>> welcome to "lunch money" where we tie together the best stories, interviews, and business news. in motors, the new gm. mary barra drives away from the past on capitol hill. one ipad per child. l.a. school district taking education to the new digital age. strike, lufthansa pilots walk a picket line. barry diller says it is all or nothing for aereo, this is a bloomberg exclusive. innovating the road race.

i am serious. everyone is talking about the changing times on wall street. >> goldman sachs looking to sell its new york stock exchange market making unit. dutch investment firm imc financial markets is in talks to buy the business. goldman bought the operations into thousands as part of a purchase. >> 5.4 billion dollars, goldman paid for that trading unit in 2000. goldman is now selling it for as much as $30 million. do you get that? five point $4 billion, $30 million. to be fair, goldman made money off that investment over the last 14 years. earning over those 14 years, at that price you are looking at a 99.4% long-term capital loss. this points to a bigger story, this is what the new york stock

exchange floor looks like today. there are humans, but there are a lot more computers. it was not always this way. this is back in the 1920's. almost one hundred years ago, that is old school. fast-forward to the 1950's, kind of new school. >> today there are more than .5 million miles of telephone wires and telegraph wires linking trading on the floor of the exchange with more than 3000 offices of exchange firms here and abroad. essentially, the stock market is people. 22 million american shareholders buying and selling securities. >> people. thousands of people worked on the stock exchange floor each day, i used to trade with those guys. it would take minutes to execute a trade. today, a few hundred people on the floor. volume has fallen and trades take milliseconds. it is that evolution that is at the heart of the investigation of high-frequency trading.

the fbi and the new york attorney general are looking into manipulation by traders who use computers at these fractions of a second, adding a little bit of fuel to the fire is this man. >> technology has eliminated a role wall street used apply. you use to need a human being to bring a buyer and seller together. you can hit a button on your computer and you can go into a box with everyone else's order. >> you don't feel good about that? >> that is what i am saying. some guy is still jacking you, you have traders, all this unnecessary financial intermediation happening. wall street has inserted itself where it is no longer necessary. >> that is michael lewis, his book goes inside the world of high frequency trading, declaring that the u.s. equity

market is rigged. he joined "market makers" this morning. >> i do not regard high-frequency traders as villains. it is like blaming the lion for eating the antelope, they are wired that way. the system is screwed up. they exploit glitches in the system. they are not wired to say is this good for the world, they do not think that way. >> high-frequency trading can be difficult to understand that you do not have to go to wikipedia. sam grobart says just watch a bad movie. >> michael lewis' latest book sets its sights on the world of high frequency trading. the complex practice performed by the most sophisticated investors with the most powerful computers. i set that is not that complex. it was a major plot point of "superman three." the crappy one with richard pryor. his character engages in

fiduciary malfeasance, or salami slicing. >> why would you do that? >> i don't know, i just did it. >> an employee's paycheck is always rounded down to the nearest whole cent, raising the question where do they go? what pryor's character does is take all those fractional cents leftover and deposits them into his own secret account. in each case, each individual effect is very strong. in the aggregate it nets him a ton of cash. in many ways, this is a lot like what high-frequency traders do. they buy stocks just before other people do and then resell them at a small increase, pocketing the tiny profit. like pryor's scheme, each transaction is so microscopic, no one would know.

over millions of trades it adds up. all you need is a high-speed data connection and a computer. just like richard pryor. >> i am a genius. >> watch michael lewis again on "charlie rose" tonight 8:00 and 10:00 p.m. eastern. from our morning on "surveillance," with me at 6:00 a.m. gm's ceo mary barra gives a mea culpa in washington. hard to get into the details, we will tell you why. gm is not the biggest offender when it comes to recalls. we have the list and our top five. one more -- big papi and commander-in-chief, david ortiz presented president obama with a jersey. get a selfie with the president -- samsung confirms it was a publicity stunt. just like it was behind the

ellen degeneres selfie. ♪ >> this is "lunch money" on

bloomberg television. also streaming live on bloomberg.com, your tablet, and your smartphone. i am adam johnson. in motors, gm's ceo mary barra in washington for a second day of testimony. answering questions on the ignition switch recalls linked to 13 deaths, mainly regarding how long gm knew about the faulty material. >> why not come here and say we are going to do the right thing and compensate the victims. money cannot erase the pain but it is the right thing to do. >> our first step in evaluating this is to hire mr. feinberg, we plan to work with him and

understand his expertise. there are civic and legal responsibilities and we want to make sure we are thoughtful and what we do. >> she endured 2.5 hours of questioning yesterday. several things resonated. the difference between old gm and new gm. barra is presumably new gm. >> i cannot turn back the clock. as soon as i learned, we acted without hesitation. we told the world we had a problem that needed to be fixed. whatever mistakes were made in the past, we will not shirk from our responsibilities now or in the future. today's gm will do the right thing. >> not all members of congress are convinced. >> you responded to a question and told us that you were going to run gm differently than it has been run in the past. 20 years ago before this

hearing, an iowa family harmed by another defective gm vehicle gave me this promotional screwdriver set. on the outside, it has a slogan. "safety comes first at gm." so, my question for you and i think the question these families want to know is what has changed at gm? isn't it true that throughout its corporate history, gm has represented to the driving public that safety has always been their number one priority? >> i cannot speak to the statements that were made in the past. all i can tell you is the way we are working now, the training we have done, we have changed our core values. we are leading by example. one of the process changes we have also made is in addition to win the technical community makes their decisions about a

safety recall, we are going to be reviewing at. we have the head of global product development and myself to see if there is more we want to do. >> have the core values of general motors always been that safety comes first? >> i have never seen that part before. today's general motors is focused on safety. we have over 18 vehicles that have a five-star crash rating. our entire buick lineup meets that. >> do you agree with the author that this is a grave safety crisis? >> this incident took way too long, it is not acceptable, that is why we are making radical changes to the process. adding more resources and adding a vice president of global safety. we will continue to make process changes and people changes as we get the results of the investigation.

>> this brings us to the second key aspect of mary barra's testimony. she failed to answer a lot of questions, admittedly because of the ongoing investigation. >> part of our investigation to get the complete timeline, i do not know the answer. that is why we are doing the investigation. i cannot answer specific questions, that is why we are doing a full investigation. that is part of the investigation. that is part of the investigation we are doing. that is part of the investigation. as part of our investigation. i want to know that just as much as you. >> there is an investigation and you cannot comment, are you getting updates from anybody regarding these proceedings? >> yes. >> well, the mechanics of the recall are complex. we break down the way this whole thing works. >> a couple kinds of recalls. one kind comes about from an

investigation known as an influence recall. then you have voluntarily initiated recalls. it is the second type i want to focus on. each company has its own methods, here is generally how it all works. once a potential safety defect is noticed, a team of engineers will investigate the issue. they will do a series of simulations and test runs to determine whether the defect creates an unreasonable safety risk. if they identify such risk, they then have five days to notify safety regulators. the company's defect panel of engineers gathers to make a recommendation on how to fix the problem. what needs to be replaced, what it will cost, the ramifications for consumers and their own dealers. that goes onto the c suite and the ceo makes a call. once a recall mandate is made, they then give a heads-up to the dealership. finally, they craft recall notification letters written

with the help of other employees and send them to car owners. >> gm has had plenty of company in the hot seat. here are the five biggest u.s. recalls in our top five. ♪

>> one footnote on the number one recall, the department of transportation allowed ford to substitute a warning sticker. are you flying to germany? you are not flying on lufthansa, pilots are on strike. we will explain why after the break.

ipads are transforming the learning process for students at this school. is it worth the money and the headaches? we answer that, coming up. ♪ >> this is "lunch money" on

bloomberg television. also streaming live on bloomberg.com, your tablet, and your smartphone. i am adam johnson. how do you take america's second largest school district into the digital age? the ipad. we go inside los angeles' new classrooms. >> i am excited to be here with you. you will receive your ipad.

>> it is a bold, billion-dollar initiative. give every public school student in los angeles and ipad. >> we wanted them to have technology. we want that fundamental civil right for every student to have what the wealthy have. >> each come with a digital curriculum designed by pearson, the text but company, and aligned with the national common core standards. before the kids got their hands on tablets, teachers got a look through a series of training sessions. >> any questions? >> in september 2013, the ipad rollout began in 47 schools. >> we are going to learn. >> what are you going to learn? >> science, math, we're going to learn to write our names. >> put the ipads in your backpack? >> no. >> are you going to put them in your desk or on the floor? >> no! >> do you sit on them? >> no! >> kindergartners followed the

rules that the older students got creative. the high schoolers -- >> they wanted things like facebook and itunes. >> now students can no longer take the tablets home, a quick fix for one of the hurdles plaguing the rollout. the superintendent insists they are manageable bonds in a high-stakes transition. >> we need a transition to books and paper. textbooks and those items are static. the notion of students being able to have current contact versus static content is what they're going to face when they go to university and college, and the world of work. >> another step forward with ipads 438 more schools this year. when the plan is completed, it will be the largest district in the country to equip each

student with an ipad. >> for more on our wiring the world series, tune into "bloomberg west" at 1:00, 6:00, at 11:00 eastern. reporting on the challenges of designing digital content for the classroom. kids k-12 are not the only ones learning online. websites like treehouse, which has over 70,000 adult students, they are opening all sorts of new doors. >> most of them are adults. folks that are electricians or plumbers or buries those who are learning how to code and they are actually making good money or doing it full-time. >> talk about some of the companies you are working with now. you work with twitter, air bnb. what do those companies get? >> people who are developers and designers need a very wide breadth of skills. just getting a computer science

degree does not work. >> does it require learning about a particular process? >> we presume our students do not know anything. and then we take them all the way to job ready. once you get a job in tech, you have to keep adding to that. we do see ourselves as the trade school of the future. i really hope that the educational model in america and the world moves back to the model of coming out of high school and choosing a trade. going to school for that trade. if you can afford university, that is great. i do not think that should be the default for people in the future.

>> workers in high-tech jobs are paying 17% to 20% more than employees in other fields. go high-tech. how about working at aereo, the streaming service dukes it out at the supreme court. we talk about the future with investor barry diller. what is harder? running 10 miles through electric shocks and barbed wire or running the tough mudder business? all the blood, sweat, and tears coming up in sports. ♪ >> this is "lunch money" on

bloomberg television. also streaming live on bloomberg.com, your tablet, and your smartphone. i am adam johnson. >> today's moving pictures -- the video is the story. an 8.2 magnitude earthquake in chile forced the evacuation of cities and towns on the northern coast, left six people dead and triggered a tsunami warning in areas as far away as hawaii. chile's president has ordered the military to help maintain order and hardest hit areas. a barricade erected by venezuela's antigovernment protesters has been blamed for deaths. the obstacle is to keep

government forces out, but their usefulness is being questioned. the president says they just cause hours of long traffic jams. pg&e corp. has been hit with a criminal charge tied to its 2010 natural gas explosion. the blast tore through a neighborhood in the san francisco bay area and killed eight people. prosecutors say the company knowingly broke federal safety rules. pg&e corp. is charged with 12 felony violations of pipeline safety laws and could face a fine of $6 million. lufthansa pilots are on strike. this has halted thousands of flights, 112 planes and 1500 crewmembers are stuck abroad. lufthansa pilots are in a dispute over benefits. we talked to the lufthansa spokesperson this morning. >> we have made offers that are good enough to start negotiations, serious negotiations with goodwill from

both sides. i cannot see that there are no compromises possible. we hope we are going to pick up the conversations pretty soon. >> pilots are upset they cannot get higher wages and retirement benefits. lufthansa is offering a dividend. profits are falling, here is the airline's response. >> we're not talking about cuts, we are talking about-are the increases are the salaries. then we are talking about at what point and time and with what conditions can pilots stop flying in the future. we do not talk about cutting things, but we talk about keeping the system running for the next decade so that lufthansa can still afford it for the next generation of pilots as well. and we talk about how much do pilots contribute on their own. i think we should have good opportunities for compromise.

>> the strike comes as one of the busiest airports in the world is going through an overhaul, heathrow is months away from opening a new terminal. it has learned from past mistakes, maybe, maybe not. angus that reports. >> heathrow's latest terminal is three months from its grand opening. it will be fully operational, it handling 25,000 passengers a day. memories of the 2008 nightmare terminal five launch are fresh in the airport's mind. luggage was lost, six hundred flights were delayed, it was embarrassing. it cost $26 million in expenses and damages. >> a very poor day for british airways. >> this is the man responsible for making sure that does not happen again. >> opening a new airport terminal is the most challenging thing any airport can take on. you can count the number of successful airport openings on one hand. one of the advantages we have is

the experience of terminal five. >> the plan is to open terminal two in slow motion. united airlines is the only carrier that will fly in first, then a new carrier will join every three weeks. the opening comes as heathrow's future is under review. the u.k.'s only hub airport is fighting to expand. some argue this strengthens their case. angus bennett, bloomberg. >> still ahead, our interview with billionaire investor barry diller. he is backing aereo in an all or nothing fight going on the way to the supreme court. that is coming up next in media. talk about cutting it close, this pennsylvania man was on the job with a tree servicing in company with a chainsaw kicked back into his neck. coworkers saved the day, detaching them over and leaving the blade and james valentine's

shoulder, it just missed an artery. he is recovering from a very near miss. ♪ >> this is "lunch money" on

bloomberg television. also streaming live on bloomberg.com, your tablet, and your smartphone. i am adam johnson. in media, aereo is tunneling broadcasters all the way to the supreme court. broadcasters want aereo to pay for content they are retransmitted. aereo says it should not have to pay and it legally. barry diller is backing the start up and plans to expand it into every major city. but, this is a big but, only if aereo wins the case in the supreme court. erik schatzker sat down with barry diller. this is exclusive. >> there is some salvage but

aereo would probably, i cannot see any path for it. it probably would not be able to continue in business. >> why is that? you have a platform, you would be ruled, a multi-video programming distributor. you would be like a cable company. could you not compete for content? >> we could probably pay retransmission consent. if we could make a deal with broadcasters, we probably could. but the value proposition would go out of the game. because aereo is a low-cost method of receiving over the air broadcasting. that is the platform. >> what if the supreme court grants you life? what happens then? >> we compete, we go on to build our business. we expand to the rest of the u.s. that we are not currently

in. the west coast, we are only in 14 or 15 cities. we would be in every urban city, any urban city, certainly the top 30 or 40 markets. >> this is an effort to reach what you believe the adjustable market of one third -- >> at the most, a third. there are many people who sat in that cable programming and satellite programming is becoming much too expensive. and that they would prefer an alternative. a much less cost alternative. that is, by definition the younger rather than the older. to me, i don't think we will reach a third come about that is the addressable. >> what about the threats from les moonves, and the like, they will turn their broadcast networks into cable channels and

render your low-cost alternative neutered? >> it is very unlikely that a broadcaster who built their business on spectrum that they got for free. spectrum by definition blocks of the american people. they got it for free in return for investing in and building a direct system. if you could get the signal directly, you could receive it without anyone in the middle. it is very unlikely that they would be able to take that broadcasting away from that distribution of that signal. and put it in a solely paid system. >> when moonves says it, it is an empty threat? >> it is a nice threat to convince anyone like the court or congress that this would be a

terrible thing, to disenfranchise 60 million people right away who do not subscribe to cable or satellite and who do get over the air. it is inconceivable to me that it could actually happen, but i can understand people saying -- it is like the least realistic alternative. >> what does aereo want to be when it grows up? what is there beyond? >> i think the service standing on its own platform is a very good thing. it is a very good service to offer. it is an alternative to a closed system. it is an alternative for a lot of people who would like to receive programming, their god-given right given the quid pro quo that the public receive free spectrum. it is a good, prosocial, positive business with good

characteristics. >> the key to aereo's future -- has it or has it not broken the copyright law? we debated on "surveillance" with professor scott galloway. >> broadcast tv is made available engine by advertising. if aereo legally works, aereo helps ratings. if you talk to anyone at the networks that are suing, aereo is a notable positive for ratings. this is not a threat to copyright holders, aereo only has broadcasting vm bloomberg. the amount of time you will spend watching broadcast tv is far higher than in a 400 channel universe of cable. the threat is about retransmission fees. let's not confuse this -- retransmission fees are paid by cable operators.

by satellite operators like directv and comcast. >> that is what is under threat right now. hold on one second, i want to bring in scott galloway, professor of marketing at nyu stern school of business. do you talk about this? is it a case study? >> aereo is going to be put out of business. >> you go the other way. >> they are taking on a $57 billion industry. you have got to pay for content. one of the ways content is shifting is from advertising to such reaction to paid model. >> what does mr. greenfield get wrong? >> he is talking about -- my stance is when you talk about technology, enabling consumer behavior makes it legitimate. you can use technology to steal. that is what the industry is going to say these guys are doing. >> from battling broadcasters to battling the elements. the company that has people pay to swim through ice and run through fire, the business of tough mudder is next.

♪ >> this is "lunch money" on

bloomberg television. also streaming live on bloomberg.com, your tablet, and your smartphone. i am adam johnson. so you think you are tough? maybe you should try that tough mudder, the 10 mile also go course complete with fire ice, and mud. it attracts over one million participants around the world every year. will dean joined us on "surveillance" about how he grew this from an idea in his business school dorm to a multimillion dollar business. >> people are working out in different ways and looking to challenge themselves.

it is not a race, it is a challenge. the second part it is social and team-based. it is about working together to get over the also close. very different from your typical marathon or triathlon. >> something else that is different, corporate sponsorships. you have been out in front, maybe this is from harvard business school. how were you able to sell the concept to companies? >> we have a demographic of men in their 20's and 30's. >> thank you, keep going. >> we have had three thousand with tough mudder tattooed on them. that shows engagement. this is a tough dynamic to reach. >> companies wanted access to overachievers? >> it is people from all walks

of life. >> you have a lot of competitors. your smaller competitors are picking up share by picking up women. there are targeting kids. are you adjusting your one-size-fits-all approach? >> you tend to find that one or two tend to rise to the top in this space. if you look at triathlons, iron man the dominant player. we make sure to have the best obstacles, we have signature obstacles. >> there is electricity going through those wires. >> we do that before "surveillance." jim chanos, a noted short seller, they do the paleo thing. they lift one thing. are you as sad as that?

>> we are not a fitness business. we are not saying that doing tough mudder will get you in shape, we are something you do if you are in shape. i have some headbands with me, we launched our repeater program. this is what you get when you do your first event. >> tom, put it on. >> he has not earned it but i will let it go. >> i have not earned this. >> fireproof? >> weak old fart? [laughter] >> this is for people who have done two. >> shameless plug! >> we have our 10 time tough mudder. this one here. we created this as a response to market demand. so many people coming back time and time again. >> one person at bloomberg who has done a tough mudder? matt miller.

today's mystery meat is circa 2011. >> i cannot believe i am doing this. that is cold! [laughter] oh my gosh. that is very cold. not swearing would be one of the more difficult parts of this course. [shouting] ♪ >> it is 56 past the hour.

we are on the markets. here is a check at where stocks ended the day. the s&p closing at a record high. 0.3%. recapitalizing on some of the earlier losses.

the nasdaq was negative for part of the day, but flipped into positive territory. orders only had factory rising, you had companies adding 191,000 jobs in march. that affected the treasury market. prices falling, yields on the 10 year rising to a three week high. fed have good enough data to raise rates? adam johnson has a look at the tie between stocks and bonds. areooks like investors changing their tune. the question is will they get it right. time for insight and action. i want to show you the etf when he flows for the first two months versus the past month. vons, money going into bonds and coming out of stocks. it's the opposite. money going out of bonds.

looks like the fed is going to be raising -- that means the price of bonds. intoo put the money stocks. weree various etf's, there three that attracted the most. financials, $1.5 billion. technology, number two. materials, number three. you see investors betting on cyclical recovery. the question is whether they are getting it right. is this really where they want to put their money? we looked at the forward estimates. we track a number of -- bottoms up from all the different analysts. they found that energy is grossed -- growing fastest of all. that is the fastest. people are betting on materials.

number six.in at financials. even though that is where the money is going, that is not necessarily where it is going. energy is growing fastest. it is trading at the lowest -- could be an opportunity, especially since energy has lagged the rest of the market. growing fastest, trading cheapest. maybe that is your opportunity. >> staying with the energy market, a check on oil prices. grinding lower. it should have been a better day for oil. crude stocks falling for the first time in 11 weeks. that wasn't because more oil was being used. it it was because oil was sitting in tankers. there was a closing of the houston ship channel. there are ports in libya that

might allow the company to export six times as much oil. a check on natural gas, rising for the first time in four days. it will beeports are low. check on gold, moving higher along with stocks. the longest slump in 19 weeks ended. a check on copper after the earthquake -- relatively flat. a little spike their earlier in the day. -- on the marks, alex deal. four on the markets, alix steel. ♪