address but it takes the driver four times to swipe my card and it doesnt work. The swipe. Orking on there is a little issue on permissions and doing offline payments where we cannot do payments unless they are connected. We have the technology to do it, but we have to get permission from all the banks and card networks, and its just not quite there yet. 5 billion, what does that mean to you . That means more than 4 billion. Its a lot of money. Square is holding an offer with a 5 billion valuation. We have people screaming bubble. Those are Good Companies to be associated with. We are one of the top firms. We didnt set that value. It is a market value. People wanted to buy some stock. What are you going to use the money for . This is mostly an internal thing. It gives some lip liquidity to internal employees. Has been a question that because you are now raising this money, does that mean an ipo is farther out . I dont know anything about that. What kind of chatter is there on the valuation of companies in general . We are talking about the technology. Thatalue is this thing they think of here in new york. It is great to float a number like 5 billion or whatever. Honestly it is not on our radar screen. Its just not part of the culture. Yorkers. Greedy new [laughter] we will be back with you in just a moment. Welcome back to street smart. Outlook, welobal have heard about the horrible conditions because of smog in china. It is so nasty. They figured out a way to actually watch the sunrise. It is called a tv screen. I moved to beijing right before the olympics, covered the olympics, and during the olympics they shut down all the manufacturing and all the factories. When i moved to there, i was like, this is beautiful, what are people talking about . A few months later, the pollution came back, and it was awful. I cannot imagine living there right now. You have been to china. That was back in 2010, or 2009 when we were building the early square reader. In the to build them u. S. And i couldnt find the manufacturing expertise here anymore. What does it take to get it right . Every Hardware Manufacturing Company it wasnt about labor cost, it was just about the expertise. I was trying to get a very specific look to the plastic. The people who knew how to build these things were all in china. I visited china about eight years ago and there were no trees at all. For the olympics, they actually had to plant trees. There are no birds because there are no trees. China and iceland, you have been traveling the world. What were you doing there . We were freezing. My wife is swedish and we went to visit the family over christmas. I am from hawaii, so this sounds really awful to me. It is an insane project they built every year. They cut up the river and take these gigantic blocks and make the most fantastic sculptures. They are swedish and they respect Building Codes. The Building Code say you have to have a fire extinguisher even if you entire building is made of ice. Sleepingasically inside a fire extinguisher if you are inside the ice hotel. You have been traveling a lot. What do you do when you are traveling . I came back from rome. The Italian Government was trying to build entrepreneurship and i was giving them an opinion. She invited us to come out and just ask for opinions. My opinion was italy would do well to build hightech companies. You are successful, you move your business overseas, and it is a great place expensive, but it is a great country to live in. You are sticking with us. We appreciate you telling us about your travels. Welcome back to street smart. We have some headlines coming in. Skin is not anew pyramid scheme. He said hes not yet met with the Chinese Government. They are saying the china team has handled all government inquiry. Skin will ensure that the Chinese Government is satisfied with the operation. After awn about 26 chinese newspaper published allegations saying it was suspected of being an illegal pyramid scheme. The Chinese Government came out today and said they were going to investigate it. Of herbalife falling perhaps in sympathy because it has also been accused of operating a pyramid scheme. Is ino saying nu skin fact not a pyramid scheme and the stock is climbing back a little bit. We are back with the cofounder of square. Time for my favorite segment of the day, word association. I want to play, too. I will go first. Trader. Been betterd have if he had done it a different way . I think he could have leaked a couple of documents but stayed in the country. Cowardicethink it is that he is staying in russia . What would happen if he came back . A think he would be tried. I have one for you, double baby. This is baked the basically a created a babyey that was remote controlled around new york city and it would scare the daylights out of people. It is basically about a devil baby, basically. I cannot even watch it. Another word, snapchat. Fun with no consequences. Goodnk theyre having a time, it is a young team, theyve got some great technology. Go for it. What is the best strategy for these kind of guys . They are in a cuttingedge area of the market. Everyone accused twitter of not having a revenue model for ever and then they pulled it off. What do you think of evan spiegel . He is a young guy, 23 years old. He has been doing things lately like not apologizing for stuff and revealing Mark Zuckerberg private messages. That you come from being a nobody and being on these news programs and getting hammered. He is growing into it. Hes going to do some crazy stuff. That is good, it is entertainment. We make some mistakes. Come on. Tea party. Senator, someone say was responsible for shutting down the government. I am a liberal. I love the fact that we have a functioning government when we have a functioning government. I think the tea party has been sort of responsible and i am happy to see the republicans are swinging more to the center and supporting the compromise. How about elon musk . Love him. Risk taker, aggressive, a history of great companies, and dreaming big. Are you going to buy a tesla . I dont have one yet. Have a couple of old volvos i dont know how to drive, so its not a secret. Becomes mainstream and a little cheaper, this would be huge motivation for me to buy a car. I dont have a license. It would be good to get out of the city and all that. They are gorgeous cars, i have driven them. They are fantastic. I love them. Legere. I am drawing a blank. Tmobile. He is very charismatic, crashed the at t party. I love that. Im glad i used his service. Jack dorsey. I love jack. He was your summer intern. It is hard to not just want to hug jack. He came to work with me when he was 15 years old. He is less shy now. He is a wonderful guy. He is hardworking and brilliant and i love him. When he was 15 years old, was there anything about him that ade you think he could be billionaire founder of multiple companies, famous . Did he seem special . We called him jack the genius of round the office. He always did his work great. That is one of the reasons we stayed friends for 20 years, and one of the reasons we started square. Marissa mayer. Successful. Also blonde hair. Very blonde. Im very interested in what she is doing. When you talk about people who work at yahoo now, they are so much more excited to work there than they were before marissa mayer. I think the story has yet to be told. We just dont know yet if what she is doing is working. I think they are getting a lot of attention. She has put out some new products, but nothing revolutionary yet. I think the jury is still out. That was a long word association. [laughter] that was fun. Thanks for playing along with us. We will be right back. Welcome back to street smart. We are here with the cofounder of square. Launch codeed found that helps employers change their hiring practices to get the right people into the right jobs. What does that mean . It means jobs. People inore technology. We had a real problem in st. Louis, not enough engineers. Employers had a requirement where you had to have a four year degree or two Years Experience before they would let you in the door. The irony is some of the best programmers dont have credentials. But we did was we made a deal toh the top 100 companies change their hiring practices and basically allow us to credential people who didnt have traditional paper and put them in these jobs. We have placed 42 people so far. Nobody has gotten fired. We are 100 success, which means we are not trying hard enough. They have been there about 90 days. You are quite the underachiever. You did graduate from college in two different peschel tees. You wrote a book in college that was a bestseller. To know thathave much to be successful in programming. There are bill gates and others who are encouraging not going to college. Education is super valuable, but we are talking about an acute deficit in the market. We need coders and people who can fill these jobs quickly. You dont need a fouryear degree to be competent as a code or. We have a program that started two days ago. Feeling that we can train somebody from a standing start to competent in six months. What do they need to know before they enter your program . Have a mind that likes word games and number games. Come to us and sit and code. Im serious in terms of what the demographic is of people who are interested in this kind of career. On monday night we had a guy who was 15 years old, we had a guy who was 62. It was about 15 girls. It was low. I am really upset with the female population right now. How do we get more women into these programming and engineering jobs . Everybody says it starts young. I have nieces and nephews and as someone who covers technology, when i was giving them things for christmas, i wanted to give them something to help them think what the programmer. Express ans dont interest in it, is it something they still need to know . We are trying to get the message out that it is a successful route. A lot of women take time off because they have a kid and they cannot get back in the work track. And there are various many other reasons. Specifically, for whatever reason they have trouble getting back in the workforce. One of the great things about coding is it is something that can be done on your own, independently. My wife put herself through a Harvard Program online when my son was two years old. I watched firsthand how you do it and you can still work around other parts of your life. Important re what is the distinction between those looking for that kind of or for a career pattern those who just got fired and are looking for an easy fit . A better job, you need a better job. It is pretty much the same problem. Online great, free education. You have access to this stuff. What we were missing was the ramp from that education to a job, and that is what launch code does. We did a series on artificial intelligence, and the idea that computers are going to be able to do more and more as the years go by. My question is, i know right now we need more engineers, we need more programmers. , are thefrom now people who learned all this stuff going to be out of a job . I cannot predict 20 years from now we will not have magic robots fixing everything for us, but probably not. Is always some really smart person who makes it seem simple. You talk about any technology that is really beautiful, you have a lot of really smart engineers behind it that produced that. There was a recent study that pointed out that just 47 of todays jobs will be automated in the next 20 years. My robot will be talking to your robot. [laughter] we will be back with jim mckelvey. Welcome back to street smart. We are here with the cofounder of square. You are a serial entrepreneur and also an artist. That is incredible. You are a glassblower. I make stuff that nobody needs. It is useless. Art is something that nobody needs. Take as lucky enough to glassblowing class in high school and i still have all of it. I agree, i would never display it. But the great thing about glass is, you can make something out of it and even if you screw it up, it is gorgeous. Emily also might have sang a little bit in high school and college. Curious as to what you think about the relationship between art and intelligence, science . I have never been good at math. Art is a great predictor of creativity in other areas. The process i love is going into the studio with this amorphous product that i get to shape every bit of, and it shows through. A great discipline. It uses some other part of your brain that somehow goes to sleep when you are just before this show you said something that struck me, that one in three people think like programmers. What does that mean . Which one of us is the programmer on this set . Its not me. Tell me what it means. There is an aptitude for people who are going to be good programmers. Not everybody is going to be a good row grammar. Good programmer . Theres a certain amount of creativity, focus, logic, math skills. You got me until math skill. Hatednow some people who math in high school who just kill it on codes. We really want a test that doesnt give us false negatives. Some people get discouraged and say i could never do that. You know what, try. It is free. The education is free right now. Why would you not take a free class . I am sold. Im doing it. Jim lckelvey. Uch, thanks for joining us on this show. Yesterday we had a record, today lots of red. Adam and i have you covered. ,umber 10 is Goldman Sachs following almost two percent after reporting a net income dropped of 19 in the Fourth Quarter. Revenue was down 13 last year. At least they did better than expectations. Estimate are they didnt beat the estimate. The reality is, the revenue is down. Csx tumbling 7 today. Analyst forecast beat ford the first time in three years. It might be difficult to meet its own profit targets over the next few years. The problem is cold. There not as much demand for people switch to natural gas. Jcpenney down more than one percent, saying it will close 32 stores. The Department Store chain has gone nine straight quarters without posting a profit. At nineer jcpenney times. What is the significance of nine . I get it. Number seven is intel, down nearly one percent. The Earnings Report due out after the bell. 13. 7 billion dollars in sales. We will have those results coming up for you. Aol rising 11 today. I have reached a deal to sell a majority stake in its news division. It has been part of a strategy to transform from a dollop provider to and advertising publisher. Number five, seaworld jumping eight percent. The movie blackfish did not receive an oscar nomination today. Issue with thet film. We dont agree with the premise of the film. It is bothersome to us for sure. Record fourthced quarter and annual results for the company. The penguin looks adorable. Holding a penguin on the floor of the new york stock , but keeping a gigantic whale in a tiny little tank all the time. The penguin is not allowed to get out and walk around. The whales were imprisoned. That is not cool. Blackrock shares up a little bit here today after Fourth Quarter ross profit rose. The company boosted its Quarterly Dividend by 15 . I hear the closing bell in the background. Hewlettpackard gained two percent. The firm says hewlett and packard is committed to rewarding shareholders with buyback and dividends. We dont need to let the bell dictate. It is just the belt. I am getting yelled at by producers. Citibank says a slump in bond trading entry bid to their miss. And number one of the day, best buy. A bad day for best buy. Biggest plunge in the s p 500, as you might expect. Thestore sales fell during holiday season. We will have more on that plunge in a little bit coming up in the hour, including adams highlights from his conversation with the ceo. The closing bell. Before i came to work, i went to best buy and bought 110 dollars worth of cables. How was your Customer Service , because that is been a big issue. Prig good. 110 for cables . Grade, bigt of high gauge speaker wire. Only the best for you. It was a bad day for you. But it couldve been worse. We were off as much as 100 earlier in the session. You know what, by the way . The nasdaq actually squeaked out. Gain, about 1 10 of a percent biotech and tech. It is time for the roundup. Special guest. We do not only have matt miller here today. We have a news columnist. What did you think of that penguin . Why is a penguin on the floor of the New York Stock Exchange . The aflac duck hangs out there sometimes. Is this a day trading penguin . Its a seaworld anniversary. That is why they were on the floor of the New York Stock Exchange. They had to cancel a Party Last Night because they were going to bring the penguins and protesters protested that they were going to be in a restaurant and not in a pool where they belong. They could stay at my house. In my bathtub. I would like to have one of those penguins. They were adorable. In my opinion, you are the greatest. You have something on new skin today. And make Skin Care Products they were called a suspected illegal pyramid scheme. A paper said they brainwash their trainees. Al of a sudden china has problem with pyramid schemes . But they still buy u. S. Treasuries. Who needs a comedian when you have that . This is going to make it into the trending stocks and i am sure Business Insider will do a story on it and we will talk about it for the next two weeks ad nausea him. They pushed herbalife down. Multilevel marketer . That is the sanitized version of a permit scheme. Do you think herbalife is a pyramid scream scheme . Catalyst is some type of regulatory action by the government, that is not good. I will tell you what is curious about this whole story. The fact that china is getting involved in the first place. China said to starbucks, you charge too much. Also, the phones dont work. Is a communist country. They have a tendency to tell people if they charge too much or if newspapers need to print certain articles. Weird things happen there. Weird, dude. That is how things go in a communist country. If you have a dictator, he gets to dictate. We have some breaking news. Earnings just came across. Lets go over to olivia, who is at alling looking those numbers. Intel has come in at 81 earnings for the Fourth Quarter. . 51 earningsat for the Fourth Quarter. Theirlso reaffirmed guidance for the First Quarter saying revenue for next year should be 12. 8 billion dollars. They think the gross margin is going to be 59 . Is reallyin for intel the most important indicator. It is the only profit indicator that intel forecasts ahead of time. But we wanted to see here were signs that the market had topped stopped shrinking. We wanted to see evidence it had shop stopped shrinking. Ahead of this, we had seen analysts revise and update her guidance for intel forecasts. One said that fourthquarter revenue would likely be at the highend of guidance. Once again, the gross margin line has just been crossed. 52 . That is really the key indicator therefore intel. See a lot of movies this year . You and i got to see a couple of movies, gravity and the great gatsby. Was beautiful. You guys went to the great gatsby together . It was beautiful. What about me . It was weird. Supposed to go but you had some hot date. These guys go to movies together all the time and they dont like any of the movies that they see. We hated gravity. It was so onedimensional, which is erotic. They did not develop the characters. How can which is ironic. Develop the characters. Did she and George Clooney have an affair or not have an affair . Clearly not in those outfits. Well, she might win an oscar. Here is the deal. The Oscar Nominations came out last night. Best picture, american hustle, captain phillips, and alice gravity, her, philomena, the wolf of wall street. In the documentary about seaworld was not nominated for best documentary. I will admit, i was surprised by that. You really liked it. Blackfish was onapparently if it shows terrestrial tv or something what was it, on cnn . If it shows on cable, it doesnt get to be nominated. This is how you know that the awards are worthless. The thing is, you have to release your movie in the last two weeks of the year or it does not get nominated. The butler . Nobody remembers the butler. That was an outstanding movie. It doesnt even get a nomination. Timing matters. Oprah winfrey doesnt get a nomination. It doesnt make any sense except for the point that it has to be over christmas rake. December 25 they put out the wolf of wall street. More breaking news. Amex earnings are in. A little bit of a miss, 1. 21. Estimates for 1. 25. This is a huge increase over last year, but that was because of some oneoff costs last year. You would think spending would have picked up, particularly in this quarter, for all the card companies. This is when people are spending for the holidays. We are seeing stocks falling a little bit after hours now. They have actually set aside a little bit more money for provisions. They were setting aside about 528 million for provisions, so a little bit of a mess there from amex. I know you were looking into a story about whether or not a Platinum Card would work. All the concerns about target and the Security Breaches, someone brought up a question the other day in the newsroom, are we all going to start going back to paying with cash . Or bitcoins. Or bitcoins. And if you go to a hockey kings now arethe taking bitcoin, right . I made the point that i always pay for everything with amex. I am notnts, and worried about it because i know that theyve got my back if theres a problem. Is it a corporate amex, because that would definitely be worth it. Thank you for being here. Thank you for having me. We are going to head to las vegas for me get back. The place where a kid can be a kid has a new owner. Shares of the company that owns Chuck E Cheese surged to an all time high today after an announcement that it would be bought for 1. 3 million 1. 3 billion. I am curious to get your take on the fact that a wall street firm is buying a place where kids play video games and eat pizza. What do you make of that . Still a very, very powerful brand. There is almost no child who has not had a Birthday Party there in the last 30 years. Apollo is a good company. I think it is in good hands, and i think they will do some interesting things with it. I think there is a lot of opportunity with the brand. Apollo is a bunch. F smart guys what is the lost opportunity . What do they make . What could they have done that they didnt . Climb into the details do it. Kids like think that Chuck E Cheese a lot, but their parents dont. I think there is a better way to bridge that gap. You agree with the analyst community. From an analyst who said that parents dont enjoy it much so it is harder to get them in the door. How do you make it a more cost edible environment hospitable environment for parents . I was running it, we beer at the same time. So alcohol. That helps. They dont allow that anymore. I think i would bring a little bit of alcohol back. A little oldfashioned entertainment. People may not realize that you are the guy to created atari among other things. Think the whole game side needs to be upgraded as well . I think so. I think aiming for kids is kids today with their tablets and smartphones, they are more sophisticated in their game knowledge than ever before. They are more sophisticated in their game knowledge, which makes it more challenging for some of these product makers. Well, you just have to match the competition, and the competition is not the pizza parlor down the street, its the tablets they have in their home. The amount of game consumption on the part of everybody right now is tremendous. Well, my kids like chucky cheese. I bet they do. And i would like it better if they serve down the hall, im sure. And margaritas. Howcoming up, want to know to live like a las vegas whale . We will show you how. Have you ever wondered just what it is like to be a vegas whale . I am sure you have. Thisk player blackjack player knows exactly what it is like and he is a central character in my up humming documentary. Take a look. 40 million gamblers go through the vagueish vegas strip each year. But to see it all, you need to be a highroller, willing to spend up to 100,0 hand. He is a blackjack player who lives the life of a rock star. When he walks into a club, celebrities pay their respects. Engineered by the casino, and they pick up the tab. Whatever you want. They are going to try to customize a package. If the player is big enough, they are going to try to give him what he wants. What it takes to dazzle everybody today is 100 times more ambitious and challenging than before. Looking fors always new ways to impress gamblers steve wynn is always looking for new ways to impress gamblers. We have trained the public to raise their expectations. Thats a good thing. But only players like don get the star treatment. Fromey will bring a player the east coast to las vegas. The mgm property has a mansion, 29 villas under a climate controlled dome. For free . Get to stay well, nothing is free. I will give you a little peak inside baseball. Jim is the ceo of mgm. I can comp you to induce you to come out here. I will give you about 80 worth of stuff. The more money spent, the more casinos make. The whale is theoretically going to lose 200,000. Give him 80,000 worth of stuff, but there is not enough caviar. So the margin on whales is higher. Will do is why casinos just about anything to keep the whales playing. What is just fascinating. 116 million in blackjacknths playing. He didnt cheat. He didnt count cards. How did he do it . Does he tell you . He does. He tells us exactly how he did it. This documentary looks at how basically this guy was able to exploit the weaknesses in the. Ndustry does he still do it . He still does. He just won another 2 million. So, in theory, we could learn from this guy. You have to be a heck of a mathematician. I asked him if he in another life would have wanted to be a trader on wall street. He said i am not dead yet, who knows what i am going to do. Some casinos will not let him into play. Rex iambs ini am surprised the guys Atlantic City still let him then. Carl icahn went to the tropicana and lost and one about 6 million. Called him and said we want you back. The longer you play, of course you will lose. But this guy does not lose. You say he is not cheating or counting cards but i feel like he is cheating or counting cards. Well, he does something. 100,000 peraying hand. But they want the whales in the door. Only the ones that lose. They think they will all lose. But think about the odds, especially with roulette. In the favor of the house. The house always wins. It doesnt always win. That is the point of this documentary. That is whats amazing. That is what this guy was able to do. I want to know how. We walk you through it step by step by step. Cool. I want to learn. So if you have any interest in making it big when is it on . Tuesday night at 9 00 a. M. Justan learn a lot, not about the industry, but about the game of blackjack itself. Awesome. Do this . Ired you to well, you know me you love dies. Anything you are not opposed that, apparently i am on beat. Its a great beat. I am on that beat too, just not on television. Prescription for profits, time for a little insight in action. This year . Group , up about three percent. For the next best group, you tech and banks. Profits have been hard to find this year, but if you were in health care, you were doing just fine, and there is a reason. It has the best twoyear sales momentum. Next best, again, technology, but second best. It is real simple. You have Top Line Sales growth that is tough to find. Is outperforming. What is curious to me is that the three best performing Health Care Stocks are totally different. He may as well be different sectors. They may as well be different sectors. Drug development, medical devices, health care and hospitals. Equal weighted positions, and for that, you go to the equal weighted etf. You want exposure to the whole group. There it is. Chart. Way, look at that it is pretty clear what is going on here. Time now for our big story, the most in 11d years this morning after reporting that u. S. Samestore sales fell this holiday season. Secrets parent, importsollar and pier 1 all reported that the holiday reallyt war is going to affect their profits. If discounts wont do it, how are we going to see any kind of retail boom in the future. Joining me now, rick snyder. Adam, you have been covering best buy. Know you spoke to the ceo what is he saying . We live in an amazon world. Isching prices with amazon what crushed them. If they had not had to do that at best buy, the ceo told me the sales would have been up mid single digits. Call it about five percent. He said you have to bring the cost down. They are going to try to take another 400 million in cost out of the business in the next year. All the merchandise you return, they are now going to sell that in what they call an open box sale. The discount is when he five is 25 80 off. Otherwise, they are writing it off. The difference between best buy and some of these other companies is that best buys issues are a little different. It is the commodities business. It is not like you are looking for specific fashion, for example. In theory. I think it is worse than that. I dont think the grinch stole christmas. Amazon and ebay did. Their numbers are up. The big thing is, behavior has changed. It used to be five people would go to five different stores. Now they are only going to three because they are looking online, and they are hunting. They are not shopping. Behavior is changing. Of biggest news was the push not going online, but to mobile. You do not need to go to best buy anymore. Used to be able to go to best buy and look around, but now you dont even need to do that. And think about the shipping. I just got a Christmas Gift today as it was so delayed from ups and fedex. That was probably my gift. It was. But what is going on here, really. Is there no hope . They have real estate. I think julie said it best. It is a commodity business. Buy was the show room for amazon for many years. Now they have tried to match ce and you cannot have all that real estate and inventory. It is a spiral down. The discounts did not work. They did not bring people in. There are some stores that do really well at this. Inc. About your experience the last time youre in a store. There is nobody to wait on you. There is nothing special. Matt miller was invest i a couple of hours ago. He said there was in best buy a couple of hours ago. He said it was a decent experience. Thats because there was nobody else in there. Also, give people a specific reason to come in. Exactly. And then give them a great experience. That is the key thing. Your experience today in shopping is better online than going into the store. What has been interesting about the trend over the past several years is that the bricks and mortar retailers have competed against amazon relatively well. Some of them, at least, have developed good websites. In the integration between the online and offline experiences very strong. Like toys r us. 81 ways you can buy it toys r us. 25 of all online sales are amazon. The next closest is walmart. So what happens to the brick andmortars . I dont know about you guys, but unlike going to the store. Were going to have a tremendous i dont like going to the store. Were going to have a tremendous rationalization. I think were going the entire chains go away. Jcpenney is a great example. I think macys is doing it right. They are becoming a topofthe line presence. When you get up and have your somee and say i want to do shopping today, macys is top of your mind. Who is not doing it well . Kohls,enney, coles some of the mid tier Department Stores, but they are at a disadvantage because their customer is not really an internet buyer. To do withothing online competition for jcpenney. They shot themselves in the foot in many ways, but they were really struggling to begin with. Asked by is a good example. Yes, a lot of best buy is a good example. Yes, a lot of people are shopping online for clothing, but there is still a big segment that wants to see the in person. That youre going to have to give the experience a much better look. Even if it is easier to return the item have you ever been to a nordstrom . Absolutely. Grand they have that big piano and they play, and you are like, this is kind of cool. And the Customer Service is fantastic. It is a different situation from all these other Companies Like the gap. When 50 off is the baseline, we are in an incredible world. Pretty soon it is going to be free and here is five dollars. The behavior has changed and i think that is the most important thing to take a look at. The way we all shop and i said this before christmas. We all did it online and had it done weeks before. That is what we are seeing. The grinch did not steal christmas. Amazon and ebay did. There is a silver line. Overall retail sales are up. But its the margins. Margins are terrible. Comeen is it going to back . Doesnt come back . I am not sure it does. Are in a downward spiral. Amazon has won competitive weapon, price. Unfortunately, we have to leave it there. Thank you so much you guys. Coming up, the man behind some of the greatest hiphop acts of all time. He is joining us right after the break. Time now for the scene where we bring you the business behind media, entertainment and pop culture. One of the original hiphop kingmakers launched the careers of queen latifah, you name it. He is leading the charge into the digital era as the founder of the annual new Music Seminar. He joins us now in studio. Great having you here. Lots to talk about. Digital distribution is totally exploding, but the Music Industry as a whole has contracted. It is turning around in terms of revenue. We are seeing the beginning of movement into a new golden age, but we are having, lets call it an adjustment. Years of selling records, we are moving into something that has much more potential. We are looking at subscriptions, advertising, revenue share toels, and the attention creating Revenue Opportunities we never would have thought of when all we did was sell records. Who is doing it right . A lot of people. Spotify, pandora, sirius xm radio. A lot of people are getting into the game. There are all of these new services in this space. Do you think the Music Industry itself that you grew up around is it embracing this technology . At first, no, but now they are. Were concerned about cannibalizing. What we have to do is learn from. Oogle their business is based on the economy of attention. Where is the attention of the world . Marley, the beatles, everybody else paid to get on radio, paid to get on video. We are not thinking about it from that perspective, and that is where the revenue is. Explain to me what you mean by that. On average, people spend four hours a week listening to sports. To four hours a week on sports attention. It is a multibillion dollar business worldwide. People spend about 14 hours a week engaged in music. But it is only a 70 billion business. If we could engage people the way sports does, we would be a trillion dollar business. How do you monetize . Television shows, for example. American idol and opportunities to create shows around artists, opportunities to create new products, highdefinition products, different products that integrate music, bundling. Usic serious has developed a 4 million business bundling music serious xml developed a 4 million business bundling music with cars. And what about the artist . They are getting the same percentage of revenue that the labels get when they are dating a download when they are getting a download or an album purchase. But the pot is smaller. When the pockets bigger, absolute revenue will start to rise. Theoretically, revenue could be three or four times bigger in 10 years than it is today. Quick west and. Pandora or spotify . Are two different models. One is advertisingbased and free. The other you have to pay for. Have a social component and create and share playlists, then you do spotify. Productant a radio type that is playlist oriented, listen to pandora. And it is simple. My dad can use pandora. He cannot use spotify. There is an algorithm and pandora, and one in spotify, and you have told me in the past you think pandora has the better algorithm. In terms of making your own radio station, yes. They have people who are experts. The other guys use the technological algorithm and there is no human interaction. Very interesting. You are a legend. It is pretty cool having you here. I view this as a great opportunity. I am very optimistic. I see the Music Industry exploding. And we are talking about it as a Music Seminar this june in new york. Maybe we will take a camera and. Pimm fox, you are coming up next. Indeed. Coming up, the poultry industry is going to respond to our coverage of a Consumer Reports study entitled the high cost of cheap chicken. Phones that are less expensive than the iphone 4 the mostg galaxy, but important feature is that it is and as a proof. Nsa proof. That was a great show. I really, really interesting show. President is going to be coming out with his recommendations for the nsa. We are going to have peter king on. He believes in security. We are going to hear what he thinks of the president s recommendations. It is such a fine line that we are all walking. The president is trying to lead. We need the nsa. They are trying to protect us and it is just a question of how they are going about it and whether there are checks and balances in the system. It is a slippery slope. How much do you really allow . We will ask him. We will get to all of it. That will do it for us. Have a terrific night everyone. We will see you back here on friday tomorrow. Thank god. It has been a long week. Good night. See you tomorrow. It is 56 past the hour. That means Bloomberg Television is on the markets. Lets take a look at where stocks closed today. It was not a very volatile session. It did not have a lot of movement in either direction. About. 15 . The dow jones down. 39 . The nasdaq was up. Indexp 500s volatility held pretty steady today as markets continue to move nearer to their alltime highs. More on the index, also known as wall streets fear gauge, i am joined by michael palmer. You so much for joining us. We have been talking about a lot of traders about how low volatility has been and continues to be. How do you trade the vix in an environment like this . What do you do . We have had two big selloffs this year. We had one on the first day of the year, january 2. The vix did not respond. We had a decent size selloff on monday and the vix did not respond. Late last year, we were looking at every seventh to be a trading event date because that is the debt ceiling date that one out there. A lot like october 17 of last year. Are hearingw we news that harry reid says the timeline is more like april. There is not a lot of shortterm fear. The market is not responding volatility wise to the selloff we have seen so far this year. We are going to remain low until that story changes. Strategy wise, what do you do ifh respect to the vix volatility is just remaining at a low level. You have to remember, when the vix is this low, buying insurance against your portfolio is very cheap. People buy call spreads in the vix said they do not have to put up too much capital. They are protecting themselves for very low amounts of money in case we do have a big selloffs in the market. That said, they do not put a lot of capital into it. These are people buying flyers in case there is a major selloff in the next six weeks. We just had the jobs report, which could have been a catalyst for volatility. Is not helping much. They are actually getting along for once. Think the vix is too low, that there is something to be worried about out there that people are missing . We have had debt ceiling talks, fiscal cliff, you name it. But you have to remember, it was less than three years ago, the japanese tsunami, they came out of nowhere. That should be part of the vix as well. It is in sure and. Insurance. When the vix is this low, it seems to me theres not really anyone pricing and the unknown, but thats hard to say. I guess people need to be prepared for the worst at all times. Thanks so much, michael, for talking to us about the vix , historicalunusual low level. For on the markets, im judy julie hyman. This is taking stock for thursday january 16th, 2014. Im pimm fox. Focusing on the price of safety. One day before president obamas speech on the nsa, the Company Behind the lack phone. They claim it is safe from government thighs. The poultry industry fights back after our safety of eating chicken. The National Chicken industry responds. Thatll show you the home can survive a nuclear attack. All that and more over the