Transcripts For BLOOMBERG Street Smart With Trish Regan And Adam Johnson 20140328

For tech domination. Us what is will tell behind the f the fed gave the bank and why he feels he is being picked on. The bighe big three, stocks we are watching. Julie hyman is keeping an eye on these. Lets start with cognizant, and i. T. Consulting company, upgraded at Morgan Stanley to overweight. The price target goes to 60 a share, well above 10 above where it is trading right now. The analysts say the estimate for the companys earnings and where its stock will go, the consensus is not pricing in the acceleration that we will see in the consulting business and the economy more broadly. Those shares rising today. Interesting bounceback for gamestop. We were talking about the company yesterday because it fell four percent on the back of earnings. Today it is coming back and then some, shares rising seven percent even some saying that the future is not so bleak for gamestop. In fact, the folks at Bloomberg Industries say continued sales of things like the xbox, the newest playstation, will fuel growth at least through the end of the year. One decline or we have is red hat, the maker of opensource software, humming out with earnings that missed analyst estimates. Buildings were not as strong as some anticipated. We are seeing a big drop their. The stock trading at its lowest since december. Time for our big story. Facebook spending spree. The company is having a pretty big week. A number of deals. 2 billion on Virtual Reality company oculus, who does not even have a product on the market yet. S today it announced it is working on a fleet of drowned by acquiring an aerospace company, hoping to shower wifi from the sky to provide Internet Access to all. Clearly, the acquisition do not directly benefit the Companies Need and potatoes business of selling ads on social media. Markad, it seems zuckerberg is modeling his mma career after these guys. The guys at google who by robots, wind turbines, and even thermostat companies to stay ahead. So our Silicon Valley billionaires overreaching in their quest to own the future . Is it coming at the expense of the shareholders . Me rightson is with now. We have a tech analyst and editor here. The maxwell chief economist. , interesting plays, a lot of money at stake. 2 billion for oculus. What is mark trying to do that could be similar to what google is trying to do . I think google classes tells us a lot of what Mark Zuckerberg is thinking about in terms of oculus, what they are doing about the next part warm for computing, and this could be it, as well as using a lot of cash to pay for it. For all the criticism that all this far out spending might engender, i think it is worth noting the company is crushing it in every metric. Everything seems to be accelerating for them, whether it is faster user growth, skyrocketing revenue per user, advertising per user. They have taken the mobile business from zero to over a billion dollars in the last quarter alone. Criticize as we might, as i surely will, it is also worth noting these guys are killing it. At the end of the day, that is what shareholders care about. As long as they see there is profitability him as long as the business is growing, you can get away with a whole lot more, than if the business was not doing well. Charlie, let me go to you. What could these drones do . We are talking about providing wifi access to people. Ideally, they would hover above where a normal airplane would go. Ideally, they will be part of internet. Org, this idea that facebook and other Tech Companies will provide, internet and connectivity in regions of the world that do not have it. Bring the next couple billion people online. Does that threaten the broadband industry . Right now, this feels very much like a marketing technique. Every time drones are involved for a tech company, it feels like one of those things where they are trying to make news and create buzz. You are not cool unless you have drones in your arsenal. Max, we have seen this with jeff bezos, too. What does facebook need to do to stay competitive . That is one of the concerns. It could run the risk of turning into blackberry down the road if they do not stay on top of things. His is a company that is willing to spend in 19 billion to get a messaging app just an effort to stay on top . Part of the story is facebook is trying to use its money and tell you on the markets to build a future. Part of what is frightening is they are not so sure their future is facebook. It might be drones or private messaging. That is a little frightening. That is a little eyes off the prize, even though they are doing well. On the other hand, they have a history of making wild acquisitions and working hard to show the big boys that you can make money off of them. I think facebook may have done too well with instagram, so they are getting awfully aggressive. On the other hand, as long as other folks are doing good things, you can hide behind them and do things that are crazy in ways that Silicon Valley and wall street have decided is ok. That kind of works in a way. We talk about microsoft, and one of the concerns and there was that they were not created or crazy enough. Should investors be a plot of this kind of action from our zuckerberg . I think you can look at each one of these and see the evil genius, i do not know, you can see a plan. Oculus, you can see a plan where they say, we want to know the ways people will compute in the future era while this may or may not be the platform, this will be the next platform for a little while. We will learn a lot in the process. We do not have to go through the rigmarole that google went through with glass. As far as the drone thing, it is happening at the same time. Why it is happening now, separately. That notion is a belief in the market share, that if they can make the market bigger, they will own that market share. The crucial factor for facebook in the future is not going to be market share or ripping of revenue per user, it is the number of the people on the internet flat out, and they need to alter that with these drones. Why is it all happening at once . That is the question. That is a fantastic question id i do wonder, cory, and would get your reaction, and then charlie and max. How much of the idea is easy money contributed to this, that they feel the pressure to do something . I like when you say that my questions are great questions. Besides that, what is going on here, they recognize that facebook that their stock price is quite high right now. They recognize, i would imagine, that this time of easy fed policy lets not forget that Sheryl Sandberg once worked for larry summers. She knows quite a bit about monetary policy. Can . Ke advantage while you to spend. His is time they have done it over and over again. Using a lot of stock to take a different stake in the future. I think they recognize a stock is better spent than their cash right now. Also in a situation where we learn that google is issuing class c shares in order to make additional acquisitions and retain ownership. Suggests we could see more acquisitions in the tech space. Charlie, does it feel like 1999 all over again . We have to look at Mark Zuckerberg in comparison to a lot of these other people. He has proven in the past year or so that he is a tech mogul, but it is not good enough in Silicon Valley just to be a mogul. Now you have to be a visionary, you need a hyperloop, you need a contact lens that detects diabetes. In other words, jeff bezos has set a new standard . There is this idea that you have to be more than just a dealmaker, you have to be someone that will alter the course of human history. We are also talking about using shareholder money to do this. Max, what is ultimately at stake here . Is this something that investors should be pleased with . Great ideas are more important than great big egos. When that happens, you have trouble. That said, if you make a systematic approach of what facebook has done, you run the risk of imposing a pattern where there was not one. It looks like they will grow if the internet grows, hence the idea of putting more people online. Or they will grow if they get into a different business. Monetizing future what they did in the past, but to grow beyond that, to be one of the big boys of tech like apple or google, they will need to go outside their comfort zone and figure out three things, how to not overpay, get into the right businesses, and stick it out and make money there. They willor 3 on how get there, but that is a wideopen question and raises the risk profile of this as an investment. Especially when you talk about valuations and 19 billion. City flunks the big stress test. Where the bank early went wrong. And americas sale revolution. One of the topics president obama will be talking about with saudi arabias King Abdullah. Back in two. Citigroup got an f in this weeks blast trust stress test. The only bank to fail the test. He did not pass the Balance Sheet part of the test. They have plenty of cash so that that rejected their capital plant for its qualitative process. So what does that mean . Are not heads of citi sure. Michael corbat told a group of Senior Executives by joshned right now rosner. It sounds like citi was rather caught off guard by this. I think the fed has become lessand more guarded and communicative with the banks since they started the stress test process subtly years ago, and that makes a certain amount of sense, but i think they decided rather than having them all come out with the banks knowing long in advance and telegraphing to the markets that they were the healthy ones and waitng it to people to until later results, they decided not to give much notice to everyone. Isnt the issue that the banks to not really know the rules of the game, because you think you are fine, you think you have enough cash in the reserves, you think you are playing by the same set of rules as everyone else, but then you get hit with this. Ram or the way the banks look at things, the way the regulators look at ames, even on the regular testing, they look at capital asked that asset, management, and sensitivity. There are qualitative aspects to it. When you are hearing about our Different Levels of management oversight, Operational Risk management, Reputational Risk management. Those are more of the qualitative aspects. Why do they need to do that . Quantitatively, if you are ok, the quality part is what makes people worry. You are suddenly in a situation where the government is deciding who they think should be successful and who is not. Think there is a view that banks are different from other companies. They survey public trust. They are the Financial Intermediaries in the system. Therefore they have to be told to a standard where a management oversight problem can, in fact, her into a london will problem. This goes back to my central backion this goes to my central question, do we need to go back to the days of separating the Investment Banking from the lending side . Can you really have a bank taking on risk if the government will be breathing down their throat and deciding who passes and who fails . Maybe you just do the utility play and Everything Else gets farmed out. I have been arguing for a while that for many of the largest banks that would be the right thing to do anyway. The best way to get out of from under the rules that have limited activities in business is to separate. So a return of glasssteagall . I do not think it should be legislative or a regulatory requirement. The banks should recognize that at some point, given the size and complexity, both sides will be systemically important financial institutions, but they could release value on the Investment Banking side. Say, weu are citi, you built up, we built up, we became the supermarket of banking. Now it is time to scale down. Haps you sell a certain divisions, spin off . You could sell dividends, a lot of banks are getting out of the commodities business. In many cases, they are selling. In other cases, we can see the banks talking about special dividends. At the end of the day, if you were to think about the business in the late 1990s, early 2000 and four we saw the rush to aggregate, you saw investment banks have a different return profile than the banks. Ultimately, the banks get into that business, use that Balance Sheet to buy Investment Banking and trading business. It ended up costing them a lot. They ended up crushing their own margins. You think back to the early 1990s, that is pregoldman sachs ipo. It was a partnership. We have a very different risk equation. Ofand i think that is part the qualitative issue here. And a different Risk Management will file profile. Of course, this was an individual moneys. The fed also has to look at you are not managing individual partner money, you are managing depositor money, shareholder money, and therefore also managing the financial intermediation of our system. So we have to look at those qualitative aspects. As much as it was Michael Corbat saying we were singled out, if you look at the banks under 100 billion dollars in assets, almost a third of them did not do so well. So it what youre starting to of the bigeatment bank that is consistent with the small banks, rather than a that go after the big guys. I think what you say makes sense. If the government is going to breathe down your back like this, then release value. Get out of that and do the utility play and let the more aggressive things be more aggressive. Josh rosner, do not go anywhere. Coming up, president obama is still traveling abroad. The latest is in saudi arabia. He will talk about the strained relationship between the two countries. And a growing number of chinas millionaires have their sights set on living the American Dream, but it comes at a hefty price. We will talk about that as well. Time for todays Global Outlook here at president obamas foreign trip has reached saudi arabia where he met with King Abdullah at a time when the relationship between the two allies has certainly shown some strains. Phil mattingly is with me right now. Where are the pressure points, would you say, most in his current relationship . It is really quite interesting. Any major issue the u. S. Has in the region right now directly impact saudi arabia. Those pressure points are anything foreignpolicy wise, president obama has done with. That includes the Israeli Palestinian peace process, syria, iran and the nuclear issues. Key has been syria. The saudis have been pushing for the u. S. To approve war and dynamic weapons system being given to the rebels. The white house has been reluctant to do that. Some talk on the table that that would be there, but no rear idea where the u. S. Will go. Just another one of the many issues foreignpolicy wise or the two stalwart allies. Isthe president s trip pretty much all ukraine all the time. Is there a sense inside the administration that they have accomplished what they needed to do this week, or is there concern that the u. S. Is has just not come out Strong Enough against Vladimir Putin . Within the administration they feel they have a comp is what they needed to, keeping european allies in line when it come to came to the tougher sanctions. ToVladimir Putin decides invade southern ukraine. That said, everyone is wary of the russian troop buildup and something the president addressed today in an interview with cbs. Effort tosimply be an intimidate ukraine, or it may be that they have additional plans. In either case, what we need right now to resolve and deescalate the situation would be for russia to move back those troops and to begin negotiations directly with Ukrainian Government as well as international community. The interesting thing from the very top of the comment, which is, they may be doing something or they may not be doing anything. The concern from within the administration is there no solid idea of what the troop buildup means and until they have the answer to that, people will be wary. The concern is that putin will not stop with crimea and has designs on other parts of the ukraine as well. What do we do if that is the case, are we try to keep our powder dry by not invoking sanctions that are that tough right now . They want to scale the sanctions based upon the actions of the russians. They feel the sartorial sanctions will be the answer. The key thing to keep in mind, u. S. Officials are very serious, no military option yet. Thank you so much. We are talking about chinese visas. How you can buy a visa to the u. S. , next. The American Dream is alive and well. At least, in china. Working senior fellow audrey singer in washington with more on this. People have to pony up to win this. You are talking half 1 million. And it a million bucks does not count legal fees or application fees. Investors the investment has to be linked to the creation of 10 fulltime jobs. It is a risk the chinese are taking on intros. The chinese accounted for more than 80 of the total issued. It makes sense when you consider the growing population of chinese millionaires. Green cards and citizenship should not be for sale. Add to that their criticisms that the socalled Regional Centers are not appropriate middlemen. Then you have to look at the fact that billions in direct investment are coming into the country when finances hard to come by these days. There are two sides to the story. Washington seems to be in favor of the program. I spent some time talking to the founder and ceo of a Hotel Company and he is making a big investment in las vegas right now. He has turned to this program to gain investors. People pay 500,000 and they get a green card and they can come to the u. S. And he is able to raise money i doing this. Audrey, let me get over to you. You released a study with the Brookings Institution on these visas and you found some problems with this program. One of the big things is this program is administered by the citizenship and Immigration Services agency. They are charged with our entire immigration visa system. Temporary visitors, temporary workers, naturalization and a host of other things. Pants he right entity to be evaluating this mess plans Business Plans and Economic Impacts of this program. Maybe some of this function should be moved over to the department of commerce. It is a very interesting, provocative program. I was just talking to josh rosner about this. On the one hand, it is great for business. On the other, is there something ethical at way . You can buy a green card. Something that may be does not sit right with who we are as a country and this idea of upward mobility. Turns out if you have 500,000, you can come to work in the u. S. Butt is a valid criticism, when you think about the program as a whole, the government lets up 140,000 visas. The Investor Program is only 10,000. It is a relatively small chunk and people say, everyone should have a chance. We should not exclude rich people. We are not excluding them. We are recruiting them. There is a limit full disclosure, one of my family members has just moved to the United States less than a year ago in this program. They have 500,000 sitting in a marriott somewhere in missouri. Home,ave purchased a multiple cars. They are doing their part to help the american economy. They say, who are we to judge . Is that an important point for us to be thinking about . , if must have enough wealth they can shell out 500 k, should should we be welcoming them because it is more wealth for our country . Programscountries have that are more aligned with what you are saying. And the wayective the program was designed is to create jobs and Economic Growth in places that really need it. If you look at that side of things, the program can boost regional economies and regional leaders across the country are foreignto this kind of direct investment, which would not only bring in new funding sources, but also boost job growth. T is a very Small Program we are going to leave it there. Everyone, the coming up, everyone, let the battle begin. Its getting rid of fannie and freddie real reform . We will discuss when street smart continues. Charters not going down without a fight. A are urging time warner investors not to endorse a takeover by comcast. Anding me, Jon Erlichman Bloomberg Media reporter edmund lee. Why dont they just pay more . Wouldnt it be more simple to say, we will up our bid . It would be a lot less fun. He likes to play every possible angle. They set a price a while back of a wild back and they want to stick to it is much as possible. Comcast shares have gone down since their original bid. They are not going down without a fight. What is this going to accomplish . Regulatory still the approval process to go through. This is a lowcost option for charter. The performance of comcast stock. This came together because Brian Roberts wanted his in buyer to be his empire to be larger. As the terms of the deal came together, there was protection big into it baked into it. There seem to be some pressure on chartered to provide that kind of protection. I have heard from some Time Warner Cable investors who have the maybe this was not right move for us as investors, still a long story because it comes down to the regulatory approval. Charter, theiror in game and again, they want the 3 million subs that comcast is looking to sell. They were trying to play nice before, but now they want to be more strategic and difficult. We want those 3 million. That is part of their strategy. Box 3 million is not a lot. 3 million is not a lot. In the United States, pay tv is a saturated market. You need to consolidate. That is why comcast is doing the deal with Time Warner Cable. About thisd initially when the deal was announced. Whether or not there would be antitrust issues. Ple have completed concluded that it will not be a big deal. It, when time of warner and comcast merge, Consumer Choice will not change. There are many things they could do with the 3 million. Aey could sell it all to company like charter or spin it off as a separate cable company. Regulators might see that as a good thing. To Cable Companies are merging, but they are spinning off another one. What happens to charter . They will have to buy a whole other company, which would be less attacks less tax efficient for them and comcast. I was going to say the skeptic would say that Time Warner Cable, knowing how this would play out, felt like going with comcast was the better bet. If you did see this spun off company, would it be run by one of the executives at Time Warner Cable . That is on a skeptic side of it. It is important to remember that. Skeptical arguments are always good. Freddie,ng fannie and the Senate Banking committee on whether to dissolve the mortgage lenders. Josh rosner will tell us why it is the wrong remedy. The Senate Banking committee will vote on a bill created by its chairman. On a plan to eliminate fannie and freddie. Is this actual real reform . Josh is saying it is not even close. They just replace them with another version of fannie and freddie . That is a certainty if the legislature passes. A lot of rumors suggesting that this was not even the bill that johnson intended to introduce. After eight months, they took a bill that looks like a lot like the corkerwarner bill. What on earth is the point . Doing, ae are political solution in hopes of economic functionality. Unfortunately, it will not go that way. One of the reasons we can make this comparison, the if yournt is saying loan losses exceed 10 , they will step in and help out. At very idea, if you are nine point one percent, you might as well make some bad it is worse than that. Of 10 forost piece private investors except for the economy starts faltering. Worse than that, those securities will not be sec registered so they will look a lot like the overthecounter toxic cdos that we had going in. Aret sounds to me they basically putting some political spin on this, we are replacing fannie and freddie, isnt that great . Thatare not really telling they are replacing it with the same taking an implied guarantee in making it explicit. Taking a regulator, which has been a safety and soundness regulator and replacing that with the new regulator who has three missions, safety and soundness, Affordable Housing goals, and consumer protection. I do not know how a regulator can serve all three functions. Say, you areld interfering with our ability to deliver Affordable Housing. The regulator would get pushed back on its safety and soundness concerns. Does this mean we can assume that home prices are going to continue to accelerate . Are we running risks that we do not want to run . The home prices she is somewhat different because i have concerns about demographics and a whole host of other things. What we are talking about is not dealing with the underlying problem up what is homeownership, how do we incentivize homeowners homeownership that is not just leverage, but the ability but the building of equity . Back to what we were just showing the viewer, five percent down. Five percent down. We saw how that ends. We have seen a movie before. Could we do away all with any kind of government backing . Ultimately, that is a big question we cannot answer. We can deal with it more effectively. They are saying private capital will take the first lost. The amount of private capital would be 500 billion to replace fannie and freddie. We have raised 15 billion dollars of private Capital First lost securities over the past five years. How quickly will we get to 500 billion . It is going to take a while. Private capital may ultimately be there. Not in a short measure. Interest rates will go up. To get incredibly low rates, you have to have some guarantee. Congress will not be comfortable with that. X of course not of course not. It will hurt homeownership and more difficult for people. We always love having you on the show. I appreciate you joining us today to talk about stress test. Josh rosner, everyone. From red hats to Restoration Hardware, we have the top 10 stocks you need to know about today. Up six points on the s p. It is time for your top 10. A smaller down, it quarterly loss than analysts estimated. Veryew ceo says, i am pleased the company is back in execution mode. Sales of the Fourth Quarter fell 64 from a year earlier. Said, this company is toast. Direct quote. Are you still doing double duty . That is a long day. Gm is number nine. The Company Announced it is pulling its brand out of china. He brand never caught on it accounted for less than one percent. The company will shift its focus. O build sales in europe kind of cool looking. I do not sell poorly in europe. Gm has so much success in china with buick. U. S. E alpha romero in the. He hopes that is the case number eight is netflix, shares are down one percent. Amazon is planning to launch a free streaming service. Slip, downtinues to 1. 5 and 12 this week. Number seven, Restoration Hardware, shares surging 11 . Driven by continued sales growth. Expanding andon transforming its retail so its retail stores. Love it. I want to throw everything away in my house and go to Restoration Hardware this weekend. Entertainment falling nearly eight percent. The casino operator offering 7 million shares of its common stock. Caesars has been restructuring debt and granted its bankers to shares. Ther million option, whichnt is confusing. Walmart is suing the Credit Card Firm for allegedly us conspiring with banks to fix swipe fees. There may be a settlement eventually before it ends up going to court. Retailers in the Credit Card Companies have been fighting for a long time. This is the latest salvo in that long fight. It has gotten ugly. There is a whole other element. In the suit, it talked about the lack of security. Cognizantfour, technology, up four percent. Benefit from an acceleration in the consulting industry. , offmber three is zynga 1. 5 despite the news that Stephen Cohen increased its bid to five percent. Shares have been following falling all week. Two, pg e corporation. They are expecting criminal charges in connection with the natural gas pipeline accident. According to an sec filing, the criminal charges are not merited and employees did not intentionally violate the Pipeline Safety act. Cuted hat down after they their forecast for the year. The maker of linux operating systems. I think a lot of nerds really love it. Market ending higher and the nasdaq managed to the gout again. Eke out a gain. Up almost 60 but not quite the 150 we saw earlier in the day. Encouraged by personal spending numbers. A little bit off today, off about 10 from the daily average. If it felt like things were slow they were. s because they been slow for the last six months and the last three years. Termtheres been a longer downtrend in volume but then you have days that are particularly low even by our reduced standards. You did have some mixed Economic Data but overall lets move into the roundup, the stories were tracking ahead of mondays opening. Here onterns is with us set. It looks like David Einhorn has been pretty busy. Gave an interview to 60 minutes and in it, he says he is investing in a new Trading Platform that aims to address flaws in the stock market. According to 60 minutes, the hedge funders said the fivemonthold group is going to succeed in a very big way. It is meant to curb the pace of transactions on the platform in order to essentially slow down highspeed trading. Goldman and world brink of Canada World Bank of canada have commented. Exploiting to take advantage of the advantage of the highfrequency trading not necessarily appeal as much to highfrequency traders because there is that delay. Gary cullen to what was writing about in his oped. The pace of trading, the speed, the complexity, but everyone actually was to see trading become a little bit more deliberate, more slow. One thing iex does is they do not give the rebates to the traders. The incentive there is for volume. Brokers just want to do the trade rather than find the best price for their clients. They are trumpeting more transparency. The rules are more published, more open, more transparent. It interesting that rbc has endorsed this because it is a veteran heading up iex and they have been a proponent of change. Bookchael lewiss new flashpoint will be coming out. And scarpelli is in the other group and scott pelley is in the other room. Tesla is adding new titanium battery shields under its model they are looking into fires that occur after tesla cars hit road debris. It is now putting a triple underbody shields. If you thought two would be enough, you were wrong. There is a titanium plate as well as a couple of others on cars that will start being made on march 6. If you do not have the triple underbody shield, you can get it retroactively installed. This is something breaking on tesla that might make you happy dealing with the dealerships. We have talked about in new jersey there has been some opposition to tesla having retail sites. In new york, they can keep it. Added investigations will be under franchise law. The legislation will implement a pact to be introduced in the near future. Across the country, as you gang upalers sort of and pay congressmen to keep these old laws on the book that limit the ability to sell the product directly to the consumer. If i want to buy a legal product from a company that i should be able to. You have to purchase it has thethe entity that license. A big company like fourdoor toyota, they might like have dealers because they are not in the business of dueling the dealership stuff. But a company like tesla, they want to sell directly to you and they should be able to because this is supposedly a free country but not in very corrupt states. Like new jersey, for example didnt the fbi director say was the most corrupt in the country . How is this different from how cars are sold in europe . They have the freedom to do things that they like. A lot of carmakers in germany operate the round dealerships and you can buy directly. I bought an audi directly from the factory and i did not have to pay fees to a middleman that were artificially created by legislation. And you did not have to deal with our salesmen. Exactly. Tomorrow morning, im going to get up early and go out to the tesla store in westchester at the mall. Im going to test drive one of the model s and this will be hopefully one of the triple underbody protections so i know it will not explode on the street. Im going to look into the buying process and see what its like from the company and not through some middleman. Connecticut is raising the minimum wage to 10 10 cents making it the first state to adopt a level the president is seeking. President obamas efforts to raise the federal wages for the First Time Since 2009 stalled amid Republican Opposition so its interesting to watch connecticut say they are going to go ahead and do this. 10. 10. I have a question. If you are a Small Business owner and you have minimum wage and for use, do you have to cut back . Does someone lose their job because you are paying three dollars an hour more . You would have to be doing pretty crappy to not be able to pay someone 10. 10 an hour. Im not one for Government Intervention but thats not a heck of a lot of money. If you are a Small Business doing such poor revenue you cannot pay your lowest employee 10 an hour, you should think about another business. An extra dash you cannot even buy a pack of smokes for three dollars. That would be 125 more per week. Even the cbo thanks that this will be a net loss for job creators. Is a lot of debate about how many jobs. Even the people coming out with the data on this, there are still a lot of debate and wiggle room about how many jobs will be lost, the net and if it versus the net loss. You have to think about connecticut. They have the highest per capita income of any state. I was there on the highway, four tesla charging stations. The cost of living has risen so much and cost of living hasnt not kept pace and the minimum wage has not kept pace. You do not want the government setting price ceilings or price floors. Is the state government. This is not the federal government. But the president wants the federal government to do it. You know president obama wants this to be federal. Thehats why trish mention federal part. Speaking of target, downgrading the Credit Rating in the s p from a to a. It has to do with what weve talked about extensively, the Customer Data breaches related effect including those on fourthquarter earnings, the head to the companies or mutation. However, the outlook does remain stable. The s p says it is because his views at the Canadian Division will lower and cost related to the data breach are manageable given the strong cash flow. There are some cost directly related to the breach and then there are the costs that are harder to quantify, people just not going to target and shopping elsewhere related to this. It looks like the effect has already started to be mitigated to some extent. Nonetheless, that was a big hit. You dont want to go there because youre afraid youre going to get your data stolen. People have million their card info taken. Works, Human Behavior people dont care that much and. T happens often enough they are offering free credit monitoring, the 10 discount saturdays. They are reaching out. I would not use my credit card. My amex but definitely not my credit card. Debit card. Maybe cash will come back. [laughter] yeah right. You remember this, right . What did you come here to plug . Its fair to say i would not be here with you today if i did not have something to plug. Have you heard of the Affordable Care act he . Top Health Care Aides on how moved totwo ferns 6 million enrolled. How does it feel having a three inch vertical . Its a three inch horizontal. Hashe Obama Administration reached a health care milestone. 6 million americans have signed up so far. They have doubled the effort to enroll as Many Americans as possible before the deadline. Joining me now, the white house advisor for Health Policy reform. Phil, welcome to street smart. I know you worked with the white house to get this passed in congress and now you are back to help with the rollout. Its fair to say the 6 million did not come with a few bumps along the way. Do you feel like you can deem . His a success at this point h . The key was getting the website up and running and once that was running, it was really just getting the information out to people. Health care is very personal to people. Seen in the last week is a tremendous surge of ,eople going to the website showing up in person, filling out applications which is just terrific. The good thing is we are not stopping at 6 million. We are going to have a lot more over the next few days. Like some have questioned the 6 million number and its not clear that people are fully signed up and you dont have to fully commit. What do you say in response to that . People have not paid their bill yet. They have not even received their bill yet. What we found in the past anecdotally is that most people are paying the bills. Once the dust settles, we will have an answer for that. Lots are not signing up through the marketplace and theyre signing up directly with companies. Those people are not even included in the 6 million people. You. Just want to ask the president went on between two ferns and ellen. All of a sudden we started to see some momentum. Do you feel he was able to reach out via Something Like between ns to a demographic that is considered crucial . Going doortodoor helps. Kobe bryant has done radio interviews. Lots of people like that have all done things. Cumulatively it has a big impact. The other thing that really helps is the Congressional Budget Office says it will save over the next years and we have the lowest rate of the increase of Health Care Costs that weve had in years. Senior citizens have signed 10 billion dollars with lower Prescription Drug prices. It takes a while to get out. It makes people more comfortable with the law. There is this mandate that businesses of a certain size have to provide health care. That someonecerns with the opportunity to add the extra employee will not do so because it will change the financial equation. Ow do you counter that . Great question. 96 of businesses have 50 employee verss or fewer. We are phasing in the loss of businesses between fifth and100 dont have a requirement to provide coverage until 2016. Over 100s that are people, they already do with the law requires. There will not be a big impact. You dont think there will be a big impact . If they start the application before march 31, they will be able to finish after a later date. I do want to play sound for you from the chairwoman, Kathy Mcmorris rodgers. There are a lot of concerns over this health care law. Even the deadline coming up march 31, the date you had to enroll and he is delaying that unilaterally. Thats not his role as president and he undermines representative government. Unfortunate and as republicans and democrats we need to be aware. Hearing a lot of criticism obviously from the republican party. How do you respond . Thanks for giving me a chance to respond. Its absolutely wrong. I cannot think of what she would say we at people who finished three quarters of their application monday night but had not completed everything and recalled on tuesday they could not have insurance. That is a nonsensible result. All we are doing is what we are doing on election day. We do not kick people off the line. If you are lined up, you get to vote. Its essential its especially important because the law is proving to be so popular with the american people. Today on the call centers when we are at capacity. A lot of americans dont seem to like it when you look at the polling data. Its great that you have the 6 million and we want to see many, many more sign up for it but there is a bias against it in the general electorate. In myre is no question mind that this is a perception fueled in part by the negative ads. I would say this. There are polls and then there is reality. The reality today as we are at capacity at the call center. We had more than one million people, on the website two days this week and there are places around the country with lines 50 or one hundred people long trying to get insurance and that is the test of popularity. There were polls before elections and then you see the election results. The numbers we are seeing are the results. One of our reporters here just said his two younger brothers signed up after seeing between two ferns. Phil schiliro, thanks. The deadline to enroll in obamacare is this weekend. Which state hits their target and which ones fail the . We have the numbers for you next. To examineo continue pay for players in college sports. They say they are employees. Will the Supreme Court agreed . Details later on street smart. Health care enrollment has hit the 6 million 6 million mark. There are a lot of states that have been doing better. The winners and losers may surprise you. Megan hughes has the story. A dozen states are far behind expectation with fewer than 50 of the signups the government projected. The worst in the nation, massachusetts. Irony, this is the state that inspired the law. Rather than update the existing universal health care exchange, they decided to start from scratch. It has been a technical disaster. The second worse state, oregon only meeting 20 of its target. Sign upas been able to completely online and they have had to resort to phone or mail. Maryland also ranks near the bottom crashing as soon as it launched. Month, they were fired. Connecticut signed up more than twice the number expected. The empire state has beat expectations, the fourth best nationwide. This diet trying to defend it. Several like North Carolina and florida have also beat projections. Despite the glitches and those affected. Een coming up next, is the ncaa a cartel . I say yes. What can be done to give students the compensation they deserve. We have the answers after the break. It was ruled by National Labor Relations Board that scholarship Football Players at northwestern our employees and are able to unionize. It used commissioner voicing concerns over the pressure that pay would put on student athletes. Paying a salary, treating a student like an employee, everything that goes along with that, the Tax Implications to those students, what it means in terms of their relationship with the school, those are very complicated issues. Some athletes like former nfl quarterback Archie Manning are not in favor route all. I dont think the players need to be paid. Education isollege a wonderful reward and if the players would just go to college, slow down a little bit. Dont worry all that much about pro ball and enjoy this college experience, get the education and make the most of it. Most players will not going to prove football so its a good journey, to play College Football and enjoy that. Your teammates, your coach is trying to have those good experiences, bowl games and so forth but the main thing is to get a degree and a College Education to do something later in life. The only problem is your coach has you playing 40 or 50 hours per week and if you want to continue that scholarship, you better hope that you play well and that you dont get hurt. The union key witness was another quarterback who described his football obligations as a job. By a woman whod covers Labor Relations from the Chicago Tribune and with me on set, bloomberg Sports Writer evan williams. Great to have you both here. Fascinating to me that this actually has not happened earlier because we heard a lot about players being taken advantage of especially at the division i level. Seems like a nobrainer that they would look to unionization but this is the first time it has actually come forward in a big way. What are the next steps . Willrthwestern says they appeal the decision. They said they have until april 9 to file a petition for review. Then the union will probably file another document that a sickly says we dont agree with the addition for review and we think that they had the right ruling and that will go to the nlrb in washington where northwestern will appeal and then it will be up to the nlrb in washington to decide whether decision ofhold the the nlrb director in chicago. With the case that could be made that this is an antitrust violation . Thats an interesting question but i think its too early to get to that level. Right now, its a decision for the original director. Northwestern will appeal and we will know more about the implications after the nlrb makes their ruling in washington. Thats what is going on and theyre talking about the ncaa effectively being a cartel. They are sort of the only game in town and you could say that they brainwash kids into thinking you need to go to division i and you will be so lucky to get this scholarship. By the way, a scholarship whose value is very debatable. It depends on the university and it may depend on how much access you are given to getting the education itself. And that is what the member organizations always come back to. The scholarship is worth so much and the opportunity to play college sports, the exposure that gets you and your movement to the next level and that is what the northwestern Football Players are trying to fight. You mentioned the antitrust suit. There was one filed about a month ago that the ncaa is fighting and the big legacy of what the northwestern Football Players are doing regardless of whether or not the National Labor Relations Board agrees is that it is just another public issue that more people are reading about and it is shifting Public Perception towards the idea that drastic change needs to be done. A lot of people get mad. They say they should be lucky they are getting this education, but you look at this, the ncaa basketball, march madness tournament for example and what you see is that the Television Revenue that is collect it off of just march madness alone tops that of any postseason professional sport including the nfl. Amateur in the sense that theres big money to play and a lot of people are getting paid. Its really interesting. One of the things i have been covering in this topic is that everyone has an opinion. Interesting because a lot of labor experts were debating yesterday about what this really means going forward. The chairman of the big east was saying theyre going have to pay taxes. So what . Thats going to be really hard. There was a study done by drexel Sports Management and i think we have some charts that show on average, a basketball player should be making in the vicinity of 900,000 with the top player being at louisville for 1. 6 million and the lowest market value being indiana four 690000 and that is her year. Thats a whole lot more than a 50,000 education they are giving you. Its easy to make that statistic with basketball because it is so small. There are so many questions that need to be answered. How much you pay the star, the versus theiel freshman. I know we only have another minute here but lets theorize for a second. What if you said, here is the amount of money we will give to division i. You have collected all this money from cbs. Here are the amounts we will give to all of you and maybe you divided up equally among division i schools and then aybe you could do that in range. You pay a little bit more for the better player, the starting player as opposed to someone who will be benched but you give them a stipend. You dont have to give them a ton of money but you give them something because they are still working. Do you pay womens gymnastics . It does not bring in money. You go with the revenueproducing sports, the ones bringing in the money are the players it would get paid. Like under that system youre taking away money from the gymnastics program. The Basketball Team and the Football Team make money and a lot of it, not a lot, but it gets siphoned off to pay for the programs that dont make money. The womens gymnastics coaches not making anything near what the mens basketball coach. You are right, nowhere close. I spoke to the mens coach at iowa and he says theres not a gymnastics coach in the country does not go to sleep worrying about if the Football Team stops making money. Why should they subsidize . Why can you not put market value onto this . Cbs,ppens from ncaa, the the actual coaches. There are programs that just dont make money and you want to have more than just a basketball and foot all team. The profit that those programs are making go back to the players and its last money for the Athletic Department as a whole to kick around and pay for the other programs. To note it comes down paying the coaches of millions and millions of dollars and maybe some of that money could go to gymnastics. Theyve got to find a way to figure this out because its putting a lot of really talented athletes in a bad spot. Its not fair. Its just not fair. Thank you very much,. Coming up, kevin spacey is turning into his house of cards character. We explained how the netflix show is taking on washington. Plus, we look at the top five acts being angry birds to shame. I will see a right back here with more street smart. Time now for the scene where we bring you the business behind media, business, pop culture. Life seems to be imitating art for kevin spacey. A consummate wheeler and dealer or the netflix show is taking inspiration from his onair persona to lobby for tax breaks for his show. Joining me now to explain it all Thomas L Mattingly and onset with me, edmund lee. Adjourning me now to explain it all to me is phil mattingly. What is he looking for . 18. 5 million in tax credits . To thee are going Maryland State Legislature and they try to incentivize the film and tv industry to come in and they do that with tax breaks. Right now, maryland has 11. 5 million im sorry, seven . 5 million and theyre trying to increase that. The most ofhat gets it, house of cards. It is like a lobbying battle straight from the show. I think kevin spacey has a certain card he can play as well and that he is who he is. He commands a lot of respect in washington because people love that show. Does that make him the ultimate lobbyist . The show made washington sexy. That was not an easy thing to do. Hes a powerbroker behind the scene guys. Asy think of themselves these power brokers. The public does not know how hard and interesting it is and he has made it apparent to them. It carries a lot of weight. Hes trying to wine and dine them. Its an interesting ploy. It is art imitating life, back and forth. How much money is really at stake here, phil . What does this mean for marylands economy . This show is exactly why states try to incentivize tvs and movies to come in. That show is entirely based in baltimore even though the show was supposed to be in the sea, it shows all baltimore landmarks, big money, big reduction in costs to come into the state. For maryland, it is extremely important and that is why you see lawmakers willing to work with them and lawmakers going to these events with kevin spacey. They understand it has a direct impact on the local economy. 150 million is what they are spending their on the local economy and that has a domino effect in a positive way. At the gets good traction. It only means more hollywood productions, more jobs, more money, better for the local economy. Thehis is something that industry overall values and looks at pretty carefully. You have shows tape in ireland because they have a really good tax incentive. Canada as well. Like thats right, vancouver. New york is tough but theyve been pretty good about offering tax breaks as well because it increases tourism, commerce, people coming in. Smaller states like maryland, to get a piece like that is important. Here, has the upper hand phil . If we are going to consider this a kevin spacey . Ultimately, they dont want to lose the show. To reada great story there that we put together and they pushed this a little too far. The studio representative from the group that runs house of cards sent a letter to the legislature basically saying if you take away the tax credit that we are packing away and leaving, and of story and they were deeply offended like that. It is like they were playing hard ball little too hard. As a couple days left in the legislative session and they are aware of the importance of having the show in the area to the local economy even more than kevin spacey sways lawmakers and votes. Its all about the art of negotiation. Sale mattingly, thank you very much. Coming up, let the games begin. The top five apps spinning off of angry birds. The rank is next. King digital came out with a valuation of 7 billion this week. With that in mind, we thought about the world of Global Gaming where you can wage a war, treat yourself to a sweet saga, or you can get it to nature and work the land. We are honoring king digitals ipo. If you want more rankings, go to bloomberg. Com ranx. Randy levine,have president of the yankees. We have the former ibm ceo and jim cook, founder of sam adams. During the next week. Im the senior right here again monday at 3 00 p. M. Have a great weekend. Enjoy. I will see you again right here and monday. 56 past the hour which means Bloomberg Television is on the markets. Equity benchmark sending the day on the green but not as much as they were earlier on. The nasdaq up about four and a half. We did get a report showing Consumer Spending rose the most as personal income rose. Ar more on what has been choppy week for the markets, i want to bring the principal at Infinity Investment advisors. To pass on aning result in a selloff in march cap stocks. Nothe short answer is because it has been quite muted but you are right. The real risk in the market has transitioned from geopolitics to said and now we are wondering whether or not the high beta, high momentum stocks transfer or broader s p equity markets. If you look closely at some of the bloomberg groupings, you will see that leisure stocks are down Something Like 15 . What does it mean, theres a lot of dispersion in the s p 500. Active Management Strategies are actually en vogue. Do you think stocks are cheap at these levels . I would not call them cheap. Valued. Y yes, but again, when you look variations, you want opportunities available. What is the mood out there among the Investment Managers that you speak to. Is it already this big pivot and we are going to a broader selloff . Of psychologyan or anecdotes but this has been troubling in that i have seen some very experienced managers who take a little more caution in the last couple of days fan they have previously. Im not suggesting that the bulls are becoming bears but it feels like risk managers are focusing on hedging rather than new money opportunities right now. What is driving the risk off sentiment . If you look at the rate curve, obviously the 30 year is suggesting that we are men and that we are in an environment of anemic growth. They are dubious about the weather playing a role in the environment and the Economic Growth path. First quarter starts next week. What is your outlook . Cliff not very good. We are looking for a growth in earnings. It does not mean we will not get upside surprises. The companies have ratcheted down expectations. Maybe the upside surprises that we should be looking at the this the end of the year we want to focus on. What is your year and target year end target . The gdp willthat grow. Expect doom and gloom but from a quantitative stance, you are still able. Jeremy hill, thank you. But does it for on the markets. Im olivia sterns. Forhis is taking stock friday, march 28, 2014. Todays theme is things that are fresh. House of cards has given us a fresh take on d. C. Politics. The Production Company is in hot water with the state of maryland. A fresh start to our date, i will introduce you to a company with a new take on your morning joe. We will talk to the ceo of a Company Giving you and your electronics a