>> live from pier three in san francisco, welcome to "bloomberg west." i am cory johnson. here is a check of your bloomberg top headlines their the first post attack edition of charlie hebdo is now on sale and proved to be a hit, selling as much as 14,600 $72 on ebay. it sold out everywhere. that magazine cover not such a hit in the muslim world. iran strongly criticized both the terrorists and the magazine,

saying it was "insulting. france meanwhile keeping security at a high level. jpmorgan chase shares fell the most in three months after the company reported a 7% drop in profits due partly to rising legal costs. jamie dimon says it is on assault by regulators who want to break it apart. >> the reason you have a mold the national banks. including governments. six have intentionally dollars a day, you will not do that with a small bank. you will not put out a $20 million per xfone and you cannot do certain things globally in 20 countries if you are not in 20 countries. >> some of the wounds might be self-inflicted. jpmorgan posted its lowest fixed income trading revenues since the financial crisis. apple suing over the wireless technology used in mobile devices. the federal court claiming they

are not essential to long-term standards and that the rates were excessive. meanwhile, ericsson suing back in texas trying to determine whether the terms were fair. and the crew of the international space station were safe after an early-morning scare over a hazardous leak. an alarm went off indicating a possible pneumonia leak. one called it a nice -- a nightmare scenario. nonetheless, astronauts are spending the day and a russian part of the space station as a precaution. tesla shares are pummeling today after elon musk said tesla will not become profitable until the year 2020. for now, the prophet news is not the only's feed him that carmaker is facing. here is elon musk speaking at the automotive news world in

congress in detroit. >> things were a little weaker in china. communications issues that needed to be fixed. most importantly people have the perception charging from china, actually at this point, we feel there are overcharging issues. we have got to work to connect that misperception. question when he now with more on the troubles, then. elon musk is saying basically chinese customers are making a mistake and not knowing they need to buy more cars. >> yes, i think tesla entered china with high motivation. they're learning the market is more difficult than they initially thought infrastructure and education wise. >> isn't that true of any product out there? >> i think it is a little different. >> are you saying we need to fix our presumptions, but i wonder

after nine months of the market sales are falling already, and maybe the market for the luxury electric car, with certain limitations, maybe is not huge. >> there is a short operating time so far, where what they are seeing is slumping sales. bringing in someone else is one step in the right direction. increasing infrastructure is another. >> in december, they got rid of the risen. >> they did. it was really because of the missed that in the infrastructure build out. one thing to remember is this also happened in germany. they entered germany thinking it would it -- be a big/in high demand. they had infrastructure problems. there is precedent for this and i think it is something they can correct for over the course of the year. it is important to note they did say they can meet their targets but obviously, in the future, --

>> let's talk about that. the promise of the country -- of the company was that we will create an electric vehicle for the masses. they got a lot of money from the government to do this would say have since paid back thanks to the shareholders who have bought into the tesla story. they have not created a low-cost car. now they say that is many years away. >> erroneous reports yesterday. they did stick by the 2017 target. an early delay 2016 at one point. but we did see the amount meant -- the announcement from chevy about the volt. it is pretty ugly. >> he is got out he talking about electric car now very soon. you have a new whatever the chevy will call it aired a bunch of competition is coming at that

price point. >> comes around the same time were later at tesla. audi is probably the leader. you also have toyota pushing forward on the hydrogen side. but in infrastructure build on that as well. on electric vehicle side, it is good news for tesla. the more charging stations, the more cars out there, elon musk said as much yesterday, in their commentary, they would like to see more in the market. i do not think it is just lip service. they would rather be a number three player in the major part of the market share than a number one in the niche market area >> sure they would. but right now, what we're seeing from the market is significant limitation. sales in the u.s. are falling. sales in china after nine months are falling. rather than imagine a future where things are different for

tesla, can we look at what they're doing and say, maybe there is limited demand? >> 22,000 sales in the u.s. and in the world. this year, we will finish around 3000 and maybe slightly less. that is demand growth. i think in his commentary yesterday, six he received the demand to accelerate. classes is a very expensive, limited car. it is a neat vehicle. from people like the way the car looks and some people think it was like the honda word very -- honda accord. it has got a lot of hype and maybe it will not be as big a company? >> number one that argument has been demand. tesla so far has proven otherwise. this is, you know the second

time outside of germany where the demand has come up front and enter. that is why we have seen the negative stock reaction. the next stop is earnings early february where they will be able to clarify some of this in greater detail in a better for him than speaking off-the-cuff. >> when do you think the model x suv will hit the road? >> i think commercial deliveries will begin in q3. sometime in earnest, in july. >> that has been pushed up several times. >> a couple years ago when the company went public it was due out at the beginning of 2014. >> i am just remembering the debut, when they could not get the trunk open. it was an amazing moment. every company wants to be amazon, where they never have to show a profit but at what point does the promise of profit get further and further away?

>> i have been talking to investors since yesterday through that discussion all morning this morning. >> they are probably not too happy. >> there is understanding about the spending. the way he delivered the message on a very high level, tesla is rough-and-tumble now. i think what he is trying to say is after their buildout of technology, in all of the investment needed to build out their network in china and europe, and to hit that 500,000 run rate, it is kind of an anchor and guidance for 2020. he is anchored to the number as going forward. >> what we see from tesla -- thank you. we appreciate it. still ahead, the online marketplace at sea is planning to go public there are not much

larger than reason private rounds. it raises the question why do an ipo at all? we will talk about that next. ♪

♪ >> i am cory johnson and this is "bloomberg west." silicon valley strikes back. crafting an ipo. one of the biggest tech ipo's to come out of new york since the glory days of 1999. the website where people sell handmade crafts and then change items in there looking to make $300 million and people familiar with the matter. we are joined by the ceo of an online shopping community. an interesting business in itself. a social shopping site with more than 350,000 stores.

how do you look at the business? is a fairly incredible thing a lot of people do not know about. how do you describe it? >> these to the incredible growth we are seeing an independent commerce. our team has done inventory of independent stores out there. we found we can calculate over 2 million. ed c, shoppify, etc. we went from 150,000 to over 2 million independent stores. etsy is a huge part of that explosive growth. >> this filing, i was so anxious to sit what kinds of things might we learn from this? >> it would be really interesting to see this -- much around how much revenue is driven by sales.

that is something i am curious about. i know a couple of years ago only 20% of etsy listed products are actually getting sales. it is still millions of products , but still, metrics like that would be interesting to hear. >> most people making stuff to sell on etsy do not sell it. >> when you have a platform that is so broad, the power of it is to expose the best content. when the barrier to entry is low, it makes it so i can open a store tomorrow and start selling. the real question is, how does the platform help a good seller get discovered? that is a big focus of what we're look -- working on. >> last we know merchandise sales, it was doing so profitably it raises a

question, why do an ipo at all? what might they need the money for other than to pay back venture capitalist's? >> the opportunity with independent commerce is really early. i shared some of the numbers in terms of the sheer number of stores and sellers online. i would not be surprised, but i hope to do. i'm sure we can put this money to good use. >> i also wonder, when we look at that business, if there are other categories they want to break out, it is interesting they powered a broader ecosystem of people making stuff. question is absolutely fascinating. a lot of attention have to go to discovery. when you have a platform with that many products, 26 million i believe, how do you find that

right rain or piece of jewelry you are looking for? discovery is the biggest challenge, i and. >> what is the last thing you bought on etsy? >> a necklace. >> nice. thank you very much. the are getting emptied to a mirror that sends you information about the close you are trying on, we will look at how intel is investing in this richard reid l next. guess of retail -- of retail next. ♪

>> welcome back.

looking at more than 1% losses across the board fitted down the smp hundred have both fallen into one-month lows. it is an unexpected drop in retail sales, fueling concern that growth in the u.s. is slowing. it is a broad-based decline, also. all 10 sectors in the red. jpmorgan and wells fargo both failed to impress with earnings. energy and materials also under pressure. where are people going? we see risk aversion and people are going where they see is safety. the yield, notably falling to an all-time record low. another place people are going expanding gains for a fourth session and climbing to a three-month high. a quick check the fear gauge as you might imagine is climbing to a one-month high back above 22.

>> i am cory johnson. this is "bloomberg west." intel has designed many things for a long time. it has taken the technology to retailers. showing off the latest and greatest this week at the national retail conference in new york. shopping bag can sense the close behind them, they can digitally order fresh year when they are running well. it sounds good. the director of the retail solutions division found a more about the company's plans for retail. >> we have been in for over five years and we are really trying to engage the retailers and understand their challenges. every year, we bring new things to the show and really are transitioning to a high-tech location for consumers to interact with retailers. >> what is the coolest thing? >> from our booth, a lot of excitement around the digital mirror but we have a cake solution, really bringing the internet of things to life.

taking the metal beer cake and taking the device and making all business models. >> an intelligent device that turns your college students dumb. i know how kegs work. interesting. >> once the consumer has already put on clothing in the dressing room and they come out to the public clothing, they can essentially turn around and do it and see what they look like in the outfit and get a view of all the different perspectives. while they do that, the digital mirror is actually recording a brief two second video, they can then share in social media via their own cell phone device. they can put it on facebook or instagram or pinterest, whatever is their interest. that enables them to get votes or likes and have that impact on the clothing decision-making. >> that is really interesting.

i would imagine the biggest challenge retailers have is not so much getting people to buy the stuff they have on their shelves, but managing inventory managing the check out, getting people from intent to closing the sale. are you working on a lot of those solutions and how have those technologies changed in the last few years? >> absolutely. one thing we did our booth is give everybody coming through our door and intel bag that has an id tag on it. it shows them by the end they can see their dots traveling through the booth and give them real-time information and demonstrate what a retailer with the if an id tag was on every piece of clothing. by tracking the clothing retailers learn a lot more. they can then analyze things like looking at what clothing gets put on 20 times in the dressing room but never gets the gist, or what types of items get purchased together.

by tracking the clothing we stay away from privacy laws and use the clothing movement as the way to see the behaviors happening in the store. >> that is really cool. cyber security and privacy are usually not in the places we think about them. how do you imagine dealing with the problem? >> privacy by design. really tried to think up front about the business problem and how do we go about that in a way that reserves the privacy of the individual. in this case, tracking the product and not the person and in addition, we want to know that retailers know about consumers because they want to give them that great, new experience. we think a few consumers will opt into enabling that type of experience with their key retailers they feel close with.

we launched a problem back in october, intel data protection technologies transaction. that enables the retailer to be in control and secure and encrypt the data related to the consumer so that it is not accidentally sullen -- stolen or by malware crooks to steal your identity. that is a big problem. >> these are front-end solutions. is this a business intel wants to be in or are they showing off what is possible and let the world margin to their own solutions? >> intel is very serious about the internet, one of our biggest growth periods for the company. it is one of the biggest sectors we are focused on right now. we're just now at the products of the solution level so we can

bring more value to that network and help the innovation network on that intel. >> the director of the retail solutions. bloomberg west will be right back. ♪

>> you're watching "bloomberg west." i am cory johnson. mark zuckerberg is in columbia the nationstate, meeting with their president. zuckerberg is hosting his first international -- to bring internet users all over the world in undeveloped nations. why columbia? for more, i'm joined by brad stone and the ohio ventures managing director paul, in chicago. the: the olympian ski team and a

tech advisor to the colombian government. we have got to talk ski team. do you want to tell us that story quickly? >> yes very quickly, about two years ago, i decided to drop everything and pursue my dream to make a living. i stopped everything in the silicon valley world and started training skiing. one problem was that i was an american. the government was nice enough to make me a citizen and i was able to go represent in those races. >> with that out of the way, talk about your involvement. >> we did make huge leaps. no one ever thought about club you start ups. a lot of stops are popping up. small funds coming out. the government had a really big role. they started a large organization coming from the top down. zuckerberg meeting with the president, it is coming from

him. it is pretty exciting. >> is this truly a charitable effort or a way to create more facebook users? >> i think it is a little bit of both. facebook has 7 million people in the world. a lot of folks live in countries where the networks do not really support moderate -- smartphone applications. they're trying to retail the internet experience for those countries. those countries do not support vibrant advertisement ecosystems. what marquez is really a mission that inspires his company and makes facebook stand for more than relevant ads. >> we look at growth statistics about what is happening where for facebook, did a growth out of sight -- outside of the u.s. it is a much smaller business when you care -- when you compare it for the u.s. but it is growing at a much faster

pace. >> absolutely. facebook's business in north america and europe is really just getting started. but the user growth, markets are saturated so facebook has to look elsewhere. if you look at where mark is spending his time, it is places like lumbee, mexico china trying to open up those markets. >> what is the biggest impediment more broadly in columbia? >> the biggest problem is all those countries, they tend to be bifurcated, the very wealthy at the top, and a large masses. cities and a large capitals, -- >> it sounds with america, but ok. but even more so. >> brazil, there is a very big that there it a large middle-class. a lot of them do not have middle-class or a very small one. the biggest problem is very rural parts. columbia is going quickly as well.

i have seen trends like this in southeast asia. it is very fast. based -- they moved to smartphones. >> interesting pair i wonder about these cases, if facebook is the use case or if there will be other sorts of abuses because for a lot of people on this art of the world, their initial experience will be, the only spans will be on the phone never on a laptop or a tablet. >> only -- almost everyone is avoiding the laptop. facebook has done certain things where here in the united states, you sent an e-mail and stuff like that. other countries, they go to southeast asia. you sign up with your mobile phone and go directly to the mobile experience. that is a very smart way to go about it here it >> then there is the drones. >> that is right. we cannot dismiss the element of rivalry in these efforts. google very famously with this

project floating balloons over developing companies and now facebook with its conductivity lab is getting into this space. no one wants to be blocked out of the markets. getting into the space. satellite development, marcus talk about lasers. he is talking about drones. that is certainly an element bringing the internet to these corners of the world that really do not have these immature cell phone networks. >> i wonder if there is a completely different path, not only an application, but a different business use case that will emerge around these countries to drive this adoption . >> sure. one of the most admirable things mark zuckerberg is doing is not just access to facebook. it is wikipedia, google search, family-planning information, government services. they are taking a broad view and try to help these communities use the internet for the first time and grow because of it. >> what do you think of the

venture opportunities in technology and places like columbia and latin america? >> all of these markets are growing quickly. the u.s. you see here, you want to look for growth, that is the way you go. also you look at the united states, there is a ton of talent everywhere. i go to columbia and you see amazing guys and girls. with the world becoming smaller executive technology, websites this blog you will see them come out everywhere. i do not think it is wise to not look at these laces. >> paul is definitely not out over his skis. thank you very much, as well as brad. it is not just other companies that are challenges getting people online. broadband internet access, a different story out in the heartland, rural internet access is still a tough issue.

we will talk about president obama's plans to connect rural america next. ♪

like i am cory johnson and this is bloomberg west. all kinds of hot.

they must have holiday gifts of 2014. my own self the stick. the 2014 song "#selfie" is just a trend. >> i have seen a lot of them since i have been traveling. yes. i did not even know about them before. >> i see them everywhere. yes. >> didn't god give us arms to shoot selfies? >> or friends to do it for you. >> these days, people bring their fancy camera equipment to bring pages of themselves at the golden gate bridge. >> in a group, you can actually get a lot more people with the

song further away from you. >> got confiscated at the airport, his first one. the second one, they do not understand what it was for. he bought another one and i thought it was stupid at first. >> a camera with a bluetooth -- a bluetooth connection. all for the greater glory of the duck face. >> what is that? is it is with the libs out. >> show him. >> that is the duck face selfie. >> your arms may be too short, but just right. >> i finally see why you need one. >> i am joined now by brad of bloomberg businessweek. >> it is fitting. >> it is amazing, this room --

boom and narcissistic moment in technology. they all come together to the stupid business in this thing. >> everyone is carrying them. >> we see the tourists walking up and down with these things all the time. the guy in the cap told me every day, he has got people with selfie six -- sticks. >> i'm against it. keeping the social fabric together was the fact that people needed to confront strangers for the golden gate bridge. we have all disappeared into our phones. that need cap people connected. we now no longer need to talk to strangers ever again. >> i have talked to strangers. >> your package gave me a little bit of hope that maybe there is

a communal gathering, that may be, at the point made, it allows group to come to get -- groups to come forward together. >> i hope to that photoshop would eliminate the need to talk to people at all. >> money you people would be there to take pictures of each other. that was a nice moment we will lose. >> it is way too narcissistic and therefore, there are no selfies available for the witness protection program. to thatclasses felt the phenomenon was telling off a little bit. >> thank you. brilliant technology like a selfie on his it, it is back. "bottom line" with mark crumpton begins at the top of the hour. >> putting his contact lenses in, but we will try to get

through it. thank you. montgomery scott will be joining us. it will be released at the top of the hour, two :00 p.m. washed in time. the anecdotal reports from businesses and the fed's 12 regional districts. we will also talk more politics. peter cook will be joining us at the top of the hour, ringing us that report. a lot more coming up at the top of the hour. i will see you then. >> trying to take a selfie of the two of us here but i do not think it will work. stephanie ruhle is the queen but we are getting there. >> is that one of the selfie sticks? >> it is a special one. >> somebody just said in my ear i am so hip. >> yes you are. thank you very much. >> thank you. >> president obama wants to improve broadband speeds for

north america and other areas. we will explore the issue next on bloomberg west. ♪

>> i am cory johnson and this is "bloomberg west." remember the days of dial-up? a long way since then. not enough for president obama. he wants to help them make -- the internet faster and cheaper. >> you know what it feels like when you do not have a good internet connection.

everything is buffering and you are trying to download the video and you have a little circle thing around and around and it is aggravating. that may need money if you're trying to do a business deal. you may lose a customer if they are not able to see you respond quickly. if you're a student and you try to study for exam and you are to download information and it does not come that is a problem for you. there are real-world consequences to this and it makes up what -- it makes us less economically competitive. >> today, the president is in iowa to eliminate laws in 19 states that restrict ugly run broadband networks. one of the municipalities at the center of the issue, that city petitioned to override tennessee law after building its own publicly run high-speed internet network. joining me now is harold. talk to me about what has been billed and where the money came

from. >> sure. we have built a cyber network to serve a 600 square mile area. homes and businesses. the money came from two places. most of that money came from the electric system as an interdivisional loan to allow the communications company to be built. after we have been building on it for about two years, we also received a very nice grant to build out our smart grid. both the electric system smart grid and the fiber system have been completed and are working very well. >> what is the bins -- the business impact. earlier we were talking about 2 million people creating items handcrafted items, it seems like just the kind of business that could be empowered with a strong internet and cannot work without an internet. >> the business impact has been twofold.

we see more industries that have come here. particularly industries that are high-tech and based on communications. the other thing is we are seeing a lot of bright, young, oshman arial folks coming into the town. we are at the point where our young people stay here if they want to because they have the opportunity to work and live and do not have to move away. >> it is probably a little bit cheaper than other places. what was the initial objective of the law that prohibited broadband? >> i think the objectives of the law were primarily anti--- they were framed as saving communities from themselves keeping the communities from doing things that might cost them economically. the reality is, if a community gets into trying to build a communications system, if anything goes wrong, only that

community will bear the burden of it. that is the absolute definition of a decision that should be made locally. >> in other words, if you want to have a problem, you should be able to have that problem. i visited utah about a year ago. with their high-speed internet they have got a much higher speed than here at the heart of technology in san francisco. a lot of big businesses have been built. there have been a couple multibillion dollar businesses in their cities. i think most people in the u.s. have slow internet connections compared to tokyo and paris. >> yes. there is something fundamentally strange about them having less internet than you have there. bigger cities also have the same speeds and capabilities that we can build in small towns. we think of there is a lesson to be learned, it is that we can do it here, we can do it anywhere. >> can you stand top of the

latest greatest, cutting-edge technology, as the government has for a lot of good reasons the big important and fast things? >> it is actually pretty easy to do. the technology we're using his basically computers. computers are bigger and faster every year and cheaper. we are currently testing equipment that is 10 gigabytes and 40 gigabytes. so yes, it is not that difficult to keep up the technology. >> herald, the president and ceo in chattanooga. thank you for your time. we really appreciated. all right, the bwest byte is where we focus on one number that tells us a whole lot. >> 415 million. this is the settlement being proposed by google, apple, adobe, and other countries -- companies, that tried to settle the lawsuits.

you probably remember steve jobs was the ringleader of that and it started in 2005. basically suppressed opportunities for engineers in silicon valley. >> wasn't there a proposed settlement? >> 325 million last year. it was said they were getting off too easy and the companies had to go back and this was the latest proposal. if it does not work, the case goes to trial later in the year. >> for all the notions that silicon valley is the land of opportunity, is a pretty amazing thing these big companies were keeping people from getting jobs they were qualified for. >> it was really about steve jobs's personality and the fact he hated losing people at apple. he strong-armed a lot of companies. google did not hire apple employees. >> it was really something he led. it was interesting, he has been lionized. he has an image about himself. the things he was doing were so

interestingly anti-competitive whether the book deals and trying to take over the business or take it away from amazon through price-fixing, and now this. >> the testimony is embarrassing. we already see how the ceo eric schmidt was bending over backwards to not alienate jobs. the companies just do not want any more of that. >> who will get the settlement? >> it will be spread through tens of thousands of these. the lawyers get a quarter of it. then these tens of thousands of engineers part of the class-action. >> brad stone, thank you very much. we should take a selfie, don't you think? it will be our first selfie. put it on. there you go. we will figure it out. thank you very much. her member you can always get the latest headlines on your phone, tablet, and bloomberg radio. we will see you tomorrow with more of "bloombert west."

♪ . .

>> from bloomberg world headquarters in new york, i'm mark crumpton and this is "bottom line" -- the intersection of economics. we begin with the fed's latest snapshot of the economy -- the fed's beige book. peter cook joins us with the details. >> the beige book, reviewing economic activity from