The Future of Travel: Lunch Money (08/07)

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Aug. 7 (Bloomberg) -- On today's "Lunch Money," super-charge the day, and devour all that's driving the markets: stocks, bonds, currencies, commodities, options. (Source: Bloomberg)

? welcome to "lunch money," on bloomberg television.

We have got the best business video anywhere.

Let's take a look at the vision from elon musk.

That is coming up in an innovation.

Meanwhile, media, the latest grab from aol is not about content.

The bank of england hits things off with a shout out to the power of the federal reserve.

Jetblue, look at all of that leg room.

Football, big bucks and a lot of laughs.

Let's kick it off with innovation, and the innovator himself, elon musk.

Really cool stuff, space rockets, solar powered services, electric cars, and maybe even a first -- a super fast way to travel.

It comes with a lot of zeros, like zero emissions.

The 060 in 5.4 seconds.

It leaves four zeros on the price tag.

The base model goes for 70 grand.

You could usually be easily pay six figures a few trickett out, but guess what?

People are buying them and buying them fast.

The first quarter gave them their first ever quarterly profits.

They are going relief fast.

Investors will pay for profitability and growth.

There is a lot of potential for this company to grow and for it to double and double again.

Not everyone is in love with that slot.

Someone said the stock has done parabolic to the moon.

It has made some investors worried.

It reminds me of the song party like it is 1999, reminds me of the things that happened before the technology bubble burst in 2000. i think that when one-third of the shares are short, it does not take much activity on the absence side of the shares before people decide they want to recover and this may be one of the best short-term rallies of all kinds -- of all time.

That is how easy it is to keep the charge.

There are two major things we are announcing that are significant.

Counting down in the u.s., we are improving the supercharged technology that will cut it in half.

By the end of next month we will have tripled the number of super charges in north america and in six months we will have covered most of the major metro areas in north america, you will be able to travel from los angeles to new york using this network.

We will have covered more in 12 months.

The system is free.

Not just free now, it is free forever.

That is the test but commitment.

He will be able to travel anywhere in north america for free, forever.

Bmw took the cover of of its new i3 last week.

It cost about half as much.

Here is what their marketing chief had to say.

At the end of the day we have been watching what the competition is doing and i hope that more and more of them are successful.

But we will be playing a significant role.

You are down here, but you are going to converge in the middle.

Can you compete?

Excellent question.

Next year we are bringing in a sports car with carbon fiber that is a super sports car.

How do these cars stacked up side by side?

You decide.

? initially, tesla had a hard time making more than 400 cars per week, now is more than 500 and you can think some pretty cool robots.

Our business week writer, ashley, got an exclusive.

We are here at the tesla factory getting a tour.

Here we are in silicon valley.

I remember the early days, it was quieter.

It was busy then, but this is a huge difference.

How big is this factory?

5.5 million.

You do not use everything in this volume.

You the stay here for the entire week.

In the past that had these huge cars.

The price is higher here.

We are convinced that integrating these manufacturing processes here saves money across the u.s. and the entire world.

Is this the present?

Do we get a car at the end of the tour?

This is the site of the car in the air?


It is surreal.

These guys will never tire.

People like used to factories and?

It is pretty cool.

His vision goes beyond roads, next week he will unveil a high- speed, long-distance transportation system plans that he calls a hyper loop.

The favorite method last year was the total recall plummeting through the earth at hydroponic speeds.

The founder of test but cars and owner of spacex has already revolutionized travel.

His latest proposal may be earthbound, that does not mean it is any less space-age.

His bold idea for a fifth mode of transportation has generated a lot of hype.

Reducing travel from los angeles to san francisco into a half- hour commute.

It is that the only idea out there.

82 transportation system moving along this route, they are calling it space travel on earth.

Without a critical investment, it may remain a pipe dream.

They are marketing a cooling system for jet systems.

It could carry 300 passengers halfway around the world with views that be a lot to be desired.

The u.k. government recently promised $90 million to the firm.

Maybe just one more from business executives.

The company is still looking for investors.

Ilan musk is still looking as well for all sorts of technological solutions.

One thing he does not need to worry about is ideas.

Jetblue adding more space on a cross-country flights.

Plus the next proposition for aol.

What does he think about jeff bezos purchasing "the washington post"? by the way, did you see "the lone ranger"? he fell off his host -- his horse.

It has only brought in $176 million in global ticket sales, it cost over $200 million to make.

Make no mistake, law and order has come to the west.

? ? this is "lunch money" on bloomberg television.

In adam johnson.

In media the biggest acquisition from aol with tim armstrong at the helm, purchasing adapt tv, it is about generating money through ad sales.

Three years ago most people thought that aol would not be around.

I think television made it the second-largest player in video.

You would know that video is a megatrend that is going to affect the global television space.

The second piece of that program is the advertising in-house software facts -- for the viewers who may not know what that is, it is basically when advertisers purchase stock of inventory, right?


You have a very wall street centric viewership, programmatic advertising, the same thing happened on wall street with people trading individual stocks -- individual stocks around traded value on wall street.

The same thing is happening in the advertising business now.

It is an important trend, media for the last 100 years has been bought in bulk.

Now you can buy that in a singular a fact from advertising, understanding each individual impression, this is the best company and fastest- growing company in the program , projected to be the largest base in the last five to 10 years.

How are you going to integrate this into the other brands?

We have many brands, one of them is a a well on, which we purchased a few years ago.

They were combined to essentially create the second- largest usage on the internet for the 150 million unique visitors in the united states.

In may i think we were tied with google around video.

We will combine those video businesses from a consumer and advertiser's standpoint.

It will operate separately on its own, being put into large holding companies.

Essentially some light integration, but really have the lead, it will allow them to continue in their path.

Competitors are obviously at the center of this space as well.

Google, facebook, that is their primary driver.

This is a competitive field.

On the web sites, this might turn off viewers or users.

Do you have those concerns?

One of the things i love about adapt tv focuses on what is good for consumers and avatars.

They have a marketplace of shared success.

One of the things they integrated into the product was the viewing metrics and how they are perceived by consumers.

Software helps the video consumer experience get better and better and overtime because it is a marketplace the network effect of the advertisers will be incentivized.

There is a big opportunity here for software to improve the user experience for publishers.

That is a big part of this acquisition.

Let me switch gears for a moment about the media news happening over the last few days.

Your media websites have put newspapers out of business, essentially.

Then you turn around and people like jeff bezos, who i know you know very well, taking the washington post, buying that and putting it digital online.

What do you think about a move like that?

You have two of the smartest people on the planet, so you have to watch this closely.

I think this is going to be very positive for "the washington post." they get the credit for having that level for side -- foresight.

They were losing quite a bit of money on "is the washington post." if you look at the strategy, you have to separate the newspaper print from the value that journalists bring in the value he has been able to build up in the online side of the business.

I think that the huffington post has become one of those valuable brands in the world.

It will be in double digit countries with 100 million video views for months, if you look at the brand, those are both mega brands or people.

You are not worried, tim?

That think it is a huge benefit, i have said this all along and you know.

The huffington post has speed in believe right now that only fuels the continued work and investment.

The washington post has a good opportunity also in is led by smart people, but first and foremost in the largest individual shareholder at a well, i want huffington opposed to win, but i think there will be other winners and i will be very happy if they have a wind out of open "the washington post." game on, tim armstrong still wants to win the newspaper game.

Mark carney, giving a bit of a shout out across the pond.

? ? the new head of the bank of england, mark carney, made his first appearance this morning and he did it with a little shout out.

They intend not to raise bank rates above the current level of 0.5% at least until the labour force survey headline measure has fallen to a threshold of 7%. while the unemployment rate remains above 7%, the npc remains ready to undertake further purchases if further stimulus is warranted.

Sound familiar?

The criteria that the committee uses to make decisions about purchase programs are qualitative.

Particularly continuation of asset purchases being tied to seeing substantial improvement in the outlook for the labor market.

But that was ben bernanke and the mark carney counterpart across the pond in december 2012. the fed decided to tie its own bond purchases to the jobless rate.


kearney gave more specifics.

The unemployment rate above 7%, we remain ready to make further purchases if further stimulus is warranted.

Until the unemployment threshold is reached, we tend not to reduce the stock purchases from the current 375 billion pounds.

The unemployment level is considered to be a threshold and not a trader with a lot of room to fall.

Even under the assumption that the current exceptional stimulant stance is maintained, we expect annual growth to be only 2.4% in two years , a little bit below its historical average.

The level of gdp is not expected to regain pre cap -- pre crisis peak.

Even on the assumption that the bank rate remains at its current level and a sustained period of growth is delivered.

Things are expected to fall back only a little after.

The welcome news is that the economy is returning to levels of growth that they can begin to describe as a perching historical averages.

What keeps sin city going?

You might be surprised.

? ? 26 minutes past the hour, that means the bloomberg news is on the market.

Trading now for a third straight day in a row.

The first time that has happened since june 12. the dow jones is off 70 points.

Two names that we want to highlight for you, directv and- dish triggering a marriage of convenience.

As you recall, it dropped back in june.

Their new ad, less money because adamas going to have more on that story, straight ahead.

? look at the sky ? ? this is "lunch money" on bloomberg television.

I am adam johnson.

Moving pictures this afternoon, a massive fire engulfing the main airport in kenya this morning.

It took them five hours to contain the blaze.

The airport was partially reopened, but all international flights have been canceled indefinitely.

The cause of the fire is being investigated.

New details of a majority of problems from last month.

Just before the plane hit the runway, there was no mechanical failures that have occurred.

Regulators are trying to determine just why the change in command happened.

Hong kong, officials seized a shipment of the illegal animal trophies.

More than 1000 ivory tusks, rhino horns, and leopard skins were found.

The container had a hidden compartment and was being shipped from nigeria and it was the second biggest bust of endangered species products from hong kong in months.

President obama is pushing his economic agenda.

Here he was yesterday in arizona.

#1, congress needs to pass a good bipartisan idea to allow every homeowner the chance to save thousands of dollars each year by refinancing their mortgage at today's rates.

Now that we have made it harder for reckless buyers to buy homes they cannot afford, let's make it easier for qualified buyers to buy the homes that they can afford.

Step three comes to the housing market, the broken immigration system.

Number four, addressing the uneven recovery by hitting the communities that were hit hardest.

We should make sure the families that cannot yet afford to buy a home still have a decent place to rent.

What really got people's attention is what he said right here.

I believe that our housing system should operate where there is a limited government role and private lending should be the backbone of the market.

That includes community-based lenders who view their borrowers as not just in number, but a name.

Privatized lending?

That is what's no one thought he would say.

I wanted to get your thoughts on the president and his thoughts on funding mortgages.

Senator judd gregg calls may socialist.

He said he was for having private capital.

An interesting sidebar.

Almost word for word?

Private capital should take a bigger role in the mortgage market.


Let's hear more from the senator.

I think he is right on the issue of private capital before the taxpayer.

Have do we wind down fannie and freddie, though?

Jeff hershey has put forward a bill.

The idea that you basically move with transition out of having a taxpayer guarantee with private sectors guaranteeing the majority of the obligation of the taxpayer.

What happens to current homeowners if congress does shut down?

Under the senate proposal, 135 more under the house plan after confirming $200,000 where the bar were puts them 20%. here is why the house wins when housing winds.

Mgm explains what he has observed as sin city recovers.

There was an extraordinarily tight correlation between housing and the gaming business.

More so than discretionary income or unemployment.

That housing is the most important metric we have found.

Here in las vegas and a nationwide it is improving very well in places like las vegas.

Plexus vegas strip alone brought home $6.2 billion in gaming money to clark county.

If you are in the mood for in a typical vacation, stay at an atypical hotel.

We have some weird ones coming out for you.

? this is "lunch money" on bloomberg television.

I am adam johnson.

If you are a jetblue fan and you fly across the country, guess what?

They are finally adding wifi later this year and creating a new first class section on flights from jfk to los angeles.

This innovation is the next chapter of jetblue.

We are taking a look at significant, lucrative routes, like new york to los angeles and san francisco.

There are customers who have been telling us -- hey, love of flying you but not on long-haul flights because you do not have a further upgrade experience with wifi, so we are solving both.

Is it only those routes, or others?

Only those ones with dedicated aircraft.

But we are really excited about this.

The corps experience, that will certainly get us into the experience.

It takes care a large number of customers on the aircraft.

So many are asking for more after the first year of service.

We will see what kind of demands we get.

Our message is that there are -- there is room for three models in the airline industry and we never chose to be discount.

There are some out there that is bare bones, nickel and dime, that is a different model.

We never shows that path from day one.

By the way, the legacy guys, all products of bankruptcy and mergers, we are not targeting that have either.

The sweet spot we are in, we can do a better and at a lower cost point, we believe.

There is room for three models in the airline industry.

How are you going to do it at a lower cost?

Starting with the number one costly in terms of fuel burned, we have the youngest fleet of any of the carriers here.

Once you take a look at how you utilize the aircraft and resources on the ground, as well as the ability to deliver the product, again, at across structure -- here is the key, and this cost point and this product, we are not talking about the ones today, not talking about those.

Those carriers that operate that product, you are talking close to $4,000. the corporate customer, there are plenty going after that customer.

Our model has always been about the smaller business owner.

Someone saving up for that trip of the year, that price point, the fair fares, we will not be judging the public.

These two rounds are the most lucrative routes in the world.

This one fits into that product.

Customers tell us that they love flying down.

But why buy the aircraft -- wifi on the aircraft without -- no wifi for six hours?

That will make sure that people stay, with wifi.

The ceo of solomon spoke with us about competition in the markets from the budget brands.

The bulk of the revenue are in the upscale business market.

The economy section itself is not that large.

Where it holds the best is where we operate.

We focus on consumers, but they want, and our consumers that way.

Very targeted to what consumers need.

In actual the focus of where scale and the business model is.

We compete by offering customers what they want and a great returns for owners.

This year i think we have shown that we do that well.

The important thing , the need for international quality brands.

We see that there is a big demand for chinese customers.

Clearly there is outbound travel from china, but it will grow very fast.

The biggest brand in china with their longer than anywhere else.

I think that over time, not immediately but over time, with other key markets, it will work for us well this weekend.

Let's say you are feeling more adventurous than intercontinental or holiday in, we have your ticket to some of the weirdest hotels around.

? two brothers to play football and rap.

Here is some athletic ability, shackled at all, 14,000 feet, then pushed off, lunging 130,000 miles per hour.

It takes years of practice.

The man caught himself when he was just six years old.

? ? this is "lunch money" on bloomberg television, streaming live on

The rush for ad revenue on your phone is heating up.

Last sunday the dallas cowboys won over the dolphins, football was the most profitable sport in the u.s.. the nfl earns over $5 billion in television broadcast rights amount.

What do you get when you mix footballs and foams together?

? football on your phone ? ? you can watch it in bed ? ? show your friends, they will ? will they have teamed up to promote the sunday ticket.

Jocks turn rappers?

Here is what the former president of cbs sports had to say.

Sports is a strategic asset now.

It drives the entire business.

You cannot measure the value of sports just from when it comes on the air and goes off the air.

You measure it in terms of maintaining and growing your subscriber base and maintaining and growing subscriber fees.

It is sports everywhere.

It has become the mantra for most of the sports products.

You only access it through your description to directtv, making that subscription even more valuable to the home subscribers.

At some point it will probably warrant an increase in the charges for the nfl sunday ticket.

Seriously, we have to get back to that video.

? football on your phone football on your phone ? ? football on your phone, that is what i said ? of football on your phone, you can watch it in bed ? ? football on your phone for pall on your phone ? ? for pall on your phone, football in your hand ? ? look at this guy using his phone is a foam ? ? your phone is not for calling, it is for football ? ? football on your phone football on your phone ? ? the the nabors alone ? do not hold me responsible if you wind up with that song stuck in your head.

The mystery meat?

A fried waffle talk go with scrambled eggs without syrup and with sausage, lucky you, fresno, a lot, chattanooga, it goes on sale in your city tomorrow.

? ? it is 56 minutes past the hour, which means that bloomberg television is on the market.

Let's get too caught up on today's trade and how the markets are trading right now.

U.s. equities right now are off of the day's lows by about seven points.

The dow jones is off by about 60 points, the nasdaq is down 70 points.

Falling for a third straight day.

Time for today's options update, groupon is gaining momentum head of the earnings release after the bell today.

Their stock had a rough ride.

They have founded over 75% over the past year.

Allen joins us now from the floor of the cme.

What is behind this run-up?

Is it warranted?

It has a value, there is business with a brand and money, management changes.

$8 was the important point last july.

Moving back above that, $8 is the critical pivot for meat.

These options right now are so expensive, what is your strategy?

How do you play it?

Take advantage of the expensive option.

I want to sell the cash secure put and if it gets put to me i want to sell it for 50 cents.

I get a lot of return, so i get to keep that 50 cents and if not i sell long with 750 being the comfort for owning it with the august option in 10 days to go.

Broadening by 10 times.

It is a win-win situation.

How big is the risk on this trade?

That any stock is going to 0. it is not going to happen overnight, but if it is put to me with a price order, i am selling it at put in gain from that.

I get to lower my bases again.

This is something i want to hold in my portfolio.

It is the point from the high to the lows.

Groupon is not the only tech stock, we have seen a huge run up on.



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