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tv   Street Smart with Trish Regan and Adam Johnson  Bloomberg  January 23, 2014 3:00pm-5:01pm EST

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♪ ♪ >> we got a big selloff underway live from bloomberg headquarters in new york, i'm trish regan. >> i'm mark crumpton, welcome to "street smart" on this thursday. >> we're seeing a lot of downside. here we are just about an hour from the close. we have the s&p and dow off better than 1%. a pretty down day all around. the nasdaq down almost a percent. we have a lot to cover. on the agenda, we're talking about h.l.f., the drama playing out on capitol hill. shares are plummeting on news
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that a u.s. senator is calling an investigation into is gations that the company a pyramid scheme. >> and richard sherman, his post-game interview has gone viral. we'll focus on how to manage the message without jeopardizing sponsorship dollars. >> that was unbelievable. i was feeling for erin andrews in that one. moments ago, we got news that the u.s. attorney's office subpoenaed chris christi's campaign for documents related to the bridge-gate scandal. the got news that the u.s. attorney's office subpoenaed chris christi's campaign for documents related to the bridge-gate scandal. the former campaign manager for president obama is here for the hour. david, this story is not going away, won't seem to go away. what is it going to mean for his ability, chris christi's ability to raise funds toward a 2016 bid. >> i managed the campaign in new jersey. i can tell you, you don't want your campaign to get subpoenaed. i think at the end of the day, the story may hold up, it probably will. this is an enormous
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distraction. if you see some of the initial poll numbers, poll numbers this far out are somewhat meaningless. his strengths are to independent interview has gone viral. we'll focus on how to manage the message without jeopardizing sponsorship voters that is where he has taken the biggest hit. if he is going to win the nomination, he has to rely on states with open primaries. >> he was just in florida this past weekend. people put it in the rear-view mirror because they're seeing politics as usual. wow, a new jersey politician to trouble, who knew? >> there is a rally around the flag in the republican base. it may strengthen his actually with core republicans. >> he is getting attacked? >> right, by the media. this investigation has gone on for a long there is a rally aro flag in the republican base. it may strengthen his actually with core republicans. >> he is getting attacked? >> right, by the media. this investigation has gone on for a long time. it's clearly going to be very, time. that's all people are going to hear about him. in the initial poll numbers, the one thing that is important, in the news for a i think he is never going to be the favorite of the tea party. to win the republican nomination, he has to get independent voters in states that allow that. right now his brand has been tarnished there. he has to work hard to rebuild that. >> what does an administration
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do in crisis mode? >> it's hard. it's a massive distraction. everyone close to him is now consumed with this. he has to govern, he is not a legislator. >> it gets you off point and off message. the question is not what he wants to do in his second term because he won the election by 22 percentage points. now it is how do we deal with this mess that we find ourselves in. >> governing day-to-day, you have to say we got decisions to make. we have an agenda to execute. in terms of his planning for a presidential race, i assume that's where the real collateral damage is. people won't have the time to commit to that. they will be busy lawyering up and dealing with where this story is going. >> i want to turn to our other top story today. hours ago, the civil liberties oversight board reviewed the findings of its report calling the end to the data sweep program calling it illegal. the world is increasingly technology dependent and terror concerns continue to rise. can the balance between privacy
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and security ever be achieved. joining us, the former commissioner on cyber security under president obama. is now a managing director of global forensic at the firm alvarez and marshall. hose, david, tom, let's start with the basics. why is this group saying that the data collection itself is, in fact, illegal? >> what they're suggesting is that there is a warrantless wiretapping occurring and too information gathering occurring in the u.s. as a whole. we need to remember that there are dozens of other countries who are actively pursuing u.s. citizens in the same regard. >> richard, the other critical part of this report is the conclusion that the data collection is actually not resulting in catching the people that they really want to catch. >> a couple things about this report. first, they don't actually alley there is warrantless wiretapping going on. they are talking about bulk telephone metadata. they are provided in bulk to
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the n.s.a. right now is now a m to court records. the stat to you that permits is insufficient and it should be ended. it's not a unanimous consensus of all five members of this board. two of them dissented on that key finding and the board did, in fact, go and say they found no abuse of government powers. they believe it was being implemented in good faith by the government. it is a relative important, it is very important, but relatively technical legal argument about the particular program. >> could you change that? could you go to the court and change it so you have the authority? >> you have to go to congress and the president has to sign it. the current program has been authorized by statute repeatedly and validated by federal judges over 15 times. it's a strongly held view by a very knowledgeable subset of the debate. it's on a very important program. let's be clear. they are saying the statute as currently written isn't ufficient to authorize the
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program. >> but, mr. kellerman, as trish was alluding to, you are trying to strike the balance for privacy, the right for americans to be safe, but also the right for americans to have their privacy not invaded. talk to us about where that right to privacy ends. we know in terms of free speech, that right ends because you can't safire in a crowded movie theater. where does the right to privacy end? >> the n.s.a. is looking for the beinterests of the u.s. citizens. you can't have privacy in a world without cyber security. st americans are being actively pursued by criminals that eign nations actively trying to steal intellectual property and rights as consumers. >> go back to the quote from ben franklin that we heard surface during the story. he says "those who surrender actively trying to steal intellectual property and rights as consumers. >> go back to the quote from ben franklin that we heard surface during the story. he says "those who surrender freedom for security will not have nor do they deserve freedom." i guess times don't really change. you go back to the 1700's
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there. this is really what is at stake. it's a slippery slope. people worry about at what point are we surrendering too much, david? >> one of the big issues is the way this was presented initially, a lot of americans thought their calls were being actual to or their phone records were looked at. if you're calling a yemeni bombmaker, they'll look at your records. it outstrips reality but you see what happened with target, neiman marcus, the data that is provided by the private sector -- >> that's the concern right there. all of your data is out actual phone it. i log into my bank account and you think there. it's remarkable when you think about this money is there because i see it there, right, who is to say someone couldn't hack into that. >> fingerprints we're leaving every day, all of us, dozens and dozens of us. >> what about those fingerprints? we're leaving them everywhere, we're on facebook, twitter, everywhere. >> an important concept is the implied consent of giving your data over to a service provider. in our construction under the supreme court law, there is a
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doctrine of third party consent, meaning if you give a third party, very rise done or facebook your data, it's their to lose and subject to a lower constitutional to say protection then, for instance, your speech which you are not giving to them. this program turns on that kite subtle and important question. >> but, mr. kellerman, are we at a point in our nation's history where a citizen's guaranteed rights are not absolute? >> i wouldn't suggest that. what i would suggest, though, is american citizens should be much more concerned with the approach to their privacy protections croned to corporations, they are underinvesting in cyber security and criminals are migrating to these systems and stealing thousands of personal records and ideas. >> but, sir, should it be voluntary? security cyber infrastructure be voluntary
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because it's in the national security interests, or should it be mandated by government? >> you cannot maintain privacy in today's world without pro efficient standards of security. you have to be con any distant that the mission is to protect americans. americans face a worse threat from cyber criminals and foreign nations -- >> let's get to the issue that people don't like the idea that the got is in their business or the threat of it. what do you recommend for the president here? how should he be handling this as more and more americans say i don't like this? >> well, i thought the speech he gave last week was very important. he did offer some reforms. to explain, again, no one is listening in on your phone calls. no one is collecting the numbers you called unless there is reason to believe that you are talking to people or doing business with people that may want to do us harm. i do think some of the reported activities that were going on with foreign leaders, reforms there are necessary and he offered those. a lot to understand is explain and reform, but i do think that
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people do have to understand that the threat has changed. if you can pick up a threat and prevent a terrorist attack, i think most americans want to do that. it's an ongoing debate. >> thank you so much. us.d is sticking with richard, always a pleasure. >> and richard sherman, wow, he is either public enemy number one or he is just a young man who is overly enthused about winning. managing a viral message when we return. ♪ ♪
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richard,
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>> welcome back to "street smart." i'm mark crumpton with trish regan and our guest host for the hour, former white house supervisor. you're a foot fan, even if you're not, the infamous video, they're calling it the rant. >> the rant, the variety rant. >> richard sherman of the
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seahawks after they beat the 49ers last weekend to advance to super bowl sunday, sherman went on a rant about his rivalry with 49ers wide receiver michael crabtree, take a listen. >> i'm the best one in the game. that's the result you're going to get. don't you ever talk about me. >> who is talking about you? >> so is this being received and how will it impact potential sponsorships? we are joined by the market manager, jamesy fritz, thanks for joining us. >> thanks for having me. >> is he public enemy number one or do people understand that he is a young kid that got jazzed up after a win? >> you have done that, right, mark? >> every day. >> i think it's turning. i think the perception immediately following the game obviously, there was a lot of outcry from the public, but, i have said this a couple different times. what people have to understand is the switch that it takes a lot of these players to play at
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such a high level, a championship level, to put your team in the super bowl is not something that easily slips on and off. there is a reason why the league usually has a 15 to 30-minute cooloff period before there is any media interviews. when you look at the timeline -- >> cool off. >> the other question is if crabtree doesn't shove him in the face, do we get that reaction? i think that set him off even more and led to obviously the emotions taking over once -- >> lots liked it. you look at t-shirt sales, they're actually up. he is doing better on that at least. is there any way that this could actually have a positive effect on his brand? >> i don't think if the win, he won't be the one delivering the i'm going to disney world. he has an amazing story from compton to stanford. clearly, there is 100% awareness who richard sherman is. if he has a good game and the seahawks win, he will have more
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opportunity than before. >> jamie, how do you market an athlete who is in the center of a storm like this? >> we tell that story and we have been telling that story all season long, you look at richard's body of work -- >> it's a great success story, is it not? >> it's amazing. what he has accomplished from a diversity standpoint and you look at the greatest athletes who played this game, look at ray lewis. he is a beast on the field but off the field an incredible guy. there is a switch for these players to play. brands are loving this right now. the feedback i'm getting -- i only had a couple brands that are questionable. they have come around and realizing now, he is trending in poland, i mean, come on. >> people are responding positively. what about in a case of like a tiger woods where people are not responding so positively? we saw with him, he lost the nike deal right after his whole scandal. >> absolutely. >> dennis rodman always seemed to have a challenge getting sponsorship. now he is in rehab. scandal and athletes, that
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doesn't necessarily work well together in terms of ad dollars. >> everyone of those contracts has language that allows them to get out of an agreement. the most compensation i have amongst brand manager, jamie, i'm putting millions of dollars behind this athlete or this brand. i don't know if they're going to go cheat on their wife, rape a girl or kill some dogs. that's real talk. >> jamie, how much does race play into this? sherman brought that up, too. he took great offense of people labeling him a thug. he is a young guy. he got excited. he was up in crabtree's face. he said some things that were immature. he regretted it later on. all he did was taunt. in the nhl we have guys that drop the gloves and beat them in a bloody pulp. is race a factor? >> it certainly has come into play. this is a violent sport. these guys are -- >> he said per barbarians. >> people are rooting for these
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guys to tear each other's head off every single weekend. they're the same guys in the bar drinking the bar, and if they have a problem with this, this generation would never be able to handle muhammed ali. >> that is an excellent comparison. ali backed it up. >> right. >> ali -- >> so did richard. >> richard hasn't won a ring yet. he is one step away from the mountaintop, but he hasn't won a ring yet. if the seahawks lose, the media is going to descend upon him like vultures? >> no, it depends on the game he has. if he gets burned deep a couple times, it could be a different story. he plays his game, ok, and they still lose, no. i think that brands are still very excited about what he has accomplished to this date. >> jamie fritz, director at fritz martin management, marketing manager of richard sherman of the seahawks, thank you for coming. > thank you for having me.
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>> there is breaking news, the company is undervalued. we got julie on the breaking newsdesk with more details. julie. >> icon on the case on apple that he has made that it's undervalued, it should return cash to shareholders. what is new here is that he is increasing his stake from yesterday. trish, when you spoke to him yesterday, he brought a stick to apple at around $3 billion. today he added another $500 million bringing his investment to $3.6 billion. the move yesterday brought him into the top 20 holders of apple. it's such a big company and so many big investors and so many investors period that it takes a lot to get you into that top 20 or top 10. now the $3.6 billion investments that brought him a little bit up higher. he also says he is in a condition to keep buying apple stock at today's price. remember, one of the things, of course he said to you yesterday
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is, you know, it's a good value here, why should apple let me buy the stock instead of it buying back its own stock? he also says that he speaks positively about apple and the company itself, but really, trish, as you know, this is his sticking point, the cash should go back to shareholders. >> he wants a buyback. one of the other points he made is tim cook is not a finance guy. he did come out yesterday and tell me that he liked tim cook. he liked the management in apple, not so much at ebay, but he liked it at apple. still to come, we'll tell you about the unconventional way jamaica was able to send its bobsled team to the olympics. it involved digital currencyy. new kid on the digital money block next. ♪ ♪
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>> are digital currencies for real and will they last? we heard that jamaica was able to send its bobsled team to the olympics and crowd sourcing and what is it, matt. >> doggy coin. you can pronounce it anyway you want. it's kind of a joke. it's definitely for real. and it's really worth real money. people are mining it and people are using it to do a lot of good things like send the jamaican bobsled team to the olympics. >> the currency, the joke and bobsled? >> it's a joke and real. it's a joke that does good things. i mean, it's fun. it's much fun. >> here is my question, ok. as we look at the bit coin universe right now, there are currencies that are trying to challenge the bit coin norm and my question is, will things like this, maybe not doge coin
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but other kinds of currencies really give bit coin a run for its money? >> not really. so there are a lot of alt coins or alternative currencies and some of them do things that make you look at bit coin in a different way or maybe some of the things do things that you would like bit coin to do. usually all of the good from the alt coins is taken and built into new bit coin. >> you wonder where the feds are in all of this, i got to ask you, david, you worry about things like terror financing, but people buying drugs on sites like silk road which got shut down. >> and jamaican bobsledding. >> jamaican bobsledding. >> you don't want that to happen. >> are they able to crack down on this? >> they have to watch it very coifl. doge coin, amateurs are involved in it out there. bit coin, you have to invest millions of dollars. >> that's true. it's become a real operation to mine bit coin. i think you have to look at all
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of these things as what they really are which is a form of currency freedom. can you buy -- could you buy drugs on silk road, yes? should the government be regulating what you can buy and what you can't buy? some people think no. there is the liberty tarean i know. i know it would be surfacing one of these days. >> those people are supporters of bit coin and supporters of something like silk road. >> thank you, matt. >> anytime. >> 26 past the hour. alex steele is on the markets. hey, alex. >> we're looking at a pretty rough day for the markets overall. the dow is not as bad as it was before down 187 points for the of a percent..8 a u.s. senator called for a probe into the company's
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investigations. he sent letters to the f.e.c. asking the agencies to look into herbal life business practices. they are accusing the company of being a pyramid scheme. ♪ ♪
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>> welcome back to "street smart." about 30 minutes from the closing ball, i'm mark chumpton. >> not looking good at all. a lot of concerns about the chinese factory data that came out today has jefferson worried, mark, about a global slowdown. >> global slowdown market as you can see there, the dow off 188 points, s&p 500 is off over full percent, nasdaq is down.8 of a percent. we have the former senior advisor to the president, he ran the 2008 campaign that president obama won. let's get to h.l.s. getting
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market. today's they are tanking, take a look, almost over 11%. a senator calling for an iny into the company urging -- our chief washington correspondent peter cook has more on this story. peter, i got to ask you, what do you think it took, why did senator markie actually take this step? >> well, he says he has some of the same concerns that we have heard from bill actionman that perhaps herbal life could be a pyramid scheme. he was triggered to do this because he heard complaints from one in particular who lost $130,000 she claims because of her relationship as a distributor with herbal life, her retirement savings. he sent these letters to the s.e.c., the f.t.c. and herbal life. he wants answers to some specific questions.
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his big concern is the compensation system strongly favors distributors who focus on selling to other distributors rather than to the general public as a whole. that sounds like a pyramid scheme to both. some of the other complaints, pressure on distributors to sign up fellow family members and spend their own money on products. in a statement he says, there is nothing nutritional about possible pyramid schemes that result in economic ruin for vulnerable families. i have serious questions about the business of herbal life and their impact. i look forward to seeing responses to my inquiry. herbal life steadfastly the claims that it is a pyramid scheme. t promises to respond to markey. a spokesperson says we received the letter and look forward to introduce the company to him and address his concerns at his earlyiest convenience. 15% today, h.l.f. down.
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>> does the senator run the risk of looking like he is doing bill actionman's bidding? >> he does that risk. he is not taking sides in this dispute and reached a conclusion. he wants answers to his questions. bill ackman did not contribute to his campaign, but there isn't a direct connection there. ed markey is well known for going after companies he thinks have done wrong in the past. he is a freshman senator, but 36 years in the house and he has crossed paths with a number of big-name corporate entities. he is not a lawmaker to tangle with lightly here in washington. >> peter cook, thank you very much. you know, we have been seeing shareholder activism unlike any other time in history, all of these guys are pushing companies stored strategic or in some cases not so strategic moves. the question is are they really unlocking shareholder value or
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are they just making lots of noise in order to make a quick buck? we have a specialist joining us here on set with some perspective. why are activists so powerful right now? >> hi, guys. they are creating value for the most part. there are some negative consequences, trish. the reason why they're powerful is because they're trying to generate a return, right. just as we were talking about herbal life, it's not so much that the senator has sent the later and may be doing the bidding of bill ackman, he is trying to create a dialogue. it's not a one-way street, it says x and then the y is the shareholders left wondering what the heck is going on. >> you said there are negative consequences, what are they? >> some of the consequences that we don't talk about on a day-to-day basis is jobs, cutting costs. so all of these activism as i said, they create shareholder
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value, short-term, "medium"-term, long-term, there will be job cuts. because of the activism because there are going to be some mergers. >> you get consolidation and less productivity. the image of activists, ralph nader comes out the other day ikahn that he should take a look at this, shareholders are not getting the best value here. the idea that you have nader saying basically i need this white knight in the form of carl icahn, would you say the activist's reputation has changed? >> there is a marriage, what is interesting, you have the very high end sort of married with grassroots activism. one thing, there is value, it's harder to run a company. we don't have a news cycle anymore. there is a news cycle because of twitter. you are criticized every moment. you have the desire to maximize profits in the short term.
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it's hard to run a public company with that long-term horizon. it's only going to get harder. you have the criticism coming from the top investor level and the grassroots. >> what is the strategy for a company when it's under attack, what is it going to do? >> you have to know what your north star is. you're not judged every quarter, that's the ultimate judgment, but every day, you're going to be more and more scrutinized and criticized, not just by the media but by your jefferson. >> north star, you wonder if ebay wonders what its north star was right now. it got the call saying i want you to spin off paypal. he took a 0.8% of the company. this company has $6 billion in revenue, compared to $8 billion for the entire company itself. people talked about this before. do you think this thing has legs? >> it definitely has legs. trish, one of the reasons, why, ok, one of the things that may have been missed, donahue, the
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c.e.o. flew from california to appear on a peer network overnight in new york to say that these two businesses shouldn't be separated. they should be together. so he knows the urgency, that's what i'm trying to emphasize here. he understands the urgency of why it needs to be together. >> the other point i would like to mention, we didn't have a chance to get to, but the idea that you now have big pension funds that are working side by side with many of these activists. these are things that they didn't used to do before. you mark this up 20% on the s&p, you might want to find a way to work with that activist in order to better your portfolio. anyway, thank you so much. david, you're not going anywhere. a lot coming up, mark. >> yes, we do. we talk state of the union, president obama's legacy, it's going to be a big speech. will it be the last important state of the union before he officially becomes what has been known as a lame duck president?
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that story when we come back. ♪ ♪
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>> welcome back to "street smart." we're a week away from president obama's state of the union address. former advisor to the president is here with us in new york and phil manningly is live with us now. phil, give us a preview of some of the expected themes. >> mark, there are two themes that you're absolutely going to hear the president hit on next week. the first incoming equality. this isn't new for this president or the white house. big speech in kansas in 2011 at the core of the 2012 campaign. for the administration, they feel this year, particularly in an election year, this is a winning issue, one where they hold the high ground. you hear about increases in minimum wage, extension of unemployment benefits and broader themes, paying for the affordability of college, things like that. also, the white house is stressing this is a "year of action." you wonder what that means,
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right, in a partisan gridlock time frame. what they mean by that is executive actions. what is really interesting to watch is what the white house specifically picks out that they think they can do unionly laterally without congress. what the president lays out on the executive action front, that is key and very interesting to watch, mark. >> what do you think we're going to see, david, on the action front? what is realistic? >> well, first of all, the speech has to be economy, economy, economy. >> incoming equality, incoming equality? >> growth, jobs. when you talk about inequality, sometimes you short-hand this. we're talking about growing more people in the middle class and making the people in the middle class feel more secure. part of the challenge is because people are cynical will washington do anything? >> david, i hope this isn't too pedestrian, but why does income inequality matter? >> it matters to the economy
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broadly, we don't have the prosperity we need unless people get their wages up. we want people to live out the american dream. you have a lot of people that think that's out of their grasp, that they are discontinued -- not able to get in the middle class. >> are we going to hear about taxes then? are we going to hear that the wealthy need to get taxed? >> the tax debate is largely over other than tax reform which is what the country ought to do. there are loopholes that will have debt reduction. >> we have heard of corporate tax form the last time. >> what you have to do, is one, what is the most important issue to people? we spent last year talking about the n.s.a. and health care and the president has to get back to the economy. he has to say i'm doing anything within my power from executive action, but congress needs to do some things. >> let me bring phil back in the conversation. what does it mean for the future of the democratic party? midterms are coming up. how important is this speech,
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phil? >> well, trish, i think this sets the tone, right. as david is saying, they want to see action right now. democrats obviously, they're into full election mode. that is going to increase over the year. they want to see what the president is going to lay out. last year it was very difficult for a number of reasons, health care, n.s.a., nonstop. they want to see what they can lay out and what they will do going forward. i was actually wondering, trish, from david's perspective on the income equality position, david, republicans are trying to grab onto this right now, too. ou said marco rubio, and others, are there areas where you see bipartisan agreement on proposals on this front? >> i think it's good to see more republicans embracing this as an issue. >> it's important for their survival as well because this is a problem. it can be very politicized. >> it's a political problem for them. it's also a problem for the
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country. if we don't get wages up and people in the middle class in this country, with the globalization and technological change, we're in big trouble in the long term. there are big divides between the parties, but there are areas of common ground and maybe congress will oversurprise us. last year they did everything they could wrong. maybe this year on immigration reform, some measures to help people get out of poverty. i do think, at least you're saying more republicans and prominent republicans embrace this as an issue. i think they're smart to do it politically. it's not just about politics. we have to solve some things here. >> david, thanks. and phil manningly joining us from the white house. phil, thank you as well. just a programming note. state of the union tuesday, you'll be here. >> tuesday night, i'll see you here. did you see this, katy perry actually said she thinks that she had a helping hand in getting president obama elected? >> i won wisconsin for him. >> we got the obama campaign mastermind to settle this. >> katy perry. >> once and for all.
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facts from fiction on katy perry and president obama's election next. ♪ ♪
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>> hi, welcome back to "street smart." we're here with former white house senior advisor and, david, we had to get your take on these stories, one caught my eye, pop singer katy perry telling "g.q." that she may have won wisconsin for president obama in the last election. you're his former campaign manager. what do you think? >> well, we had some other help . very few people worked as hard as she did. she crisscrossed the country for us. i talked to her in las vegas when she was performing and she said she was passionate. she helped register people to vote and turned out. she has a big audience on social works. people could tell it was authentic. >> do they matter in terms of getting the youth vote, for
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example? >> they have got a big network of people they can reach, right. i think the reason she was so effective is people knew she cared about issues, whether it was women's health care, whether it was the economy, she cared about these issues. she was really committed. she did probably attend 15 events for us and traveled really, really hard. >> you are a professional political operative. how can you tell it's genuine? some folks want to go along for the ride and be in the limelight? >> voters and young people have a sensitized b.s. meter and can tell whether anyone means it or not. it's hard to reach people these days. every consumer company knows that. you have someone with tens of millions of followers on twitter, give an interview and reach a lot of people, it's an asset. >> she told "g.q." magazine she believes in aliens. >> she joins a third of the country. said women abee
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cannot control their libido or reproductive system without the government. who wants to take this? >> what? what? what? >> say that again. is it taken out of context. >> they cannot control their libido or reproductive system without the help of the government. what do you make of that? >> outrageous is not strong enough a word. i think the republican male politicians, any male politicians stop talking about women's reproductive system, health care, just stop it. >> don't go there! >> that's unbelievable. read the quote again. >> again. >> again. >> they cannot control their libido or reproductive system without the help of the government. have ess katy perry may something to say about it. >> katy perry would have a lot to say about that. that's crazy. they should listen to your advice and stay away from -- >> she actually believes in
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aliens, too. it's possible and he is very interested in space exploration. yeah, richard branson, virgin gaming is getting into the gaming business. new jersey, of course, has joined delaware and nevada in allowing online gaming. do you think, david, this trend is going to continue? could this go the way of the marijuana movement where every state is looking for a little extra tax revenue? >> i assume that you have got three states now, i expect two years from now, another six or eight, there is a trend. whether you get to all 50, i don't know. states are hurting budgetwise. they need revenue. >> david joining us for the hour. good to see you, sir. thanks so much for joining us. >> good stuff. coming up, we're going to be joined tomorrow by barry riddle, chief investment officer and coming up next, we have more "street smart," market off 173, i'll see you right back here. >> see you tomorrow.
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>> we got a big selloff underway as we head into the close on "street smart." take a look, off 17 points, loss of 1%. a lot of concerns right now about china and that factory data we saw today, a lot of concerns that perhaps we're looking at a global slowdown. matt is here. >> when you get bad factory data out of china, it concerns people. when you get good fact data out of china, people say i don't believe if i believe the data out of china. >> here we are. >> you can't win out of china, you know. >> like the fed, right, how everybody is interpreting. >> when ben bernanke speaks.
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>> starbucks reports its first quarter results, bloomberg 69 cents on revenues of $4.3 billion. we'll have full coverage of these results along with an interview of the company's c.f.o. coming up on "street smart." >> number nine is shares are jumping 5% after they released better than expected results for the first quarter. strong demand for its newer product. f-5 issued an upbeat outlook for the current people. >> american eagle dropping after saying the c.e.o. is leaving. they will replace him on an interim basis. teens are pulling back on purchases. i made a purchase for my husband. he is not a teen. number seven, united-continental, a benchmark revenue measure may show little growth amid a slowdown in booking.
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delta projected quarterly growth as much as 4%. >> number six is microsoft trading flat. the company is due to report its second-quarter results after the closing bell, hence, being in the top 10, investors are looking for an update on the company's c.e.o. search and info on mobile strategy and new windows 8 products. stay tuned for microsoft results just moments away. >> number five, mickey d.'s up a fraction, fourth-quarter profits that are little changed from a year earlier. fewer customers are visiting mcdonald's losing shares to dunkin donuts and wendy's. the company has new items including mighty wings that didn't work. mcdonald's has about 10 million pounds of wings on their hands. >> that's a lot. >> 20% of what they bought for that limited time promotion in september. >> 10 million wings, earlier, one of our producers told me it's the same as 666 elephants?
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>> what? that's interesting. >> that's the weight of 10 million chickens. our director pointed out why don't they go to burgers, fries, and sodas. >> i asked them that very question. they said that is their core business to make their money. to grow their sales, they need the new products. those products are responsible for revenues going from $1.25 to $2.7 million. >> they're trying to get healthier, too. >> we're never going to make the bell. >> no, we're not. >> it's in 30 seconds. >> shares up nearly 11%, the hedge fund manager bill ackman has accused of being a pyramid scheme after a u.s. senator lled for a thrill into the company. >> carl icahn, $500 million worth of shares, $3.6 billion.
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hang on. every day. >> did better than yesterday. we are giving people the top 10 stocks they need to know about. whether it ends 10 seconds before the bell are after, they don't care if we finish when the bell rings. [laughter] number two, nokia plunging after a fourth-quarter loss and handset sales. part of the device and services unit has agreed. >> the number one stock of the day -- can we just replay this. netflix surging after forecasting customer growth topping estimates that they may charge new users more. ceo reed hastings wants to increase revenue and profit. >> look at that look at his face. >> do you watch orange is the new blackjack go >> do you watch
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other netflix series?-- " orange is the new black?" "house of cards?" >> he watches netflix constantly so whenever i get home and he's watching -- if they were more going to charge 10 dollars? collected only two dollars more. >> a went to a more tiered structure and might be a good deal. >> looks like the s and p is sending officer appointed sent, concerned about poor manufacturing data out of china today. are we going to "the washington davos,- are we going to
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switzerland? tom keene sucked on with jack lew talking about whether he thinks the u.s. economy is doing any better. >> i think the u.s. economy is doing much better. we started the year strong as opposed to when we had real headwinds and other fiscal policies. this year, we have tailwinds with good fundamental growth in a broad range of growth. we need to keep that going and we certainly avoid having any kind of the self-inflicted wounds that we saw last year like the government shutdown and fight over the debt limit. twohing an agreement on a your budget, i am hopeful we can get through these next few months and show that there is a year that will not have that type of character.
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>> there was this debt ceiling debate i was talking about with my colleague peter cook in washington. selected democrats are having trouble with the calendar. friday.focused on a i have spoken -- >> i have spoken to leaders on both sides of the house and i'll it is informed-- house and it is informed by flows of spending. the date is much sooner. i'm not sure where the misunderstanding is coming from. but, to get to joe moakley amped up o'neill in a moment. we have real measurement
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experience. does washington leave forward when jack lew says there's money coming in because of your experience? a i hope i have built up certain amount of credibility. i try to be straight whether it is good or bad news. this is just a question of accounting. congress passed a law saying the debt limit expires and we have very limited flexibility to use what is known as extraordinary measures. given the time of year, they much more limited. simple explanation, when people file for tax returns, a lot of money goes out. it's not until later when people file. we do not have months of room after february 2. and it could be -- for a few days but it is >> you're awfully young to have
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worked for joe moakley of massachusetts, the legendary congressman. are we anywhere near the collegiality of that time as we see this new benevolence on capitol hill? it would be nice if after 5:00 everyone could be friends. they returned to regular order by congress passing the budget and i think there's a way to go to get back to where we were in the 1970's am a 1980 loss. 1980's.he were the most partisan time ever. the 1990s were the most partisan time ever. couldrsonal relationships help to read bridge gaps.
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aree policy differences legitimate and we have to work our way through them. it means you cannot do all of these things but you find the areas where you can move the public is not for word. i'm optimistic that congress will now want to get things done whether it is infrastructure, immigration reform. a model of what they did on the budget. >> why we can't have railroads as nice as the swiss? they are beautiful. why can't america have a chief of staff in the white house or a secretary of the treasury say we need to do infrastructure? >> we have been pursuing an agenda for the last five years that included high-speed rail. it's very much been a part of what we have been trying to do. traditionally, infrastructure is something you can get a bipartisan agreement on. it does not have party lines.
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everyone wants better roads and airports. the debate has been dominated and it makes it much more difficult to find an agreement. be gettinge can through the areas where we need to find an agreement. hopefully we can extend transportation programs this year. note today,ing rate a variable interest rate note, first time in 17 years and the consensus from bloomberg is suggesting a higher interest rate environment. why are we issuing a floating rate note if consensus says higher rates or in the future? >> we think there is a niche in the market for it. we do not time it where rates are ripping. we try to have targets out there with the treasury market and innovative product have been a
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long time in development and still have a ways to go before it is actually in effect. >> let me just pick the average .merican citizen or morganf jpmorgan stanley has systemically important. >> we have a practice of whether we are or are not looking at any specific company -- with a practice of not commenting whether or not we are looking at a company is significant or presents risks that require many action. this has been done in private where they can present material. so i willood stead not comment one way or another. lesst's get to something
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controversial, broncos are seahawks he? >> i'm a new york man. >> secretary of the treasury jack lew, thank you. you, tom keene. julie is taking a look at the starbucks earning as well as microsoft that just crossed. starbucks is looking marginally worse than estimated metrics. key let's get the starbucks first of all. the earnings beating estimates and revenue rising here by about 12 72 $4.2 billion-- 12% to $4.2 billion. are falling in the united states. that is still impressive. starbucks has been remarkably consistent since the depths of the financial crisis at providing quarter over quarter
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of strong same-store sales growth. traffic is incredible but it looks like the growth this past quarter slowed a little bit. howard schultz, ceo, did comment on the growth of online sales saying it has been eating into things like mall traffic. thaty have been something affected starbucks as well. if you look at the international market, they have performed better. if you look at europe, middle east, and africa, consort 5% better. they were up 8 are sent in china -- 8% in china. let's talk about microsoft as well. up about 3% to $.78. just over 24 and a half billion dollars -- $24.5 billion. commercial revenues really driving things here. cloud service revenue more than doubling according to microsoft.
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however, when you do talk about the consumer side of the business i was surprised. revenue support for the surface tablet more than doubling sequentially quarter over quarter and selling 7.4 million xbox consoles. it sounds like they are still selling the man seeing growth in sales. and of course the xbox, a very popular item as well. >> do you know anyone who uses a surface tablet? >> someone is buying them. >> do you know anyone who owns or uses a surface tablet? >> no one. i think michael crofton uses one. i don't know anyone else who does.
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>> coming up, we will have more on starbucks earnings. >> is it weird? >> i'm glad you pointed it out. i really don't know anyone. will this have an impact on new regulations set i president obama? matt and i will be right back. ♪
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>> time now for the big story, the nsa data debate. program hasphone been named illegal and urging the program be stopped. the five-member board created by congress to protect privacy under anti-terror laws as the program has provided only "minimal help" towards forwarding other terror attacks. will it few congressional efforts to curb the nsa activity? phil mattingly, white house correspondent. former nsa deputy training director.
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this is kind of a political issue, but will we see changes as a result? >> trish, things have already been seized on this. senator patrick leahy, chairman of the senate judiciary committee, and a top republican in the house have released statements easing on this report. it missed it because it's a week after the president's big speech. >> kernel, let me ask you, a lot of this debate when you boil it down is really about how much security you are willing to trade for personal freedom. the is the tohough at
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nsa about that? surely there are people who believe in freedom and liberty working at the day -- at the nsa? >> they do so there are a lot of ironies in this issue. first of all, when you look at the release of the word from the privacy commission, the five but theys mentioned, are legal experts or close to the field and none of them are intelligence experts. the dissenting members, two of the five, said the board had overstepped its bounds when it looked at the legality of this issue. as a moderately good debate about this. it has been no evidence of them deliberately doing anything
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illegal. >> they should still be collecting big made a data-- meta data, all of our internet information and using that the somehow fight terrorism. that has to do with the technology behind it. what we are looking at here is trying to do this in the most efficient manner possible. when you look at the way in which big meta-data is collected through these programs, in particular the one in section 215, what we're looking at here is basically a cop on the beat. when they go down the street and they are performing their duties, they're looking at various indicators out there. this is kind of a digital version of that. that is why there really has to be a good debate about how much of a cop on the be do you really want the nsa to be or do you really want my enforcement to be? it is a community intelligence issue as well as law
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enforcement. there are some sick thickets issues we need to look at. >> this comes one week after the speech. >> the committees are looking at changes than they are pointing to march 28, the reauthorization date or the section 215 program. changes can happen fast. although it does is add fuel to the fire. anyone against the program will grab this and use it, absolutely. >> what do you think about the leaders of the nsa? are they going to push to keep as much use of metadata as they possibly can or are they going to sit back and let congress do what it will? >> i don't think they will sit akiyama congress do what it wants, but what they're going to
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try to do is they're going to try to influence the debate -- i don't think they will sit back and let congress do what it wants. they also want to do things that are technically and operationally sound. what they have to do is figure -- they know the change is coming. the change will affect the way that the nsa collects data. they want to do things in a way to allow them to continue the mission, in spite of what the report says, has been effective in thwarting terrorism and has really made a difference. says.pite what the report >> good point. >> a lot of people will be troubled by the report, saying it does not do a lot. there are a lot of concerns in general. you get what happened with target or neiman marcus with peoples credit card data being stolen. this goes into one big bucket where people are worried about the idea of big brother and all of their information is out there.
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>> i'm always worried about big brother but doesn't help ? are you getting one ounce of security for the privacy you are giving up? >> there are some things not released in the public domain but when you look at what has done in the wake of 9/11, you did not do everything we needed to do from an intelligence perspective to fort the attacks and that is patently obvious. what happened in the wake of mohammed --d sheikh sheikh, he was found using the same type of information we are using here in terms of what the nsa does. the difference is that was for an information and now we are talking domestic. but we are trying to do in the and domesticoreign
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and that's a hard thing to do. >> let's jump in here and ask you about edwards noted and if you think this is someone who deserves -- >> to be tried for treason. >> should he be tried for treason? exactly that. is he a hero as many people believe? >> many people think he was a so manyause he revealed sources and methods associated with the nsa so i need to come down on the side that you should be tried for treason. that does not mean he's guilty but it should at least be judged by competent jury of his peers. cracker have not been for him, we would not know about any of this in the first place. there is that dichotomy. >> he got the discussion started. i don't know. our most people against the surveillance state? do most people think edward
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snowden, although he may have given up some u.s. operatives, obviously that is something you don't want to do, has it at they started an important conversation? you startedel like an important conversation. not on the grounds that anyone at the white house, capitol hill, or the intelligence conversation wanted it to begin, but everyone agrees that this conversation is worth having. how this was done, i cannot think of an administration official that ever would say this is a positive thing to have happen. besides, the scope, the diplomatic implications, all of these issues. look, this is a conversation everyone is willing to have. how it came about was the worst- case scenario for the perspective of law-enforcement. >> fascinating the session. eighton, thanks. >> ipo's for all. on a mission to democratize the
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capital market coming up next on "street smart." ♪
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>> time for the roundup, stories we're tracking ahead of tomorrow's open. we are joined by brian greenlee from "bloomberg businessweek." >> we under the last hour with this. i thought it was very interesting. it's something that difficult to get your head around. >> tell everyone what a story is, matt. former arkansas governor mike democratsaying that are trying to win over female voters by giving them birth control and telling them "they cannot control their libido or their reprint of the system without the help of the government -- reproductive
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system." asked about his comments, press secretary jay carney said that, "it sounds offensive to me and to women." >> i don't think he understood it correctly. >> it is just -- >> what mike huckabee is saying is that the government should of women's sexual health issues and stay out of the rights. i agree 100%. it is ironic that a republican is making a statement like that. typically, republicans are interested in controlling women's reproductive rights more than democrats. >> now what republicans are interested in is getting reelected. >> they would not go pro-choice to get reelected. thehere is someone from republican national campaign committee with his hand in his head saying "don't talk about women, don't talk about women."
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he's not elected republican right now because they have strict marching orders not to talk about this subject. >> are they getting subversive marching orders? not the rnc but congressional leaders but -- don't say it. >> basically the republicans are -- >> why did he say that? we need to move ourselves away from the sky. >> let's go to another topic. interviewed by gq talking about the president. she wants to ask them about aliens. "i believe in astrology. i believe in aliens. how self-important we are to think we are the only life form." thinking about aliens. >> not aliens. to have to buy
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question. it just hasn't been appropriate yet." onealso said, i might have wisconsin for him. he called me out a few times. she performed at a rally in milwaukee before the election. she was wearing some choice close. >> i kind of like it -- choice clothes. >> it's funny. on.d plouffe was just she may have helped. it helps to get some of the you have tout, but be somewhat careful when you have a celebrity endorsement. try toi know is that i read the gq article this afternoon and the bloomberg internal servers block it. i don't know within the article. it's too racy for me to have read it. >> i can loan you mind. won wisconsin, but
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it's not like he won by 75 are sent. >> you are saying she gave him a him. >> she's saying she's saying that. >> you, you -- i'm moving on and i'm going to clean.ings herbalife tanking as ed markey sends letters to the sec asking that they look into the business practices. "there's nothing nutritional about possible pyramid schemes that promise financial benefit ruin.ad to economic i have serious questions about the business practices of herbalife and the impact on my constituents." doesn't it look like he's doing bidding?en-- ackman's >> there is a very simple test to see if it's a pyramid scheme or not. are alike on is not investing as
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a potential reseller because that is not where the money is -- karl icahn is not investing. smart money is not working down the chain as a reseller like all of these constituents but rather is investing in the company itself. >> you do not think ed markey's constituents are not smart money? >> i think it's entirely possible. i say this as a proud former member of massachusetts. 401(k),y lost their $130,000. >> that's a serious investment. one constituent invested all of their 401(k) and herbalife? best.bably not the >> not a terribly intelligent decision, no. >> it's the distinction. it's not like they laid it all in the stock of the company. they took it out of their 401(k)
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and played a role as a reseller. >> that's even stupider. >> thank you for being here today. coming up everyone, the starbucks cfo on the company's latest earnings. we are back with troy all started -- troy alstead right after this. ♪
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>> it's time now for the scene where we bring you the business behind media, entertainment, and pop culture. it was directed and produced in the movie-style. the company amc chose as lead
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book runner in doing ipo's allows fans to buy a piece of the companies going public turning, and her turning customers into investors. eric schneider joins us to explain his unique as this model. you trying to democratize capital markets. you don't charge fees for people to get into deals that previously only rich investors got into. >> we want to make it easy and affordable for everyone to invest in the brands they love, see free, and that includes ipo's. >> if you go to the movies all the time, you join their stop club and you get discounts on films and stuff -- you join th eir stub club. buy-you would get an early in on the ipo. >> why not? why don't you want to tell
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people who help make your brand great, people who care, that you matter and we will provide you the same access as the institutions? appeal toll really consumer-based companies. think about a spokane and all of the appeal at the retail level, which actually backfired initially -- think about facebook and all of the appeal, because it actually plummeted. i bought of consumer companies --i imagine a lot of these could look to their customer base. >> it has a lot of appeal to consumer companies but what we bre finding is that every b2 company has infinity bases -- employees, suppliers, users. we are finding that people are very interested and we are getting amazing conversions that would surprise you. >> i know you cannot talk about the consumer usa holding ipo but
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i thought, what an amazing vote of confidence. bys is an auto lender owned a bank. if someone knows about ipos, it's a bank, and kkr, smartest guys on the street. it's an incredible vote of confidence in the business model. >> you are right. i can't say anything. [laughter] >> very interesting stuff. i find it so interest ring -- interesting in a gray world of finance to see a newcomer, an upstart -- >> thinking about it in a different way, an innovator in capital markets right now. hard because in finance, it is so regulated that you see very little innovation. you see it in entertainment and so many industries but not financial. >> how did you bust through that? through thework
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regulation? >> we worked very closely with the sec. we are a technology company first and foremost a we built it to comply exactly with the regulations to give all of the investor protections that are required. >> thank you so much, barry schneider, ceo of loyal3. outbucks earnings are driven by an increase in traffic. joining us now to break it all down as the cfo of starbucks, troy alstead on the phone with us from seattle. hello, troy. >> hi. >> initially, the numbers look. when you dig a little deeper and look at comps sales, they are 5.9% estimate, but in fact it looks like the americas growth, what we're seeing in the u.s., is the slowest since the first quarter of 2010. what's going on?
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why is growth slowing? >> we're very pleased with the growth given the backdrop of what is happening in retail traffic. yes, in the americas we had a somewhat slower growth trajectory in this first quarter, the holidays, than we did coming in the last quarter. that was all driven by december and that holiday. it is really reflective, we believe, on what we think is a long-term, accelerating trend towards fewer people shopping in bricks and mortar and moving to online. >> you are starbucks. we cannot buy our coffee online. >> you can now. an important point. you cannot get your experience from that handcrafted beverage online. fewer people are in the malls and other retailers, fewer people on the streets shopping there are fewer people who pop in to get a beverage. we saw that.
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we did not grow traffic in december. >> tricia brings up something interesting. while we are on the subject of innovation and technology, i was excited when starbucks came out with the possibility to pay with my mobile phone, it was one of the first big merchants to do so. if i'm there is an app, not mistaken, where you can order your copy and pick it up? >> not yet. we are always testing. we are a leader in mobile payments and we are always testing how to maintain that leadership position, how to offer customers technology and innovation that makes their experience better to perhaps speed up the line in the stores. we are doing some testing in that space. nothing yet, but you can always count on starbucks to lead in technology and innovation. >> i think you just gave him a really good idea. but i'm sure i have read it somewhere.
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pre-k's we had a huge selloff on the street with concerns about a a hugen -->> we have had selloff on the street. what are you seeing on a global level? are you concerned that there is, in fact, a slowdown coming? >> this was her strongest global growth since 2010. this was the first time that we had global comp growth and growth in every single region at 5% or greater, first time since 2010. we are seeing very consistent growth in china. 25% growth in revenue. 5% same-store growth in europe and really moving that both top and bottom line to a record level for us. it's very encouraging. >> do you see that continuing? >> we have every confidence in what we saw in the first quarter and we see every reason to
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reaffirm our previous targets. >> i just grabbed her notes here and she has something that says looking at possibly selling beer and wine, which i think is a great idea. >> i knew you would go there. >> we have about 25 stores with an evening program. it's more than beer and wine. it is food programs in the evening to give the customer a chance to use it when they want to and it's been a great program for us so far. >> we have a starbucks in bronxville where lots of people gather there socially. and i want a cup of coffee and my mom wants some wind, that makes sense. -- cup of wine, that makes sense. offering and how
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that's playing out. has that been considered a success for you guys yet? >> is a huge elevation of the food program in our stores and extremely well. we are about midway through the rollout and that is the full la boulange roll out. the lunch and afternoon grew faster in terms of comp sales down did any other part of the day. it just underscores that we have a huge food opportunity and we could not be more pleased with the results of la boulange so far. evenetty sure you will not need coffee -- alcohol, food. inc. for joining us today, troy alstead, starbucks cfo. say think he was about to "we are always focused on coffee," and you always need to focus on your strengths. >> coming up, more "street smart," what we do best.
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>> i can't believe we forgot to ask starbucks the most important question of all. >> we should have asked him about selling pot and colorado. flex is an starbucks from seattle? >> that's right. aty should be able to sell their headquarters if they applied for the license is right. [laughter] >> beep repaired for that question next time you are on, troy. we have a big day tomorrow. ask john mcenroe. the highlight of my week -- maybe my year. john mcenroe tomorrow. >> we will see you back here tomorrow with him then. ♪
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." the hour which means." bloomberg is on the markets. watching starbucks. same store sales trailing estimates. slowing despite wider than average in sales. they did beat bottom line estimates by two pennies reaffirming target growth rate for the next year. after caught up on a broader
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markets as well. we're looking at a market decidedly in the red. t and riphe mos tearing some of that damage. you have to go back to about mid august to find a day where the s and p fell 1% in the first 90 minutes of trading. were hurtn sectors the worst. not only did you have the preliminary read on china manufacturing data from hsbc coming in below that the little growth level, you had existing home sales in the u.s. coming and little light in november of buys lower. as the markets fell today, the vix actually took off. the index measuring volatility of the or team for the first time in two weeks and for more on the index also known as the s gage, dan deming joins me now from the cboe. stuckx has really been between 12 and 13. is this a confirmed breakout at
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this point? now but tell you right as you mentioned in the first 90 minutes, that was a pretty significant selloff. we saw heavy buying and there was some concern that this would move in on itself. the market was able to come back in the afternoon so we saw the vix give up a little bit there but nonetheless we did see a shift as far as the volatility expectations. >> typically when we have a down day, buys the dip has been the theme. what is the corresponding pattern? taper back down in that 12-13 area and we have seen that in the past few months but i will tell you now, it just feels like right now, we are in this inflection point did we see here between the 1810-weeks and 50 area having a very difficult time getting above and now we see some week this year rolling
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in february and we're the debt ceiling deal coming up. as we get closer, there will be more concerned about that and you will see the vix staying well above 12 and possibly even push it towards 14-15. >> you sound more on the bearish side. , so are looking at 1812 will that be a catalyst to the upside the? >> you think so. it's going to become a pivot point. as we close on an area, particularly if it is momentum day, you will be a fairly significant cap up. big buyers today are the february 16 call and the buyers for the may call. you still see some repositioning as we roll into this quarter where they are buying high side. expect a shift of volatility expectations. , dan deming,ever we really appreciate it.
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for "on the markets," i'm alix steel. ♪
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>> this is "taking stock" for thursday, january 23, 2014. i'm pimm fox. today we're going to quempling your thirst for earn aings. coffee and water. starbucks and microsoft report their earnings as of the close of trading today. we'll tell you what those numbers mean for shareholders and customers. i'll introduce to you two local coffee shop owners and find out how they are faring against the java giant. plus aquafina. that today on "t

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