Target Customers Hit Twice: Surveillance (12/23)

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Dec. 23 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Burt Flickinger, Steven Englander, Thomas Gensemer, Richard Falkenrath, and Joe Letteri. (Source: Bloomberg)

This is "bloomberg surveillance." santa's helpers are begging shoppers to wander into stores.

Holiday discounts, will it be enough to keep the grinch away?

A double whammy for target customers.

Personal data stolen, jpmorgan chase is limiting how much they can spend.

Matt miller has visions of bitcoin.

Bitcoin gift cards are here, the careful where you show them off.

Good morning, this is "bloomberg surveillance," live from new york.

Monday, december 23. i am scarlet fu.

Tom keene is all.

We have matt miller.

Did you bring any bitcoin gift certificates?

That was going to be a surprise.

We anticipated it.

I have bitcoin christmas cards.

China's benchmark money market rate climbed overnight for a seven day as banks struggle to meet cash demand.

Japan unveiled a record budget for next fiscal year.

That will go along with some serious debt that that country is being stifled under.

Economic data in the u.s., 8:30 a.m., chicago fed and personal income as well as personal spending data.

We will give you those numbers.

9:55 a.m., university of michigan's consumer confidence numbers.

Facebook starts its first day of trading in the s&p 500. that is something you have heard about and prepare for last week.

It becomes official now, you will see it in the listings.

It is the 100th anniversary of the federal reserve.

After that top-secret, 1913 meeting on jekyll island.

I have been to jekyll island, is very interesting.

Another institution is making news.

Not the fed, the imf.

Raising its forecast for it u.s. growth.

You can see that reflected in u.s. futures and around the world.

Futures up 7 points on s&p, about 0.5% gain.

Same on nasdaq and dow.

We are seeing the grind higher for bond yields, 2.9% on the back of fed taper.

Dollar taking it on the chin against most currencies.

Crude oil falling, it has been an uptrend.

That has an effect.

Looking at the price of gasoline.

Up by about 15 cents over the last week.

I knew i paid more.

Gasoline futures are rising.

The china market story everyone has been looking at?

Everyone is concerned about what is happening with that.

It is a seasonal thing, it has been percolating and is not going away.

I am not concerned.

If you went to beijing, you would be.

It is a command economy, we cannot invest as regular joe's. bank managers and china will do what the party tells them to do.

It is not working.

They may have lost control.

Let's get to our front page, the stories making the front page.

In the u.s., a deadline for individuals to sign up for health insurance under the affordable care act.

They cover for kick in on january 1. number of americans falling far short of the enrollment goal.

What is interesting is for the young healthy people.

They are supposed to subsidize insurance for all her people.

A lot of deadlines have been extended, this remains firm.

Insurance companies are afraid young people are going to sit back and not sign up until just before they need it, throwing off consolations.

They want them in the pool now.

I heard people saying penalties are not stiff enough, they would rather pay the penalty then sign up for health insurance.

If you are not a serious risk, why would you want to take on the job of subsidizing health care for older people who have had more time to work, more time to save, and should be more responsible with their money.

That does not make any sense at all.

Doesn't make sense?

We will talk to eliana goldman -- it makes actuarial science, thinking about the poor.

For the greater good.

Julianna goldman will shed some light.

After six years, apple seals a deal to sell the iphone through china's biggest mobile phone carrier -- china mobile.

This gets a win for both companies to fight declining share.

1.2 billion wireless subscribers.

China mobile is responsible for 763 million users.

1.22 billion subscribers.

Every consumer goods company has been salivating.

We were talking -- how do you make an apple product as cool and china as people think it is here so you can reach the people, given their premium price.

The 5c was supposed to get you there, sales have fallen short.

Is is still cool?

I still have an iphone, it is getting boring.

It does not seem as cool as a samsung galaxy note.

Upgrade to a fablet.

Time to go to the dark side.

You will never get your text messages.

Our third story is about tiffany's, paying up $.5 billion.

An arbitrator in the netherlands awarded swatch in a breach of contract dispute with tiffany's. this is more than whatever they aren't all of last year.

Stock down in german trading.

This is tied to a joint venture.

They agreed to develop and sell watches under the tiffany brand.

Tiffany, swatch -- things you do not put in the same sentence.

We're going to talk about luxury retail later.

This takes two dollars and change out of tiffany's earnings.

Certainly.

A big hit.

Maybe swatch was going to make tiffany's watches.

It was branded with the tiffany brand in the blue box.

The blue box itself.

Those are our stories.

Bert flickinger is a retail analyst and director at strategic resources, our guest host.

Also, stephen englander of 210 strategy at citigroup.

The other one has a swatch on.

What do you make of that?

As you and scarlet referenced, it is going to hit tiffany's earnings 35% for the entire year.

When you look at tiffany having to pay 2/3 of legal fees, plus cost of arbitration.

It is closer to $.5 billion in a settlement.

Devastating news.

Everything was working well for tiffany's. sales, stock market, wealth effect, price of commodities, jewels.

It has gone from the best of times to the worst of times just before christmas.

Why would they make a deal with a downmarket product?

The genesis of the thinking, obviously not correct, tiffany's watch sales about a decade ago was close to -- 9% of total sales.

It dropped to 1% as a percent of all to face sales on land and online.

To try to get watches back to at least 5%, they thought there was operating income.

There could have been better partners.

Perfect partner, a great swiss luxury company.

Stephen and letter from citigroup.

The imf upgrading forecast for the u.s.. this is great into 2014. fed tapering, jobs report.

There are a lot of things to watch out for.

Notably, the political concerns and overhang.

They are catching up to the market.

The second half of this year we had q3 revised up, people are pushing up the q4 forecasts.

There is an arithmetic modulus.

Not clear that tapering -- it may indicate stronger growth.

It is not a cause of stronger growth.

No one expected the fiscal issue would be a major deal in 2014. they are catching up to the market.

The imf is catching up to the market.

That has markets higher this morning.

Do people believe the imf's forecasting ability -- people have trouble with the fed.

A few people believe.

The market is reacting to the devastator in.

-- to the dovish tapering.

It is not the end of the world, the fed is keeping interest rates low for a long period.

You roll up the yield curve and clip coupons and collect money.

It looks like we are going to see a strengthening economy replacing the fed and terms of a driver for the markets.

That is one thing the fed recognized, they did not need the emergency room type of stimulus anymore.

People talk about tapering as if it is the end of the world.

When you compare the economic situation now with a year or 1.5 years ago, it is very clear that things are much better.

We can all go out and buy watches at tiffany's. matt miller.

The strengthening economy is great for everybody.

Maybe it is good for movie theaters.

Our twitter question of the day -- what does it take for a movie to get you off of your couch?

We will be talking later with the guy responsible for serious special effects in some of the biggest hit movies, including "avatar.: " we saw "the hobbit," it was fun but i would have rather spent four hours on the couch.

Four hours?

That it takes a while to get out, you have to park the car.

There is a lot involved.

I could have seen "anchorman 2." coming up, the follow-up from targets customer data breach.

Banks are now limiting victims' ability to take out cash.

We will discuss this on "bloomberg surveillance," streaming on your tablet, your phone, and bloomberg.com.

? welcome back to quit surveillance," on bloomberg television.

Chief investment strategist of legg mason will join betty on "in the loop," is she here?

She is here today.

Robert hagstrom, diehard bloombergers stay here.

We are here all week long.

We will be shopping after work.

This is "bloomberg surveillance," i am scarlet phil.

Tom keene is taking a rare week off.

Changing the locks right now.

It is a holiday shopping season.

Credit card issuers are in damage control mode after last weeks security breach at target.

At 240 million credit and debit cardholders were compromised.

This affected any one at a target store between thanksgiving and december 15. victims now face a lower limit on atm cash withdrawals and spending at stores.

Not a great pr situation.

People who can least afford to do that.

They are going to need cash for holiday shopping.

That is a good point.

The credit cardholders are not affected, it is only debit cardholders.

That is why jpmorgan on sunday yesterday opened a bunch of banks so people could take out some cash.

When my dad and i first developed -- cochaired the first taxsk force with the first-ever card.

It -- first debit card.

It is the same cassette tape magstrip.

When we developed the system 35 years ago, 90% of transactions were done in cash.

As you are saying, it is damaging for people.

35-year-old technology has not changed -- in america.

Everywhere else, they have gone to chip.

It is ubiquitous for technology.

Between the issuing and the acquiring banks, visa, master, discover, general-purpose credit card companies and retailers, they have refused to invest.

Target is going to be looking at lawsuit litigation contingency reserves of $0.5 billion two point $5 billion.

And many more companies will have -- 0.5 -- contingency reserves of $0.25 billion to $.5 billion.

Customers have less money to spend.

Is it something to and sent these companies to do this, we are moving to make your card more secure?

They are making the card more secure, but greed is unprecedented.

I the credit card companies, my dad and i started and it was five cents per swipe for online debit, and 15% for debit.

Now it is two dollars per transaction.

Insane.

$30 billion out there in undeserved profit.

Bringing in steve englander, we have a way -- a currency that has no inner charge fees.

It has almost total security, especially compared to the weakness of -- bitcoin.

Secure by the entire network.

Bitcoin bull.

Why don't more people adopt bitcoin?

It is so secure and so free and so instant.

I think the security at the point of transaction, .2 point.

-- point to point, bitcoin wallets, bitcoin exchanges, there has been a fraud and security seems very well.

When you are transacting you are secure, but when you are holding the wallet it seems -- that is a vulnerability.

It is no more formal than holding cash in your wallet.

People have wallet stolen every day.

But is your entire bank account.

No one with a lot of money in bitcoin keeps it all in one wallet.

You have a wallet you spend.

You keep real money, as you would with cash, in a vault.

Real money!

Defaults are very hard to access.

-- the vaults are very hard to access.

We know how to manage cash and avoid pickpockets and so on.

There is still a lot of experimentation with bitcoin.

It would be very hard to get the man on the street to feel comfortable and to be secure carrying a bitcoin wall around and spending it.

It took me a few days.

We will see.

Maybe target should look into it, they have had trouble convincing people to go back into their stores.

10% off.

Our team later in the midwest said they did not even have signage and the stores telling shoppers about the accounts.

Public relations fail.

We will keep discussing this throughout our.

In the next hour, four-time academy award winner special effects director will be joining us.

"the bhobbit," mike mckee and i went to see it over the weekend.

For starters?

-- four stars.

Awful lot of gold, there is a currency.

This is "bloomberg surveillance." ? this is "bloomberg surveillance," i am scarlet fu with michael mckee and matt miller.

Tom keene is off.

This is really weird.

It is 70 degrees in new york.

An ice storm making life miserable in canada's most populous provinces.

Ontario and quebec.

1.5 million households lose electricity, 400 flights canceled at toronto's airport.

I hope erik schatzker got out.

The man who expanded the seagram empire has died, edgar bronfman led seagram for 20 years before retiring.

He was a longtime president of the world jewish congress.

Here is my favorite story as a bronco fan, peyton manning has reclaimed the record for most touchdown passes in a season, 51 for the year.

Breaking the mark set by tom brady in 2007. brady had broken manning's record.

The clip does not go on, the receiver who catches the ball did not realize it was a record, he just dropped the ball.

He picked it up and grabbed it and ran off the field.

Selling it on ebay right now.

For bitcoin.

Do you have him on your fantasy football team?

I do not have a fantasy team.

What?

Morning must read.

Tom keene would hate this.

He less disruption.

"financial times" is saying we should lose this war.

If there is a buzzword that deserves to be strangled it is disruptor.

It originated in silicon valley and has spread like a virus into u.s. politics and media.

He points out that most of what gets accomplished in the world gets accomplished by teamwork, hard work behind the scenes.

The eureka moment is very rare.

We overuse the word and it is not the way the world really works.

But the idea that things are being disrupted and there is a structural change going on in the economy still is valid.

It is a horrible cliche.

It belongs with potus and yolo.

It is cray cray, not adorbs.

Cray cray?

As an crazy.

It is ridiculous.

Stephen engle at her, what do you think of the terms as rector -- the term disruptor?

It was disruptive in a positive for way to society -- the airplane.

What is now is nice, it is not the same magnitude.

Robert gordon at the university of chicago point out indoor plumbing.

We will talk about retailers bracing themselves for a last-minute shopping.

Things to watch out for.

? this is "bloomberg surveillance," i am scarlet fu with michael mckee and matt miller.

Tom keene is off.

Mike, you have a data check.

Not a whole lot that people expect to happen.

Everybody is happy, i guess it is the holiday spirit and the imf saying the u.s. is going to grow more quickly in 2014. it is an up day in the futures market in europe as well.

Look at s&p futures, up on the 8 points.

10 year note, unchanged.

Good news in the sense that we are not seeing it continue to move higher with those comments about stronger economy here.

The dollar taking a beating in every market.

Down against the yen as well.

Crude oil down, it has been rising.

Giving an ion that trend.

Concerns about the sudan maybe having concerns.

We are starting off well.

What happened to the data check graphic?

Do we not do that anymore?

That is old.

I miss that.

Holiday shopping winds down.

Hard to say who the clear winner is.

The disruptive amazon, is it luxury?

Here to tell us is bert flickinger, managing director at strategic resource group.

He has narrowed down the list of winners and losers heading into 2014. walmart and big box retail stores will hit the wall.

We are talking about target, toys "r" us.

At the same time -- here is that bifurcation of america.

Luxury will accelerate.

Record earnings for high-end brands.

How do you feel of that whole?

More intricacies and m&a -- more bankruptcies and m&a. lohman's going out of sale.

Bert flickinger, which company is going to be the first to hit the wall?

Walmart has difficulties but it generates so much in revenue it is not going to go out of business.

Their same store sales will be negative for the fourth straight quarter unless target saves them from target cap attaching itself.

Kmart-sears combination having a really tough time.

Big-box stores -- their inventory management is poor, they are cutting working capital, raising stock dividends and buybacks.

Leadership has been lost.

That is the wrong way to go.

In this season, is it because people have migrated to other stores or online.

Or is it because we are not shopping at the a combination of the two.

We are browsing, not buying.

Walmart was notorious for the second year in a row for having doorbusters.

Our team across america saw that people would go in, doorbusters were out of stock, they have been freezing for hours waiting.

The weather was from brooklyn or chicago.

They said we are not shopping here anymore.

We are going to go to macy's or someplace that is in stock or we are going to go to amazon online.

That is why comp scores, internet sales up 25%. in addition to big-box stores, penney and sears and midtier department stores are getting hit.

Consumer electronics -- officemax, unplanned obsolescence as a scarlet indicated.

Stephen engle under of citigroup, you track currencies and strategy.

Part of the burst of shopping we have seen from overseas over the last couple years has been driving those numbers higher.

The dollar has been strengthening.

European and japanese forests do not get enough bang for their buck.

Coming from an emerging market is not as pleasant to shop.

You do not pay for the trip as you used to.

Europeans still doing pretty well.

Brits doing better than they used to.

One of the problems seems to be is that there are so many malls.

A lot are anchored by stores like sears and jcpenney.

If people do not go to those stores, they will not go to the mall?

The in-line tenants are really in trouble.

B and c malls, in addition to bankruptcies, beyond loehmann's, a lot of people in the malls -- restaurants or retail -- decline in customer accounts is compromising many of those.

They are shutting down.

To the mall owners credit, they are shutting down these anchor tenants and putting in more interesting things.

Community centers, decent restaurants.

They're doing their best to bring people into the mall and getting sears out.

That is right.

Destination malls are working.

You have to have a great retailers.

If you do not, to michael's point, you have 3 times to 4 times more retail square footage in the u.s. and other countries.

What about high-end luxury, kanye west is saying louis vuitton's prices are too extreme.

Have we reached a point where they have raised prices to an extent that we have reached a tipping point?

Kanye may not pay up to keep up with the cardassians.

-- keep up with the kardashians.

Blueberry, hermes, doing well.

Speaking of celebrities that all viewers know.

Not a place you expect to see bfa doing shopping.

We have been talking about walmart.

She would be at bergdorf's. is that a good place to go?

She dropped by walmart in massachusetts.

A place i would not expect to see queen bey.

Talking to fans over the loudspeaker.

She offered to pay the first $50 of every customer is shopping bills.

And she did.

That is pretty awesome.

She gave out gift cards.

She stopped by because her new album has just dropped.

That is what we say.

That is what they say.

That is what kanye says.

Beyonce's problem dropped only at walmart.

Other retailers were really upset at beyonce for getting itunes a 10 day closes.

-- 10 day exclusive.

Walmart in new england, beyonce did the initiative with walmart even though best buy, target and other retailers are not telling her cd.

Wal-mart shoppers got a treat.

We will continue to discuss the retail season on "surveillance." do you remember the scene in "swingers"? vegas baby.

The new gambling capital of the world, that is coming up.

? this is "bloomberg surveillance," i am scarlet fit with michael mckee and matt miller.

Tom keene is off.

Our top headlines.

The biggest year yet for junk loans to u.s. companies.

The market for junk rated loans increased to $683 billion in 2013. beating the previous record set in 2008. that is leading regulators to warn that the axis is that contributed to the credit crisis may come back.

A lawsuit that prompted john paulson to sell off his washington mutual bank bonds.

At -- jpmorgan sued the fdic.

Jpmorgan acquired washington mutual after the collapse and wants money to pay for losses and other claims.

For the second week, the biggest movie was "the hobbit: desolation of smaug," scarlet and i contributing to the more than $31 million for time warner and mgm holdings.

In second place, the most hyped movie, "tom keene 2 -- "anchorman 2." i saw it.

I was not completely in love with it.

The same thing about anchorman 1, i thought it was horrible.

The next 50 times i fell more in love with that.

I am hoping the same will be true.

We look forward to hearing you quote from it.

I will.

Time for our single best chart.

The single best chart.

On the sate of gambling and how growth is in asia.

This is from bloomberg industries.

It tracks macau gaming revenue in the last 8 years.

$11 billion per quarter in 2005 to almost $90 billion last quarter, over 700% increase in eight years.

This trend continuing, growth estimates have been raised.

A 10% to 70% annual growth rate.

-- to 17% annual growth rate.

If they made "swingers 2," macau baby, macau.

I am not sure that what happens in the cal states and medi-cal.

A lot of it goes to the world's 12 richest mand.

Bloomberg cat a sit down over the weekend with mr adelson, owner of the macau-sands casino.

Abandoning a plan to build a resort in spain.

He explained what uncertainty had to do with that decision.

This would be the largest real estate development ever undertaken on a commercial basis.

I cannot and neither can any other company of four to bet -- afford to bet that kind of money, $35 billion.

A new government could come into power and change everything that is part of the agreement.

I needed some sort of indemnification.

Stephen englander, that is a problem.

Europe is not able to give guarantees to business that it will not be disrupted.

Europe is still recovering and in the early stages of recovery from the debt crisis.

2013 was going to be the most placid year, politically, europe has had.

Looking ahead, as elections come up, we have european parliamentary elections in may, other elections -- the dissatisfaction among people who have suffered from the crisis will result in changes of government.

It is hard to give those kinds of commitments.

That is what it also talks about -- what adelson talks about.

Is there light at the end of the tunnel?

Is a faint light, you are not sure it is actually daylight.

A lot of if's. it looks like a lot of things are better.

The ecb has done its part.

In ending risk.

It does not mean it has disappeared.

There is now.

Economic risk -- issues with growth, fiscal monetary policy and trouble improving and bringing back to full capacity.

In retail, the european equivalent of walmart is struggling with the box retailers.

Reinforcing stephen's points.

Our first look at some photos making news.

The first one is one that mike brought up, peyton manning breaks a record.

An ill-gotten record.

Quarterback to throw the most touchdowns.

He took it from tom brady, who did it after cheating.

Let's keep in mind that tom brady's record comes from 2007, when the patriots videotaped the other team.

You are getting at brady's record was ill-gotten?

Peyton gains his crown, he is the legit king.

He is 37 years old, he had for neck injuries and everyone thought he would never play again.

How old can quarterbacks play until?

This is the age when -- running, kicking.

Let's talk about germany.

Ice swimmers.

About 50 kilometers north of berlin.

The north pole, pretty much.

Going swimming.

Everyone in germany -- i will tell you somebody who has lived in germany -- every doctor in germany will tell you it is your circulation.

Everything is about circulation.

They say that this improves their circulation.

In harbin, china, the biggest beer brewing city in that country.

Looking at a large snow sculpture with a 117 meter long.

What is it?

350 feet long, 26 meter high.

A woolly mammoth?

They do ice sculptures in the middle of summer.

They slaughter them for their meat.

Tusks.

Do they do tasks in china?

They sell the ivory and china.

Much more coming up on "surveillance," 29%. that is how much gold has tumbled this year, a biggest drop since 1981. we will discuss the correlation to bitcoin.

If there is on he.

Coming up next.

? this is "bloomberg surveillance." i am scarlet fu with michael mckee matt miller.

Tom keene is off.

Some company news.

An activist investor plans to push for a bigger break up of the owner of olive garden and read lobster.

They want more than a spinoff or sale of red lobster.

Star board wants to create a real estate investment trust for its property holdings.

At&t joining direct -- joining verizon to publish transparency reports on law enforcement requests for customer data.

Major internet companies such as google have already disclosed government requests for data.

Shareholders at time warner cable make it incoming ceo the will to resist a 62 billion dollars takeover offer.

Charter communications preparing a bid, time warner cable has delivered a total return of 462% since 2009, that could convince shareholders not to press for a sale.

I will tell you what is out of fashion, gold.

Dropping below $1200, 1194. gold heading for its first loss in 32 years.

29% decline.

Where do you want to put your money instead?

Matt miller would put it in bitcoin.

That is tanking, too.

How correlated are those two currencies?

Stephen engle under, managing director -- stephen englander at citigroup.

People who buy that point are like the people who buy gold.

If you can figure out why you buy gold.

They are distrustful of the government, what a store of value nobody else can get, that sort of thing.

Are they going to trade in tandem?

Not in perfect correlation.

As you said, the people who like gold and people who like bitcoin -- they do not want to be inside the financial system.

They do not want to be in a fiat currency.

We have seen central banks balance sheets expand.

One lesson i would draw is negative for bitcoin and goal.

-- and gold.

How forgiving people are of high it currencies -- of fiat currencies.

Whatever it you see hints of tightening, everybody rushes back.

Why?

If fiat currencies are backed by trust in that paper.

Tom keene will say it is backed by the taxing power of the u.s. as far as the dollar is concerned.

All central banks seem to be on a mission to do the currency that the issue.

I am not talking about now, i am talking about all central banks, forever.

Why do we trust them when we know they are going to debase currency?

They have not done the weimer republic the basement.

Hyper inflation, things get out of control.

That has been developed for the central banks.

Goods and services inflation has been under control.

I think as well at the end of the day, the taxing makes a difference.

They can be regulated, that makes a difference.

I can name about 7 or 8 electronic currencies, i expect you can name 48. if you are concerned about the expansion of central bank balance sheet.

You add the electronic currencies, you say what is the control in the aggregate?

Each one there is a limit, but taken together, what is the control?

There is a limit.

For bitcoin, they can only make 21 million.

That is a problem, you end up with not enough currency for demand.

It can be spent down to -- right now the eighth decimal place.

Let me show you, speaking of security, what happened on friday on street smart.

Adam, here you go.

Trish, here you go.

Wow.

A private key on the inside that you can access and load into your wallet.

If you have a block chain wallet or corn-based wallet.

This is what i put on my phone.

Exactly.

When i went to buy or sell, i put this on the computer, the computer reads it to debit my account.

That is right.

Here is a good point to the new ness, a good lesson to learn as far as the currencies.

What we showed was a -- it is like i gave everyone a copy of adam's debict card and pin number.

It is like i passed out his social security number.

Almost instantly, someone froze the hd picture and copy the private key and took the money out of that christmas wallet.

It was only $20. the person, on reddit, he said he will give it back.

Just to be aware, do not go showing your private key around.

A good lesson to learn.

Security is a lesson with the choir.

If you passed out your pin number, it would be an issue.

Stephen englander of citigroup, thank you for joining us.

Per flickinger, thank you for joining us.

Mike, forex.

We do not have a bitcoin quote.

Other currencies strengthening against the dollar.

You can see it with the euro/dollar, aussie dollar, dollar index.

In the next hour, thomas goetz rejoins us.

? .. but today's the deadline to sign up for obama care if you want to some -- if you want to be covered on january 1. u.s. it is the new first time the tom keene ever was a jekyll i don't -- jekyll island.

When you take a vacation there -- because i had been there i still get e-mails from them offering vacation packages.

It is a nice place.

I always think of it like shutter island.

Let's talk about some company news now.

Certainly we are going to be -- bring and thomas for this.

Apples officially going to sell the iphone through the biggest wireless company after six years of negotiations, striking a deal with china mobile.

They can sell to both companies who have seen their market share fall in china.

How do you make the iphone cool?

Boeing factory workers will vote on a contract that will guarantee work on the new 77x. union leaders have rejected the deal which calls for a pension freeze.

Rank-and-file members should be allowed to vote.

This is a big deal.

It could mean the future of airplane construction.

And a big ice storm that hits north texas two weeks ago is still causing problems for ups.

They are the world's biggest package delivery service and they say they do have a backlog that they won't say how big it is.

Wall street journal says ups brought a 900 extra managers to help out.

Explain where your cowboy hat is.

It is stuck on the road somewhere.

In texas somewhere.

I have multiple cowboy hats, don't worry.

Something we are watching today, it is a deadline to get people covered by the for the care act.

More than one million people have signed up for private insurance.

There is still a ton of confusion around all of these different deadlines in applying and making the payment.

Julianna goldman is bloomberg's white house correspondent and she is going to clear up some of the confusion for us.

Take us through the various deadlines.

There is a deadline today that goes into effect january 1. today, december 23, is the deadline to enroll in obamacare if you want to get insurance january 1. when do you have to pay for that new insurance?

The obama administration has asked insurers to delay that the deadline.

Some are allowing people to pay january 10. they will still be able to have insurance beginning january 1. that is one deadline.

Then you have a deadline in january to enroll and to be covered by february 15. the big deadline for all of 2014, which is when the administration had originally been hoping to get people enrolled.

If the question is a lot of young healthy people are rushing to sign up the way the white house had anticipated.

What kind of last-minute drives are they pursuing to get these young healthy people, these young invincible's to sign up?

Over the last several weeks the white house is been doing offers to push the -- has been doing pushes on social media.

One of the day?

's, yes we know around one million people have enrolled, falling short of the 3.3 million people the administration had been hoping for you they are not releasing the demographic information.

Some of the states have been reporting that the people who aren't rolling, it is to the big fear for insurers, skewed over less healthy individuals.

We want to bring in our guest host, thomas consumer.

He cofounded blue state digital in 2005 which let the digital strategy for blue -- for president obama.

Ifdon't you think the president wishes he kept you on?

I think campaigning is a far different thing.

The difference is the difference between the state exchanges and federal exchange peter the stated change -- federal extent.

The state exchange seems to be working better.

The numbers are daunting although the website is finally fixed.

People are going through, they are not qualifying for the federal subsidies and it is little more than a comfortable paper did the insurers were pushing benefits from increasing enrollment -- increase in moment.

Right now the numbers are not going to work out when the actuaries run the figures.

People are going to be stuck.

How do you get insurers back on your side?

I think you need to push the numbers.

They need to have a more efficient -- more efficient sign up rate.

What seems be happening now -- upfront from the website debacle, we're still looking back at that as to why it is not working.

The new creative after falling a little bit short.

It was a hipster campaign of people talking about it over christmas.

The pajama guy?

Clock's he seems to be this -- it seems to be the scrutiny is really high.

We are seeing in them -- see numbers a third of what they expected that this point.

I'll be interested to hear what washington's take is on the pajama guy.

What you think about that guy?

Was it a one-piece?

I don't think your foot seas -- i don't think they were footi sies.

I saw them all out of colorado.

This was last week.

It was a classic hipster looking and encouraging his friend.

The administration has been beefing up cms and call centers.

They e-mailed 2 million people who have been stuck in the enroll and process, about 600,000 phone calls that try to help people make sure they are in enrolled.

The website is working now.

The what is happening on the backend?

What can of data is being transmitted to insurers?

Today we have the deadline for the big test is going to come on january 1. this is what has had white house officials unable to sleep that night.

The biggest concern is people are going to be showing up to pharmacies, going to the doctors, trying to continue treatment plans.

Who is in charge here?

The president has broadened the best and brightest in silicon valley and there seems to be a new name in the mix all the time.

His kathleen sebelius storm the help?

They wanted to change the procurement process so they do not have this kind of messed up -- kathleen sebelius is a health and human services secretary.

She is one of the people taking the lead here.

Hessian look at the website by this point?

Or is it not clear?

Julianna goldman joining us.

Coming up we are going to continue talking about obamacare . we're going to talk about another government problem.

We will explain next.

This is thomas get summer -- is a new world for retail.

Targets and massive data breach now but -- data breach nabbed credit card numbers from millions of customers.

How to started recover?

-- how does target recovery e they did the ceo videos and they were really thoughtful about their apologies but really what most of these retailers are in the middle of, they are not in the control of it.

-- they're not in control of it.

What they need to do is have a clear point of view of what they should be doing better in the future.

Much of this is because of the decline in security features that should have been put in years ago.

We are still operating on rails 50 years ago -- 50 years old.

Wasn't there a massive data breach in tjx e crooks there was roughly 80 million people and before that there has -- tjx?

That was roughly 80 million people and before that there were breaches from america's middleman.

The cost of investing in a new technology keeps getting put off read the new deadline is 2015 but that has been rolled back before.

At that point i think the liability will transfer from the credit card processors to the retailers.

That may be a new incentive.

You need a retailer to be out in front.

That is the opportunity for target.

Have you step out and not just have an apology but implement and change the way credit cards are done in the industry.

You have fewer people involved.

It is all online.

While they are still susceptible to it it is less than conventional retail pit is there a role for government to play?

I think there has to be.

We have seen some he delays.

We are behind so much of the developed world.

Our numbers continue to increase as others fall.

It needs to be government play here if retailers do not step up.

One thing that discourages anyone from doing anything is even though there is fraud doesn't count forelock -- for luck.

This is to the heart of the brand.

You're talking about service to the brand.

How do you change the conversation?

U.s. chief strategy officer.

Coming up on surveillance, the number for you, 150 $6 billion, that is how much the internet committees made last year mining the same data that the nsa has gathered.

Our twitter question of the day, what does it take for a movie to get you off your couch?

I that we mean most normal people sit at home, eating junk food, and watching on-demand.

What does it take for you to get up, drive to the mall, and eat junk food and water movie in the theater he echoplex -- in the theater?

Mix in some xbox.

Go to the bathroom, do all that.

I am here with michael mckee and matt miller.

Tom keene is offer the week.

Mike mckee has our top headlines.

You don't want to be in canada today.

Here it is 60 degrees.

There it is an ice storm p life is miserable in canada.

The two most popular provinces, more than half a million households -- 400 flights canceled at toronto's airport.

All three members of the russian punk band pussy riot have been released from prison.

They served two-year sentences after a performance at moscow's main cathedral.

The imf has raised its outlook for the u.s. economy.

Christine lagarde is saying the fed plans to tape or bond buying -- to taper bond buying.

We are seeing futures and a lot of activity in the markets higher this morning because of that if people are getting optimistic.

-- that.

People are getting optimistic.

But obama turned probably the greatest failure of his presidency.

The whole year has been rough, starting off with gun control, which has also tanked.

The economy and the market is great.

4.1%. we're down to seven percent unemployment.

Google, facebook, other internet companies protesting nsa surveillance of their customers.

They know that those companies are making billions from buying the exact same data.

America's internet companies made $156 billion last year, that is twice the intelligence budget.

The smallest value is $1.65. most likely a mail your user -- a mail user.

Typically a usb mail user who has 250 friends and posts 150 times per month.

Bloomberg contributor is here to talk about the balance between business.

Why are companies more worried about our personal data than the governments?

Part of the answers they do not know the implications of this.

The second part is they consented to it.

Even though no one read the disclosures?

Kwok's it is a combination -- it is a, nation of ignorance and consent.

At least they went through the formality of taking the box.

The government it is a combination of ignorance and coercion.

It is also big brother.

A company is not as likely to come to your company and arrest you.

The company does not quite have the resources the government has when it wants to go up against you in a court of law.

The government has a monopoly on the use of force and therefore has a higher indifference standard.

This economy has exploded in the last 20 years.

It has grown so fast, driven by the investment banks.

The only way they can effectively monetize the data is selling the data about their users.

Looks how much different from what they gather from what the government gathers -- how much more does the government know about you?

It depends on if the government is investigating you or not.

The government, as a practical matter, does not know anything about you.

If you are using any of these internet-based services, the services know everything you put on there.

If anything they can correlate with any other service which is voluntarily correlating with the other data.

Maybe a guy from google could show up at your door.

Do the computers know this?

Are there actual files that say richard falcon wrath does ask?

-- richard falcon wrath -- falkenrath.

That practice predates the economy goes to the credit card economy.

We know the tech companies collect all this personal data on us.

Then they figure out how to sell us on things.

Why aren't people more worried about the extent to which this data is being used against us?

I think they think of the reality.

I have a fundamental distrust of the government.

Whether it is because of a monopoly or whether because we think everything from our voting record start taxing records are going to be linked, we think the government is more efficient at connecting these dots when the drones from amazon are more likely to arrive at our door.

When the corporate eta it -- corporate eta horrid it's too creepy, that is when people will fight back.

-- corporate etadata.

They're still hugely successful.

We also want to take a look at how the nsa surveillance has hurt the prospects of a couple of u.s. companies and benefited some european companies.

We will continue.

A four-time academy award winner, the man who pioneered special effects on the hobbit, will be joining us later.

I am scarlet fu with michael mckee and matt miller.

Tom keene is offer the week.

Let the company news from the files of bloomberg west.

An activist investor plans to push for a bigger break up from the owner of golf garden -- of all of garden and red lobster.

-- from all of garden and red lobster.

Shareholders of time warner cable could give the incoming field markets.

They will resist a takeover offer.

Charter in dutch charter is preparing a bid that could come next year.

Time warner has generated a total return of 62% since 2009. at&t joining verizon and a bit in a public transparency report.

Telecom companies have cooperated with u.s. government surveillance programs.

Major internet companies like google have is closed government request for data.

That is today's company news.

Staying with that, we are going to talk about surveillance.

A telephonic companies have warned that surveillance -- telecom companies have warned that surveillance has been costing the country.

Richard falcon wrath, former white house -- richard fal kenwrath.

These european companies are getting a hit from the u.s. government.

The boeing issue is a more traditional industrial competition.

This is very complicated and involves multiple different factors.

There is an economic nationalism component where the european companies are trying to promote their national champions.

Here there is also a national security argument.

And the privacy dimension, which the european union has a different privacy framework in the u.s.. -- framework that the u.s. a government in europe wants to know something about you.

Can they go to google and say we have a laurent here in germany, you have to provide data on us -- have a warrant here in germany, you have to provide data on us?

They do that all the time.

The companies themselves have some discretion so there are certain countries where there is not this rule of law.

They may occasionally -- they may not comply.

Egypt, for instance, in the middle of the turmoil of the arab spring, it was reported twitter and facebook did not comply with some of the egyptian security services requests for data about their subscribers.

In general, the answer is yes.

Is it just an excuse to get back to european companies if anyone who has been requested to hand over the data would not do so?

I think it is more than just an excuse.

I think it is a very serious issue.

This is where the snowden revelations become important.

They make clear how extensive the powers of the u.s. government is to a tap into the systems.

These are u.s. based and the u.s. chartered companies that historically have a close tie with the u.s. government.

We found out more about that from snowden.

The u.s. has a leg up on everybody else in their ability to get some information and make use of it, use it in ways that are beyond particularized suspicion leading to a particular warrant and request for information.

Here is a question i have, the bottom line of all of this, everybody is concerned what happens with the government and how much data they are collecting on us.

How much control does the president of the united states, the civilian authority, have over these?

Could we see a dr.

Strangelove world that people worry about?

I don't worry about that.

I think it could be another branch of government or independent act.

What we have seen is that some of the techniques, in fact, a lot of the techniques got out of hand.

They are doing things that people want revealed.

Like the native data -- like the metadata.

Since the 50s, black and white movies, i have always assumed our country's intelligence agencies could go to the phone companies and credit card companies and get all the data they want.

That is what they do.

If they can't do that they are not doing a very good job.

There is a difference between the things that are done constantly and routinely versus the things we have to do out of suspicion.

I don't think metadata is the biggest problem.

I think the biggest one is rsa and encryption standards.

The story we have seen emerging over the last week is the nsa is paying when the leading to that security companies, $10 million to undermine their own subscription protocol.

That is a big problem.

Rsa is a unit of the enc.

Thank you for computing.

-- fork into getting.

-- thank you for contributing.

2.9 for your 10-year note.

This is bloomberg surveillance on bloomberg television, streaming on your tablet, phone, and bloomberg.com.

I'm here with michael mckee and matt miller.

Tom keene is offer the week.

Our guest host is thomas ken summegensimer.

The hobbit, it was the fifth movie i have seen in this series.

-- in the full franchise.

The movie that first brought visual effects into mainstream culture, the visually remastered star wars, the man behind those effects went on to work on another sci-fi blockbuster, lord of the rings, which grew two point nine $2 billion worldwide.

-- which grew $2.92 billion worldwide.

It got back-to-back academy awards.

If we take a look at the business behind visual effects.

You have had for academy awards.

Four.

I wanted to make sure i have my facts.

How often do we get to say that?

I don't know how often you can say that ever.

Do have them all lined up?

One on the mantelpiece, the rest i keep in the office.

Can i ask which one is on the mantelpiece?

From "the two towers." that was a good one.

It occurs to me -- it is great because you cannot tell the difference between the real and the fantasy.

The effects have gotten so good.

It makes me wonder how much this costs and how much it is to do.

It must be an amazing amount of computing power to put this all together.

It is very hard to do.

When we did jurassic park in 1993, there were 55 shots in the film of dinosaurs.

That took us a year to do.

In this film we had 2000 shots and that took us a year to go -- a year to do.

What audiences want to see is bigger and bigger.

What about the budget?

When you had to say how much we are going to say -- how much -- it always seems like there is an overrun.

What we create is interesting because every shot we do, 2000 of them, is unique.

There are similarities but everything is a tough to make peace.

It is tricky to budget.

Is this chicken and egg in terms of how you come up with what you are going to do?

Does the director say what you he -- what he wants or do you say what you want to do?

It is always story driven.

We just try to find ideas that will feed the next development of the story.

With the hobbit we were very fortunate.

We know what the story is.

On a film like that hits us with -- james cameron sent us the script and we said we are going to need a year to figure this out.

I can bring an actor back into the studio if i start editing the movie and i don't like a scene.

You can't really just reprogram everything right away.

Sure he can.

It happens a lot.

We have to be fox will.

It is a very creative process.

If the director has a new idea and wants to change something, change and ending, we can adapt.

Hollywood is going into survival mode.

Is this a safer investment?

I don't know about safe but these seem to be films that audiences want to see.

We enjoy making them.

It is sort of working out.

You said you can bring in the at chris that the actress.

-- you can bring in the actress.

Is it a safer investment?

It is hard for me to say "safer." there's a certain amount of leap of faith involved.

We like to see what we are going to get on the other end.

Thank you for joining us.

Our twitter question for the day, what does it take for a movie to get you off your couch and away from on-demand into the theater?

Tom keene is off for the week.

We changed the locks.

Joining us now is betty liu.

Don't let him back in.

What you have on the show today?

Friday we were talking about this company where you order snacks by a monthly subscription.

The ceo was going to be joining us this morning.

They can deliver at 6:00 in the morning.

They probably could.

Everything from nuts to chocolate covered pretzels, we could all chip in for one.

What a great idea.

We're going to talk specifically about warren buffett.

We're going to replay some of the highlights of his comments throughout the year and what he said about everything from ibm to government shut down to breaking bad.

We are going to talk about where he is going to invest in 2014. warren buffett made $37 million per day.

It's pretty good.

Betty liu in the loop, starting at 10 a.m. and -- at 10 a.m. let's get to some business.

You want to make some money, how much do you want to bet on apple?

They made a deal, apple can sell apple products.

They have almost one billion users in china.

There are a lot of potential iphone sales out there.

Microsoft, not one billion, microsoft sold 2 million of the xbox one.

It is fantastic.

People like microsoft.

I have all of them.

The xbox one is the best.

I know scarlet likes the robins egg blue box.

You don't want to be holding shares of tiffany.

They are down two percent.

The judge rules that they are in violation of that.

Eon say shopping at tiffany's i can guess.

She was -- beyonce shopping at tiffany second-guessed -- shopping at tiffany's i can guess and she was spotted at walmart.

Her new album have gone on sale and they are selling it at walmart in addition to on itunes.

Target should have gotten her on board.

You can add 10% off on target.

We have much more coming up.

What does it take to make a blockbuster sale of a-list actors?

We will discuss.

Coming up tomorrow, author of "the facebook effect" will talk about the biggest media trends in 2013, including everybody watching bloomberg surveillance.

And looking ahead to what he will say about 2014. this is bloomberg surveillance, i am here with michael mckee and matt miller.

Tom keene is offer the week.

Our guest hostess from person more stellar.

Christmas is the most wonderful day of the year for makers for mobile applications.

December 25 is when people unwrap their new smart loans and tablets and people start downloading.

Is any estimate it will get half of its yearly subscribers for the popular penguin game on christmas.

It is a downside to the boom in retailers, sales are up and so are returns.

As much as one third of all internet sales get returned.

Do you do that -- do you do that?

I order everything so i return it as well.

You games such as call of duty may play a bigger role in training the new -- in trading the military.

There are skeptics who say video games are a cost-cutting tool.

Call of duty, i have the new one for xbox one.

It is so realistic that it is a different game than what i am used to pay previous military games you run around and shoot everything you can.

You hardly ever die and respond intimately.

The new one you have to be terrified of when walking around the corner of a building.

It's pretty realistic.

You are going through training now.

We have been in training over the nast -- training over the weekend for this next segment.

He has won four academy awards for special effects creator.

We are taking a look at what a create -- what it takes to create a blockbuster movie.

I want to tick off my must-see movies.

The new hobbit movie goes along with the lord of the rings trilogy.

It also american hustle is a good storyline and brings back the 70s. and walter mitty, which speaks to all of us.

We have to see anchorman.

You are joining us here, you do the special effects for one of the movies.

When you look at the holiday movies, are you spending your time watching the storylines or are you looking at the special- effects?

I am looking at the storylines.

You go to movies to watch the story.

At that point the work is over and done with.

I notice it and i take stock of it, especially with the award season coming up.

Generally you are there to enjoy the movie.

How you get into your line of work?

I know a lot of people who have grown up and want to be movie directors or actors.

Do they grow up and say they want to be a special-effects actor?

In the past you made miniatures and did things with super eight cameras.

Always interested in -- i was interested in computer graphics.

One of the first films i worked on was jurassic park.

Having gone through that experience and being able to create those dinosaurs, it opened up a whole new world for directors.

To the special-effects make it so directors and movie studios cannot higher that don't higher -- movie studios don't higher a-list stars?

You want good effect -- good actors for your film.

If you need in mcallen to play gandalf, actors are there for a reason.

What we do helps create these characters and stories that help complete the rest of the film.

We have the third hobbit film coming up in the sequel to planet of the apes coming out.

Rise of the planet of the apes was awesome.

I don't go to the theaters as much anymore since i moved into the suburbs.

I stayed home and watch movies on netflix or itunes.

Rise of the planet of the apes was one of those movies where i thought i would watch it and see how it was and it really was surprising in a positive way.

Are you thinking about how they look on the big screen or do you think about the small screen when matt miller sitting there eight hours straight?

The big screen.

It naturally translates over.

It gets harder with 3-d, i'd imagine.

It does.

The physics behind it, all the detail has been completely correct.

Do you like 3-d? i get a headache wearing the glasses.

I think people have started to opt for the 2-d films.

I enjoy it because i like the immersive experience of it.

Those glasses, i cannot get into them.

We asked the twitter question today what it takes to get people like me off the couch and into the theaters.

"a certain degree of awesomeness." bringing rachel mcadams and is a good move.

Has she been in a lot of movies with special-effects?

I can think of any special- effects films.

She was in mean girls.

One person tweeted in, "offer a sitter.

Someone wrote, "only a movie about the red sox winning the world series." this is someone who obviously watches surveillance and knows tom keene is a diehard fan.

Here are some ideas -- do you ever think here are some ideas that i can borrow order to inspire to bring over to the big screen?

They are a different format.

Game of thrones is a great series and it is very -- it has a nice effects component to it.

It would have been a hard one to make as a film.

This text has been automatically generated. It may not be 100% accurate.

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