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tv   Bloomberg West  Bloomberg  March 15, 2016 11:00pm-12:01am EDT

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>> and begin with a check of your news. visuals and washington, d.c. date will shut down the city's metro system beginning cat midnight tonight. they will have a systemwide safety decision. a.m.will be closed until 5 washington time. the obama administration has reversed course on drilling for oil on the selfies coast. they announced it will abandon the offshore oil and gas journaling. coastal communities and the pentagon opposed the plan. visit moscow to
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discuss the russian withdrawal syria. forces gambling out today. warplanes will continue on opposition targets. syrian opposition says a russian withdrawal will help negotiations. iran may have a treasure trove of information from sailors they detained in january. they cleaned about 13,000 pages from laptops and gps devices. mother theresa will be declared a saint on september 4. day andews 24 hours a more than 150 new spheres around the world. i am mark crumpton. "bloomberg west" is next.
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emily: this is bloomberg west. apple takes a final swing at the justice department seeking to ken the court order asking for access to the phone. oracle weaving rewards of long-term quality investment. the new part of the car industry has to congress. fast felte how jumping cars hit the market. to our lead. apple filing it responds to the government for unlocking and encrypted iphone. they say it exceeds the government power. the next showdown will be tuesday when they will argue before a federal judge on whether apple will have to comply with the court order or not. for more, i want to bring in our guest host scott mandel. also with me here is the
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cofounder of child layer discount player cory johnson is here to begin all down. this is about at this latest release wants. >> this really is shaping around the illegal search work for one phone and nothing more. all they need to consider is what is in this is something is. apple maintains that this is not one thing. throughening a door pandora's box of a lot issues that relate to privacy and the right of a company not to have to do the work of the government. you know so much about the loss surrounding security. your company operates everywhere. what do you make of the
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government argument versus apple argument. 'su think the government argument is stronger. michelle: they are still recovering lawyers. this is a really hard situation. it in the media. it is important to understand. on one side, the law enforcement agencies need to do their job. day americany citizens and need to have tools to do their job. everyone can understand that. apple represents a technology company, one of many. this isare saying incredibly personal. it has all of your personal information. security is fundamental to trust with people using our product and making our consumer lives better. we're not going to do anything
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to undermine the security of that phone. it is a hard balance to strike. you are seeing the crux of the conversation. privacy versus security. law enforcement agencies do bear role in a world of encryption? there are not easy answers. apple saying there is the middle ground or compromise. what do you make of that? issue.it is a huge i take the apple side of it not so much because of the specifics of the case but the way it is playing out. this is such a big issue is should be debated in congress, not the government trying to play in one little case in san bernardino county that may open up a broader holocene. case involved a terrorist where or two people were killed. yes, but i think they
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have said that there is not any expectation that there is really evidence on this device that would lead into anything in the future. emily: well, we do not know. in terms of the relationship the china saying that government is misrepresenting, michelle, it you have unique information about what the chinese government really requires good what is the relationship with china? do they do more for the chinese government? apple has been clear saying the allegations made by the u.s. government have been false and egregious. that is what evidence suggests. what does apple do in china? they store all of their icloud data with in china. then they also use the chinese wi-fi for desperate call. -- portico. they also store all of the
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icloud data in the united states and they are mandated by the fcc to operate with in the united states. they are doing the exact same thing in the u.s. as they are doing in china. that is it. that is where the evidence ends. that, there's no evidence that says they are giving information to the chinese government. they have said they are not. they are operating within the laws of the country. says applee doj has complied to 405 request from the chinese government. what is standing out to you? they are looking to the the newut to rewrite kind of operating system that apple doesn't have. what they have to do it will create something completely new that violate apple's recent
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beast of the way they conduct their business. the government's case is we have requested in previous classes, making the telephone company keep certain kinds of records. right certain software to allow us pursue search words. apple saying they do not want to do that and that the government demand to write a new operating system is something specifically congress has said that it would not have to do. the filing is 34 pages. i have it right here. it is a lot to digest. i did speak with apple's lawyer to get his view of what their argument is at this point. i started by asking if there is any scenario in which apple would provide the tools to the government if terror attacks were imminent. >> we are talking about a court order and the justice department going in where the san bernardino share has said there probably is not -- sheriff has
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probably said there probably not any information on this phone. they will not be issuing press releases or filing things if they were hot on the lead of additional evidence of terrorism. we understand their desire to leave though stone unturned. i do not want to talk about future issues. apple is a great corporate citizen. it takes it obligations very seriously. case islem with this the government is asking for a tool that would apply in every case. the district attorney from manhattan says he has hundreds of phones in all different types of cases that he would want to ask courts to give him the power to use this tool if the court here allows it. testified that of course they would want to use it in other cases. all i can say that all is requested from a court is not
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permissible. apple takes it obligations as a corporate citizen very seriously. this is the wrong process in the wrong way to go about adjusting a vital policy issue for this country and really for everyone around the world. emily: what are the next steps in this case? it seems far-fetched to think congress will solve this in an election year. at what point you think this goes to the supreme court? a we take it one step at time. we have a hearing next week. as a lawyer, i am looking for the next battle down the road. that said, we know this is an important issue. we are building a record before the magistrate and district provideat we will strong grounds for appellate theeedings or beyond to supreme court. right now, we are hoping that we
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can convince the magistrate judge that what the justice department wants here is unauthorized. it is not constitutional. the fbi and justice department will come to their senses and realize this is not the right way to go about dealing with these important issues. .e can have this policy debate i thought the hearings before the house judiciary committee were very productive last week. you have members of congress, komiity experts, director talking about these issues. i feel there is a way we can resolve these issues even in an election year and come to something that has a policy rather than trying to use statute in judicial proceedings that were not meant to address these issues. to move thiswants debate to congress which may or may not be realistic. i want to hear your thoughts on
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his answers to my questions. if something big was going to happen, what would you think then? dodged thelearly question. he also is pointing at such a big question the point he did make that is valid is that this is not the right forum to decide the answer. congress is the forum. michelle: it is not the u.s. government versus apple. the is very clearly versus fbi and the justice department. it is not clear that everyone within the government sees all these things clearly. why that is important is a world with strong encryption has risks. absolutely. one of the drawbacks is it makes it harder for law enforcement agencies to track data about people both good and bad. what is interesting that we should punch up is that the director of the nsa came out and
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said law enforcement needs to find out how to do their job in the world of encryption. when he said that, it was an undertone of again, not everyone at the u.s. government is aligned. there are differing opinions. i think it is really telling that he things we need to find a .ay that emily: the president's aching at sxsw said the tech industry is taking an absolutist view on this. we should be able to get a key to a small number of people in situations. to me that sounds similar to the doj's position. about the head of the nsa. the nsa could do this if they wanted to. are there technical ways to get the information off this phone that were not -- that we are not talking about here? michelle: apple has turned over
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a lot of information to the government dared they gave away the icloud. they complied with the warrant that was due process. that is not what we are talking about. basically what the fbi is asking for through the court is that we want to mandate apple to create software to do something. how serious is it to say that any court could issue something to any company saying "we want you to create software to do this." that is a dangerous precedent. emily: that aside, is there another way to get the information off the phone? technically. we were told there were multiple ways to get information on the phone and if apple cannot do it who can? flaw and aecurity vulnerability has been found on the apple phone. they said it will take four
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weeks and six-10 engineers to get the information. it is possible. there is a security vulnerability on the phone. apple will close the security vulnerability. there will be an update where it is not possible. in my view right now with the window is closed and i think 'sat i would say monday press conference will be about that. emily: that is when they will be announcing their on hackable phone. thank you so much for joining us. cory johnson our editor at large, thank you for breaking it down for as weird coming up, the clouds seem to pay off your they report earnings. we will break it all down.
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emily: oracle shares are popping as much as 4%. $9 billion in revenue. wall street had expected $9.13 billion here in the results indicate oracle is beginning to reap the benefits of a multitier investment in software. over $580 million. pat is here to help me break it down. and cory johnson is still with us from new york. what are the highlights here? how successful is oracle in a quest to take on a new cloud hierarchy? pat: a lot of competitors. the good news is the fast path business.
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56%. growth. the margins did not disappoint people. that is their big strategic objective. that is what they have been working on. emily: what is your take on the business? you are often a bit more skeptical about oracle. how is it doing compared to the big names dell, hp, microsoft? cory: it is doing better but it is moving away from legacy hardware. bad and reports were have been bad for a long time. the top line revenue growth, you can see a trend you see with other companies or that is their legacy business of a software that they sell by the title. their revenue growth overall is not growing at all. you see similar results, worse results, when you look at hewlett-packard.
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dell took a dive. you see the numbers with ibm, certainly. old hardware sell and on premise software. when you look at the cloud result, it is growing at a fantastic pace. this 57% number of cloud software sales is spectacular. it is much faster than salesforce grown topline numbers. it is a smaller number than salesforce for sure. if it grows at 57% year-over-year for a few work orators, it will not be a lot smaller. they're taking on the biggest cloud software vendors and are adding to it again customers. beltu can change the fan to a cloud company and you see the margins getting better, it is very promising for this company.
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hurd: you interviewed mark recently. take a look at what he had to say about oracle cost future. i think over the next five to 10 years you will see the majority of i.t. shift to the cloud. for us we look at it as an opportunity. the fact that we have such a strong on premise base will be important to make the two world work together. emily: pat, where do you see oracle in the neck five or 10 years? -- in the next five or 10 years? the cloud is only 8% of the business. emily: isn't it the future? they have to get there. last or was 7%. it will take a well. there is so much competition that they are heading into.
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you have these competitors who are different than what you have dealt with in the past. you have these mammoth internet companies. you are competing against amazon, and google. they are investing like crazy and they are not afraid to cut rices. that is the world we are heading into. emily: what is your view of oracle's future? cory: pat is dead on. competitors will be google and microsoft and amazon. salesforce is a company that spends so much money on marketing to grow the top line that their margins will not compete. google is fearless. amazon is fearless. microsoft is fearless. those are tough competitors. editorcory johnson our at large. we will have you back on in five or 10 years. later this hour we had to be filled. everyone from google and two teslas putting their car on display as congress takes a
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closer look at driverless vehicles. us or arudeau joining sit down with our bloomberg editor in chief 9:00 a.m. bloomberg time thursday.
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hasly: emily: alan warren jumped ship as chief operating officer. he has been overseeing google docs. at 2.6been the riot billion dollars. it promises users simple help insurance. win for artificial intelligence. they won before the three against the player. considered the best way.
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the final match was a close one. aiis a huge landmark for the system. it is the first computer system to be a top layer. experts are astounded that it was able to master such a complex game. it could position the tech company as a leader in artificial intelligence. .acebook has instant articles now apple is introducing a mobile news at your it will be available for publishers of all sizes, even independent bloggers. they biggest internet companies 54 reader attention. go along players like facebook and snapchat. tesla says the sooner they thelate driverless cars, it sooner they will hit the market. we will have the latest development next.
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if you like bloomberg news, check us out on the radio. we will be right back. ♪
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america hasin launched a new service from san francisco to denver. sir richard branson hosted a-t . why did they choose san francisco? it has a lot to offer. virgin american pop success is technology driven. they are attracting young people. it has been very important for virgin. we get the lion share of
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them. wonderful city to go for skiing and hiking. if you want a joint, you go to denver. a lot of recreational everything going on in denver. what is it about the big businesses you do that it might not typically attract the interest of entrepreneurs and start up evil and yet urgent has done that? what is it about the way you have pursued your business? we are just going through some turbulence. excuse the bounds. bounce. sees it situations where i feel things are not being run well. the american airline system 10 years ago did not have a decent airline. let's launch virgin
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america great the best airline. do well and you will survive. both a virgin america is bestseller in the states. our people have done a great job. loads of tech and young people who want to be flying in a slightly more hip airline. emily: sir richard branson speaking to our own cory johnson from 35,000 feet. more "bloomberg west" next.
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emily: google acts appearing before congress asking them to stand before driverless cars. witnesses told congress the economist cars will depend on how fast lawmakers put rules in face. tim higgins was at hearing and joins us. what are the big issues here? congress calling for in the department of transportation to get more involved. tim: it is really remarkable. google is asking congress to
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expand the dot's authority cars.te economist you don't often see congress to get more involved in their industry. what is the mood of senators? are the enthusiastic or skeptical? tim: part of this is an escalation by google to counter what is going on in california where state regulators are trying to implement restrictions. they took it to congress. they appear to be getting a nice reception today, generally pretty shery are members of the senate saying it is probably time for the government to get involved. if they do not want road bumps or hurdles in the future. emily: there was a warning by an expert from duke that set the national highway transportation safety administration does not have the expertise to properly regulate this technology and that people are going to die
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eventually and what happens then ? tim: it is a matter of time. the question is when. she is pushing for transparency. one of the sharper moments during the exchange with some of the senators with these representatives is over the idea of what they support a minimum standard for safety and privacy? members of the companies were sidestepping that or they want the government to clear the way for technology but do not want to necessarily agree to roles that will limit what they can do. emily: tim higgins joining us from washington. thank you so much. i got the chance to speak with baidu's autonomous car units. what type ofasking weather conditions. we are working to put
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additional difficulties in the driving car. you said it can perform in mixed conditions. the does that mean? jing: highway and local streets. emily: what else can the car do? can it make you turns? can emerge on a you rate -- freeway? -- can it in march on a freeway? jing: yes. it can drive like human beings. it is like a human driver. emily: why is baidu working on self driving cars? lot of the industry is a technical t -- technology with ai embedded.
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they need this kind of technology in china to help them grow. emily: the co has said he will have a commercial product in the car in five years. are you on track for that? jing: yes. that is not production. china. not 1% or 2% in there are aery year million vehicles sold. nothe beginning we are going to go with the majority. emily: is there learning in the car? jing: perception. needs to understand the environment. is it possible to build a
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version of your self driving car without lidar? that could significantly ring down the cost. but it willpossible probably be a little bit later in the years. provides thedar benefits so we can bring the vehicle to the market earlier. emily: we know that google, uber , tesla are all working on self driving cars. potentially apple. what is going to make your car stand out? jing: we are in the ai area. you can see from a lot of our that we are in the ai technology. there is recognition. how much support are you
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getting from the chinese government? jing: we have not got support yet. we are hoping that what we have done in the u.s. with the obama government [indiscernible] emily: baidu senior vice president, head of the self driving car units. drivers nong lyft car, no problem. it gives drivers a chance to rent cars for $90 a week plus a charge for my. 40 rides aer gets don't get a charge for
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the miles. after chicago the program will expand to baltimore, boston, and washington d c a major disrupter of the datastorage industry on the future of last storage. a victory for mark zuckerberg in his two-year court battle over a neighboring property. the turns of the settlement later in this hour. ♪
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for amazon bad news from italy. under investigation in the eu for elected tax -- alleged tax evasion. company is being probed.
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it is now one of three u.s. big name technology companies that allegations.ax it is cooperating though it declined to give additional details. amazon has unveiled a new area in hope will give them a leg up in the cloud space. they are launching the database migration service to make it easier and quicker for more businesses to shift their data to it roaming. amazon want to capitalize on the companies making the jump into cloud storage. microsoft said it was adding it to the cloud computing platform. the datastorage industry is on the cost of a major shift. flash storage may be the future. one company is shaking up the industry that just went public. discussioncuss the is the pierce storage ceo. inc. you so much. -- thank you.
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you went public back in october. the stock is down 27%. like thethis been first few months as a public company? has it been different? >> it may be different but we went in thinking only about the long-term and improving business financials. we did that. we had a great fourth quarter. cash flowss was positive for the first time. we have to keep doing our job. emily: has being public health with tax bracket situations? scott: yes. they like the transparency. it gets customers assurance when we had six hundred million dollars in the bank. you wishedmentioned you had invested. do.t: we we had invested in another company which was an early pioneer.
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we did not think it was a conflict. board did not have a chance. emily: what do you think are the big trends to watch? scott: this is a tremendous time. for a while.ed the revolution has taken a long time to arrive. up until this point, the incumbents have either crushed or bought out all of the new companies. we have been trying to find ways ones like scott is creating. we think that time has arrived. they lost employees and sales. there will be a handful of new datastorage companies. emily: storage is becoming a
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commodity. what are you doing to stay on top of this? scott: i was saying the opposite. storage is not commoditizing. we have not seen that much innovation. in use todaytorage was designed more than 20 years ago. there is nowhere else in tech that i can think that is true. we have unleashed a great deal of innovation. i have talked about the public market and the turmoil that we have in. things have gone down a little bit. where do you see this going. the last time we spoke about this there was a huge collection to prior week. are changes in their forecasts that are really quite modest. the public markets are clearly volatile. there are more volatile than the fundamentals of the business
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themselves. to see thetinue disconnect between public market inuations and the volatility the evaluations and what is happening with the company fundamentals themselves. we are going think to see more germanic corrections like that? aret s: these companies going to do great, both of them. it will take a while for the market to recover. i think you have to look after the business. in terms of innovation, we launched our second project this week. we are building a scale out storage platform for a really large data sets. we have the mercedes formula one team talking about how they used this to deliver their first and second near finishes. they're able to process it much more quickly on flash then the
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good on the prior technology. about shutterfly talk getting 28 billion photos into something the size of a microwave. they could never do that bef ore. dynamic for our customer. emily: what is happening on the market side? we talked to a lot that said they are in a holding pattern because they have not been able to raise. venture capitalists will have to deploy that money. will this reopen at some point? it will.of course as investors in new companies, we love to see valuations come down. it is a great time to have a of capital. the fundamentals of innovation are doing so well. they are terrific companies. 450 in our portfolio.
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i've never seen our portfolios doing better. emily: what about new investments? some have said in the last six months they met with hundreds of companies. typically there needs to be a little digestion period where under for numerous come to the reality that the valuations have come down to a new level. until that happens, people will hesitate. thank you so much for stopping by. scott d: pleasure. anytime. borrowed angram has idea from facebook. they want to personalize the deal experience within our rhythm that decides what they will most likely want to see. the book of the user miss 70% of feeds. the new order will be based on the likelihood of the user interests. up, mark zuckerberg has a
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two-year dispute. -- how the terms were reached. ♪
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emily: the doj is looking forward to his court date without. reiterated the stands on the matter, saying the constitution and the three branches of the federal government should be entrusted to strike the balance between each citizen right to privacy in all citizens right to safety and justice. the constitution and the laws of the united states do not yet that power in a single operation. apple filed a response to the argument for unlocking an encrypted iphone earlier. a say it exceeds limit government power. the next big showdown will be tuesday, march 22. the long court battle next to
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mark zuckerberg home has timely come to a close. ued developer who s decided to drop it in exchange for a guarantee that zuckerberg will not sue him. was the guy a swimmer or did he have a case? >> that is what the lawyers contended. they have said that this was nothing more than extortion. there is a temptation at first glance to surmise that. the reason the case has lasted this long is because he had legitimate claims that were backed up. emily: like what? joel: he had evidence that he said showed that mark zuckerberg betrayed him.
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he basically said the deal was he claimed he sold mark zuckerberg the right to buy this land in exchange for introduction to help develop this business. what zuckerberg got what he needed and paid $1.7 million for the rights he walked away and did not help him out. emily: got? scott s: what is he afraid of question mark sue him for? case progressed, things went very badly for this guy very quickly. month his own lawyer revealed this guy is under a criminal tax investigation. this is one thing that has just surfaced over the transaction with mark zuckerberg. the implication there being
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maybe he did not pay taxes on this money. there is other evidence that mark zuckerberg's lawyers worked aggressively to dig into his past. he found out that when he worked rp he does ino trashcan and recycle bins to pull out medical equipment that he resold on ebay. this kind of background in .etail came to light the timing is interesting. six weeks from now mark zuckerberg with scheduled to testify. right? onl: the trial was to begin april 25. the timing was very fortuitous for mark zuckerberg. his lawyers will say they have been working aggressively and furiously for months now to produce this kind of evidence. the plaintiffs, the developer,
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who quitlawyer already the case for reasons he said he cannot disclose. he nearly lost the second lawyer. didy: how many property mark zuckerberg own around his home? this was directly behind his property. he owns a pair -- he owns it. i guess from the date this confrontation led him to buy almost all of the properties surrounding his home. there is one woman who lives in what i think was the horse carriage house of his home who will not sell her property. emily: one last holdout. one woman who will not sell. joel: that is right. emily: thank you so much for that fascinating story.
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thank you so much for joining us today on the show. we will have to have you back again when the market regrets --re-corrects. tomorrow we will be talking to the former israeli prime minister. ♪
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