>> welcome to "lunch money." i am adam johnson. here's what we have on the menu today, at the top we have a wildcard, our exclusive interview with mom at el-erian. he responds to the company and a plunge in earnings season. we will run you through those companies around the world. taking a trip to asia, for countries that have a problem with china, the ultimate destination for anyone who likes the finer things. finally an innovation, soon on the proof. we will step inside of the wooden caps on.

interior this thing is built to survive a tidal wave. we will kick it off with what everyone is talking about, bill ackman. >> the combined is a much better business than it was separated. we have committed a large amount of capital to this entity. with a contractual requirement for at least one year. we intend to own it for longer than that. in this transaction when they deal gets done, when deal 2, 3, 4 from here. >> bill ackman, you know him as the founder and ceo of pershing square capital management. taking on companies like herbalife. now he is playing dealmaker. just remind me, what does allergan actually do? >> today i got back into my favorite jeans. >> i had a really good hair day. >> i found some great shoes on

retail. >> i asked my doctor about botox cosmetic. >> that's right, they are the maker of botox. they accounted for about one third of the company's sales last year. valiant has had a focus on generic drugs, but they are expanding into specialty medicines. the ceo took the helm and spent $19 billion on 35 companies. why partner with bill ackman? >> a bill in pershing square is much better at trading and doing that type of thing. we don't have people with those capabilities. second, we did not have $4 billion to put at risk. mr. ackman and his team have contributed $4 billion towards our cause, they can be an independent voice. they are the largest shareholder we have. finally, in terms of the probability of this deal being done, having a third-party validating our business model

that truly believes the combination of this for the short-term and long-term, that is a huge asset. >> the deal is very complex. they basically purchased 30 million allergan shares and announced a plan to purchase the whole company with stock surges. if the deal goes through at the offered price, ackman and valiant will save $830 million on the deal. he explained his thinking this morning on "market makers." >> as soon as we get a fruitful, we will acquire the underlying shares. this is the exact same economic exposure is if we owned the stock. >> we don't want to partner with everyone, right? we want to partner with the best management in the industry, the industry that we like. this is not about making a pop on a stock.

this is about establishing a large position in the combined company, an attractive position not just for us, but for allergan shareholders, valiant shareholders, it is a good model. >> dow chemical certainly knows about activism. they have quite a lot going on here. so, bill ackman, i will tell you -- >> they don't overpay. price,one pays a big that is great for us. we will make some money. they get 15% of our profit. >> one of the other real reasons why they don't happen, yet to

spend a lot of time. the deal gets shopped to someone else. here they are getting a breakup fee. ackman have plenty more to say. he gets into his herbalife position. watch the full interview on mobile apps even apple tv and amazon fire tv. mohamed el-erian speaks. and what was life like for him now? our exclusive interview comes up , and wildcard. by the way, david letterman gets a visit from the man who is going to take his job. stephen cole bear showed up on "the late show" last night. you know what? i will let them take it from your. >> i will do whatever you have

done. >> no, you don't want to do that. >> no? >> it seems to have gone pretty well, dave. >> it has gone on. [laughter] [applause] >> i am obviously thrilled. >> i am thrilled as well. in a situation like this, i have been doing this for a long time, they could have just as easily hired another like me. but they didn't. they hired a guy -- >> of like me. every is like a snowflake, dave. we are all unique in our own way. ♪

>> this is lunch money, on bloomberg television. we are everywhere that you are. i am adam johnson. today? mohamed el-erian speaks.

he made headlines in january, you may recall, when he unexpectedly left the helm. >> time for me to act with you and with others, who have gone through a transition over the last four months after 14 great years at pimco and have put together a portfolio part-time activities that i am excited about. i am also excited about spending more time with my family and my daughter. things have been put in place going forward. who else but you to have my first interview with? >> now that the pleasantries are over, why did you leave pimco? >> i have the privilege of working with the best of the best in the industry. i was there for 14 years, including six as the ceo. i have lots of friends. i value my acquaintances and what we did it in terms of

serving up clients, which we did in terms of globalizing the firm and in terms of diversity. but it was time for me to do something different. to step back and have a different perspective on life. after the long hours, the grueling travel schedule, it was just the right time. >> if you remember, bill gross, the man who brought mr. el-erian into the country to one day -- the company to one date take it over? he was not happy. >> extremely disappointed. i thought i knew him better. frankly, we hired him to be my successor. does it make me mad? yes, it makes me mad. does it make me disillusioned? not really. i am tempted to say -- come on, tell us why. the furor over the last two months in terms of the headlines are quite exaggerated. it is not indicative of what

this company is, was, and will be in terms of our future structure. >> so, that was bill gross on mohamed el-erian. now let's hear mohammed on bill. >> bill is one of the world's best investors. i have the privilege of watching him in action. he is just a great investor. someone who can differentiate signals from noise. someone who is committed to delivering value. the other thing that has been accurate is that bill is part of a talent pool at pimco, a deep talent, and enormous bench that is keyed to the firm going forward. >> a very gracious of him. has he actually spoken to him since his partner? >> i will not comment on my private interactions with bill or anyone else at pimco or in my life, for that matter. i go back to a very simple issue -- i was privileged to work there for 14 years, i had a

great time, i have lots of friendships that i cherish. i am truly expecting to go from success to success. >> how difficult was it to come to the sick -- to this decision? >> it was hard. i will tell you, if your daughter comes to you with a list of 22 things that you have missed as a parent, you realize there are these special moments in your children's life, every parents -- every parent knows it . i was missing too many of these, it was tt simple. >> special moments? you not want to call that a guilt trip, but that is serious stuff. you can understand. >> she wrote down 22 specific events that were important to her that i had missed. that served as a wake-up call. it served as -- you know, a realization that the time had come to do something different. >> she sounds like a good lawyer, by the way, documenting everything, giving you evidence. >> it came up in the context of

me asking her why it is she does not listen to me anymore. she said -- just a minute, she went to her room, came back, we went from discussing what she was doing what i had asked her to do, brushing her teeth, to me defending that i am not really an awful parent. she is a great lawyer. >> at pimco you were working 17 hours per day? now you have, as you mentioned,a, a collection of part-time jobs that probably equals a full-time and half-time job. what is your day to day life now as opposed to what it was like at pimco? >> i still get up at the same time, which is really early. i spend the first two hours looking at what is happening. i watch my -- i write my bloomberg view column in that time. at 6:30 i wake up my daughter, get her breakfast, and i have the privilege of taking her to school. spending half an hour in the car with your child is a great way

to connect. i come back and i have conference calls for my other elements. for the global development council. and then i get to pick her up at the bus in the afternoon and take her to her activities. it is a wonderful mix of the professional stuff and of the personal stuff. the key issue now is that i have a lot more flexibility and i travel less. i was traveling a lot, which is very disruptive. >> and you are now getting into social media? >> yes, i discovered twitter. i discovered what an incredible ecosystem that is for being alerted on interesting articles, on interesting elements. i have also discovered something else, this incredible excitement when you mix the advances in the online social media with something else. we have seen something else

being entertainment, being the media, your business. we are now seeing it impact finance. incredible empowerment and democratization that i think is consequential in terms of the landscape we will be looking at in the next five years to 10 years. >> you can watch the full interview, including his expertise on the global economy. go to mover.com/tv. next we will take you to six flags great adventure. also, a plunge in dubai. and then we are headed to monaco. here is one for you, happy 450th birthday, william shakespeare. in case you were wondering, 37 plays, 100 54 sonnets? he died at a ripe old age. ♪

>> company, earnings season, we are going to get to the fun in a minute. dow chemical, this would be the largest maker of chemicals in the u.s., beating the estimates for profit in the first quarter. thank the wider margins on plastics for the higher prices. on the topline the revenue missed estimates. the ceo explained why to us this morning. >> as you know, north america had a very cold winter in the month of march. lots of transportation and white house carrier issues. north american revenues were not robust.

clearly the bottom line was, at the end of the day, what matters. but i would not read much into the topline number this time around as it relates to our company. we saw growth in china, europe eating a decent recovery that we are very optimistic about, and frankly given the world economy being slow in recovery and uncertain, i believe we had good margin growth through the quarter. that is actually now six consecutive quarters of the year on year margin growth, a great trend for our company. >> i don't understand how you are able to do that with raw material costs rising. >> we have in particular with our investments on the gold coast that we have announced go against low-cost shell gas, with saudi investments in canada and argentina. we have low-cost imports independent of the oil price. that difference is what comes

through to our shareholders, in essence. >> speaking of, he has been getting pressure from dan loeb. his third point hedge fund since -- says that dow can add billions by spinning off commodity chemicals and plastics. they have rejected the proposal, saying that they do plan to sell some underperforming assets. the question is -- how do you deal with an activist investor like mr. loeb? >> people make choices based on where they see the strategy and execution. with six consecutive quarters of year on year improvement, performance speaks for itself. this is a complex company. we take a straw materials and make over 2000 product families that are integrated. they all get used and reused in common sites for utility and infrastructure. we are only -- one of the only companies in the world they can do that and make money. consistent financial performance and the long-term is the goal,

we keep delivering in the short-term. while the investor says they have an idea to make more money, we listen and we engage. if we learn something, we will execute against it. we have learned a few things at this point. they have learned some fun things from us. we choose to agree on some things and disagree on others. we -- we agree on one thing, the pursuit of shareholder value, which is what this company is doing. frankly, i think it is a win-win if we learn from each other and have the same objective. >> forget about the activist investor, focus instead on the activist ceo? >> it is a terminology. i know tons of activist ceos. they work very hard to change every day. really, it is not the term, activist, that you should be looking for. it is the homework and the details behind what is being proposed and whether there is more or less value in creating

that change. >> it you could call jim reid anderson and activist ceo. that is him on the left. i am the guy on the right. we are riding el toro at his amusement park three years ago. he brought it out of bankruptcy and revamped pricing to maximize profits. admittedly, it is still a roller coaster ride. it fell during this quarter because spring break came late this year. >> we are very early in the season. only five percent of our full-year attendance. but i tell you, that is a very good start. we have seen a 25% overall increase in our passes, our combination membership and season passes. the act of days is very strong. more importantly we have seen an average per capita increase of seven percent in the quarter, following, as you know, a string of records.

our stock is up fivefold. overall profitability has doubled. fourth record year in a row. more importantly, guest satisfaction is at an all-time high. >> pricing is the key here, at six flags. customers have spent seven percent more on average each time that they go to the park. the ceo says that that pricing power has not gone away. >> we have a tremendous brand that is recognized globally. we have a great value offering, so even though the per capita increase as we have seen, we think there is room to grow on the price front. we are very careful and do not want consumers to feel like they are gouged, we are seeing nice increases in spending and we anticipate that to continue. >> six flags is not stopping there, later this year they have announced a theme park in dubai. john mccain says that washington is way off base in its handling of russia and we will hear what

he would do differently, if you were president. that is next. innovation, we will take you inside of a 4d movie theater. yeah, you heard me right. ♪

>> we are fully digital. we're online, we're on mobile, we're on app tv. we are on amazon fire tv. you name it, we're there. i'm adam johnson. today's moving pictures, with the video as the source, search crews are focusing on the third and fourth decks of the sunken ferry in south korea as they try to recover the bodies. the ship's passengers, divers have been trying to break through cabin walls, trying to reach the victims, most of them came from a high school near seoul. the death toll from the accident has risen to 150. there are still 152 people listed as missing. a sandstorm swept across parts of northwest china. the storms reduced visibility, and the high winds damaged

power facilities, knocking out electricity. the sand storms were also blamed for triggering more than a dozen fires. and albert pujols became just the 26th major leaguer to hit 500 home runs. the los angeles angels slugger belted number 500 in the fifth inning of last night's game against the washington nationals. earlier in the came, pujols hit a home run. that one was number 499. the 34-year-old pujols is the third youngest player to reach the 500-homer milestone. congratulations. all right, today in world, president obama kicks off an eight-day, four-nation newer asia. his first stop, japan. he arrived in tokyo this morning. the president expressed support for japan in its dispute with china over a group of uninhabited islands in the east china sea. china says the islands belong to them, japan says no way. washington's solidarity with japan comes at a time of record chinese military spending and

concerns over north korea's nuclear weapons program. territorial disputes seem to be common, at least the common denominator among foreign affairs. vice president joe biden was just in ukraine, condemning russians' annexation of crimea. >> we call on russia to stop supporting men hiding behind masks in unmarked uniforms, sowing unrest in eastern ukraine, and we have been clear that more provocative behavior by russia will lead to more cost and to greater isolation. >> senator mccain was also in the region visiting the baltic states. the republican senator from arizona has not been shy about criticizing the white house in regards to russia. speaking with charlie rose, senator mccain says the obama administration is "far off base" in how it's dealing with putin. >> they said that they would not give them defensive weapons. they said that they would give

them meals ready to eat. they wouldn't even fly them in on u.s. aircraft. they had to use trucks on u.s. military aircraft. they had to use trucks because they didn't want to provoke vladimir putin. i mean, it's crazy. haven't we figured him out yet? isn't this the guy that said the worst event of the 20th century was the breakup of the soviet union? isn't this the guy that continues to thumb his nose at us, whether it be snowden or whether it be these activities in the eastern ukraine or other places in the world? the first thing, charlie, is understand vladimir putin for what he is, and act accordingly. what have we done in the n light of the absorption of crimea into russia? we have sanctioned 11 people and one bank. now, do you think that when putin sees that's the result of

what he did that that somehow is going to deter him? of course not. aum ok, so what would mccain do if he were the commander in chief? >> i would do a long series of steps, ranging from helping ukraine become energy-independent. >> how long does that take? >> probably takes a couple three years. but you -- well, you got to plan for it, and there are things, other ways we can do to help them. lithuania, just by getting energy from sweden and offshore natural gas establishment, they're able to to it. we can do it if we want to. second, make it clear to vladimir putin that we will provide these people with weapons with which to defend themselves. if vladimir putin moves further into ukraine from eastern ukraine, i would at least give them the ability to defend themselves. >> well, what would do you? >> putin's calculation is, what is the cost for my taking further action? so far it's been none.

>> former british prime minister tony blair favors a strong approach to russia as well, but he says western leaders need to put aside their differences with russia to unify against a greater issue, that would be islamic extremism. he spoke at a panel at bloomberg's headquarters in london last night. >> ukraine is a quite separate issue, and there, you know, i favor taking a very strong and clear approach with any attempt by russia to take over the eastern part of ukraine. but that shouldn't blind us to the fact that in respect to this battle around islamism, we actually have a common interest. people forget, you know, over 15% of the russian population is now muslim. russia itself has major issues and challenges around this. you know, we got a common interest with them. even in china recently, there's been terrible terror attacks coming out of the northwest province of china. you know, again, whatever differences we may have in

other cities of the world, on this issue, which i think is still the biggest threat to global security in nearly 25 sent riis, we should be prepared to work with them. none of that means you can cede to ukraine. >> watch more of his remarks at bloomberg.com/tv. john mccain, by the way, you can see him too. charlie rose's full interview with the senator is tonight at 8:00 eastern, right here on bloomberg television. coming up -- from coast to desert islands, we find out what is for sale in monaco's most exclusive luxury show. we're going inside monaco's most exclusive nightclub. check this out. ♪

>> this is "lunch money," streaming live everywhere. we're online, we're on your phone, on your tablet, even apple tv and now amazon fire tv.

i am adam johnson. global luxury spending could reach $1.2 trillion by 2020. that's provided that china keeps growing and luxury brands keep selling online. one advisor says luxuries are developing their brands, trying to reach more customers. we talked about it this morning on "surveillance." >> the multichannel customer is more likely to spend between two and five times more than a one-channel customer. all these guys slowly but surely, very quickly, will all be online. >> you have said that burper zi it well. what is burr berry do right online? >> they a platform which engages with the consumer, creates sort of a viral sensation by making content which can be shared. they end up becoming media companies, in a way, being able to communicate in ways that typically brands never did. >> monaco is the world's smallest country, but it is the place for luxury, and when it pouts a luxury trade show, only the best will do. tom gibson is going take us

there. >> this is billed as the most exclusive car show in the world, and it's probably not far from the truth. to the latest in green technology, this place is for the well-to-do car fan. >> i think it's fun to see the brands like porsche and audi and with some engines and a special color scheme, and i think that's what monaco is about. there's a bit of everything for everybody here. >> as well as the more established names in luxury, this is a place for upstarts to catch a few eyes too. >> i can go over here. >> from denmark, this one has a top speed of 375 kilometers per hour. with another foreign production , this seems to be the place to find. >> where i live, they would

look more on front, whatever. >> but it's not just carmakers looking for the next high-value customer. there's both helicopters, jewelry, furniture, water sport, and the world's most expensive facial. not to mention a private island resort. >> they are targeting the same clientele, people who love the finer things in life, so we believe it's the right platform to meet the perfect individual. >> this is rare, hard to make, or just not your taste, then top marks is probably the place to find it. tom gibson, bloomberg. >> ok, so imagine you're in monaco during the formula one place, and you want a place to party. oh, we got your place. >> one year in brazil, we were

all driving around, looking for a party to go to, it was the end of the season, no one knows about six drivers, and you know, we couldn't find anywhere to go, and i just thought, what a shame, because everyone gets along. the idea was that it would be somewhere that people felt safe where people could all go together of the same ilk and have fun, not worry about pictures going out to press media. the lovely thing is whenever you come here, the only ones who get in have a pass, and of a dance floor, and there's no roped off areas, which i didn't want. i didn't want, oh, this is the v.i.p. section, this is you can't go in there. i hate that. security didn't recognize somebody who wanted to sing, and it was back to the d.j. booth, which wasn't particularly great. there you go. i think some people are really unique. we're a big family.

we've got an absolutely zero tolerance for time wasting and things not done properly. we work hard, but we play hard. >> coming up -- an innovation, the silicon valley extra newer with a low-tech solution for a tsunami. do you like 3-d films? how about 4-did? we're going to show you the next film frontier. ♪

>> entrepreneur chris robinson has never built a boat, and he admits that a tsunami is probably not likely to hit his house in silicon valley, but he's spent the past two years building a 22-foot long, eight foot high pod made of plywood which he thinks can survive a tidal wave.

we decided to head to palo alto to check this thing out. >> when i started, i just, you know, i bought 20 sheets of plywood and just started cutting. i don't know how to build a boat, so it was a good design for me, because it was basically two shapes. i wanted one a cylinder, and just put them together. the tsunami ball is a 22-foot long, 8 1/2-feet tall, 10-feet wide survival boat made of plywood and epoxy. you can put 10, 12 people in there. i got the idea for working on it, i was in a start-up incubator in silicon valley, and in one week we had a presentation by an astronaut talking about how astroids might hit the plan and the we should divert them or they'd cause giant tsunamis. two days later, the japanese tsunami hit. i spent a year in fukushima. of course, you imagine the

people that you knew and the friends that you had and you wonder if they're ok. it was a hard thing. the idea is to design something that will be comfortable on land so that, once you live in a place that had sue natural he's, it would just number your backward. when you hear the alarm and the family would climb in, you'd be ok. so it will sit in our backyard somewhere, and it's possibly wee to do a deal where folks can check it out and spend the night. i don't know what i've spent so far. i kind of look at it i'm taking my retirement early while i have the ability to jump up and down and lift heavy objects. i've been in some fairly successful startups, which is also helpful for a big budget with the bowl. the biggest one was pay pal, at some point i was at facebook. it's allowed me to think very creatively about problem solving. there are people who are making tsunami balls in japan that are very cost-effective that didn't exist when i started the

project. but this is -- i think this is more like an art project than a business. that is a strong looking bowl. all right, from low-tech to high-tech, imagine watching a movie in four dimensions, not three, but four. it's actually taken off overseas. now it's coming to america. our senior west coast correspondent, jon erlichman, tested it out for himself. >> welcome to the movie theater of the future. if you thought 3-d was cool, try adding moving chairs, bubbles, water, strobe lights, a feet tickler, and smoke. >> let's do it. >> my feet are shaking. >> the company behind this 4-d technology is a korean theater chain. it rolled out 40-x in its own theaters first, then theaters in mexico came calling. now it's in downtown los angeles and is rerote fitting

one of his theaters, a process that can cost $700,000. >> to be competitive and relevant in the movie business, you have to constantly be evolving. >> and all this movie theater magic can basically be controlled through a tablet. >> the effective digital is you have this total environmental control. you're not just, you know, shooting the movie out at the same time, but you have these effects that are timed exactly with the movie. >> effects that engage four of the five senses, smells like gun powder and freshly brewed coffee are stored in canisters behind the theater and piped in at the right time. >> smells like burning rubber. burning rubber. it's raining. i'm in the theater, and it's raining. >> yes. >> the 4-d experience comes around $6 more than a 3-d movie ticket, an up charge exhibittors like this hope will pay off. >> we anticipate that there will be a strong demand to roll

it out into other movie theaters. >> flying through the air. >> you're moving with him? >> yeah, you get a sense of floating a little bit. >> oh! whoa! that was crazy. >> how's this for innovation? caterpillar's big machines play a big game in today's "mystery meat." ♪ ♪

approaching 56 minutes after the hour. bloomberg is on the market. let's talk about the big reports coming out after the day.

better iphone sales in terms of number of units shipped have been estimated. fewer ipads being shipped. moore capital going back to shareholders. $90 billion. the stock is split 7-1. there are two coming in better than estimates. facebook beefing up its mobile presence. let's talk about apple. i want to bring back ken brian blair. do you buy the stock after all of this? >> absolutely. it is very. it is not just about the buyback. it is not just about what happens of iphones in the quarter. we are the cusp of a significant product cycle. apple hasn't introduce anything new for four years. we haven't seen anything since.

there is a host of things that could come. they will refresh the mac hardware. what i have said to clients, though make a few million of those this calendar year. the new iphone six could be a significant seller. it sounds like a small thing. it will let them go head-to-head with samsung in the global marketplace where large screens are in hot demand. >> you see this side of shareholders. quarter.he it would notace of signal confidence on the part of the company. listening to our investor base. -- company that has

changed its minds many times for the betterment of its investors. steve jobs was famous for saying we're not going to do that and then doing it two years later. they do that. there were investors that did want to see a buyback. >> we just got a tweet from one of them. it was carl icahn. -- the least shocking tweet we can classify that. a lot of the same investors have step away from the stock in the last 24 months. it was october of two years ago that it topped out at $700. it is been in decline since them. this is an opportunity to move in another direction. follow.to see products

we are going to see that. their gross margins bounced. >> that already have high margins. >> they do. that was a surprise. this is a move back toward that range. >> you wonder what is going to happen with the new products. >> that it's a great point. there is always risk. likes thank you. -- >> thank you. i'm julie hyman.

. .