30 minutes. market makers is up next. ♪ >> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. all a twitter. shares have taken flight. we talked to an investor who says twitter should not be flying so high. they say great album. retailers say she gave them the shaft. ordinary man gets 18 of professional bodyguards. what it is like to have your own detail. welcome to "market makers," i am scarlet fu. haveam olivia sterns, we so much great stuff. figuring out what is going on with twitter. come on we will be talking with the onset and introducing you to the best honey and america. looking into buying

one, there is a long backorder. on vacation. >> i am going skiing tomorrow. the news feed. cessna owner textron buys beechcraft. billion deal will help textron encounter a slump in business jet sales. cessna'st complements product line. aircraft sales account for about 60% of textron's sales. gm recalling 1.5 million vehicles in china. regulators say there is a defect in the fuel pump bracket that can cause gas leaks. the retail stores on december 30. gm operates in china with s a i motors. the turkish firm that owns godiva chocolates is gobbling up the firm that makes chocolate pretzels.

demet's,21 million for that was owned by a connecticut buyout firm. the big stock stories -- twitter. shares have exploded. around 70%. if you look at the chart, you can see that there is a debt at the end. end.dip at the about 5%, analysts downgraded it to the equivalent of a cell -- a sell. our next guest agrees. larry, you do not actually own twitter. hoodie -- >> no. prospectsl business are good but you do not want to buy. >> you have the business and the stock. business is sensational. if you take google, facebook, and twitter and take the growths of the global ad business for the next five years, they are

going to capture all of the incremental revenue. these are wonderful businesses. people like us, especially at gabelli, we are disciplined investors. arediscipline in the stock two different things. since they collect ad dollars you can size the market and look at how fast it grows. basically, at close to a $40 makeon valuation, i cannot it grow fast enough to justify the price. >> was a priced too high to begin with? >> the offering was pretty clever. the insiders do not sell. you create more or less an artificial shortage. this happens in a lot of ipos. if you look at the turnover of the stock, the stock has an of age holding period day. this is a trading apple. >> the stock is up 40% since december 10 two yesterday.

it is now worth more by market cap than time warner cable or viacom. >> goodness gracious, there is speculation going on. is definition of speculation when someone is making money and you and i are not. people are buying it. not understand the price of what they are paying relative to the business. this is a company that does not make money. it is going to make a lot of money -- >> when? >> probably next year there will be several hundred million dollars, several years from now there will be more ebitda. five years from now, i get the stock where it is right now. hardcial media stocks are for value investors. >> in sometime time or other, interest rates are going to go up. the discount rate that people

are going to apply to the future stream of income is going to go down of the stock is going to go -- god forbid something happens to the business. like aol or another cold situation -- cult situation. >> you talk about speculation. is there so much of a wide discrepancy -- there is a lot of -- not a lot of visibility. how do you value the company? >> i don't try too hard until i or two public corridors. take google as an example. we have now 40 or 50 quarters si nce google has been public. the lowest conversion of income was 12. google did some have been as high as 65. when it is 12, it goes down for a short period. you don't know how effectively

putter is going to convert its incremental revenue to ebitd. once i see the behaviors at conference calls, i will be better able to access it. in this business, knowing what you do not know is very critical. i do not know it right now. i cannot make a reasonable assessment. i do not have to swing at every pitch. this is a page i did not want to swing out. >> do you think twitter can be a facebook size business? about facebook size, facebook now has $3 billion of ebitd. 10 years from now they might hit that. it will be a business with over $1 billion in cash flow. at social media giants, when you compare facebook to twitter to linkedin, you look at linkedin and think about the amount of data they have. this is a professional network that makes inherently were

likely to be sticky. it is there jo -- it is their job. why isn't linkedin worth 10 times twitter? >> linkedin is worth what the market says it is worth, somewhere around 80 times ebitd, a 1.5% return. it has got to grow weekly to justify that when you can get a certainty return of 3% from the government. that will only compound at 3%. you can match those. >> are any social media stocks out there at any level that you would buy? >> i would still be a buyer of 5% return. investing heavily in these interesting vehicles like the google glass. >> is google a social media company? >> i would describe it as a technological conglomerate.

it has a driverless car, glasses. eats by collecting ad dollars. at 19 times cash flow, it is not terribly cheap but not outrageously expensive. >> we need to take a quick break. larry haverty sounding off on his pick for 2014. sam grobart is an ordinary man. what is he doing with a security detail jacob why he brought some muscle to work. ♪ losing good employees costs business. talking to a ceo who knows how to stop brain drain. " on is "market makers bloomberg television. watch all our interviews live on apple tv. ♪

>> we are back with more from larry haverty, portfolio manager. let's turn the conversation to yahoo!, it has doubled this year. what is marissa mayer doing right? >> you cannot know. the numbers have not really printed. i would have liked to have seen the consolidated revenues start to increase. she has made a lot of acquisitions with a lot of personnel changes. my first visit point in being able to address her management is the fourth quarter and we have not seen that. the jury is out. residing -- she has certainly presided over a stock appreciation. the previous management started the ball rolling there, they improve relations with junkball -- with jack ma. >> how much of your that on amazon is going down to marissa

mayer's strategy and alibaba? yahoo!, not amazon. we were betting the whole thing on alibaba. we thought alibaba was undervalued. we begin to understand it -- we have been having investors in the cal. -- in macau. we're involved with tencent. we learned about what the chinese government wanted to do. we thought alibaba was undervalued. run by a guy who was very difficult and pick our pockets with this paypal look-alike. we thought that at worst, alibaba was worth $100 billion. the economist did a wonderful article and said that a few months ago, the possibility

could be the most valuable company in the world. the numbers now suggest looking at the sweater tied valuations -- this company make lots of money -- looking at this twitter type valuation. this company makes lots of money. it is greater than the market cap of the stock. >> do you see a scenario where alibaba goes public and yahoo! hurt?art -- yahoo! is >> yahoo! will have to sell half of their shares in the aberrant. there'll be more burden on recep -- on marissa. domestic business of yahoo! is valued at 10 times. previously you are being paid to take it away. >> one thing that has moved the evaluation on yahoo! is dan drum forging the

mercer mayertting in place. he sold off his shares. that make you want to get out? thee were pretty firm on idea that this thing was going to be worth a lot of money. i look at macau as a proxy, it is going to double and create $600 billion -- $60 billion worth of wealth. china is this big. subs.mobile, 760 million dan made a mistake. >> they are selling iphones. >> dan loeb has taken aim at sony. not clear where his successes live. this is an interesting take -- pick, you recently took a stake in sony. what do you like? beginning toinally

figure out how to make money in the music industry with the change and technology. music industry profits were even serrated by technological change eviscerated by technological change. profits disappeared at rock bottom and are going to start coming up. they allow owners of music to monetize. >> is sony blindly profiting from that? or is it taking the lead? >> both. it is a free bonus. at some point it will become a lot of money. the columbia studio is a phenomenal asset. they have a great tv business with a bad couple of years and films. the business is worth way more than the market price is paying. the real call option on sony is in electronics. up, ive this thing coming

am going to the consumer electronics show in january, ultra-high-definition tv. i have watched 400 people have their mouths open at a demonstration in new york about a month ago. all over theo be consumer electronics show. in two years in the u.s., there will be 3 million of these sold. sony we'll have a seat at the table. the electronics business, making virtually no money right now, is going to make money. we like to look at it in a 3 year to 5 year timeframe. you have the entertainment business is -- they're going to get spun off or make money. >> is that the right thing to do? >> i think that is, i don't think it is going to happen. a better entertainment business and i get a turn in

electronics, which no one is looking for. i am sure someone is going to think about it. somebody is going to make money. to contend with. and the playstation 4. cable, a lot of speculation charter is going to buy that. when? >> reasonably soon. john has pretty much got his financing lined up. he is not afraid of leverage. all of his companies have been buying their stock at pretty very lowiples with cost financing. most of them are at the high end of what they told people is acceptable that leverage ratios -- debt leverage ratios. you have a financial manager replacing an operating manager. they made missteps in dealing with -- >> customer satisfaction is low. >> customer satisfaction can improve, john has the operator.

they are ready for the dance. >> when? >> next few weeks. the citigroup conference is in las vegas. that was the conference when the aol-time warner deal was announced. we will have you back on for the deal. looking forward to ultra hdtv. larry haverty at gamco. amazon's holiday season by the number. they sold enough rainbow looms to circle the globe. have you ever used one? ♪

>> despite christmas delivery woes, amazon has had a record-setting holiday season. they added more than one million week members and the third of december. a record order of more than 36 million items on cyber monday. julie hyman joins us. you think they are giving away money. giving away free shipping. if you pay your $79 to become a prime member. amazon sent a limited prime memberships -- >> how? >> sorry, our system is overloaded. who knows? it is not clear. they give you a lot of numbers and their release on how the holiday shopping season went. except how the holiday shopping season went. they tell you the numbers from a ago, of go, -- a month

cyber monday. they do tell you a couple little tidbits. they tell you more than half of their customers shot using a mobile device. >> kindle. of course. between thanksgiving and cyber monday, customers ordered more than five toys per second from a mobile device. you saw the figure you mentioned, 37 million items 426 per second. >> cyber monday is old news. the xbox was very popular. all of these have qualifiers. at the peak time of when people were buying, they were buying 1000 permanent. rainbow looms. do you guys know what they are? it is like jelly bracelets. rubber bands, you weave them together.

in a hot wheels to circle the daytona race track. what does this really tell us? amazon is huge. a great pre department. what they did tell us about some membership, they had many people signing up that they had to limit memberships. we do not know how many people are prime members. give you some more information about the prime memberships. again, it is the philosophy at amazon that is so fascinating. it is geared towards customer service, even if it cost the company money. >> prime is a loss leader. wedefinitely, and my house are using prime to send paper towels to the house. that is a waste of money because someone will go to the store. amazon spends on shipping for a prime number is a lot more than $79 for the full

year. >> a qs olivia from going to the store. keeps olivia from going to the store. in salesad $70 million last quarter and reported a loss. salesk -- $17 million in from last quarter and reported a loss. >> look at the numbers, comscore said sales actually slowed. >> are you using amazon prime video? that is one of the benefits. to get you back on to talk about amazon prime. julie hyman. ourore than one million of neighbors will be losing unemployment. what democrats say an extension would mean for the economy. >> bnc's new album was a secret. amazon and target say that is

not cool. we will figure out what she is called. >> if you missed any of our interviews, you can watch them on apple tv. you're watching "market makers." ♪

>> live from bloomberg headquarters in new york, this is "market makers," with erik schatzker and stephanie ruhle. >> welcome back to "market makers." i am scarlet fu. >> i am olivia sterns. we are happily feeling in. -- fi lling in. >> a quiet day but you would not know it from looking at the markets, treasury yields are at a two-year high in the stock market is making record highs. >> twitter has been surging all week and is now down 5% on friday. from one of the analysts, a little bit of a push back after big gains.

advertising has a problem, brain drain. more than 30% of the industry's employees turn over. it is a concern for the president of one of the world's largest ad companies. he has written a book called "the talent mandate." erik schatzker and i spoke to him earlier this month. the marketing services industry, it has been happening for decades. we are an industry driven by ideas. people need to find stimulation anywhere and everywhere they can. of industriesots about ideas and creativity. look west to silicon valley. there is lots of that going on here. yet you do not see 30% of employees cycling out of a company in a year. >> the difference is it is also a fairly incestuous industry. people know one another. there is limited players.

silicon valley is an interesting parallel to draw. from onepeople moving company to another within silicon valley. in our industry, it is higher. it is also the way people move around and collect experiences. it is a broader theme we see and what is happening with talent in the town economy today with people going from job to collect experience. >> our supervisor said relationships are more portable than code. when you see turnover, are people going off to form their own companies the way they do out west. are they moving around within the advertising world? >> the first degree of churn is within the industry. industry ashe broadly as possible as marketing services. you could work for an and aising agency one day quasi-technology communication start of the next. more people leaving

the marketing services industry to go to google's or facebook's or tech type companies. that is newer. those are the two big draws in terms of where people are going and why they are leaving. book you interviewed leaders at companies like facebook. dreamworks, forbes, and others. what do they tell you about the secret to preventing turnover? it is as simple as that. >> it is. one of the most interesting insights we found, it was very surprising. the range of companies we interviewed was so fast. dow chemical to exxon mobil to google and facebook. you would think there would be very different insights in terms of why people stay and leave. there was a remarkable similarity. the most important one in terms of why people stay and what makes people successful is the notion of cultural fit.

what more and more companies are recruiting for today and making sure they spend a lot of time to know the horns of it is -- the importance of is cultural fit. do they believe in the vision of the company? it is not just does the person fit with the company, does the company fit with the person. >> there is a talk about the rise of the millennial's. they are coming into the workforce. what is your oppression of the generation -- what is your impression of this generation and how have they influenced how companies operate? onthe first point millennial's -- it is broader than a demographic. it is a mindset. a lot of attitudes that millennials have, wanting constant feedback, wanting to take on more, fueling the workplace as a meritocracy than

ch tenure is valued, those are millennial values. they have seeped into the workplace. if you look at some of the best-performing companies, those are values of those companies. on the positive side, they are helping to make the workforce a better and more productive place where people are more turbocharged. a challenge is that they are more demanding. they look for more. that is the flipside. you tend to hear a more negative spin on millennials in the workforce. going to her are present close to 75% of the represent close to 75% of the workforce. >> my experience covering wall street has made me a sec. every bank used -- has made me a cynic. every bank wants you to believe the same thing, culture is important. the truth is it is all about the

compensation. the golden handcuffs. >> the interesting thing -- this is always underreported. year, it isar over dropping in and when you ask employees, whether the department of labor and statistics or studies we do on our industry, what is the prime reason for why you can't to a company? is growing and compensation is lessening. around thirdt now or fourth. it is slightly underreported, few people will say the number one thing for me is how much i get paid. it is a trend that we do see where more and more people, even beyond millennials, want to work for a company where they share the values and feel is dynamic and going places. they went to work for a company that they want to work with. >> that was andrew bennett, president of havas.

>> millions of unemployed workers are set to lose their jobless benefits. will congress act to extend them or is this the end to the government's response to the great recession? look at this picture, one of the best of the year from our photo team. a celebration of the biggest merger in the advertising industry. the combined company is now the largest advertising firm in the world. >> big smiles. >> all smiles. ♪

are.3 million americans about to have their only steady income disappear. thanks to a standoff in congress, their unemployment benefits and tomorrow -- end tomorrow, the debate over extending these will be the first legislative fight of 2014. peter cook has more. what do you mean when we say emergency benefits? >> we are talking about something that was created in 2008 by president bush at the time of the financial crisis. this was extended unemployment benefits beyond the traditional 26 weeks normally provided by the states. it has been renewed 11 times since then. it allows up to 73 weeks of benefits and all. millionday, 1.3 americans will see those benefits go away because it has not been extended further.

another 3.6 million will have them run out by the end of 2014. republicans argue with unemployment now down to 7%, the emergency is over and it is time for the product to end. he is open toays another extension if it is paid for. democrats say it is the wrong time to end this. they believe this is still an emergency. it has got to be paid for to be extended. >> it expires tomorrow but we are talking about prospects for a deal next year. what are the chances? >> they aren't that bad for a deal. there is a bipartisan bill in the senate for a three-month extension. jack reed and senator heller are combining to try to get something done. the question is paying for it. a three-month extension would be about $6.5 billion, a full year would be $25 billion. that is real money. the budget deal took away a lot

of the low hanging fruit and easy things to pay for that extension. a first test vote january 6 and the senate, harry reid promising to have a vote and challenge republicans. it does not look like we are going to get a deal. for ite from how you pay if there is no deal, assuming congress goes back to its old wa economic impact are we looking at? >> it depends who you are talking to. the white house says it could jobs in economy 240,000 loss to demand. in analyst thinks there could be a 0.4% hit to gdp. it could lower the unemployment forcing some people to actually take lower paying jobs. they my job at those jobs since they are not getting benefits. it would force some for stop looking to work, that would drive the unemployment rate

down, not for the reasons we would like. >> another story in d.c., herbalife. bill ackman put a $1 billion short on. investing a lot in lobbying. this is not just a wall street story, it is a washington story. the company has been trying to fight against ackman, who has been lobbying members of congress and regulators that this maker of vitamins is an scheme.pyramid they have been fighting back by talking to some of the same lawmakers. they have been spending about $1.3 million, a record for the company in washington on lobbying this year. it is in response to ackman. to watch,to continue how much they are spending in washington to maintain their name. we have seen what happened with ackman and where that has gone.

he says the fight is not over and beliefs is short bet is righ t. washington is a factor. >> they'll act and did not spend a lot on lobbying, pershing -- bill ackman did not spend a lot on lobbying, pershing square spent a tenth of what herblalife did. >> they are still speaking with regulators. >> peter cook. >> a lot of money for a nutrition company to be paying for lobbying. etyonce's sigrid allen -- secr albums. we will dollars into the controversy. stick with "market makers." ♪

>> it is the holiday season and we are consuming a lot of media. beyonce broke tradition whence she bypassed retailers and released her album through itunes. target and amazon are feeling the pain. by beyonce.ve it paid off. look how many albums she managed to sell. 600,000 within the first three days. it broke all kinds of records for itunes. amazon is not making the physical cd available. they are allowed to sell one week after she launched the album through itunes. they did not want to sell it, nor did target. >> i didn't know people still bought physical cds. it up. might take amazon and target are saying you bypassed us and we are not going to sell your apple. target was miffed. last time, they worked very

closely with beyonce to market it. it is a threat to other artists who say i am going to bypass the traditional retailers. not need adoes middleman. she just goes straight to her fans. we know jay-z is worth a lot of money. how about beyoncé herself. >> forbes estimates anywhere from $92 million to $100 million in earnings from june 2012 to june 2013. think of her empire. together, they are formidable. and as her own fragrance clothing line. there is also the music. she really is quite a force. she is one of the best selling female recording artists. i don't know that target and amazon are doing themselves any favors. >> did any retailers decide to sell the cd? walmart, beyonce

showed up at a walmart in massachusetts as a way to show up target and amazon. she showed up and spoke on the speakerphone. she gave out gift cards to customers. she was definitely rewarding walmart for selling her album. >> that's pretty cool. imagine going into walmart and beyoncé walks up and tells you you have $50. actually buys cds anymore? there is no doubt that physical music sales are in a structural decline. package music sales total about $30 million in 2013, that is only half the sales we saw six years ago. -- $13 million. one thing is coming down, digital music is coming up. itunes, amazon, and walmart control 60% of the music market. target is number four. >> larry haverty thought the

music business was great 10 years ago. he thinks it is making money again. >> it is making a comeback. >> itunes, of course. more than one million are employed in the security business. you hundred thousand jobs will be added in the industry over the next decade. thanks in part to demand for bodyguards. bloomberg businessweek's sam grobart decided to find out what the hype is about. >> kind of a different morning for me today. not because i am in a mercedes-benz. i was picked up by david and vincent of stone security services. they are what we call bodyguards. they will spend the day with me to show me what it is like when you have a professional security detail. >> your plans are -- we are going to start with --

>> i will be at the office, 1:00 maybe stepping out to get something to eat. then back to the office. >> a simple day. you have a white male approaching. can i help you? >> i want to ask him a question. >> not today. >> what are you doing when you are not with me? >> it is a very boring situation. hurry up and wait. >> are you armed? >> we take a threat assessment, who is looking to hurt you. that may include as carrying a larger gun than we usually carry, which is a nine millimeter, eight they go up to a 45 millimeter. >> does everybody have a law enforcement background? >> they do. we send our gentlemen down to a camp run by the secret service

where we refreshed ourselves with all the new technologies out there. the bad guys are always thinking. >> what are you paying attention to? >> vinnie is watching to see if we are being followed. >> the looks you get from people are amazing. >> tommy what is going to happen when we go in. >> we are going to have to find the best place for you to set. >> one slice. everybody is looking at me and nobody knows who i am. it has been an extraordinary day watching these guys in action. they are constantly working. you feel very conspicuous but extremely safe. >> i have to stop by the grocery store on the way home to pick up some food for dinner. that, sam commands new respect around the office. >> he does in a pizza parlor. >> i love that that they had to scan the room. >> heelys has one eye in his

rearview mirror. >> is approaching 56 minutes past the hour, it is time for bloomberg to go "on the markets." u.s. stocks climbing to record highs to a after day. -- we haveto hit the hit 50 highs for the s&p. >> today, backing off a little bit. off by one point five points. doubt industrial losing 11 points. 0.25%.also losing twitter had been driving from the gains of late but is pulling back after an analyst downgrade. >> twitter down by about 5%. % on newstextron, up 2 that textron, who makes private jets, has reached a deal to buy beechcraft 41 $.4 billion as it tries to count a slump in business jet sales. not forget bond sales.

the stock market is losing steam but yields are climbing. the 10 year yield earlier went above 3%. right now it is 2.9%. is driven by optimism over the u.s. economy. signs that things are improving. the 10 year yield, 2.98%. >> we have really seen that widened to the widest level in two years. >> you wonder what that means for bank earnings next year. we have heard so much saying their interest rate margins have been compressed so much by the zero interest rate policy. >> the 10 year is at the highest level since 2011. perhaps thinking the fed will pick up the pace. meeting is fomc january 30. the tapered by $10 billion last time. in the next hour of "market cofounder of rent the

runway will join us. why she is going brick-and-mortar. ♪

>> live, from bloomberg world headquarters in new york, this is "market makers", with erik schatzker and stephanie ruhle. giant.ican can this hoodie bring high- paying job back to the usa? we will talk to the ceo who is disruptive idea is changing the way women get to feed up. -- gussied up. >> we'll take a look at the prison of the future. i welcome to "market makers," am scarlet fu. >> i am olivia sterns, stephanie ruhle and erik schatzker are off

today. has anyone stopped you on the street because they thought you were the star of "orange is the new black?" >> i have gotten to go to the front of a line. i wasn't in orange, but i thought i had looked like i was imprisoned by looking terrible -- i looked like i was in prison, buecause i looked terrible. they told me they loved my show. will spend what premium to become the car in their segment. bmw want to surpass the franchise as the world's biggest carmaker.

the benchmark index falling as much as four percent today. we can bite to present against the dollar. the massive corruption scandal has led to allegations against three top ministers, and there's worry about a showdown between the prime business or -- minister and the judiciary. police and firefighters have been called in to investigate, resell were backloaded from the berlin outpost in 2012 during a similar scare. uh-oh.g -- a big to eat theirid not own burgers and fries. any idea what mcdonald's is thinking? the oneald's was not responsible for the content.

it was a third-party vendor done by nurture help. the calls did not have control of the content, but the real issue is that the website is better known for helping the employees. small pieces and they get full longer and faster, and so they do not bad boy -- spend more. website's took their down on wednesday, saying they would be back soon. issuing a statement saying that a combination of factors has caused us to read it -- us to .eevaluate all over the twitter and internet over the past couple of days. is artie taking heat for paying its employees low wages.

>> here's what the ceo had to say about it when he spoke to in 's ancora betty liu. >> is where -- if we have to increase, we will do what we have to do. we are not a minimum wage of blair today, and the opportunities provided at donald's are greater than at many other places. of the daynd mcdonald's applies a chunk of that. just one issue facing mcdonald's in the industry, one of the others? >> it is not just the pr disaster, and is a lot a people who are not eating in their stores. they're getting really hurt, people are eating out less. same-store sales in the us down 10% in november. revenues estimated to be up 2.4%

for this year, less than half of the that's other competitors. at the end of the day, it's a rebekkah brunson access at all. it said that mcdonald's is a restaurant that consumers are least likely to recommend their friends and family. feel,s not have a cool and the question is what do they do not? -- what do they do now? analysts are saying they needed new product. they tried the mighty wings, that did not work out. they were a dollar each, they were spicy, they did not sell well. >> they should go with a veggie burger. >> they have salads and other healthy options competitors so hard to sell those. >> thank you. the year,hat time of wall street analysts look ahead to make a forecast for the markets in the year ahead here

we put them on tv to talk about it. our editor michael mckee is tracking all of this. said -- s -- he >> the predictions are really wildly off the even those that make them will say that it is hard to get anything right a year from now. who knows what will happen in the coming year? according to the people on wall street, they say they know. here on bloomberg television and other forecast television organizations. as we can see, they do not track, these are the big mi sses this year of what they thought it was going to be. miss but 17 point five percent -- 17.5%. they make forecasts of what earnings-per-share going to be. these were their forecast for the record is had made last

december. they had not gone to the fourth quarter yes, and here's the actual results. >> they missed the second half slowdown. but so youtough game do not want to rely what they tell you in these broad macro sense of what is going to happen. >> from a top-down perspective, the wall street executives have failed. what about broad macroeconomics, how are they doing there? a whole lotly, not better. we look at what they forecast for gdp over the coming three quarters last december, this is what they saw happening, and tually what ac happened. for the most part, stronger than they actually thought. nobody has an accurate forecast for 12 month out, it is so hard to do. >> why do they get it so wrong? >> so many things can happen.

there are some other theories, the more an expert is quoted, the less accurate they tend to be. -- ifermittent information changes, they do not change their way of looking at things. at this point, they know that they cannot predict the future, but they are paid to do so. so they have to put up these forecast but they do the best they can to come up with them. and they say they will revise them during the year. >> they revise the very quickly. thank you. coming up on "market makers ." drivingnds that will be invasion in 2014 -- innovation in 2014. >> it is time for the yearbook

in your market makers. take a look at this woman but she read it from a wisconsin high school in 1993. you can help us figure out who it is. tweet yourguesses -- guesses. this is "market makers," live on bbg television and streaming on your phone, tablet, and at bloomberg.com. ♪

bloombergr for some -- now for some bloomberg west top tech media headlines. analysts say there's nothing to justify the huge run-up in the shares over the past week. the average price target on the stock is $44. about 40% lower than where it is trading right now. the christmas box office with the second best on record by about $78 million in tickets were sold on wednesday.

number one for the holiday, "the hobbit ergo the film house now , the film has now grossed millions of dollars. and congratulations, the game of thrones, the most illegally downloaded show on television. 5.9program was downloaded million times on bit torrent. close competitors were raking bad and walking dead. -- breaking bad and the walking dead. smartphones, class or google glass, these are some of the predictions that may come true next year. on more insight on what we can expect, let's begin the ceo of a beta be marketing company.

you think that a big trend next year is going to be advertising on your smart phone's mode -- home screen. how do you think that will work? >> let's hope i will be a little more accurate than the predictors you had on earlier. i think it is going to happen to him and i think the big trend we're going to see -- if you think about these devices about about 1.2 billion of them are out there. this home screen on this device, we look at it about 100 times a day. that is over 100 billion impressions of opportunity that marketers are not touching today. i think we're going to start to see that come. it might be innocent, so what might happen is that they're going to provide a free cell phone, they're going to provide free service for those who are willing to show ads on their phone. >> ad supported, free handset? >> think of this in terms of candle they have a

that you can get if you will --t show for that you hit that you can get for $50 if you will let them show ads on their screen. there are a few comedies out there thinking about it. -- companies thinking about this. they have an application that allows you to serve as a home screen. five cents a day, and that is not enough to override the nuisance. i think people would be willing to do it if it were a phone. >> i know you're also big on wearables. it feels like it was a big to do firstgoogle posco last debuted, but that fizzled out, and we saw a few smartphone watches, but i'm not sure i want

one. why do you think 2014 is going to be the year for wearable tech? >> let's start with google glass. google glass is a great concept, a robotou look at an -- or a watch, that is what you look like. patentust filed for a for a heart monitor embedded in the device. whenkind of capability, you can have the device on you, it is monitoring different things in your body, and it is giving you accurate information without having a phone in your body -- in your pocket, that is something we might be ready for. of yves saint torent, i think we're going see a very fashionable watch,

from apple next year that will be a credit great changer that category changer. we have always heard that, will 2014 be the next big apple product that will change every thing we know? >> i think there are two apple products that will hit and will change everything. what is the apple loss, and to his final leave the apple tv. >> but we have heard that. jobs wask that steve working on this right before he passed away, and that has been reported on. i think apple has finally gotten this right, and they have practicing, and using their box capability. they're going to integrate that with a screen, and be one of the most exciting tvs you have average. it's just as an example of what i think it will do. you will be able to watch a show and have a twitter stream right next to it, and interact with that twitter stream as you're watching the show right on the tv. i think that is just a sample of

what this television is going to be cable blog. so this is obedient network will be embedded in the display. we have been hearing about this for so long, and nothing happened over the last three years. does that tell you that there are some difficulty that apple is having negotiating with content distributors are content creators? >> i think there are some of that, but what is going to be different about the stevie it is not going to the have the get -- this tv it is that not only going to have the internet capabilities, it is going to come together with existing content with internet content. i think the challenge that apple has as more of a manufacturing one. how do we get the manufacturing right at a price point that consumers are going to be willing to buy? that is what has taken them as long as it has to put something on the market. >> apple tv sounds great, but i will see it when i believe -- believe it when i see it.

i also wanted to ask about twitter, which has been surging this week, even though it is selling a five percent today. you say it is revolutionary, could be by -- like the printing press, how is that possible? >> before the printing press, a handful of people got to read the book or see a newspaper. the printing press allowed that to be mass-produced, suborbital but to see that. they get radio, and that change communication, because you and millions of people that had access to real-time information. tv turned that into pictures, twitter for the first time is a -- andublic introduction direction that we have never seen before. it is the first time that real- time we can interact with each other in a public way. they collect the internet town square, and we can see what is going on. with theat happens arab spring, with the other revolutions and other massive groups of people using twitter

to communicate. i think it is the future of the medication -- of communication. and while the downgrade of twitter shares might be interesting for now, i think it will be the next google. >> this will be a company by the peak of last book -- facebook, does this mean that facebook's platform will be less desirable than 200 and 14 -- in 2014? >> no doubt in my mind. i think the problem facebook has it has a closed off platform. twitter is wide open. content is being consumed today by people using twitter, and they do not even know they're using twitter. information is coming and in a way that they are getting access to even for a google search. facebook does not work that way, and i would say that we have seen the peak of facebook top

's popularity. you.ank >> coming up, mark zuckerberg might have made it fashionable, but the company says they are making them great. the ceo of high-quality honey odiehossi american giant is here with us. ♪

>> a brazilian fast food chain is coming to the u.s.

more thanthere are 400 of them, and they specialize in fast food. one came to florida in 2011, and went more upscale. there are seven of those restaurants in florida with a more in the works -- with eight more in the works. at first, people that they were a toy store with the name. we're purging 26 minutes past the hour, so it is time for bloomberg to go on the markets. the european market poses a just a few moments that closes a just a few moments, and they are all in the green. areeuropean stocks approaching the longest winning streak in two months. we're seeing some of the optimism faded little bit here

in the u.s. market, we started off higher, but we have since lost some steam. not big declines or anything, the s&p 500 losing almost .1%. >> the nasdaq is trading at its highest level since 2000. the 10-year note trading a little bit lower, earlier today they 10 year yield was at its highest level since 2011. just yesterday the 10-year note rocher that the -- broke through, and has signs that the economy is picking up. up, american giant he theydies are so hot, are sold out. >> helpless figure out who this

woman is. tweak your guesses to either one of us, or to our market makers twitter. ♪

>> >> live, from bloomberg world headquarters in new york, this is "market makers", with erik schatzker and stephanie ruhle. >> welcome to "market makers," i am scarlet fu. am olivia sterns, erik schatzker and stephanie ruhle are off today. stephanie ruhle is watching though, tweeting to us. customers often have to wait ir hands onet the this sweatshirt. is a comedy called a marriage i had, and he ceo bayard winthrop

joins us now. good morning. you starting off your career in investment banking, you didn't -- you then worked in manufacturing, and then use the -- then he wanted to make the world's greatest hoodie. retail dirty secret, the vast majority of what you're paying for is unrelated to the manufacturing process. i felt there was a real opportunity to eliminate those and build a great run it and keep the price reasonable for great american may gloats -- for great american made clothes. great prideu take in the craftsmanship of this product, but what gets american giant -- what sets american giant away from american apparel? industry andpparel a lot of other businesses, when you get into the business of

rolling out lots of retail stores or layering and resellers between you and the customer, you are adding layers of cost. any business that is deciding to support hundreds of retail stores across the country make a decision about the business model that is going to be paying for all of that for which by then it -- definition detract from the quality. if you think of all of those things you get a new way to approach an old problem. >> but your price point is not that far off from american apparel. >> we get there by selling trips to crowd -- direct to customers and best of quality. >> that may be the case, but it is difficult to actually get your hands on one of these sweatshirts. i know there's a lot of buzz around your product, but you have had a lot of trouble keeping up with demand. does that show the limitations

of major fracturing in the u.s.? it might be as simple as downloading an app for apple, but manufacturing requires an interesting matchup between consumers that are finding out about brands, and scaling very rapidly, match it with old world manufacturing. if someone tweets about our sweatshirt, or are close, thousands of thousands of customers can hear about it in an instant. then we have to make the product. that is what different -- is is different from our business model. there was backorder on product for a month, but our scaling is happening really rapidly. we hope we are getting in front of the problem. >> the time it takes from ordering raw materials to making

sweatshirts is about 3.5 months long. are you shortening that timeline? >> as you get bigger and bigger your compressing that timeline. we source all the way back to our yarn and gotten coming domestically. compress those leadtimes down. we can be to market it has little to 68 weeks going all the productway to the fabric. >> there is a story this week and about how textile makers are actually using -- moving to the u.s. as art of this great renaissance of american manufacturing. are you seeing this as a startup manufacturer in the u.s.? is it easier to manufacture goods in the u.s. than in asia? is laborggest part

costs. the arming process, it is a relatively labor-light process. when you get to the cutting and the selling of fabric, your labor costs rise. i think you're good to see the ing.t wave of yarn the cutting and sewing will come later, but as more and more pieces come back to the u.s., and bypass traditional cost of retail and reselling, even the cut and so parts of the process are going to come back as well. >> how are you going to turn a hoodie into an iconic american clothing item? you have been called the best hoodie of all time gabon -- of all time, but are you trying to get endorsements? >> we're trying to build product. the blue gene and the sweatshirt iconic american look.

we wanted to go back to that category. customers want great product at a fair price, and that has been lacking in the apparel a long time. we believe, as we get into new categories like t-shirts them a button-down shirts, you're going to see the brand grow, and demand grow. we are keeping that having a hard time keeping up right now, but it will come with time. >> thank you for joining us. >> coming up, a look at the sharing economy. we'll talk to the ceo of the company rent the runway. live on"market makers," bbg television and streaming on your phone, tablet, and at bloomberg.com. ♪

>> we're going to vegas for new year's them and you need an outfit that makes you look like a million bucks, but do not want to spend $1 million? our next guest is the cofounder of rent the runway. here to tell us more about this as jennifer fleiss, president of the company. a great outfit, why are you opening up a pop-up in vegas? >> we figured vegas was a place where everyone wants to dress up, but it -- so it seemed like a great place. >> as a customer, i'm not sure i would want to go out in a dress that someone has worn out in vegas before you. >> we have perfected our dry

cleaning techniques and no one has to worry about that. largest dryof the cleaners in the northeast, and we have really hold on the type of chemicals that we use and a video that we do to repair and make addresses feel like new. ups you're only -- what are the purpose of the pop-ups, since you also have him order -- brick naand morter? >> we have people coming in and looking outfits for the next five or six out event so they have every up, they are able to work with a stylist and get their plan. if they want to look vegas-

fied, they will come to us and get all ready. we really started to learn a lot stores here in new york, consisting of voters that ers areent custom renting multiple times a year. we have a beyoncé boutique on site where bb has picked out styles that affect her personal site, and you can read those looks. it is a partnership with the mrs. carter show world tour which is actually in the new york area right now. anything -- did she design anything? >> no, but her stylist pick them out from our assortment. she picked out the styles that are most protective of her fabulousness. this is a partnership so we worked up terms that are mutually beneficial.

>> how many other partnerships do we you have? >> we have hundreds. wise, we felt that beyoncé was the perfect thing for she is so aspirational and such an inspiration. we wanted someone who would embody the 360 degree wo man. >> you have a new icing ended, tell us how that will be different. ofyou can get hundreds dollar -- a dress that is worth hundreds of dollars or thousands of dollars for very cheap. we realize that you're only wearing a dress once, and in a place like vegas where your

photograph, and it gets posted online, you're only going to wear was because everyone has seen it. profit?ou making a >> this is our biggest time of the year, it is the holiday season. for you new year's, christmas, people are renting a lot right now. overall, it is going to be a little bit wild until we have that whale at the end of the month. a high season is also point, but able are ready all the time during the year. -- people are renting from us all of the time throughout the year. wedding season, proxies and, black-tie events, all of it. >> thank you. we are going to tell you about i high-tech gel that keeps robots humming a long. ♪

>> the fifth biggest jail in the united states has become the home for the most cutting edge technology in the world. $11.7 million project that utilizes everything from fuel cells to robots to save taxpayers $2.5 million annually. >> welcome to the jail of the 21st-century. >> a living lab. with inmates. >> located just 35 miles from silicon valley, this jail is home to some of the advanced tenor -- most advanced energy technology and there are robots doing the job of 25 inmates.

>> they do the laundry, and the food. >> they'll sub manpower doing would have to have manpower doing those jobs if not for the robots? >> you have to deputies watching moving thes carts. >> a safety issue. >> this is one of the safest the saudis around their knowing that we have that backup system makes it so much easier. newow, as a result of the smart grid, it takes just four seconds. power, we are self-sufficient, and our green power will kick in for us.

it will keep everything on lockdown. >> it requires 2.4 megawatts of energy and order to keep 3000 inmates securely locked up. the county lockup has become a greeting down for -- breeding ground for energy innovation. energy bill their by $2.5 million a year. >> this is a search compatible smart grid them and allows you to use your generation seriously. in a runs the jail 24 hours a day seven days a week. >> would you -- what would you say to the taxpayer out there who was suspicious? laboratoryreal-world that we are showing that these technologies do work. >> they have all of those robots

whooshing the laundry along, what did the inmates do? >> is one thing to get past big prison guard, it would be one thing to get past a robot. i got a glance of my doppelgänger behind one of those robots. the next season of "orange is the new black." >> it is the year began. take a look at this woman, help us figure out who it is. >> tweet to either one of us. as we go to break, take a look at this picture. one of the best of the year from our bloomberg photo james -- tea m. leaving the courtroom after being found liable for his part of misleading investors during

the financial crisis. ♪

>> is the moment you have all been waiting for, we're going to reveal the yearbook picture of the day. have you been able to guess who this woman is?

she graduated high school in 1993 from wausau, wisconsin. executive. tech and she now has blonde hair. >> marissa mayer? >> there she is. the first person who treated us with the answer was -- you got it correct. how many people -- female executives would be there that would be recognizable? her, sheryl sandberg, you start running out of names after a while. >> it is 56 minutes past the hour, liver television is on the markets. down on derivatives

with today's options insight. abercrombie & fitch is falling out of favor with investors about dropping 30% since january. you may not buy your clothes at abercrombie & fitch at your best -- definitely laying the stock. >> i love distressed stocks in strong sectors. there got up 300% in the last five years, it is up 40% year- to-date. if you look at it, hasn't drunk to your support if you can put up a two-year chart. ares a risk free play, we at about 34 right now, and we also have bullish divergence, which means that the stock may be low, but the military -- the volatility will make new highs. >> walk us through this call. >> it gives you the right to

belong from $20 which is below these multi-year lows, so that option is going to cost about $6.50, so it is six dollars and the money. it is worth six dollars of intrinsic value right now, if the sense of time value. it is going to act like this stock on the upside. it is a stock substitution strategy, so your raking about $.50 higher ready of nearly five months for good thing to happen -- good things to happen with absolutely zero risk. stock on the call -- the for profit? >> not at all. you look to sell the option for a higher price. you exercise into shares, and you're going to be much better off if you have a little bit of time component left by buying the option that will behave like the stock and sell the option when it is possible for you. i'll usually like to risk about half of what i pay, so really

you're not risking $650 per share, you're risking dreaded $25 to be in a position for recovery. 324 is the upside target. >> and looks like you start making money at 3450, but the options are pricing it at eight percent chance of this trade making any money at all. >> this is and in the money option, so it is going to have an 80% chance of being in the money at expiration, but that 3450 is the breakeven. we need this option to move upward, and will gain value as it does. of prime value50 to lose over the next five months, that is the way i am looking to play it. >> any other retail names your looking at -- you are looking at? >> believe it or not, i like

target and they had bullish divergence, so the fear was not there. has notat target, it reacted that poorly to all of its negative news. i happen to like that store as well. at everight i shop coming at it, but you will shop at target despite the security issues. we appreciate it. in 30 the markets again minutes. "lunch money." " is up next. . ♪

." welcome to "lunch money take a look at the menu. in energy, we're going to look at the economics of crude. our movie dish, how to win and oscar. tiny planes popular with the business crowd. no marketing to no managers. we will explain how. and the best of 2013, what better way to finish the show than cars and tanks. >>