Putin Redraws Atlas: Surveillance (03/19)

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March 19 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Bill Harris, Matthew Campbell, Yukari Iwatani, Cass Sunstein, Mike McKee, and Judd Gregg. (Source: Bloomberg)

The alice is redrawn as putin will not back down.

Cameron of the united kingdom, "additional measures to punish russia." janet yellen will hold a press conference.

The shadow of steve jobs hangs over apple's haunted empire.

Good morning, this is "bloomberg surveillance." we're live from our world headquarters in new york.

I am tom keene joined with scarlet fu and adam johnson.

Good morning.

Overnight, u.k. and a plummet rate held steady at 7.2%, reinforcing the bank of england's tryst rate to record low.

-- interest rates at a record low.

Rough recovery ahead of a sales tax increase scheduled for april.

In china, starting trading between the yuan new zealand dollar, currency and global trade is a big deal.

They're trying to make the yuan a global currency.

Good luck.

Research shows it is a lot harder to do.

Easy to talk about, harder to get people to buy into it.

Economic data in the u.s., 7:00, we have the weekly mortgage application.

That is a volatile number.

8:30, the account balance.

2:00, fomc followed by janet yellen's news conference.

We will carry that live.

That is a very big deal.

This doesn't paint a malaysia 370. we will talk about that in a bit.

Alicia central bank cut their gdp forecast.

-- malaysia central bank cut their gdp forecast.

We have been supplying so much liquidity to world markets, that has helped other economies, malaysia is an example.

I would argue the central bank is in considering any of that given all of the turmoil.

They basically did not acknowledge it at the last meeting.

They said, deal with it.

On your own.

Earnings before the bell, fedex is the one you want to watch.

After the bell, guess.

Stocks, bonds, currencies, commodities.

Not much going on.

On to the second screen.

Currency markets.

We will get to that in a moment.

Ruble-rally, sort of.

Even the australian dollar putting on a bit, a stronger aussie dollar.

Putin rally of the ruble, here's the weaken russian ruble.

A one-day little blip of a stronger ruble off of that -- not a press conference or news conference, but a stage.

It was a speech.

A very dramatic setting.

Old russia kind of setting with high ceilings and chandeliers and the guys opening the golden doors with a white gloves.

There they are and in walks el presidente.

That's what you do.

And then they shoo me out the door.

Scarlet fu gets us started -- i'm going to guess, ukraine?

All the pomp and circumstance taking place in russia yesterday.

There's a big pep rally.

Ukraine sees a somewhat differently.

The new government calls putin a threat to international security.

Leaders will be meeting in brussels to decide if they go to stage three of sanctions.

I am taken back by the press conference of 10 or so days ago, putin slumped in a chair all by himself -- and providing.

Totally improvising.

Compared to the fit and finish we've seen the last 48 hours.

There were thousands of russian troops on ukrainian soil.

We spoke yesterday with the peterson institute and agreed you have to look for layers of new sanctions to come upon.

Yes, right now it is 11 people effectively post to putin putting pressure internally.

Some of them have said they see that as a confirmation of their own support of russia.

That is something we will continue to monitor.

Investors are not too worried about it.

Our second front-page story, they are mental development on the missing malaysia airline flight.

There been many theories.

The one that caught my interest in "the new york post," -- people say they saw low-flying jet the day the plane went missing.

Apparently -- where is the confirmation?

It had the logo at 6:30 morning.

They say there's no credible information to back that up.

They have shrunk it based on the amount of fuel they had.

But there are no answers.

Just conjecture and conspiracy theories.

We will continue to cover this.

Authorities are looking into the flight simulator that they removed from the home of the pilot.

They say some files have been deleted from it.

And, by the way -- there you go.

They just said the plane setting the maldives is not true.

So go seconds proceed very.

Nevertheless, it shows an example of where we are.

People saying they spotted the jet remarkably similar.

Why do we buy into conspiracy theories?

Cass sunstein joins us.

Tweet us with your theories.

Jason morgan agreeing to buy its commodities unit.

Why do i care?

The deal could be announced today.

Pressing big banks to get out of the markets.

They think they're too much control and influence.

You cannot put more than 3.5% into proprietary trading.

It would only make sense that would get rid of this business.

Jpmorgan commodities effectively going to start up in switzerland.

Mark rich -- adam johnson, otherwise, very good.

In my previous life, i traded oil.

A very old, well-known company.

I can't talk, i've got a cold.

When i can't talk and have a cold, people go, yes!

That is our front-page story.

Is to wait until 7:00, and e-mails will come in.

Our guest host is a wonderful guest host in the 6:00 hour, l harris is a veteran of any number of financial technology working with personal capital.

We look today at oracle in the nonevent that was oracle earnings.

He is the former chief executive officer of paypal.

Do they all want to write code?

Yes.

The driving force in so congo and behind the programming.

They want to work for dropbox, facebook.

They don't want to work for oracle or apple, do they?

No i'm a that is her grandfather's tech company.

I want to rip up the script.

You have a shirt on that i love, love, love.

Look at the shirt that bill harris has on.

It is like a graph shirt.

At paypal in the early days, we were presenting to our board.

We had some graphs and charts and anything else.

Everybody wore a shirt like this.

We painted on the back of the shirt the graphs of our quarterly performance.

That is great.

Then we took the coat off, turn around, now is the presentation.

I wonder if the young folks in silicon valley where these kind of shirts?

No, t-shirts.

And goodies.

By morning must-read on the divide between the old and young from "the new york times" magazine -- i think it is true.

I think it is a bit of a problem for silicon valley in general.

These infrastructural -- hardware pieces, these are things that have made possible everything we are doing today.

But that is not where the action is.

In the meantime, we get more -- look at this.

$19 billion for 55-person company.

It is ridiculous.

But that is where the action is, where the money is, that is where young programmers want to be.

Bill harris with us.

We will get to his important discussion of paypal later in the hour.

Company news with scarlet fu.

Toyota up a one of the largest fines ever for an automaker, said to pay 1.2 billion dollars to settle an investigation into why some of its cars sped up without warning.

The sudden unintended acceleration issue led to the recall of 10 million vehicles.

The settlement to be announced as early as today.

The four series grant to giving bmw a boost.

The automaker says it will post to mitigate gains and profits this year thanks to that and other models.

Re-tax profit will top $11 billion that was posted last year.

Sales gains are coming from 16 new or refreshed models in the carmaker is forecasting the second half to be even stronger than the first.

Shares of microsoft hire and the premarket.

The shares jumped almost 4% yesterday to the highest since 2000. the rally triggered by reports microsoft will introduce a version of its office software for the apple ipad.

It could be as early as next week.

That is rich shattering.

If you can't beat them, join them.

Finally.

There is going to be a premium version available for subscription services.

Coming up, the u.s. and eu sanctions are not just impacting russian oligarchs.

Why london is devastated, next, on "bloomberg surveillance." ? good morning, "bloomberg surveillance." on market makers, the women of our headquarters.

Liev schreiber.

Partner of naomi watts.

In my immediate that i don't know who naomi watts is?

, on.

Friends with nicole kidman.

I know nicole kidman.

She a very good guitar player, right?

Nearly watts is a very good-looking lady.

But really?

Things you need to know from adam johnson.

Russian oligarchs.

There the main target.

Dealmakers in london stander lose out.

More than $180 billion of russian generated business is now at stake.

Matthew campbell joins us from london.

Wealthy russians have standout out across europe.

We know they have homes in switzerland, bank accounts there as well.

Sports teams across the continent.

Is this is london especially vulnerable?

London is not an exaggeration to say the business capital of russia.

When you have a lot of money, as a lot of these russian oligarchs do, you need to invest it.

You need to find lawyers, accountants, bankers to advise you.

And they have come to london.

They feel protected in the u.k. rather than in russia.

Specifically, what kind of this mess has been interrupted by the crisis in ukraine?

There have been a couple of initial public offerings that seemed to have been shelved.

One by a retailer which has put off its ipo.

Another the which is a pretty well known german retailer, was going to float its russian retail business.

Late yesterday, that was shelved.

Companies looking to come to the public markets, work that would largely be done in london, are saying, we're going to hold off.

We saw dave and karen 1 -- we saw david cameron.

Does he greet the oligarchs?

Well, this is a very complex relationship.

The british government is in a tough spot.

On the one hand, they don't want to jeopardize the city of london, which is an enormous driver of prince economy, the financial sector.

-- britain economy, the financial sector.

But they have to stand up to president putin.

It is a balancing act.

:, germany particular, have very significant trading relationships with russia and there will be cautious as well.

Do you get the sense when you're reporting and speaking to people that russians need the city of london more or does the city of london the these russian oligarchs and their business more?

Very good question.

It is a symbiotic relationship.

A term i can't say i coined.

London-grad.

On a whole, the russians in london more because there are not a lot of options for them for a place to service his enormous wealth.

They don't, for the most part, come to the u.s. largely because they don't like the irs much.

Russian speakers, they don't have the knowledge.

Unemployment is 7.2%, which is flat with the previous month.

This is part of the problem with britain as a whole, which is there really are two economies.

There is london and london being driven by the financial sector.

In the second part, there are big problems in the u.k.. traditionally, the country is been able to lead on the financial sector, which is such a dynamo.

What the russian crisis threatens, some of the work that comes in to that hub.

Thank you so much, matthew campbell from london.

Sticking with the british economy, the u.k. hopes it has found a way to deter counterfeiters.

The british are coming out with a new coin.

After the current model spend millions of fakes.

It is -- come on, it looks like bitcoin.

12 sided threepenny coin.

Good luck counterfeiting that.

Can i get this at costco?

No, you can't. what is the english equivalent?

That is based off the currency of king's landing.

That is a one pound coin?

Yes.

The pound will be made with cutting-edge british technology that will make it one of the most secure coins in the world.

I'm not sure i would call british technology cutting-edge.

Remember the lucas electrical system?

Isaac newton was the head of the meant.

It was so messed up, they brought in isaac newton to salvage the mint.

Queen elizabeth still on the pound.

When charles comes up, they want to change that.

King charles.

King adam i like the way it sounds.

Coming up, cass sunstein on his new book "conspiracy theories." our twitter question of the day -- midmorning, "bloomberg surveillance." michael mckee will join us in the 7:00 hour with his perspective as we eagerly await maybe fewer words, more words from janet yellen, 2:00 p.m. this afternoon.

We will give you perspective from smart guests.

Time for our morning must read.

Here's what he has to say about health care in the ncaa -- the president is going on espn tonight, presenting his final four bracket.

I understand why they're doing it.

It is a captive audience.

But isn't anything sacred?

Can't we just watch basketball?

Can't we just watch, don't "funny or die" without watching the president?

The president is drawing up the first pitch.

It is just an extension of that.

Fox college sports, pro sports -- your argument about not paying.

These guys are in school.

Are you kidding me?

No, i'm not kidding.

Exactly right.

Is nothing sacred?

Can we just play basketball and enjoy it?

Do we have to turn everything into a stage where we are taking partisan views?

Talking about the affordable care act the desperation to get going.

The affordable care act has to get more than the current, 4.2 million subscribers anyway, you have to get healthy people to pay for -- the healthy young people is key.

Speaking of companies that have a lot of work to do, apple in the tim cook era.

What is he doing to maintain its dominance in the tech industry?

? good morning, everyone.

"bloomberg surveillance." new york city.

I am tom keene.

The darkened empire state building.

There is new york city.

That is spectacular.

Good morning, everyone.

"bloomberg surveillance." a quick data check.

A pre-fed data check.

It means i can do it in 30 seconds.

No one wants to do -- get ahead of the announcement later this afternoon.

Microsoft shares are trading at their highest level.

The stock is up almost 4%. an office version for ipad will be unveiled.

This will come next week.

If they wanted to update to a premium version, that would require a prescription.

Cory johnson did that wonderful interview with steve ballmer.

Stock is probably up 30% from that point.

A lawyer and a salesman.

The earnings have grown 809 fold on microsoft -- eight or nine fold on microsoft.

Now it is 10, 11, 12 times earnings.

It is old tech, when it comes down to it.

It's take a deep dive into new tech.

Apple.

It has been 2.5 years since tim cook was named ceo.

The company rang up $171 billion in sales.

It is also clear that apple has lost some of its luster.

Before we get started, tim cook called the reporting in your book nonsense.

He dashed a lot of the things that you say.

He said the book fails to capture apple, steve jobs, or anyone in the company.

Are you pessimistic about apple's future?

I just think that apple is in a place where there caught between not wanting to -- wanting to stick to the way steve jobs -- steve jobs' vision of apple and saying that apple has not changed, when everything an apple has changed.

I do think it is struggling a little bit.

It is struggling a little bit.

Tim cook is the ceo.

A lot of people do not to know much -- know too much about him.

What can you tell us about the way he manages apple for the new era?

He is in operations executive.

Process, order, driving business as efficiently as possible.

You do get the flavor throughout the company.

You devote an entire chapter to clay christiansen and disruption.

Apple started to listen to its customers a decade ago and got in trouble.

Our they listening to much to the customers right now?

How much it is doing and what impact it will have is still too early to tell.

You do see a little bit of a rollback.

Give me a tangible example of where mr.

Cook and his team are failing versus the aesthetic and detail that steve jobs had.

What is a tangible example of failure?

The colored phones?

The iphone 5c certainly has not sold well.

I think the biggest issue is perception.

Steve jobs had a reality distortion field.

What i find interesting is your background.

Prior to covering apple, you also covered sony and its demise after its founder passed away.

What parallels do you see?

I think i would not draw direct parallels, but certainly a sony there was a lot of looking back at how things should and could have been.

The distinction here is critical -- the free cash flow of apple.

They are minting money.

That is what mr.

Jobs is supposed to do, mr.

Cook is supposed to do, right?

It holds itself to a higher standard of success than others.

To make insanely great products.

I think it is incredibly naiàve that they are minting money.

That is their standard of success and that is fine.

They can do things to drive their business toward more money or whatever.

They have never been about money.

They are about changing the world.

I think the original ipad was the last time that apple has wowed us.

It is about changing hearts and minds.

To realize the magnitude of cook posture alan it was necessary to -- cook's challenge it was necessary to understand the personalities on the team.

Apple is facing a lot of challenges as a big company.

The growth over the last couple of years is tremendous.

Without steve jobs, it makes the job that much harder.

Apple was a company that was synonymous with steve jobs.

The entire organization is built around this man and his strengths and weaknesses.

When you have somebody who is completely opposite at the helm with the same management team, things are thrown out of equilibrium.

I guessed is bill harris.

You know -- our guest is bill harris.

You know i think too about silicon valley.

What is the perception now?

I think people like tim cook.

The era of radical innovation at apple is over.

It is not necessarily over simply because steve is gone.

It is over because apple is a big company.

It is producing big profits.

Thick about what happened at microsoft.

The exact same thing.

Are you saying that once you get big you cannot innovate?

Yes.

What about corning?

That is innovation.

Corning is innovation.

I will grant you the microsoft issue.

Within the reporting on the haunted empire, is that the ultimate risk that the ballmer- ize apple computer?

Yes.

And they need to decide whether or not they are ok with that.

Who do you think is the biggest risk taker in apple right now?

Good question.

That is my question.

Have they left?

I can see anybody and that is part of my question about apple.

Steve jobs was the biggest risk taker and he took all of the air out of the room.

To your credit and in a new york post article this morning, you say mr.

Cook is doing a good job.

What is your specific criticism if you say at the same time that he is doing a good executive job?

It is not a criticism as much as he is completely opposite of steve jobs running the place.

If there is one, it is that i wish he would paint a post steve jobs vision.

The idea that apple has not changed is not convincing.

Can the iphone 6 do it?

I -- come on.

I have an iphone five.

The problem with the iphone is that all of the improvements are incremental.

I think phones are good enough for most people.

I love my iphone 5 s. who is the biggest risk taker in silicon valley overall?

I would think elon musk.

Elon musk is going awaty from what everyone else is doing.

Social media -- he is going back to hardware and going outside traditional tech arenas to do things absolutely brand-new.

There was a report that he had a conversation with apple.

Speculation was that maybe apple is going to make a car.

We will see.

Thank you so much.

The author of "haunted empire." coming up on "bloomberg surveillance," janet yellen.

We will discuss specifically how long the fed statements have gotten.

That is coming up next.

? good morning, everyone.

"bloomberg surveillance." adam johnson has our special top headlines.

He will say them through throat lozenges.

Thank you for coming in.

My pleasure to be here.

I can almost talk.

Hundreds of students stormed the legislature in taiwan to protest a trade deal.

The agreement was signed last june and still needs to be formally approved.

The students say they will occupy the legislature until the legislature agrees to go back on the pact.

Amazing how many protests there are around the world.

A leak in an astro gas pipeline near the -- in the natural gas pipeline near the new york building blast.

8 people were killed in that blast which leveled two buildings.

The yankees-red sox training game was interrupted by a swarm of bees.

Look at that.

Go get them, guys.

A-rod is not there.

He is praying raid -- springay ing raid.

They got their best men on it.

All of this was given an opportunity to let you know that the yankees topped the red sox.

8-1 was the final.

There you have it.

Those are your top headlines.

Sore loser.

Spring training.

How about a grapefruit single best chart?

Are single best chart is on the fed.

The official policy statement has gotten wordier and more long-winded in discussing its intentions.

As it has grown in length, so to have the number of assets on the fed balance sheet.

This is from credit suisse.

That is an awesome chart.

The number of words against the balance sheet.

Both have taken a turn higher.

Correlation, not causation.

I was talking about this exact topic six years ago.

There are verbal to of nast x going on trying to make clear the intention on guidance -- verbal gymnastics going on trying to make clear the intention on guidance.

Explaining.

The morning must-read.

We give you three ideas through the morning of what we see in the press and research notes.

Here is my morning must-read.

Philippe hildenbrand.

Now with blackrock.

That is the tension today.

Not this meeting.

When do we see that move?

What kind of signs this janet yellen drop in the way of normalizing interest rates?

Most of the speeches, she really forces on the challenges of a job economy and what the fed can't do about the job economy.

She is a labor economist.

Like so many.

The dual mandate seems to be shifting away from the unemployment target.

It seems to be shifting to the inflation argument, you have to get it about 2%. bill harris, how much attention to people in silicon valley pay attention -- silicon valley to the federal reserve?

Not much.

Why is that?

Money is actually not free, it is just highly available.

The returns that venture capital groups are looking for an tech investments -- it is double digits.

It is often 25% or 30%. that is the target they are looking for.

By the way, just to clarify, venture capital on an annual basis -- 25%, year after year after year?

That is what they are looking for, yes.

No wonder all the money is going to whatsapp.

Where else can you get that growth?

Exactly.

Many of the investments just bomb completely.

They have to average that out.

The best venture capital groups do total roi-based double-digit returns.

It sounds great compared to the policy.

Tune into the special coverage of the fed rate decisions this afternoon.

And janet yellen's first news conference at fed chair.

That is at 2:00 p.m. eastern.

Coming up, we will talk about paypal and whether ebay should spin it off or whether it should listen to carl icahn.

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

Let's get you company news from the files of "bloomberg west." the new york stock exchange is in the lead to win the listing for alibaba's ipo.

It has indicated that it prefers the nyse for the listing.

Ali baba has said it decided to list its shares in the u.s. rather than hong kong.

Google is bringing android software to smart watches.

The watch will let you ask questions and give you answers.

That is good for you, tom.

The google watches are scheduled to be available later this year.

We know what we are getting tom.

Oracle falling short of profit estimates.

$.68 per share.

$9.3 billion below estimates.

They're facing tougher competition's from other rivals that are selling cloud-based software programs.

That is the company news.

A quiet data screen.

10 year yield.

This is serious if you care about technology.

Carl icahn wants to pry paypal away from ebay.

He suggests that shareholders will see an immediate gain.

Bill harris is the former ceo of paypal.

Carl icahn's argument has merit and then there is another side to the story.

Bill harris, honored to have you here.

How wrong is carl icahn?

I think he is wrong because there are tremendous synergies between ebay and paypal.

So much of paypal's business is on ebay.

Back in 1999 when we started, it was essentially a person-to-person payment system, but it was not.

It was 95% being able to buy things on ebay.

That is fine, but as mr.

Carl icahn writes -- do they have to be more responsible and start deploying more cash to shareholders?

Yes, i think that makes a lot of sense.

But you do not do that by breaking up the company's. they have too many things that are linked.

There has been a big technology push over at paypal.

They were very active last year, adding 58 products.

Rethinking mobile payments, simple fine transactions for small businesses.

Isn't this a sign that ebay is allowing paypal to grow organically and that's it is a good fit?

Yes.

And they need to do this.

The move from desktop to mobile is a revolution that is sweeping the entire tech industry.

They have been slow to jump on that.

But i think they are doing that now.

We have to educate everybody, including me.

I look at paypal as nothing more than an easy way to do ebay.

It is more now, right?

You do not have to necessarily be involved with ebay.

I can get money to you on paypal.

I don't know that.

My bar tab?

Exactly.

[laughter] t-mobile is trying to do the same thing in the t-mobile network.

That is what the company is doing.

This is where it is going.

Two carl icahn's point, why is it that you cannot have separate companies, paypal, ebay, they agree to do business with one another and then each with its own valuation?

Paypal presumably more.

What is wrong with that logic?

Two major companies agreeing to do business together for the long term does not work.

Why not?

Joint ventures.

You ran paypal.

You created it because you needed a way to make transactions happen on ebay.

Why can't you have those two together that are linked?

Creating long-term cooperative ventures between two large institutions with their own financials and directives just is not a stable long-term formula.

Paypal has a tremendous opportunity to become the online payment system that really threatens to be the next-generation visa.

Absolutely.

Pulling it apart from ebay, which is where they still get a large portion of their direct revenue, is not the right thing.

If carl icahn went to hbs and give a speech, would he get the respect in a lecture hall?

I don't think so.

Why not?

The biggest reason is that he is always talking about doing things in the interest of shareholders.

In fact, he is doing tings in the interest of his own pocket.

He is a shareholder.

Yes.

But he is interested in his shareholdings, as opposed to the shareholdings of others.

I will go with that, but i don't understand why silicon valley has a different rulebook on use of cash.

They have to keep a huge amount, so does ford and gm.

You just said that carl icahn can jumpstart the idea that ebay and paypal employ more cash to shareholders.

Yes.

It is a public good.

Across technology.

-- across technology, there is too much retention of cash.

Particularly, the old-line companies who were sitting there with billions of dollars of cash on their balance sheets who don't need them.

Those should be distributed.

What would you say to john donahoe, the ceo of ebay?

I would say, makes a business work.

That is the biggest way to fend off someone like carl icahn.

Is he there?

No.

paypal is starting to become aggressive outside of ebay, but not enough.

Ebay itself is struggling.

Bill harris, former ceo of paypal and former ceo of intuit.

I will do it for report right now.

It is a stronger ruble.

36.10 one dollar-ruble.

I would watch euro-dollar as well.

Australian dollar doing better.

In the next hour, the former goodman a straight of a regulatory affairs at the white house will be joining us.

? this is "bloomberg surveillance." the atlas is a redrawn and putin will not back down.

It is fed day.

Janet yellen holds her first press conference.

It is always the friends that let you down.

Republicans disappoint wall street.

Good morning, everyone.

This is "bloomberg surveillance ." it is wednesday, march 19. i am tom keene.

Joining me, scarlet fu and adam johnson.

Our guest host this hour is cass sunstein.

We will look at his new book on conspiracy theories.

Time for our morning brief.

Overnight, the u.k. unemployment rate held steady.

7.2%. japan's trade deficit exceeded analysts estimates and february.

-- in february.

China, direct trading between the yuan and new zealand.

As far as economic data goes, we just got this moment ago.

The weekly mortgage applications that were down 1.2% last week.

It is a volatile number.

Down two weeks in a row.

2:00 p.m. eastern time, the fomc rate decision -- this is a big deal.

We will take that live right here on bloomberg television.

Make sure you tune into our special coverage right here on "bottom line." what do you have, scarlet?

We need to begin with jpmorgan.

When it comes to jpmorgan, the bank is selling its commodities trading business.

It is being bought for $3.7 billion.

This is according to people with knowledge of the matter.

This is coming straight from regulators.

Deutsche bank plans to cut more jobs at its investment bank.

The reductions are to take place at the investment banking business.

Executives are also considering job cuts in corporate finance, capital markets, and trading business.

Toyota will pay one of the largest fines ever for an automaker.

It is set to pay 1.2 billion dollars to settle an investigation into why some of its cars sped up without warning.

The unintended acceleration led to the recall of 10 million vehicles.

A touch of gm right now.

We have done a number of interviews.

Citigroup does not equate the gm news over the toyota news.

They thought that toyota -- that toyota was much worse.

Nobody escapes from this.

These are production issues.

Let's get to the fed day.

This afternoon.

Few, several, many.

The fed is using many more words than five years ago.

Janet yellen, possibly she will shift and simply say less.

Michael mckee is our chief economics correspondent.

He gets paid by the syllable.

This is going to be fascinating.

Do you presume she will say less?

I don't think so.

She is probably going to be about the same as she was up on capitol hill.

Extremely accommodating, extremely expensive in terms of what she says.

The interesting thing will be in the statement this time.

The fed is going to do a recall this time.

It has a phrase in their that they have had since december of 2012. the 6.5% threshold.

The market presumes that will be pulled out.

Just like the gm equipment, that is not working anymore.

We are at 6.7%. the unemployment rate came down much faster than they thought.

Is this a victory lap for evidence of chicago and boston -- for chicago and boston?

They can look back and say maybe they accomplished something.

You can make the argument that that help hold down interest rates.

Now we go back to being vague.

What is the fed really thinking?

Now these qualitative measures of the employment rate.

Being vague meaning having a lengthier and wordier statement.

The number of words and the fed's growing balance sheet.

Do you come away with a clear understanding of what they intend?

I do, but i do this for a living.

The question is, do investors?

This is the most recent fed statement.

What is that 0.9 font?

Mr.

mckie is holdingee is hoping up a full page -- holding up a full page.

This is the original from mr.

Alan greenspan.

That is a quarter of a page.

832 words.

All you are doing is looking at the first line and looking for keywords.

What would you ask janet yellen?

How are they going to munich it that they are ready to change rates?

-- to communicate that they are ready to change rates?

How are we going to know that?

That is what everyone in washington is wanting to know.

You could look at the date guidance, but now what do we do?

How do we know?

I can't concentrate.

Are you really going to spring training?

Are you really?

Later this week, we are going to do a story on communities building stadiums to attract people.

I am not on speaking terms with you.

[laughter] do it now before rates go up.

To make him even more angry, we are going to go down and see the red sox new spring training.

You are absolutely killing me.

Bring in cass sunstein.

Cass sunstein is our guest host for the hour.

As the federal reserve a conspiracy theory?

I don't think so.

It is a long-standing institution that is designed to stabilize the economy.

Tell that to some members of congress.

Did they take on too much of a legal burden in the financial crisis?

I would not criticize them.

I think it is the case that the economy is doing better now.

It is hard to remember that just a few years ago we were on the verge of a terrible economic situation.

We were in the midst of something awful and it could have gotten worse.

The fed played a significant role in helping.

Give us a clinic on how the fed fits into executive, legislative, and judicial.

When do they fit in?

The original idea of the fed is that the fed is an independent institution, which means that it is not subject to congress, except that it works under the law congress enacts, but it is an independent body pursuant to those laws.

What makes it unusual is that the president does not have oversight of the fed.

The president has oversight of the department of the treasury, environmental protection agency.

Who has oversight of janet yellen?

She is principally the person who has oversight over janet yellen.

Congress can always change the law.

Janet yellen is subject to the law.

What we are really talking about is an off-balance-sheet entity that now has the largest balance sheet in the world.

Is there an inconsistency there legally?

No.

it is constitutional to have an independent entity.

There is the necessary and proper clause.

It gives congress the authority to do a lot of things to make sure the constitution works.

The fed's constitutionality is well-established.

It is an anomaly and a lot of constitutional scholars are nervous.

The federal trade to -- commission is another.

The fed stance on solid constitutional ground.

You do not want to politicize decisions about the money supply.

I want to bring in michael mckee.

For more use it with your experience, how independent is the fed versus when president truman was in office?

There was a constant concern, but the fed seems to be completely independent.

You can't find any evidence that they have bowed to political pressure in any way.

It does not look like they are doing that.

The fed is also a self financing agency.

It is one of the few that makes its own money and pays its own way.

It returns money to the treasury.

They try to do that at the white house and look where that got them.

Today is the federal reserve's decision on interest rates.

That comes out at 2:00 p.m. you will want to stay tuned to bloomberg television for the full coverage of the announcement and janet yellen's first news conference as the fed chair.

That will take place on "bottom line" today.

I want to talk about what is happening in the u.k. they figured out a new way to deter counterfeiters.

The british are coming out with a new one ppound coin.

It is modeled on the old 12 sided threepenny coin.

The pound will be made with cutting edge british technology that will make it one of the most secure coins in the world.

12 sides.

All sorts of different colors on it in metal.

What do you think of it?

I think they should have put the dragon lady from "game of thrones." she has had more to do with the british economy than the queen.

The croatian economy as well.

We will speak with the former new hampshire governor and senator judd gregg coming up.

On television and radio.

? good morning, everyone.

"bloomberg surveillance." this matters now to our guest host.

The conservatives hate him.

Cass sunstein.

What matters to him is from 1964. the new york times.

11 mark supreme court decision.

-- a landmark supreme court decision.

"the new york times" ran aman ad.

What is different about the fear then than the fears now?

We have a lot of fears about the economy, unemployment, the economic situation.

He don't have fears fortunately about violence of the same kind.

We do have fears of criminality.

There was some fear in the 1960's that the country was spiraling apart.

We are not in the midst of that.

What is the difference in the character of the supreme court now than in 1964? we have in terms of quality and horsepower, one of the top courts in history and we had that in the 1960's. the ideological disposition of the court is predominantly conservative.

The ideological disposition in 1964 was pretty liberal.

That is a major shift.

Would you presume that the selection of supreme court judges will be front and center in the midterm elections?

You know, politicians often talk about it.

Voters are not excited about the selection of new supreme court judges.

I don't expect it will be a huge issue in the midterms.

Who is justice brennan?

My father was an arch conservative.

He adored the guy.

Everybody loved justice brennan, at least as a person.

He was one of the most gracious, outgoing, nonjudgmental people you could ever meet.

People like tim across ideological lines.

He was a great listener.

Even though a lot of conservatives did not agree with his opinions, they tended to think that he listen to what daschle listened to what they had to say -- listened to what they had to say.

If you could speak to any american about the youth neatness of our judicial branch -- uniqueness of our judicial branch, what would you say about it?

There is the independence and power.

It makes it very unusual.

What we have is a court that genuinely stands apart from the other branches.

It is not subject to political will.

Cass sunstein with us.

He is a harvard research.

I went to the red carpet last night for the beginning of the fourth season of "game of thrones." all of that is coming up.

Winter is coming.

? good morning, everyone.

"bloomberg surveillance." cass sunstein of harvard law is with us today in support of celebration of conspiracy theories.

Let's get to top headlines.

Here is adam johnson.

Unemployment in the u.k. hold steady -- 7.2%. that is a drop from 7.4% during the previous three months.

It reinforces the case for keeping interest rates at a record low.

Japan's pray deficit -- trade deficit narrowed, but it is still larger than forecast.

It had a record the month before, but economists believe it was exaggerated.

Japan's exports rose 9.8%. a lot of numbers.

In taiwan, hundreds of students stormed low legislature to predicate a trade deal -- protest a trade deal with china.

The deal needs to be formally approved.

The students say they will occupy the legislature and to lawmakers agree to review the trade pact thoroughly.

Those are your top headlines.

The background here is that the lawmakers have already been scuffling over this trade pact.

They fought for two days.

Punches were thrown.

Something like the bloomberg surveillance tv meetings.

Nice to know that the ways of washington are alive and well in the rest of the world.

Democrats want to tax wall street banks.

Republicans, the gop, i think they desire to tax the big banks as well.

Goldman sachs backs out of a republican confab.

Judd gregg is a former senator and governor of new hampshire.

The battle continues and continues.

We now have your republicans desiring to go after wall street.

How serious is this effort by the house ways and means?

I congratulate him for his major tax reform initiative.

Today, we have tax laws that encourage people to invest to avoid taxes.

The way you correct that is by doing what chairman camp is suggesting.

Take tax rates down.

On this specific issue, i think he has gone off on the wrong track.

If you think of government is always moving left, as i do, if you think of it as a train, how fast it moves left depends on the number of engines on the train.

This is a very insidious revenue source.

It gives legislators a great opportunity to spend a lot of money in the government in ways that they should not.

Think it is counterproductive to keeping the government under control to have this type of a tax.

We do it within a competitive mill you.

-- milieu.

If we have an income tax on the elite of wall street, do you think wall street would migrate to the city in london?

Hopefully, they would come to new hampshire where we have a lot better income tax and an attitude that we protect entrepreneurs and our refugee camp for entrepreneurs in new england.

A much better place than london, by the way.

That was a shameless plug by the former senator from new hampshire.

Moving the financial capital of the world to nashua.

Nashua, hannover, manchester.

Hanover is our enclave, like cambridge -- non-markets.

We will put that down to our friends over at dartmouth.

You said that the natural tendency of government is to move left.

Why do you phrase it that way?

Well, because it is true.

Democratic governments by nature move to the left to guess people are willing to vote for benefits which they don't necessarily have to pay for or somebody else pays for.

They are willing to get those benefits and are enthusiastic about getting those benefits.

People who are elected tend to give them those benefits and government grows.

It is historically true across the globe and in western cultures, especially.

We are certainly headed in the same track as europe.

There is no question that the country always moves left.

It is driven by revenue sources, in large part.

They are taxes.

You need to keep taxes visible so people understand what they are paying in taxes.

Judd gregg with us.

Cass sunstein with us him with his esteemed academic career.

You talk about conspiracy theories and dangerous ideas.

Is it a dangerous idea to avoid hanover, cambridge, chicago, san jose, stanford?

What he said precisely was that these are lands of nonmarket thought.

I have all the respect in the world for the senator, there is plenty of market thought at dartmouth fortunately, and harvard is full of market thought.

Not withstanding cliches in the public culture.

We need market thought.

The great universities are enthusiastic.

I should not be too hard on dartmouth.

I teach there myself.

I would point out that harvard's squash team did better than good at dartmouth.

Harvard was the national champion.

It is partly because of market forces.

That is true.

The basketball team is doing well.

What is the ask it -- broader overhaul of taxes?

I cannot imagine it is very high.

People understand this is a massive expansion in tax revenue.

You were looking at a sales tax.

This is not a good idea for our nation do have a national sales tax, whether directed at one industry or industries across the board.

I cannot believe -- i think dave camp has done a great job in putting forward the idea of tax reform.

Take rates down and eliminate exemptions.

This part i do not think has a lot of buyback.

Thank you so much.

Conspiracy theories surround us.

Just look at the investigation into the malaysian airlines fight -- flight 370. ? this is "bloomberg surveillance." i am scarlet fu.

Let's get you some company news.

Starting with jpmorgan.

Selling its commodities trading business.

The unit is being bought for $3.7 billion.

The sale comes as concerns rose that banks could control prices if they owned commodities as well as trade them.

Bmw says it will post significant gains in profit this year thanks to sales of its coupe and other models.

Sales gains are coming from 16 new or refreshed models.

They're forecasting the second half to be even stronger than the first.

Hess is teaming up with north dakota to find workers for the state.

It has 20,000 jobs to fill thanks to the oil boom.

Truck driver jobs to health care professionals.

Those are the company news headlines.

It is a tough place to work.

That is where the work is.

People like to work out there.

The weather up in north dakota.

I was talking to one guy -- he's charging $350 per night at what is essentially a best western.

We are brain-dead about the joys of living in north dakota.

People enjoy it.

Big sky country.

Back to nature.

90 miles.

It is a lot of guys.

I am with you.

You went out last night.

I went out last night.

I still have angst.

Why?

He was rubbing elbows with celebrities.

He mingled with the cast and crew of "game of thrones." season 4 premieres in april.

Take a look.

This is also about minting millions of dollars.

What is it like to work with the budget?

We facilitate the work.

It becomes a little bit greater every year.

More than anyone else on the show, i look at it, they did not write that.

He just did that.

You are not as clever as you think you are.

Still makes me more clever than you.

Do you write a lot of what you say?

I write nothing.

Plays, films.

What is going on here is a new movie -- television with big, big budgets.

How do you get rich?

On the backs of other people.

I have never seen him so animated.

He is so stoic.

It was great.

He single-handedly changed television and here he is doing it again.

Did you hang out with her?

I hung with everybody.

No.

it was great.

Hbo put on a show.

It was wonderfully done.

You got to see the first episode as well.

Only the president has been able to.

They gave me a fancy copy with a whole bunch of security numbers on it.

One of the major themes was the piracy and copyright.

Cass sunstein with us with harvard law.

This was front and center.

The value of american copyright and privacy.

There they are struggling with this with "game of thrones." it is a problem with producers, songwriters, in particular.

Their stuff gets pirated and they are just giving it to the public.

They have a raging debate, is it a good thing that this is pirated and then they go to other products.

It is the most pirated product of 2012 as well.

This is a big deal for the u.s., protecting our property.

It is our productivity.

It was a fun night, thanks to our team.

I hate to break this up, but we have breaking news from fedex.

Reporting profit.

Missing the consensus.

I'm not sure it is comparable.

That is a big mess.

They have cut full-year earnings share because of weather effects.

Analysts were looking for $6.90. they blamed unusually severe winter storms.

It affected operating income for the quarter by $125 million.

That comes on the heels of what we saw from ups.

I wonder about nominal gdp forward.

In other words, do you get a payback?

Do you make up for it in later quarters?

In terms of spending, $3.8 billion.

That is down $200 million from the prior forecast.

Fedex is holding back a little bit on its cash outlay.

Good morning, everyone.

"bloomberg surveillance." all of our digital media.

Including bloomberg radio plus.

Thank you for your many details -- e-mails.

I am tom keene.

With me, scarlet fu and adam johnson.

Our guest host is cass sunstein.

Of bloomberg view and harvard law.

His book is "conspiracy theories." that is exactly what i want to talk about.

I want to bring up an editorial that we saw yesterday in "the guardian." you wrote the book "conspiracy theories.

."/ we are talking about it?

What is it about them that are so convenient for people to latch onto?

When there is a terrible event, a tragedy, an economic downturn, people want to have some narrative that explains it.

The human mind does not like uncertainty and confusion.

Especially under circumstances of fear or outrage, the mind gravitates to conspiracy theories.

In the case of malaysia airlines flight 370, do we avoid connect and legitimate facts and such a way that they lead us to completely invalid conclusions?

There is logic and there is a sense that if you are stringing together a bunch of apparent clues, you may come up with something that is pretty bogus.

The result so a sense of agnosticism and patience.

That is sometimes justified in the face of uncertainty.

What is it about the current economic or political environment that encourage us to look at these conspiracy theories?

The economy has been struggling.

Under circumstances of distress, conspiracy theories are attractive.

The social media is really a breeding ground for conspiracy theories.

You can get across to a large number of people in an instant.

Because there are no editors?

Partly.

And partly because of the ease and speed of getting at thousands or millions of people.

It is interesting, the historical context here.

How you pull history into your analysis.

It is all of the hate mail about cass sunstein.

It is worth buying just for the back cover.

This is a quote from the book.

From "conspiracy theories." what are the conspiracy theories of liberals?

It is easy to say a conservative society goes to conspiracy theories.

Wall street.

Liberals, when they are in their bad funk, they think that their bad companies have conspired together.

The word plutocrat is often a giveaway that there is a conspiracy theory of on the way -- conspiracy theory on the way.

What would you like to convey?

A free press, as we discussed before, is central.

Freedom of speech.

People deserve protection in a free society.

To recognize that will some conspiracy theories are true, watergate really happened.

There is a lot of randomness and accidents and to suspect people of wrongdoing or conspiring often is more attractive than it is grounded.

You take a shot at fox news on your backs cover -- back cover.

What would you do to maintain a conservative voice but a smarter voice?

Fox news took shots at me.

I don't know that i take any at them, in particular.

I have a lot of respect for what they do there.

The conservative voices important in our society.

A little less bombast and a little more substance would be a good idea.

Does that mean strive less to connect the dots?

Connecting the dots is often good.

But if it is ridiculous and unfair, then it is a disservice to the american people.

I cannot say enough about the depth of the 220 four pages of "conspiracy theories." thank you.

Our twitter question of the day.

Why do we buy into conspiracy theories?

Tweed us.

-- tweaked us -- tweet ius.

? good morning, everyone.

The euro is ever stronger.

A mindset that really damage german exports.

This is "bloomberg surveillance ." with me, scarlet fu and adam johnson.

Adam has our top headlines.

South africa's president has been found guilty of misconduct.

He benefited materially from spending $21 million to upgrade his private home.

He has tonight authorizing the spending on what the government said were required security upgrades.

Investigators have found a leak in a natural gas pipeline news in new york buildings that were destroyed about a week ago in the explosion.

It failed a pressure test and had been removed for further testing.

8 people were killed in the blast, which leveled two buildings.

The yankees-red sox spring training game was interrupted by a swarm of bees and left field.

-- in left field.

The ballplayers passed the time.

The yankees topped the red sox, 8-1. those are your top headlines.

There was a gimmick couple of seasons ago -- a game a couple of seasons ago when they were swarmed by bees.

It is a field of grass.

There was a red sox story of 12 months ago that was of doom and gloom.

I must say that the same stories are being written about the new york yankees right now.

Yes, they are.

Don't leave out the kn icks and the giants adnnd the nets.

It would be nice to end derek jeter's final season with a world series when.

-- win.

I am taking a look at fedex.

They just reported results.

It looks at whether was a big problem.

Fred smith talks about when the weather was close to normal, the outlook was fine.

Winter weather significantly affected the third quarter.

That is what they are blaming.

We will have to wait until the conference call on the question-and-answer session.

We know that they're trying to overhaul their success segment.

There are a lot of moving parts.

Moving movers.

Will the be some sort of make up in later quarters?

Or is it money that is lost?

Verizon is going to buy -- this just came out.

Horizon is up.

We can show people where that is trading.

$18 last close yesterday.

The buyer is up big.

23%. vidara is a private company.

In ireland.

A quick mention of oracle which reported earnings yesterday.

Profit and sales missing estimates because of increased competition from other companies, especially in cloud computing.

We will be right back with cass sunstein." ? this is "bloomberg surveillance." i am scarlet fu.

Our guest host is cass sunstein.

Let's get you some company news from the files of "bloomberg west." the new york stock exchange is in the lead to win the listing for alibaba's ipo.

Alibaba said it had decided to list in the u.s. rather than in hong kong.

Google is bringing android software to smart watches.

You can ask questions and get answers.

You can monitor health and fitness.

The google launches are scheduled to be available later this year.

Oracle is falling short of profit estimates.

$.58 per share -- two cents below analyst estimates.

Oracle is facing tougher competition from sales force.com and other rivals.

That is today's company news.

Shares are moving down, too.

A challenge there in base technology.

The future of american legislators is at risk.

The american bar association has noted a trend in decreasing law school enrollment.

You once thought about applying to law school.

Some talk about it, others do it, others do it well.

Cass sunstein suns with us.

His new book is "conspiracy theories." it has changed.

Yes, all economic prospects are little darker than they were before the recession.

We are still in the midst of that.

How broad is the distinction between a top-tier law school and a second tier law school?

Is it ever wider?

I am not sure that it is wider now than it was.

The top-tier schools, the job prospects are good.

From the weaker schools, the job prospects are little more -- a little tougher.

The economy struggled.

When the economy struggles, the demand for any services, including legal services, just decreases.

I am interested about the makeup of the student body at law schools.

You hear about a lot of international students.

Are they going to law school and taking them back to their countries?

A lot of them are.

You can see terrific students who are coming from england and china and germany and france, who are getting american legal education, we are the gold standard, the best in the world, people appreciate that.

They go back to their world and are involved in international legal transactions.

Sometimes they stay here and work for american firms.

Competition.

Be on teaching people the law, how to think like a lawyer, what are the guiding principles that you are trying to teach your students right now?

The most important really is that law students will be working in law or elsewhere for decades.

They should both master what the current principles are and get a sense of how to make them better , how to make the country better, so the law changes as it confronts new problems and it has to adapt.

To give critical skills so that people cannot just recite the rules, but figure out how to make them better.

That is central.

Does there need a rethink of the curriculum?

There has been a lot of criticism.

I think probably if there was a law school class on xeroxing papers, it would be a very short class.

I think the current curriculum may be rethought, should be rethought in some respects, in terms of current economic necessities, but to think a little more abstractly and critically about the law, that is probably a good idea.

Could abraham lincoln go through the turn of academics in law school, corporate law, today?

Could an abraham lincoln exist today?

I think so.

I think he would do great in

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

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