Microsoft Picks An Insider: Surveillance (01/31)

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Jan. 31 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Cory Johnson, Robert Peck, Rick Watson, Steven Wieting, Adam Parker, Michael Wolf, Neal Pilson and Eugene Lee. (Source: Bloomberg)

This is "bloomberg surveillance." microsoft chooses an insider to move deion the gates-ballmer years.

Amazon disappoints as world-class customer service leads to a world-class shareholder loss.

I'm sure no one talked about drones in the conference call.

Will emerging-market the stress cost your 401(k)? good morning, everyone.

It is "bloomberg surveillance." we are live from world headquarters in new york.

Friday, january 31. where did the month go?

I'm tom keene.

Scarlet fu and alix steel with us as well.

It is super bowl morning.

-- super bowl morning brief.

Taking a look at euro area inflation am actually hit 0.7%, below half of the european central bank target in january.

Some eco-data here in the u.s.. 8:30 a.m., personal income and spending, 9:55, university of michigan confidence and earnings -- simon property group, mastercard, chevron.

Chinese new year.

Chinese markets closed until friday, february 7, which means they won't be buying gold.

Anywhere you go there will be a lot of chinese tourists because they have the entire week off.

A year of the horse.

Year of the doughnut?

That is every day for you, tom.

Not a year.

Wow.

Let's get a data check.

Dunkin' donuts, krispy kreme -- a straight data check.

10-year yield, breaking below 2.67%. a lot of them -- inflation dynamics in the debate over the weekend.

The euro well under one point 36. the next screen showing emerging-market stability.

The yen is -- ok, i will call it midpoint.

Renminbi is a weaker.

And you can see the stability again and gold, stable.

We scour the papers this morning.

Lots on the super bowl.

His the front page good the front page story, the only one i am looking at on bloomberg.com is microsoft making its decision.

At the board is expected to name satya nadella as the next ceo.

He is an internal guy.

He heads up enterprise and cloud at microsoft and has been with the company for more than two decades.

The flipside to this is what happens to bill gates?

He is chairman of the border right now.

The board is reportedly discussing to replace him.

He may take a more active role in the company, he may not.

John thompson, believe independent -- thompson is an interesting guy, very much -- associated with symantec.

Bill gates also will still hold stock, though.

Not possible selling the stock -- just the chairman role.

Where's the consumer?

Nowhere.

When used promote somebody like nadella you focus on enterprise and enterprise is what got them where they were.

Enterprises a long workday.

Cory johnson is religiously on seattle hawk standard time -- you are out on the west coast.

49ers, don't insult them.

You have the sensitive west coast look going on.

What is your headline on all the news?

First of all, our team did a great job breaking the story and there are caveats in the story saying it is not a done deal yet but for the board -- ok.

An inside job is the right way to look at this.

His is a guy who has credibility at microsoft, number one.

Microsoft is a place where it is famously hard to run divisions because the other divisions are gunning for you.

There are spirits -- stories at microsoft of divisions that develop their own software that deals -- because they were the want to deal because the political environment in the company was so difficult.

Was the active in steve ballmer's idea of one microsoft?

He certainly got him up within the recent reorganization.

To me, throughout this process, when i looked at the different candidates, i have seen the different visions of the future of microsoft.

In satya nadella -- alan mulally's name was bantered about, for instance, this was the guy to come in and solve the corporate albums of the divisions battling themselves.

In nadella, you have a guy who has really been focused on an surprise.

What microsoft is really struggling with is a post-pc world.

Their entire business has been developed on the back of windows.

Microsoft office, a dominant product, develop a cause of windows operating system monopoly is so powerful.

Now you have a world where the entire computing industry has gone away from the pc -- he is a cloud guy.

A cloud guy.

As a result -- and in a price guy.

Microsoft recognizing this is more likely in the future.

Is it more betting on enterprise and stuff like that versus no one else wanted the job?

It took them an long time to come to conclusion.

An list of ceo's he saying not interested.

A lot of people at microsoft want the job.

Let me posit an argument that one of the most important companies in all the world enterprise computing is not in the seattle area, but amazon.

Because amazon's web services is completely changing everything about technology and happening right on the back door of microsoft.

Let's rip up the script.

I was fascinated by amazon's earnings report last night.

Me, it was ac chains -- it was a sea change, jean muster called at that.

What was the dynamic?

I saw a lot of the same.

A company that has massive revenue growth and faster revenue growth they're not only the rest of consumer products but also faster revenue growth than anyone else on the internet.

And gross margins up.

Gross margins up, but barely.

Fourth-quarter gross margins for amazon should be fantastic there at the company does not aim to make money.

Want to go back to microsoft for a moment because this is something big and has been percolating.

Bill gates was on bloomberg television not too long ago and betty liu asked about the prospect of returning to microsoft here at this is what he said.

My full-time work will be the foundation for the rest of my wife.

My wife melinda and i enjoy that.

We get to do it in depth.

So i am not going to change that.

I will help out part-time.

He politely deflected.

But here's the thing, microsoft has only had to ceo's he in us history, bill gates and steve ballmer.

It is hard to think that gates will remove his presence completely.

Still on the board.

Two of the largest shareholders.

And i think most importantly, they deed -- did a reorg of the entire business -- obviously with his blessing.

Picking satya nadella means they will build on the decisions they already made, including the acquisition of nokia, including the dividend and share buyback things that have been going through, as well as the corporate focus.

I think the chances, for example, they spin off xbox, unlikely.

Thus promoting an insider like satya nadella reduce the likelihood of brain drain question mark there is a talent war out there.

Microsoft has not been exactly the most appealing place.

The thing with microsoft as people stay there.

People stay their life.

That is one of the big issues.

You make an entire 20-30 year career because you are the one who invented the "save" button.

People referred you in the hallways as that is the guy who did the "save" button.

Different from seattle -- other big companies.

We spoke to satya nadella just last month.

This is the new growth.

If you look at what happened even in the last quarter in terms of our clout, it grew over one hundred percent.

We have over 50% of the fortune 500 moving.

Already a run rate of a billion and a half.

That is the kind of new growth we are seeing as of the $2 trillion of i.t. spend is going through a fundamental shift.

New growth is a great point but what about the new style of microsoft question mark he was around when each operation ran its own company and they competed against each other.

I think a focus on enterprise will be interesting.

You mentioned to john thompson as well.

John is a friend of mine, but when he -- when he ran symantec.

I think that focus on enterprise, especially with john thompson, steps into the temporary chairman role, would be more emphasis as time goes on.

Cory johnson of course with "bloomberg west." let's want about the day.

Futures -10, markets quiet.

And then they change and all in all it is yield lower.

The 10-year is lower.

You just saw on bloomberg hd the stunning and we have seen in the last four months with these stunning low yield in europe dared so many people concerned about this inflation and out right deflation.

We will be looking at that through the morning as well.

Right now on this friday, let's get to company news.

You mentioned amazon.

Let's talk about google.

The retail -- a retailer spending more on google ads during the holiday.

Posted fourth-quarter sales that beat analyst estimates.

But profits were hurt by an 11% drop in the price of ads.

Following up on amazon, shares now down as much as 13% in extended trading.

The world's biggest online retailer posted earnings that missed analyst estimates.

Operating costs increased 20%. for the first time, amazon now says it will raise its price of the $79 a month prime membership which includes two-day shipping and an list video streaming.

The highest-paid head of a u.s. bank in 2012 bid pretty well last year as well.

Goldman sachs ceo lloyd blankfein getting an 11% increase in its stock bonus to almost $15 million.

Blank fine high as a 2 million dollars salary.

We will give details of his cash on this later on.

Shares of goldman sachs rose 39% in 2013. let's look at the twitter question.

You know it's got a be about the super bowl.

All of new york fired up about the super bowl.

It is so simple.

Here @bsurveillance, who will have the best sunday?

He in manning, bruno mars, or bud light?

Bruno mars?

Name me one of his songs.

I can't sing that one.

Never say never.

Seattle seahawks empire state building, go hawks, go broncos, go red sox.

Wait, they're not playing.

? good morning, everyone.

This friday morning.

Kevin plank, interesting guy, under armour president and ceo and started off of a kitchen table.

He's got to be living the super bowl.

11:00 a.m.. all of my workout.

Virtually comes from under armour.

Tight pants.

Once a year, whether i need it or not.

This is "bloomberg surveillance ." the chiseled tom keene.

Scarlet fu alix steel.

Scarlet fu is focused on -- shares were kind of bouncing around yesterday afternoon after the company came out with the results.

The takeaway, a prophet miss but a revenue beat and google has work to do when it comes to mobile -- profit miss but a revenue beat.

Clicks on ads when about the prices on as an average fell eight or send, an acceleration in decline because it was down eight percent in the previous quarter.

Indicating google is not monetizing enough on each click.

Kind of a contrast of facebook which seems to have the opposite scenario.

As more advertising moves to mobile, the value per ad has gone down.

But the rise in the amount of clicks they have been getting has been so strong it helps carry the day.

On all of the stuff, a rarely touch a google app.

And they are on here, i have five or six.

Safari -- more likely google search.

Apple maps of google maps?

I don't use maps.

You go three blocks -- let's get some expertise.

Robert, you know from twitter.

What a call on twitter.

With suntrust, robertson and humphrey.

He has a buy on google.

Good morning.

What did you glean from the google earnings call, from the tone?

They made 29.2% per year since inception.

Can they keep the juggernaut going?

I think they are hitting on the key things.

Quite honestly the biggest number to take away is the paid click number accelerated from 26% growth to 31, and think of that as the units of what they can sell.

What is great is it is growing and accelerating.

The pricing part will ultimately catch up over time.

As he pointed out, right now it is being suppressed with the shift toward mobile but over time those mobile ads will improve as far as they're pricing and that will give you another lever for revenue growth.

Your colleague in crime over at evercore talks about mobile ad quality.

What is the quality of google's mobile ad versus other platforms?

What's we think they are behind were facebook and twitter are.

They spoke and -- facebook and twitter have been good about the mobile ad install, not just showing the brands, but more ads where you can install games directly to your phone.

Those ads are more valuable to the advertisers, and hence they are willing to pay more.

Look for google to expand more into those types of areas, which is great, because there's a lot of opportunity in front of them.

Let's bring in cory johnson, smarter than me.

Looking at this company -- what do you make of the patent issues with this company.

The company spent, $4 billion of shareholder money the past 20 months to accumulate a bunch of patents but he has -- they have to yet win any significant victories.

As you know, a big patent more -- more about two years ago.

Microsoft, apple, and google.

We think the rationale behind the motorola acquisition was primarily the 22,000 patents.

What we hear is really going on there is one everyone throws up their arsenal of patents it is difficult for someone else to sue and win on these patent issues.

It is really more of a defensive game against the bigger players.

Probably the smaller players right now.

We will see how it plays out.

But i think the players stocks the patents -- mutual self-destruction of somebody tries to force.

We saw for google on the rise, $2.5 billion.

-- we saw capex rise.

Will they try to diversify and shore up their mobile question mark acting things the mobile application side.

Expand into the hardware part of the business.

They are rumored to be looking at things like snapchat for a couple of billion dollars.

Look for them to try to stay around the periphery of social and mobile applications while the growth is taking place.

They are going to focus on social mobile applications for things like google glass of these exciting ventures get all the headlines but when are we going to see some of those innovative venture stop paying off significantly in the form of increased revenue and profits?

I think it is a couple years.

We have the new google glass that came out a couple years ago and it is still rudimentary, crude, not ready for the mass public yet.

So i think a good year or two before they can look slick and cool and something the public would want and actually hit a price point the general public can afford.

I think we are still a couple years away of having that.

Robert peck, thank you so much.

Cory johnson from "bloomberg west." where does eric schmidt fit into this google cocktails?

They put -- they paid more for -- then they received from motorola.

They are willing to spend money and take big chances.

Am i right in the stereotype that nobody gets out of a loser like google?

You are the best at it in silicon valley?

I guess.

As i mentioned yesterday, big tex merges don't work.

They made a mistake once and i don't think they will do it again.

Cory johnson from "bloomberg west." something going on at facebook, the new cover of "bloomberg businessweek." an in-depth look at facebook and how it is maturing sense it was founded 10 years ago in a harvard dorm room.

They spoke hitting pre-big -- hitting puberty.

The new issue is out on store shelves today.

Available on the ipad app as well.

This is bloomberg, streaming on your television, bloomberg.com.

? good morning, everyone.

It is blue, green, seattle seahawks colors.

A nice little contest on top of the empire state building.

All of this region, as the nation focuses on truly the great national pastime now ghana football, this sunday, the super bowl out of new jersey.

Alix steel has a top headlines.

Not commodity-free.

Opponents of the keystone pipeline unlikely to be unhappy with a new state department report, according to people briefed.

Those one at government to revise last year's report showing the pipeline would had -- have only minimal impact on carbon emissions.

The government will seek the death penalty for the suspect in the boston marathon bombing if he is it.

That attack killed three people and injured 260. attorney general eric holder made the decision.

The suspect pleaded not guilty.

Wall street is picking up much of the tab for this weekend's super bowl here in the new york area.

The host committee is paying $70 million, five times as much the cost last year in new orleans.

Goldman sachs, jpmorgan, morgan stanley, blackrock and citigroup tiered and those are your top -- who would say no?

No, we are not going to do that.

Bear stearns -- bear stearns would've said no.

[laughter] since they are not around anymore.

Here is my gallows morning must-read.

David brooks in "the new york times" i thought with an interesting op-ed piece for february 20 14, 10 months away from the next election.

The president began his career as an organizer.

His mobility agenda floundered because -- i spelled it out.

Folks, i can't spell, what can i say?

The governing majority he needed is not a fit.

The president has a chance to remedy that to organize, to convene, and to build.

I agree with mr.

Brooks, a campaigner in chief has a real opportunity.

Much like microsoft and intel's has floundered.

It is about leadership and he can pick it up and go.

It is about execution.

Not just about having the idea.

We are seeing so much opposition to the executive actions.

Of the ideas were not even so bold in the last eight of the union.

Henry waxman's retirement -- a big deal.

He was a strong liberal from california, to get things done with conservatives.

And he has given up.

I believe george martin, the liberal from -- when guys like that who can really get things done with people across the aisle think in this congress it just can't happen -- he has no plans.

Chairman of microsoft?

It is open, i think.

Hang out with john thompson.

Cory johnson on california politics.

Beginning of amazon, coming up, we will look at the company's complicated relationship with third-party sellers.

Kind of a love-hate thing.

Our twitter question of the day, who the best sunday, a in manning, bruno mars, or bud light?

? and friday morning in the nation's capital.

This after a busy week with the state of the union.

Correction -- i mentioned earlier, george martin, of course, confusing george miller with the legendary beatles producer, george miller from the 11th congressional district in california, congress men miller retiring as well.

And henry waxman announces his retirement as well.

Let's do a quick data check.

Markets solidly on the move.

You see it in the interest rate and i love to say that, space, with the yield under 2.67%, now under 2.66. the yield is driving lower.

You see it in europe as well.

But it's really the headlines in january for pros.

Yields confound consensus and drive lower nymex crude.

Scarlet fu is with us.

She is looking at amazon as a loser.

She is a loser in the premarket, down about five percent.

But interesting after it reported results yesterday it plummeted, but losses have moderated here.

Headlines, revenue and profit missed analyst estimates.

There were lost the dictation's built-in because this was the fourth quarter, we -- with holiday shopping sales included.

International sales slowed.

But the stock pared some declined at amazon floated this idea of raising prices on prime membership.

Margins, 26 .5%, the highest in the quarter since the 1990's. basically sales growth might be slowing but amazon might be starting to eat out a little money here.

A big heart are the third-party sales.

The ceo of merchant injury, he breathes e-commerce business.

-- merchant tree.

We talked about the relationship with amazon but how important is a question mark for amazon, it is one of their big growth.

Third-party are other retailers selling through amazon platform.

Amazon provides the real estate of distribution and the sellers provide the fulfillment.

About 39% of its units in the last quarter.

Is there a downside question mark is amazon lose control of what it is able to sell?

They do lose some aspect of control but it is a well-known problem for that this point.

That's for them at this point.

It may the own warehouses where they take their third-party products into their warehouses with the robots at most retailers don't have this sort of is to be shown.

What about price?

You talk about gross margins and the impact of gross margins on them.

Do they have any influence or control over the prices of the third-party sellers?

Can they display the ones that have lower prices more or use the search engines to put them up front?

There are probably a dozen factors of who -- an important concept, who has highest display and they have absolutely -- absolutely sure.

Obviously that's sometimes the lowest price is not the top because the person may not have the best service.

Amazon will then get into it and sell their own product and beat them out on price.

How often does it happen?

It happens all the time and the reverse as well.

Amazon will get out of product that is more profitable to move to third parties.

You saw that in video games in the fourth quarter.

As an expert on retail amazon, five years ago, 17,000 employees, they ramp it up to 80,000 employees and now heading toward 117,000 employees.

Are those retail job equivalents?

Are the jobs they are creating essentially pulling lower rage -- and the world -- and lower wage retail jobs question mark taking share from retailers, the answer is probably yes.

But i think of amazon as a software company.

It is microsoft at the next generation.

And not logistics?

Logistics company but software -- software powers the logistics.

You go to their distribution center or for film and center, they call it, -- for film and centers, they are really amazing things because in part they are all amazon custom written software.

We saw the video of all the packages rolling around, pushed to the right place and stat -- slept with the stickers.

The machinery that manages that is all written by amazon.

Anybody who works at amazon can essentially pull a cord to stop a certain profit from being sold to hear about a problem.

Expertise -- you talk about this industry laid off 400 people, 500 people.

Then i guess that jeff bezos is the greatest job creator in america?

Off the mark?

I think it is unless there are drones replacing ups workers.

Amazon is a technology company that happens to do retail.

When they think about what next industry they want to be in -- wages with full time benefits.

Those are not great jobs.

Working at an amazon fulfillment center is not a great job.

Not even as good a job is working in cosco.

Close to minimum wage.

Often temporary workers.

Think of all of the retailers going out of business because amazon is succeeding.

I would not call them a job creator.

We talked about amazon as a technology company but what it has done so well is the prime membership for graham which has sucked away the momentum from other retailers with free shipping.

Now that amazon is rethinking that cost struck for -- structure, will kind of relationship does amazon have with the third-party sellers?

It basically does not offer that through the third-party sellers.

Third-party sellers can take advantage of prime and super saver shipping by become -- by becoming part of fulfillment of amazon.

Do they lose out in that way?

They do not lose out because they are able to get on the first page which amazon is.

Whereas, if they don't offer fulfillment by amazon -- i am not on crime.

Am i? yes.

I don't do prime.

Prime is great.

If you are in manhattan and you don't have prime -- did you just call me a tool?

Prime pricing might increase.

Still getting free shipping for $100 -- back to that point, amazon gets 10%-50% -- 10%-15%, could we see concessions to the third parties to keep them there?

The people that make concessions are people that are less than amazon.

Amazon is a prime destination for a third-party.

There are many marketplaces that are trying to build up that amazon is the leader.

What did the sales due to the third-party?

Huge.

First page to be on the second page, 10x. that much of a move.

I might remind everyone, 30% per year for the last 10 years.

Do you see a hick up in amazon or is it still basically trending up?

Like any great growth story, the enemy is themselves.

You have 3 million sellers, hundreds of millions of products, you lose control of your brand a little bit him and what are you standing for?

One quick last question.

Did you believe the drone delivery thing or was it a pr stunt?

I think a pr stunt.

This is the guy who had the thousand year clock.

That is how he thinks about things.

Imho own believer, i think.

I think it will happen.

Im -- i am a drone believer, i think.

I am.

Thank you so much for coming.

Appreciate it.

Comeback.

Coming up, we will look at why the super bowl still dominates ratings in our single best chart.

And it leads us to our twitter question -- who is going to the best sunday out there?

Eight manning, bruno mars or bud light?

Tweet us @bsurveillance.

? good morning, everyone.

I'm tom keene with scarlet fu and alix steel.

Features on the move.

We are now -14. yields come in.

That is the headline -- this morning, stable emerging markets.

Real issues of where inflation be or disinflation, all these things interconnected.

We have a guest at coming up in the next hour from morgan stanley on the tension.

Single best chart this afternoon.

Live sports is a big draw for ad marketers.

With super bowl weekend coming up, let me show you how the super bowl rings versus other live sporting events.

Ad sales approaching $300 million, compared to the world series and all the games, that is the white line.

Super bowl still ahead by 50 million.

March madness, college basketball, has steadily grown but not at the same rate.

Everybody i talk to, march madness is their month of the year, what they live for.

Because they have their brackets and they are engaged.

The super bowl in terms of ad sales and the commercials that are broadcast, that is where the real money is paid you see people try to copy the formula.

You be the entertainment in the middle of it.

There is just nothing like a super bowl.

Devil rangers, southside johnny was terrible.

Speaking of terrible, to blizzard, arctic vortex, we had them all the last couple of weeks ray caddick for the market and super bowl tickets.

But this weekend there will be no blizzard, a little less fun of for meteorologist bonnie snyder.

As the weather gets better, the people want to buy more tickets?

The weather has had a dramatic impact on the ticket sales so far.

We look back at the month of january, around january 20 we start to see a drop in the ticket prices by 38%. just days before a big storm hit.

10 inches of snow hit new jersey, so in the days leading up, the hypo was building about another snowstorm.

And looking at february in general, we tend to get a lot of snow we days in february in this part of the country so people have been looking at what typically happens and that impacted the prices.

It seems like prices would then be going up at the weather is better and more people want them.

Now it is, but when it started dropping that is what we saw.

Interesting how the weather forecast -- and it was not the only thing.

Both teams are far away so it is a big expense for fans.

You gave us great coverage on atlanta.

Serious issues.

63 is the temperature this weekend.

It is done and gone.

But the memory has not been forgotten.

People are still angry that so many of them were stuck 7, 8, 9 hours on the road.

And schools have been closed after the fact that a lot of people complaining schools were not closed that day.

You can see the roads are a lot better.

But just a couple of inches of snow paralyzed an entire metropolitan area.

Of they did not pour salt.

Not that day.

And they let school early the same time they let offices.

They spent over a million dollars to increase their ability to deal these -- with these kinds of things and it did not get done.

Taking a look at atlanta, the abandoned cars.

They have been cleared to the side of i-95 north highway.

The main roads out of atlanta brought to a standstill.

The national guard -- i-75. i was on the east coast.

The national guard was sent out to get them back on its feet.

They had to.

So many people stranded 24 hours later in the vehicles.

And then going to 63, with lash.

Reparations fully underway in beijing for the lunar new year celebration -- reparations fully underway.

Year of the horse.

Today, january 31. the celebrations run until february 14. why don't we get a two-week vacation for new year's? shut down everything.

Congress is not in session.

Why not vacation?

You can't comeback -- you can take two weeks off.

You can take as long as you want but you can't come back.

In hong kong, fears of a bird flu resurgence has led to pretty swift action.

Workers disposing of dead chickens slaughtered in a wholesale poultry market.

20,000 birds were killed in total.

Yesterday the government imposed a ban on the sale of live take -- chickens.

It happens every couple of years.

At has an impact on yum!

Brands because of a celtic and -- they sell chickens.

I heard the phone ring, the head of pr for yum!

Brands.

He have the bird flu fears and then who is going to want to go buy chicken?

Especially if you don't know what the sources coming from.

Killing 20,000 birds.

I will still eat chicken, maybe not in china.

More on the china new year coming up.

That is a surprise.

Let me translate for you, folks.

I am going to get dumped on big shot.

Brace yourself.

Year of the donut.

The cover of the new "business week was quote -- business week" is facebook.

Founded 10 years ago and a harvard dorm room and immortalized.

? good morning, everyone.

"bloomberg surveillance." i'm tom keene in the world headquarters in new york.

That sound in the air, we have it with our two stories of buildings here at lexington and 59. sometimes we have a fire alarm and that is what we have right now.

That is the noisy here hear in the background.

We will persevere.

Right now, an alarming company news.

We start with the alarming issue over at yahoo!. one more issue with yahoo!'s e-mail service.

The company is working with federal law enforcement agencies to find out who tried to break into user e-mail accounts.

Last month ceo marissa mayer apologized for problems with yahoo!

Mail, and clueless and lost messages and users being shut out.

Shares of zynga soaring in extended trading, up as much as 24%. the game maker heinz farmville and mafia wars will cut 15% of its staff and also spending more than $500 million to buy a popular mobile developer natural motion.

The ceo is retooling.

A great day for facebook cofounder mark zuckerberg.

Shares of the social network company hitting a record high that boosted his fortune by 2.2 billion dollars.

He is now worth more than $27 billion.

Good for 20 second place and the bloomberg billionaires index.

Mr.

zuckerberg on the cover of "bloomberg businessweek" this week, on newsstands.

Again, we have a fire alarm going on in the building.

We will continue as our good security staff takes a look at that very large bloomberg campus here.

Futures, -15, dow futures, -29. markets on the move.

Can said action and emerging-market distress cause a bear market in u.s. equities?

The underlying debate is simply pure economics.

At citi private bank, someone who smelled economics into corporate profit and investment.

Wonderful to have you here.

Fire alarm with whack fire alarm -- fire alarm in the markets.

What did you observe in turkey and how didn't read down back into the united states?

The issue is an emergency rate hike is hardly an ideal rescue package.

When you think about what has been done in emerging markets to react to the stronger underlying growth trend, the tapering of monetary policy by the fed, the removal of stimulus in the developed world, difficult adjustments need to be made in some emerging markets.

Let me go to your wheelhouse.

When we see those adjustments and they come back to the u.s. economy, obviously through exports, how do they come back to corporate earnings?

Either earnings threatened of google, general electric, general motors, by what is going on in argentina, russia, or turkey?

Modestly.

When you think about the effect, there are probably much larger correlations in financial markets.

You tend to see correlated selloffs across the world but ultimately you have to rise to a really critical rush holt for these financial market affects to spill over to have effects on large regions like the united states.

What about the eurozone, because don't they get more exports from the company -- countries in trouble?

Keep in mind in the eurozone you have fiscal tightening.

The last couple of years, it was actually quite severe, holding back domestic economic activity.

A lot of what was happening is the euro area, germany, with the world's largest trade surplus, the united states having a recovery, which is not lowering the savings rate, the developed world is displacing emerging markets x porters and export growth.

So, this is a shift in growth to developed markets.

It is a negative for emerging markets but counts as a positive for developed markets.

India's essential banker made comments that central banker made comments where he basically slammed industrial nations.

Take a listen.

International monetary cooperation has broken down.

Industrial countries have to play a part in restoring that, and they cannot at their -- this point washed their hands and say we will do what we need to, you do the adjustment.

If we insist on that, we will certainly do the adjustment we need to and certainly in india we are in the process of doing that, but they may not like the kinds of adjustments we will be forced to do down the line.

A sickly saying industrial nations are running selfish economic policies and they have responsibility -- basically he is saying industrial nations are running selfish.

If you talking to his constituents?

He is talking to global central bankers in the developed world.

This is a really difficult thing for policy makers the united states because the primaries -- primary responsibility is to the domestic economy.

They will be looking at feedback effects on the united states and developed markets, but to be honest, those effects will be rather small.

The question is, should central bankers in the united states have done less during the period of weakness?

I know you are not day trading for citi private bank -- but with features -15 come a dow futures -123, what is the effect on u.s. markets will we begin to break various ports?

10-year yield lower, cold makes its move.

What will be the fx?

The problem is last year we probably had more non-pr -- bond price volatility than stock price volatility.

The correlation for the last two years has been unprecedented.

We have not had a meaningful correction since 2012 of any sort.

The typical direction averages around 13%. last year six percent was the largest inter-year correction and the corrections we had in previous years since 2010 meant nothing to full-year return.

Stephen wieting from citi credit bank, a trooper with the alarm going off.

Foreign exchange -- it is actually pretty quiet given what we see with features -16, dow futures -138. i am looking at the argentine peso, 8.02, that will be interesting because bailey they have to protect the peso.

The yen nowhere near breaking through to new yen strength.

There is our forex report in a tumultuous morning.

Coming up in the next hour on bloomberg television and radio, we will speak to adam parker, chief u.s. equity strategist at morgan stanley.

? microsoft chooses an insider, bill gates may be chased -- replaced as chairman.

Customer service leads to a shareholder lost.

Nobody talked about drones of a conference call.

Richard sherman, he is underpaid . he needs a big super bowl.

Good morning, this a bluebird surveillance alive from the world headquarters in new york.

It it is friday, january 31. i am time -- tom keene.

We listen to alarms go off at our world headquarters building.

Everything seems to be fined as our security checks it out.

They have also check out adam parker.

He gives us traffic market perspective.

Markets of -- had deteriorated in the last hour.

Here is alex deal.

New-home starts is the highest in 26 years.

This is half the european central bank target in january.

Economic activity in the u.s., personal income spending and earnings before the bell did report the dividend earnings counterfeit one dollars and $.20 a share.

Mastercard and chevron and it is chinese new year.

The chinese markets will be lows until friday, february 7. it is good to company news.

A lot of big tech it earnings.

Google spent more on the holidays.

There sales beat estimates.

They were hurt by 11% drop in the price of ads.

Shares of amazon were down early trading.

They posted earnings that missed estimates.

Operating costs increased 20%. for the first time, it may raise the price of the $79 a month prime membership that includes two-day shipping and endless video streaming.

The highest-paid head of the bank did pretty well last year.

Goldman sachs ceo got 11% increased.

He makes almost $15 million.

We will get details of his bonus later on.

Shares rose 39% in 2013. here on the panel, we have two towers in midtown.

There is a fire alarm that goes on buildings wide.

It appeared on bloomberg television as our security checks it out.

We say good morning to you.

A shout out to tonya in taiwan, one of our staff is watching us.

We say good evening to all of you in asia.

It is been a tumultuous month for the market.

Microsoft staggers toward new chief executive officer.

We're reporting.

Satya nadella has been anointed.

The real question is the future of bill gates as chairman.

Adam parker is with us.

Michael wolff joins us.

He is a yahoo board member who --. what is bill gates going to do?

Is he really with his foundation, or is he secretly running a day-to-day at microsoft?

There have been two ceos.

By choosing a ceo if this is in fact true, an insider, a technologist who has been running the cloud and the technology infrastructure part of the company, the best technology companies are surrounded by the best technologists.

A guy who is an incredible engineer could make a huge difference.

The double barrel of nadella and john thompson gives you two different skill sets.

It gives you two skill sets but we should be careful about reading too much into it.

Ultimately, the ceo has to run the company.

It is not want to have a two headed monster of a board.

When the board is meeting, what do they talk about?

I cannot tell you what is going on inside the microsoft board, i can't tell you what normally happens on a board discussion like this.

There is a lot of debate about not just the person but the direction of the company.

What kind of a flavor of ceo -- they were all over the map.

Elicits a decision they have made is away from a broad, general manager to somebody who will be credible with the engineers in the company.

The product makes a difference.

What are the users going to get?

This is the right guy for that.

It is fashionable to blame the media, steve ballmer did make many missteps.

You have run the boards and companies, what would you have done differently?

I think they should have had their in ear to the ground.

They were looking at it from an operating system perspective.

They get way behind on search because they did not understand the importance of the internet and what search was going to mean.

They're much more of an enterprise company now.

They need to recognize they are not a consumer business and by looking at this from the enterprise side, understanding what companies need, they will be in a better position to move forward.

We forget how big they are.

We talk about microsoft, apple and microsoft are huge.

We just do not get the scale.

Microsoft throws off an enormous amount of cash.

Ultimately, most people in an office environment use office.

Over the last three months, he looked like tech had a chance to outperform the s&p. what do you think now?

There are some big cap internet stocks in the going fast.

The there are some software was and are not.

There is an old tech and a new tech happening.

You see that divide pretty clearly.

That massive cash generation we were talking about, does that make technology or attractive?

It may not.

A lot of this is not a lot of progress.

It depends.

You look at it and say it is cheaper than the market and growing faster.

I want some of that.

Then it is what stock to i put in?

Very few individual stocks look right.

I want to talk in our next section about the market and the proview view.

We come into this weekend with him merging markets, how does the morgan stanley team synthesize that to u.s. investors?

It is about what can cause volatility.

We have had a lot of things happen, a lot of macro issues in europe and asia.

One thing that did not change is the recession.

Things will be fine.

I cannot think of another time when it was not because of a u.s. recession.

We are not afraid of one.

To the guys at microsoft stare their stock prices?

I've never seen a board that looked at their decisions as day traders.

If they are had a big followed with a stock, they're worried about the future of the country -- company.

How does microsoft exist in this world of apple and google and a whole set of others.

Especially as technology gets more consumer eyes.

Does this make them a new tech at all?

I don't know.

What will come down to is what is a new experience and functionality they will create for people rushing mark they will do that on a faster track if they have an inherent -- engineering guy heading the company.

Said those we're watching is the weather.

We have just survived the coldest month of the century.

Of the century.

Chicago was colder than the south pole.

We been talking about atlanta all morning.

They were dealing with a rare snowstorm.

By that standard, no month has been this cold in the 21st century.

Unbelievable.

You mean the first 14 years?

I am looking back to fdr.

It is warming up a little bit.

The fluctuation in weather is wreaking havoc on the national gas market.

They might get above freezing.

Heatwave.

Markets of the move, the 10 year yield is worth watching.

Are twitter questions a, will have the best the best sunday peyton manning, bruno mars, or bud lite?

? i'm tom keene.

Our guest this is adam parker.

He is at morgan stanley.

There is an opportunity.

Forget about the gloom of the weekend of the super bowl.

What is the courage point?

You have to be brave to buy.

As long as you believe the earnings will grow and i do, you will be optimistic and capitalize.

The markets been spotty because people are worried about chinese growth and emergency -- emerging-market companies.

Report after report shows good signs?

It could be both.

It can be the situation.

I think they're looking for opportunities.

I do not think the background is great.

You get a couple of percent purchases, i think that is a pretty good year.

I begin to get more multiple expansion.

When you look at the global, we have all seen this.

We have been there and done that.

What emergent -- emerging-market start to go, what do you suggest is the outside shock the could coalesce the emerging markets?

The potential for a stop moment.

It really is that china will be more stable than people think.

What i have learned and maybe this is complacent, which crisis that you worried about turnout to be a good idea?

Kris, italy, portugal.

That is it a point with the by.

But usually not a panic moment.

It is not a correction.

Do we buy the value stocks or do we go with the growth the guys?

I think it is both.

There are things like refiners and insurers that sold off hard.

Adam parker with morgan stanley, we have so much talk about.

Not just the chinese new year and we have the super bowl this weekend in our great new york city.

Coming up, tough times for technology.

Amazon is that the first tech company to not make its quarter.

We will ask why that is happening.

We only do that on bloomberg surveillance.

Good morning.

Good morning.

Scarlet fu and alix steel are with me.

Adam parker is with us from morgan stanley.

We to buy some headlines.

Here is alex deal.

Opponents of the keystone pipeline are going to be unhappy.

Opponents were the government to revise last year's report when it was concluded the pipeline would have minimal impact on carbon emissions.

Former capital fund manner -- manager has wrapped up his defense of that big insider-trading trial.

The jury is likely to the case next week.

Wall street is picking up much of the tab for this year -- weeks super bowl.

The host committee is paying $70 million.

Local sponsors are of who's who.

Those are your top headlines.

Rip up the script.

Are you on the 50 yard line?

I'm not going to the game, i am a patriots fan.

I am still drowning in my tears.

Let's find a seat for adam parker the super bowl.

We will take a look at what is going to with washingtonians.

House republicans are at their annual retreat in maryland.

There can fronting -- confronting to 2 problems.

They are confronting those issues.

There decided how to handle them in the wake of the midterm elections.

The big one has been immigration.

John boehner handed out principles that will likely govern their views on immigration going forward.

There is a healthy discussion about those principles.

This is a moment of truth for the republicans to include legal status for undocumented workers in the country.

It is a break from what they have advocated for in the past.

It is an important change in how they have approach that.

That is where the debate is going to play out over the next 24 hours and couple of weeks.

The publicans debated it and decide with the next move will be.

What a significant other retreat?

Why can't they do this on capitol hill?

They do this every year.

They try to get away from washington and have a more intimate conversation among themselves.

These are big issues for them.

There are some big dividing lines over all of these issues.

Health care came up yesterday.

They're trying to get a consensus among themselves.

That is been very difficult for john boehner.

He is exerting more power over the last couple of weeks.

That is what i wanted to go with.

I saw him at the state of the union with his usual distressed face on as the president spoke.

What is the power structure with republicans?

How in control is he?

I do think he would have trotted out the immigration principles yesterday if he did not feel like he was in control.

His stature has been elevated.

This is a gamble for him to push this forward and try to advance immigration reform in this congress.

It is a huge risk.

A lot of members asked why we do this when there is such a great chance of taking back this -- the senate.

We could take over congress.

He said this is important to do.

We should do it this year along our lines.

Peter cook, thank you.

The republicans to retreat.

A free vacation?

Adam parker is from morgan stanley.

Our midterm elections risky?

People are short-term focused.

People are not talking about yet.

Even with the economy stabilizing?

The economy will be better in 2014, there could be some shifts and that could matter.

The portfolio managers are not thinking about that.

What is being said about russia or argentina as it affects chairman yellien?

Emerging-market economies are going to stabilize.

There is risk that they will not.

Global policy will be normal.

Will republic is have to say to more silicon valley behind their cause?

Silicon valley once immigration reform.

Some of the issues in silicon valley are the huge value of equity.

Then i want to increase taxes.

In one immigration reform.

It is not clear where they write their checks in terms of donations.

The influence on yahoo, could you get an invitation to the next yahoo party and i was?

Things got a lot hotter there.

He went to bed too early.

When it gets hotter, i usually leave.

It is chinese new year and we have the forecast.

? alive shot of metlife stadium.

It to a half days away from the big game.

That is sam grobart cerumen.

See sam grobart hilarious video about hotel rooms.

I'm scarlet fu with alix steel and tom keene.

The city some company news.

Study with the justice department handed out praise for t-mobile.

T-mobile has spearheaded increased competition in the u.s. since a government blocked its takeover by at&t. that demonstrates antitrust enforcement.

Southwest airlines is the winner when it comes to buying up slots at reagan national airport.

Related to management southwest by slots for put a seven roundtrips and jetblue will have 20. when it resortwynn resorts are controlled by steve when.

We are all watching amazon.

That is from our must-read from bloomberg for you.

When it retail foot traffic and sales a disappointing december, the standard explanation is people must be moving their purchases online.

Do you agree with that?

Amazon sales were up 20%. they have the ability to raise their prime charges by $20. this is an issue of margin.

They overspent on shipping.

They had to give shipping to people who did not get things by christmas.

They have a tremendous amount of pricing power.

With that kind of growth, they should continue to take off.

Why wasn't the market for giving?

The sales growth was at 20%. what happened?

Stocks had great price momentum, people were looking for an excuse to sell.

It the penalty for missing is greater than the reward for being in january.

Look at that over the last two or three years.

Evaluation is still crazy.

We're looking at over 1000 times, that is unspeakably high.

Fast-growing stocks that are cheap, the market is already figuring out about it.

Something must be cyclical.

For the five or 10% that go fast, you want to look at that.

We have a note about amazon saying they are a believer that amazon is fundamental inflection points.

The inflection point is their ability to compete with people like netflix and others.

Amazon prime gives you a huge amount of streaming video.

That is one thing where they are inflection.

They are getting into the device business.

Are they going to launch others?

Are they competed against apple or netflix?

Are they competed against google?

I would call it the year of marissa mayer.

They have the come up with something.

What do you think will be a surprise from yahoo this year?

She get the traffic to go up.

It is the largest website in the u.s.. now they're going to have to sell ads.

There was not a story about momentum.

It was on a story about audience growth.

They will have to have a lot of advertising.

We see more apps on out -- yahoo weather?

Now, they're producing great apps.

Their sports app is great.

They're now the position where they can monetize mobile which they could not have done before.

What do you think when you hear the sighs monetizing mobile?

I hate the word monetizing.

Adam parker from morgan stanley trying to monetize as a move forward.

In terms of the share price reaction, it is all over the map.

Amazon is down by almost six percent.

Italy have futures are doing, it is down 10 personas on s&p futures.

New have some data coming up this morning, including personal income and spending at 8:30 a.m. good morning.

We are around the world at bloomberg tv plus on the ipad.

I am tom keene.

With me are scarlet fu and adam parker.

We're thrilled to have him with us with all the tech turmoil.

A lot of tech turmoil and it is chinese new year.

With the constrictions of what the new year will bring.

I tracked down a geo to get his outlook.

We will start with alix steel.

You are good because you were born in the year of the goat.

Your outlook is your health will improve and you will get a promotion at work.

You should go to a warm climate.

I'm going to arizona on sunday.

I was eating greece for of its -- vacation.

You are a dragon.

Walk slowly.

Her travel year will be good for business and leisure.

You have the loneliness sign for this year.

Ok.

scarlet, you are the rat.

You may lose money.

You should avoid changing companies.

You need to rest well and exercise well and get out of ice rinks.

Rest well does not work when you get up at 3:00 a.m. every day.

Whatever that is, maybe i should skip surveillance and knew that instead.

Adam parker, you are the rooster.

You need to stay conservative in investment.

That was his recommendation.

There are many opportunities for work or business.

You should rely on your friends for help as trouble rises.

I hope to make some of those first.

I did talk to him to get some outlook for the year ahead, not just for personal fortune but for the global economy.

As we talk about the year ahead for microsoft, he said it is a year of search for companies and countries.

They will be looking for leadership.

Real estate will lead the u.s. economy.

It led last year as well.

Seriously, i think this is so important.

The u.s. experiment and why we have done better out of this crisis is our animal spirits.

Our horror scope is we just cleared out, don't we?

There's been so much to inspire us.

There are so many divorces that have rocked big corporations.

The impact of technology has been everywhere.

It is also impacted asia.

Take a look at the number of companies that have come out of nowhere, alibaba, that are dominated that market.

What can we learn from them?

We did not make a full-screen for michael wolff.

I will get your fortune later on.

I will wait and see.

This is douglas of seabreeze partners.

Never make predictions, especially about the future.

Maybe you'll be ok for you,,. he has to be careful and not trip.

The day of the donor for him.

Coming up, we will talk about the markets and the new bloomberg businessweek.

Facebook is celebrating its 10th birthday.

How would has matured since it was founded in a harvard dorm room.

? is a forget markets on the move.

Philip who alix steel are with us.

What do you have?

The president of stub hub will be talking about to get pricing and 18,000 tickets a metal.

That is remarkable giving the weather was a big factor and people went anyway.

We look to bloomberg television.

We have much more microsoft as well.

We kick off our earnings calendar with shares of google.

It is moving higher by three and a half percent.

It is moving around to the results.

Profit missed analyst that revenue beats.

Google has work to do on mobile when you compare it to facebook.

The volume of clicks on ads picked up to 31%. people worried that google is not monetizing anopheles click.

I know you don't talk on individual securities.

If these tech stocks were split, isn't it time for the doubts have a google feel to it?

I think it is harder to trade the stocks in high-volume.

It is a disadvantage for institutional investors.

It looks like you could trade, but when you -- it is a bigger problem.

Is google really need tech anymore?

Is it too big and too heavy?

There are people who say that google is the next microsoft.

It is a big company.

They been able to move very quickly.

They been able to get into other businesses, they are trying their hand.

They just bought nast that makes home automation and the internet thing.

They are an industrial complex right now.

We look at those companies, they're not growing that fast.

The ones are growing fast still are in the internet.

They are the ones that institutional investors want to hold.

We look at the biggest 50 companies in the u.s., you're looking at the fastest-growing.

Thank you so much for coming in today.

Adam parker as well from morgan stanley.

We will get you guys out on the road.

Thank you so much for coming in.

Them up, we will discuss football.

There is a game after all on sunday.

It also has to do with our twitter question.

Lead i am alix steel.

Litigious and company news from the files of bloomberg west.

The company says it is working with federal law enforcement agencies to find out who tried to break into it.

Shares of zynga sword up as much as 20%. of they will cut 15% of its staff.

Their spending $500 million to buy a popular game creator.

There looking at games for mobile devices.

Shares of facebook at a record high yesterday.

That boosted his net worth.

That is company news from the files of bloomberg west.

A lot of excitement in the new york area.

Richard sherman makes $500,000, he would like to the super bowl for their team.

But also for their future livelihood.

It is the business of the super bowl.

Eugene lee is here.

Let me go to you as well.

What is different this time around for us and mr.

Sherman?

He made quite a splash.

He is one of many athletes who have

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

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