This is "taking stock ," for friday, august 9, 2013. i am pimm fox.
President obama wants to revamp the patriot act.
We find out if the changes are enough for activist suing the national security agency.
How does your garden grow -- urban decay in the bankrupt detroit turns out to be the right mix for the urban gardening does this.
It is friday.
That means my producers will try to stump me with the mystery guest.
For a closer look at companies making news, let's go to su keenan.
Jcpenney stock dropping 6%. pershing square bill ackman criticized upper management saying the chairman needs to be replaced and the board is not effective.
Priceline closed up 4% today, continuing the march to a $1000 stock price.
They reported a 20% increase in profits.
Apple stock dropped as investors remain wary of the ability to compete with samsung.
Apple's share of the smartphone market in china was cut in half in the second quarter as consumers turned to the mastech suppliers -- domestic suppliers.
President obama has outlined potential changes to the government's surveillance program.
Julianna goldman has details.
The president just wrapped up his press conference before leaving for martha's vineyard.
A lot of topics he covered -- i want to start with comments about the search for the next fed chairman, saying that pick was as important as his lifetime supreme court appointments -- one of the most important choices he has to make as president.
He said janet yellen and larry summers are outstanding candidates, but he tried to defuse the idea that it is a to- person -- two-person race and he indicated there were four candidates he is considering.
Franca, i think both larry summers and janet yellen are highly qualified, and there are other candidates that are highly qualified as well.
I will make the decision in the fall.
The president -- the president went to capitol hill and defended larry summers.
He defended his defense of summers, saying it was not because of an insidetrack to the job, but that because summers worked hard for him.
The susan rice comparison -- he compared his defense of summers to when he defended susan rice against criticism when he was considering her for secretary of state, and that is interesting because she was being publicly vetted at the time and he did not go on to nominate her.
As we read that tea leaves, as we like to do, that could be an indication of where the president's mind is now, but he said the decision will not come until the fall.
He announced steps to enhance public confidence in the u.s. government's surveillance programs.
That is right.
He outlined the steps he has taken to enhance public confidence.
He was a little defensive.
He was not saying it was not enough for me to have confidence, americans need to have confidence as well, and, frankly, he underestimated that if he thought there were appropriate checks and balances that americans would be ok with it as well.
This program is an important told the disrupt terrorist pots and it does not allow the government to listen to phone calls without a warrant, but given the scale of the program, i understand the concerns of those who would worry that it could be subject to abuse.
They will be releasing, and they did release the legal rationale for section 215 of the patriot act deals with telephone records.
They will also work with congress to enhance privacy protection in the patriot act, and the president also said when it comes to the foreign intelligence surveillance court that there could be a civil liberties advocate to provide additional checks.
He also announced he would form an outside advisory board that would conduct a review.
The first report comes in the next 60 days about how we should be thinking about balancing national security concerns and civil liberties.
All of this, the president acknowledges, will not answer the questions, but it will tee off the discussion.
How did the president discuss relations with russia because it does relate to counter-terrorism issues related to edward snowden, the former nsa contractor?
Sure, a lot of questions about this after the white house canceled a one-on-one meeting between president obama and president vladimir putin.
He said he did not have a bad relationship with putin, but russia needs to understand where they are going in the 21st century.
You could tell the president does not want to blow up the relationship, so he is going to the g 20, and interestingly, he said he does not want to see the olympics boycotted, but the best way to push back against, for example, anti-gay legislation, is to have gay and lesbian athletes represent the united states, go there and bring home runs, gold and silver.
He put in another dig, saying russia might have better teams if they had gay and lesbian athletes on them.
Thank you, julianna goldman.
For more reaction on potential changes to the patriot act, i am joined by trevor tim with that electronic frontier association, a nonprofit that has filed lawsuits against the national security agency.
We have david kennedy, head of trusted sacked, and he has worked for the nsa.
Gentleman, good to have you with us.
David kennedy, i want to begin with you.
You heard about the president's four-point attempt to refine counterterrorism measures.
Do you think it will have much effect on whether u.s. government actually does?
If you look at where we are at with society, the surveillance we seek is unprecedented, and transparency has always been concerned -- the concern of the american people, and i do not think they have satisfied those concerns, spare open with everything they are doing.
If you look at history, he says we have stopped numerous terrorist attacks and we are doing this for the greater good and we are more transparent than any other country, but they do not share those details, continue to monitor and they do not say any specifics, which damages us long-term in our rights and constitution.
Trevor, you are suing the national security agency.
What is the basis of the lawsuit?
We have known that this type of surveillance has been going on for the past seven years, and the nsa is directly sitting on the cables for telecommunications companies like at&t, verizon and sprint, and the edward snowden files have only confirms what we have been arguing.
The government is finally releasing this information, only in response to what has come out in the last couple of months.
It is way overdue.
I agree with the last guest that says transparency is an important first step, but the devil is in the details about how this will be reformed going forward and how the administration will work at congress to make sure there is more oversight in place for these surveillance programs that hit at american privacy, despite comment that they do not.
David, can you talk about oak data collection -- bulk data collection -- you think that will end?
I do not.
You heard the president say they will have more oversight and be more transparent, but the mass collections is too valuable and viewed that way in surveillance committees, and i think it will continue -- communities, and i think it will continue and there will be little disclosure to the american people about what is happening.
What about location data?
Being able to find individuals who the use of technological devices like smart phones and tablets gekko -- tablets?
Exit is a great point.
The nsa acknowledges they have the authority to collect that data on every single american.
They claim they are not currently doing that, but there is nothing stopping them from doing so.
When we talk about the phone records program, we think about it as an invasion of privacy, and it certainly is, but we have to look at the effectiveness.
The administration found a cab driver in san diego sending money to somalia.
This is the only single incident a are looking to say the program is effective, and it is clearly not when you compare it to the privacy and liberties we are giving up by allowing the government to collect phone records, who we call, when we call them, and for how long.
David kennedy, you work for the national security agency.
You know about the bureaucracy of counterterrorism.
People are asking how is this possible that someone like edward snowden at the age of 26, a contractor, could have access to this information, let alone reveal it?
If you look at the younger generation, they are very tech savvy.
I am young, when is the hair and stuff.
It is a young society when we are doing the types of things we are doing in the nsa or signals collection facilities.
The job edward snowden had was the systems administration side.
Just by inherent spots ability, you have to access multiple systems, domains and infrastructure that allows access to that data.
Coming from the top secret, classified section of the house, there is very little access control to that data.
Trevor timm, what about search and seizure question mark -- seizure gekko -- search and seizure?
They have the ability to look at e-mails, and despite legal restrictions, there is nothing stopping them from doing so.
We have always set up our country in a way that provides checks and balances and there is court oversight and defendants are able to challenge surveillance if they believe it is unconstitutional.
Right now, the fisa court operates in secrecy.
The nsa has been operating under laws that have been reinterpreted by the government, and nobody knows what they say.
Once we get those facts, the american public can make the choice if they want us surveillance or if -- this surveillance or if they want to scale it back.
The president, speaking at his press conference, talk about using counterterrorism technology the united states has in countries that do not have the security infrastructure that exists in the u.s.. what are foreign governments to make for -- of the president's proposals for reform?
If you look at where security is generally and abroad, there is not a lot of security in different countries.
They are trying to build up infrastructure over time, and it shows we are actively going after these countries, even though the president mentioned we were looking at this from a different type of view , and we do not go after the information you think we are going after versus countries they go after the information that we do not necessarily go after.
They are open words when you listen to the president because we do not know this information.
There is no transparency.
It is done under the cloak and dagger of the national security agency, showing we are better than these countries but we do not look at all the information that is out there.
David kennedy, thank you.
Thank you, trevor timm, of the electronic frontier foundation.
Breaking news from bloomberg involving apple.
The company has one it's patent case against caps on at the u.s. trade agency.
A full report on what this means coming up next.
Breaking news from bloomberg.
He turned to the smartphone patent wars where the u.s. trade industry has delivered a victory to apple and a bigger blow to samsung.
We are in washington with the details.
After postponing its decision last week, the u.s. international trade commission has ruled in favor of apple.
According to a notice posted on the website, samsung violated apple patents and the administration has ordered a ban on imports with products that feature those products.
We did not know how broad the ruling would be.
The judge could strike a specific ruling, listing which models infringed on patents, or a broader ruling that listed the violations by technology.
In the specific ruling, many miles are already out of production, so any ban on those products would not have been so bad, but the judge handed down this broader ruling, a worst- case scenario, because it impacts old models and current and future designs.
Samsung warned it could create an immediate shortage of mobile devices.
There is a lot at stake for samsung.
The import ban has to go to the president's office for review.
It is not over for samsung.
The u.s. trade rep overturned a ban against apple, so samsung is hoping for a repeat.
Thank you, yang yang.
Coming up on "taking stock ," what is going on in the world of ipads -- 6000 students could be getting them.
Also, a look at the economy -- detroit is bankrupt but it is growing vegetables.
I have a mystery guest -- first clue, went from making big hits, to taking many walks.
? some embarrassing news from detroit -- the largest u.s. city to file for bankruptcy lost a check for $1 million, and after a month of searching, it was found in the desk drawer at city hall.
The financial systems are outdated.
Bloomberg is reporting on a positive trend in detroit.
Many of the cities abandoned lots are being turned into farmland.
We are joined from washington, d.c. and from detroit, the president of eastern market, a giant farmers market.
Allen, set the stage -- what is going on in terms of landing vegetables in detroit?
When you look at trends in agriculture, one of the more interesting is the trend toward urban farming -- cities using spaces that might have been abandoned, or things that might have been put to different use.
Opening up urban farming opportunities.
You have seen that in new york with the brooklyn grange, in seattle.
It is meant to deal with public health issues, obesity and economic development.
In detroit, you have an interesting situation with a city that has real issues with bacon problems and urban aquaculture is part of the solution.
Dan, tell us about eastern market and later tracked.
It is an old school, local full -- food district.
We run wholesale markets, retail markets, and we are surrounded by about 80 local food businesses.
We are the place where urban farmers can make processors and distributors, but our bread and butter is farmers throughout southeast michigan.com to sell to the 4.5 million people -- throughout southeast michigan that come to sell for 2 -- two 4.5 million people that live in detroit.
Increasingly, our work is on trying to work alongside people that are growing on city lots to figure out how to add value and create jobs around local food processing.
Alan bjerga, is there a city ordinance or a regulation that would spur the development of urban agriculture?
It is something that has been looked at in detroit for a long time.
In march, an ordinance was passed that should allow an expansion of the industry.
Dan would be living this more than i have, but there have been questions about whether there should be urban farming, land used for tree farms -- investments in those areas.
It is still literally an open field.
Alan bjerga joining us from washington from bloomberg news.
My thanks also to dan camody , the head of eastern market company.
It is 26 minutes past the hour, time for on the markets.
The s&p lowered by six today, closing at 1691. the nasdaq fell nine points.
Networking equipment manufacturing juniper networks closing down after they disclose they are being investigated for violation of the correct actions act.
We will find out the latest about apple versus samsung, and our mystery guest went from a three-point stance to four- legged friend.
? this is "taking stock" on bloomberg.
I am pimm fox.
For the headlines, let's go to mark crumpton.
Jpmorgan is said to be near a settlement over london whale trades, negotiating final terms of the deal to the bad bets that led to losses of more than $6 billion.
Investigators say the bank misled investors about trade.
Billionaire carlos millan -- carlos slim is trying to expand in europe, making a offer for royal kpn.
They already own 30% of kpn . the number of americans living overseas who renounce their citizenship jumped six fold.
There were more than 1100 of them, apparently because the government is preparing to crack down on tax cheats that live abroad.
Coming up on "bottom line," apple wins another round in the patent were with samsung.
I will talk about that with scott kessler from s&p capital iq.
That is tonight beginning at 7:00 p.m. eastern right here on bloomberg television.
Thank you, mark crumpton.
The los angeles school district is planning to purchase ipads for every one of their 600,000 students.
For more on how tablets and technology could enhance the technology of students, i am joined by marjorie maher.
Thank you for coming in.
Thank you for having me.
Tommy about this plan -- giving out 600 -- tell me about this plan -- giving out 600,000 ipads.
They are starting with 30 thousand.
They want to move quickly.
They are not alone.
We see ipads in schools all over the country and other tablets as well.
At scholastic, we are getting ready to bring out our reading intervention program on the ipad.
It is in the apple store, the?
For release, we hope, very soon.
It is the beginning of an ipad phenomenon.
There is no question that we will see 1-2-1 direct -- devices for all kids.
We are at the beginning of learning how ipads will work, what is the best use of them.
We are seeing good things with field-testing with our read 180 program.
It is a reading intervention program based on technology for adolescents that are having reading difficulty, which, sadly, there are millions of them, and it helps adolescents build fluency, knowledge and reading skills.
I was looking at statistics with the los angeles school system.
30% of third-graders do not read at the third-grade level.
Is this also part of the reason to get the ipad and tablet computers -- there is a reading problem?
Let's call it a reading challenge.
There are a lot of kids in this country not reading on grade level, and that is why people are looking at putting tablets and devices in kits and because there are excited -- kids hands because there are exciting ideas about how they can be used.
The tablet itself will not solve the problem.
Not unless you have the teacher, curriculum and the support.
It can it help?
It can help, bridging the technology at home, but it is a device, not a full solution.
Where is the money coming from -- 600,000 ipads, that is a lot of cash.
I think they will probably pass a bond.
It is half of a billion dollars, is what the school district has said, and you know, that is just the beginning, really, because in order to have that much technology in a district like los angeles, they have to make sure the building can support--- that they have the right amount of wireless, that -- support them -- that they have the right amount of wireless technology and the teachers to support.
What about that scholastic -- what kinds of things are you doing and what kind of feedback have you gotten from teachers as well as students?
So, we have been a leader in how to use technology in schools since the 1980's, which is going back a long way, and we believe the role of technology is not to replace teachers, but to help teachers.
Almost all of our learning technology is personalized.
Kids work on it.
It provides information back to the teacher about a student's strengths and weaknesses.
We also hope that it addresses kids where they are, so it is motivating -- get them in a zone where there is just enough challenge to keep it interesting.
We are interested in the principles of gaming theory -- how do you keep the average where it is hard, but not so hard that you put it down.
Who is developing this technology?
Does it happen in house and scholastic or is there a community of developers?
There are both.
We have engineers, designers at scholastic.
We tried to work with the best minds in education and technology, though we also use people on the outside.
It is a big endeavor.
There are a lot of exciting startups -- two guys in their garage building something interesting.
What you see in technology in schools is everything from small, exciting, narrow applications, too large, audacious offerings.
Is there a connection between those who developed the technology for these applications, like reading, and the students themselves -- getting the students interested in making things that would appear on the ipad or tablet computer as well?
That is incredibly important -- that students feel a sense of ownership or they are involved.
That they learn the skills to do it and get a job -- or that they learn the skills to do it and get a job.
Yeah, and obviously it marries on their age, but is that are going -- varies on their age, but the kids going to school now, they will get out of high school in 2025. they will be using technology every day come and they will view it as an essential part of entertainment.
What is iread?
It is our reading program for k-2. there is an emphasis to have kids reading on grade level by the end of grade three.
If they are not, it is harder for them to catch up.
Iread is teaching them phonics, word recognition, and it is done in a setting where the teachers are monsters, and they are in a school run by monsters, and the kids get an avatar that is a monster, and they can decorate.
It is fun.
Thank you, margery mayer.
Let's go to su keenan for our bloomberg brief report.
Saturday in orlando, president obama will speak at the disabled american veterans national convention, and following the speech, the first family will fly to martha's vineyard for the 10-day vacation.
Sunday in asia, the second quarter gross domestic product, which likely rose for a third straight quarter.
Back to the u.s., monday, green supply and demand forecast for the department of agriculture for the coming year, as well as the u.s. monthly bus bench budget -- budget statement for july.
Coming up, notable disappointments and relative successes at the summer box office.
We run down the hits and the mrs., as well as how video-on- demand services are changing, yes, everything.
More next, "taking stock.
The ? -- "taking stock." ? first.
Disney is betting that a direct to dvd movie will make some money.
"planes was supposed to be added to stores, but disney decided to release it to theaters today.
Will it be a moneymaker?
We are joined by bloomberg news reporter greg evans.
You have been busy, spending time in the dark watching blockbusters.
Watching blockbusters, special effects and men of steel.
Let's talk about a blockbuster at night or might not -- that may or may not end up being a blockbuster -- "the lone ranger." that was a bit -- that was a disappointment in terms of blockbusters.
Some have done well, but that really just bombed.
It was johnny depp.
He was supposed to be a big draw.
He was in "dark shadows," last year and that did not do much.
He is a likable personality and people are drawn to him, but he tends to overdo these cartoon performances and i think people are getting tired of it.
"the lone ranger" was a terrible movie.
What are some other films that did not get the reception people were hoping for?
It kicked off with "after" with will smith that did not do well at all.
What is the premise?
People say it is a scientology allegory, about immortals.
That was the pre-course or two real -- precursor to real bombs like "white house down, which was easily one of the worst movies i have seen in five years.
Did that bomb at the box office?
Channing tatum was on the cover of "vanity fair." it was going to be the movie of the summer, and it was laughably bad.
That is the trifecta -- "the lone ranger," "after earth," and "white house down." what did you like?
"pacific rim" was ok.
All of these films have special effect.
I think people are getting tired of them.
What was the was bussie -- buzziest thing?
Sharknado that had bad effect.
It caught people's imagination in a way most bought authors have not.
What about blockbuster -- box office receipts for "world war z /" if i had to pick one that i like, that would be it.
That surprised me.
I did not see where that was going.
And not one hair out of place for brad pitt.
Zombies have only so much they can do.
They cannot destroy red pit -- brad pitt's looks.
Hugh -- hulu on demand -- what our videos on demand that you have been looking at?
There is something interesting going on.
We are not having to wait a long time for online movies.
There is a movie right now that is debuting in theaters as well as on-demand called "lovelace" about linda lovelace, the "the throat" star , a serious movie.
It is on-demand on itunes and in theaters today.
You are seeing that they are releasing them at the same time.
It is a movie that is not great, but it is not bad.
It is something you might want to check out, and people would not have the chance because it will play in limited markets.
These are the kind of things you would see in film festivals.
What is the next movie you look forward to seeing?
I am saying "jobs" wednesday starting ashton kutcher as steve jobs.
Thank you, greg evans.
Next, my mystery guest -- he went from the gridiron, to the street, to daycare.
? my next guest is a mystery to me, but luckily my producers have given us a few clues -- he went from making big hits, to taking many walks, from a three point stands to four-legged friends, and from the gridiron, to the street, to daycare.
Let's bring out the mystery guest.
Great to have you with us on "taking stock." judging by your size, you must have played professional sports.
Did you play for all?
Four-legged friends -- something to do with dogs?
Crack something to do with taking care of them -- something to do with taking care of them?
Do you run something called "the spot was quoted in new york?
-- do you own is something called this bot in new york.
Doggie daycare -- many people do not know it exists.
That is right.
It is one of the services we offer at spot.
. -- for dogs.
You are rooming, taking care of a variety of things for them.
That is right.
We have partnered up with luxury residential of onlookers in the city and other urban areas we have expanded to, delivering had services done at a high level as an amenity to the building owners.
It has caught on.
It is very difficult for someone that owns a dog -- me being someone who has had a 180 pound dog in the city for 13 years, to find the services you need that fit your lifestyle.
You played for the carolina panthers.
How did you go from playing pro ball to deciding you want to get into the world of canine comfort?
I did not jump from football to this business.
When my career ended -- you were injured, right?
Yes, i have multiple back injury and my career was cut short.
Cutting out -- coming out of the university of and selena, i made a natural progression -- pennsylvania, i made the natural progression to wall street.
I saw this unmet opportunity with pet services in a very mature, fast growing segment of business.
You also had a big dog.
What kind of breed?
I started with a 180 pound bull mastiff.
With me from charlotte, where i was living when i played with all, too -- football, to new york.
He was my best friend.
Crazy hours trading international markets.
I was looking for the right services for him and i was disappointed with the level and standard of service available.
I was willing to pay top dollar.
You could not find anything that suited your needs.
What i found was small mom- and-pop this this is -- people that love dogs that wanted to be in the segment but that did not have the capital where the infrastructure to provide them -- or the infrastructure to provide them on a high level in a scalable model.
How many locations do you have now?
You have more than one spot.
Currently, we have more than seven -- we have seven locations.
We partner to roll out 50 dog- friendly buildings in and around new york.
Since that partnership was announced, we have our nerd with -- we have partnered with silverstein properties, who is building out a negative facility.
-- megan facility.
-- mega facility.
Comedy dogs do you have now?
-- how many dogs do you have now?
The first two facilities -- we now have about 5000 dogs we see on a daily basis.
We have also entered into dealing with airlines.
We partnered with united airlines and we are in talks with other major airlines where we run on-site facilities, dealing with all of the animals that are transported through major hubs.
Thank you very much, mitch marrow.
The chief executive of spot during it is 56 minutes past the hour.
And it is time for on the markets.
The dow jones industrial average loses 72. the s&p 500 down six points and the nasdaq down nine points.
New corey gaines about the moral four percent as the broader steel and aluminum market posts gains.
The stock is up about 7.6% in the last month.
Thank you for "taking stock.
I am pimm fox.
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