>> from bloomberg world headquarters in new york, i am mark crumpton. this is "bottom line." big deal in retail, joseph a bank agrees to buy eddie bauer. we will examine how the weather is the fact in the u.s. economy. and is the commercial use of drones legal? to our viewers in the united states and those of you joining us, welcome, we have full coverage of the stories making headlines today.

megan hughes looks at how the faa is to -- dealing with drone mania. on's begin with peter cook the marijuana industry and new guidelines from the department of justice. good afternoon. >> good afternoon. this is another step forward to legalize marijuana use in the united states, specifically in the state of colorado and washington, which have allowed for the recreational use of marijuana. the federal government, the justice department and the treasury department possible euro of crimes enforcement are releasing guidelines to banks in those states that would allow actually provide services to marijuana businesses, to marijuana customers. federal government still views marijuana as an illegal substance, treated that way although these laws have changed

and those businesses in colorado, the only place where you can actually buy marijuana, for recreational use, those businesses have not been able to bank with anyone. they have been cash only business is because the federal banking laws against them. this allows banks to move forward and actually signed them up as customers. the guidance is specific as to what they need to do. do thorough due diligence on the customers. they need to know exactly who it is they are doing business with and they need to continue filing suspicious activity reports involving any transaction involving marijuana. that is significant. everything they do must be reported to the federal government and the banks need to red flag those customers the banks suspect may be doing above and beyond what is allowed under the law in colorado. it puts a responsibility on the

banks, but does allow them to move forward the business. there is a statement from the director of the network with the government on this move, our guidance with clarity on what they must do to provide services to marijuana businesses and what reporting will assist law enforcement. int is jessica calvery washington. this is a big move by the federal government and what that has been called for in colorado and in washington because these businesses did not know where to put all of the cash and that was posing problems in those states. from thes the news federal government, another step forward for the marijuana industry. follow-up tos is a what the attorney general eric holder said last week, correct? >> that is right. they would be providing this

guidance and they initially provided guidance on what the government would do in august from a criminal standpoint is saying we are going to enforce the federal laws of the worst offenders in these states to move forward on their own. this banking guidance is a subset of that. it is another challenge, trying to harmonize the federal and state laws. it is a step forward for these industries and something the governor of colorado and washington state had asked the government for. the question is if you are a big, do you take this risk and engaged in this business? it is not clear this guidance will be enough to get some banks into this business. coloradoe head of the bankers association raise questions about how far the guidance would go. would it be sufficient to provide a safe harbor for banks to engage in this and not worry the government was looking in their books and over their backs. >> you mentioned safe harbor, one of the concerns is that banks do not want to be, in a

sense, stained by dealing with this money. is that correct? >> well, that is a question that will have to be answered by the banks. some financial institutions see this business, no question it is a growth business, will see this business as an opportunity. some banks will worry about their reputation. for them.much risk again, the two states right now that allow for the recreational use, 18 additional states that allow the use of marijuana for medicinal purposes. this also affects them as well. and than just colorado washington, but those are the states directly affected where this is an issue right now. a lot of those businesses were wondering what to do with their cash at the end of the day. some of them, whether it was mattresses, it was a risk because there was a lot of cash

and no place to put it. >> peter cook with breaking news. now to our other story on this friday, jos. a. bank makes a deal, but not with men's wearhouse. it is buying eddie bauer from private equity firm golden gate capital for $825 million in cash and stock. for more, let's bring in cristina alesci. what do investors think about this deal and what is it a surprise? surprise because we knew eddie bauer was talking to banks. the announcement did catch investors off guard. we saw a little bit of a confused reaction from them. the natural combination would be between men's wearhouse and jos. a bank, but there has been battle between those companies as to who would be the actual buyer, the aggressor, the management team. >> battle is an understatement. they were going at it. >> absolutely. each one of these companies, men's wearhouse and bank wants

that takesne company over the other. so what date is trying to do, look, it is the smaller company. men's wearhouse is bigger. they figure they can take eddie bauer on and do a combination, it makes itself eger and in that way it protects itself from any hostile move from men's wearhouse. today we saw investors confused by all of this. maybe the activist investors in wearhouseand men's thought, look, this is a sweetheart deal. for are buying eddie bauer a hefty price, but in exchange, they get some protection from the aggressor. >> does it add value? is the board being responsible? we are would say, yes, being responsible because we think we can get a bigger price

for men's wearhouse and maybe this is just a negotiating position to do that. when you look at the release today, and you read the conditions of the eddie bauer deal, it says if jos. a. bank gets a better deal from another company, men's wearhouse, or it could back out of the deal with eddie bauer. so it leaves the door open for a possible merger between bank and wearhouse. the board would say we are piecing short-term investors by buyback. if you want your money, take it and go home. in the meantime, we are going to work on growing the business. from a synergy standpoint, many the deal makes sense, but if we combine with eddie bauer, you have a stronger growth story. >> seems like a lot of about. what happens next? out some notesut saying they think men's wearhouse should raise their bid for bank and have them abandon the deal with eddie bauer.

the stock is reacting in a way that is unclear right now. what i can tell you, there is an incentive for men's wearhouse to go ahead and raise its bid to rid >> cristina alesci, with that big deal between jos. a. bank and eddie bauer. winter weather has been putting a chill on the u.s. economy. we will look at the economic impact of the severe weather when "bottom line" continues in just a moment. ♪

>> welcome back. this is "bottom line," streaming on your tablet and phone and bloomberg.com. the winter storm that slammed the united states is moving out to sea while a second system takes aim at new england. the winter is weighing on the u.s. economy, impacting everything from commodity prices to employment numbers. joins us now from

washington. thank you for your time. welcome to the broadcast. harsh weather, let's talk fed. how difficult is it going to be for policymakers to determine if signs of slowing growth have been caused by the weather or is it more perhaps structural economic weakness? be aat is going to difficult challenge. the weather is so integrated into the economy. my focus for my customers are on the energy sector. some of my colleagues focus on the agriculture sector. in terms of energy, this has been a very impressive winter, one of the coldest since the 2000 winter. it has been really aggressive but you are right, there is a very big challenge to separate the weather out of the numbers. >> we have been fortunate because the winter weather has not had much of an agricultural

impact. the same can't be said of natural gas. it has seen the highest volatility in the market. how concerned are you and talk to me about how consumers have been affect did. -- affected. traders, like you said, the volatility has been incredible. higher than we have seen in several years, it has been a very volatile winter as wherea -- as well as very cold. some of the companies that are hedging their risk have gotten shaken now by the high prices. there will be some ripple effect, and certainly gas prices are higher than they have been several years. revolution,hale gas we had higher gas prices. even though we have seen a strong increase over the past year, we are still not at the levels we were at earlier in the new century. butt had had some effect,

not as bad as it could be. hashat type of strain retirement but on that and how much is that affecting electricity? >> we have seen a lot of trending told the coal replacement. and this winter we have seen electricity in the mid-atlantic down in texas, demand has been record, record consumption. we are also seeing concerns because california has a big drought going on. if they do not get enough hydro supply for the summer, you will see, they will have to rely on natural gas. 29% less natural gas in storage that there was a year ago. what happened and what does that mean for supplies? >> it has been amazing. the winter has been a marathon.

every month since november has coming colder than normal. every month. february is also on track to do it. my clients are concerned about march because we are seeing signs marshes going to be colder than normal. it has been a marathon of natural gas demand. looks like we will have the lowest end of season storage of natural gas since 2003. wehas been a long time since have had supplies down the slope. thank goodness we have shale gas. >> i'm speaking with matt rogers. he is in washington. what has been the most impressive characteristic so far this winter? it is actually a last guy. i talked about alaska cause to lead. every time we get a jet stream spike over alaska, it has driven down these articulate breaks. it has been an impressive pattern in that area. that has driven the polar vortex

down. it has given a lot of outbreaks into the u.s. watching korean trends. do you think there is going to be a thaw? next have a warm upcoming week. you might hit 60 in new york. toortunately, it is going last three days. everyone is going to love it on the eastern seaboard before we get some more colder weather in march. >> you mentioned the drought on the west coast and you talked about the hydro supply. what about gas requirements? the big issue, in the pacific northwest and california. we have seen below normal snowpack and that is going to increase the demand for gas. ift is a big issue because we get natural gas supplies down to record low levels, we have to resupply that for next winter. if you're trying to do that and direct a lot of demand and gas to the west, it is going to

create some issues next year. this is going to be a long-running issue. matt rogers, the founder and president of commodity whether troop. thank you for your time -- of commodity weather group. thank you for your time. we are on the web, your mobile device, and also on apple tv. next, we have the state of the union, but what about the state coffee bean the that is. with a drought pushing prices higher, white coffee beans are light jet fuel. alix steel will explain when "bottom line" continues in a moment. ♪

>> welcome back. this is "bottom line," streaming on your tablet, phone, and bloomberg.com. the coffee market. prices are up on concern the weather will harm the crop this year. 80% of us drink coffee in the u.s., so what does that mean for our caffeine buzz? first off, what is happening to those beings? >> do you drink coffee? >> i do. not as much as to. >> you are hurting demand. it is all your fault. brazil is the largest coffee producer and it is really running into some serious problems right now. there is no rain, it has been dry. that is what is threatening what was supposed to be a record crop. the exporter makes one third of

all of the coffee. where does it go? there are two types of beans, ta, and thenus you have the arabica beans, which eu have at starbucks. that is what brazil has. leaves are getting burned. that is what is driving prices up. >> what about the coffee companies? miller at piper jaffray told me to dollars. she told me that because she says starbucks pays about two dollars all in. that is getting the beans when they want. they pay a little bit extra for that. it depends on how fast the price moves. seene been some that have

some 10% increase per pound. about two cents for us, retail and manufacturing. you can handle two cents. you can do that. come on. the interesting thing, what about next year? list of the coffee guys have sourced their beings. the problem is when they buy it next year. i was talking to ken shea who says they have 1-2 more quarters of protection and that is when the conversation is going to happen about raising prices. it is a competitive industry. starbucks and mcdonald's. he thinks it will be industrywide increase. if you take a look, futures are about 16% below their five-year average. this bike has been extreme but there is still a little bit of leeway. >> if there is one bad crop, what does that mean? >> that is the issue. it is not like corn. can get some serious

damage. if it gets too hot, next year's crop might suffer just as much. what we are also seeing a lot of companies trying to invest in their own resource to combat this volatility. starbucks is one of the ones doing that. it bought a farm in costa rica. they are experimenting with some variations. they invested 3 million from columbia, which is a big producer. it will not be enough for the total beans they need. >> you don't drink coffee? >> i don't. once you jkd cap, it is like, what is the point? so i ended up quitting it. >> coming up, bloomberg is on the markets. newsrooman is in the with the details. i don't know if you drink coffee. >> i do not drink coffee. drinker.a

the markets are getting a jolt today. you look at the three major averages, we are seeing gains across the board. the nasdaq is gaining. we have better than estimated consumer confidence numbers today. we are also looking at the treasury market. we are seeing yields bump up a little bit as the prices come down. the outlook that the federal reserve will continue tapering. we heard from janet yellen earlier this week and she seemed to indicate that indeed the fed was going to continue. in terms of individual movers we are watching, twitter is on the list. jpmorgan announced it has taken a 9.1% stake in the website. the news comes as insiders prepare their first chance to sell shares of twitter tomorrow. the cell ban will be lifted tomorrow, freeing up the 10 million shares that are held by nonexecutive employees. we are also looking at j.m. smucker, lowering its net sales forecast, after third-quarter earnings were light of

estimates. competitive pricing and currency exchange headwinds will lead to those lower earnings numbers. we'll have more on the markets in 30 minutes. more "bottom line" after the break. ♪

>> welcome back to the second half-hour of "bottom line." i am mark crumpton. thanks for staying with us. some of the top stories, president obama heads to a warmer part of the country today to focus on california's drought. the president will be in the fresno area and in the san joaquin valley and he will announce more than $160 million in federal aid, including money in the farm bill for programs that cover the loss of livestock. has declared a state of emergency for the 10th largest economy. secretary of state john kerry met that chinese president to

seek help in deterring north korea's nuclear ambitions. they spoke about restraining assertiveness that its royal ties with neighbors. he said that he had "a very constructive meeting" with ansident xi, saying it was opportunity do dig into the details of some of the north korea challenges. commuters face slick roads again stormafter yet another brought snow and ice to the eastern united states. the latest go-round of bad weather began overnight in some places, just in time to delay tens of thousands of deliveries of valentine's day flowers. snow and rain fell on roads already covered in many parts of the northeastern u.s. with deep puddles and icy patches. that is a look at the top stories at this hour. frank underwood is back. all of washington is watching.

that is right. netflix released a season two of "house of cards" at 3:00 a.m. phil mattingly stayed up, you know you did not. did you really stay up to watch? >> i caught a couple of hours of sleep, mark, but i was awake by 4:00 a.m.. i caught the first episode and let me tell you, i spend the entire day waiting for work to and so i can go home and watch the next 12 episodes. you, there issk word that is why the president does, he likes to binge watch his favorite shows and "house of cards" is among them. >> he said it to the netflix ceo. i know capitol hill staffers are watching. people at the white house are watching. the president, you mentioned his trip to california, meeting with

the king of jordan but he has two free days. the assumption right now is that he plans on watching a lot of tv. the second season of the show is going to be among his watching plans. will he be binge watching all 13 episodes? i'm not sure about that. he will take some men. >> -- take some in. >> how realistic is the show? is this the way the house majority whip operates? for those that are familiar with the political lingo, the whip is the vote counter. shapeps the caucus into to pass legislation. >> that is right. that is who kevin spacey plays in the first season. we went and talked to lawmakers. we wanted to know how realistic it was. take a listen to what they had to say. >> the only unrealistic thing

about the show is that a democrat could represent south carolina. that will never happen. kevin spacey makes it look more exciting than it is. and a lot more devious. it will be interesting to see what they do with the new season. >> he is probably a composite. none of this are that industry and -- that interesting. >> i have not watched it. but i will. >> pretty much everyone is watching. we talked about the president, he said something on twitter, oilers this no weekend. the white house is prepared. one, keep an eye on the late episodes. julianna goldman makes an appearance. keep an eye out. >> this is amazing. she goes to a state dinner, she is making an appearance on "house of cards."

where did we go wrong? >> i don't know. she is the lead. one day, we hope to reach that level. usphil mattingly joining from the white house. he is either a macho man or it is not that cold, but he does not have a coat on. have a good weekend. time for the week ahead, we preview the economic data with joe brusuelas. he joins me on the phone to go through the charts. good to have you on. let's start with regional manufacturing. how much impact will the weather have on the empire report? >> investors should brace themselves for a larger than retailated declines in manufacturing, due to the incremental weather we have seen. what is interesting, as we saw the new order components pointing toward better production coming out of last

year, that has changed so we will have to wait until spring time to get a sense of what is going on. of course we did see industrial production this morning, which youed weakness in areas would expect like mining and motor vehicle production. so it will be another couple of months. chart looks at inflation. we are still below the two percent target. the downward revision we saw, is that going to change? >> what that does is it tells us there is not enough aggregate demand to really pose much of a risk to the outlook. if you look at inflation, it has been very low. in fact, as we saw in the testimony this week, the fed is concerned about continuing to di sinflate. the producer price indexes is going to be changed.

we will now see services and purchases take on a larger role in the report. we will be sensitive in terms of the market to see what that looks like when we get the new report. atand we will get a look january numbers for housing and permits. the starts data, is that going to be affected by the weather? and because of the volatility in the equity market? >> a couple of things, the start is always slow at the end of the year. we do get winter every year. that should have been priced in by investors. we did see permits roll over the past couple of months. volatility,uity that will put a fear into homebuilders that the wealthy will not to buy the second home or they will want to wait to buy a new home. we're going to watch this closely. we talked about this before. this year, the key metric is three percent on long-term

rates. it should rates move up, probably as they will, we will on homebuilder sentiment. >> existing home sales, talk to me about the sales of used homes. are they in recovery? whatterest-rates rise, will that mean for the used home market? thes we have seen from homebuilder and other analysts, we just have not worked off the excess inventory from the bubble. are made inurchases cash. we need to see that changed more of as cash and traditional home buyer. as we did mention a second ago, should long-term rates rise above three percent, that is going to challenge what is going on. we are not providing enough jobs and we're not seeing wages rise

fast enough to support a true recovery in housing. run.d a good two-year this year the housing market will improve, albeit slower. joe brusuelas for joining us on the phone from stamford, connecticut. thank you. coming up, paving the way for commercial drones. authorities debate how best to regulate the unmanned aircraft. megan hughes will join us from washington as we take a look inside the unregulated drone boom. stay with us. "bottom line" continues on this friday in just a moment. ♪

check out the latest edition of bloomberg businessweek, you can read it on

the go with our new app. businesses are not waiting for rules to be issued by the faa. estimates are in the tens of they are and overwhelmingly agency, which is trying to come up with rules for flying them. megan hughes has more on the unregulated drone boom. >> we are airborne. mainstream.ve gone even this character has one. >> they are making a movie without me. >> he borrowed it to spy on his son. real estate is one area where the use is widespread. they shoot video of properties and even interiors, capturing surfers hanging 10, the filmmaker of a filmmaker -- of a gettysburg documentary posted about it. >> it can shoot from a few feet off the ground to 400 feet in

the air. >> shots that may be illegal. the faa does not permit flights for commercial purposes. >> you can't just acquire one of these vehicles and watch it into the airspace. that is not how it works. >> you can. that is how it works. >> the regulation needs to say that. >> we went shopping in maryland to see how easy it is to get one. with the camera, that will be closer to $1500. >> can we try it? all right, we have liftoff. >> he says the camera equipped one is flying off the shelves and the sales are illegal. how they are used is someone else's problem. >> is there anything that is going to show me what the faa says they can and can't do? box will moment, this not tell you about the faa. >> while they're struggling to write guidelines, he is worried about crashes.

in this video, you can see a chopper in the drone's airspace. >> it could bring down the helicopter. >> the faa has not done much to enforce the ban. it sent some 17 notices, but issued just one fine. a beernth, it did order company to stand down after an online video pitched near delivery to ice fishermen in minnesota. megan hughes is live in our washington bureau. what is the timeline for the faa to let businesses to know what they can do? >> it seems to be a moving timeline. for commercial use, they were supposed to have rules a couple of years ago. 2011, and it is now expected in november. that is for limited airspace, up to 400 feet. they are also supposed to have

words for incorporating them into the bigger airspace. along with planes and helicopters. congress erected them to have that by 2015. about thee telling us crew that made the gettysburg documentary. did they have permission? did they have to get it? >> it is a good question. they thought they had gone through all of the hurdles. they got permission to shoot with drones, but the park service and the faa did not communicate. so they thought they had permission and the crew that actually shot some of that has worked on other mainstream, "the wolf of wall street," a honda commercial. some mainstream things we are talking about. the businesses are just doing it. >> what about the drone industry groups? >> their argument, although a lot of businesses are going out

and doing it on their own, they say this is really inhibiting businesses going to a bigger scale and it is inhibiting business in the united states. because they can do a lot of things overseas right now. the sochi olympics, they are shooting a lot of the olympics with drones that they can't do here. basically, they make the case this is one instance of manufacturers actually asking for regulation. >> megan hughes in washington. next, encore. we will be right back. ♪

yout is friday, so we bring encore, a look back at the most notable new stories on "bottom line." easing,quantitative headed down the tapering path,

people have to focus on the fundamentals. the fundamentals are not very good. that has helped to the last couple of weeks. to see it like rescinded. i hope our lawmakers will take the action they need to so we can adjust the long-term fiscal stability problem without having across-the-board cuts. >> if you look at most a social platforms that are exploding, they were born on a mobile device and they are visual in nature. the killer app for facebook was the photos. then you have instagram, all very visual in nature. is to way they stay ahead look for promising technologies. technologies that can find anomalies in your data stream, , because youor can't predict what the next one is going to look like. >> the downshift is a more

sustainable level of activity. you can't have double digit price growth, sharp rise in activity, with mortgage rates trending higher and the fundamentals very weak. >> what i'm worried about is that some of the losses we saw, although they are in areas of foot traffic, department stores, places where people go out, restaurants, they were hit. on the other side of it, grocery stores did better. though the materials. with thessociated disruption and the damages caused by storms. there was an imprint of the weather, but i worry about those that lost wages due to the weather coming repeated events. at 39abbing an injury years old is not a lot of fun. hade he is healthy, he has a year to work out. i am sure he is going to make this swansong special. with us.

another check of the market movers on the other side of the break. "bottom line" returns in a moment. ♪

>> get the latest headlines of the top of the hour, streaming on your tablet pen bloomberg.com. that does it for this edition of "bottom line." -- forfor jesting us joining us. on the markets is next. is 56 past the hour, i am julie hyman. nearing highs, multi-year highs, once again, for example, the nasdaq is the highest since in summer 2000. the s&p 500 is within 10 points again.record once

almost we have come full circle since the beginning of the year. that means the s&p is down 4/10 of a percent year to date. we want to highlight a couple of individual movers, shares rising more than five percent after the company announced a beating on fourth-quarter earnings and named a new ceo. shares of trulia are following. wider than a estimated loss. revenue more than doubled from one year earlier. we are also watching two commodity movers, take a look at gold today. we have a little bit of decline in prices today, but we have recently been seeing a rebound and it is actually headed toward the biggest weekly gain since august. natural gas also heading for a game, the frigid weather having increased demand for heating fuel, sending supply to a 10 year season-low. the severe winter weather has taken its toll on the economy.

from retail sales and factory production and the massive snowstorm could have a big effect on the february jobs report. victoria stillwell joins me now to explain. but walk meple, through the actual numbers and how this could have an effect on the jobs numbers we are going to be getting. >> writes, in order to be counted as employees in the need topayroll, workers have received pay for some part of their season. if workers had to stay home and were not paid, they will not be candid. that is a problem. >> it is not just jobs, it is other readings as well. in your research, where did you find the weather has been manifesting itself? >> we have seen a range of economic indicators take a hit. yesterday's retail sales data dropped 0.4% from the month before.

that may have been because shoppers did not feel like going out, getting in their cars, driving in the snow. we definitely have seen it in jobs data the past two months, january and december were disappointing. seen it in theo manufacturing data, as you mentioned. the drop was the biggest since 2009. i think at this point economist and policy makers are trying to shake out whether this is the weather or whether it is weakness that needs to be investigated. >> economists are having trouble, the fed must the having trouble. what does this mean for tapering? >> luckily we have another month's data before they have to make a decision. they are going to take their time. said yellen has already they are going to very carefully look at the numbers before they make any sort of decision. she has acknowledged the weather

and said they don't want to be too hasty in making a decision. stillwell, thank you for breaking down the weather affect on the economy. we will be on the markets again in 30 minutes. "street smart" is next. ♪ >> we have a rally underway. up 140 two on the dow. we have 59 minutes on the clock until the closing bell. the s&p on track for its largest weekly gain of the year. we are scouring every market for your last trade of the day on the first trade for tuesday. we have a holiday wed