>> welcome to "lunch money" where we tie together the best stories, interviews, videos, and business news. i am adam johnson. joseph banks spends valentine's day looking for love. eddie bauer selling his warehouse. starbucks is using a firm in costa rica to stop the potential coffee-pocalypse. california is in the worst drought ever. in today's wild card, love and

money. we have a special valentine's day top five. we're kicking it off with what everyone is talking about. season two of the hit show "house of cards." the series has been a huge win for netflix. what is the creator have planned to stay in the winners circle? >> you want to talk what you did with season one. it is releasing all the episodes on one day or releasing it onto the internet is not there. it is just the story itself. it motivated us to expand the scope of the series, to deepen our exploration of characters, and challenge ourselves to do better than we did before. >> as with the first season, netflix released every episode of the dark political drama all at once encouraging binge watchers, including phil mattingly.

here he is for the 3:00 a.m. premier sitting with his great dane. he spoke with real-life d.c. lawmakers about how realistic the show is. >> capitol hill staffers were up watching. that is how highly anticipated the release was. government was closed until 10:00 a.m. this morning, so a couple more hours to catch up on episodes. >> the only unrealistic thing about the show is that a democrat to represent south carolina. that will never happen. it is great acting. >> kevin spacey makes it look more exciting than it is and a lot more devious, but it would be interesting to see what they do with the new season. >> he is probably a composite. none of us are that interesting. >> i am one of the few living americans who has not watched it. >> what does this mean for the company's bottom line? >> the stock has gone up 160% since "house of cards" debuted and subscriber numbers have

risen. netflix is said in the same breath as hbo. that is the company and wants to be like. a lot of analysts say as long as netflix continues to develop original programming, this is the future for the company and it has a good in with cord cutters and guys that will never cut the cord. >> netflix is doing good. could it do better? >> netflix charges very little for customers, $7 a month. that is what comcast charges you for a remote per month. if comcast was making it, they would charge you $700 a month to watch. >> in the olympics, the u.s. is getting crushed. particularly disappointing, the american speedskating team. no u.s. skater has finished higher than seven through six of the olympic events. the high-tech uniforms, lehman on the uniforms. these are made by under armour for these games.

they were developed with the help of aerospace engineers at lockheed martin. we caught up with the ceo of under armour at the debut. >> we built these specifically for sochi. we are hopeful a lot of gold medals will come from this. lockheed built the joint strikeforce fighter. they are the best in the world. they understand speed and making athletes better. it is the formula we will use across all of our product categories. it is accentuating the great story you will see of under armour highlighted at the

olympics. stephanie ruhle spoke with him on the phone earlier this morning. >> we have had a relationship since 2011 and have been working closely with the game and athletes. the executive director at u.s. speedskating. we have had a great relationship. i do not want this to be perceived as anything other than trying to find out what we can do to help our athletes win. on this project, we work directly with lockheed martin. we had everything from computational modeling and wind tunnel testing to get these things built. we built not just one suit, but

multiple suits for the athletes. it is trying to find the right mix. we have a full team on the ground in sochi making modifications and adjustments, which is typical for what you do at this level of high-speed performance athletics. this is part of the game. we're going to put our athletes in the best position to win and bring home gold. >> you can hear the full authorization with the under armour founder and ceo on bloomberg.com and on our app. there is one company not feeling the chill on valentine's day. eddie bauer gets a little love, next. another ceo tries to spread the love as his company prepares cutbacks. celebrations marking the lantern festival throughout china. it marks the last day of the lunar new year holiday. you can see the chinese folk artists performing the dragon dance. that is molten iron they are running through to create the image of a dragon flying through fireworks. you've got to wonder if that hurts. ♪

>> this is "lunch money" on bloomberg television and streaming live on your tablet and smartphone. i am adam johnson. it is valentine's day. what better way to express your love than with a proposal of corporate matrimony? >> joseph banks will buy the eddie bauer brand in a cash and stock deal valued at $825 million. the deal comes after joseph bank flirted with a merger with men's wearhouse. >> that is joseph banks played hard to get with men's wearhouse. mr. banks had tried to buy men's wearhouse. setting off. but down on one knee for eddie bauer. eddie bauer practically invented the down coat in the 1930's. now owned by golden gate capital. the retail veteran advising joseph banks on this deal. he told us this was the first company they looked at two years ago. >> we believe they fit with eddie bauer.

joseph bank was superior. it is a growth business. it had been taken over by golden gate after bankruptcy. all of the attributes joseph bank has in terms of management, they have two of the best -- >> you represent joseph bank in your long career. are you saying eddie bauer is not a brand that has been a train wreck for a decade? >> it has had problems. they hired mike egeck, the guy that built columbia and north basin to a terrific company. he and his people are great marketing people. this team is going to be fantastic.

>> what is eddie bauer doing correctly now that makes it so attractive to joseph bank? >> they have gone back to their roots as an outdoor company, as a sportswear company. they also have children and men's. it is going to give joseph bank the ability to expand into new categories, gain an international presence. there are meaningful cost synergies. >> gilbert, stay with us. bert, i want you to reply to this. gilbert harrison looks at the financing. you look at traffic. are you seeing better traffic and merchandising at eddie bauer? >> eddie bauer is hurt by declining customers at shopping malls across america and retailers spending less. gilbert is correct. mike egeck helps the merchandising. going back to the comcast-time

warner deal, there will be no sec objections on this one where there will be several ftc objections. this is a clean deal. >> it looks like joseph bank is dumping men's wearhouse and on valentine's day. breaking up is hard to do. the offer for joseph bank expires on march 28. dayton. some companies are getting together and others are cutting back. >> the insurer is eliminating 1500 jobs. the cuts will come from the top-rated casualty unit which will reduce earnings by $255 million before taxes. >> these cuts at aig should help boost profit, which beat estimates for the last quarter. the insurer also boosted the quarterly dividend by 25% and authorized another $1 billion in stock buybacks. aig giving back to shareholders. >> betty liu spoke to the ceo after the earnings release yesterday. >> it is nothing more than clearly we have got to

continually manage efficiency and productivity of our company. we spent a lot of time working on moving people to lower-cost locations. tennessee and other locations around the united states. we have a wonderful relationship with olathe, kansas. we're moving people out of higher cost cities into lower-cost cities and some offshore as well. you bring the first wave of people to those locations keeping the older people in their jobs until we are ready to make a smooth transition. art of this is nothing more than dealing with the dual jobs that have been going on in parallel. in addition, we are looking to delayer the company to empower our people more so they do not have eight or nine layers below me. we will look at expanded control to make sure our employees dealing with customers are

empowered and do not have many places to go to get a decision, because that is what our clients want. they want an innovative and empowered culture of aig. that is what we have been. we need to restore that and make sure people are comfortable they can get a decision from the person they first come in contact with at aig. >> when you talk about delayering, in which unit do you see that happening the most? >> we are studying this across the 63,000 employee base. we are looking at cost accompanying. we are asking people to give thought to things. how many approvals you need on anything, we're saying no more than five. if you have to go to more than five people to get something decided, it is too much. when you have people who are product people, finance functional people or technology people and then you have the direct bosses, it is getting too

much. we want to get to the point where we have a lot of authority at the local level and very little layers above that. it is the thought of how we improve the decision-making and empowerment. >> aig's cost cuts speak to a broader issue. companies cutting back to boost earnings. over the past five years, earnings growth has outpaced sales growth nearly five to one. who is growing the top line? we can read about it on today's blog. i posted it on twitter. the u.s. government is asking some companies to cut the use of drones. we will look inside the unregulated boom. plus a coffee break with no ordinary joe. we will hear what a ceo is saying about his industry next. ♪

>> this is "lunch money" on bloomberg television. we are also streaming live on your tablet and smartphone. coffee bean prices have spiked 30% on concern dry weather in brazil will harm crops. what is it mean for our caffeine buzz? alix steel explains. >> companies like netflix only buy arabica beans that are being hammered in brazil because of hot, dry weather.

they paid $2 per pound because it pays for the beans it wants when it wants it. it wants the supply locked in for this year for about a 10% price increase for coffee beans per pound. it is a 2% increase across the board in the current quarter. the problem is one bad crop this year in brazil hurts the fruit. it hurts the plants. that could mean another bad crop next year. it takes a while for these plants to recover even if there is rain. we have seen companies like starbucks investing in resource. the company bought a 600 acre farm in costa rica to experiment with coffee varieties, test growing methods. also invested $3 million to secure coffee quality and supply in certain regions of colombia. baby steps to help their supply chain. >> coffee apocalypse? "business week" shows us how starbucks is trying to deal with this. >> ♪

>> ♪ >> since 80% of americans drink coffee, it is big business. coke has gotten involved. three years ago, it partnered with the italian group and green mountain coffee more recently.

he sat down with stephanie ruhle to explain the difference between the deals. >> coco cola and we have a joint deal already. the strategy is to do one blend, the highest possible polity, always the same across all consumption occasions. the same blend you can enjoy in a restaurant or cafe is brewed into ready to drink coffee in a bottle that you can buy from them and coca cola together. coca-cola is one of the biggest coffee manufacturers. they have other interests, ready to drink coffee in japan, much larger than illy. the strategic intent with green mountain is to serve coffee with the same soft drink machines. this market is growing. maybe one day, we will outgrow

that. >> you also have a new partnership with samsung. i see why jay-z would work with samsung, why are you? >> next year, there will be the universal show in milan about feeding the planet energy for life. the first time the theme centered around food. coffee is important, so central. the export authority decided to dedicate an entire pavilion to coffee. there will be the largest celebration of coffee in history. we will bring it online, make it accessible for the coffee drinkers will believe through mobile technology. >> what is your number one growth strategy? >> the core business is always hospitality, cafes, hotels, and restaurants. we also would benefit more by having a more competitive country. italy is not so competitive. italy has a problem.

first of all, the internal market is not growing anymore. we are in a depression. we now have the gdp we used to have in 1998. the problem is debt is much higher and unemployment is at an all-time record. this creates a situation where it is difficult to get consumption. it is always important for a brand to have a strong internal market before you go international. it is difficult to get the confidence to keep investing. it is difficult to get credit. everything becomes difficult. we have a total tax rate which is exceeding 68%. how much can you invest in such an environment? >> a lot of people in the u.s. could use a couple of warm coffee today. coming up, weather extremes from ice and snow to the drought in california. hear why this online trading site soars in volume the day after valentine's day. that is coming up. ♪ >> it is 26 minutes after the

>> it is 26 minutes after the hour. let's get you caught up on where stocks are trading at the moment. we have a mixed picture today. the dow and s&p of rising. the s&p 500 is within 1% of its record, almost coming full circle from where we ended last year. the nasdaq is trending lower by 6.2%. better-than-expected numbers are helping prop up stocks to some extent. in terms of individual members, they beat second-quarter earnings estimates and is maintaining the full-year growth outlook. campbell's noted revenue was up 14% from last year countering a drop internationally. we will have more on the markets in 30 minutes. more "lunch money" coming your way next. ♪

>> this is "lunch money" on bloomberg television. we are also streaming live on bloomberg.com, your tablet and smartphone. the video is the story. the italian prime minister presented his letter of resignation at the president of palace in rome earlier today. he quit after his own party voted to replace him with the mayor of florence. he lasted just 10 months as prime minister. he's the third premiere in a row whose rule was brought to an early end by italy's fractured parliament. police in thailand faced off

again with antigovernment protesters on the streets of bangkok. police were unsuccessful. they say they will return again tomorrow. sandra bullock gets a spot at madame tussaud's wax museum in hollywood. just in time for the academy awards in two weeks. she is up for best actress for her role in "gravity." weather extremes in the u.s. snow has delayed travel across the country from texas to maine. at least 21 deaths have been blamed on these storms according to the associated press. in california, the opposite problem. it has been the worst drought on record. the governor has declared a state of emergency for the world's 10th largest economy. president obama is pledging billions of dollars in aid to the farmers. it could boost food prices and leave thousands of crop workers jobless. what if you could create a drought proof farm? i know it sounds crazy.

with an ancient technique, it might be possible. rachel crane shows us how. >> we have broccolis, kale, tomato plants, different lettuces. >> two years ago, ken armstrong started a different kind of vegetable patch in california. >> people asked if i was doing farming before this. i told them no. everything i tried to grow before i killed because i forgot to water it. that is one beautiful head of lettuce. >> the farm is an aquaponic farm where fish and produce growth

together in a symbiotic relationship. >> all the nutrients are available to the plants of all time. expend less energy on roots and more on growth. >> in this pond, there are 800 catfish being grown organically. plants can grow on floating racks. the roots dangle in the water below soaking up the fertilizer. >> the plants have taken the nitrates out of the system. the clean water is returned to the fish tank where it begins the process again. >> aquaponics is a combination of plant farming and fishing harming. it cancels out the negatives of both. >> fish are cold-blooded, so in the system it is not possible to have e. coli or salmonella. the fish can be harvested and used as a protein source.

>> aquaponic farms cost more to build but are less expensive to run. they eliminate the need for pesticides or pricey equipment. it may seem counterintuitive to grow vegetables in pools of water during one of the worst droughts in history, but they use 90% less water than conventional farming because the water is continuously reused and is not lost to evaporation. >> they could reduce our water by 80% and it would not affect us at all. >> it turns out it is older than dirt. the chinese used carp in their rice paddies. this ancient method may prove to be the modern solution to drought. >> i believe this is the evolution of farming. because of its ability to grow faster with fewer resources, it will be the methodology of growing in the future. >> the future of drones is in the hands of the faa. we will look at the fight with unregulated drums next. valentine's day is not just about love. it is also about money. it turns out love costs a lot. that is a baby albino alligator. the pair were introduced at an

aquarium in paris. they are generally not found in the wild. they are easy targets for predators. there are fewer than 30 in captivity. the price tag for these two? about $55,000 each. ♪

>> this is "lunch money" on bloomberg television. we are also streaming live on bloomberg.com, your tablet, and smartphone. the faa is cracking down on drones. it is testing in six states. michigan has yet to be added to the list. detroit flower delivery was hoping to make a name for itself this year by delivering free bouquets. sorry, guys. clever idea, but no luck. the agency has its hands full dealing with a lot of other guys. megan hughes explains. >> we are airborne. >> drones have gone mainstream. even the "modern family" character has one. he borrowed it from his real estate company to spy on his son. real estate is one area where real-life drone use is widespread.

drones shoot photos of properties. they are capturing surfers on the north shore. the filmmaker of the gettysburg documentary boasts about the technology. >> it can shoot from a few feet off the ground to 400 feet in the air. >> they are beautiful shots, but also may be illegal. the faa does not permit drone flights for commercial purposes. >> you cannot just acquire one of these vehicles and launch it into the airspace. that is not how it works. >> you can't? >> the regulation needs to say that. >> we went shopping at a drone dealership in maryland to see how easy it is to get one. >> for the one with the camera, that will be closer to $1500 to $2000. >> can we try it out? we have liftoff. >> the technician says this is flying off the shelves and the sales are legal. how the drones are used is someone else's problem. is there anything in here that

will show me what the faa says i can and can't do with this? the faa is struggling to write new guidelines. in this serve video, you can see a chopper in the drone's airspace. >> the worst case is it could bring down the chopper. it has sent 17 notices ordering people to stop using drones but issued just one fine. last month, the faa did order lakemaid beer to stand down. megan hughes, bloomberg, riverdale maryland. >> no love for drones. we have a top five that is full of valentine's day love. for those who do not get the gift they want and in their disappointment aside to straight, guess what? there is a website for that too, exclusively for people in relationships. this is scandalous. it is our wildcard. as we had to break, here is google's take on valentine's day. >> not really saying anything.

when you walk down the hall, trying to touch hands. >> i walk up with a heavy heart and huge doubt, questioning. >> madly obsessed with each other for years. >> i decided enough of this. >> we got married on saturday. on monday, we went back to our day to day lives. david was getting dressed to go into the office. ♪

>> this is "lunch money" on bloomberg television. we also streaming live on bloomberg.com, your tablet, and your smartphone. we are celebrating valentine's day. if you need last minute gift ideas, we have you covered. >> i am the ultimate wing man, and it is time to make the magic happen. >> ♪

>> this valentine's day, show her how you really feel. >> ♪ >> wouldn't your valentine like to know how you feel? >> ♪ >> sure you can drop $250 for chocolate truffles or give a few of the candy hearts with messages. they have been around for 167 years.

>> the sayings were different back then. some do not work now. they said things like "sassy boy" and "i am gay" for being happy. a lot of things have been retired that do not work anymore. >> how does the company stay competitive? >> we use social media. we got a lot of information from our facebook page. it is a tradition passed down from parents to children over many decades. this year with our color your own box, we are looking to attract children. >> i'm curious about the difference between how important valentine's day is and what they can do all year. >> we celebrate once a year, but we believe it can be a year-round brand. you will probably see new products coming up that will be every day and not just once a year. the sweethearts brand. >> will it be for singles and divorced couples?

>> think about how important breath mints are to love. >> mints are definitely important for love. if you're looking for your soulmate online, so is having a good profile. "wired" did research pulling together massive amounts of data, trying to put together some tips to help you master internet dating. here is what they found. the following words were most used by men who scored high on the attractiveness scale. ready? surfing, surf, the ocean. words most used by women who scored high on the attractiveness scale for men? london, n.y.c., surfing, and athlete. interesting. the most attractive band you could mention was radiohead. they are all owned by match group. revenues are over $700 million a

year because love don't come cheap. >> search for love or companionship is the most important search people go one in their life. that is valuable. people are willing to invest in that and go through the websites. >> how much do people spend on dates? what are the dating life expenditures? >> we just did a big study at match.com. no surprise. people spend almost $1000 a year being single. that is going on dates, online dating memberships, dating advice, and other things like that. when you're single and actively dating, it is one of the priorities. it is not like a gym membership when you make the commitment to get healthy. >> you know what? some people are not looking for love, not at least in a monogamous way. ashley madison, the only dating

site for people already in relationships. >> i saw a huge percentage of people going to dating sites were not single. i thought i would build something. >> for you, was it that there is a market for everything? were you making a market for it? >> i was a sports attorney. i think there is infidelity in my professional dna, in a sense. the data was compelling. we all know affairs happen. we might be blown away by how many people the day after valentine's day will come to a service like ours. the opportunity was there and i wanted to pursue it. i could not imagine 25 million members, but that is what it has become. >> i learned this morning the day after valentine's day for a cheating website is like black friday. >> why? >> why do you think? valentine's day is a litmus test of sorts. >> my man let me down?

>> if you have expectations, romance or feeling better about yourself, it could be the second year it has felt hollow. you're going to do something different. you could do things people would say are healthier. you can join a gym, see a therapist, but you might also find a lover. >> before it gets that complicated, it starts out with puppy love. we picked our favorite story. happy valentine's day. >> does she know? >> yes, she does. >> how is that going? >> good. it just ordered 20 minutes into this. i was in the cafeteria. just got a drink of root beer. she walks up to me and asks me to go out. >> what did she say exactly? >> she said, chris, will you go out with me? >> they do not last. it is middle school. this is not who you are starting

your life with. you do not spend your life with your middle school sweethearts. ♪

>> it is approaching 56 past the hour. let's take a look at where stocks stand halfway through the trading session.

quakes where stocks closed the session. up.ng in the treasury market, we are seeing yields a little bit higher. almost a two week high as investors look ahead to further tapering of the feds quantitative easing. we want to highlight a couple of commodity movers for you as well. natural gas is one. we have seen big gains in natural gas because of the terrible weather we have had in the northeast. remember, natural gas is used to he nearly 50% of homes in the u.s.. gold we are watching prices. gold seeing its biggest weekly gain since august. we are also seeing silverstein

day rally, the longest since march, 2008. -- seeing silvers 13 day rally, the longest since march, 2008. >> the news was traded before it happened. we did not get tapering right away but we did get a gold to the lasto rally over few months. people are afraid of higher interest rates. higher interest rates are going to drive gold higher. >> we have also been watching corporate earnings. this season is beginning to wind down. let's see what adam johnson considers a key issue. >> we have a little bit of a growth problem here in the u.s.. we also have a solution. insight in action. look at the imbalance, the difference in earnings growth 2008 and sales growth since 2008.

earnings, remember, you can manipulate all that stuff. that is after depreciation, amortization, buy back shares, raise your earnings-per-share. we want to see sales line out here. that is what it boils down to. by the way, this differential is in part why we are seeing operating margins highest they have ever been. i am showing you 25 years. you can go back even farther than that. it is the differential that is enabling this. that is maxed out. we need to find topline growth, sales growth. if you look at the different sectors in the s&p 500, you will -- youtouch see clearly will see clearly where you're getting the best growth, health care. what do you buy? sph.a, biotech him a the best-performing group over the past year is up about 50%

versus the s&p 500, eight teen percent. -- 18%. >> that was adam johnson. all day long, hedge funds have been reporting changes to their portfolios in their 13 f filings. apple has been one of the highlights. carl icahn confirming that he holds 4.7 million shares. george soros boosted his stake in apple and we saw tudor investment cutting its stake in apple. that is some of the highlights we saw from these filings. for on the markets, i am julie hyman.