New Search for Malaysia Jet: Surveillance (03/28)

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March 28 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests include Airline Weekly Managing Editor Seth Kaplan, Motif Investing's Hardeep Walia and Sandler O'Neill & Partner's Robert Albertson. (Source: Bloomberg)

This is "bloomberg surveillance." the malaysia air searches is shifting to warmer waters.

General motors finishes a gruesome first quarter.

We will speak to their new safety czar.

The ipo friendly continues -- frenzy continues to read spotify takes the bait.

Good morning, everyone.

It this is "bloomberg surveillance." joining me come a scarlet fu and adam johnson.

Busy friday, here you go.

Japan's finance minister cautions consumers on their slower spending.

The government may have to increase the stimulus program ahead of the 8 -- april tax hike.

Spanish consumer prices dropped unexpectedly.

One quarter of the spanish workforce is not working.

Imagine if it were like that here in the u.s.. later this morning, air force one will be landing in saudi arabia.

President obama will meet king abdullah for formal meetings and then a dinner later tonight.

University of michigan confidence is at 9:55 a.m. we have blackberry earnings today.

We will be joined by john chen, the man who runs blackberry.

He will be joining us on "market makers." it is more than curiosity.

How is this company possibly going to survive?

It loses money every quarter.

The moneymaker for blackberry is going to be the enterprise customer.

The fact that you have the value and cash on the balance.

They are burning through it.

Earnings at 7:00 a.m. let's do a data check right now.

Stocks, bonds, currencies, commodities.

It is a back-and-forth week.

Onto our second screen.

Live cattle, cows -- i don't know what 138 means.

It is at 138 dollars -- $138 per pound?

That affects everyone's food prices.

Let's go to this chart on spain.

Inflation in spain.

The financial crisis.

Get over it.

We got over it.

Thank you, mario draghi.

Off we go.

Under the zero line.

It may force some unconventional options as well.

It is not greece, it is not italy.

Significant disinflation.

You understand why the fed is so concerned, so focused on inflation.

You need a little inflation to have growth in the economy.

Deflation is a real problem.

We and the first quarter this coming monday, i should say.

We have scoured the pages.

Here is scarlet fu with her front page.

March 31 is the official deadline for the affordable care act.

Our first front-page story -- it is the deadline for now.

They keep moving it back.

That is the deadline for now and it looks like the affordable care act has hit its target of 6 million sign-ups.

This is a symbolic line for the obama administration.

It is not clear how many of those who have signed up have been uninsured.

Am i right that the focal point here is still what is called single young people?

The healthy ones who are going to pay for the older people.

We don't have the details on exactly who has signed up, whether they have insurance before hand.

The president spoke on a conference call yesterday and he encouraged them to redouble their efforts over the next four days.

You have four more days to sign up.

People are expectedly -- effectively self insuring.

My insurance in new york city would be $700 per month.

That is a lot of money.

Imagine if i were a family of four.

You could leave your job of bloomberg and go start another job.

That is the argument.

That is what is called the young urban male premium.

This young urban male is healthy and does not need to pay $700 per month.

You closed out a restaurant yesterday.

I did not close it out.

It was lunch and by the time i left it was dinner.

[laughter] the plane probably flew a shorter distance than first thought.

The plane was truck -- probably traveling faster, so it did not end up as far south.

The new areas moved outside of the roaring 40's. on a friday morning, i just want to say thank you to our management team.

I don't think we have been hysterical on this, but it is sad.

I woke up this morning and i thought, this is such a sad story.

239 people dead.

And no answers, that is the issue.

Weather conditions have improved.

Scarlet, help me.

We have no official word.

Not yet.

Still on the search.

Our third front-page story.

We moved to turkey.

Blocking youtube.

Did they block "surveillance"? i'm sure they can still get bloomberg.com.

This comes after a leaked recording of officials discussing a military incursion into syria.

They have municipal elections coming up in days.

I will be curious to know if they still have linkedin in turkey.

China still has it.

They are all about business.

You are good to go in china.

Those are your front-page stories this morning.

We have a set of guests to get you through bloomberg surveillance this morning.

We have a former microsoft executive.

We have the chief strategist at sandler o'neill.

The buzz over microsoft overnight was microsoft office out on the ipad.

There it is.

I love it.

This is amazing.

It has been in the works for almost three years.

They launched yesterday.

It is so right for the ipad.

They spent a lot of time and a lot of money getting the precision and making it an apple quality products.

Let's get some mba quality aspect on this.

Does this change the ipad usage at wall street firms?

Does work on android, too?

They are about to launch.

They will be coming soon.

They did not best that i. -- specify.

The business world lives with windows.

You have got to give that desk at that.

-- get that.

It was a thumbs-up.

Steve ballmer had cooked this up in the weeks before he left.

It took a lot of courage and there was a lot of consistency in the message.

He has been saying, mobile first, clout first.

Mobile first on tablets is ios first.

Mobile first on tablets -- phones is android first.

It is a combination of surface.

Effectively.

There was no way to deny that the surface did not work.

I prefer office on the ipad2 office on surface.

-- ipad to office on surface.

What is a question you would ask a technologist about microsoft?

Why does it take so long to get these things done?

One of the big changes they have made right now is that microsoft has traditionally been last -- let's integrate all our innovation.

They freed them up.

You do not have to worry about windows and these other things.

It is a complex business driving this out.

You have a billion office users across the world.

Different devices.

It is a strategic company.

It is not like there was a big technological hurdle.

This is definitely a strategic discussion and it was all about preserving the existing franchise.

How do you make the shift?

They're saying, we have no choice.

We missed on surface, tablets.

What do we do now?

Robert albertson.

We have a correct.

Give us your sense of the banking industry world.

We have the stress test results coming out.

How many more heads will roll from the first-quarter numbers?

The first quarter has some issues.

[laughter] putting it mildly.

Investors have to see the forest through the trees.

You know interest rates are going to go up.

We don't know when.

You have the balance sheet.

You have a big hole in the economy for credit on the commercial side because the shadow banks never came back to the degree they could have.

It looks very good for this industry.

Let's come back.

As we look at this nice mix between technology and finance.

Let's get to company news.

We start with media.

Cbs outdoor will begin trading.

The ipo will raise $560 million.

Sac capital is asking a federal judge to approve its insider trading settlement with the government.

They told the judge that sac is deeply remorseful for the illegal actions of employees.

The sentencing hearing is scheduled for april 10. toyota gives the camry a makeover.

They will roll out a refreshed version next month.

Toyota is trying to send off gains.

The camry is the number one selling car in the u.s. that is today's company news.

A deadly combination at gm.

Most of the cars recalled were marketed to young, inexperienced drivers who may have been among the least prepared to react to that ignition problem.

We will discuss that next.

Here is our twitter question of the day.

Whose reputation took the biggest hit this week?

Citigroup?

Gm?

candy crushed?

President obama?

Malaysian air?

Vladimir putin?

Wire the boston red sox not on their?

-- there?

You are harsh.

This is "bloomberg surveillance." whose reputation took the biggest hit?

? good morning, everyone.

"bloomberg surveillance." i am tom keene.

With me, scarlet fu and adam johnson.

It has been an ugly quarter for general motors.

It has not been a very generous quarter for the company, as well.

Under criminal investigation for the decade-long delay in recalling vehicles with faulty ignition switches.

There links to 12 fatal accidents.

A were entry-level cars marketed to first-time drivers.

-- they were entry-level cars marketed to first-time drivers.

You guys went through all the lawsuits and looked through all the data and you found that a lot of the deaths were linked to young kids, 16-year-old, 17 are old.

It was not quite clear what prompted the accident.

Now that there is this the nation switch debacle to people are connecting the dots.

That is right.

It is a very traumatic incident.

You are jotting down the road and your car were to suddenly shut off.

There was testimony.

One of the engineers tried this himself.

He did it in his neighborhood and was able to pull it over safely.

That is someone who had been driving longer than someone who had been driving longer than some of these customers had been alive.

A lot of pretty new drivers.

People in their teens.

You add in other factors.

In some cases, there was drinking involved, or it was night, when you are a teenager, you're much less capable to respond to something tricky and unpredictable.

It is an interesting calculus, correlation and causation.

Is this because they were cheap cars?

That is what young kids by?

Yes.

Most of these are not the kids buying them.

Let's be honest.

These are parents.

Middle-class families who already have a pickup and a minivan.

They have a kid who is in high school or going to college and they are going to help them buy, they want them to have a new car.

Small, fuel-efficient.

A lot of them stuck around.

As they stuck around as used cars, they status entry-level cars.

As tragic as this all is, let's not forget the general motors got its bailout in 2009, which means the company does not have to respond to legal claims filed before 2009. this is disturbing, but the company is not necessarily liable for things that happened before then.

Is that correct?

That is right.

They are not liable for the crashes that happened before then.

They are liable for those that came since.

Gm has said they will take care of their customers.

They don't want to go beyond that.

It looks like their intention is that they know they have to take care of these people because they know the right thing to do.

It seems to me that they are not putting down their shields.

They do not want to open up to everything.

He have indicated that they are going to accept some of the liability.

What it will cost them and what it will cost the shareholders on the balance sheet will presumably be a lot less than the cost in public image of telling families, sorry, we don't need to pay you, so we are not going to.

They could do that.

One of the curious subtexts is that it looks like to the outside world at gm is circling the wagons, saying it is going to pull its opel division from china to focus on opel on europe and maybe in the u.s.. what other signs do you have the gm is circling the wagons?

I would not expect opel to come to the u.s.. we are seeing a carving up of the global markets between opel and chevrolet.

Gm has decided to keep opel and instead of having chevy move into europe and try to take the low-end in the market, they are really just letting opel be opel as a european brand and try to compete better against volkswagen and give it the opportunity to go down market.

When you look at china, they know that these brands are all the same company.

They will not even let subaru invest in china because they see it as part of toyota.

Letting opel back out of china gives more opportunity for chevy.

The manchester united's partnership was not about winning chevy converts in the u.k., it was about china.

That is where they are trying to grow.

Thank you so much.

Jamie butters, our auto reporter joining us.

We will be speaking with general motors newly route -- appointed head of safety.

What i want to ask him is what he is going to be able to do differently as long as he has been there?

We will be right back.

? good morning, everyone.

Good friday morning.

Adam johnson has our top headlines.

A milestone for obamacare.

What do you know?

Or than 6 million people have signed up for private health lines -- plants on the affordable care act.

The program has seen a surge of applicants in recent days ahead of the deadline.

You have to sign up or at least begin signing up for this.

Because now there is an exemption.

You have to start.

Not enough yummies -- young urban males, who are healthy and pay for everyone else.

Harvard accepted 5.9% of applicants into its freshman class.

That is up from last year's exception rate of 5.8%. the rise is a seven-year move in which the admission rate had declined.

All of the ivy league schools notified high schoolers yesterday as to whether or not they had been accepted.

I will never admit getting my princeton letter in the mail.

I was very proud.

A record-setting contract.

The detroit tigers and miguel cabrera agreed to a 10 million -- 10 year, $292 million deal.

I'm speechless.

He is a two-time american league m.v.p.. the deal surpassed alex rodriguez' deal.

I know that hurts you.

I bet their cash positive on him day one, just for the endorsements on the clothing.

Prince fielder is gone.

The red sox are 12-1. 12-1 odds.

The yankees are 14-1 odds.

They win the world series and they get no respect from the "new york post." you mentioned a rod.

Do you know who else is up there?

Have you heard of anyone named joey votto of the cincinnati reds?

Is quite good.

We call to mr.

Sara eisen.

Because of the cincinnati connection.

To remember johnny bench?

I got to sit in his box when i was seven years old.

Robert albertson, are you with us on the conversation?

Always.

I don't want to disclose.

A man of mystery.

You are not flying the flag?

I am bashful.

It is a big deal.

The money involved shows the value of these different franchises.

I know nothing about baseball.

I'm a football guy.

World cup fan.

We will discuss banks.

Five out of 30 banks failed the stress tests.

? next week, the high is 61 degrees in new york after a long winter.

Spring is here.

A gorgeous morning with the sun up early.

The empire state building is looking south towards downtown, manhattan.

There's the chrysler building.

We take that picture every morning -- that is an award-winning shot.

You never get used to it.

The construction site on the right is all residential.

The dubai kind of tall.

Click that thing in the middle, $50 million a pop.

There is mine.

This is "bloomberg surveillance," i am tom keene.

With me as scarlet fu and adam johnson.

Here is a data check.

Not much going on, futures up six and the euro, 1.3721. big gainers and users from yesterday, twitter up to $46.32 because of the partnership with billboard to create real-time music charts.

We have been talking about whether you need music on twitter, i am not convinced.

Citigroup down by 5.4%, dropping the most since november 2012. its capital plan was rejected by the fed, shocking senior management.

To me it is still $4.75, i do not care.

Michael corbat is doing damage control.

King digital, maker of candy crush down for a second day.

It has not risen since it went public.

$22.50, now it is $18 $.50. what do you do with the bankers who thought this up?

Like they still get paid.

Whose reputation took the biggest hit this week?

Citigroup, king digital, bankers, the affordable care act struggling to get the sign-up, turkey?

6 million was lowered from 7 million.

Keep lowering the bar and you will meet it.

At least i can say i got 6 million.

Citigroup and the challenges they had.

Citigroup stunned wall street, team corbett flaunt the stress test.

-- team corbat flunked the stress test.

Robert albertson with sandler o'neill, linking banking to the economy.

Where will banking be in 24 months?

It will be better and there will be more consolidation.

I am not sure regulators will come off this pendulum swing . what is standing between banks and capital -- the biggest obstacle is the regulators and all these changes and surprises.

What will go on at citigroup this weekend?

Mr.

corbat will have meetings through the weekend, do they change people so they do not have this happen again?

They talked about processes.

That is the frustration.

The stress test, regulators have control of capital i've ask, defense -- 28 variables -- the stress test, regulators have control of capital, buybacks, dividends.

You give me 28 variables i am supposed to come up with earnings, losses, specific in all categories, all this.

How can that be done?

Jamie dimon did it, uncle corbat -- michael corbat did not.

Citi has more emerging-market is missed, that is good.

Can you apply the same variables to 20 or 30 emerging markets?

You can't, the regulators do not give you much guidance once it is over.

You, with a number that is massively different than mine.

You drop into the subjective about process.

It is to opaque.

How ironic yesterday, bank of america ups dividends by $.04, what is bank of america doing right that citi is not?

It is not right versus wrong, it is the subjective view of business of these banks.

The ones that came up short are qualitative shorts.

They are all global banks.

Citi is the most global next to hsbc.

Is the federal reserve picking winners and losers?

I do not really believe that.

I think they are getting more accustomed to understanding how different emerging markets are outside the u.s.. if you are a managinger, pull back on emerging markets?

No, they grow faster and have more diversity.

You have to have different people on site who understand the countries.

This is one of the guests this bank offers investors.

Almost a century of experience.

Whether -- you work at sandler o'neill, is this an opportunity for larger regional banks?

We focus on -- i am guilty of this -- we focus on five or six banks.

Bank of america, citi, jpmorgan.

Is this an opportunity for pnc financial?

You go down into the 50 billion banks, 20 billion banks, it is a show coming to all of you.

Different versions and later versions but this same issue.

How will you project in the future accurately to meet -- figuring out the percent of the income statement this will cost a given bank -- five cents on the dollar evaporates because we are stressed?

A lot of this comes to do with systems and people that are already there.

You get down to it original or community bank, all the sudden it is a big number.

Everyone needs to move ahead, including citigroup.

The backdrop is one where rates may start heading higher.

Charles evans talked about the potential for those interest rates when he spoke with eddie lynn yesterday -- when he spoke with a little -- we spoke with betty liu in hong kong.

Mid-2015 or even later.

For rates to rise?

I frankly think it would be appropriate to hold longer than that, it will depend on the data and how quickly inflation starts moving up to the target.

You mentioned you expect rates to rise faster, that is good news for the banks?

It is.

This is the first time the stress test includes a really big bomb and rates.

Rates go to nominal gdp on the long and.

A six percent 10 year is not crazy.

It will be very helpful and is long overdue.

It is good news.

Unvarnished good news.

For years, you were the institutional investor and never one banking analyst.

What are you telling clients at sandler o'neill?

Be selective.

You want to be on the commercial business side of banking, not consumer.

That is a different subject.

The economy has shifted.

That is where the hotspot is in terms of growth.

These are still strong models that will work, despite all the barriers and fights they have to get into with the lawsuits and regulators.

It works.

Robert albertson of sandler o'neill.

Hardeep walia is going to do and ask all tutorial -- to do an excel tutorial.

Coming up on "surveillance," geopolitical struggles around the world.

Coming up next on "bloomberg surveillance." ? good morning, "bloomberg surveillance." i am tom keene.

Here's adam johnson.

The search area for the missing malaysia airlines jet has shifted almost 700 miles to the northeast after write our data shows the plane was traveling faster than estimated.

It travel a shorter distance than previously thought.

The new areas closer to land, which will allow planes to spend more time over the water searching.

The murder trial of oscar pistorius has been postponed after one of the judges a system -- after one of the judges' assistants became sick.

The stories' -- pistorius pageantry lawyers were supposed to present the case.

He is accused of killing reeva steenkamp.

The trial will happen on april 7. chris christie says the decisions made by former aides in the bridgegate scandal continue to baffle him.

He spoke with diane sawyer.

I said who would do something like that?

Sometimes people do inexplicably stupid things.

That is what makes this so hard as the guy in charge.

Doesn't make any sense to me.

To some extent, it still does not.

The interview made the same -- the interview aired the same day a report said that christie had no knowledge.

Hardeep walia, do you believe chris christie?

No.

i think he has lost weight.

He has, he got surgery.

When you set a tone of being hyper aggressive as a leader, you have to set the culture of your organization.

He set a culture of hyper aggressiveness.

That is sensitive west coast.

Robert albertson, why should chris christie continue with his career?

You either believe this or not.

It sounds like a pretty stupid thing to do.

I do not think he or any politician in this position would condone it.

You set a talent and a culture, but whatever the culture is, people have to be reasonable.

Do we set him to a higher standard from wilbur mills in the fountain?

That is a little different from a bridge jam.

It does not sound right that he was in the back room.

I don't think it is a big deal.

What matters is policy issues, we tend to focus on this.

On friday, we know what is a big deal is single best chart.

In a world of less spending, less government spending on defense and sequestration, warfare defense stocks are eating the s&p 500. the s&p is up about 18% over the past year.

Hardeep walia, you came up with this chart.

Explain what is going on.

Modern warfare stocks, the white wine, have done better than the broader market.

Who would have thought modern warfare would be the s&p. the modern warfare index is asymmetrically weighted index weighted towards higher roi's, drones, not conventional warfare.

The blue line is a conventional warfare etf.

There has been a move and dollars away from conventional to higher roi spending.

The sequester within the u.s.. for emerging markets, 20% of the growth is driven by asia -- ukraine and instability.

When people ask -- people last year were looking at defense as not a good place to be.

This proves something else.

When i think of warfare stocks, it is weird to say that term.

Lockheed martin, northrop grumman, do you lump them together or is there more specific company's? there are specific covenants, irobot is in there.

The methodology has more to do with waiting.

There are conventional and nonconventional, the methodology focuses on the higher roi's -- drones are doing well.

Not conventional things that are not gaining.

A missed opportunity for anyone who doubted defense stocks.

Can it continue question mark with what is going on in asia, everyone is now worried.

This is a nice way to play currency markets.

What would you do in banking?

What is the motif for banking question mark we have a fed tapering motif.

It is doing well, we have a too big to fail index.

Companies that are deemed by the government as too big to fail.

There is a discount they get because of that.

We do the s&p by close to 11. is it the discount or the complexity?

Once you go into big firms, there are a lot of things that drive it.

I like your methodology.

You should help the fed do stress tests.

Hardeep walia, dial 1-800- janet yellen.

Technology relations near 1999 levels.

Is it a bubble about to pop?

We discuss that next on "surveillance," streaming on your tablet, smartphone, and bloomberg.com.

Robert albertson got 30,000 shares of kit digital.

? good morning, a beautiful shot of washington, d.c. still quiet.

The president just left italy and is on his way to saudi arabia.

He will be meeting with the king.

The first lady just returned from china.

Back from beijing.

This is "bloomberg surveillance," i am scarlet fu with tom keene adam johnson in new york.

Some company news.

Twitter will give developers a hand.

They plan to release a mobile advertising product that developers can use.

They hope to attract marketers into e-commerce and game industry.

This according to people with knowledge of the matter.

Uber will roll out its service in hong kong, beijing, and jakarta this year.

This is an effort by cooper -- by uber to tap into demand by wealthy travelers.

A three-day trial in hong kong starts today.

Sony replaces its cfo less than two months after they forecasted a record deficit.

That is today's company news.

He is not being fired, he's being moved to another office.

The j.p. morgan bankers who did king digital.

Get made 10,000 shares.

Echo of 1999, the new new of ipo's. in 2014, spotify will ipo.

Hopefully they will tweet higher and not be crushed like king digital.

Hardeep walia has seen this too many times.

He is with motif investing.

Robert albertson from sandler o'neill.

Hardeep, what is distinctive this time around?

Valuations are high.

There is a strategic premium going on.

Whether it is whatsapp or -- is whatsapp worth $19 million?

To a standalone investor, probably not.

Whether it is google, facebook, companies are taking advantage of the high-priced currency to take strategic advantages.

And ip, from where you sit and technology, is it a retail frenzy?

An institutional frenzy?

I have got to own it?

It is a conversation -- it is a combination of both.

Everyone is trying to get into this.

Robert albertson, you have decades of experience with this foolishness.

Is it a redux of what we have seen?

Arco it seems to be untethered to the fundamentals of stock analysis.

You could have said that for a long time in the first bubble, i am not sure if this is a bubble or not.

For someone who has been living in the real world of earnings per share np's are priced to book, the psychology continues.

It is the reverse and financials.

In some instances, you are seeing the strategic deals not be priced as well as the ipo's. our financial back from the dead.

Is the financial sector finally back, you can't ipo effectively financially?

The financials beat the broad sector three years in a row.

Same about the state of the sustainability of the tech world.

Things keep building and building.

Spotify planning an ipo in the third quarter.

Looking to interview with bankers.

We have a great chart that shows where spotify is in terms of its market position.

Number three after pandora and itunes.

Itunes is part of apple.

Spotify is the third place player right now in this.

Will go in public signify this is at the top?

Spotify is different from pandora.

85% of revenue comes from subscription.

Pandora has 80% of revenue from advertising.

The models are very different.

They both have a big problem, they pay a lot of costs for content.

That will not end anytime soon.

From a sustainability model of subscription, it is a different business.

I am a little more excited about modify than i was pandora.

The economics are pretty good.

If you take away the subscription model you have less risk to itunes or new entrants in the market.

King digital -- we learned about that is weak.

Robert albertson, what the consequences to bankers doing a lousy job in hardeep walia's world?

The consequences to j.p. morgan and the others that brought this?

You reap the reward you deserve, your investors drive your success when you are selling them ideas, no matter what.

If you go too far, you are in trouble.

Buyer beware?

No, but i think everyone has to look at these things based on their own knowledge and background.

People who sell securities are trying to sell a concept, a business model.

You have to look through it and say doesn't make sense or not?

If you look at a ten-year average of the first-day pop on and ipo, it is around 12%. that is a critical point, what does that signify?

There is excitement.

Look at the number of ipos that have been shrinking.

There is demand issues that have to be factored in.

From a banker's perspective with that in place, this is not good news for the underwriter.

The use of cash and all these companies that have great currency to make acquisitions.

Investors talk about the use of cash and how they are hoarding cash.

When they deploy some of it to make a $19 billion acquisition of whatsapp, they get vilified.

You cannot keep wall street happy.

When the money is sitting, why aren't you buying companies.

When you buy companies, why did you pay that much money question mark larry page was in the running as well.

Companies that fail in technology do not focus on the future.

The oculus acquisition, what on earth are they thinking.

This was a future project.

These moonshot deals have to continue.

You could lose advantage quickly.

I love having you together.

I would love to get both of you.

Robert albertson and hardeep walia, can you switch jobs for a month?

I can go for california for a month.

Reality tv.

Robert albertson, tech guy.

A forex report.

Dollar yen, 102.37. i am watching commodities.

The bid australian dollar, doing better.

U.s. dollar, a little bit of a bid.

Ian bremmer joins us next on "surveillance." ? this is "bloomberg surveillance." the malaysia surge shifts closer to perth, australia.

The area is the size of new mexico.

General motors finishes a gruesome first quarter.

We speak to their new safety czar.

Russia considers options as troops move near ukraine's border.

This is "bloomberg surveillance," live from new york.

It is friday, march 28. i am tom keene.

Joining me is scarlet fu and adam johnson.

Our guest host is ian bremmer, president and founder of the eurasia group and author of "every nation for itself." also with us, ceo and founder of reputation.com.

Everyone who got shares on that ipo but out the top.

Overnight, japan's taro aso cautious that the company might have to -- that the country might have to expand spending.

Spanish consumer prices drop as unemployment hovers near 26%, a quarter of the population that can work is not working.

Later this morning, airports -- landing in saudi arabia, president obama will meet king abdullah.

Personal spending at 8:00 a.m.. blackberry earnings is coming out.

Lex blackberry reporting a loss for the border.

The adjusted loss per share was eight cents, analysts were looking for $.57 a share.

That seems like a pretty big gap.

In terms of gross margin, 43% when analysts were looking for 34 .6%. revenue was down 18%. $957 million, analysts were looking for more than $1 billion.

Compare and contrast this train wreck.

The initial buzz on microsoft.

Unveiling microsoft office for the apple ipad.

Microsoft trying to make that transition to mobile.

What is blackberry transitioning to?

To the enterprise customer.

Given the fact that it has lost money for a consecutive quarters, the question is whether there is salvage value.

A number of investors have suggested it as the patents that might be worth $2 billion.

Here is the headline, blackberry targeting break even cash flow by the time the red sox win the world series.

By the end of fiscal year 2015. looking at the earnings matrix, quarterly losses are forecast through 2016. asking john chen, the ceo, how he will move forward.

Coming up on bloomberg live at 11:00 a.m. on "market makers." other companies?

Turkey blocking access to youtube after the site featured a recording of government officials discussing a possible military operation in syria.

The foreign ministry called the leak a "despicable attack on national security." prime minister erdogan blocked twitter days before elections across the country.

Walmart suing visa over swipe fees, accusing these of charging excessively high fees when customers swipe debit or credit cards.

The chain is seeking $5 billion in damages.

Toyota gives the camera a makeover, rolling out a refreshed version of the car at the new york auto show next month.

Trying to fend off gains by the ford fusion and models from japanese rivals.

Camry is still the number one selling vehicle in the u.s., but sales were down 17%. the rhetorical doctrine as the u.s. struggles with foreign policy.

Washington has given way to a seat-of-the-pants response.

The state department pi vots.

Ian bremmer has been busy.

What will you hope to see from the u.s. this weekend?

As russia has 100,000 troops in the vicinity of the ukraine?

What i hope to see from the u.s., not what we are going to see.

The last few weeks has been steady escalation from both sides.

The russians are not going to back down given threats of sanctions.

The americans trying to isolate russia trending.

We cannot isolate russia.

The europeans are not with us.

They have vastly more economic composure than we do.

The brics have said no.

As the president travels to riyadh, are the salaries with us question mark can they affect the oil price to affect mr.

Putin?

The saudi relationship is pretty broken.

This is the same saudi arabia that refused a seat on the security council because they were so antagonized by what they believed was obama committed to them they would go into syria.

The salaries are concerned about a pending iranian nuclear deal.

That is great for a lot of folks in the world, but really bad for the saudis.

It brings oil prices down but makes the iranians more powerful, which they do not like on a greater scale.

Who are the friends of the u.s.? the u.s. is very isolated?

We are not quite as isolated as the russians.

If you look at who voted with the russians -- belarus entegris -- belarus and to just tajikistan.

We have allies that are starting to hedge to a greater degree like south korea and germany, not small countries.

We go to davos and there is a geopolitical sphere.

Do you give anything about this?

Is it background to silicon valley question mark it does not affect my stock.

We have customers in places like russia and saudi.

What are the russian customers doing?

Anytime there is economic disruption, it is felt most in silicon valley where the most discretionary spending tends to be.

We like inflation and nice, helping markets.

We feel it all the time.

Ian, back to something you wrote in "the new york times" about how more hard-line response is not the answer.

Who will lead diplomacy?

The president has not done a good job.

It is rather find myself so outside the mainstream in terms of where i think foreign policy is going.

The opposition to obama in the u.s. has overwhelmingly been we are not doing enough, we are not demonizing putin enough.

The reality is the problem that i see -- most americans, despite the fact they are concerned about the ukraine and russia, do not want the u.s. going in.

Like cereal.

The u.s. sets a tough stance, assad you are gone.

Assad is winning three years later, american credibility looks back.

We have to hang up the "or else" cleats, it is undermining credibility and the stability of american alliances.

Writer cohen -- roger cohen was writing to you in "the new york times." this is not the time for cliches about the wonders of democracy.

The great distinguishing feature of open societies is their capacity for renewal.

How does president obama renew our ability to interact with other countries as partners and not necessarily as a country that questions?

It comes across as hypocritical because there is no overarching strategy.

Obama is going to saudi.

The saudis are antidemocratic.

He is trying to work with them on middle east he's process, iran, syria.

He is not going to say when are you going to let women drive?

Clearly we do not care as much about those things in countries we have assets.

I think at the end of the john hay era it was the same issues.

Is it normal for a white house to have a job love for issues?

-- a jumble of issues?

We are experiencing creative destruction we have not seen since world war ii.

The relationship between key powers is more unstable than it has been for a long time.

You have a president who is getting dragged into foreign policy and does not want to be.

Headlines from the president.

An interview with cbs, the president said russia must not revert back to cold war practices.

He adds we have no interest in encircling russia.

He adds that putin may be misreading the west.

President obama -- is mr.

Putin misreading that west?

His approval ratings are at 80%, they were at 60% weeks ago.

There is a view that the u.s. is happy to facilitate russian decline, nato enlargement, energy diversification away from russia, even shock therapy.

I think the russians are over that, but that is the perception.

They are setting their own red line on ukraine that they take more seriously.

They are not leaving ukraine.

The sanctions have been limited by the europeans have taken a softer tone.

Russia has a lot more at stake in ukraine than the u.s. ian bremmer for the entire hour.

We talk about candy crush, king digital falling for a second day.

We discussed with the ceo of reputation.com.

? good morning, "bloomberg surveillance." headlines from the president talking about the u.s. will not encircle russia.

This matters now to ian bremmer, one of america's foremost thinkers on international relations.

Front and center in the u.s. diplomatic response to rush's annexation of crimea.

The op-ed yesterday on these issues.

We hear from free the car you -- we hear from fareed zakaria in "the washington post." making war increasingly rare, but some places stand in opposition.

You take issue with fareed.

I like fareed but i think in the u.s. we have seen a demonization of putin.

He is easy to caricature.

It is difficult to talk about the russians as a 19th-century power because they have responded by taking crimea, maturity russian and -- majority russian.

As opposed to u.s. invasion of iraq.

Compare and contrast ian bremmer's g-zero world with fareed zakaria's post-american world.

Fareed's presumption in this piece is that u.s. values are still the universal value.

And are transportable.

The american support for democracy and for liberties and support for sovereignty is something other countries are going to stand up for.

He would believe that yesterday the russians are becoming more isolated because the yuan general assembly voted to condemn the russians and the crimean annexation.

Not a single bric, major emerging market, voted with the u.s. on this.

Can we get -- can we get back to optimism and have a public policy that is an optimistic american foreign policy?

The u.s. can, only if we go small.

If we claim the international community is supporting us, we will get in trouble.

The g-7 is a smaller group of like-minded countries but it is not global.

When we pretend that american exceptionalism applies to countries like china, india, or russia, too large to isolate, we get in trouble.

This is the difference between my and fareed's worldview on this issue.

Ian bremmer of eurasia group.

With the tragedy of malaysia airlines, we dip into the finances of the air carrier.

Malaysian airlines's financials.

Good morning, it is "bloomberg surveillance." ? good morning, everyone.

"bloomberg surveillance," i am tom keene.

Our guest host -- ian bremmer of eurasia group and michael fertik with reputation.com.

Smart discussion being had this morning.

Let's go to a smart set of top headlines with adam johnson.

The search area for the missing malaysia airlines jet has shifted to the northeast after radar data shows the plane was traveling faster than estimated and traveled a short distance than previously thought.

The new areas closer to land, allowing planes to spend more time searching for the aircraft.

A milestone for obama care, more than 6 million people signed up for health plans under the affordable care act, meeting the estimate from the cbo.

The program has seen a surge of applicants ahead of the march 31 deadline for americans to start the enrollment process.

New jersey governor chris christie says decisions his former aides made continue to battle him.

He had an interview with abc news' diane sawyer.

When things were reported, i said this could not possibly be true, who would do something like that?

Sometimes people do inexplicably stupid things.

That is what makes it so hard as the guy in charge.

None of it made any sense to me.

To some extent, it still does not.

The interview aired the same day report found the governor had no knowledge of the bridge closures.

Those are your top headlines.

Nickel verdict -- michael fertik, your call?

He has got to keep marching to his own drummer.

He hired a serious law firm to do this report.

They are legit?

Something still smells funny about this.

This will continue, i don't think he knew as little he reports to have known.

What is your advice?

He is paying you $10,000 an hour?

Gobi governor, focus on being governor and do your best.

Does that mean you will stop talking about the bridge and move on?

No, you have to start throwing people who work for you on the bus.

You move on and focus on the positive.

I don't think people like the fact this is a loyal new jersey guy throwing loyal new jersey people under the bus.

How do you repair vladimir putin's reputation?

Resign, live in siberia.

Dr.

zhivago.

His reputation is fine in russia.

This is a really important point.

They like him in russia.

This plays well, ukraine is their territory and has been for 300 years, that is their perspective.

We have no sense of the way they perceive it.

I will rip up the script and go back to 1954. until nikita khrushchev would like a ukrainian -- gave crimea to ukraine.

The majority is rus sian.

95% of commands voted.

Mode of a -- moldova-- are you worried?

No, i am worried that russians feel the need to change the government.

Yanukovych just gave another press conference in rostov in russia.

They are not giving up.

Are the troops on the border going to go in?

Was the probability?

Close to 50-50. eastern ukraine or the entire thing?

Eastern ukraine.

The russians intend to change the government.

They can do it with cash, political pressure, or militarily.

Know when to refer in crimea -- no one to root for in crimea.

My morning rest read is about how putin may save the eurozone.

We have bulgaria, lithuania, poland, latvia, hungary, lithuania, czech republic in line to join the eurozone.

The western-u.s. alliance looks fragile.

There is a lot more reason for the europeans to hang together security wise vis-a®-vis russia.

There is no reason for them to hang together economically vis-a®-vis russia.

It is where they get energy and the banks are doing business.

That is a serious challenge.

Aegon, explained images we have seen of the chinese leadership and how they dovetail with russia at this time.

We have the legacy of the 1950's and the 1960's and the ominous secret relationship.

Was the actual tenor?

When obama and others chose not to go to the sochi olympics, xi jinping was there.

No question --xi jinping did not vote with the russians at the security council, but they abstained when everyone else voted with the u.s. is this a new axid?s? if the russians go into ukraine all the way and american sanctions become iran level sanctions, they likely reactions from russia will be to cut a deal with china.

Is it easy for them to shift the hydrocarbon flow from western russia over to europe and reverse it back over to china?

It might not be easy but increasingly the russians do not have a choice and they understand that.

One of the announcements made at g-7 in europe was the creation of an emergency session of the g-7 countries to talk about energy security.

It means diversification away from russia.

You think they are not paying attention to that in the kremlin?

Ian bremmer and michael fertik.

G.m. trying to repair its reputation.

Speaking with the newly appointed vehicle safety head after this.

? in washington dc on this quiet morning.

The president is abroad, that barely describes a trip from italy to riyadh.

The flight into riyadh, stunning how stark it is into the city.

Dusgty, something to see.

The president visiting saudi arabia.

Headlines with cvs moments ago talking about russia and the cold war.

A headline from another time and place.

This is "bloomberg surveillance," good morning.

Some top headlines -- some company news.

Cbs's billboard business is going public.

Cbs outdoor will go public after pricing at the top of the range, raising $560 million.

Cbs plans to buy smaller rivals.

J sac capital asking a federal judge to approve its insider trading settlement with the government.

A lawyer with steve cohen said sac is "deeply remorseful" for the unlawful actions.

Stephen cohen now owns 5.2% of zynga.

Cohen's stake is worth about 173 lane dollars.

Shares of zynga have gained this year.

Tom, you are shaking your head.

The middle child was deeply remorseful last night, asking for money.

[laughter] what is that, deeply remorseful?

$1.9 million.

Bikes a lesson for all of us.

In a similar vein but on a serious note -- malaysia airlines.

We know it for the missing plane.

It is the third worst performing airline in the world.

Operating margins of -4%. seth kaplan joins us, 239 people dead with a plain missing, how can the airline survive?

Probably on a government cash infusion.

This is a majority-owned government airline.

Over the years, we have seen airlines in a situation like this that were teetering anyway, on the brink.

Twa 800 and swissair 111. those all happened a couple years before those airlines either want away or essentially did.

Twa was acquired by american.

Air france survived fine.

That is different, air france was a stronger airline.

Malaysia air, one of the fastest growing in the world and growing at 70% average seats per mile.

-- at 17% average seats per mile.

Growing rapidly and am profitably.

This is a fixed cost industry.

You have expensive airplanes is so you might as well fly them as much as possible.

Jet fuel has been a variable cost.

Let me ask you -- if you have family members, do they fly major role developed economy carriers?

After what we saw and san francisco with asiana or malaysia air, can i have equal confidence in second-tier asian airlines?

These airlines have very good safety records -- malaysia airlines had a good safety record.

Do not equate financial problems with what is happened.

A half decade ago, half the u.s. industry was bankrupt and they are perfectly safe to fly.

I would fly it, i would not invest in it.

Michael fertik, ceo of reputation.com, what do you tell the man who is running malaysia airlines?

You distance yourself from the malaysian government.

They were stalling the revelations about what happened, was very confused about what the military radar version of the civilian surveillance indicated.

They did not cooperate well with regional or global powers and did not reveal information, they changed the story a lot.

If you are the ceo of this airline you have to say we stand on our own two feet and we are not the government.

Seth kaplan, thank you so much.

Do something about security in atlanta, the lines are way too long.

Seth kaplan with airline weekly.

Some important data coming up this morning at 8:30, personal income and spending.

Futures higher by almost 5 points.

10 year yield moving up, reflecting a drop in bond prices.

2.689%. zero study against the dollar, 1.3731. crude oil up, 101.68. data coming up, personal income and personal spending for february at 8:30. good morning, "bloomberg surveillance," all our interviews out on bloomberg radio plus and bloomberg tv plus.

Really good work at bloomberg.com as well.

I am tom keene, with me as scarlet fu and adam johnson.

Ian bremmer from eurasia group and michael fertik from reputation.com.

G.m. ceo mary barra trying to reassure customers and investors after the recall and has created a new position for the sole purpose of improving gm's safety record.

She has made jeff boyer to the role.

He joins us now by phone from detroit.

Congratulations on the position.

I want to ask you about the distinction of gm's safety culture.

You have been there since 1976, 40 years at the company.

People are focusing on what you will change, i want to know what you will keep?

We are renewing our commitment to the safety, satisfaction, and peace of mind of customers.

We are resolving the ignition switch issue and taking full accountability to the problems that led to this recall.

What about processes?

Some talk that processes were subpar in 2006 when gm switched to the new design of the ignition switch.

The engineers did not assign a new part number.

There was reportedly little documentation.

The processes are going to be scrutinized.

First of all, we asked our outside investigators to look into that because we do not fully understand all the facts of the matter.

They can do a good job understanding those at a very detailed level.

It is important that we understand the facts so we can take the appropriate actions and resolve the issues.

Identify the processes that need to be tightened up.

I love your track record.

Back to 1976. as simple as this -- what is your dialogue as the engineer's czar with your lawyers.

The conversation between the lawyers and the engineer?

What i would rather focus on and what my activities are focused on everyday is to drive consistency and transparency across our vehicle safety activities globally.

It is focused around safety and reliability of gm vehicles.

We want to make sure we are taking care of the customers involved in the recall.

Making sure their vehicles are fixed properly and we get the information to them that they need.

Arentn't i believing that these problems occurred years ago?

They do not involve the present cars?

Once again, we need to have the benefit of the outside investigation to go back and look at all the facts of the matter and understand.

We need to learn from this, get better, and move forward.

Admittedly a tough question -- you have been of the company for decades.

What new can someone like you bring to a reputation that is in a tough spot right now?

First and foremost, if you look at our vehicles, we have a strong safety record.

Our vehicles enjoy the recommendation of five stars, highway insurance institute top safety picks, and consumer reports best buy.

We need to signify our process and make the processes more visible and manageable so that when issues are identified we can resolve them quickly and take appropriate action with customers.

Jeff boyer, thank you for joining us.

Gm's global vehicle safety vice president.

Michael fertik, gm has a reputation to repair.

He has got to toe the party lines.

As to what gm is doing, they are doing a lot of right things.

They hired a senior guy who is taking it seriously and is very sober about this.

He referenced the third-party audit they are doing.

The third-party analysis, outside investigation.

Make it clean and real with an outside investigation.

That is the right way -- i suggest mr.

Boyer conflated their present stance with the reality that the cars are from decades ago.

They do not know exactly where things stand right now, it is a moving target.

That is our twitter question of the day, whose reputation took the biggest hit this week?

Gm, citi, king, obama.

Tweet us @bsurveillance.

? good morning, "bloomberg surveillance." i am tom keene.

With me is scarlet fu and adam johnson.

Adam has top headlines.

Connecticut governor signs legislation to make the state's minimum wage the highest in the country, $10.10 an hour by 2017, signing it in the same restaurant he and president obama died in several weeks ago discussing the minimum wage.

Harvard opens a little bit more, excepting five percent of applicants up from last year a patch -- harvard opens a little bit more.

Accepting 5.9%, up from last year's 5.8%. they are all lacrosse players and hockey players.

I was a rower at harvard.

I tried rolling at princeton.

Detroit tigers and miguel cabrera agreed to a 10 year, 292 million dollar contract according to espn.

Cabrera is a two-time all-american and lee m.v.p.. this would surpass the contract the yankees gave alex rodriguez, the richest mlb contract.

A-rdood is an asset for the yankees.

He is a costly asset.

Turco we are surrounded by red sox fans.

Cabrera is the superstar, it is all about -- everything, it is all about a few key players.

Whether it is a firm or whatever.

It has default fewer and fewer.

When i talk to guys starting businesses, they say how do i recruit?

I say they key thing is the first engineer you get, get a rockstar.

Get a miguel cabrera.

Chicago fed's charge evidence -- chicago fed president spoke with verybetty liu in hong kong talking about rates lifting.

Mid-2015 or even later.

I think -- for rates to begin to rise.

I frankly think it would be appropriate to hold longer than that, it will depend on the data and how quickly inflation starts moving up to our target.

Everyone trying to dial back what janet yellen said about interest rates rising in about six months.

Oecd with a gauze of a weaker global economy.

Ian bremmer to the geopolitical tensions, continued violence in egypt.

How is the linkage of tepid economic growth to your geopolitical world?

Yellen might have to dial back if we have tensions that grow to the extent that they start whacking emerging markets.

Maybe it has us -- it has an effect on the u.s. yellen has been a standout of relatively weak obama appointments.

You should be happy with her performance.

Ian bremmer and michael fertik, red sox fans.

Coming up, d-day for obamacare.

The deadline to enroll in private health care.

? if you are in cash, you are a loser.

On monday, adam parker, chief u.s. equities strategist at morgan stanley.

He has been preaching you are an idiot in cash.

Look for that monday, the final day of the first quarter of 2014. scarlet?

This is "bloomberg surveillance," here with ian bremmer of the eurasia group and author of "every nation for itself here, also, michael fertik of re putation.com.

Blackberry's good news and bad news.

Reporting a loss of eight cents per share, much narrow were then analysts'anticipated $.57 defi cit.

Blackberry's cast position sank.

Uber expanding to hong kong, beijing, and jakarta this year.

An effort by uber to tap into growing demand from wealthy travelers.

A three-day trial starts in hong kong today.

Sony replaces its cfo, masaru kato being moved.

Kenichiro yoshido will be taking over as cfo for now.

And a lot of interesting geopolitical and technology abates.

Turkey blocked youtube it week after it tried to ban twitter.

Ian bremmer, president of eurasia group michael fertik of reputation.com.

Set of the geopolitics right now.

What is mr.

Erdogan trying to do in istanbul and ankara?

He has elections coming up and he has lost a lot of support.

There has been such divisiveness, creeping authoritarianism from erdogan.

The economy is not doing well and all the rest.

The number we had wikileaks in the u.s.? when you found out what was going on, we actually run a pretty tight ship and the state department.

Wikileaks is hitting turkey.

All this information is coming out, being forced out in places like youtube and twitter.

Unlike the u.s., the turks cannot handle that level of transparency and erdogan is trying to crush it.

Michael, the rules in mrdr.

Bremmer's world have ever changed.

Unlike the uae or saudi or russia or bahrain, turkey does not have the infrastructure or techn

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

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