>> welcome to "lunch money."." ng a look at the menu, wall street, leon cooperman speaks, tells us where his money is going. a bloomberg exclusive. in motors? are friendly and cheap.ars that and the gop comes out firing against some new numbers showing the impact on jobs growth. fashion? hot topic expands into the u.s., we will speak to the bl sponaire owner who reinvented the opera. the met tries to an just tries to attract the younger set.

kicking it off with one of the biggest companies in the umpanie kicking the habit. >> cvs caremark saying thaemark will stop selling tobacco products by october 1. very interesting, they say they will stop selling tobacco products. a big change. the 7600 stores that they operate in the u.s. are goingin. their largest provider of prescription drugs says thon this will cut anthis revenue by $2 billion.lion they are losing sales not only from cigarettes, but from people who might have been stopping in and buying other things. this is as they try to become more of a health care company. >> every day we are helping millions of patients manage chronic conditions, like high blood pressure, high cholesterol, and diabetero all of these conditiofs arsemade worse by smoking. tobacco products have no place in a setting where health care

is delivered. when we ked ourselves where wersel expect to be in the future a inh health care company, it became clear that removing tobacco products from our stores is the right thing to do.to d >> president obama thinks it is the right thing to do as well. he put out a statement saying that as one of the largest retailers in americailthey set a good example and that the decision will help to advance the administration's attempts to reduce tobacco related deaths and bring down health care costs that is from an ex-smoker. walgreens said in a statement that they have been evaluating the product category for some time and the balance thatance customers expect from them withh ongoing health needs as well. they will continue to evaluate the choice of products while helping to educahe and providing smoking cessation products andpd ternatives that help to reduce the demand for tobacco products.

this new change will be part of the big change at cvs. you can see the new no smokingng tgo on their websgo oand on the twitter page. the question is, will this branding move help them to make y? she was the ceo of playboy, what does she have to say about it? >> cvs and walgreens have beene e ying to reinvent what it means to be a drugstore. becoming a part of peoples daily health needs. the board seems to feel that is was a strong way to reinforce that healthy living brand. i think it will put pressure on walgreens to decide whether thed are going to folloe goit. i think there is an interesting question that comes from when you substitute judgment tir your consumers judgment, where do you go after have started down that slippery slope? >> do you stop sel dng candy? soda?

li s ople do not likenot li that they sell condomsher lottery tickets and i wonder if they have thought through the implications othis decision. what happens when e-cigarettes become more dominant? it is a big step. >> cvs may be willing to leave it all behind. they generate about 70% of their sales through prescrs thons thon drugs. leon cooperman hle the right prescription. he has his own outlook. toyota is on track for recordd profits after years of crisis. what is driving the recovery? we will tellou, coming up. and it started with high school kids in the 1970s, now it is 200 feet of snow and ice sculptures. this year they salute statues

that depict winter sport landmark from around the world. just think, that stuff is all si made of snow. ♪

>> this is lunch money," on bloomberg television. we are also streaming live on bloomb com and on yourand tablet. leon cooperman knows how to make money, one of the best. it is not any one trade that has made him famous, but his ability to consistently bring returns year after year. it earned him a spot on the bloomberg market magazine. get this 22%. that was just through october. he talked to our "market makers" team this morning. >> it creates opportunity. i think that the correction was

to be expected and healthy.. the reason they could be expected was there were too many players on the same side. you folks have an exhibit on your terminal where you solicit and display the opinions of, i think, about 21 different strategists. it was interesting, at the endtg of the year 20 of them had the market up for the year, one of them was down. the vast majority of people were investing long and stocks, long on japan, short in the yen, and all of a sudden they were not thinking about it at that time, emerging-market issues. we not thinking about some slowdown in the economy. the market took a quick five percent hit. for a number of months i have been arguing -- >> you pointed out that the market is down, and based on what you are saying about strategist outlook, is the stock market going to end the year up or down? >> up.

r a number of months i have been saying that profits are growing very slowly. in a world where corporate profits are growing five percent, six percent, the answer is the multiple that you want to ascribe to the earnings. i have been thinking that a 16 multiple on the s&p beingn reasonable, that is $117 on the index this year. i do not want to sound like a statistician, but we all are, a little bit. if you take that multiple, thatl is 1872. tast year the market ended at 1848. there was not a lot of room for appreciation if the 16 multiple was right. certainly, one could not make an argument that it was dramatically undervalued. i made the argument that it was. after the end of this year, things look ok for the economy. going into 2015 you could market up by six percent for the

improvement on profits that one might anticipate next year, getting you around 1960, very close to the consensus number of 1950. >> the problem is that not everybody -- you are right, everyone is at times a statistician, and sometimes people are reasonable, but they are not always as reasonable and rational as you are.on why do you believe, why are you certain -- why is this correction not going to lead to a bear market motivated by fear and panic? >> number one, one is not certain about anything in life. it would be dangerous to think that you know all the answers. but i would say that traditionally there are several phenomenon in place when you ge to a bear market. i would say i n my view, i uld get bearish as opposed to being modest. i have been sai that for hs.hs

i am no raging bull, but i would get negative if i thought that a recession was coming and saw idence of that. the reality is that all the economic data supports continued economic growth, including today's adp number. what is the big deal? you can get a big number on friday around employment and ita is just change. the first thing i would need to get bearish would be the expectation of the recessionary forecast. d say that readingsay that r economics, speaking to the companies, the chance for recession is probably one out ol babl five percent? the second thing, and i said is a month ago, but now we are on er side of the equation, a quick 10% to 15% from the year-end level on a zone of valuation. that is not happening. quite the contrary, we are creating opportunity in the , rk

the four thing would be growth under one percent or less, threatening the outlook of corporate rockets, or ternatively grte over thregr and a ercent, which would bring the fed into play. but the kenny steel computation, most bear markets are induced by recessions. the case for a recession does not seem to be a credible case. >> mr. cooperman, what are you buying? >> aig is generating a fair amount of excess capital, nine times the earning, we think it grows in line with the market with book value wi the 60's. we think that they will do the job we think they can do on book value with markevalue e crossing. the stock is now 46, 47, discount to book value. citigroup has a nice correction trading under a times, eight

percent grower, sallie maesallie buying back stock, yielding three percent, splitting up into two companies shortly, which we think will create great value as it could be a prime takeover candidate. paying eight times earnings, again, on half the market. we like some of the energy companies. we have been high on sandwich energy. people are waiting around for an hostile people to show up for these companies. are these investors to come who do not value the asset they sits where we consume catalysts for change. san e is a name where we have seen the investors getting involved.. >> that is my point.hat tpg did a lot of analysis on sand ridge the analysis is posted on their website. we believe that that is posted between seven and 12. we think that they owned the stock before they showed up. the assets were about 10. the stock watrading around six.

we see that th wonee tir proxy fight and changed ght ewged management, which is shareholder friendly, doing the right thingh , cutting costs, hydratingng drilling activity. they have a big meeting on march 4 they will lay out their story. >> in general, as a matter of principle, is it a good idea to anticipate in soan cases or perhaps follow activists? think about carl icahn with ebay or apple. do you like the positions that he takes? do you want to be there with carl? >> i am one of his losers this year. he got involved in transocean. we have both been wrong. he is a very bright man. we do our independent work. we listen to what he has to say. we have our own view.

we owned ebay, actually, eefore , we agreed with him,th that they should create a much lower cost around car col for the higher growth vehicles in the company. but i take the activists. we are quiet activists. we tell companies what we think, we advocate our positions in our views. let it he compensated to do the heavy lifting and profit from good work. we do not buy into underperforming companies with the idea of banging on them. we are not patsies. we are well known for expressing our views intelligently. if we feel they are not going to listen, l basically move on. >> you can watch the full interview on our website, bloomberg.com/tv. you can find it on your tablet. the app is free. next, we are talking awe a trucks. ford, toyota, tesla. whoa, a tesla truck?

we will address those rumors. and what is next for the top shop company billionaire owner? check out how the boone county elementa school. ♪

>> motors? what a feeling. ford is final in the quarter fr last year. there's a japanese carmaker hoping to hit ¥1.9 trillion,

toyota. one of the top executives talked about global growth yesterday re tokyo. >> we see the global auto industry m on a modernon recovery trend, but we need to carefull tch how much the recent volatility in the market would impact the real economy in d.e wo we are sti ermined to focus on our midterm to long-term growth strategy.th >> what about the f 150? the world's number one pick up? >> we have seen pieces of it. >> they showed something, and motor trend did a front page cover story on the pr stic model of a car that they showed in detroit that they are never going to make. toyota shows stuff that they are never going to make. they do not have the cajones to bring it out, so to speak.

>> here is why, the ceo, it is his name on the car. he can do what he wants. es to race. a $600,000 car? he said he wanted to make more interesting cars. what is the point of building something boring all the time. >> is a pickup truck that interesting? i do not get the appeal. >> have you met matt miller? >> how could they make these bunkers trucks? it is a nster with a 6.2 liter engine, but they sell them out? they cannot keep them on the lot? there are 10 other guys out there who find it amazingly attractive. >> one out of every 10 people go to the desert, nine out of 10 go to the grocery store, but they look awesome. >> there you go. >> i was in this random place in texas driving the truck and they thought it was a concept car.

it is the same reactiothi got driving around the streets in a lamborghini. >> fun to also think aboutnk abo whether tesla miwhetintroduce a truck. >> we were quoting him in an article, he said somethi he sae his sales guy went to detroit and said that they were not building a truck, where did you get that crazy idea? it came from elon muame fr then he said he just says crazy stuff sometimes. >> that is funny, i was in california over the holiday, ana they said that he was known for saying random things. >> he just gave the forecast? >> that is what makes them awesome. >> admitted. do not tell anyone, but he is kind of cool. >> ok, elon musk is cool, but so is the competition. here's matt with a look at the other electric cars coming to market.

♪ >> when you think about sexy, eco-friendly transportation, you probably think about the tesla. why not? it is a gorgeous car.. but it costs about $100,000. go have alternatives that go foa about half that price. this fiat costs one third the of a tesla and comes with an absolutely gorgeous driver. the bmw here, the seats are dye with olive leaves and it is 95% recyclable. this is a technology that toyota is betting will mock the tesla electr is out of theout water is all that this thing produces. it is a hydrogen fuel-cell vehicle. the only emissions are water.

ecis entire car is expected to come in at $50,000. that is the amount of money that tesla ds on the battery packs al e. this plug-in hybrid only takes two and a half hours to charge. with superchargers. if none of those is good enough for you in the price tag is not the problem, we have another option. the bmw i8. 131 horsepower electric moower getting 95 miles per gallon ilep -- it goes zero to 60 in four and a half seconds. it is more aggressive in the design stance. >> look at these doors. >> all right, who needs a combustion engine? we have washington.

gument in the fight over amacare. madison square garden getting a makeover. we get an exclusive look inside. that is later. ♪ >> bloomberg tv is on the .a let's take a look at where stocks stand right now. it has been a bouncy session and remains so. the dow is higher by just eight points but the s&p and the nasdaq main in the red. mixed economic data this morning on the downside, prthe e payroll reports coming in weaker than estimated. on the other hand, we had the ism service report coming in com better than estimated. genetics research, surging after the purchasing of crescendo bioscience. this is subject to regulatory approval and set to close bye by

july. the company reported second-ond- quarter earnings that the analyst estimates and raised their forecast. we will have more on the markets in 30 minutes. ♪

>> this is "lunch money," on bloomberg television. we are also streaming live on your tablet and your smart phone. i am adam johnson. moving pictures, the video is the story. the schools are closed, planes are grounded in the northeast. a second storm in as many days slams into the region. guess what? there is more to come this weekend. another storm is forecast for sunday. ireland?el heavy ra is the proble is th the river lee, large portions have overflowed as it werf into stores. look at that, shop owners and

residents are bracing forac another storm this week. the bassist for the red hot chili peppers admits that their instruments were not plugged in during the halftime appearance.e thnfl was reportednf worried about sound isabound asked theed band to pre-record everything. the vocals were sung live. l the nation came tht with itst wi eport on the new health care law known as obamacare. unfortunately for democrats, it is not pretty. the report says that the new health car americans to work fewer hours, enough to be the equivalent of 2 million fewer jobs in 2017, also impacting gdp. >> our more detailed analysis of the effects of the affordable care act on the incentive of being in the lbeinorce, working hours, it reduces urs, estimate of gdp over the second

half of the 10 year window. it is one of a large number of factors that have led to our downward revisn on gdp. >> republicans wasted no time touting big government and small employment. >> you are saying that becausegu of government policies, asenhe welfare state expands, the incentive to work declines? >> no matter how you calculate this number or how the administratiries to explain it itut 2.5 times as big as the anticipated numbe was when this was look at the first time. >> i wonder what the cost- benefit ratio is to all of this disruption fhe providers of health care and consumers of health care when, at the end of able to estimate is we havee bhb reduced the number of unemployed from 45 million to 3 million,

-- 30 million, but at what cost? >> for all the media who shot that somehow the affordable carl act was going to hurt jobs? i just want to be very clear that the director of the congressional budget office says that for this year and the next couple of years, it will help to reduce unemployment. >> curious. in theory, obamacare will allow people to choose to work less because they can get health insurance regardless. >> i have no doubt that, if for example, we got rid of social security medicare, many m- m- year-olds would choose to work more to avoid, potentially, starving or to give themselves an opportunity to get health care. not think that anyone would say that that was a compellings argument to eliminate social medicare.are.

>> our s ior economist here at bloomberg government says that it is not just about incentives, w the subsidy is ructured. >> there is a huge drop-off at 250% of the poverty level.rt at that point, the health care y drops dramatically. people are much more on the hook for what they have to pay in health care coverage. because there is this is continuity in the health care structure of the subsidy, youhe see a bit of a perversion or distortion in the amount of labor supply. this is true of all subsidies that are structured this way, food stamps or medicare. >> should we not be surprised by this number?r? this is all part of the point, really. >> it is not surprisinis n our health-ce analyst makes this important note, that thise, was something that came out ofou the original legislation. the original legislation called for a much graduated subsidy decrease as income rises but

there was a republican pushback that compelled the legislation to make the drop-off much more severe at the threshold. in some ways, this is part of i the republican influence on obamacare. but there is a second thing, stephanie, that came out of the report.. cbo said that there was no compelling evidence elat there has been an increase in part- jobs. jobs. part, again, of the republican opposition ic obamacare, that companies would be incentivid to create more part-time jobs than -tll-time jobs. right now that does not look like it is happening. >> congress is not just arguing about obamacare, but the nation's debt limit is again going to expire on friday. talks are ongoing. expect to see more top shops in the u.s., what about the expansion? coming up. why is this designer anti-logo? coming up. ♪

>> today in fashion?od we will look at br will hat are expand ex like top s liin top fifth avue philip green spoke with reencip n we put our flag down in the middle of fithe avenue, there is no leaving.leaving. it is a commitment. we are going to get it right. all of our flaall stores, we have tried to do something unique. this will probably be slightly more difficult, ther diffi dif certain things you are not allowed to do. you move the lightbulb, theybu want to come and see you. >> and yet the flagship for him brick and mortar is where you want to be? >> i believe that you neie flagship's and it will build our online business as well. >> a showc e.

>> half the bu>> half tourists, half is local. fifth avenue, i assume, we haves four plates, for lots of 10,000 square feet. so, listen, just half the size of this building.. >> which is huge. are odd streets where you wanteo to be on that hundred meters. es time.ime. >> this is why it took you over two years to find the perfect spot? >> every time we go to negotiation to fned the premises, we have different words we use.. the two countries, dividcountra common language. we are in the room of a different location with ation w landlord, said you are just inflexible.

he touches his toes and says, e i am not. [laughter] that is what it is like to find a shop in new york. >> bonob nched the women's year line yesterday. here is how they plan to go after the ladies. >> the idea is all year round. it is for essential pieces that you can wear.wear. value over versatility. the genes with phenomenal 30% stretch. we are hearing amazing things from the woman wearing it.t. related to our pocket swea our, it is one of those essential pieces in your wardrobe. >> the one challenging thing, and i will tell you this, about jeans, is that you need to try them on. you might try on 50 pairs before you find the one that really works, that really fits. how does a woman shodoes afor jeans with you manage that? >> our whole company is built on a radical idea, which is that you can build trust and fit with online at the core. when we starwhenbos, people said that there was no way. we built a customer service tea

of ninjas. >> what is ninja?wh >> a great, energetic, and emphatic service if you call or write that in.writ moreover, we have these great to turn policies that convince people they can take a chance on this. were finding the world hasng changed, with e-marketing moving the margins to the coar.coar. >> whether it is trish buying a more air brand or meet going to bonobos, and im not sure of my size, you will send me three or four to try on and an easy way to return it? >> you got it. and we have now of course extended off-line. we have eight of these shops, dasically th are personath fitting rooms where you can try things on and they will ship it to you. something like that could be coming, but we want to earn the right to the brand.. we strongly believe we can do that online. >> here is a question.

does expansion risk thepaoss the brand identity? here is hen allen of steven allen.alle >> it is always about doing it as good as you possibly can. anything we do, anyts only to get better. now we have a whole design team, we are able to do so much more, and frankly i think a lot better. >> one thing is interesting about tom's question, you have chosen to forgo a logo.. .why is that?hat? >> i would never want to wear that. when i was a kid i would cut off the alligators. i liked the idea of it. the idea of refinement. buying the best, having the best, but a lot of times thehe -- a lot of times it was thats the quality was good. we make our shirts right here in

new york. everything that we can make here, we t o make here. >> how long does a look last? do you start looking ahead by five years? do you say that i am in ay t but i may not be then? >> i think in general we do men's and women's equally's we try not to make anything thah we f of the moment because b its trendy or whatever. we try to things that you are going to buy or wear and people say, that is a beautiful blazer or beautiful shirt. >> that does not just go for fashion. the metropolitan opera wants toe next generation to listen.list two miles down?down madison square garden, also trying to attract people. we will go behind the scenes on the $1 billion makeover. we will be right back. ♪

>> in pop, the industry trying to hit a high note. the renee fleming super bowl performance might actually help. the man at the helm of the new york metropolitan opera told trish regan how he is trying to win over the next generation.. >> we have to make it elling, first of allngfirs and we do not expect every young person to jump on their bicycle and ride r to td opera house, but the fact of the matter is that if people give opera ance and we do oance and properly, presenting these brave microphones in front of anion or audience of 3800 people, p hundreds of thousands of more, millions with radio, it is an incredibly exciting artform when it comes together. it has everything. music, theater, scenery. we are bringing the most dynamic people in the worlople the stage. the problem with that, the challenge, is that it is long.

operas typically are three hours long. they are iligey areuages. n succeed the way suat a great foreign films succeeig, we have to have an audience tha ais willing to invest a bit intellectually. but there are great rewards. >> he has competition about 30 blocks away, madison squway, mon garden undergoing a transformation. gave us an exclusivesive . this cost $1 billion. >> the rolling stones, elton john, sinatra, fraser, rangers, g xt, they all have one thing in common -- the world's most famous arena. madison square garden has been the place for entertainers since 1879. >> the garden is courageous. -- for the ages. the garden is forever. it is a different level of quality, service, and finish. lt in 1968, today it stands as a new york icon with a rich history.

with new, splashy venues, spng built around the country, it was in dire need of a renovation or transformation, as the ceo describes it. >> the biggest challenge was getting it done while we still played. everywhere else, you move somewhere, ou close the the bu own.n. we had three smers worth of being shut down.sh we worked until 3 p.m. every single day. the logistics of making that of getting done on time? omenal. >> you notice the difference as soon as you walk in. an open entrance way, nearly twice the size. two 600 foot screens on the ceiling. wi-fi throughout. two sky bridges suspended over the court. a massive multimedia scoreboard. it took 2.6 million hours of labor to compllathe transformation and cost $1

billion. ratner is banking on more than just ticket sajust recoup the costs. >> it is just a matter of raing prices. we created an asset where we had a marketing partner who found it desirable. this is inventory that did not exist before. inventory thinveot exist before. we were able twork collaboratively willaboratans to give people what the pwant. >> how is it that the gardit is able to pack the people into these games, even when you do not win? that always amazes me. >> it is an overall experience,i as we walk around, you see the billion-dollar investment. you see what it is like. we can stop here, yoan sok at the garden, you look at the food

r you look at the our programs throughout. its an experience, an adventure to come to the garden. that is what we try to do.y to it is a legendary icon. when people come here, they need to feel that they have experienced maexperiuare gard >> the building completed its transfor on in october.ber. the company is still running up the score. >> next on their schedule? minster dog show starts on monday. myster today, what happenswhat h when you combine a coke can with 2000 degree lava2000 look at this.hi ♪

>> 56 minutes past the hour, bloomberg television is on the markets. let's take a look at what movers we are watching. news coming out after the bell. coca cola is tang a 10% a stake in green mountain coffee. green mountain is developing a

keurigkeurig cold cold to make s both, and in it -- carboned and not. i was listening to the call with the two companies. n mountain sayn mountay will willbe coming out with other ss of brands. coke paid about one point two $5 billion for at steakn n twitter comintt with its first earnings report. investors so far are not liking what they are seeing. the nbers, the company earned moneyey where it was not expectd to by analysts. those coming ahead of estimates. taking deeper, liking what they seehat includg the growth in the users of twitter. all of this coming outn what was an otherwise not very activo day for the s&p 500. closedlightly lower withghixed ghixeconomic data. as we take a step back, there is debate about the emerging markets. what effect iswh it going to happen the u.s. stocks?

joining me with thoughts is istroy, aa partner and senior portfolio manager at a glol lternative vestment firm. irm.thanks for coming. there has been this big debate. we heard from leon cooperman today. they were saying, em is a concern but u.s. st are still a good place to the. >> we would echo that sentiment. rising u.s. tides -- emergi markets have a lot of fundamental issues and worst technical ones. at the end of the day, equities have the best reward of any asset class. if one is really the isn't it? there is not unanimity on that at some peoplesome peo think that p growth is ing to be as asbust as the imf is forecastin this year. eawhe do you stand on that? we think this is a three

hrpercent to 3.5% growth year. perhaps it is because of inventory overstocking in the third and fourth quarters. think the u.s. is on a great growth trajectory. the fundamentals have improved significantly at the consumer t. corporate america -- people tend to forget that the fiscal austerity of last year, the majority is going away. together,he two 2.7% plus the austerity that is 323 -- 3%, you are in % 3.5% easily. .eqty seem like the best aspect class going forward. >> i want to get to -- what is your best idea right now given the optimistic outlook? the wide range for equities could be -10 to up 20.

in the hedge fund universe, we think the best sttegy is equity as it was last year. we don't think the strategy needs markets to go up to make money. there is ample and in a activity, share buybacks, etc. we are pretty confident if markets are flat editors can make mid-to high single digits. if we get the more optimistic outcome -- >> it could be even better. >> more like five percent to 15%. >> he have to leave it there. thank you so much for coming in. i r on the market, i am julie hyman. ♪y . .