Russia Enters Ukraine: Surveillance (03/03)

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March 3 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests include Eurasia Group President Ian Bremmer, Orient-Express Hotels President and CEO John Scott and Eurasia Group Director of Emerging Markets Strategy Alex Kliment. (Source: Bloomberg)

The secretary of state will travel to kiev as wretched dispatches additional force it to crimea.

Margaret's respond this morning.

U.s. equity futures are lower.

Let it go, let it go -- ellen tweets out a selfie and crashes twitter.

This is "bloomberg surveillance," monday, march 3. joining me is scarlet fu and cory johnson.

Big news from russia, they raised their key interest rates in response to the ruble falling.

150 bps, up to seven percent.

They were at an eight month low.

That's a big move.

China pmi, u.k. mortgage approvals, personal income and spending and i is a manufacturing -- we will see that later today.

Ism manufacturing.

Let's look at a data check.

Futures are -18. the 10 year yield has been all over the place which is a good barometer of linking the ukraine to the market with equities and bonds.

Nymex crude and brent are elevated.

On to the next screen -- the vxx 14 and the ruble 36.49 and brent crude again.

That is the big change from friday.

Oil is really on the move.

We are starting to see some response in the market from the tension in ukraine.

It was as if everyone ignored it last week.

If you look at the front page, it is more focused.

It has to do with the ukraine.

Both the financial times" calls it the russian creeping invasion.

They received permission from the russian parliament to send troops there.

There has been no public remarks.

We know russians are active fighting -- are occupying airports.

They have troops in crimea which serves as a departure point for russian ships.

The response from the international community has pretty much been widespread condemnation.

John kerry is on his way to kiev and the president is weighing sanctions against russia.

John kerry mentioned there could be asset freezes, be subband, destruction of trade but it is all up in the air.

Foreign ministers are holding an emergency meeting.

This is the economics of the moment with secretary kerry going to kiev that so many have requested.

A headline yesterday -- they are well prepared for any guest shortages.

That's one of the big economic issues in terms of russia.

It suggests big changes and the way that russia sees itself in the world.

This is soviet russia.

This is not russia the global power.

The video and photo of the moment is ukraine troops lined up behind a screen.

That has been the single photo of the morning.

This will be our focus.

Ian bremer will join us later.

We are starting to see the repercussions rattle through the market.

You mentioned how russia raised its main interest rate to seven percent from 5.5% which is a most since 1998. it has not done much for the ruble and stocks worldwide are falling.

Futures are lower as well.

Treasuries and gold are higher.

Crude oil is up as well as natural gas and wheat prices.

We can expect to see more of that.

This is a significant change in the fluidity of global assets.

Those are the front page stories.

101.25 is a global litmus paper.

It is simply about sovereignty and the nato response to actions by russia area the headlines continue this morning and richard falkenrath has given us terrific perspective on events in ukraine but the courts mated -- on the coordinated response of the west.

I need a prinmer on nato, do they still have teeth?

It has a lot of forces under arms.

4 nato countries border ukraine.

It does have teeth but whether they will be used in a serious way in a military conflict with russia, i seriously doubt.

We are part of nato and the secretary will fly to kiev today.

What would you suggest is his priority list?

He will try to shore up the new ukrainian government.

We will have some sort of offer of near-term fiscal assistance for the ukraine they have an immediate fiscal crisis on their hands that they will try to deal with.

We will try to show solidarity with them against what he will describe is a russian menace and stiffen their spines.

Would he go to crimea to meet with russia or moscow?

He definitely will not.

That would be too provocative.

I doubt he would go to russia.

The symbolism of a high-level visit like that with russians is too risky for the obama administration.

What type of influence does the u.s. have?

Not extensive, economic sanctions are an option but they are self-inflicted wounds as well.

If you sanction the russian oil experts to europe, it will hurt the europeans as well.

They will look at visa restrictions on a couple of russian officials and may look at asset freezes but russia is a really big economy.

It's not like some of the other countries that have been effectively targeted by sanctions.

There is very little reason to believe a sanctioned strategy will work to course the russians.

Everybody agreed over the weekend.

I was shocked to see the statement talking about the russian arch is a patient and the g7. -- the russian artistic patient in the g7 -- the russian participation in the g7. in times of international crisis is when you want governments talking.

It suggests this issue is more important than any other issue on the international stage like a around or syria or the global economy.

To suddenly say this is an important country, member of the security council and we will not have meetings because we are to talk?

Not sensible.

Here is a geography lesson.

Ryan chilcote reported out of lush and that mr.

Medvedev said a bridge will be belts -- be built, what is this?

The bridge connects the black sea to the sea of red.

Currently, the only land bridge on the crimea runs three ukraine.

It is called the deaths mess of parakot.

There is another straight on the far eastern side that's about four kilometers from what is part of russia.

First person to conceive a bridge across a straight was albert speer, architect of the third reich is a way to march troops into persia and they began construction in 1943. the materials were left behind and the red army built the bridge in 1944. it was destroyed that winter by ice floes.

An agreement was signed by the former ukrainian president and the former russian president in april of 2010 to rebuild and now they are re-creating the idea.

What to crimea's want?

It's a good question and we don't exactly know where they were go.

They don't seem to want war.

Who is a crimean is an important question.

It's a in until a that has been horribly ethically -- ethnically cleansed over the years.

Stalin forcibly removed about one million of the ethnic population of crimea into siberia in 1944. many of them died on the way and replace them with russians and ukrainians.

Now it's a mix in the dominant population is russians but there is also ukrainians and the number of tartars who have been coming back from side.

To reclaim what they think is their homeland.

F richardalkenrath, we appreciate your perspective.

Right now, company news -- in non-ukraine is, a rare miss for warren buffett, the measure of berkshire hathaway, the stock has risen as much of the s&p 500 is the first time they missed on their five-year target dating back to 1965. after ringing up record earnings last year, he says he will be looking to do more deals this year in the u.s. the microsoft new ceo is shuffling management.

He has promoted mark penn to fulfill the new role of chief strategy officer.

He is a former political strategist to work on the hillary clinton presidential bid.

Tony bates ran skype is also with microsoft.

American express debuts its first no see credit card.

- no -fee credit card.

They want to broaden its customer base.

We have breaking news out oftyco.

It will sell itself korean unit for 1.93 billion units.

Some m&a to get the week started and there will be a financial effect.

It will revise its eps forecast because of this deal.

It now sees second-quarter earnings per share when you back out some items, or 89-40 one cents per share on the deal.

Did you sleep last night?


I watched an hour and 15 minutes of the oscars and i learned the hard way that you don't watch the oscars with the twitter feed.

Speaking of which, it turns out that a lot of the pre-oscar buzz was on the money when it came to the big acting awards.

" 12 years a slave" won best picture.

Brad pitt was one of the producers of the film.

Earlier in the evening, best supporting actor was taken from the same movie.

It also won for best adapted screenplay.

"gravity" one the most oscars of the night including that director.

Who are you wearing this morning?

I'm wearing gbs,. alan hit the ball out -- ellen hit the ball out of the park.

She took a group selfie.

That was causing twitter to be out of commission.

People admitted they were hungry because they had been starving for an entire week.

There it is, the oscars and we will have more on that.

Markets are on the move in futures are -20. coming up, the japanese fast fashion -- they are looking to expand its global footprint on an american target and we will speak with the company that they are looking at.

"bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and

. ? good morning, everyone, "bloomberg surveillance." cory johnson is with us today.

Are you on at 6:00 tonight?

"bloomberg west" will be.

Cory johnson working a 28 hour day today.

We have been talking about j.crew flirting with the idea of going public once again.

It is privately held now.

A japanese clothing giant is looking at the company as they might possibly i choir -- acquire j. crew.

This is a company, fast retailing, that has a number of rounds under its umbrella.

How does j. crew fit in here?

J. crew would be a great addition for fast retailing.

Its biggest contributor to its revenue is what you mentioned first which is uniflow and j. crew gives it a nice step up.

It brings it up a notch.

Uniqlo could be compared to the gap of japan.

There is a major deserve -- diversify outside its home market.

You're talking about 12.6 oh yen dollars of revenue last year.

Most of that, $9 billion, came from inside japan, which is a slow growth market.

But i have to go outside and clearly, the company has designed global domination.

The president has said he wants to make it into the biggest retailer in the world.

Unlike many of the deals we have seen from japanese companies coming to the u.s. or growth, what makes yanai different is that they are priced discipline.

He will not overpay and that's what will make this deal different from things like softbank coming to the u.s.. are there fundamental changes in business?

Fast action is an unbelievable concept that is changing the entire retail loathing business.

I wonder if that was it just changes in the way that j. crew does their business.

Fast fashion requires a big change in fashion.

They see someone walking on the runway in the lamb and they literally have seamstresses in the bowels of a shipbuilding new clothing so it will arrive in the stores.

J. crew does not change as much.

J. crew has changed a lot of its fashion.

It has adapted that model of always coming out with new designs at the higher end.

Retailers have to innovate as much as technology companies.

With the company actually change, that's my question.

? yanai is a big fan of mickey drexler.

They would probably keep him at the helm.

How that would work out is tough to say.

You are talking about classic personalities.

The two men have a connection.

Yanai has been in touch with j.crew for a long time.

Talks just turn it recently formally because there has been discussions about this company going public.

It has five equity backers.

That want to cash out.

Any news on j. crew going public?

They want to be valued like ted baker which traits 17 times cash flow were just gap which trades about eight times.

That's not bad for a growth retailer, that's what they're going for.

Thank you for the latest on fast retailing looking at j.crew as a possible acquisition.

More is coming up on "bloomberg surveillance." capital management is sending letters to fannie mae and freddie mac requesting corporate governance actions.

We will speak with roots berkowitz.

--bruce berkowitz.

This is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and

? good morning, everyone "bloomberg surveillance." futures are negative 19 and the markets are really on a coordinated move off of the continuing news flow out of ukraine, russia, and crimea.

Oil is joining the others and a more lengthy response to the geopolitical news.

Ian bremer will join us in a bit.

The chinese president vows to crack down on terrorism following an attack at a train station that killed 32 people.

10 terrorists stormed into the station saturday and attacked people with knives.

No group is claiming responsibility for this assault.

President obama meets with the israeli prime minister.

The president urged prime minister netanyahu to make peace with palestinian leaders and he says he will not give in to pressure.

The president will become more directly involved in the peace process.

"nonstop" knocked out "the lego movie" in the box office.

"son of god" took in $20 million.

I saw him on central park south, there is no way he is 61. he is probably older.

He is now an action star.

Morning must read -- i read it and so did cory johnson -- this is a tradition in my house right and up on saturday morning before anyone else when a letter from warren buffett comes out and read it.

I want to talk about the funky accounting he talks about.

What does all that mean?

Non- gaap is the issues.

Companies report that when they are trying to massage the numbers.

Guess what money -- it guess what company use that term the most?


These are corporations rebelling against conservative issues.

The corporations are saying not -- don't look at our real numbers.

They are smoothing it out to the bare minimum.

I thought it was telling that warren buffett suggests a conflict.

He is buying more ibm but also criticizing the accounting policies.

I cannot say enough about this 21 page letter from berkshire hathaway.

This is a primer on common sense.

Coming up 12 million is how many people flooded the airwaves last year.

? good morning, everyone.

Cory johnson and scarlet fu are with me.

Futures are -20 and that gets us to a data check.

That tells you everything you need to know.

A lot of risk aversion is taking place right you have a flight to safety with futures dan and european stocks falling and stocks fell down and the emerging markets print the 10 year yield is below 2.6%. the euro is weaker versus the dollar.

The ecb held its debt holders is meeting this week.

A little bit of pressure has been removed because inflation came and above economist targets.

Crude oil is up by one point seven percent.

You see it would rent crude.

The yen has new strength.

It is showing accord native response to what we see in ukraine.

It is the most seismic geopolitical event since 9/11 -- ian bremmer on ukraine.

The g8 moves toward maybe g one or g2. ian bremmer is president of the eurasia group.

He joins us again this morning.

You made major headlines this morning, over the weekend, comparing these events to 9/11, discussed that point, coming up on the british foreign minister said this is the biggest danger europe has had in the last 20 years.

We are talking about the united states making it clear in no uncertain terms that the russians -- that if the russians in that -- intervene, the russians went ahead with nary a care.

For the first time, we have the united states and the major power effectively at our real loggerhead against each other.

The europeans are largely on the american side and there is a breakdown in leadership in the geopolitical stability.

To go to the narrow, what is the attention point right now between ukraine troops and russian troops?

How will that work out in the coming 24 hours?

As long as the russians do not go into east ukraine proper, we will not see -- we will see a lot of tension but we are not going to see any active fighting.

You have lots of very, very strong ukrainian nationalists that could easily undermine the ukrainian government or cause violence against russians in the region.

They are unhappy about what the russians have done.

If that occurs, it is likely the russians would go into protect them.

Without the intention of vladimir putin going further into ukraine, it could happen anyway and vladimir putin is making up his mind.

That could lead to violence.

Let's bring in richard falken rath.

We saw this other side of russia airing the olympics, why is glad they were potent willing to throw away efforts of polishing up russia's image for the ukraine?

I'm not sure he cares that much about this image for it he believes in the traditional hard power and doing things in strength rather than through goodwill.

He does not seem to care much for the hearts and minds of the world.

They shined her in the olympics but when you get down to it, he's going to take care of business the only way he knows how which is through the unambiguous use of strength.

What is his endgame?

I don't think he knows yet.

He is waiting to see how this go.

I don't think he's interested in annexation of ukraine.

Error ways for him to get what he wants out of the crimean.

Short of annexation.

Annexation is difficult to carry through.

Look to eastern ukraine as the next flashpoint.

Let me ask you about the tools the west has.

Is all of the money that russians have and european banking counts tools the west can use as tools to influence the western governments?

No, because this is absolutely , after chechnya, the most important national security interest russia has.

There is nothing the west could do short of military troops which certainly they are not intending.

There is zero percent chance of a head to head military conflict that would get the russians off the dime and consider moving out of crimea.

That is the first point but the second point is that the europeans are not going to support that kind of behavior.

The germans right now are blanching even at the idea of throwing the russians out of the g-8. the notion that they would suddenly risk their economic relationship with russia or that italy would support the u.s. with serious sanctions, it's not on the table.

I fear the obama administration really overextended itself on this issue.

You sent that out on twitter this weekend.

Timothy snyder at your university had the best essay of the weekend, giving us a history.

10 days ago, northeastern ukraine you mentioned as a place to focus on.

With the new resurgence in the eastern ukraine, how close are we to a partition?

How close are we to a partition of ukraine?

Having crimea is already an effective partition.

It's one that many people will be able to swallow but maybe not the americans.

The germans and others could probably get there.

Going further than that, it is not a majority ethnic russia anywhere outside of crimea.

I would say that the military in that region would largely be pro-ukraine.

The citizens in the larger cities would be split but in the smaller cities they would be pro-ukrainian.

The russians know that well.

I think the russians would rather use economic leverage beyond crimea to get what they want and they will be able to do it including on a presidential election than directly invading.

Having said that, if there is violence against russian citizens -- ethnic russians living in these cities in the next few days, and not set up by the russians, just something that happens from local ukrainian nationals, some of whom are in the new government, if that happens, the likelihood the russians would respond with force is pretty high.

Thank you so much, ian bremmer.

It is our twitter question of the day.

We will switch gears because we want to talk about airlines.

The flight carrier of the united arab emirates has now recorded a profit for the word straight year.

Part of that profit is money collected from its alliances with other carriers.

We are talking air berlin, virgin australia and arer lingus.

I want to start with setting the scene.

For those of us who do not fly to abu dhabi oh regularly, what is the main distinction between your airline and the emirates?

Both of you are premium carriers.

[no audio] we are both global carriers and are building a strong network over the last 10 years.

We are differentiated with great service on board the aircraft but we have also invested in other airlines for it we invest in six other carriers to stretch our network.

We are equity investors in australia and india, throughout the indian ocean and europe.

Part of that is generating topline traffic.

We have come to negotiate on our costs and achieve greater skill in reducing our unit costs.

You mentioned equity alliances, you have seven of them, but nothing in the americas.

When might we see you buy a stake in american carrier?

Quite frankly, it's not a shopping list.

We have 47 coaches and two of them are with american airlines and jetblue and they work well for us.

Where we see unique opportunities in certain markets where we are being constrained, we have invested in carriers.

We don't have the challenge of the u.s.. the u.s. is open skies and i am satisfied with the relationship we have with american and jetblue.

Thank you for joining us.

Coming up, the coveted academy award for best picture does not always mean a big payout at the box office.

We will talk about the numbers behind the oscar boost.

This is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and

? good morning, everyone "bloomberg surveillance." the market is on the move.

With me is scarlet fu and we have cory johnson.

I am thrilled to be here.

The trial of oscar pretorius begins in south africa today.

He is accused of killing his girlfriend on valentine's day 2013. he was once listed as one of "time magazine" most influential people.

Pimco is turning more bearish on canada.

Bill gross has cut his exposure to canada in half.

There were the canadian housing market is overvalued and the prices will begin to fall this year a polar plunge for chicago.

Mayor braman a rahm emanuel jumped into the water as well as jimmy fallon.

He emerged with his eyes bulging.

The polar plunge raises money for the special olympics and those are your top headlines.

He apparently did that -- i thought the deal we had is if i did "bloomberg west" i have to swim back and forth to alcatraz.

There is a great triathlon of the escape to alcatraz.

They go from a boat right near there.

It's a sensitive triathlon.

Here is a single best chart.

We've got to do something on the oscars.

Everyone goes up there and being nominated is an honor, they say.

It works the same way for box office receipts.

This is data compiled by box office mojo which takes a look at the revenue taken in from best picture winners.

Over the last 10 years, we are talking about 300 $10 million.

How does that compare to the highest grossing movies overall?

Big difference -- 1/4 of what the highest grossing films raked in which was $1.3 billion.

That is all "transformers?" you got it.

Films that when the oscars don't necessarily win the most money but the nominated does.

I was surprised that after winning best picture, most of these movies only see about a single percentage point rise in sales afterwards.

Did you like e the joke thatllen said about the scenarios?

She got rave reviews.

Richardfalkenrath, they did the tweet thing.

It got huge traction.

It crashed twitter.

Can you help me here?

Why do people beat up on and hathaway?

Twitter was a vicious.

She is a little too eager and she's an enthusiastic drama club kid.

People like to be up on her.

What was kevin spacey doing their?

He was with all the a-list stars.

It crashed twitter and bradley cooper -- which one is he?

This is successful.

The attempt at integrating twitter and social media into the grammys was awful.

Ll cool j was mentioning #but this is a clever and comfortable way to bring social media into this.

We've got cory johnson today.

I enjoyed watching it on twitter.

. the second screen is arguably the biggest change and the way the main events are happening and broadcasting.

Broadcasters are adapting to what they call the second screen.

If you are tweeting, you have to watch it live and if you watch it live -- ellen took a picture of everyone with her camera phone and then it was a samsung commercial afterwards.

Do you think that was an accident?

We want to put this back into the best picture category.

Charlie rose interview the director of "12 years a slave." at some point, i wanted to make a movie about slavery.

For me, there was a hole in the canon in cinema about the subject.

It was not referenced were there for me.

I wanted to investigate that.

I wanted to find out about that.

If you stayed up to watch the whole oscar sermon a, you will notice brad pitt went up there to get the award because he was one of the producers of the movie.

I watched "gravity" on the plane.

It's a bad movie to watch on a plane.

Better than the liam neeson movie.

Coming up, we will talk about getting a makeover.

? this is "bloomberg surveillance." let's get to company news.

We start with apple introducing a system to use iphones in cars with voice command.

It will be rolled out at the geneva motor show this week and be available in vehicles later this year.

They say it lets people use iphones with minimized the stretching.

Google and samsung have objected to the microsoft plan to buyweibo long-distance.

They want to make sure this does not want to result in higher licensing fees.

Chinese mobilephone micro's phone makers have objected to the deal.

Weibo is china's micro blogging platform, the largest in the country.

They make money but twitter doesn't? weibo has twice as many users as twitter.

It is a little bit different, it's a combination of twitter and facebook.

It is massively popular, 1/3 of chinese internet users are honest.

Do we trust the chinese accounting?

Well we have not seen it but no, we don't trust it.

When you have the pcaob, the chinese auditors cannot even close the book.

If they do an ipo, that is a huge accounting breach.

Can the u.s. auditors go back and look at the documents that went into the audit which they are not allowed to do right now.

You should come by more often.

Thank you for having me.

He's here again?


maybe he will visit the 21 club later.

The owner of hotels is ditching the orient express.

It will rename itself next monday as though mod.

Joining us now is john scott.

Tell us about the name change.

Why make the change and what are the limitations of's associated with a rail excursion?

It was about what is the right thing to do with the company.

I have been the ceo for a year now i traveled around to our great properties around the world and what resonated is that the individual property brands were very well recognized.

You mentioned the 21 club and the copacabana, people know those properties but they don't know that they were part of something bigger.

The opportunity is really to connect the dots.

We want to make it easier for our guests to visit or the just one property, multiple properties in the crease more value for our company.

So much about luxury travel is centered about offering an experience.

Orient express is a specific experience.

What do you want the name belmont to e volk?

-- evoke.

We want to celebrate those names.

We are not a chain luxury company.

We are an experienced travel companies so we will celebrate the individual names.

We are going to add belmond.

It means beautiful world and it will be the way to experience all those properties.

It will be a connector.

It's not meant to detract the individual properties.

You were with rosewood before this.

I had a beverage of my choice at the carlyle hotel.

Is that what you will do over here?

We made that connection a little more obvious.

Rosewood was about celebrating individual names and that's what we will be at belmond.

We will celebrate the individual names.

People are not looking for a one-size-fits-all approach.

How important is it for those kinds of consumers to have mileage low royalty programs -- loyalty programs?

That's a great question.

I think it is even offering.

-- i think it is evolving.

I think less about points and more about recognizing -- when i walk into sunset tower and they say welcome home, i love that place.

I get no mileage there whatsoever but they will never get me out of there.

It is that and making sure -- for example, in your minibar, if you had the things you want it was free as opposed to you have all the junk -- it's about customization and knowing what you want and making sure we provide that.

Would you please come back?

John scott with us with belmond.

We have a forex report with futures negative.

The yen is the litmus paper.

That is new yen strength which shows the tension of the last hour of russia intervening on the d valuation of the ruble.

China is still in the news as well.

Coming up in the next hour, investor bruce berkowitz is blasting fannie mae and freddie mac and he will join us in the next hour.

? this is " bloomberg su rveillance." the secretary of date will travel to russia.

-- will head to ukraine.

U.s. equity futures down 21. fannie and freddie mac are minting money.

Should it go to private investors or stay with uncle sam?

This is bloomberg "surveillance." it is monday thomas march 3. joining me a scarlet fu.

He saw all the oscars, we welcome cory johnson.

Our host for the hour, richard dalton asked.

-- richard falkenrath.

Russia raises interest rate unexpectedly.

China pma dropped to an eight-month low.

U.s. mortgage approvals rose more than forecast in january to them highest level in more than six years as the property market strengthens.

This shows the change in the global housing market.

We are expecting some of that.

I is some manufacturing construction spending and total vehicle sales a big number that is being driven.

Subprime lending a big deal.

Earnings after the bell, mbia as well.

We have company news.

Berkshire hathaway sales will rise as much as the s&p 500 through 2008. the first time the company missed on the five-year target dating back to 1965. after ringing up record earnings last year, looking to do more deals this year.

Especially in the united states.

Microsoft ceo is shuffling management.

Mark penn will fill the new role of street -- cheap strategy officer according to people familiar with the matter.

Executive bp tony bates was -- leaving the company.

The employees of citigroup being questioned by authorities and mexico according to government officials.

Trying to figure out how the bank was allegedly cheating out of hundreds of millions of dollars on loans to oil services company.

City employees were not interviewed as suspects but rather for information related to the loans.

Breaking news out of las vegas.

A group called the caesars acquisition company says it will sell to caesars growth hurt nurse a handful of hotels in vegas.

New orleans as well.

2.2 billion dollars, including debt of 100 $85 million and will take on of $223 million.

Moving chess pieces on the main places on the strip.

Do not really have any numbers to play with here.

Dow futures -127. bloomberg you with a terrific rollout.

Jeffrey goldberg sat down with president obama.

Benjamin netanyahu visits the white house.

There is not a moment to lose.

First, the news of the morning.

Author of the book prisoners and joins us from washington after the exclusive interview with president obama.

Many ways to go here.

Let me start with the ukraine.

What is your most careful observation in the cacophony of this monday morning?

My most careful observation will cost you extra.

The west is not just president obama's problem.

The west is struggling to gearing out what to do.

Quite one thing when seriousness behaves, and even when small, roguish nations misbehaved.

Difficult to bring them into a line.

When russia does something egregious like this, they said around the white house and other offices of power and look for ways to give a reasonable response when you know this is a huge deal.

Huge deal to send the secretary of state 2:00 p.m.. -- to the ukraine.

I want to come right back to jeffrey goldberg.

The idea of a new u.s. foreign-policy.

What is the foreign-policy?

Of passive, reactive one.

When you contrast the role compared to the collapse of the soviet union, there is no difference whatsoever.

This is a government really following events and trying to keep up with them, not shaving them.

Do you agree with that, of passive reactive state department?

It is not really a state department.

It is a white house.

When you have a president, and i am not making a value judgment, but when you have a president that is domestically oriented who seems to want to with draw from the world and mess of the world and reflecting what the american people seem to want, you sometimes get surprised by either ends and sometimes surprised by the amount of times you have to spend.

They send most of the time figuring out reactions.

-- spend most of the time figuring out reactions.

Lex i want to go to your piece published today.

The president will meet with benjamin netanyahu later on in d.c. what surprised you in your conversation with the president?

A couple of things.

The first, on the actual peace process, he is totally reengaged in this.

For months, it was john kerry doing that negotiating.

Now he is back in the picture, maybe because kerry asked him to be.

You think there will be some pressure put on him.

They will say you are it, you are the one.

And then what was striking and this is president obama said here are the consequences or your country if you do not do this.

He was not threatening any kind of american action, but saying the world is changing and you have to realize you are becoming more isolated and you do not go down the pass of the road i am laying out with you, you will have problems.

We talked a lot about serious and iran and the deterrent power.

After august in syria when you threaten to use force but then at the last moment pulled back from that, do you think they'd no longer believe you would strike them?

He said no, of course not.

Of course they believe that.

He said this.

Gave up chemical weapons because the russians told them i was serious.

So he is adamant about this.

I was struck by your term that president obama is totally reengaged with the middle east peace process.

My sense with the president is he does not engage in anything.

My sense is this is someone who will have one meeting with the prime minister and that will be it for him.

Why would he deviate from what he has done for five and a half years now?

I am not buying the premise of your argument.

It eras of opportunity to have a foreign-policy achievement -- they do not have a lot of foreign-policy achievements in the middle east.


Chemical weapons coming out much more slowly than they thought.

Of course the white house wants to own it.

I think what they will do today is they will assess how likely it is.

If it is not that likely, he will say to the secretary of state, keep working it.

Why wouldn't the president want to come in and quarterback this?

This is a really fundamental change.

John kerry has used language to describe this is the last chance for middle east peace.

I do not think the president exactly believes that but i think he will make a push and the language has changed and we will see if the policy changes.

Really appreciated it.

Rave review from me.

You cannot say enough about the new the zion.

You will get smarter by keeping bloomberg view frequently in front of your eyes.

Peter ortzag writing up a storm as well.

Breaking news.

Progress on the men's wearhouse just of a bank merger.

On non-disclosure with joseph a bank.

Entering the disagreement -- entering this to enter a deal.

Men's wearhouse said it welcomed the offer for do did salute -- to diligence.

Maybe we will have some kind of resolution in the near-term.

Data check.

Futures -20. they were bad and got better and rolled over again.

-20 on s&p futures.

Oil is one nil -- 104.57. what is president obama's next step as he looks at the situation in the ukraine?

Tweet us @bsurveillance.

? good morning, everyone.

Bloomberg "surveillance." i'm tom keene.

Futures -20. dow futures -146. at the oscars yesterday.

"12 years a slave." best supporting actress for her role in the film.

In terms of which movie ran -- one that most number of oscars, it was "gravity." it started sandra bullock as an astronaut who is left floating in space.

She spoke with charlie rose, and they talked about why she found it a really difficult experience.

All of the things that frustrated me that what -- once i found out where a benefit.

The lost control, frustration, and instead of fighting it, you embrace it and became a friend rather than something that was a problem.

Richard falkenrath, you do not care about the oscars or much of the movies but you did like this one.

The thing i love most about it, the sound was incredible.

They way they handled silence, the briefing inside the suits, a huge explosion impact with no sound.

So unusual.

The sound was incredible.

To see the space station fly apart in this massive explosion and to hear nothing, just right.

They got it just right.

Were you uncomfortable watching the movie?

I was uncomfortable watching the trailer.

You watched gravity on the plane?

About an hour into the movie she says probably not.

Away from the finance and economics that we do, are the oscars the same as they were five years ago?

It is not.

That is also because i do not have as much time to watch the movies.

It is a bigger production than it used to be.

I like what i learned in with tweeting a selfie.

I feel so produced now.

So much of the buildup to the actual awards.

Which do you like the best?

I actually like golden globes.

Golden globes is known as the starter award show.

Everyone is excited and testing out everything.

That is my favorite one.

Were stressed?

I do not know yet.

Men's wearhouse entering a non-disc is are packed with joseph a bank.

Prepared to boost the offer price.

This is bloomberg "surveillance." ? good morning, everyone.

Bloomberg "surveillance." we deteriorate.

Lows for the dead -21 .30. dow futures -100 87. further yen strength to a fragile morning.

March 3 top headlines.

Here is cory johnson.

Today is the first day the story -- that the trial begins in south africa today.

The blade runner accused of killing his girlfriend on valentine's day 2013. he was once listed as the most influential people and has pled not guilty to the charges.

Pimco turning more bearish on canada.

Cutting exposure to canada, cutting debts and half.

They warned the canadian housing market is overvalued and prices will begin to fall this year.

China's president crackdown on terrorism, following an attack of the train station that killed 30 three people over the weekend.

A group of more than 10 stormed into the station saturday.

No group has claimed responsibility for it the attack.

Scarlet fu with us.

We look at the dynamic between i will say western china and beijing.

The city where these attacks took place, a lot of minorities in that city.

This has been brewing over the years.

This is a terrorist attack.

Yes, and a very unusual one.

I have been watching these things for longer than i care to think about.

I have never seen one quite like this.

When they say there will be a major crackdown, there will be a major crackdown.

Really aggressive and comprehensive.

There was a writer who call the china's 9-11. there was an article going back and forth about whether it was terrorism or not.

No question.

When a group of men wade into an urban area armed with machetes and large knives --- do you assume they are from western china?

I do.

One of the main ethnic groups, it is a possibility.

Help us parachute into shanghai and moved two blocks or hong kong.

If we were to parachute to this region, what would we find?

A very rural, undeveloped region.

It is much less developed.

Has not benefited from the incredible growth of china.

Many have left and gone to work in the cities.

The demographics are totally dissimilar to what we have seen in coastal china.

Thank you.

We want to switch gears and visit headlines that broke earlier in the hour.

Men's wearhouse announcing a nondisclosure agreement with joseph a bank.

Bringing in our deals reporter.

What does that mean nondisclosure agreement?

They are going to do a deal.

We knew this was going to happen.

For a long time, thanks was the bad guy because it did not want to do a deal with men's wearhouse.

Put up protections that shareholders saw as a poison pill.

They announced a crazy deal for eddie bauer to make himself bigger and harder to deal with.

A lot of shareholders viewed that as a very hostile act toward shareholders because they said you have a logical target or, a combination makes a lot of sense and you are going off to do this deal with eddie bauer.

Now it looks like think is pretty smart because i held out to get the price it wanted.

To get everyone's attention, buy one get five free, 20-60 in share price.

Joseph bank is the good guy here . it would appear to be the case that if everything goes well, they get the best thing for shareholders.

Here is what no one is talking about.

Evan -- even if they agree, there are real concerns for getting this over the finish line.

Regulators will take a harsh look at the deal.

It has to two clear antitrust.

Thanks could turn around and demand protections if regulators do not sign off.

That could make ends warehouse look away from the deal.

I could demand hell or high water measure.

Are activists involved here?


They are in both stocks.

They have been pushing for the deal from day one.

Men's wearhouse is buying just of a bank?

-- joseph a. bank.


The bank management team wants to keep their job and do not want to work for a company that they think is not run as well as their own company.

You have a lot of personalities clashing right now.

To what degree is the men's warehouse marketing message about orange zimmer -- george cymer.

To what degree is there an negative impact from listening to the voice for so long?

There is no question that they have not been impacted by this.

That is one reason the whole thing started, thanks was the original aggressor.

They got word in of weak position because they lost the zimmer and made an attempt to buy it.

Sales growth, three percent.

Thank you.

I am more baffled than i was before you came on.

It is amazing.

It is like michael dell but worse.

Worse and better close.

Twitter question of the day, president obama.

What is the next step to deal with the situation in the ukraine?

Tweet us.

Fannie mae has a back a lot money to the u.s. treasury and then some.

We will discuss this with bruce berkowitz.

? this is bloomberg "surveillance." i am scarlet fu here with tom keene and cory johnson.

Berkshire hathaway changing the language on possible successors to warren buffett.

Identifying certain current subsidiary managers who could succeed warren buffett.

A change from previous language that said three managers have been identified.

Comcast universal fixers wins the weekend box office.

The thriller featuring liam nelson -- nielsen grabbed the number one spot.

The lego movie tumbled to second spot.

American express debuting the first no fee credit card.

It is the biggest introduction in 13 years going by how much it cost to develop the market.

Part of an effort to broaden the customer base.

There was a tina fey ad on during the oscars yesterday as well.

We continue with the number one story, ukraine and crime era -- crimea.

Ian bremmer just back from kiev.

Good morning.

When you look at what we see, the international job owning.

What would you suggest we should look for from secretary kerry's trip to kiev?

I think part of the problem for the united states and secretary kerry is the united states does not have a huge amount of influence or leverage over russia on this issue.

From russia's perspective, ukraine is in excess agile issue in terms of geopolitics and domestic allah text.

It simply matters more to russia.

Russia has more influence directly on the ground.

What kerry can do is talk about sanctions but they will not have much of an effect because the relationship is not very deep.

Political sanctions is not something that will move him tremendously.

There seems to be a lot of job owning this morning.

Is it for donated?

Is it a coordinated effort or ad hoc effort between sweden, germany, u.s., imf and others?

I think there is certainly room or better coordination.

Not everyone's interests are precisely aligned.

Europeans have a much deeper energy relationship with russia, which bounds the ability to center into an economic scenario with russia.

You mentioned this earlier.

Explained the hydrocarbon linkage between russia, ukraine, and germany.

Russia is incredibly dependent on oil and gas exports.

A large fraction go through pipelines to the european union, which gets about 30% of its gas consumption directly from russian suppliers.

That is by far the most important economic relationship in that part of the world.

The map of the hydrocarbons looks like your hockey road trip over the weekend.

Like everything goes through the ukraine.

That is the issue.

I think we have to be very careful in how we describe cold war versus hot war.

Clearly an issue in which the u.s. and russia will have to come to an understanding or there could be a very serious conflict right on the border of europe.

The idea of a russian invasion could turn very ugly very quickly.

A solution has to be found quickly.

I continue to wonder.

Two thirds of the 56 billion that flowed out of the country could be traced to illegal activity.

Seems like they would have there for a reason to him pound at some of the assets and punish russia in a different way, if they cared to.

Any suggestion that is on the table?

There has been vague talk about sanctions against certain elites.

No clarity on that.

It certainly is true that one way to get vladimir putin's attention more clearly is to go after that assets of key russian elites that support him.

I do not have any information on how far that has gone.


He is in kiev.

What will you look for today with a stream of headlines coming up?

I think one of the most intrinsic -- interesting instruments will be european debt.

I think one of the outcomes will be a short-term bailouts of the ukrainian debt.

So they will throw them a lifeline.

That will alleviate near-term fiscal crisis.

Really, kerry cannot do much else.

A visit should be worth a month or two of economic bailout.

Within the data check, brent crude almost at 112. futures as well at session lows.

S&p futures down by 20 points.

The 10 year yield continue syncing as well.

As you would expect, with risk assets being taken off the market, the euro weaker versus the dollar.

Good morning, everyone.

Bloomberg television, radio.

All of the interviews of bloombergtv plus.

Markets really on the move this morning.

Scarlet fu and cory johnson with meat.

Guest host is richard falkenrath . a lot to talk about this on this front and center topic.

Lex we need to talk about fannie mae and freddie mac.

First or collects -- bruce berkowitz blasting them for ignoring shareholder rights.

Raising stakes to help investors share the spoils in a newly invested company.

They have a -- they have started to break it in with the housing or get recovery.

Private investors questioned the profits of fannie mae and freddie mac going forever to the united states government.

Reciprocal with swiss a chief investment officer and founder of their home capital management . owns shares of this to say the least.

Good morning.

You have been out front on the debate.

Any likelihood we will see washington decide that fannie mae or freddie mac should the private?

I do not know.

In my opinion, there is no debate.

Fannie mae and freddie mac are private companies.

They are no different than coca-cola or disney.

People talking about the debate between privatized, public.

Last time i looked on the bloomberg screen, all 170,000 ohms fannie mae and freddie mac.

So it does not make sense to me, that debate.

We own them.

I do not see anyone else who owns them.

Time to move forward.

In my recent note to directors, i am trying to remind them who they were.

This is the issue, the directors have a lot of weight on them from washington.

What will be the catalyst to get washington to move?

I look at it as if i were a director.

I have been a director on companies.

I have a fiduciary responsibility to all shareholders.

I do not listen to what someone in washington tells me to do.

I listen to the owners of the company who i represent.

You recently one the federal judge right to discovery to find out changes made in the governance.

What do you hope to find?

What is hidden that you could not find before?

The last decision may -- may december 2012 when the sun was shining it was obvious the companies would make their a good money.

There was a deal between one government agency and another and we do not understand this.

It was not necessary and does not make any sense.

We are trying to understand the thinking behind it because we cannot find any object to it.

The original agreement that handled everything.

A mistake was made in december 2012. may have been an oversight careless mistake or something else.

I choose to believe it was a simple mistake.

The law is about the past.

My discussion with the board is about the future.

Government has every right to change its relationship with fannie mae and freddie mac.

Government does not have the right to alter past agreements from the 1970's, 1990's. time for the board to represent their own.

That is the primary reason to have directors.

Directors are capable of doing it.

They are paid very well to represent the owners.

Time to separate fact and fiction.

Thank you.

Coming up, how will the u.s. government react to the standoff in the ukraine?

Michael turner will join us on bloomberg surveillance.

This is bloomberg "surveillance." ? good morning, everyone.

Bloomberg "surveillance." ? turning to our three top photographs.

It is the oscar admission.

Today's top photographs, looking at the goings on of the academy awards.

Jennifer's lawrence -- jennifer lawrence, reaching for the oscar.

This time she held it together.

She one best supporting actress.

Lawrence was nominated for american hustle and the center.

12 years a slave did really well.

Best picture, best adapted screenplay.

Photo number two, ellen degeneres.

Her celebrity selfie.

A great sign -- a great autographed.

It is the record holder.

Retweeted almost 3 million times.

This direct -- disrupted twitter service.

She handed her phone to bradley cooper.

He is the photographer here.

Allen is behind meryl streep, jennifer lawrence.

Which one is bradley cooper?

The way in the front.

To the good-looking one.

Number one, ellen degeneres delivering last night.

She is samsung wants and iphone later on.

Meryl streep digging into the pizza.

I like the way she integrated social media.

That worked out really well.

I heard rave reviews for the town of the oscars.

Really beginning to learn from the enemies.

They are starving themselves for weeks.

We do that on bloomberg "surveillance." / i actually had to gain weight.

Fights interact -- interviewing the director.

At some point i want to make a movie about slavery because there was all in cinema about this particular subject.

It was not referenced and not there for me.

I wanted to investigate that.

I wanted to find out about that.

British director steve mcqueen.

Dallas buyers club?

Matthew mcconaughey and jerod lehto.

Jared lehto speech was great.

He thanked his mother.

Rooting for people in venezuela and ukraine.

They are being transformed by your world of social media.

A big deal for all of these guys.

Twitter may be the most of them all.

Were you watching the instagram feed?

A much to watch, so little time.

Coming up, president obama's next move, what is it?

I called turner joining us next.

-- michael turner.

? this is bloomberg "surveillance." i am scarlet fu with tom keene and cory johnson.

Our guest is richard falkenrath, former adviser to the white house on national security.

Time now for company news.

Starting with apple introducing a system to use in iphones and cars with voice command.

It will be rolled out at the motor show this week and be available in vehicles later on this year.

Google and samsung have objected to the plan to buy nokia phone business.

They have asked the ministry of commerce to make sure the deal does not result in higher licensing fees.

Chinese mobile phone makers have artie expressed concern about the deal.

Valued at $5 billion after posting the first profit.

Weighing in on china's largest microblogging platform after posted a profit last quarter.

Also said to be pursuing an ipo in the u.s. today at 1:00 and 6:00, bloomberg west with the best in technology.

Thrilled to have cory johnson with us this morning.

Got it.

What is the distinction i need to know about?

I am always arguing that we are quick to focus on businesses and companies and not on stocks and markets.

I think the market is an upcoming ipo that is one of the biggest technology ipos ever and think that is one of the reasons people are looking at this as one of the other kinds of next shoe to fall.

Very good.

Cory johnson on that.

More on that at 1:00. the next guest says the president is sending a dangerous message to the world, especially russia.

A critic of u.s. actions around ukraine from intense congressional district in ohio, michael turner and the armed services committee.

Good morning.

Our secretary of state goes to the ukraine today.

What would you like to see him accomplish?

The president has by casting this environment of weak this allowed president putin to take the actions.

The whole thing began by him intervening in ukraine internal politics where they were trying to execute an agreement with the eu.

Ultimately this invasion by russia.

The president, and secretary kerry, have to shift their view to understand this is a different russia than they perceived.

Their view has been as secure russia is a secure europe, but the more secure russia feels, the more adventurous they become.

The secretary needs to begin to recognize this is not an east-west issue.

Bring as breaking news to help us in the conversation.

The ukraine prime minister says russian forces are now only in crimea.

Also seeks clarity for what they want and says the troops will not invade east ukraine.

Headlines from the ukrainian prime minister.

To what extent is there discussion on moving american warship to the region if it comes to that?

I think there needs to be a broader discussion then where do we move asset?

We need to make sure we take actions that strengthen the allies.

A number of allies are very nervous right now.

Obviously concerns as they look to their issues with russia.

Certainly as this comes on the border, they need to have concerns.

Certainly we need to look at this in a broader context.

One of them is this is an administration that has walked away from nato obligations with europe.

As we look to the possible expansion, this has been cold to that.

The ukraine and georgia on a path to the missed -- midwest, and that has been disrupt the.

Richard falkenrath working with us.

Look for austerity and frugality of the national defense.

How do we project a state department policy if we are recovering from two wars and want to take the armed services back?

With great difficulty.

The military dimension is absence.

This will not be a crisis that teachers u.s. military use of force.

Carriers are not going to the black sea.

To the extent we are engaged at all, it is about what we say and do with our allies.

We have no powerful course of instruments that can merge them on this front.

By cap we learned anything about the way russia has made the moves?

I've remember when georgia invaded the south.

There was an interesting cyber attack that precluded that.

I was wondering if you saw anything that happens in crimea that was similar?

I think there is a lesson to be learned.

I think the big lesson is to be learned from the administration.

He got caught trying to negotiate a secret deal with putin about the missile defense system.

Russia may be violating the treaty without action by the administration.

This administration has been pursuing an narrative that is just not

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


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