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Jan. 22 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Kenneth Rogoff, David Bank, Steve Bolze, Arne Sorenson, Craig Moffett, Stephen Pagliuca, and Pierre Beaudoin. (Source: Bloomberg)

This is "bloomberg surveillance." who needs cable television?

Amazon links into creating an online pay-tv service.

Thomas edison invented the lightbulb, the ceo of general electric.

Developing new power around the world.

The tallest hotel in new york, fall from the priciest.

Marriott opens a new way to watch the snowstorms on the east coast.

Good morning, this is "bloomberg surveillance," live from new york this wednesday, january 22. i am scarlet fu with michael mckee.

Tom keene is in davos attending the world economic forum.

Tom, you missed the snowstorm here in new york.

Are you getting wintry weather in switzerland?

We will go downhill skiing in central park when we get back.

A snowless davos.

A light cover across the alps.

I did a panel with brian moynihan of bank of america, peter sands of standard charter and don barton of mckenzie, a spirited discussion about the themes here.

Moving that ford on "bloomberg surveillance," arnie sorenson from marriott international has a global feel for the ebb and flow of american global business.

Ken rogoff joins us in a bit, a lot to talk about.

This seems to be a davos where the business crew, the corporate crew is taking over the meeting.

Corporations are everywhere.

Hans nichols was showing the helicopters with london tv, they are out.

We will be joining you shortly.

We need to get to michael mckee with our morning brief.

You are going to play weatherman.

You cannot avoid it, so cold and so much snow on the east coast.

Over in england, bank of england has released minutes showing that members saw no need to raise rates soon, u.k. unemployment is supposed to be the trigger at a threshold of 7% , they are supposed to consider raising rates.

Like 6.5% in the u.s. the u.k. reported unemployment is at 7.1%, going to raise the question of what they do sooner rather than later.

In tokyo, no change in bank of japan policy, $671 billion a year in stimulus even though that economy is starting to pick up at inflation is going higher.

In the u.s., a light day.

Only mortgage applications out at 7:00 a.m. earnings, not as many big companies, coach is going to lead our list, motorola, general dynamics, after the bell we get netflix and ebay.

Talking about netflix this morning.

Also, the weather.

It has stopped snowing in new york.

Finally.

Schools are closed in philadelphia and d.c., students of new york are going to school even though wind chills are like -10 degrees.

That is affecting the markets locally.

Pay up to get what you need, natural gas prices in new york city at a record $120 per british thermal unit, seven times.

We are paying up.

You have a data check.

Right now we are lower across the board for equities, the s&p futures down by three at the moment.

Not a whole lot of movement.

The 10 year note yield, said of -- we have settled into the range, 184. crude oil reacting to the weather, up $.42 on the day, that spreads through the energy complex, natural gas.

We mentioned the new york city spot price.

Up to a two your high.

In boston, don't look.

Heating oil futures, paying a lot more than those who use natural gas.

The tom keene watch, swiss franc a little weaker again today.

Tom's time at the pn a bar gets a little cheaper.

Gold futures, $1,239. this is on the website of bloomberg.com, the shakeup over at pimco, the world's biggest bond fund manager.

Ceo mohamed el-erian will be leaving.

A surprising departure.

This is a bombshell.

He was seen as the heir apparent to bill gross, not clear why.

He is not speaking on this, clients pull a lot of money, $41 billion from pimco's bond funds last year, pimco did not do well with bond losing favor.

He was charged with diversifying and building inequity business, maybe that has something to do with it.

Maybe he is looking for a different job, a policymaking job.

He has been very active on the op-ed front.

His son will be bringing, continuing to discuss this.

I'm sure -- his phone will be ringing, continuing to discuss this.

Don't gates -- bill gates was here yesterday at bloomberg headquarters.

He sat down with michael bloomberg, the founder of bloomberg lp, majority shareholder.

They were talking about challenges to philanthropy.

I am naturally optimistic.

The facts are on the site of the optimists.

It is dangerous that people are focusing on the bad news and not seeing progress.

It means they do not look at the best practices.

It makes them less generous.

We are raising poor countries, most people live in middle income countries now.

More to be done, health, agriculture.

The success, if you do not see that, you are not going to participate in what we need to do.

There will be no poor nations by the time we reach 2035? almost none, landlocked countries in africa, north korea, less than 10. when i was born, almost all countries were poor.

Now we are down to about a quarter of them.

The next 20 years, if we focus on it, we can make it really exceptional.

Few poor countries, some bold predictions.

Our final front-page story, amazon approaching u.s. media companies to get rights for online paid television.

Offering a live programming similar to paid tv, this would expand on their prime subscription service.

Do you use that?

We do, the kids love it.

It brings more options.

Let's bring in our guest host, media analyst at rbc capital markets.

A lot of consolidation going on in cable tv, yet you have amazon coming in as new competition.

I think this is pretty astounding.

One single data point for an industry is interesting, but not meaningful.

When you combine this with the fact that sony is -- has announced they are launching a streaming service.

We are pretty sure that is part of the verizon strategy in acquiring the intel assets.

Now you have the chatter about amazon.

All the sudden, think about that.

In an industry that was essentially a monopoly between guys who built the cable and the ground and a handful in the have satellites and all of a sudden you have a whole bunch of new competition coming in just as you are starting to get concerned about cable guys consolidating.

Hopefully for media companies, putting some of the leverage in their hands.

Media is the gift that keeps on giving.

In terms of their ability to monetize content and grow earnings.

What about companies -- can they all survive?

That is a great question.

The business case for any of them is -- i think we saw with intel, they were going to launch the first over-the-top cable system.

Ultimately, they sold the assets to verizon.

They really must not have had a terrific business case for a stand-alone, non-facilities-based cable operator for them.

In the hands of someone who has customer relationships, who could use it as a customer acquisition tool, it becomes a more interesting business case for amazon or what verizon could do as well.

Rolling into the mobile products.

Good news for anyone who generates content or tv fans.

Our twitter question of the day.

How do you watch tv?

Do you cut the cord, do you use netflix?

Tweet us @bsurveillance.

Mr.

keene has been watching bloomberg tv through his ipad app.

12 noon in switzerland.

Hearing the church bells in the background.

He studied the 15th century, kenneth rogoff joins us from harvard university to kick off our davos coverage for "bloomberg surveillance." ? good morning, "bloomberg surveillance" from new york city and davos, switzerland at the world economic forum.

The themes are many and diverse.

A lot of talk about strategy.

The idea that the air afford could be different.

As we do every time we come to davos, we opened coverage with ken rogoff of harvard university.

One of our most astute international economists.

The book of the era, "this time is different." has anyone read it cover to cover?

Some people claim to.

Congratulations of the enduring effect of "this time is different." bringing forward the new.

What is new in 2014? we have more data on how this crisis has unfolded.

We dug deeper into past crises before world war ii, all the way back to 1857. trying to measure, we know it was bad, how bad?

For the u.s., it is the worst post world war ii recession.

A little worse than average.

Europe is worse than you might think.

I heard that this morning.

John, formerly of the imf joined us.

Europe is distinctive.

Let me ask you an econ 101 question, if christine lagarde has a caution, why are the markets doing so well?

Why did we have four great years of equity markets if the ken rogoff's of the world have skepticism?

After other crises, we have had a similar pattern with equity markets for the first few years.

This is not after -- this is not out of character.

If we are looking recently, there has been some measure of stability in europe, it is hardly growing gangbusters.

It is a big improvement from blowing up.

In the u.s., it is growing.

There has been a natural -- crises do end, maybe we are starting to move away.

It is still a long way from full recovery in europe.

We could go two hours or three hours nonstop.

The issue of the moment is inequality, the frustration of a -- forget about 1%, maybe 7%. then there's the rest of america.

What would you like to see our politicians do?

What is the rogoff prescription for the president and the next president?

In the big picture, technology and globalization will drive the story.

There is a political side that we see it everywhere.

Labor's share is plummeting and has been for 25 years.

Before that, we had technological process and -- we had technological progress and do not have share plummeted.

We have to see changes.

It is permanent, structure.

It will come back you naturally.

Technology will go where it is expensive.

Replacing highly endowed individuals.

Something with the tax system is clear.

Infrastructure investment, it is incredible we have not had this.

Why?

Do you know why we don't have swiss railroads?

We have sent a guy to the moon and we cannot do this.

Aside from politics, there is imminent domain, it is hard to tell somebody we are taking your land to build a railroad.

That is part of it.

There has been a political paralysis in recent years.

I had not anticipated -- i thought the crisis would energize our political system.

I stood with you in 2007 in the bloomberg radio studios in new york, you were two years ahead of the discussion on the need for investment.

This is a theme that davos.

Why can't c-c;lass officers invest to create jobs?

Is it washington's, berlin's fault?

We live in a world where politics has become more paramount than it has been a long -- in a long time.

You care more about washington is doing.

A part of it is the recovery taking hold.

Over time, maybe we will start to see the investment.

That is the last piece, when we see that pick up, we will feel better.

Public and private investment.

We are teaching at harvard university, what is different about what you are teaching now, may 2007 before the crisis?

For example, real interest rates being zero -- distortion -- the puzzle of why interest rates are so low, nobody really knows.

Does janet yellen?

No, she knows the seven explanations, it is hard to calibrate.

She knows pieces where the fed can do something.

Financial crises, my students are more interested now.

I will go without.

To talk to you at davos about the year forward for the u.s., some nice surprises, the u.k. doing better-than-expected.

Did austerity work there?

I think that is over rated as being the single driver of everything going on.

The u.s., showed at the meetings, it has behaved the same way it always has with that size debt and deficit.

We did not do anything more anything less, you can't complain about the sequester.

The credit system taking time to heal is number one.

I would have like to see debt write-downs.

Prepress -- progress or kenneth drove off --professor ken rogoff of harvard university.

Executive officers have to sleep in hotel rooms.

We will talk to marriott's ceo.

From new york city and davos and the world economic forum, this is "bloomberg surveillance." stay with us.

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

Tom keene is in davos.

Mike has our top headlines this wednesday morning.

Good morning to folks in japan, bake of japan -- bank of japan will continue with plans to expand the monetary base by as much as 600 $70 billion annually.

There was a change in the language, cutting a reference to uncertainty.

Bank of england's 7% target, they saw no immediate reason to raise rates.

The unemployment rate fell to numeral set -- the unemployment rate fell to 7.1%. the winter storm on the east coast, look out the window, thousands of flights are canceled.

A foot of snow in some areas.

At midnight, 11 inches of snow in central park.

Washington dc and boston clothing -- closing schools.

A wave of arctic air adds insult to injury.

We have got negative five degrees wind chill -- we have got -5 degrees.

Polar vortex has entered our lexicon.

The people at the weather bureau called the polar pig.

Something from "the new yorker," the cult of over work.

After junior bankers at goldman sachs, credit suisse, and bank of america were told not to work on saturdays.

Grinding out hundred hour weeks health spankers think of themselves as more dedicated than everyone else.

-- helps bankers think of themselves as more dedicated than anyone else.

David banks, you remember when you were a junior banker, putting in your hundred hours a week.

What has become more challenging today versus when i was an analyst, at first in boston in 1990, the global nature of the market and the 24-hour news cycle makes it impossible to not be reactive.

When i think about the sell side of our business.

It would be great to say everybody take today off.

When the supreme court rules on a friday night that they are going to hear the aereo case.

We need to be reactive to clients.

It is interesting but difficult to execute in practice.

Same thing other companies face.

The snowstorm hits new york, they called people into work.

Does it -- didn't really benefit you to sit around 15 hours a day?

Were you that much more productive?

I think the clients appreciate a timely insight, that is what we are in the business for.

That is the choice we make to go into the financial services industry.

You get paid.

That is nice, too.

The productivity of most knowledge workers is hard to quantify.

When we come back on "bloomberg surveillance," heading back to davos.

The tide is shifting in the power industry with the head of ge's power and water industry.

? we want to clarify something.

Amazon and a paid tv service, nevermind.

"the wall street journal" had reported they approached content providers.

Amazon, and an e-mail to "usa today," denies that.

"we are not planning to license television channels or offer a paid tv service." it looks like talk of another entrant into that field is premature.

Some thoughts from david bank at rbc capital markets.

Is this surprising?

What i said before, one data point to the sector is not really that meaningful.

Cumulatively, thematically, a number of them are.

What i would focus on -- whether or not it is amazon or someone else, sony is, it looks as though verizon is.

There are buyers for this content.

We are clearly on the verge of seeing streaming over the top cable products launched.

It looks as though it is not going to be amazon, never say never.

If not now, soon.

Mike has our top headlines.

Clashes between protesters and police in the ukraine have turned deadly.

Two people reported to have died in kiev, the first deaths since protests began two months ago.

New anti-protest laws are going into effect.

Police have been cracking down on protesters.

John kerry and representatives of dozens of other countries in geneva for the start of peace talks on syria.

The conference host to jumpstart progress and end the three year civil war in that country.

Fighting has spilled into lebanon, turkey, and he rocked as opposition groups try to topple president assad.

It seems like a safe bet, berkshire hathaway backing a $1 billion prize to anyone who picks any winner -- every winner of every game in the march madness tournament.

A joint effort between buffett and quicken loans.

The odds, 9 quintillion to one.

9 followed by 18 0's. we will take those odds.

I always get knocked out really early.

Do you study the teams or pick them by the jersey color?

Isolate him backwards.

-- i filli it in backwards.

Very interesting.

Bragging rights.

$1 billion.

Real money.

Trouble ahead for hbo, showtime and other premium pay tv channels.

This is from npd group, subscriptions to premium paid tv channels is the yellow line, they are slipping.

Falling to 32%, down 6 percentage points.

Subscription video-on-demand -- netflix, hulu plus, gaining strength, the white line.

32% versus 27% two years ago.

In terms of who leads the way, netflix, 80 nine percent overall.

Hulu plus has a 10% share, and amazon prime at 2%. david bank, looking at netflix gaining momentum, balance that with content costs it needs for all the content.

Is it a credible threat to the premium paid tv channels like hbo?

I don't think it is one or the other, at the end of the day, investors are focused on two things when they talk about media.

They often talk about a macro cyclical, advertising and consumer driven.

Then they talk about secular headwinds, generation not watching television, buying netflix.

I think there is something people forget, there is a content cyclicality.

If shows are not good, people do not want to buy services.

In contrast to the data, i would point you towards the subscription data at showtime.

"homeland." cbs is the parent company, it has been a success because of "homeland." while hbo is doing well with "game of thrones," we are past the air of "sopranos." some element of share shift going on, really benefiting showtime.

By the same token, if the shows are better, people will subscribe.

Our twitter question of the day, how do you watch your television?

Amazon prime, netflix, cut the cord and on the ipad?

Tweet s @bsurveillance.

This is "bloomberg surveillance." ? this is "bloomberg surveillance," i am scarlet fit with michael mckee.

Tom keene is in davos, switzerland.

The big banks have finished reporting earnings, they are free to talk about their financial outlook.

Brian moynihan of bank of america spoke with erik schatzker yesterday about the recovery from the financial crisis.

There are still uncertainties, we have investigations by the department of justice.

We will deal with those.

But we were able to and really had to get to over the last few years to start to clean the balance sheet up, take uncertainty away around the company.

We did a lot of work and it cost a lot of money.

A lot of it has been spent.

We still have more to do, tom is joining us from davos with special guests.

Brian moynihan speaking pretty candidly.

Very visible here in the early hours of davos.

Up to the early hours, stephanie ruhle has finally graced us with her presence this wednesday morning.

Up at the crack of 12:22, erik schatzker was here at 5:00 a.m. harassing financial types.

You harassed brian moynihan.

A very perceptive interview.

This is a -- distancing himself from fortress dimon.

I need to clear something up.

I came in at 7:00 a.m., i was here before both of you.

"surveillance" pilates -- tell us -- bank of america distancing themselves from deutsche bank and jpmorgan.

He wants everyone to know that just because jpmorgan had to write a 13 billion dollar check does not mean bank of america will have to write a $70 million -- a $17 billion check.

We were there first, we bought countrywide, we have written all kinds of checks and had to pay money here and there.

A lot of what went into jpmorgan's $13 billion bank of america has already -- you cannot forget, we are seeing jamie dimon paying fines, what inning is brian moynihan in -- he just had a fantastic fourth quarter, trading at record highs.

The beat goes on.

Postcrisis highs.

They are under a huge amount of regulatory pressure, there are still finds to be paid.

If you look at what is going on inside bank of america, it does not seem like those employees are crying like a few years ago.

What is different from a few years ago?

We talked about it with one of the best performing hedge funds managers in the world, exclusively and financials.

He said banks have made the turn from being capital-intensive businesses to a utility.

He told us a bank like utility or a utility like bank is a "beautiful thing>' -- eight "beautiful thing." i wonder where their head count will be years from now.

But who are the heads, what are their job fountains, you are seeing hiring go on in compliance.

Highflying traders -- it is a gorgeous day in davos . you attended a tech pioneers dinner.

We went around the room and came up with new businesses.

I know davos is about bringing the biggest names together, we are talking to them.

There is another different track, the young leaders, the changers.

Mike bloomberg has said the people you should know are the next gen.

I sat next to a guy, 28 years old, started a data company and sold it to tpg because the president of mexico said the mexican government needs to figure out what to do with the data.

-- big data.

What are the next big businesses?

People said we need to figure out how to cure diseases, teleportation, self driving cars.

Hedge fund managers would say are you kidding?

That shows the dichotomy in davos.

Three or four conversations, we will touch on that throughout this wednesday, thursday, and friday.

Erik, let's come back.

How was the key in a bar?

-- how was the piano bar?

It was lovely.

Barry is the pmiano player.

Here in davos.

Stephanie ruhle, erik schatzker, and tom keene in davos.

? this is "bloomberg surveillance," i am here with michael mckee.

Tom keene is in davos.

Some company news a from of a global in a row for ibm, a drop in sales for a seventh straight quarter.

Revenues fell 5.5% to 27 $.7 billion, shy of estimates.

Weeding the ceo to say they will not take their annual bonuses.

Blackberry selling most of its real estate in canada, almost 3 million square feet of space.

Part of john chen's plan to raise cash and turn of the company around.

Nokia may return $4 billion to shareholders, they could pledge some of that in the form of an annual dividend as early as tomorrow.

Nokia has not guaranteed any payouts.

That is company news from "bloomberg west." they will be focusing on netflix today, reporting earnings after the close.

Up in europe, no early trade in the u.s. david bank, you do not cover netflix specifically, but you look at the effect it has.

What about the net new trolley rolling -- what about the net neutrality ruling?

Investors ask about the threat of cord cutting.

Going back to the chart you showed on the potential, the suggestion of share lots of traditional cable -- of hbo.

I wonder if net neutrality will come on the earnings call.

If it becomes more expensive to watch television online because of the cost of the data, all of a sudden, traditional viewership, cable, watching television over cable becomes a more attractive proposition.

It plays into the way people think about cord cutting.

Looking at what are they doing with content spend with respect to big media companies and how much they are doing on their own.

Issues of -- how long does that last?

More strength of the internet, how much leverage and for how long do cable companies have?

With respect to -- net neutrality, making it more expensive.

I pay my cable bill, my unbundled cable bill about $70 a month.

An unlimited amount of bits coming through to watch television, the value proposition of the ecosystem.

People do not really think about the concept of metered bandwidth.

The more you watch online, potentially the more expensive it could get.

If we migrate viewership towards the online basis, it changes the model and the way we think about things.

I do not know when, but i do know -- i think few people are thinking.

They think of both of them as unlimited.

Right now we have the best of both worlds, david bank, media analyst at rbc capital with his thoughts on net neutrality.

We want to get back to davos, switzerland.

Even though at 753 feet, the new marriott in midtown manhattan is the tallest in the country.

Torres and and business travel -- four -- tourism expanding and looking to emerging markets.

Tom at davos, room service research.

You eat little things you pick up with a beverage of your choice.

He is a magnet, arne sorenson, ceo of marriott international joins us right now.

Davos is not the normal hotel business.

Are you a gdp business or is there a thrust of doing better than global growth?

I think we are doing better than global growth, but demand is stricken by global gdp.

-- but demand is driven by gdp.

Global gdp for the world as a whole.

Manhattan has benefited by the growth of the u.s. but a rising mass of middle-class people from around the world.

People who never had the resources to travel before.

Where do they want to go?

New york.

You have just built the largest hotel tower in new york, previously it was mandarin oriental, high end.

Courtyard residence inn, we were looking at real estate prices,. a great return.

Beautiful hotel, floor to ceiling windows and fabulous views.

What does that say about our economy?

If you could have a high-end property, why wouldn't you?

There are people that can that group is growing.

The ruhle family travels as an entourage.

$1000 a night.

You are going for the middle market, what is the distinction about the middle market in america?

People are very different, they stay in luxury hotels for an anniversary trip or a business trip when somebody else is paying, maybe they stay in a less expensive place.

We look at people coming out of china.

Many like to come to new york and love to shop in new york.

Sometimes they are shopping for goods that were manufactured in china, ship to the u.s.. there is something special about buying it here.

Many travelers want to satay in a moderate tier property to save money for shopping.

We hear more and more that travelers when the boutique experience.

There was a "new york times" op-ed, they want a chic experience, not about marriott points anymore.

I don't think it is either-or,. you look at the residence and we have just opened -- the residence inn we have just opened.

Three floors of original art, very unique.

Customers are telling us, give me a place where i remember.

Experience, something about the architecture, too.

The moment i have left, i have forgotten which theybeige room i stayed in.

Do you redo washington or build something new?

You do both.

The regency hotel on park avenue.

Reinvented.

Donald trump in d.c. we have 4000 properties, many of those are beautiful.

Sun capital and they will get capital.

We are not going to get rid of them, we will get rid of some.

What is your biggest headache in 2014? we need bodies, what is the biggest labor headache?

The world is a big place, we open in developing markets, finding people with language skills and skills we need to welcome guests to our hotels.

It is very different from what we have in the u.s.. in the u.s., because unemployment is so high, we can find people we need.

Stephanie.

You just had an announcement in south africa.

South africa is the future.

Why?

They give out scarves.

For the first time since independence, you are seeing a number of countries with strong government empowering people to grow, encouraging entrepreneurship.

Seeing growing middle classes, not just strength and south africa, that has been the story for the last decade at least.

Strength in markets like kenya, ethiopia, nigeria.

As we seek regional travel grow, opportunities are great.

Kenya is next?

Absolutely, we will be in kenya soon.

Stephanie ruhle on safari.

One of the greatest trips of all time, east african safari.

The sky is like nothing else in the world.

Arne sorenson with marriott international, getting us started on our discussion with officers of corporations.

A forex report.

Outrageously expensive in switzerland, what they look at in europe.

Somewhat pegged a few years ago, dollar-yen, abe speaking at davos, the keynote speech of the day.

So much more ahead.

A perfect day in davos.

Economics, finance, investment, business on "bloomberg surveillance." all through the day.

Let's take a look at davos, good morning.

? . companies like amazon, betting that more of us will cut the cord.

Is the internet giant looking at licensing television channels for new online purposes?

Private equity making quick moves.

We speak with a boston celtics co-owner.

The government auctions off airwaves amid surging demands for the wireless sector.

Why aren't the big telecom players making a bid?

Good morning, this is "bloomberg surveillance." is wednesday, january 22. i am scarlet fu, here with michael mckee.

Tom keene is in dollars, switzerland.

Our guest host for the aisle is -- for the hour is craig moffett.

Tom, we want to get to you, first of all.

You had a late night at the piano bar?

Holding up ok, the start of 220 -- two 28 hour days.

The private equity outlook here with the owner of the celtics, he gets a lot of visibility, but he is here less for basketball and much more to capture the relationships and transactional energy of a busier 2013 for private equity.

An interesting interview with someone looking global, coming up.

All right, we will rejoin you shortly, but we need to get the setup for the morning and mike does that with the morning brief.

A big move this morning in the british pound after bank of england notes show that they do not need to raise interest soon.

Today their trigger fell to 7.1%. no change in the bank of japan's monetary policy either.

Today, mortgage backers, mortgage applications are up for third week.

Earnings ahead.

We are waiting on motorola solutions from freeport mac moran, general dynamics, and netflix.

If you look out the window you will notice that it has stopped snowing along the east coast, schools closed in philadelphia, d.c., new york city public schools open, but the cold has moved in.

Windchill of five degrees below zero.

If you are going anywhere, check with your airline.

In the meantime, let's get you some company news headlines as well.

Mohammed el-erian, quitting pimco, leaving his door open as coach and investment officer in march coming as he struggles to slow the record reduction.

He was widely viewed to be the follow-up chief investment officer.

Amazon says they are not planning an online pay-tv service, telling usa today that they continue to create original shows and amazon studios.

Amazon responding to media reports that they were taking content rights for the pay-tv service.

Seven in a row for ibm, reporting a drop in sales for seven state for -- seven straight quarter.

Revenue fell to $27.7 billion.

That is today's company news.

We want to bring in our guest host for the hour, craig moffett.

Netflix reports earnings later today, as michael mckee was just telling us.

They have been making a lot of moves to become more of a media company and less of a technology company, but at the sake -- the same time the stock price makes it look like there are no challenges ahead for the company.

Are they in a good position, from where you sit?

As a media company, but the challenges and what the stock has been responding to of late, in the last week or so, giving back its gains, netflix today arbitrage the transport, meaning they get free transport from cable operators with whom they essentially compete.

That may not last forever.

In the wake of the fcc ruling about net neutrality from last week, there are now real questions about whether they will start to be charged or, from an economics perspective, if the customer being charged would be the same thing or if that transport function essentially remains free.

If it does not, a lot of the appeal of netflix is given back.

A lot of the appeal of netflix, let's face it, is that it is cheaper.

Can they absorb raising fees from the cable companies?

Would they have to pass it along?

Like i would expect that they would have to pass it along.

The way i think about the cable industry is different from most people.

I do not think about the margins as gross margin, i think about the video gross margin as the transport charge and the content that you buy from your cable operator is just a pass-through.

Money that is passed along to disney, viacom, what have you.

The challenge is if you start to see the charge move over to online, the value proposition radically changes.

We will continue to get more thoughts from craig moffett, but in the meantime we want to go back to.

Most, switzerland.

You have a lineup of guests for us this morning.

Who is with you now?

We have an all-star lineup looking for an all-star in basketball.

Known for his ownership in the celtics, this may be one of the reasons he is up the valley in switzerland.

The managing director of bain capital joins us this morning.

Why are you in.

Most?

What is your specific to do list?

It is a meeting place for ceos, government officials, economists.

It is great for us, we try to build notices, but you have to do that in a macro environment.

You learn about what is going on the world, you meet all sorts of bankers and ceos, we could learn a lot about technology.

A massive jargon alert.

What is tmt?

Telecom marketing services.

It benefits marissa mayer, all of those things.

More of an intellectual practice.

It is also an opportunity, as well, to identify things you might want to buy and sell.

There is no question that private equity wants to build the business, but once built, you need to exit.

People talk about 2013 as being the year of exits.

What will 2014 be?

If you were here a few years ago, it was kind of doom and gloom coming out of the banking crisis, but now that has kind of flipped.

I do not think that multiples are out of control in a lot of the companies.

We see opportunities in investing in that environment.

You do not think that things are too expensive?

You have got to be selective.

We are looking at building companies to take more market share.

To go more global.

You have to be very careful, mo -- they are not low, for sure.

There are public market multiples, private market multiples.

Companies are not motivated -- ceos are not motivated to do things right now because they are being rewarded for just sitting still.

How do you persuade these ceos to actually get off the pot and start doing things?

Things go in cycles.

Just like anything else, there has not been much in the last few years.

There has been pent up demand.

You are talking about cycles, the championship celtics, i was born that magic night in 1984 when the celtics did better than good.

I remember that night as the most memorable.

Larry bird, alex.

Sorry.

But steve, it is a rebuilding year for you.

You have 47 draft picks in the next six years?

Incredible.

We have great gross in the club.

When we bought the club, 12 years ago, we looked at it as a business and we thought the key issue was doing great on the draft, bringing in people like danny aims.

We ended up drafting some great players.

The rest of it is history.

Now we are back in a situation where we have developed a few young stars that we have supplemented and traded for fantastic revenue.

The key thing that you learn is you have got to be patient, just like in business.

That is why i love right equity.

We can build to the long-term.

Too many make the mistake of wanting to turn the team around in one year or two years.

Is television your friend in sports?

Or are you beholden to television?

Television is big time your friend.

The rights fees are fantastic.

It is your friend because the nba and sports in general are must-see tv.

Is in the must-see toronto maple leafs and canadians?

Speaking of those teams, they have been busy.

Do you see this?

You recognize this.

A fantastic company, canada goose.

What are you going to do with them?

It is a real fantastic strategy.

That this company has a great brand with fantastic products.

Very good.

Thank you so much.

Eric, there is a canada goose waiting for you right now.

Now you know more about it.

Thank you so much.

We are in.

Most.

We have much more with tom keene and stephanie ruhle here.

? this is "bloomberg surveillance." i am scarlet fu.

Time for this matters now with our guest host, craig moffett.

We are going to talk about housing information.

When the housing market sank, it put the brakes on new households.

Now that housing is in full recovery mode, has household inflation kept pace?

It has not and there may be reverse causality.

It may be that the failure to create new households is what is keeping the housing market back, but there are two fundamentally separate issues.

There is the question of -- our children moving out or moving in?

-- are the children moving out or moving in?

The industries that i follow are very much driven by household formation.

Household formation has ground just about to a halt.

Is it causation or correlation?

I think in some ways it is causation.

The failure to create new household units is creating less and less demand for new housing stock.

So, you are seeing some decoupling of those things in how the stock is increasing as we get a recovery, going into second homes, weekend homes, that sort of thing, but the issue of whether we are creating new primary household unit is a key driver of all kinds of parts of the economy and it has been very weak.

What can companies do to decouple?

It is much more of a macroeconomic issue than anything that any company can do.

Here is the problem, right?

If the household formation equation stays the weight is related to population, historically population growth has been in the range of one half.

Results have fallen back to three quarters of one percent.

At the same time, household formation is usually faster than that, now it is slower.

This has of course had huge impacts on the areas that you cover.

Absolutely it does.

Craig moffett, thank you so much.

We are going to head back to domino's, switzerland, where the power ceo will be joining us right here on "bloomberg surveillance." right here on your tablet, phone, and.com.

? this is "bloomberg surveillance." tom keene is an domino's. our guest host for the hour, craig moffett.

-- isn't almost.

-- is in.

Lous -- is in doubles, switzerland.

-- davos, switzerland.

There was a change in the language of the bank statement following the policy meeting, bank of japan cutting a reference to the economy facing uncertainty.

Clashes between protesters and the police and the ukraine have turned deadly.

Two people have been reported to have died.

The process began two months ago.

New anti-protest laws went into effect and the measures backfired as police began cracking down on protesters.

The winter storm roaring of the east coast has caused thousands of flights to be canceled.

Call your airline.

11 inches in central park.

Snow cover not just new york, but washington, d.c., closing schools, making this morning's commute very tricky.

Now we are getting intel on injuries and arctic air moving in behind the storm.

Temperatures are plunging.

Anyone who has been outside artie knows that one, it is cold.

What was the real temperature?

Minus five degrees.

Out.

Is there an effect on natural gas prices?

They are at a two-year high, nationally, all-time record in new york city.

And natural gas prices are sky high, you're at davos home.

Tom, you are in davos, switzerland -- here at home.

Tom, you are in davos, switzerland.

Stephen from general electric, how about bull to division?

71% of their businesses outside the united states of america, yet they are one of the industrial juggernauts.

Heat, power, duke of university electrical engineering, taking the industrial world go.

Great to have you here.

What is your message to your international clients?

You walk into one of 25 meetings, you have to send a message.

It is great to come to davos, the community is here.

A number of our utility customers, as well as partners around the world.

Our message is that the industry that we know is changing.

Age of gas, transformation from renewables, and a shift from centralized power to decentralized power.

Our message is we need to come to a consensus of where the industry is evolving.

The median to me is apple, apple, facebook, google.

Change up to pandora radio.

You are creating jobs in america with your international expansion.

Can you say that there will be investment in american jobs?

Or do you just pour them over to catholic stand?

-- port them over to as extent -- malaysia?

A lot of that is done in our factories in the united states.

We speak with our customers not only about bringing jobs to hear, but to the united states.

When you look at five years from now, general electric, ge capital being pared down, just a melt about an industrial ge.

Translate that into english.

What is an industrial ge looking like as opposed to your first week years ago?

Like i have been with them for 21 years.

They started in this area.

Edison went to bring products to the market.

We are looking to get 70% of the revenue is a company in industrial power and water.

It is the largest piece of the company, but so is health care aviation.

Our businesses will grow more.

You will continue to see acquisitions like you saw in the last few weeks.

You will see power and water going forward.

You will continue to see a differentiated product service where the glow -- where the growth is primarily global.

70% of the energy around the world will be in development.

What do you say for a congressman -- what do you say to a congressman who is up for election.

That is a dialog for another time and place?

I have spoken to our customers and partners around the world.

One of the things they look at in the u.s. right now, based on energy costs, the u.s. is really one of the most competitive in the world in terms of shell gas.

We are actually building up our for -- our footprint.

That is not only for servicing and product development, but also in terms of how we ship rodarte's out.

The time that we have left, all the rage is talking about engineering.

What is your guidance to people worldwide watching us?

Listening to us about the proper balance between engineering, science, math, education, and the liberal arts?

I think that in technology, education is terrific.

My son is an engineer right now.

It is a great grounding point.

But you have to make sure you have a great commercial knowledge as well.

Make sure you understand how it ties in with the dynamics of the world.

Technology is not good enough, it has to fit in with what is required.

There is so much change in the industry right now, you have to make that connection.

People with technology backgrounds and a firm understanding of industries and business knowledge.

How do you define manufacturing renaissance in the united states?

We are calling it advanced manufacturing.

3-d printing, things like that, already having a big impact on our business.

Going forward it will revolutionize manufacturing.

Steve, thank you so much.

Here in domino's, someone coming here to actually listen to their customers.

There is a lot of that going on.

It is a perfect wednesday in davos, switzerland.

Get out the snow shovel, i will he home to help out.

Maybe i needed ge snowblower and then i will not have to do it.

We will be right back from davos , switzerland.

This is bloomberg's "surveillance." good morning.

? coming up on bloomberg television, the ceo of morgan stanley will be sitting down with erik schatzker and stephanie ruhle.

It is a bit of a tradition for him to speak with eric every year at davos.

This is bloomberg, surveillance -- bloomberg "surveillance." tom keene is in davos.

Mike has our news this morning.

We will start with france, cutting more jobs there on top of the 11,000 positions they plan to eliminate by 2015. reductions come as they struggle with production overcapacity.

Facebook has made sheryl sandberg a billionaire.

The company's coo passed the billion mark after they closed at a record high yesterday.

She is one of the youngest female billionaires in the world according to the bloomberg billionaires index.

Target is ending health insurance for its part-time workers.

They will pay $500 to the dump any losing coverage and a consulting firm will help them find new obamacare plans.

They have joined trader joe's and home depot with other companies who have scaled back.

That is what the critics of the affordable care act predicted it -- predicted would happen.

Men of the -- many of the companies claim that you get better benefits out of obamacare.

It has yet to be determined.

We will see how it plays out.

Ryan moynahan yesterday, the bank of america ceo joins erik schatzker in davos.

He discussed moving forward from the financial crisis.

Let's listen to what he had to say.

In terms of the best financial decision, it is to help clients and customers with their lives.

We have done everything we can.

As we continue with compliance and the risk infrastructure we have been building on, you won't find those types of things repeating.

Eric and tom are with us now, the key words there are compliance, problems, and cleaning up.

No question.

You captured it perfectly.

It was about the simpler bank of america, the idea of a narrow framework.

A phrase that i really associate with mr.

Moynahan.

The new bank of america, all the other banks spent so much time on it, they are going for a simpler plan?

That is what they say.

So far you can believe them.

But that is partly because the regulators want the banks to be in the business of client service only.

So, it sounds good to us because we want to see banks fulfilling a different role than they used to, and it certainly sounds good to regulators, but the big question is -- five years from now, is that what they are going to be doing?

Do you just assume that these are smaller banks?

Viewers and listeners wondering about headcount, are there just going to be fewer bodies?

Perhaps in the short run, but there is still a huge opportunity to do more in financial services as the world economy grows faster.

There need to be intermediaries for filling that role.

Of course, there are operations act up by the ceo of morgan stanley, who does private lending.

But they are never going to get to the scale of a bank, because they are not leveraged financial institutions.

There were two metrics, deutsche bank and the challenge at the top, with bank of america at the bottom, taking a victory lap this quarter.

What do they have that the others do not?

Bank of america, morgan stanley, the largest financial advisory firms in the world, tucked inside a bank of america.

Bank of america moves past litigation issues, morgan stanley did the same thing, you are starting to see that model based on client service is beginning to generate the kind of earnings leverage that you cannot get right now.

Forming later today?

Correct.

Well, one of the most acute ceos -- we all have different characters, we do not put them all in the same blue blazer snow blue -- blue blazer snow boots -- i will get it out.

The piano bar did its damage, of course.

Killed me.

What i find interesting is the way we heard from different banks during the earnings season and how they are trying to differentiate themselves from each other.

Jamie dimon is at the top of this, too, right?

I have not seen jamie dimon yet.

Maybe he is coming up by sleigh.

That would be the canadian thing.

That is certainly one visual image.

It would be.

They have to be sensitive about landing on helicopters.

So 2006. tom keene in domino's, switzerland -- davos, switzerland.

New economic data, lower by one point right now, s&p futures are at 18.37. this is "bloomberg surveillance." i am michael mckee, with scarlet fu.

Our guest host for the hour, craig moffett.

And of course, tom keene, as you saw, in davos.

We will be rejoining him shortly, but we want to talk about something that is taking place here, today.

The u.s. will be auctioning off where -- airwaves for the first time in five years.

The auction is expected to raise one $.6 billion.

What is interesting is to is not planning to bid.

Craig moffett, you would think that the big telecom players, at&t, verizon, t-mobile, sprint, would be very invested, but they are sitting out.

There is this consensus view that all spectrum is good spectrum, but you have to step back and question that sort of simplistic notion.

If four out of four of the big carriers said that this is something we did not need -- all spectrum is different.

Some spectrum bands are more attractive than others.

Some fit that are into the portfolio of what someone art he owns.

But it is a striking development that all four companies said that they could pass on this spectrum.

Can you explain what that means?

The average person may not understand.

Technologically it is complex, but you have different spectrum bands at different frequencies.

The same way you might have a radio at higher or lower frequencies.

As an engineer, designing a wireless network, you want low frequencies for coverage, high frequencies for capacity, and a coherent portfolio so that they fit together in a sensible way.

The problem with what they are auctioning today is that it does not fit terribly well with the existing holdings of the major for carriers.

What would explain why someone like an institutional investor might want to come in and make a bid on this type of spectrum?

What might they see in this particular purchase?

Of the demand for data -- the belief is that the demand for data will be so great, they will go after whatever they can get.

I think you have to be a little circumspect about that, right?

If you are saying that you know better than what at&t knows about what will happen five years from now -- historically we just published research showing that the returns that you get from buying spectrum that must be spectacular because there is this demand, this is about the return you would get from corporate bonds.

Gotcha.

Mario gabelli will be on bloomberg television, what would you want to ask him?

The question i would have is -- if i look at the spectrum bands they will be auctioned over the next several years, the auction is the beginning of a multiyear process.

If i look out over the band, the expectation is that there is $50 billion of capital spending coming, equal to about three years of free cash flow in the wireless industry.

It means that the industry is not going to generate any money for years.

In order to pay for the amount of spectrum that the industry supposedly needs.

So, where's the money going to come from?

I guess that is the real question.

If all of this spectrum keeps going up in value?

In the long run it comes from us.

Is there a possible new use for spectrum that we are not thinking about right now?

Talking about the big for carriers, could someone create a data carrier for someone just like that?

We have seen a couple of people try that.

Square is in bankruptcy court right now, unrelated to fundamental demand.

Dish network, the satellite-tv operator, is also amassing spectrum.

I think the expectation is that whatever they do will eventually be tilted towards providing data services over traditional voice and text.

Especially as wi-fi becomes more prominent as a way for people to get their data.

Craig moffett, joining us as the guest host.

The twitter question of the day linking this together, how do you watch television?

Are you cut the cord?

Are you paying $200 per month, like michael mckee and i are?

This is "bloomberg surveillance," on television and radio.

? this is "bloomberg surveillance." tom keene is and i'll post.

Betty liu, the anchor of "in the loop," with us this morning.

I know, i actually made it in.

Well, i only had to walk a few blocks.

Hotel overnight?

Exactly.

We were talking about wireless spectrum.

You have someone who is bidding on the spectrum today?

Wax that is right, there are what, two dozen or so applicants?

We are hearing a lot about this, now.

But they are a controlling shareholder in a company called lynch 3-d communications.

They are bidding on this spectrum against the big wigs like charlie ergen.

Greg, i know that you have questions.

What would be your biggest one?

Last segment we were talking about this -- where is the money going to come from?

The wireless industry today, i always thought about spectrum is fully and changeable.

From an engineering perspective you can either add more capital spending or put more on the test . they really are completely interchangeable.

Over the next couple of years, particularly if we are headed into a price war -- and it looks like we are.

You have to question where the money is going to come from in terms of the major wireless players who are paying for all of this incremental capacity.

But you need that capacity, though, right?

That is right.

That is one of the things that people are struggling with.

What is the return you will see him all of this before we dip into the price point?

Show me the money.

You are exactly right.

I will be asking all those questions.

Coming up at 9 a.m.? that is right.

You did my job army.

[laughter] we need to get to my earnings -- to our earnings calendar this morning.

Cooks, tumbling in the premarket right now.

North american comparable sales dropping 13.6%, double the estimate revenue option in markets.

People are just not headed over to the malls and going into grocery stores, i guess.

One reported idea last night, down in the premarket, by 3.5%, sales were down for seven straight quarter even though earnings-per-share came in better than forecast.

They were having trouble with their server unit.

The one that bonobos is talking about buying.

They are still in advanced discussions.

That is what we heard from the companies yesterday.

In terms of what is on the earnings calendar, thursday mcdonald's, starbucks, and southwest airlines will be reporting results.

Friday we have png, stanley, black & decker, xerox.

Looking ahead to next week, apple is the next big one, then caterpillar and royal caribbean.

After today's close, netflix is reporting in addition to ebay.

An interesting technology week.

It is.

Much more is coming up, we have our agenda on airbus and boeing.

We speak with the ceo, next.

? this is "bloomberg surveillance." our guest host for the hour, craig moffett.

Mike has some company news from the files of "bloomberg west." amazon says they are not planning an online pay-tv service, telling "usa today," that they do continue to plan -- to plan to continue making original shows, but not television.

Blackberry is selling most of its real estate in canada.

The company will sell almost 3 million square feet of space and then lease back what it needs.

It is their plan to raise cash as the ceo looks to turn blackberry around.

Nokia may return as much as $4 billion to shareholders, speaking of cash.

Deutsche bank predicts that the british company could return some of that amount in the form of an annual dividend as soon as tomorrow.

They have not guaranteed any payout.

That is today's company news.

What about news stories that are like names from the past?

It does not take long in the tech world.

What is the saying?

The graveyard is littered with tech relics?

There has to be a saying about companies and how long they can live.

Speaking of relics, if you think that airbus and boeing are the only airplane companies in the skies, think again.

We discussed one company's new airplane and why they do not anticipate any problems with their launch.

Listen.

I know we have got a lot of work up front, a lot of testing of front to make sure that where we go, what we do, that it is just confirmation of the work that has been done.

I do not anticipate major issues . tom and eric are over in.

Lous.

What else did you learn from him ? what we were talking about there was the new series of jets that lombardi a is making -- lombardi -- bombardier is making.

Why is the c-series delayed?

This is a problem for them, because as you know, when you are airbus, boeing, you have got to have an airplane that the customers want to buy.

The problem is that until 2015, they will not have one.

I want to go to your expertise on canadian financing and industries.

Brazil, all of that, this is a competitive landscape.

What is it about them that you, as a canadian, when you look at this wonderful company and the

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

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