>>. welcome to "lunch money" i am adam johnson. the fed chose confidence in the economy and starts to taper it economic stimulus. in tech, facebook and mark zuckerberg land to sell shares worth $4 billion. the crash test results are out. we will tell you who is the safest and who is not. and we had to the farm to find out what makes wide you -- wagyu beef different than the others. seenast few weeks we have signs of the u.s. economy on the

mend. growth has picked up. unemployment has dropped. the treasury department exited its stake from general motors. congress passed a budget, and n y n the federal reserve are confident enough to taper the pace of their bond buying program. >> the committee decided to reduce the pace at which it is reducing the size of the federal reserve balance sheet. bernanke, when should we expect to see additional tapering? reduction reflects the belief that progress towards economic objectives will be sustained. if the incoming data supports the outlook for inflation, we will likely reduce the security purchases in further measured steps in future meetings. they thought its assessment of current conditions in the outlook which is informed by a range of indicators including measures of labor market conditions, financial conditions, and inflation pressures, the committee not anticipate it will be appropriate to maintain the

current federal fund target well past the time that the unemployment rate declined to below 6.5%, especially if projected inflation continues to run below its two percent goal. >> what changes will the fed face next year? >> this is about moving into the next phase of policy from purchases to promises. the promises of forward guidance are great in theory. in reality, it may end up being a lot more challenging for the fed to be successful. that is when the story for 2014 will be all about, does the fed have credibility with foreign guidance? easy when the economy is great and inflation is not falling. a much more challenging environment it the economy has been signaling recently, and it inflation data finally starts to find footing on the upper side. maye front and yield curves be a little more volatile than the fed hopes they would be. >> mr. chairman? >> we are certainly not giving

up. we maintained a highly accommodative policy. nothing we did today was meant to reduce accommodation. we will still buy assets at a high rate and increase our balance sheet and holding onto those assets. we strengthened our guidance to make clear we expect to keep rates low will be on the point of unappointed at 6.5%. >> if the economy continues to improve, when will qe taper off completely? >> will they ramp it up, what is clear here is the expectations, the fed is going to read your rate, it is all conditional on the path of the economy. right now, understand the environment we have been in for the last six weeks, economic data has consistently surprised to the upside. if you have the consistent performance along the lines of what they are forecasting here in terms of economic growth

activity, you can see them step up to a 10 billion taper, but they will be out of qe by the end of 2014, as long as the economy proceeds along this path. >> how might we view the fed's actions a few months from now? this is an economy with the normal growth at three percent come a rates near zero, and lots of bond buying. the taper does not change that. the balance sheet is still growing quickly. >> if you look at the level of issuance which is being taper, maybe you want to take that into account, too. >> is will go down in history books as the day when the direction of travel turned for fed policy and the easiest monetary policy anywhere on record in modern times began to start to be unwound, but that is one million miles from tightening monetary policy.

the moment isat to cut by another 10 billion in january and then to keep going. that is not going to slow unless things go wrong. they would pick up if things went well. the big test is what happened with economic data. strong numbers in the first quarter of next year and second quarter, we will see treasury yields break out of their ranges. 3.5%.r moving to around that would be better for the risk markets and the dollar. want to seestors clearer data and guided from the fed before jumping to conclusions about what we have heard so far. >> what the fed has told us is based on the current pace of removal of asset purchases, we will be in qe mode for most of next year. there is a lot of celebration about this wonderful forward guidance from the fed and that has boosted risk appetite and

cap equities strong. the words could become meaningless very quickly. the only real credible element of forward guidance is the action of the fed and the fact they are telling us quantitative easing is carrying on for most of 2014. that is the really important aspect. that is why at the bank of england, forward guidance is more difficult. they finished asset artist is last year. short-term rates are going up and they are doing nothing about it. it will become data dependent. if you go up to 10 billion , and it isnext year notable that there is an implicit bias in the speed of removal of quantitative easing, a bias toward speeding up. bernanke said if the economy improves -- we will speed up. if it disappoints, we will pause. he did not say we will restart.

there.s an implicit bias in terms of inflation, there is a danger. any economist will tell you the inflation reading today is telling you where the economy was 18 months ago, maybe two years ago. there is a danger we make this a mistake that was made in 2003, 2004. ben bernanke had the name of helicopter ben. rates in 2003,ut but the economic activity data was picking up. essentially, the concerns about deflation back then were wrong. but they should be looking at is the activity data, which to date, is picking up. looking at the overall economy, it is safe to say that it will take time to separate the fed fueled economic data from the numbers as they stand on their own. in other words, what is the economy look like without fed influence? >> the world did not end that we

still have a jerryrigged economy . while we see no sign of inflation, paul krugman has been right on that. i think there will always be some more ability than when there is a release of animal spirits, there will be a lot of cash to bid up a lot of assets. >> how confident is the fed in this economy? the possibility where the fed is signaling its confidence in the economy and that confidence in the economy is helping to boost financial confidence and therefore financial assets. so far it has been the failures of the confidence in the fed and economy and therefore they holdd the distortions to of asset prices. today we see a reverse of that. it is too early to say that is the trend for 2014 but that is certainly a major change in how we see the relationship between the fed's actions and financial market performance. looking forward to next year,

what should investors inspect -- expect? of fiscalas a lot consolidation in 2013. the government probably subtracted 175 basis points from growth. next year, the number will be much smaller, perhaps 30 basis points. just from that factor alone, you should expect an increase in topline growth. the big question is, washington has to stay out of the way. this budget deal we got is good news from that perspective, but it is not put -- shooting ourselves in the foot. fromisk is the backlash that deal seems to leave some republican leaders to say we need to make an issue out of the debt limit again. that is not good news for the economy. facebook founder mark zuckerberg has a big tax liability this year, so this year the company is selling millions of shares. air asia just drops some heavy

cash in a deal with boeing.

money" on "lunch bloomberg television. you can also watch us streaming on your tablet, phone, and on bloomberg.com. mark zuckerberg and some additional rollers are planning to sell stock, about $4 billion worth. the sale is the curse that facebook has filed since its may 2012 ipo. so why the big sale? a lot ofsomeone with experience who also happens to be a former yahoo! board member. hasrom the beginning, mark control the company. now, he has special shares just as the founders of google do and other people. give thoseing to

shares away, he certainly wants to convert them from the to a, so he maintains that super voting control. in terms of price, it is a good moment to sell. every analyst has a buy on it at a much higher price. >> the average price target for the next year is above $60. right now at $55. is this an indication that those inside facebook do not see the stock going much higher? >> it may be just a moment. i think they have confidence in the business. facebook continues to be a growing phenomenon. >> is this really that big of a deal? >> cosmetics. i do not have the math, but if is heselling 27 million, offering company stock not to have the attention on his own shares? >> so why is facebook doing this now? a motto in silicon

valley that you raise money when you can, not when you need. they are taking advantage of the moment where people think the stock and company is doing great. it is striking that balance between what is going to be that overhang versus good moment to raise money. we toured the facebook hardware labs where engineers have come up with cool ways to maximize efficiency and even conserve energy. we are inside the facebook campus on the hardware lab, an unusual set up. they build and design their own servers and network equipment. the goal is to save money by making much more efficient data centers. by making more efficient equipment that they could buy. the are in now is the electrical lab. this is where we do the circuit board level detail the work. we are running more than 20,000

servers per technician. so what are the common replacement items, and how can i do, and service on a box with my 10 fingers? an easy example is getting rid of screws were accounts. there is a guide out there using screwdrivers and you can just pop it out. >> you got it. have done things of such a high level, nobody had faced the problems that you did before, so you build something that suited your needs. made theout you standards that others are now building on. >> designing out a dollar 50 out of the server, at scale, has an impact. >> this is a server in a vat of oil. why? this is how the facebook hacker culture applies to hardware. the team got together and said we have been hearing about oil

immersion. let's see if we can make it work with an open commute server design. fromught some mineral oil a veterinary supply store. it is also a horse laxative and is also good for cooling servers. this is our of in room. we have people simulate everywhere were servers might go. the ovens here allow us to create a wide range of environmental conditions, including thermal events. >> you take an actual server and put it inside these ovens. >> we need to have our own test- ability. we understand our operating environment much better than our suppliers. everybody has ovens. most do not have this. the other this and one, you have the noisiest operations. >> noisier than a software developing floor.

>> christmas comes early this year for airbus. we will speak to the ceo on the air asia orders. and the top safety picks for automobiles. ♪

>> airbus gets an early resident . a $600 million order for 35 airplanes from air asia. rapid growth in the region made it possible. i have grown from two claimed to 115 but our margins have increased dramatically every year.

the easy part is buying planes. the hard part is making money from the planes. the hardest part is to finance the planes. the most hard part is to fill the planes. so i think we have done it carefully, it is aggressive but well thought out. our major points are in asia. we still have hardly touched india. we have china, japan, korea, australia, the middle east. definitely, we want to come back to europe. massive opportunity to exploit europe, which is not far away. >> air asia focuses on long hauls. here is what this means for the company. >> this is a company that is really about cementing our key slots. it is much more about what is happening in the short-term economy.

we have to plan long-term and make minutes now. relative torates total passengers is still some 10%, especially for flights more than 10 hours -- four hours across the asia-pacific. where we started flying, we can reach rates of 35% to 60%. we want to make sure we are the ones bringing that gap, before anyone else does. a bidt week airbus lost from air canada, so this comes as a blow. >> it is a nice christmas gift with 25 orders. looking for a deal of your own?

norwegian air shuttle plans to offer cheap flights. >> norwegian air shuttle. it has been around since 2001 and is headed by this man. now he is trying to take the low-cost model long haul with cheaper flights to the u.s.. but how is he going to do that? >> first, you need the right tools to do it. you need the right aircraft. the only one we found it possible to do it with was with the dreamliner or the airbus 350. seven -- recently said that the 787 is too expensive to do long-haul. if he cannot do it, how can you? >> he can do it if he has access to the aircraft. we have already started with the dreamliner's. they are not easy to get a hold of. norwegian air shuttle is not

the first to try no frail long- haul air flights. planes may now be more fuel- efficient but it is still no guarantee the business model is sustainable. did your karmic the 2014 top safety list? we will tell you about the new rules and who made the list. be growing ingyu popularity here in the u.s. ♪

>> we are one day post taper. the yield on the 10 year highury at a three-month right now. 2.93% is the return. traders say the path of least resistance is the higher yield. analysts point out if the fed keeps cutting bond purchases by $10 billion every meeting, they should be done with quantitative easing by the end of next year. there also focusing on dollar, gaining on most of the major currencies, especially the euro. not the japanese yen. they are beginning their policy meeting today. u.s. stocks giving back some of their gains from yesterday. the s&p retreating from a record high with an unexpected increase in jobless claims. c interactive at a new high. they plan to turn their popular

match.com dating service into a separate business. winnebago calling the most in about 2.5 years. we are on the markets again in 30 minutes.

>> this is "lunch money" on bloomberg television. you can also watch us streaming on your tablet, phone, and on bloomberg.com. officials are hopeful that a wildfire in california's big sur region can be contained by tomorrow. the blaze has destroyed more than a dozen homes and 850 acres. fire is unusually late this season but the land is unusually dry. the region has only gotten about seven inches of rain. usually it gets about 15. testersrnment oh marched through bangkok to demand the prime minister stepped down before the february elections. demonstrators want independent

counsel. some marched on the u.s. embassy as well protesting comment from american officials that the democratic process be respected in the country. former nba star dennis rodman is back in north korea. he is working on an early january basketball game pitting a roster of former nba players against a north korean team. wereys plans for the visit not affected by the recent execution of his uncle. will release their top safety pick for 2014. result includes a new test, how well cars avoid crashes. only 39 out of 130 scored well. the reason, tougher standards. 22 models one top safety pick, meant that they were equipped with crash avoidance technology. another 17 were designated top safety picks. everything else is still safe

but still not a standout. the big winner this year was honda, including the acura brand. they had six of the top category models. in the u.s., ford had two top safety picks. if you are wondering how these are calculated, we decided to send megan hughes to the testing facility in rockers bill, virginia. at the insurance institute for highway safety in virginia, engineers ready a mazda cx-5. anxious mazda executives wait. ready, set, crash. the dummy did well. as far as i know, all of the injury measures were in the good zone. all the cars in the graveyard are competing to be one of this year's top safety picks. >> can i look at a car like this and say probably not a top safety pick? >> if you know what you are

looking for. you can see where the driver would be sitting. he is intact. if we look at that one across the way, you see how the wheel and where your legs would normally be? this is not good. >> the institute this year has added a new test. it trades in dummies for people. they are testing crash avoidance features. >> sensor that can gather information about the environment, should i mourn the driver about a collision, should i put on the brakes? >> we put a subaru to the test. engineers record speed and input to the pedal. >> we are approaching the car. >> there is the warning. >> you did not brake. now it is my turn. >> does that car get dinged?

>> all the time. >> drive 25 miles per hour straight into the back. the brakes kick in just in time. the subaru past. -- passed. engineers are also testing vehicles that can detect and avoid a moving pedestrian. robots in oure blind spots and see how we deal with that. right now only limited models are equipped with technology and it does not come standard. but it's too estimated the technology could lessen an impact on the third of deadly crashes. >> we are going to hear from the founder of one of the only farms in america to raise one real

japanese wagyu beef. and where in the world can you use your bitcoins? ♪

>> this is " lunch money" on bloomberg television. you can also watch us streaming on your tablet, phone, and on bloomberg.com. japan traditional cuisine is on the u.n. world heritage list and is also becoming an endangered species. >> this chap is on a mission to save the national cuisine from extinction. he noticed there was a problem teaching at an elementary school. when i ask him to name their favorite japanese food, most of them name hamburgers. that is how in danger japanese food is. eatingids who grew up burgers do not know what japanese food is. >> to the professionals that

make it, it is a way of life. painstaking presentation, intricate presentation, and the use of locally sourced foods. needs to be something that can be eaten at the specific time in that dish. you can become healthy eating these foods at the right times. that is what this means, the philosophy behind eating the things that are the best of the season. chains have lowered in japan while japanese cuisine interest has waned. consumption has fallen 17% in the past year. officials hope unesco's decision to protect accrued can help to breathe new life into the economy. >> the popularity of wagyu beef breed ofg, a specific japanese cows raised under strict guidelines.

even american farmers are catching onto this one. pensive, one of the best tasting beats in the world, but also one of the most expensive. they love their oats. what we do that is different, and there might be two or three others that are doing what we are doing in america, we are raising wagyu beef, what we call start to finish. we breed them here, raise them, finish them here. the whole culture of wagyu is the opposite of the american culture of commercial beef. commercial beef is the faster and bigger you can get in the shortest amount of time. is your friend. no drugs, stress-free, humanely raised, and they have a special japanese diet. there is dried distillers grain, soy meal, minerals, and cracked

corn. differenceis the between prime beef and wagyu beef? this is just to show the difference in quality. quality, theprime highest grade usda has in america. this is wagyu beef. you can see the marble indifference. the japanese have 12 grades above prime. >> is this an older piece of beef, younger? >> this was maybe 18 months. wagyu takes about 30 months to finish. lots of armor that you massage the cow, you feed them beer. what is true, how do you get it to be so luscious and fatty? book,t is why i wrote the "america's wagyu trail."

ofre are a lot misconceptions about this breed. it has been shrouded in secrecy for years. we do not massage them. the guys on the farm drink the beer. genetics,ly about all, stress-free humanely raised. >> what is the cost differential? that stake at a steakhouse might be 50 books. our restaurant in roanoke, indiana, population 1700, we are charging $90 for a five ounce ribeye. in new york, double. >> is it scalable? >> one percent of beef in america achieves prime quality. one percent of wagyu exceeds 100% of prime. breeds,ssed with other basically we can completely change the quality equation of beef in america. foods andsee whole

other grocery stores having more of this antibiotic 5, 10 years out? >> absolutely. it will revolutionize the quality of the beef in america, and also, this is healthy fat. >> how do you respond to the anti-beef crew who pushes back against the entire industry? >> when i first had wagyu, i thought something that good enough to good for you. the truth is that is monounsaturated fat. the wagyu have an unusual ability to create healthy meet. there are no drugs or added hormones. it is good stuff. that is fatty meat but it looks real good. so how much is a wagyu cow worth? >> fully finished, about $6,000. in tokyo, about $15,000. >> how does that compare to a normal beast in colorado? 400 dollars.

>> how much does it cost to raise it? you have to be careful about what you feed it, no genetically modified things. the cost would be about $4500. >> within the economics of this, the simple question, why are more people not doing this? why do i not see fancy beef more often, isn't that people will not pay the price? is relatively unknown. there is a big difference between the real wagyu raised in america and some of the imposters. >> what about the psychology that i want a 16 ounce steak on lessate compared to pristine wagyu beef. >> we find that in the heartland. we are used to big cowboy steaks.

i am a big eater. that five ounce ribeye, i can barely eat it. it is so dense with labor and nutrient value. it is a tasting experience, not a gluttonous one. >> so how do japanese feel about the americans raising wagyu beef? >> i think the japanese are grateful in a way. we are exposing their national of 330e to a country million people, so a much bigger market. nameu might recognize the and the ring. >> that is a world series ring with the yankees. the big apple.n i started my career here in 1977. >> if you are going abroad and using bitcoins, you will want to hear from matt miller on his ninth day of 12 days of bitcoin. ♪

>> this is "lunch money." you can also watch us streaming on your tablet, phone, and on bloomberg.com. day nine of bloomberg television 12 days of bitcoin and less than one week before christmas. meansst of us, it traveling home and taking some vacation, so, matt miller, can i pay with bitcoins? >> i have been fascinated with all the regulation around bitcoin and it has heated up over the last few days come with the bodyslammed china put on the currency yesterday. >> prices have gone from what to what during the course of your story? >> when i bought it, we were just over 800, but we had come down from 1200. one-person probably paid $1200

for it. we came back up to 1000 for a moment. some point, a bitcoin traded for 330 books in china. it has been a wild ride. i have done a lot of things with this, including buying a pain -- plane ticket to spain. it was trading around 1000 when i did that. i was thinking, where can i go over christmas? bitcoin, i2 days of will hopefully take some time off. i decided to take out a map and look to see where i could spend my bitcoin. china is an obvious place where it will be terribly difficult. . put this together in green, it is accepted, read, do not go, yellow is undecided.

europe is my fallback vacation destination. there is me on a motorcycle tour through bavaria. these countries are undecided in that i could probably spend my bitcoins there. germany -- china want control over everything, countries like germany want to tax everything. d'etre.their raison if you want to buy or sell it, they will put a vat on it. >> the places that you definitely cannot go for bitcoin? china. if you want to buy or sell in germany or scandinavia, you will be charged a vat. maybe 70% in germany. 17% in germany. for the purchase or sale of it.

but for using it, you will not pay the tax. >> who is going to know? that is the beauty of bitcoin. onill say, u.s. is in yellow the chart because you need a might transact or license and 47 states, and that is very expensive. >> a new way to make confetti. ♪

andt is 56 past the hour that means bloombergtv is on the markets. it is official, the fed is beginning to taper its stimulus, scaling back its monthly buying program to $70 billion and ending the debate on when the announcement would be made.

the announcement took some by surprise because only one third of economists addicted tapering with start this soon. that got it right with the snp capital iq. we heard from them earlier this morning. i did not expect our chief foromist -- she was calling the tapering. that was the house view. there is a few reason this is good for stocks. the uncertainty is removed so there is really fair. number two, validation of the recovery. you have a respected body feeling the economy is strong enough they can feel -- they feel they can handle stimulus removal. lastly, the porter guidance was dovish. -- forward guidance was dovish. now they say on employment has to be well below that before they raise rates. they also point to inflation being low. these were signals to the market

,hat it will be quite a while 18 to 24 months before the start raising rates. put it all together and we have seen the removal of one of the biggest headwinds to this bull market. we have been underway materials all year, the third worst performing sector in the market. we are also underway telecom and utilities. we still see quite a bit of commodity volatility. i like the reflation argument but i prefer to play that with emerging-market equities. it may be time to get more upbeat on materials but this year it has been a loser. dividend paying stocks was yesterday's trade. the ointment with this fed outlook is an upper drifting interest rate, so more competition for the telecom companies, utilities. we are focused more on cyclicals. we think the taper was a validation for cyclicals. that is very want to be.

we like discretionary, industrial, health care. a bump updid get after the announcement yesterday but more mixed today. jam cofounder mario sounded off on the concerns he still sees weighing on the markets. clearly, a confrontation over the debt ceiling, which is fundamental to the long-term outlook for stocks. there are so many others. there is no margin of safety in the market. >> take a look at how markets are trading in the first full day after the decision to taper. we have the dow a little higher and earlier today touched an intraday record. we will see if it manages to close at that level. we did get jobless claim this number -- numbers this morning. of course, we had a big rally yesterday. we really needed something else

to sustain this. in the treasury market, we have yields bumping up. a 10-year going to 2.93%. gold prices falling as well in the wake of this decision. crude getting a boost on the decision that growth could be coming back and that is allowing the fed to pull back on its stimulus. copper not benefiting from that sentiment. we are on the markets once again in 30 minutes time. "bloomberg west" is next. ♪

>> welcome to the early edition of "bloomberg west." i am emily chang in our focus is on innovation, technology, and the future of business. and markerberg andreessen are cashing out millions of their facebook shares, selling the stock as part of a just announced secondary offering worth nearly $4 billion. hackers stole data from up to 40 million credit cards used it target during the height of this year's holiday shopping season, accessing the information theugh swipe machines in