Reaching this reality and yes, cinnabon, you know, cinnabons, the smell of all of that frosting and cinnamon. Talking about how to avoid the same fate as the gorman gourmet cake maker crimes. First headlines from su keenan. Earnings season. Wells fargo came out with numbers this morning. Profits increased 4 on lower credit cost. Wells fargo pershare earnings failed to top the preceding quarters for the First Time Since 2009. Has agreed to delay it started in new york until monday. The court has granted an injunction against uber. Lebron james is returning to the Cleveland Cavaliers where he started his career. Cavaliershe cleveland a billiondollar franchise, double what the team was worth without him. Those are the headlines. Thanks very much. And his on lebron james to surgeon to return to cleveland. Joining me on the telephone is some of his clients include players such as richart tony felton. Great to have you on bloomberg. What does this mean for the future of the nba . I think it is great for the nba. Togives everybody something look forward to and i think it is great news and i think everybody is a winner, except for the miami heat. What do you think the deal will cost the Cleveland Cavaliers . You know, he is going to do a max deal regardless. Of value is worth hundreds millions of dollars to have him. He is a worldwide icon and i think this creates even higher push for him and his value. Do you think the cavaliers have to give up their firstround draft pick . What it is looking like. If they can pry kevin love from minnesota, it will be a win for everybody. I know as much as they dont want to do that, it is going to take that to get some inside presence to get a post player which will enhance lebrons game. What about the way he went about announcing this on Sports Illustrated online, an article he penned himself . It was done correctly this time. Last time there was a lot of bad feedback the way it was handled in this time he did it the right way. From being in the business, the all kind of felt he was leaning to cleveland because of the fact he was taking a long time to make his decision. If he was going to stay with the heat, i felt like it would have been done right away. It was like having a jury deliberating for a certain time. The longer he was out, more people got on the bandwagon he was headed to cleveland. What about the owner of the cavaliers. He made some harsh statements when lebron laughed and in the heat of them when he left and in the heat of the moment, they have patched that up and i think it is good. It goes to show no one is perfect and we all make bad decisions at times and in this case, they were able to heal their wounds. Does this do to clevelands chances to take a championship . You know, i think they are very close. The question is going to be how quickly they can mature and play as a unit. Probablyty is you have one or two guys who have been through that championship run. They are going to have to add some pieces. At the end of the day, for the next several years, they are going to be in a position to compete for a championship. Salary for the broncos to 72 million. That is the estimateto. Tony, anything the heat can do to respond . Theyre going to have to reload. Theyve got a climb and you always try to have a game plan in place for plan a and plan b. A lot of the chips can fall. May be headed to houston. It has been a great run for them. Is one of the great basketball minds. I am sure he will put it together. Thank you for joining us, tony dutt, joining us from michigan. Lebron james returning to the climate leaders. Reynolds tobacco is looking for some returns by trying to acquire another company andining the brands creating a major competitor for the industry leader. Byh details i am joined carolina chapelle and i want to go to robert proctor, joining us from stanford, california. His book is entitled golden holocaust origins of the cigarette catastrophe and the case for abolition. Tara, i want to begin with you. What do we know about any potential combination between them . We know the company has confirmed they are in talks. Sources are telling Bloomberg News the agreement could be announced as early as monday. Isdition American Tobacco going to somehow participate in this deal. They would be willing to keep their stake at 42 , helping the deal go through and we know that Imperial Tobacco in london is going to be a part of buying the assets that are going to be divested to appease regulators that will be concerned about come addition issues. Has anolds American Market cap around 33 billion. Lorillard 23 billion. Reynolds is the second biggest in the u. S. And lorillard the third biggest. Trying to compete with philip morris. This is coming as smoking is declining in the u. S. People are spending fewer dollars on cigarettes. The companies are trying to broaden their horizons and get into markets where smoking is a growing market. , if this dealtor does come to fruition, what does this mean for the liabilities a company like lorillard has assumed . A sense in which reynolds is buying a certain amount of risk. The companies they have absorbed over the past 15 years really made most of the cigarettes for the first to 60 or 70 years of the century. Phillip morris is pushing overseas and reynolds has sold their overseas business. And parthunkering down of that is from the fact lorillard is a menthol cigarette company. That is risky because we dont know if the fda is going to ban menthol. If we do, that will be bad for this merger. If they dont, it would be good for reynolds. Described the link between the cigarette companies, their liability, and the bonds that have been bought by investors linked to payments from cigarette companies. Is differentre types of risk in this business. Ultimately, these are shortterm investments. The industry is not strong over the long term, but theyve got for all threends of the big three now. And those are going to continue for a while. As far as the financing, no issues that would be presented to reynolds . It does not seem that way. They need help in order to do this. That has not come up yet. We will look for the deal terms on monday. Are we going to hear the word synergy as a euphemism for job cuts . Absolutely. The neighbors the companies are neighbors. They can consolidate operations and employees. What has been the attractiveness of tobacco stocks . U. S. Is hard to say in the because smoking is down. These companies are looking to new ways to grow. The dividend yield was one of the reasons why. That is a big reason, for sure. The last point having to do with this combination, antitrust rules, would they apply in the same way to Tobacco Companies as other Companies Given it is shrinking . Of course. And would make a duopoly that is one of the reasons reynolds would probably sell some of their brands over to Imperial Tobacco so they could threee some semblance of parties. And remember the history of this has been one of consolidation. Ever since the 1950s and 1960s. There are going to be some antitrust issues. What about the tax revenue collected on cigarettes . Is going to be imperiled by this combination . But that isure, definitely a topic for debate right now among the analysts talking about this deal and its implications. Thank you very much, my thanks also to robert proctor. Up, crumbs bakery empire has shuttered its doors. We will talk about how a food chain can avoid this situation. Weve got the president of cinnabon about keeping the business fresh and you will hear from the governor of north dakota on how oil has changed the states economy, giving it a fresh new look. This is taking stock on bloomberg. This is taking stock i am pimm fox. The Booming Oil Industry in north dakota. Megan hughes caught up with Jack Dalrymple attending a meeting of nations governors. She asked him about the prospects for the republicans in the november elections. I think it is going to be a very good year for republican governors on the ballot. I am one of the few that is not running this year so i am having fun observing. The issues are right this year. People are very concerned about what is going on with the federal government and republican governors should do very well. What do you make of Chris Christies leadership in terms of fundraising . He announced record fundraising for the Second Quarter after the bridge scandal. How do you rate him . He is a very effective guy, popular. I think he has great connections. I think and is an advantaged to be from a larger state. Probably from the east coast and he does a great job. The topicove onto right now in north dakota, the oil industry. North dakota is number two to texas in terms of oil production. This is a state that has seen a lot of poverty and that you have incredibly low unemployment. What is the prospect for the future . Where do you see growth . I think were going to continue to grow very nicely. We are the fastestgrowing economy in the United States for each of the last four years. The Fastest Growing population in the United States. And i see no end to it. We will continue to move forward. It is not just oil. Other industries are doing well also. Technology, manufacturing, agriculture, all of our industries are doing well. Are some problems with oil and gas. There was a Pipeline Leak over the weekend. Problems with trucks and farmland. Youve got flaring you can see from space. What is the state doing about those problems . We have big challenges, no question. When you are expending your Energy Production at the rate we are, we have gone from 100,000 barrels of oil per day six years ago to today one Million Barrels a day. So that is very rapid growth. And we have to invest a lot in order to keep up with that. Highways, law enforcement. We are doing the things we need to do to protect our quality of life. A new state gas capture plan that requires everybody to have a gas capture plan before they drilled. You said there has been too much flaring. The new gas capture plan is not entirely popular with the industry. They may find they cant get a permit if they do not have a plan that is ready to go. For a few, it will be a challenge. 2020 we will be capturing 90 of the gas in north dakota and that is as it should be. Whene have to keep in mind you are growing that rapidly, we have to build the infrastructure from scratch. We are not like oklahoma and texas that has had infrastructure 50 years. We have to create it as we go. We are catching up to it. We will take care of it. President obama is going to hold an Energy Summit in your state. What should the governments role be, and has the white house done a good job . Really the states have the growth of energy development. They are the ones who have embraced it, or not embraced it. But we have to keep in mind that really the right policy for the nation is in all of the above energy policy. Huge growth in Wind Development in north dakota, biofuels have grown rapidly. Industry vibrant coal that produces electricity for the nation. We cant just pick out our favorite form of energy to the exclusion of all of the others. Your vision for building on the oil and gas boom you have seen . You talked about corporate partnerships, ge. Where is your vision . The exciting parts, utilizing and taking advantage of this incredible resource, natural gas is going to be plentiful and affordable. We are going to be able to use liquefied natural gas to power a ,ot of things in north america vehicle fuels will change. It is a great opportunity for the country. Thanks to megan hughes reporting from the governors conference in nashville. Coming up, i will talk to the president of cinnabon on why demand for the 800 calorie cinnabon is still growing. And amazon wants to expand its testing of drums that will deliver packages to your door by air. Has some safety questions. Weve got the latest next. This is taking stock. I am pimm fox. The smell of a cinnabon, cinnamon, frosting, cinnabon has expanded to 1100 locations, 52 countries but cinnabon is not content with sweet treats outside the home. I am joined by the president kat cole. Thanks for being here. Of the bringing some samples, you have made everybody here at bloomberg, their eyes are watering. They are smiling. How did you get into the cinnabon business . I have grown up in restaurants since i was 17. Luckily as an employer, the food low barriers to entry and a lot of good people start in entrylevel positions and work their way up here it i found a home in global franchising and continued to move up and they also benefited from a lot of the restaurant associations that provide leadership and mentoring that put me in a position to be able to run such an amazing brand. You put that together with an mba from georgia state. Sellingame year we were my previous company, hooters restaurants, i was running the Georgia Restaurant Association and was getting my mba. Nights, weekends. You mentioned nights and weekends. These are fulltime jobs. You breathe and eat. Absolutely. Especially when you are global, and you have a franchise base. Investors,couple of but hundreds of Franchise Partners all over the world. To 24 hoursds exist a day and you have to build a team that understands that. One of the things we dont necessarily need is an 800 calorie cinnabon. And us how that came about what things you are doing. Cool story is such a of entrepreneurs getting it right. They started the brand and partnered with a baker and chef and came up with the recipe. They stayed addicted to quality, expanded it and started franchising and grew all over the world. Cinnabon has had four owners in its 28 years. To have been successful through that many owners is interesting. A few things have driven the commitmentthe roll, to quality, and actually menu extension. Made us famous, but it is only a portion of the menu today. Bites are so tiny and cute. That type of variety along with the beverages have helped us keep people coming back even though we are famous for the big one. With your Business School background, do you think crimes is going to be a case study in why you should not have gone public or you did not expand in the way that would be successful in the marketplace . Crimes will be an interesting case study. It is a sweet brand, even though its Retail Locations were only in 50 spots. That is not large by most that national standards. Pop have such a place in culture. Despite a popular brand, it does not mean the economic model is working on the inside and just because you have gone public does not mean it is something that can be a concern. Kat cole, cinnabon president. This is taking stock. This is taking stock. I am pimm fox. Lets go to su keenan. U. S. Budget deficit so far this fiscal year was the smallest since 2008. A stronger economy bolstered tax payments by consumers and businesses. Another deal between drugmakers. Scheier has been negotiating after itago beginning raised its takeover offer to 51. 5 billion. A stock was suspended from trading appearing to have no members, no revenue, no assets and only one employee. The stock has risen as much as 36,000 percent from midmay. Those are the top headlines. Back to you. Very much. Amazon. Com knows how to sell a lot of stuff and now it is trying to sell the faa on a plan to expand the testing of its delivery drones. Amazon says using aerial vehicles is one invention we are incredibly passionate about and we believe customers will love it. But will safety officials love it . Joining me is michael toscano. Thanks for being with us. Exactly what the current rules and regulations are governing the use of Unmanned Systems. L, right now the faa does use ofor hobbyists Unmanned Systems but there is an opportunity from a commercial technologyake this co and use it in a different way. The 13th entity that has asked for an exemption from the small Unmanned Aircraft systems that is being proposed to utilize ander demonstrate and test to see if it can be utilized in a safe manner. This has been used by utilities to by check transmission lines or to do testing work. Is that the first step in general approval . There has been certain cases where the faa has had an monitoringor certain capabilities. For the most part, what you are seeing is earlier this year the faa voiced and made it public they would be entertaining from the small Unmanned Aircraft system rule that is going to be coming out in november. Once they put that out, there will be a 90 day response willand then they adjudicate those comments and come out with a small rule. That may be a process that takes up to you and a half to two years. So not to lose the momentum in the possibility of using light utilizing this technology, the faa said they would entertain exemptions that can show a safe case to utilize this technology. 13 exemptions have been filed already with the faa since may. Is the 13th. Amazon is looking to be able to take the technology they have right now and demonstrate at their facility in seattle it can be used in a safe way to allow the delivery of packages that weigh less than five pounds. You mentioned other countries have rules and regulations governing the use of these devices. Where should we look for some guidance . Canada,rope, australia, and actually some places when the monsoon season hits, 85 of the roads are wiped out. How do you get medicine and food and logistics to those people who have been cut off from society . This is one technology they are looking and to do that. Some of thed be parameters the faa would have to put in place to make sure this is safe and viable . You hit upon it, safety. For any unmanned system. The question is how safe we can we do it and what are the environments which has the aptitude for this to be utilized . You look at the movie industry, agriculture, power lines, gas lines, you look at what amazon is looking to do. The systems do well for the four and Difficult Missions humans face every da