stanley stock is up. >> they're happy. this has been going on since financial crisis. banks have been pushed three or five years ago to pay employees in more deferred stock. it is not just this year. gains have been building up since the financial crisis. if you have all of the stock, you're much happier. >> thank you very much. we are on the markets again in just 30 minutes. smart" smart -- street starts now. >> after the best annual game since 1997, stocks close at a loss. welcome to the most important hour of the session. we are scouring every market. house.yman is in the

good to have you here. >> good to be here. not so unusual on the first trading day of the year that you would have a reversal of some of the trends you saw last year. overall stocks were up and now they are down. individual stocks did very poorly last you and are up today. >> that is right. tried to play the counter trade. time for a big picture. to tell you what is happening right now, we will start with the s&p 500. down about one percent. we were up six percent in 2013. no one wanted to sell them. today, fine. we put a little bit of the profitability in our park it -- pocket. this is a surprise. right now, the yield is 298, about two-yearm high. that is in spite of that her data. manufacturing, construction, and jobs, all better. it may be the same sort of thing. you take on's down enough and

people will buy them. that in turn pushes the yield down. you take hold down far enough and eventually people will buy it. it had the worst year in 12 years. today, people are buying it. everything is running countertrend. >> speaking of which, i will stick with the gold theme and thought about the worst performer in the s&p 500. newmont mining was the worst performer last year. it is rebounding today. the counterof stocks we're are talking about. martha stewart is also on the list. reaching a settlement with macy's over a dispute involving selling martha stewart and merchandise.

finally, technology is a big laggard today. wells fargo set the margin is alreadytory priced into the stock. >> the idea of -- ideal iphone 5. i cracked the screen of the indestructible glass. to the applenight store. we go on now to the big story. the first deal of 2014. he has finally reached an agreement with the health care trust. he will ride the 42% share of chrysler fiat does not already own. at 4.3nsaction is valued billion dollars and it means no ipo. it ends the cat -- the cat and mouse game. i tell you what, let's bring in our auto pros. caldwell is a senior analyst, and, our very own matt

miller, mr. carr guy himself. let's talk about the economics of this thing. chrysler is ironically putting up some of the money. of, rememberd me the headline a couple of weeks ago? is a little different, because the whole point of this, as you know, is so that fiat can get access to the $12 billion cash pile at chrysler. they will use some of it to do the deal. fiat is paying $1.75 billion to the autoworkers trust and the rest of the money will come from chrysler. chrysler will pay a lump sum and -- some three special dividend and $700 million in four annual installments between now and 2018. this is a masterstroke. -- somebody ined graphics loves the dodge viper.

we have been showing me that showing this. everyone knew sergio would get this done before the ipo actually happened. that was a negotiating tactic. the fact he would get a better deal than most deaths than most analysts thought, he was going for four. the trust wanted six. they say that because they say they want more than they would get as a bargaining tactic. 4.35. 700 of that is going out over four years. really stretching it out and getting chrysler to foot the bill for the lion's share. clear what chrysler brings. what does fiat bring to chrysler? >> fiat brought to chrysler the opportunity to exist. obama and his car team was trying to decide whether or not

to keep chrysler. was it important enough to the u.s. economy to bailout this company e -- company? they decided it was but they needed a competent seat -- cdo. fiat could bring small technology that would help chrysler. one of the things they had to do to get five percent of the andrship was produce a car make that in the u.s.. they build out a small car lineup. that someally excited of the opportunities going forward to use alpha technology and dodge vehicles and vice maserati. the there is opportunity for them. >> think about what you just said. building a maserati on a chrysler jeep platform.

some would say that is sacrilegious and others would say it is in. sacrilegious in the first place is also a testament to .hat a great job she cherokee is a great car. it is really a great that form. if maserati is going to go out and build a giant station wagon for moms, they might as well do it on a station wagon. >> what does this ultimately means for consumers, starting with incidents in the u.s. and running conversation? it is good for consumers in the united states. what got chrysler in the was that the market shifted and they were not prepared to have smaller cars. that has changed.

quicker toould come market. there is more to draw from. broad, that story heats up in europe as well. they've a smaller suv. chrysler has colonies on. it is a winning record consumers out there. >> we talked about some of the innovations were cross-platform opportunities. any others you are looking forward to? >> the skies the limit. is becoming a lot more accessible for people. people like the brand names. they like the italians ran. having that to draw from will help chrysler. bit limiting in the u.s.. >> if you will say that, you have to say maserati will build a car on a chrysler platform.

>> they paid $36 billion in the 1990's. 40% of chrysler is valued at 4.5. it is really only worth $10 billion. >> one of the things jamie brought up earlier which is an amazing thing, sergio is going to invest over $12 billion in beefing up his italian manufacturing capacity. is buying fewer cars than it has had in the case, and -- ybody else we get this beauty. , and it only rival cost $50,000, a carbon fiber tub. it is incredible. like almost makes me feel

he is sounding like a modern-day carpet bag he is basically buying chrysler on the cheek. of the take the cash out u.s. and invest into fiat, which is losing money. what is your take? >> he is a smart dealmaker. he turned them around and then got into chrysler and turned it around. money, that has scary echoes for chrysler. bought chrysler, chrysler had a lot of cash. that was used with several other deals. got some of the cash. that is a concern. if you look at what marchionne is doing, he is trying to build a global automaker. two thirds or halfway there. footprint in south america. all of those jobs.

let's not forget about the fact there are a lot of men and women working for chrysler in detroit. he has championed the city of detroit. ,e has partnerships to people all these people. >> he is taking the money out now. >> they would have no jobs otherwise. >> i'm curious. the fact we are now seeing this deal instead of an ipo, is there risk chrysler will lose some of the talent making some positive changes their? -- there? , chrysler wass worth more if it is all integrated than a standalone hybrid company. the story with chrysler is you make a ton of money when times of good and are on the brink of death when times are bad. in theory, they need to be part of a -- an organization. if they could be in a larger

group, maybe they could be large enough to make it through. that has always been the thinking with chrysler. >> thank you for joining us from detroit. matt miller reindeer. jessica, what a pleasure to have a woman on the show talking cars. great stuff. thank you. >> hopefully we will hear from a woman much more often talking about cars. coming up, while you were sleeping, corporate america woke up. adam explains. drone on the search for sharks. we will take you inside. ♪

>> corporate america woke up. time for insight and action. easy to just not see this because it happened last week. in the middle of the vacation week. this is a deal. capital goods orders, aircraft and nondefense, capital rose 4.5%. spending it is the best again we have had in the past six months. .t has reversed a series they started to spend money again. month over month gains. look at this. capital goods orders were the highest they have been in a long time. sawre above the peak we before the crisis began. this is a big deal, corporate america spending more money.

spending returns to corporate america, so do profits. especially at the industrials. we are showing data crunched out by the bloomberg industries team. you can see industrials gross thein is approaching highest it has ever been. as all of these other countries start ordering machines from industrial companies, industrial companies are making a lot of money. we looked at the machinery makers within the s&p 1500. there are about 50. we found companies growing earnings the most this year that also are majority rated. here they are. industries, energy, flowserve, dover, and wag tech. these are the earnings growth numbers i am showing you. the point is corporate america is spending money again.

as it spends money on equipment, these are the types of companies that benefit. there is growth. longer is in no recovery. it is now an out right expansion. he is the cofounder of an investment group, and his researches some of the most widely read on the street. he says for two years he has been telling clients to focus on the u.s. and this year is no different. welcome back. us.k you for joining >> as long as you read it, that is all that matters. >> it is good stuff. i read it as well. capital goods numbers, spending is coming back. i know you are also looking at jobs as a reason for optimism. >> right. as we head for new highs, the jobs market, people have complained it has not been a robust recovery in jobs. time heals all wounds. the pace of job creation we have new high in non-

foreign payrolls this july. even on that front, once we start new highs, you are getting in and people start feeling better about themselves. >> talk about -- talk us through this. is a big deal. explain to viewers how to interpret this chart. >> we are showing the peak in eachntage decline ahead of recession. the line shows the peak -- >> in other words, it has taken a long time, much longer. >>) we don't -- dug a deeper hole. it has been slow going. but it is going. we are seeing more economic indicators showing positive momentum in the last month and we have in over the prior year. the number of better than expected indicators. indicators are beating estimates

more so than they have been in the last six months. it is an encouraging thing. the timing of the fed to taper their was good timing. up, what we are going to be worried about is will the fed have to move up its timeline to pull back tapering more and maybe even hike rates. no one is even to death thinking --ut that but come 2015, >> ben bernanke did say in his last conference that we will the 6.5%s lower than threshold on unemployment. if we start to connect the dots does the unemployment accelerate, if employment accelerates, so unemployment might theer to six, fed raise rates sooner? >> i do not think in 2014 that is even on the cards. going into 2015, we will have to talk about that. gdp, we have had three quarters in this recovery where gdp grew

faster than the average for that point in recovery. two of them were in the last three quarters. six months ago, known was talking about the growth picking up. people were still worried about it erie it the fed may say this and economists may say that. often times, we find ourselves looking and the expectations do not normally pan out. >> we tend to see rates move higher and you can see the dollar moved higher also. it has already been recovering. you are looking at the correlation between that and stocks. >> yes. an improved u.s. economy translates into a stronger dollar. that is great for u.s. equities. this chart here, we are showing the u.s. dollar index compared to the relative strength of the s&p versus the rest of the world . >> weren't the gains this year pretty much pricing in the outlook? when you see 29% gain in the s&p 500, it is because people think, at least in part because things

are starting to improve. >> things are starting to improve their coming into 2013, valuations, that was our one key , that valuations were very to historical norms especially for an economy that was recovering. we have seen multiple expansions. but we need to see now is the market is valued at the end of the year. we will see the improved economy and earnings picking up. we still think this year will become -- last year was more multiple expansion versus earnings growth. it was probably about 2-1. equalear, we will see an earnings growth. with us.e glad to be here. >> coming up, a trip -- a drone that tracks sharks. ♪

trackingthe sale drone sharks across the coast of california. ♪ ♪

>> up next -- ♪

-- >> colorado went --pot yesterday to sell recreational marijuana. 600 million dollars in sales and 60 million in tax revenue. where will the money go? met other joins us to talk about this very issue. tax proceeds go?

>> it is fairly complicated. willsale marijuana sales be taxed at 15%. since most of the vendors grow their own weed, they are getting taxed only at the retail level. a 10% tax. money, and the conservative estimates have it at $67 million for the year, 85% goes to the state level and 15% goes to the local. getting in the leads a little bit. the bottom line is it will be split up between going to help build schools, ironically, because most duties get their weed there. if that is why, it is circular and self fulfilling. >> the new york times had a story yesterday and said one of the big concerns was keeping the adult buyers of marijuana, keeping that marijuana from getting into the hands of

teenagers, and i always wondered where 16-year-old dudes get hot air they had to i from teenagers. it will now go the other way around. schoolswill be building or investing in schools. building more infrastructure. the towns that have dispensaries are ready because they have had medical marijuana for a long time. no potholes. so to speak. they have invested so well in the infrastructure. it is interesting. the jobs front is really interesting. 6000 people already employed at dispensaries. in colorado. they get about 120 applications a week because this is the licensing for people to work in these stores. they expect that to go up to about 200. >> to that point, it is only in several counties in this state so far. >> it could be anywhere in this state, but certain towns or counties have opted out, just from ohio and i live in a dry town, they just do

not sell liquor. this is the case with colorado. he will have dry towns and counties. it in a be able to get lot of places. it is mostly around denver. .50 retail potshots will open about three quarters of those were in denver. imagine 50 people applied for licenses, but only 24 had gotten all of their paperwork in in time for yesterday. maybe they were too high. >> maybe it is a little complicated area >> we are joking about this, but how much red tape? >> it does not really look that complicated. would expect and i to have in a free country where you should be able to do whatever you want as long as you're not harming anybody else, but let's deal with it. it is not really that way in this country. a lot of red tape and government involvement. wouldnot as much as you

expect for something of this magnitude. we are at the beginning of the end of prohibition on marijuana. washington state is next. you have to expect more progressive states like california to start falling in the future. when other states see the amount -- >> california split into six. marijuana is sold in a number of other states. >> 20. for medicinal purposes, which, a lot of people, i feel like, probably think they have a legitimate need for marijuana. >> because it helps with pain. are the profit margins on the legal marijuana? despite it being called a weed, isn't it pretty label and -- labor-intensive to grow? >> yes. i've seen in colorado are very high-tech. they are really high on energy use. .hey are mostly indoor

>> at a certain temperature. >> exactly. are, for operations the most part, family operations. you could expect that to grow. beply and demand would interesting. you previously had to have a license. you had to go to some sort of dr.. doctor. run out on the first day? >> i have not gotten the tallies in yet. a huge imagine it being problem for a lot of people in colorado. the most interesting thing will be ski vacations, scan -- centered around going in skiing, but also smoking pot. people will be hiring tour guides -- guys to take them through this. a statement was already released , saying you cannot smoke weed. >> you cannot smoke on the

mound. cigarettes and cigars and pipes, nothing. we are out of time. we could keep going on this topic, because it is new ground and we're curious to talk about it. the biggest smartphone maker in the world has got a problem and the chairman has got a solution. we are talking sam sung after the break. ibm's chief development officer will lay out five innovations that will completely revolutionize your life. cool stuff. twoill be back here in minutes. ♪

>> 2013 was quite a year for samsung.

it hit the highest quarterly learning -- earnings ever hear its stock fell for the first time in five years as investors worry, maybe all the other stuff was as good as it is. samsung's chairman will have none of it. he addressed concerns saying we have to change again. we must have a bigger push for innovations, including bigger structure, so we can lead industry transparent with earnings coming out next week, is now the time to bet on samsung's strategy shift? let's ask our panel. emily chang with a story and paul our closer with a trend. stocks dropped another five percent today on his comments. what is going on? >> when we look at samsung, we have to look at the picture. the company does a lot of things. everything from refrigerators to ceiling fans to smartphones. what the chairman said today is he talked about what samsung does not do well yet. that is software. he encouraged people to think about how samsung could move forward beyond hardware.

they have televideo operating istems, which analysts say mediocre. a smart phone operating system. analysts again say that is mediocre. they really rely mostly on android. that is on google as well. the focus will be, how can they control the end to end experience like apple does? hardware and software? google does it. they have android. microsoft does it. they brought nokia. samsung needs to think about how they cannot just control the hardware, which they're doing incredibly well in, but the software as well. the big question is, can samsung innovate in software in a way that is meaningful, in a way that is valuable, in a way that is quality, given it is a company that does so many other things? another thing we should look at with samsung this year is computing. they have got the galaxy gear smart watch. it has not unwell yet. there is talk samsung could be getting into a google glass product.

frontier may well be cars. apple ios made be compatible with a number of different automakers. the screen on your dashboard is getting bigger and bigger. apple and google might want to be there. they may be looking at potential innovations in the mobile category as well. >> as we listen to emily, sam some kind of sounds like apple. it has got to keep creating the next best things and has got to be in front of consumers on the outside and inside. >> the comparison to apple is apt. ever andare the best the stock drops. emily is right on. they need to look at markets where they can expand. they are selling millions and millions of handsets. the smartphone is becoming commoditized. they need to look at what is the next a thing. will it be cars? will it be wearables? will it be robotics? these are areas where a lot of competitors are investing for a long time. in addition to software, they need to be looking at services.

other than their security platform, they are not doing a lot with clout and security. that is something that could keep people in their ecosystem. big contracts are places where they could potentially make a lot of money. how need to be looking at to build out the ecosystem going forward and not just doing the status quo. >> if we look at just smartphones, that is the easiest part. the s-4, we could all talk about and appreciate that. if you look at market share from of 2012 versuser the third quarter of this past -- samsung game 4/10 of one what are they doing wrong? why they not getting more? >> the market is starting to commoditize, especially in the west.

it is harder for them to compete and get new users when you do not have as many new users coming into the channel. they need to start going more low-end if they want to grow numbers and go after china and other asian markets where they have strong foothold. i think software is one of the reallyngs were they are well known for android but that is a google controlled ecosystem. they need to start doing things that can differentiate themselves above and beyond. see you nodding. what are you thinking? >> the story will not be about apple. it will be about other non-apple players nothing at samsung's heels. samsung is the global leader in smart phones. they are doing a lot of things well. some people say they maybe deserve a little more love. here in the u.s.. it will be about companies like microsoft, which has not really come into its own in the smartphone space yet.

microsoft is looking pretty good. on the other hand, samsung has a lot of things working in its favor. it is the global leader. theymarkets like china, have a bigger screen. something apple has resisted to do. it seems like consumers are wanting more and more. to,ink it will come down can they create a better experience? that is not just hardware. that is with the operating system as well. a customize a lot of things with android. they have some features here and there. can they create an end to end experience consumers really wt to hold in their hands? >> a great point. what about an investor experience? when you look at the charts, what do you see? >> the last year has been rough for stocks. you see a bunch of lower highs in the stock. right here, here, and here. acceleration to the downside.

today. an uptick in volume. want to see volume and stocks stabilize. from a longer-term perspective -- , hitu have got to turn off clear and drag the other time -- the other one down. >> first time doing this. the longer term expect -- perspective, the upper trend or mains in place for samsung. what you want to see in the next couple of days is for that to hold and the volume to stabilize. i think samsung could be a good opportunity in the year ahead. >> good deal. and emily chang of bloomberg west. we will be watching you later. one index could hit its

highest mark ever in 2014. ♪

>> time for chart attack. paul, you have got a couple of charts to explain why we could actually have another good year on the hill -- heels of last year. >> we look back historically. when the market has 25 plus percent gain, in the next year ahead, what is the average year -- maximum year today gain? looking solely at history, the s&p 500, in the year following gain, the average year to date peak in the market is 15 .8%. >> so if history is any guide, for next year, -- >> you could see a 15% gain throughout the year. that would take us to 2140 in the s&p 500.

that is above what anything -- anyone is expecting now. is 5.5%.ge target the maximum is 13% they are looking for. more important like, you now do the same analysis for the nasdaq. you see the average gain is about 26.3%. all but two years, you have seen a gain of at least 10% at some point in the year following the return. >> that is significant. if i start to see -- i think this through. up 26% on the nasdaq takes us veryto something important. >> yes. it takes you back to the above all-time highs of the nasdaq, which we thought we would never see those levels again. not to say we would necessarily definitely finish the year out there, but they history, based solely on history, that would take us to about 5200. >> we are up more than 20% this year. history says when you're up more than 20%, you typically get a

26% gain next year. you apply that and we are -- you are right. that was the all-time high. everyone thought that would never happen again and 2005 was . fluke >> you think that would take forever to do. just like death just like employment will take a new high, maybe we will see the nasdaq. fairness, it would take watcher years. but that is incredible the -- incredible. today.ou for joining us >> from urban dwellers to the people wearing crocs like matt miller, we have the top 10 stocks you need to know. the next hour, cannot remember the password to your 401(k)? or your twitter feed? do not sweat it. ibm says passwords will soon be a thing of the past. we will tell you why coming up. ♪

>> bank of america, one of the few names up today. upgradeafter getting an this morning from citigroup. a stock also hitting a 52-week high. citigroup says the bank will benefit because of its exposure to the u.s. consumer. >> number nine is crocs. also got an upgrade this morning. -- blackstone announce

his own 200 million dollar investment and after matt miller bought a camel care earlier in the week. shocking. eight, up four percent intraday's trade. falling 50% last year. --t made the biggest decline .t supposedly shared why sell it to advertisers when you could give it to the government? >> you could make money with advertisers. >> oh. i thought we just gave everybody's data way to the government. >> number 6, 2 for the price of one. american eagle and urban

outfitters. both had a dismal 2013 but are being raised to buy. top picks among specialty retailers for 2014. >> a strong stomach. number five, twitter. doing pretty well today. the social media company got an upgrade. fromng its price target $52 per share to $70 per share. it makes it among the highest price targets in data tracked by bloomberg. check your calendars. it was just last month twitter too far, saying it is too fast. it is all over the place. a great run last year. or -- krameraim was here. she thinks it'll gets $85. it is around 67 right now. she thinks people will get it there. she says it does not necessarily have to do with fundamentals. >> it definitely does not. literally on an

enterprise value. the value of stock plus the bonds, adding a 300 multiple of cash flow. >> who cares about that? >> i see you for your twitter blue sweater today. devices. about 3% downgraded by both goldman sachs and wells fargo. both said valuation and softening chip demand was down. they have also been cut by deutsche bank last month. >> exxon mobil falling today along with other energy stocks .own almost 1.5% all 10 major groups in the s&p 500 are down today. oil prices down the most in almost 14 months. energy shares are falling. apple, and number two, down

1%. downgraded today, wells fargo securities saying they are under pressure later in the year. is the first closing bell of 2014. the number one stock of the day, fiat. shares are up 16% and this comes as the ceo reaches a deal with the uaw trust. the transaction is valued at about four point $3 billion. it's amazing. we were talking with matt earlier, jewels. chrysler makes the wagoneer. fiat owns maserati. you know effectively have maserati being built on the cheap wagoneer platform. >> why not? >> i cannot wrap my head around that notion. it is built on a jeep or form.

>> i will not be doing it so it does not bother me too much. >> this was bothersome to some. it was not enough in the s&p 500 and i've seen some notes expressing concern here because the first day of the year tends to be an update. , the first trade of the year has been an uptick so this is a breaking of that trend. was the return not including dividends. nobody wanted to sell. .- 29.6% >> a lot of people saying that today. >> it's curious that people went into bonds because they ticked down four basis points. they are re-securing the allocations. >> the prices lowest we've seen. stocks highest ever, bonds

lowest in two years. >> everything was down in terms so also a broad- based selloff today. >> time for the roundup, the stories that we are tracking ahead of tomorrow's open. carol massar are a bloomberg news -- of bloomberg news. right here in house to sorted out. time in 44first years, warren buffett will miss his target of increasing berkshire hathaway net worth at a faster rate of the s&p 500. continued rally would mean berkshire would fall short of the goal and of course the s&p cap the going up so its return 100 and 28% including dividends since the end of 2008 and the book value, has yardstick thomas up 80% starting at the same point through september 13 -- september 30. they are predict in his gain

will be in the low to mid 80s. that would indeed mean he fell short of his own target. this comes with some caveats. first of all, if you look at his longer-term record, it's pretty darn good. >> just 20% annual return. a part of this has to do not with his necessarily making bad decisions although one could as thehe ibm decision s&p 500 and stock overall, the amazing outperformance compared to historical alarms. the indexrd to beat every year. it's especially hard to beat an index when it's up 30%. that's what he was up against. >> one of our bloomberg view w referenced another blogger saying if you look at an index fund it's true that hardly

anyone -- if you are a stock picker and you try to be the s&p ,00 over just the past year very, very few people are actually lucky enough or smart enough. it's even harder to do it on a consistent basis. years over the past five so maybe standards are a little bit high. like you said, take a look at the long-term track record. >> the comment that jumps out at me over the past month is david tepper who finished the year somewhere north of for the percent eat the s&p 500 and his comment to stephanie ruhle was, my greatest fear is for my fellow money managers not to be long enough. will have another great year and you don't want to be short. you want to be long as much as you can get. that implies long on margin are

are a 30% gain. incredible. >> we will have to see what happens. tracks that guy has made staggering amounts of money. calling on president obama to make a plea bargain with the former nsa agent. in a piece penned by the editorial board, here is what they wrote. "you may have committed a crime to do so but he's done his country a great service and it's time to offer mr. snowden some kind of clemency allowing him to return home and face at least substantially reduced punishment in light of his role as a whistleblower. withimes has been working the guardian to publish information since last summer. i want to open this up to everyone here and viewers, feel free to tweet in as well. when we first heard about this, everyone was so adamant he had crossed the line. >> not everyone. twix we heard time and time

again that he was a traitor. said sohard falkenrath as recently as last week on the show. somehow, that dialogue is changing. what stewart take? -- what is your take? >> these were potentially important security secrets but i think he really opened up a lot of windows to the amount of information that the government does collect down there. it's been enlightening for a lot of us. in some ways, maybe has done a service. >> he definitely did a service. we did not know it was happening. . , we did not know until he did not -- full stop we did know he was doing this. if anything, you give him a slap on the wrist. >> what is a slap on the wrist? jail time? >> the interesting thing here is the president said there wasn't

whistleblower legislation so why did you not take advantage of it? he was a contractor. he said he told his appear years about this and they did not do anything about it and there does not appear to be any documentation. i worry about what other documentation he has not released. >> he says he has more. bring him back home and let's get the information undercover. about what to think the incentives are for other people out there, other contractors with the kind of access to that information. if you say you sent edward snowden to russia with no way to return back but if you come back we will give you a slap on the wrist? then you think maybe i can get the fame and notoriety and not get punished. think you? >> i think he's done a service and i cannot believe i said that.

for a long time i felt he violated the oath that he took but as you pointed out we would not have the awareness that we now have in this country about what's being done in needing to be some internal checks and balances and i think that's why we've had this. it's an ugly process and let us hope no americans lose their lives over this. it is something that needed to happen. >> it's a tough, tough issue. the domestic diva has reached a deal. macy's settled the legal dispute with martha stewart over whether her company breached by selling products at jcpenney. they said they would roll back the agreement to stop making product in categories exclusive end this four years earlier than planned. the terms are not being disclosed but they say it does not reflect the outstanding plans. are we done yet?

>> apparently not. this stuff is still ongoing. martha stewart investors were certainly saying the stock was up in 9% today so definitely a this iselief that finally done with. i'm still confused about how it happened in the first place and there was so much confusion. >> there was an agreement they had with jcpenney and then they rebranded but macy's was still upset. it's like a soap opera. >> it's interesting that martha stewart designed merchandise is still in hot demand. >> it's a well-known brand. >> it's enduring. >> she has a lot of style. there is a reasonably we call her the domestic diva. >> let's talk about the latest security breach because there are so many recently. the latest at snapped shot, user

names and phone numbers have been leaked. allows open access to two files showing details of users along with their location. todayid censor the final the jets of the phone numbers but they said they should feel the to contact them for uncensored database. this come months after they were warned that the data was vulnerable. >> that's the thing. >> they said it was not a big deal. >> that was the reaction. to do this would require crosschecking against the national database of phone numbers and would be too difficult. the irony is that snapshot claim to fame is the discretion, right? the whole deal is you use this so no one will know. >> instead it takes eight seconds and in theory there is no trail? there is always a trail.

>> this is problematic if they get their lawyers. >> they better get someone to fix those firewalls. on january 2ywhere they sell a bag with a random assortment of products. we are doing the conversion in jan and it comes in different configurations. includes an 11 inch macbook air with our support air jacket, apple magnetic -- magic mouse and beats by dr. dre bluetooth. the mac book air alone is worth 990 nine dollars so we are talking about a serious discount. you know something about awful

-- apple? the year is not done but the estimate is 3984. 70will be back up to $44 eight cents. this is the first time in about 12 years we have seen a down earnings year for apple. >> i will take one of those. >> a plane ticket to japan. >> why is it only in japan? >> that's a very curious question, carol. >> i need some of that sugar. >> check it out on your ipad. much for coming on. the u.s. trumps the world in ipo's raking in $56 billion but can we sustain the momentum you? you will get the ipo outlook for 2014.

as you mayer storm, have heard, is approaching bringing subzero temperatures. another date on the impact on travel and business. ♪

>> 2013 was the best year for u.s. ip euros since the annual total to 56 billion dollars. can we sustain that momentum yard go joining us now, ceo of investor relations firm and bloomberg ipo reporter. what have you been hearing in terms of the overall stock market is that we will continue to see gains but the magnitude will be lessened. what are you hearing from clients in terms of what we will see ipo-wise? >> we conducted our fourth annual survey of ipo transaction

attorneys. we've done at the past four years to gauge there's in thental awareness sentiment the past several years has been the same, very out of mystic. the expectation is that 2014 will be as good if not better than 2013. >> so a record? correct potentially. we were close to the record from 2007. 200 22 ipos closed in 2013, 75% higher. there is money that's waiting to be spent. the economy is rebounding. hopefully it will continue and there is a desire to continue to put money to good use in good companies. we see a lot of this ipo activity center? >> everyone will try to take advantage of this open window. my sources are saying we could see a lot from asia and europe.

u.s. was the story and 2013 but overseas markets will be the story with the rebound of the european economic situation as well as in asia. china lifted a 15 month freeze on ipo's. we could see a huge backlog of activity coming to the fore. >> will they be happening in china? >> it means a lot of us in the u.s. won't have access because that is in the "a" shares market. >> we will see a lot of activity in hong kong. spinning off his trust into an ipo as well as -- who knows? alibaba. >> we have to talk about that. it could be bigger than twitter for example when it becomes public. what is the buzz and expectation about how significant that will be? is clearlygy

expected to rule in 2014. coming off of twitter, certainly alibaba, dropbox, there is that buzz. i would not say it's reminiscent to the tech bubble when the certainly,rst of but the buzz word has gained momentum and there's the expert tatian that companies will continue to ride that wave. >> any concern as the fed starts pulling back on stimulus that it has some sort of negative fact -- effect? >> any volatility in the market could be a problem for the ipo market. right now, so long as things maintain their stability it's expected we should see at least the same as in 2013. will be the big one but you highlight some of the other big ones. coupon.com, zoosk. >> the dating site?

.> they use facebook >> doesn't work cap go >> i have not tried it.-- does it work? >> have'nn't tried it. we have seen a big surge in ad tech companies. alsove heard they are planning on filing an ipo in the first quarter. >> what's amazing as i listen to both of you is that it's all about technology. no one is saying there are some great industrial or manufacturers as the u.s. is able to capture natural gas more cheaply. why is there no talk about other sectors? and theyou look at 2013 industries that had the most success ipo-wise, financial services, healthcare. i think it's a return to looking at fundamentals so the companies

that we see going out are strong. they have good fundamentals. investors are looking for a good return on their dollar. this is not right where it was all based on height -- hype. that thee countries seerney said we should activity coming out of his israel. israel is a hotbed for technology. , youe mid-to-late 2000's did not see that much coming out propertytellectual world and israel. there was a great ipo. wix.com went public. out brain is another getting a lot of attention. we should expect a lot from that part of the world. >> viewers who want to play with ipo's themselves can go to the

.icker >> thank you, jeff corbin, to talk about ipos. >> governor cuomo declaring a state of emergency as we brace for the storm. if you are flying, make sure you check in in advance. trying to fly to singapore. we will see if you get out. jewels and i will be right back in two minutes. >> we are not going anywhere. -- jules and i will be back. ♪

>> it is called outside the say the least especially if you are right here in new york city. and governor have declared a state of emergency

and for more on what to expect, our very own meteorologist, bonnie schneider, joins us now. from your point of view, how bad is this? >> we are looking at some very bad conditions. many flights have been canceled in advance where it has not started snowing yet. chicago o'hare has 325 canceled already. just kind of getting ahead of the storm. in terms of the snowfall forecast, very heavy snow and new advisories issued. blizzard warnings from coastal man as well as nassau county on long island. -- we have blizzard warning's from coastal new hampshire and maine. treacherous. to be governor cuomo already saying parts of the long island expressway will be closed at mid-eye tonight because of it.

certainly looking at very dangerous conditions tonight in the worst of the storm is yet to come. >> get home safely. new year and talking about the new world order with ibm. ♪ >

>> who do you go to when you want to see the future? a fortune teller down on 6th avenue? the chief innovator of ibm is here joining us now with the five innovations that will change your life, all of our lives, and the next five years. i went to start with education. basically, your research has shown that there will be a bit of a rotation in education to be more tailor-made. is that a good way to describe it? >> if you think about the challenge of a typical and structure faces, this is 35 kids you are of never faced before. how will it show you the

strengths and weaknesses of every child? the classroom learns the child so that over the course of your education it actually says, ok, from day one this kid struggles with this kind of mathematics but has extraordinary reading skills we should be. every year when the kid walks into the room the teacher is perfectly prepared to deal with your strengths and we this is. learnede more, as they they can address any issues that crop up. >> how would it change in the middle of the year? know what to expect. they get a folder from the previous year's teacher. how would you adapt in the middle of the year? continuouslyns is fed back. you work from electronic media. you are presenting materials on one side and you work electronically on the other and you literally in real time can see they are struggling with a concept so you walk to their desk and say, i see you are having difficulty.

here's the solution. as opposed to trying to figure out where there are struggling and that assumes they asked. >> how does this measure things that are not sort of able to be calibrated in written form? social skills, verbal skills, that sort of hang? >> it will not be all encompassing. it cannot be. in terms of simply interacting with facts and the ability to read, translate, and act upon them, you can learn there is a mild case of dyslexia simply by realizing the kind of disconnect that are occurring. the teacher is overloaded. they have large classes and it's a struggle. you want to give them the tools. you don't replace them anyway. you enhance their effectiveness. >> i want to move on to the retail world. this is perhaps surprising. local will be it online. explain. >> you want to buy a camera.

everything you would plug in here to an slr. it you want the tactile experience but you also want the shopping.e of online imagine opting in so it identifies you and you agreed to let the use the data and it knows you've been looking at these cameras. the ones you're interested hin are here, here. if you really like it, they hand you the one you like. that will be the convergence. you are seeing that with apple. >> even something as simple as purchasing food. if you are allergic, you walk in

the store and you really don't want that because you are .llergic against milk >> extreme "minority report." >> you are right. we will get to that. >> let's talk about healthcare. it's already starting to happen, the whole sequencing of dna. you think there'll be a whole expansion. crexendo think about the , this physician had leukemia and none of the conventional treatments worked. basically the sequenced his genome and they found the difference between the healthy cells and the ones that were cancerous was an imperfection in dna but much more similar to what you see in kidney cancer. they treated him with medicine appropriate for kidney cancer and he's in full remission. a kind of a breakthrough is amazing what you are doing treatments based on averages as opposed to individualized. >> why did the fda shut down the company trying to going that

direction? >> do you have the information play active kind of there's a challenge in the whole point of big data getting it up in a form we can use it is to get accurate associations between a dna reading and public interfacing. cities. talk about this big city, how are they going to change in the next five years. place but theyul should cater to the resident and not the other way around. during rush hour, you walk in and a train shows up and it's packed like sardines. there's another 130 seconds behind it and it's empty. imagine that if you opt in and say i was not let you know who i am but let you know i'm here, it willa rush of people and i

accelerate the first train and bring another right behind it so we don't get this overload. >> what about those people holding the doors? >> they will always do that. >> in fairness to new york city subways, they do tell you the train will be there in two minutes. >> they are getting better. let's get to security and a digital guardian. there are more and more of this. we were just talking about the add.hot -- snapchat >> all of the things i have discussed, these are running analytics and bringing the costs down. instead of worrying about protecting my computer or my cell phone, what if you

protected you? you have a digital guardian really adept at electronics that watched the entire world on your behalf. stuff start showing up and you did not see a direct correlation between what happens. >> what happened the? is that a device, a company? >> it will be running very broadly echoes from virtually everything. that will come out of some other major security group or out of a startup. >> your credit card company already does a limited form of that. >> mcafee was founded, what, 12 years ago? beinght now instead of the point solution it will protect you in the literal sense of the world and you will have an overseer. you have to. you are giving up so much information and you want something protect in you.

>> you have a very cool job. this is what you do every day, thinking about these big issues. >> i like it. chiefnie meyerson, ibm innovation officer. fire"nger games catching broke records. how much will the sequel make an 2014? we will break down the box office year ahead coming up in the scene. the coolest ride ever. this is one of the stories in today's weird wall street. julie hyman down by will be right back. rightie and i will be back. ♪

>> time now for the scene where we bring in the business behind media and pop wiltshire. which movies will win and that is thanks to tweeting, liking, and pinning. there's a company that puts us all together. they are already talking about 2014 and the hits. how do you aggregate the data? >> they have a system that plugs into the full twitter firehose to a blog aggregator and we listen to all things entertainment. weadd up all the scores and figure out what movies people are talking about. >> how accurate has the strategy been in the past, these algorithms?

>> weedy lawn looks ahead we dog at the next 12 -- long looks ahead looking at the next 12, 18, 24 months. wereyear at this time, we talking about "iron man 3," " " hunger games," catching fire." >> one will be a continued but also this team girl power thing. gent" is another one of these franchises. and i have trailer to say it looks pretty cool. you have the next "hunger games" installment and you have another "default in are stars." very good. to be it's hard when you look at the teen girl fan base because they are so loud and when you compare

these to the first two installments of hundred games as films, they look to be very strong. fault and" and " the are stars" both star shailene woodley and are getting a lot of buzz. 2." the amazing spiderman i felel likeit it should be 22. what are they saying about some of the other kind of comic book stuff? >> what's really getting people foxx as theamie villain. aey were excited about seeing

new stars of his magnitude joining the series. we are also seeing a lot of conversation for the next marvel film "captain america -- winter soldier." the avengers assemble down the loan get a lot of attention. assembled ands, alone, get a lot of attention. >> what stands out is how little daring there is. girlave the team phenomenon, sequels, a remake in "godzilla." >> comic book stuff. "21our second edition of jump street" and "need for speed." there's not a lot of uniqueness on this list.

>> those of the things people will be excited about. maybe that are originally and get people excited like this year "wolf of wall street" and " closer toustle release. no one would have been talking about this time last year. no one knew it even existed outside of los angeles. franchises, these they are a lot of what is driving the box office today. them, no are aware of of them, are excited to talk about the videos online. >> before we let you go, reality shows. what are people talking about? >> coming up for the spring, the l" with new judges sty" as a dyna political conversation as well as entertainment and also "the

bachelor" getting people talking in reality tv. >> thanks for joining us, ben carlson. iology. pimm fox you're going to be .aking over at 5:00 pre-k's a bumpy road home for american commuters as everyone braces for a northeastern snow in grounding over 1000 flights. i will speak to the chief executive of one of the nation's top manufacturers of portable generators. moving to muddy conditions, talking to a professional bull oner champion about hanging when a 1500 pound bull blocks. all of that and next on "taking stock." with trish, street"

adam, julie, carol is next. ♪

>> time for weird wall street where bizarre is business as usual. >> the canadian company wanted to show off the battery ability to stand up to cold so it straight day 2005 gmc silverado so they got them to build a body and cap for the truck made out of 11,000 pounds of ice and they got it to run for a mild and they submitted it to the guinness book of world records to take the first self-propelled ice truck. if you wanted to take a spin, it's actually melted. >> that's incredible. tracks it's pretty cool. an audit exercise but why not? -- an odd exercies. >> the battery held the charge

and i guess that was the point. here is some of you kept up her own new year's resolution. a woman named a beautiful existence -- yes, truly her name -- vowed she would eat nothing but starbucks food for a full year and she made it. the 40-year-old mother of two a nothing but prepackaged salads, pastries from starbucks and it cost her about $500 per month which is less than i would have guessed. the greatest challenge is reintroducing non-starbucks fare to her diet like fried food. would you do it? >> no,. -- no. no normal person would. >> my first reaction that it was like morgan spurlock. >> why? i don't understand. food is terrible. >> i like their salads. but i make better coffee at my desk.

we will see you tomorrow. ♪

the hourching 56 past and meaning bloomberg television is "on the markets." i'm julie hyman. let's look at where markets closed the first trading day of 2014. it told back for the three major zero .8%.ll around the s&p 500 closed at a record the last day of 2013 as did the dow. posing at a 13-year high so all major averages polling backend this is the first time in five years we have seen a down day for the first trading day of the year. was notguest says he surprised by today's selloff. the picture may have gotten too

rosie at the end of the year and this could either start of a volatile trading environment as we wait a resolution of uncertainty in washington. joining me today for the volatility report, michael palmer, from the cboe. have been saying that stocks have gotten ahead of themselves. why do you think stocks may be changing as we are formally in the new year? >> we had a huge december, a huge and to 2013 with this moderate bond by an program and tapering being announced. it did not scare the market. we had a major rally. the dead deal -- excuse me, the budget deal was in place. the year.uge end of recessive strengthening and volatility towards the end of the month. coming in, buying options going into january. it really was not all that

surprising. >> what happens now in terms of volatility? what are you seeing in terms of expectations being priced in? we are moving011, and reacting to certain dates, specifically the debt ceiling date. we have a date out there, february 7. it could probably be extended and we are going to see a choppy market or people reacting to congress when they come back next week. a bigiling is going to be deal and they really react to that. >> what about the jobs report coming out next friday? what kind of activity do you think we will see surrounding that? report coming out would be a big deal because the percentage went down, lower unemployment, we would say we have a higher likelihood of tapering and that's not the case anymore. moderate tapering programs are already in place.

i don't think the market really reacts to this unemployment number like it once did hear all eyes are on the debt ceiling in early to mid february. >> i spoke to a trader earlier in the week you said he thinks we are in this sort of cycle for the vix where we will remain relatively range bound and subdued. what's your take? >> what's insurance anyways? range andd flows in a it's expensive when you really needed. that is how the vix will react all the time. they will have a rather moderate range most of the time. this ultimately is the cost of insurance for a portfolio. that is what the vix, in some sense, is. we will be range bound until we have a big event that really .icks the vix into a tizzy >> that will be good for you

guys. michael palmer, we look forward to that tizzy. for "on the markets," i'm julie hyman. ♪

>> this is "taking stock" for thursday, january second, 2013. it is 2013. so far, off to a bumpy start. the s&p 500 off nearly two percent. there is also a major snowstorm headed to the northeast. it is set to arrive in new york city along the east coast. we will give you the latest on what you need to know about the i will speak to the professional bull riders chief executive.