This is "bloomberg surveillance." markets are stable this morning after a grim monday.
The president gets a thumbed down for his proposed retirement scheme.
And the social network age s. facebook turns 10. good morning everyone, this is "bloomberg surveillance." it is tuesday, february 4. joining me, live sterns is with us, on her way to sochi.
And it's time for our morning brief.
Olivia we have to rip up the script here, get right over here anthony.
Live is going to a hockey game in sochi, you are so far from me.
I have your ticket here, you're not going to be able to see -- you are only bringing this up because you are so jealous.
Live, he's farther from the ice than you are.
You're seeing latvia and the philippines?
That's the hockey game?
Very, very exciting.
Also exciting today, economic data.
10:00 a.m. we'll get the factory orders out.
Big disappointment, even worst than the most pessimistic survey.
Also have seop earnings, the sirius radio, sirius is now trading below the bid price that liberty media has aufered to buy.
At 10:00 a.m. we'll get the annual economic projections, congress's latest outlook for the economy and at 10:15, exactly from targeting these markets stop talking about the hockey, heading into the hills for the recent credit card attacks.
Here's the problem, those reports are put together in november.
They're not released until now.
But for the rest of the agencies to put together their federal budget, they need to have economic forecast to work from.
That's what they work from.
And you know, it's a guide to what the government's thinking, what the government was thinking last year.
One last item, the president making a speech.
Remarks on connect e.d. basically increasing the internet access for students.
Do a data check, let's do a data check after what we saw yesterday.
Futures are up five right now.
10-year yield is the story.
I saw a 239 print, yields lower, the yang came in stronger.
Maybe a little weaker on the second screen.
And i threw copper in there as just one example of the emerging market tension.
Copper nowhere near support but something to begin to watch here.
We looked at the papers this morning, we scowered the papers in the web.
Let's get right to front page.
Yeah, that polar vortex that blasted much of the u.s. last month is coming back.
We're getting another storm tomorrow.
Hit detroit particularly hard, automakers blaming the bitter cold and snow anywhere a drop in car sales.
A 15.2 million annual selling rate last month.
That means they're all holding more than a hundred delay supply which could mean discounts ahead.
Apple's lays the ground work for a bigger move into tv, at least according to the "wall street journal," it is putting together a network of internet infrastructure capable of giving customers large account of content.
Apple's business increasingly is tied to services delivered over the web.
Apple tv, you can watch blomberg on that.
Also on the app store, i they brought in $16 billion -- that's a huge amount of money.
We don't talk enough about it.
You don't store enough on your personal device.
Exactly, nobody keeps movies on their p.c., we all take this off the cloud, so it makes sense.
This is the google model and netflix and now apple.
With all the gloom of apple, the store did well as well.
It's one of the big success stories.
Some earnings to talk about this morning, speaking of success stories, switzerland's larger bank, fourth quarter profit beating estimates, lower legal costs and the tax game helping.
So did higher earnings at the investment bank.
They've been rebuilding those.
Meanwhile, b.p., their fourth quarter profit dropped from a year ago.
Happening to all the pig majors, refining margins weakening.
Since 2010, b.p. in particular, sold less profitable fields, focused on margins rather than volume.
We should mention earnings through yesterday, 260 of the s & p 500 share weighted gains up 70.5%. reporting they have beaten forecast, that's all fixed so it doesn't tell you anything.
It happens all the time.
Revenue, up 3.5%, not a whole lot yet.
And the forecast -- yeah, which doesn't give you a lot of confidence.
Maybe one reason we're seeing the declines.
Let's get a perspective.
Richer lesser is with the boston consulting group.
What did you learn that you see after a bloody january?
There's a general higher level of optimism about the world economy.
The strength in the u.s., actually optimism about china in the mid term even though it might be a tougher year this year, continued concern about europe in the medium term.
Rich, with the markets declining the way they have, does that change strategy mans?
Does that change investment plans?
I don't think yet.
I think most companies are looking at a mid term horizon around strategies and investment planning.
I think we have to put this in context.
U.s. equities are up 30%. when you have a bump like that in a single year, the fact there's a correction.
Do people really think we can get through everything or is this going to shake them a little bit?
So, actually ended on a quite strong note in the u.s. i would say right now the confidence around the u.s. is pretty strong, at least from the business leaders i talked to around the world.
They look at the u.s. with low energy cost, good labor cost and flexibility, housing roughly and balance and a medium term outlook i think they feel pretty bullish on.
I think they look at the emerging markets, recognizing the volatility and the emerging markets will be high, probably due to the taper and partly due to their internal challenges.
Was there a sense that developed markets are more exposed to turmoil?
I think most companies view it the other way, they look at the relative growth rates, even with the uncertainties and realize they need to keep shifting their capabilities.
I think largely it's an investment outlook.
Then how do you respond to what we observed yesterday?
Going from 12 to 21. these are markets on the move.
Maybe the idea is that we're not used to taking losses?
Is there a new regime about how we respond to volatility?
What companies are responding to is where it is just extremely high and they have to separate how they operate in the near term from what they're investing for and in the medium term.
Right now companies look at a china or southeast asia or parts of latin america and say they need to be there and figure out how to win.
How do they change how they invest?
So, first they have to recognize that the business models need to be set to win in those markets.
I think what you see increasingly is not trying to export the developed world models into the emerging markets but to build the assets.
Sometimes it areas by market, whether that's really possible.
Sometimes by building more capabilities.
With a local culture, building local management teams.
Investing in leadership.
Building the capabilities.
Sounds like a new trans national organization.
We'll continue on through the hour.
Don't forget three days of jobs report beginning tomorrow as we culminate with a friday jobs report, 8:30 friday morning.
Olivia stearnes has our company news.
I'm going to kick it off with one car maker who is not blaming the weather.
The automaker predicts profit will almost double close to $19 billion for fiscal year ending in march.
Earnings from toyotas overseas sales surprise surprise have soared, has weakened in the last year.
And job cuts at royal k.p.n. is eliminating as many as 2,000 jbs, about 14% of its work force.
The cuts were prompted by the mobile phone price.
And bank of america slashes bonuses for some traders.
The firm cut the bonus pool for some interest rate traders by as much as 20%, according to people with knowledge to the matter.
That's today's company news.
Is the 10 year anniversary for facebook.
I thought it was a joke at the beginning.
We will look at this on bloomberg television.
The reality of a most successful media giant that is facebook, all that coming up today on bloomberg television.
From new york city this morning, it's "bloomberg surveillance," good morning ? coming up, the loop at 8:00 a.m. and will be an interesting conversation amid all the price wars.
John ledger obviously at t-mobile shaking up the industry.
Yeah, no kidding, the pink ads in the super bowl.
Markets calmer after what we saw yesterday.
Futures up 6, dow futures up 32. it has been 10 years, 10 years, since mark zuckerberg started facebook in his harvard dorm room.
Mike, you've got that for us.
It has changed a lot over the years.
The company now worth about $135 billion.
People say it could be the fastest company to reach $150 billion in market value.
The transition to mobile to key, the fourth quarter earnings report, january 29 show that for the first time sales from ads on mobile phones and tablets exceeded the revenue they got from traditional p.c.'s, as facebook celebrates its 10th birthday.
You would talk about it a lot, snap chat, they said they didn't want to be part of facebook.
They don't say how many users they have, but they say they handle more photos every year.
And that's huge, that's huge.
You were talking earlier about the threat of facebook losing well van't si.
Snap chat already holding more photos.
I love snap chat, all the economists, you go back.
All your forecasts disappear.
I have a question for olivia and i think this is a generational issue.
I look at facebook as not part of american industry.
I look at it as invented in a dorm room, it's done really well and give them all the success it's got.
But sort of pretend business but do you perceive it as seamless with all the other things we talk about?
It's certainly not, it's a consumer facing company, it's a social network, the business prospect speak to the last quarter they posted, blockbuster numbers.
This isn't minnesota mining is it?
No, it's not minnesota mining but mobile is the single fastest growing consumer element in the economy and they have one out of five minutes, people on mobile.
If that's not a core business, a part of our world.
Harold sanders recently said people spend more time mobile on facebook than their next closest competitor.
Is that a good thing or a bad thing for the economy?
They don't add anything to g.d.p. but they distract.
Businesses want different ways to connect to their consumers.
It's adding, making life better for people.
Providing businesses unique ways to reach their markets, providing more insight into the customers they're reaching.
Mobile is going to be a central part in the years to come.
Currently a huge player in it.
They're trying to get $10 billion, apple is $56 billion.
That shows you the scope and the scale.
I just, we talked so much about facebook and all the rest of social media, on this 10-year anniversary, is it really part of our industrial ecosystem?
You asked about themes, one is about the economy, but the other is just about technology and integral it's becoming not just to companies on the west coast, but to all companies.
The number of companies that are thinking mobile first, how to interact with customers, new ways to use data, changing the supply chain, it's incredible how fast the technology issues are rippling through the broader economy.
And they're at the heart of that, among several others.
Rich, we had this great interview with mark zuckerberg, facebook hits puberty, not sure he appreciated that.
Not sure 10 years old means puberty.
In it, mark zuckerberg said we're at a phase in the company where we can take a step back and think about what we should do next.
What do you think he should do next?
I think the -- so first of all, i think one of the most impressive things is the ability to be adaptive and aguile, even for a young country.
We assume that it's something only older companies do.
But if you look at facebook, in less than 18 months with the entire world watching and all the pressures, it's impressive.
I think they set up a culture of ex peerm men tation, papers, announcements, trying different things, a willingness to fail and tolerate failure.
Also, makes the point that mark has grown up, he's moved on from sandals to sneakers.
Do you think he still needs her around to breed that sense of credibility?
I think the results would say they're a pretty remarkable team.
If you look at a strong company, it's not one individual.
It's teams at the top that work together and re-enforce each other and bring different perspectives and capabilities.
That's what they've established.
Here is paper, on my phone.
Please don't ask about the pink cell phone case.
Here's our team, in a photograph.
I've got, there's my photos.
There's a photo i took in central park yesterday of the snow.
What's the so what here?
People wanted to connect with their worlds.
It's dramatic, the way mobile's becoming a huge part of their lives.
Every stage you can say why do we really need this?
Every new technology, this is the way the world is going.
Do they speak to you differently when you consult to social media?
10-year-old upstarts, do they listen to the consulting groups or speak to you differently than emerson electric?
Companies that are in an early phase of growth, they normally have a strong business model, they have the confidence and exuberance of youth.
They often have a lot of self confidence about what they will do on their own.
Did you see how he looked at me and said you don't have the exuberance?
Did you notice that?
It's a good segue into the next block,000. it's crushing.
Richard lesser is crushing me from boston consulting group.
Coming up in our next hour on bloomberg television and radio, the olympics coming up, we'll talk with leo hendry, he'll tell us what olivia will see over there in smp ochi.
This is bloomberg surveillance on television radio, your tablet and your phone, mobile, as mr.
Good morning everyone, "bloomberg surveillance." futures up 5, dow futures up 25. there is a live shot of queens and then over to brooklyn later on "bloomberg surveillance," we will discuss the number of plaid shorts in brooklyn, new york.
The entire control room is on the edge of their seat.
See what scarlet is missing by sleeping in.
Yes, a gorgeous morning here.
And then more rain and snow.
Opposition leaders in ukraine are pushing for a parliamentary vote to change the country's constitution.
The proposal would weaken the president's power and shift more authority to the parliament.
The measure is seen as a way to end the standoff.
Confidence among c.e.o.'s in the u.s. close to a two year high according to a survey of the young president's association.
Business conditions will improve in the next six months, that's up from 42% in the previous survey.
C.e.o.'s were particularly upbeat.
Record ratings for the super bowl.
Except probably in denver.
At least until halftime.
The audience slightly larger than the one that tuned into the super bowl two years ago when the new york football giants beat the new england patriots.
Those are your top headlines.
You went to bed when?
After the safety or did you wait five minutes?
I waited five minutes.
Olivia wasn't far behind me, i'm sure.
It was not fun to watch.
I think i sent both of you a text sess message they were 24-0. she went and changed from her broncos orange to her seahawks green.
I thought i might talk about a topic you guys might know a lot about, testosterone.
Men have been overdrugged by overprocessed foods and gender bending chemicals like b.p.a. the last thing they need is a prescription for a risky drug to treat a trumped-up disease.
It has tripled since 2001. the author is saying that these pharmaceutical companies are pandering to men, symptoms that are natural signs of aging, instead of heading to the pharmacy to get their fix -- is this the last day on the show?
We should go gently into that good night.
Haven't you noticed these commercials on tv?
They're all over the place.
Feeling a little sluggish.
It caught my eye because it can actually produce symptoms of people not just myself, they might have symptoms from the drugs.
Pretty dangerous stuff.
i'll guess i'll stop that treatment.
In a moment, we're going to treat credit card fraud, hackers stole personal data from millions of consumers.
The senate wants to know how to stop it.
? earnings are out, a big beat for switzerland's biggest bank.
Nice job there, you got a nice trip.
For more on what's driving, this is a bit of a complicated earnings, some of its revenues, some of its accountings.
Look, mike, they came in doubling the analysts, why?
Because they got a tax credit, but the business is doing well.
Looks like the relationship with the regulators getting a little bit better, got smacked in terms of having to put more, but they seem to be getting along, up 67%, so not a bad set of numbers you've got to say.
And the bigger profit means bigger bonuses there.
Tends to surprise its earnings and this was one a lot of people were happy about, at least people who worked there.
We turn to profitability, put 3.2 billion swiss frank part of its deferred, and the bank's going to have to hold onto their levels.
Do you have to pay up the talent here?
The situation i would actually say would be able to attract very good talents to our bank in addition to the one that we're already, so i think the fact that our strategy is working, that we have a clear strategy, it's also very attractive valuable proposition for many people out there.
Sorry mike, go.
I was just going to ask the strategy, how do analysts see it?
They did have a bit of an accounting gain here.
Do think they this will work long term?
Mike, i think, you know, that overarming issues, a bit like everybody else, foreign exchange.
If they can get through this year and begin to put a quantum around foreign exchange litigation, don't forget it's not all gone but they took that huge hit at the end of 2012. if we can get an idea of what the quantum for foreign exchange litigation might be and we don't know what that is, could be tiny, could be large, i think you begin to see a little bit more of a stretch in terms of evaluation.
But these are guys that have had a good year and i think that's the take away.
Doing better than expected.
They're making some changes there, huge concentration and competition in switzerland between u.b.s., the old union bank of switzerland and credit suites.
In washington, hearings begin today in the senate.
Finally, and i mean finally, executives some target and neiman marcus make their way to capitol hill.
Bankers and retailers, they fight over who to blame.
It's a large number, $3 trillion of credit card transactions hang in the balance.
Richard lesser is with us on trust.
I sort of look at this as yeah, no big deal.
Unfortunately this is a big deal, isn't it?
Of course it's a big deal.
I think right now companies face two huge challenges in the cyber world, the digital world.
One is the protection of data and the second is how they handle the data that they themselves have.
Privacy and the like.
Companies are being held to a very high expectation.
One of the things they do is systems analysis, of all this cyberdebate.
Can i be confident the systems are protected now?
They got into target, they got into neiman marcus.
Why can't they get into the local liquor store or whatever?
So we're not cybersecurity people but it's very clear, the game keeps rising.
Can you be confident?
They're getting better, and those that are trying to attack it are getting more sophisticated.
This isn't a game with an end point.
This is an ongoing struggle that we'll see play out over years and decades to come.
But the expectation the consumers have is very high.
A mistake once has been forgiven if you look backwards, but if you keep seeing companies repeated in the state, you'll see a real erosion in trust that will inhibit the companies ability to move forward.
You tom, quickly to your point.
The national retail federation has come out calling these fraud prone cards because the technology is so outdated.
That swipe technology is the same that's on an 80's cassette tape.
Remember there was a day where all of a sudden, it was y million?
Yeah, what do you think about -- i think there's two separate points.
When you're in a huge company you have a breech like this, the first thing is to be able to figure out where are the issues and what magnitude.
The second the so communicate directly about what you know and what you don't know.
I think that challenge is in front of all companies when they're facing a crisis.
It seems like sort of two sides.
The retailers say the bankers should improve card security.
The bankers want them to cover the breachers.
Where do you weigh in?
If there was ever a place for collaboration, this is it.
The requirements are on both sides.
They have such strong incentives to collaborate to make sure we're putting a foundation in that can protect consumers data.
I think we're going to see more examples of collaboration in the years ahead to get their hands around this and to make sure they're going as fast as the criminals are.
Are you talking to companies about jumping over this whole credit card technology thing.
I think right now, companies are so focused on how to evolve the digital model with the three year out view.
A big part of our work has been not just designing the businesses for today but looking ahead.
The technology is moving so fast, both in how people interact the ship to mobile, and other elements as well as the payments.
To olivia's point, how am i going to buy something?
How am i going to buy a lawnmower in march?
Am i going to use a swipe card?
You're going to use your bit coin -- no, i'm serious.
How are we going to do this?
I think we're going to see a variety of elements come through, i don't think the jury's out yet.
I think the ability to predict five years out.
In march you'll still use your swipe card.
Five years out it could bit katie: or other payments.
Do we know who did this?
f.b.i.'s looking into it.
The executives go up on the hill, can we say it's this party, this nation?
No, they're going to say they're working with federal authorities.
But i do have some interesting stats i want to pull up with you about trust in online, this is interesting.
Apple had the number one spot, these were rankings according to.
Tart also fared pretty well, but oh dear at the very bottom, number 40 is amazon.
Isn't that interesting?
Apple in first place.
Why don't people like major league baseball?
Why don't people like major league baseball?
As a retail list.
Don't you find that interesting?
To me, my apple experience, richard, i think this goes so much to what you guys do, just about pass codes.
On apple, they're always asking for my pass code, which i forget.
Every time you wanted to buy something.
No, my pass cord is michael mckey loves the denver broncos.
Nobody has asked me an i.d. to sign a bill in 20 years.
Very little security going on in payment systems.
So consumers have a lot of faith in apple, that's one more reason analysts say they have future potentially.
What are the politicians going to do?
What's the goal of washington, mr.
I think the goal of washington is to shine a spotlight on it.
There's two possibilities.
One is they shine a spotlight and they encourage the investments and make it clear that failure to invest and failure to protect data will receive scrutiny.
The other is they try to regulate and pass a bunch of policies and tell people how to do it.
In a fast changing landscape that would be a huge mistake.
Richard lesser, this is a big deal.
It is a big deal.
Wait until the next breach.
I don't even want to know.
The number of the day, 11.3 years, since tom's patriots were in the super bowl.
And we'll take a look at how this trend is growing.
"bloomberg surveillance" on television streaming on your tablet, your phone and bloomberg.com.
? good morning everyone, "bloomberg surveillance." new territory for volatility in the last number of days.
Mike has our top headlines this morning.
We start in thailand where pressure is building on the prime minister, the main opposition party says it will petition a court to annul the results of the national vote held over the weekend.
The opposition alleges the election was unconstitutional.
Protesters have vowed to step up demonstrations in effort to pressure the prime minister to resign.
Construction in the u.k. last month expanding at the fastest pace since august of 2007. that was a long time ago.
The reading is the strongest since the month before the financial crisis hit britain.
A bike-up in residential building from growing demand for new homes helped fuel the games.
10 of the biggest drug companies have formed an alliance with the federal government to find new drugs to treat diseases such as alzeimers and diabetes.
The group includes johnson and johnson.
They'll work with the national constitute of health to research and discover new medicines.
Those are your top headlines today.
Single best part after what we've seen in the market, is always important.
Has to do with economics.
Here's our michael mckey.
It has to do with cars and trucks.
We talked about how the sales in january disappointed because of the weather.
But it doesn't look like we're going to have that for a long time.
Because what we're finding out is that the fleet of cars on the road is the oldest ever.
See the blue lines there are cars, the yellow line, light trucks, which are basically your s.u.v.'s. they keep getting older.
11.3 years, according to i.h.s. auto motive.
The average age increased faster than five years before that.
That suggested there's going to be pent up demand for cars going forward.
In our youth, we used to talk about autos being what was called a stick.
Are autos still a big part of the america's g.d.p.? a much lower part because of the recession and the falloff there.
They were over 4%. but one of the interesting things here is that autos are not the kind of event they used to be.
Remember in september, everybody would gather around the showroom.
And people don't do that anymore.
Richard lesser with the boston consulting group, how would you consult the big three of detroit right now?
Firs of all, i would be bold and optimistic for two reasons.
One is, i think the average age of the cars should give them confidence there's going to be demand in the years ahead.
And that we're in balance now.
The second thing is the technology potential in automobiles is enormous.
You look at what's happening in software, digital world, it's going to create new experiences for consumers and auto companies need to be looking at future demand and understanding where their consumers are going.
Right, before you go, i know you got to get on with a busy day, we were talking about microsoft.
It's important that we get your thoughts on the management change that we're seeing at microsoft.
It's funny we started the conversation earlier about facebook and the trans formission that went through.
I think every company, where they're older or younger, needs to go through transformations from time to time to revisit how they operate and what they do.
I think this management change is coming at an excellent time from microsoft.
Say what's next, what are the next offerings, how do they compete in a cloud world, how do they compete with a different kind of consumer, landscape and different technology platforms.
Desktop going to mobile.
Seems like a well timed opportunity.
Are they the same train wreck as any other company or is there something you neck?
I think this train wreck, i don't see it that way.
I think companies that have been around for decades and have been able to grow in very difficult environments.
The challenge is to be agile and not get stuck in a particular way of doing things.
That's true if you're a technology company or automobile company.
I think on microsoft, it's fascinating.
How about our twitter question of the day?
What has the stock market declined telling us?
What has the stock market declined, it's telling us that we're going to work forever.
We're going to work forever!
? good morning everyone.
"bloomberg surveillance." that is gorgeous, washington, with a storm abrewing north of washington, the next storm up the eastern seaboard, snow and rain.
Washington though, that testimony later today on target neiman marcus, that will be excitement at the capitol.
That's a gorgeous shot.
Olivia sterns, she's going to sochi here in a couple of days which is beyond exciting.
I'm not going anywhere.
Yeah, we're going nowhere.
I'll be sending you snapshots.
Intell changing rules on executive pay.
They will require more executives to own stocks and will tie bonuses to operating goals.
The changes are part to connect pay more closely with the company's financial performance.
Panasonic topped profit forecast.
Posted net income of $730 million for the period.
They have been moving away from unprofitable consumer businesses and focusing on meeting demand from automakers and home builders.
And nintendo wraps up its stock buy back.
Nintendo also said they sold a chupping of their holdings.
That's today's company news.
How could you part ways with mario and luigi?
You could not, there's no question about that.
This is front and center, this is important, this is the biggest results i've had in my writings at bloomberg business week.
It's about your lousy retirement.
It is a gimmick, that is the consensus as the president launches, is it myra?
Or our -- i'll get it.
It's my i.r.a. potato, potato.
Thank you, olivia.
The returns are bond like, there's no automatic sign-in, you have to opt in, which in itself is insane.
What exactly is wrong with guaranteed return?
This is the result of financial repression that i get one or two percent a year, big deal.
Yeah, so i think what's interesting about this program, two things.
One is, i think the president very clearly moved discussion of retirement to center stage.
It is real, it is a real crisis as you were just mentioning.
And so we're going to be talking about it a lot more.
The second thing about myra, i call it myra, is interesting.
It is a program that has the potential to categorize savings.
We just have a group of people who aren't trained or acclimated to save.
So what is interesting about this program is you have an opportunity to create sabres and because of the caps on it, you have to turn them into investments.
I said at the brookings institute x years ago, and peter and company said the only way to do this is opt in.
Didn't the president have a fabulous opportunity there to truly change the landscape and say you're forced into myra, until you decide to pull out.
Why didn't he do that?
That has been the model we're taking in the d.c. plan.
The 401 k plan.
So in that plan in 2006, legislation was passed that allowed employers to default people in to plans, first day they showed up for work.
That has worked tremendously.
I'm not sure if the administration right now has the ability to do that.
The other thing that makes this a little bit difficult is you're going into one investment option which is the r bond, a new financial instrument, different.
We haven't seen how it will behave under a variety of situations.
And in a fiscal standpoint, that's why at this point in time, opt out.
Yeah, my answer is about american greed which is one or two percent, we need to talk to somebody -- absolutely unacceptable and thrilled to have, mike holland joining us this morning.
Of course been a great supporter of "bloomberg surveillance." the heart of the issue is the president's trying to do the right thing and give you a bond return and smart guys are saying to buy a hundred shares a day.
Equity returns to better.
That's the heart of the debate, right?
Long term 09% is better than 1%. split the difference, 5%! little half and half.
I applaud him and the administration for trying to get people to save.
You talked about your 201 k for many years.
The reality is is that if you hit people who haven't been doing anything just to start.
An investment made in november in a philippines fund?
Boy, has that worked out.
So far, so good.
But the problem here is that people, the president's program is aimed at people who don't have retirement.
So they don't have an executive option.
How will you get people to put money in stocks if they're not having it automatically withdrawn?
You're trying to create a savings culture first then where they can grow into -- i think that's what's interesting about the proposal has.
I thought this acted more like a savings bond.
That's the problem, in the last five years, the stock market has doubled but that doesn't help most people who get pensions, in fact, most americans don't have pensions, social security is not enough.
How can you encourage people to build a nest egg on a return that low?
What's happening here, there's a program that you can look to for success over in the united kingdom where they did a national savings program.
They put them into a program very much like this.
I know, i started mine.
So you put money into this, you get used to making contributions, being a saver.
You don't lose money and then after a while, you say ok, i want to extend this, but the two to four percent -- the important thing is you get started.
I got to ask the tough question, chip.
What is the research on black rock being an active manager versus the passive manager debate.
How did active do in 2013? it areaed, as you know.
You have different strategies that are doing well on an active basis and other ones that are doing -- what's going to do well for 2014? that's not my area to talk about.
But i can tell you, we believe there's a role for both active and passive.
Passive is at the core of the portfolio, active is where you see opportunity.
What i like about what we offer to our clients is the ability to offer active and passive.
Thank you so much.
Myra, not the my i.r.a., or whatever it is.
Let's do a my 4 x report, looking at dollar yen, that's what i've been looking at.
It has been a stronger yen, and also much more "bloomberg surveillance," good morning.
? markets are stable this morning after a grim monday.
U.s. equity markets near a correction.
Sports works on tv.
Doesn't bode well for the olympics -- does it bode well for the olympics?
Stephen allen wants me to look brooklyn.
This is bloomberg surveillance.
We are live from new york.
It is tuesday, february fourth.
Adjoining the michael mckee, olivia sterns.
Scarlet fu has decided to sleep in.
Our guest host is leo hendry, managing partner -- let's get to the morning brief.
Eco-data at 10:00 a.m. expect factory orders to come in falling about 1.8%. a big mess on the isam manufacturing index this day.
Serious -- sirius xm radio and mcgraw-hill.
Neiman marcus and target heading to the hill for hearings on the credit card hack.
Let's get to company news.
Here is michael mckee.
Ubs topping profit forecast.
Posting net income of $1 billion last quarter, helped by gains at its invest in bank and wealth management units.
Benefiting from a decline in legal costs.
Much bigger bonuses for people at ubs.
Facebook turns 10 years old today and i did not buy tom keene anything.
It has grown to more than 6000 employees, averages more than 750 million users per day.
It is releasing a new facebook paper app -- a newsreader.
Apple lays the groundwork for a bigger move into tv.
Putting together a network of internet infrastructure.
The move will apple offer customers larger modes of content as they move more stuff into the cloud.
Maybe we can get you one of those plaid shirts.
It is unreal.
It is like one big mumford and sons.
It is a rumpled look.
I need the beard.
And the thing, you've got to do the -- it is cold enough outside.
What is the wash thing?
It is a washboard.
It is a woodie guthrie -- you play the washboard.
Something like that.
This is what matters.
Markets are stable after a particularly ugly monday afternoon with the dow jones industrial over 7%. -- down over 7%. your 401(k) has diminished and the doubts of economic growth -- and of the doubts of economic growth.
Wonderful to have you here.
Have we forgotten what it was like to have a little volatility in the markets.
It has been so long.
We have been talking about this for the past 18 months.
We have had nothing like this.
We finally get it and it is done 4% yesterday and people say we are in a bear market.
Shares are on sale today.
[laughter] this is an arch investment today.
Shares are on sale today and yet we are all worried about dollar yen and the rest of it.
2008 changed the psychology for some new people.
A whole generation of investors may not come back into the stock market.
As a result of that, you end up with a situation where when you do get a turn, it comes really fast and really hard.
You were talking 12% or 13% in these markets in the last four weeks.
A reaffirmation of share buyback.
The cushion under this to watch what they do, not what they say.
Gloom, gloom, gloom on the market and company after company is deploying cash back for shareholders.
How much of this is due to the fed pulling back?
Is that an excuse for selloff?
Or are people does not prepared for all of that liquidity to be withdrawn?
It is actually both.
It is an excuse -- they really have not started on the one hand.
Tom keene will send out a tweet that includes the relationship between previous qe pullbacks in the relationship to the market.
When it happens, the market -- it does not matter the why -- they do go together.
We are experiencing them once again.
Live me ask you this.
The governor of the south african -- i misspoke.
[laughter] i misspoke about the role of the fed in emerging markets, which is leading the soul thing.
I want to hear what she has to say and get your reaction.
It is a very important question.
When the united states and the advanced economies were in the heat of the fight, this was seven years now, and my view it should be appreciated or better understood that what is happening to emerging markets -- the fed is messing up the world here and we should be doing about it -- something about it.
I don't remember any of these people thinking the fed over these past six years when the markets were going up and they were getting cheap money.
I don't believe they're overspending for a second -- the profligate waste -- not all of it is the reserve -- a result of the fed.
This brings up the distortions that we have seen as we try to solve the financial crisis.
Are you optimistic we can get through these times of distortions without major instability in market?
I love hearing michael talk.
The comment from the president was very informing.
When you turn a spigot on for six years, it is extremely hard to shut it off.
There was this profligate spending in developing countries that was just obscene.
Everybody has no inculcated themselves that this is a perpetual spec it, it will never be shut off than mrs.
Yellen will do the right thing as well.
You cannot keep doing this.
This market has been fragile for a decade.
It has been fueled by externalities.
It is part of the bigger conversation about whether or not emerging markets have been victimized by the fed or not.
Reza prized that there has not been more differentiation than?
It looks like a broad selloff in the emerging markets?
Whereas, turkey and brazil have been overspending.
You have identified also what is going on in the u.s. market to read you have the reality, what is going on in the countries and the economies, and that you have the markets.
The two are not necessarily in sync.
In the u.s., companies are doing ok.
I was in taiwan i week ago -- the companies are doing ok.
But the markets are saying -- how about earnings?
All of this currency volatility?
So much of the consumption that has been driving this has been done through consumer debt, corporate debt -- the bricks as we know it have said am i am going to play catch-up ball with your money.
I go in the last couple days back to the idea of brazil with a sub 3% gdp.
Which i do not understand.
This is a joke for michael holland.
This goes to the media hype out there.
The 50 and 200-day moving average.
Everybody ages, everybody grace.
It makes for great fodder in the business media.
We are so far away from the groom -- gloom of a death crisis.
We are nowhere near it.
This morning, waking up to 70 and 70 on the s&p, if we do not -- 1770 on the s&p, we do not cross over that by wednesday, we are going to stray to help on the stock market -- straight to hell on the stock market -- i do not believe that.
Thank you so much for coming on sort notice.
-- short notice.
We have some earnings up from sirius.
Record revenue up to $3.8 billion -- that is up 12%. sirius is still trading below the offer.
"bloomberg surveillance" -- good morning to all of you.
Coming up, it is fashion week, but it is not about bowties and fancy suits.
It is about plaid shirts, about being casual, about an artisan all overpriced plaid shirt.
? good morning, everyone.
I'm tom keene.
Leo hindery, managing partner of intermedia partners.
We will talk about the olympics and a bit.
One of his passions -- it is not as simple as the haves and the have not.
It is the quality of our jobs.
Manufacturing jobs as opposed to service sector jobs.
Both parties ignoring the widening inequality.
We ignore it and then we ignore it structure.
And the recovery began from this horrible recession, 43% of the jobs that have been created pay $16 or less per hour.
To they have benefits?
Most half of the women or men work full-time for walmart received state assistance in california.
You look at the resuscitation without looking at the quality of resuscitation.
For most half of the jobs pay $16 or less, the only way that resuscitation sticks is consumer credit double.
Did you hear anything from the president in his challenged state of the union address?
The vision to address the income dispersion?
You cannot address the dispersion without addressing the unbalance between manufacturing and service jobs in america.
Lesson 8% of women and men making something in this country -- if only eight percent of the workers make something, the rest of us do not.
As an economist to mind you are a very good one, you cannot sustain that short of credit levels.
That is the reality that was stored -- ignored in the state of the union address.
How do we jumpstart manufacturing?
You stop cheating in china.
You take the subsidies that are illegal out of the system so that our trade imbalance in manufactured goods -- about $400 billion per year -- begins to back up.
What stuns me is that we spent all of this time on the federal deficit, verio deuce -- very obtuse, very complex.
We need to pay attention to or hundred billion dollars per year in manufactured goods coming into this country.
The store that will never him ever go away.
Coming up, the olympics start friday.
Their time zones away.
Will it be a different olympics because of where they are?
Also, will the be different because of social media?
We will cover that for you here.
Markets improve this morning.
? good morning, everyone.
I am tom keene.
Scarlet fu is in later today.
Dow futures up 31. our guest host for the hour is leo hindery.
Managing partner with intermedia partners.
Your is michael mckee.
-- here is michael mckee.
Opposite in -- opposition leaders in ukraine moving to curb residential powers.
The measure is seen as a way to end the standoff between antigovernment groups and the president.
Construction and the u.k. expanding at the fastest pace since august 2007. the growing demand for new homes there is help into fuel begins.
-- the gains.
Record ratings for the super bowl.
111.5 million viewers tuned into coverage of the seattle seahawks route of whatever team in orange that was.
It was the largest tv audience in history.
That is kind of interesting because there is so much talk about how we have fragmented as a nation, there are still some events that bring us together.
One of those events is fashion week.
Descending on new york this week.
I thought you were a vampire weekend guy?
I am sensitive.
[laughter] which is a perfect segue to the fact that perhaps tom keene maybe needs a bit of a surveillance makeover.
The question is, how do you build a fine tuned selection of the coolest downtown thread?
We are joined by the man behind the business of stephen allen, stephen allen himself.
You are a taste maker.
What you think of tom's look?
I think it is great.
I would wear a bowtie all the time if i could.
If you go to williamsburg, you see all of these guys -- full on beards and mustaches and fasts and bowties.
When did you figure this out?
I am fascinated by the idea of the east those of another time.
-- ethos of another time.
Was it an idea 15 years ago or did it evolve over time?
I grew up in the city.
I went to public schools, private schools.
I was kind of messy.
I went to college in california.
I think it is the east coast, west coast hybrid type thing.
I wanted to do shirts and shorts i could sit -- throw in the wash.
It started with shirts and other brands.
You have grown so big.
You even have a store and hamptons.
How have you been able to grow so successfully?
You have a eyewear, home stores.
What is driving it?
Everything that we have done is a company has happened from something else.
The plan initially was to open a store and have a lot of interesting products in that store and that evolved into representing a lot of designers we were selling in the store and doing their sales internationally.
That evolved into the private label line.
Do you risk losing your brand and your image as you leverage out?
You have done fossil investment.
Is it a risk of losing the character of brooklyn if you expand globally?
It has always been about doing it as good as we possibly can.
Whatever we do, if we leverage anything, it is only to get better.
Starting out, it was me and one assistant.
Now we have a whole design team.
We are able to do so much more and i think, quite frankly, a lot better.
One thing interesting about tom's question is that you have chosen to forgo a logo.
Why do you choose not to brand yourself?
I used to have polo or izod and cut off the label.
You cut off the little alligator.
I like the idea of this sort of refinement and find the best, having the best.
Because it was expensive, the quality was good.
We make our shirts he read new york.
Made in america.
Everything we can make your, we try to make your.
How long does a look last?
You start looking ahead five years or something and saying, i am in now, i may not be then, so what can i project people will be wearing?
That's a great point.
I think in general -- we do men's and women's almost equally.
We try not to make anything we feel that is something that is of the moment because it is trendy.
We try to make things that you will buy and you will wear -- that it's a beautiful blazer, that is a beautiful shirt to rid -- what is the dynamic of this yours fashion week in new york?
What is the tone?
It is always crazy.
This time it is a little bit more spread out to rid -- out.
We were showing of lincoln center last year.
This year, we are in the west village.
It is always the same kind of panic.
Can you transported to london and asia?
We have a great partner in japan.
They're doing a really good job.
Your football helmet in the window of bloomingdale's -- there were 18 football helmets and the window of bloomingdale's. yours sticks out like a soft -- sore thumb.
It is plaid.
A quilted football helmet.
It is soft.
Our entire control room awaits their steve allen slagged.
Stocks keep falling.
Is there a safe place to put your money?
Our twitter question -- what is the stock market decline telling us?
It is a gorgeous day between storms here on the end of manhattan.
It was gorgeous yesterday.
Sunrise across all of new york.
Tom keene with michael mckee and olivia sterns.
Olivia has company news.
Toyota forecasting record annual profit.
Profit will almost double for $19 billion for its fiscal year ending in march.
Sales have soared as japan posse and as we can over the past year -- japan's yen has weakened over the past year.
It is all part of an effort to give u.s. students access to broadband and wireless technology.
Bank of america slashes bonuses for some traders.
The firm cut the bonus for some interest rate traders were as much as 20% -- this according to people with knowledge of the matters.
There it is.
Can markets recover this morning?
The games of change.
Nbc has put out $4.3 billion for the olympic games two 2001 he -- to 2020. the olympic rules of changed, the figure skating thing has changed.
Leo hindery help us invent sports entertainment.
He gives his on these new olympics -- perspective on these new olympics.
It is so gone.
Waiting at 8:00 p.m. for peggy fleming to come out.
Three things have happened.
The cold war ended.
That was seminal.
The old olympic games were asked -- us during the bad guys.
That was seminal.
We fought our political wars through the olympics.
The other thing that changed was that the mix of content had to begin to adapt.
You had extreme sports coming into traditional -- and the case of the winter -- traditional alpine and nordic events.
It has confused the audience.
There is an audience that grew up around traditional winter sports.
And now you have the half pipe.
Are you into the olympics?
Yes, but i will be the old style.
The hockey and the alpine skiing events.
The traditional nordic events.
The biggest change is that this product is so prolific that it is being streamed and available in countless forms.
That is the breakdown that is most interesting into the future.
There are two event that have so much content that they do not work and traditional on television settings, march madness -- with all of those games.
We want to watch them all at once.
So you're watching many of them on your desktop.
The olympics is so much content, yet the economic model was the old espn subscription model.
I go back to the old abc jim mccain days were you would wait until prime time at night to find out who won anything.
We do not do that anymore.
What is the value of something like nbc?
Time zones in many of these jurisdictionsreally disadvantage -- what is going to happen?
Socha will have much less viewing than you might ask you.
We see so much of this product over the course of the year that it is just no longer special.
It depends a you account for it area they will use cross promotion to justify it.
At that price, they will probably lose money.
Two americans watch when americans don't when?
If we know that our guy did not win in this key event or hockey event, do we watch?
You watch because you are a true fan.
The jingoism has disappeared and that is a big deal.
I want to did very quickly to olivia sterns.
What are you going to do in sochi?
I want to go to the hockey.
Every single event will be on tape delay except the very finals of the men's and women's hockey.
I will be going to hockey.
No bobsled or lose -- luge?
Did you know bmw is making bobsled's? what are you doing?
I am doing the luge.
[laughter] while tom is doing that, i will check on data for you.
We are up on the s&p futures are now.
Money is coming out of bonds.
Do not pay any attention to the euro right now.
This is what is happening to the markets.
All green here.
Good morning, everyone.
Michael mckee and olivia sterns.
Leo hindery with us as well.
We have been talking about all of our major indexes down in the new year.
Fixed income remains full durable decibel marble to rising interest rates.
-- full durable to rising interest -- vuonerablernable to rising interest rates.
We remember you spending a lot of time in assets.
Thank you for being with us.
How vulnerable is the world today when we see this kind of volatility going on in the markets?
Should we be worried about it?
Or is this healthy correction and we move on?
It is good to be with you.
I think there is some serious former ability and what we are seeing today.
Not that the markets have overreacted the last few days.
As leo said earlier, if you turn the spigot on for five or six euros, you have got to expect some adjustment in markets when the spigot turns off.
Quite frankly, we are seeing a shift.
Some boats and upon the rocks.
Weren't buffett said, when the tide goes out, we see who is swimming naked.
Or can you name any countries where the fundamentals are not good and this could expose them?
The countries that expose me are those with current account deficits.
Brazil, turkey, indonesia, india.
Some are making progress in reducing deficits.
The key way to do that is to raise interest rates, bring growth down -- this will affect global demand for u.s. products.
You are such a voice are of major bankers in the crises.
Are the major banks better prepared to deal with these countries as they see their currencies devalue?
As they see interest rates go up?
As they have to speak domestically.
I think the banks are prepared today because they're much better capitalized.
They have liquidity buffers to ensure that of any particular firm got in trouble, it would not threaten the whole system, as it did in 2008. i think we still have a widespread environment of weak economies, particularly in europe.
The countries that have been driving growth over the last few years are not going to be as robust as they have been going forward.
What can be done to reduce the recent turmoil and emerging markets.
The governor is saying more coordination needs to happen.
What can actually be done?
I have been pleading for more coordination for years.
I don't think there is much to be done there.
What i would say, however, is that the major central banks could step forward, this would give confidence to markets, these key emerging markets are not going to run out of reserves -- the other thing that could happen is that the imf could step forward with its own credit line.
Some countries will have to step forward to strengthen their own programs.
I want to ask an oddball question -- it may sound odd ball -- puerto rico -- everybody is worried about puerto rico not being able to pay its bond debt.
You don't with the last country who could not do that -- greece -- but they cannot default and puerto rico.
How do the markets handle that/ under the banks handle that?
-- how do the banks handle that?
I think they have to sit down and sort this out cooperatively.
Stretch out the terms of it.
Find some cooperative solutions here.
So we do not hit the wall as we try to avoid with greece.
Is the imf's task the same here?
I don't think the imf can afford to call it business as usual.
I think they are extraordinarily help all and some result, but the drove the austerity agenda too fast and too sharp, and that of focusing on structural reforms in this economy.
The need to step back and ask them a are the keys to sustainability?
It is growth, not just production.
Futures are up 6. dow futures up 36. ? "bloomberg surveillance." it it is washington -- up to speed on capitol hill.
Phil mattingly will be joining us at 8:00. good morning.
What do you have?
Carson block is co-anchoring with stephanie ruhle and myself.
Bart chilton, going to be a great interview.
Then the sprint ceo is coming on.
He will be on talking with us.
What will we get out of the target, neiman marcus testimony on capitol hill today?
Is it just showtime for legislators?
Showtime and cover yourself for the companies.
I think there will be a little bit of back-and-forth.
Phil mattingly, helping us out in washington.
It is time for morning movers.
We are going to start with lenovo.
Buying a lot of stuff lately.
They bought motorola mobility.
That is one of the big concerns.
Five analyst downgrades.
Huge jump in the hong kong market.
The problem is, when are the going to make money?
It will take them years to integrate these equities.
The stock is hammered.
It is not just the overall markets.
I am talking about the owner of taco bell and kfc.