Twitter Growth Stuns: Surveillance (2/6)

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Feb. 6 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Robert Burke, David Kirkpatrick, Manus Cranny, Michelle Meyer, Michael McKee, and Tim Armstrong. (Source: Bloomberg)

This is bloomberg "surveillance." twitter shares plunge as revenue and earnings analysis is pushed aside.

There is little for users.

Critical jobs report tomorrow.

Michael kors is a billionaire.

All that from amanda python tote with the brass tag hanging from it.

2009 hundred 95 dollars.

That said, betty liu.

Good morning, everyone.

This is bloomberg "surveillance." we're live from bloomberg world headquarters in new york.

It is tuesday -- thursday, february 6. joining me is betty liu.

Amanda python bag, does that work?

The way you described it, i am going to go out and get one.

I am going to stop talking.

You have the morning brief.

A lot of economic data.

Jobs numbers.

That will be a preview to the jobs report friday.

At 9:45 a.m. the bloomberg consumer comfort index.

7:00 is the bank of england rate decision.

More importantly, the ecb, they will be issuing their statement and decision at 7:45 a.m. 7:45 a.m. this morning.

Four expect druggie to cut rate.

-- expect draghi to cut rates.

We will have michelle meyer with us as we see this decision and press conference.

Anything goes even what we have seen overseas with the markets.

In the meantime, back here in the u.s., the parade of earnings continues before the bell.

Aetna, gm, 20th century fox, and aol.

We will pay close attention to aol, because the ceo of the company, tim armstrong, will be on later with us.

After the bell, news corporation, linkedin.

The olympic guys begin today in sochi.

One guy is trading three lightbulbs for a doorknob in his room.

Let's do a data check.

Equities, bonds, currencies and commodities.

One screen today.

Futures are up nine points.

The yield is back up, a good sign.

Calming the market at 2.67. your wreck -- euro goes nowhere.

Here is what i am looking at ahead of tomorrow's jobs report, dollar-yen.

Weaker yen over the recent months.

A little bit of a rollover here to 100 one this morning.

A busy day.

The twitter news last night was something.

We scour the pages of the web.

This is certainly one of the top stories, but we want to start with disney.

Profit climbed 33%, beating analyst estimates.

Credit goes to " frozen" that every little girl and apparently tom knows pretty well.

? let her go, g ?let her go ? he has been spotted singing on the sidewalks of new york.

Bella and i actually got together to watch the movie.

-- betty and i are actually going to get together and watch the movie.

Jon erlichman spoke with the ceo of disney about the franchise.

I do not want to rule anything out about the future of "frozeon."en." we have been as specific as we can be about other plans, probably even more specific than we typically are at this point, but we are very excited about it, and there is great demand for it.

Not just across our businesses, but marketplaces around the world.

And we talk about franchises, we talk about something that is successful across as mrs.

And territories over long periods of time and i think this checks all those boxes.

Expect a sequel, part three and part four.

They will redo disney, i am sure.

Green mountain coffee roasters in the premarket, up about 31%. coca cola buying a 10% stake in the company.

They will help the coffee maker introduce a new cold beverage system.

That has the competition like sodastream international but worried.

So stream shares longed.

-- sodastream shares plunged.

It was hot a few months ago but now you do not hear much about it.

Except for the advertisement with scarlet johansson that is about it really.

I managed to get an espresso on madison avenue.

You cannot.

It is jammed.

Apparently they have these great flavors.

Cinnabon coffee.

Sounds really good.

Our last front-page story on the other extreme, twitter.

Shares are down almost 18% in the premarket now after reporting the first earnings report as a publicly traded him sunny.

Revenue beat estimates,, but still losing money.

Twice as big as expected.

The growth in users is what everyone is talking about.

It is a slowdown from the previous quarter.

The stock tumbling and the previous quarter.

-- in the previous quarter.

We will talk about the distribution of the conference call and a little bit.

Right now, let's talk about results.

We bring in david kirkpatrick, author of " the facebook effect." joining us is robert burke thomas chairman and chief executive of burke associates.

Berg very leading the way.

-- bergurberry leading the way.

Analysts not surprised.

The stock is simply overpriced.

Do you agree?

It is growing nicely.

It is investing what it got in the ipo to improve the product, simplify the product, but the stock got way ahead of its us -- way ahead of itself.

It has a higher valuation in terms of multiples, to the point that is ins it is insane in my opinion.

The stock is crazy.

Do you in your book talking about the arrogance, and i mean that in a constructive way, facebook.

It seemed for me to be a very humble management yesterday on the conference call.

Is this a twitter with a starkly different call then facebook?

You do not think facebook is humble?

Zuckerberg is relentlessly focused on the long-term, so he maybe gets cocky seeming sometimes.

The end of the call talking about he needs to talk to his mother more.

I think they are focusing on simplifying the user experience and is really smart.

And analyst says that twitter faces the identity crisis.

He told bloomberg news that twitter needs to answer the question about whether it can ever become a mass-market product or whether it is for destined to be a niche for news junkies.

That is a serious question they have to answer.

I do not agree.

I think it is mainstream.

I think it is way too hard to use for the average user.

The question is, why do i need to use twitter?

Have your mother try to use it.

They are like what, @/ ? i think they can get rid of some of the icons.

I just flat out disagree.

Where you see this and where the potential growth is is in fashion.

Robert burke with us.

You see what berg very did.

-- burberry did.

Where will fashion be five years from now with twitter?

It is the distribution platform, isn't it?

I fashion it as embracing social media and connecting to the customer.

When you talk about fashion week, it was an industry event, but now it is a consumer even.

A runway show in london in a week, and sx series -- accessories you can buy directly online.

Social media so instantaneous yet fashion week highlights fashions we will see nine months from now.

There are businesses that have been created, a website where you can go on and order a day after the short he -- the show.

You pre-order and get the merchandise.

Is social media still in the same rhythm?

Now they are trying to fulfill product that you can get immediately.

The customer is not content waiting six months.

Here is the future.

This company makes bags.

Is that a hint?

They are on instagram, moving robert burke's world.

Where will this be in five years?

I think the pace of business is accelerating generally.

Fashion has always been for the long-term view.

They announce something now and start selling an eight or nine months.

I have to believe that will change over time.

They are looking at categories, too.

If you look at handbags and accessories.

You can customize a trench bag -- trenchcoat right after the fashion show.

Certainly having an impact.

Instagram has taken over in an enormous way because it is so visually driven.

I was going to say, it is beautiful pictures.

Who does not love that?

Men and women.

Pinterest also.

It is big in this arena.

David and robert, stay with us.

Company news.

Credit suisse legal costs taking a big bite out of the bottom line.

Missing profits after setting aside 570 million in legal provisions.

They are facing litigation related to mortgage securities and faces an investigation into whether it helps american clients evade taxes.

A shocker from sony.

Forecasting a one billion dollar annual loss.

Three months ago predicting a profit.

Sony says sales of mobile profits have been weak and sales from communication unit will be below jobs -- will be below estimates.

5000 jobs will be happening in the next round of cuts.

Bear stearns winning dismissal over a lawsuit related to mortgage backed securities.

Srm global claim that lost more than $2 million by relying on statements from bear stearns about securities.

A judge ruled that bear stearns failed to prove the claim and took too long to file the suit -- the srm company i should say.

Coming up, a lot more on twitter and fashion week in new york.

Also, the black sea.

Sochi olympics begin today.

The opening ceremonies tomorrow.

From new york city, it is bloomberg "surveillance." good morning.

? good morning, everyone.

Bloomberg "surveillance." coming up, nigel travis.

The chinese year of the donut.

Nigel travis from dunkin' donuts.

3:00 on " street smart." do they make a sugar-free donut?

I am serious.

I think they might.

In which case, i might have to.

I am on a sugar-free diet.

Holistic and natural.

Betty with us this morning.

We will look at sony i believe.

Sony earnings, a surprising forecast of a lost.

Heading into the results, it is a matter of bad or terrible.

Headed for a 10th straight year of losses.

It has been bad for a long time.

It forecast a surprise loss of one point $1 billion.

1.1 billion for the full year versus an earlier profit forecast.

You really have to scratch your head there.

The company cutting 5000 jobs on top of the 10,000 jobs it had are ready cut.

The ceo not really getting the job done.

He said they will sell the pc business and splits up the television division.

The question is whether this goes far enough to appease dan loeb, who has been pushing for a spinoff of the entertainment business.

He says sony needs to restructure its tv and pc businesses overall.

Like everyone else, sony looking to focus on mobile devices and games.

It is a train wreck.

Joining us is david kirkpatrick, on facebook.

Sony, to me, it is this distant corporation that is always behind.

Ever since apple came along, more or less.

I was listening to the report just now.

He comes out of the game business, but not an internet business.

It's sony is going to thrive, somehow they have to thrive in the era of instant and the era of the internet generally.

However good playstation is that he created and built into a multibillion-dollar franchise, it does not really have a connection to the internet cannot give him the kind of savvy i think he needs.

What amazed me is the comment from an analyst at jefferies who pointed out the insurance profit is higher than the group operating profit.

We do not even know about the insurance business, because it is very domestically focused.

Where is the value in the company's consumer electronics business?

He says it is worth zero.

Value would have to be found by real innovation we have not seen yet.

I do not feel that there is a lot of value in it right now.

Tvs are a commodity.

4d are going to be cool, but how many people are going to feel they can do that when the prices plummet anyway gekko y? sony going to sell the tv business and going to team up with window vote for the rest of the tv business.

I want to get your thoughts on lenovo.

-- teaming up with lenovo.

I think the strategy is to become a premier chinese brand.

It already moved in the direction when about the ibm business way back and the keypad continues to be a big business.

They have a wonderful perspective in technology.

I think buying motorola for cell phones is a great thing for them.

They will sell in china and will legitimize them and parts of the world where people may not want to buy a chinese brand.

So i think they are making a really lot -- making a lot of smart moves.

Speaking of brands, i want to talk about the asian consumer.

You hear about the companies like sony that are lacking or falling behind in innovation, how much of that is affected by the fact that the consumers in these countries are by a foreign brands?

They are much more a name or do with apples or burberry's? the asian customer is very global.

You see them traveling more and more to france and paris.

London.

Hawaii.

They are now having exposure.

The attraction to a global brand is extremely high.

In fact, probably disproportionate to any kind of local brand, and that is something that has happened in the past 5-7 years.

That is something we will have to couldn't can you -- continue evaluating.

That brings us to the question of the day, what is tomorrow's bcr or walkman?

Tomorrow's obsolete technology product.

This is bloomberg "surveillance." we are streaming on your tablet, smartphone and bloomberg.com.

? good morning, everyone.

Bloomberg "surveillance." i am tom keene.

Scarlet fu returns to us today.

With us also is betty liu.

I love that he has betty and scarlet here.

I knew you were going to go there.

A warning from the u.s. airlines flying to russia.

Homeland security has told carriers to be on the lookout for two case -- toothpaste tubes that could carry and gradients to make a bomb.

This was issued yesterday two days before the start of the winter olympics andin sochi.

The broadcast was delayed for an hour while he pushed to have a woman interviewer included.

But eventually the state-run broadcaster relented and the female reporter participated in the interview.

Thursday night football, cbs prime time for ball just got stronger.

They won the bidding to televise eight thursday -- eight games on thursday night now.

It had been broadcast exclusively on the nfl network in recent years.

No financial terms would -- were disclosed by guggenheim securities estimates get paid as much as $300 billion for the rights.

Football is a precious commodity.

Nfl will still be airing the games and cbs.

Cbs promoting sunday.

A huge promotion platform.

It is all about the power of the live sporting events and how much everyone wants it.

And the power of football, yes.

We need the power of a morning must reads.

Scarlet fu has morning news.

It is only early february, but i think i have found the market metaphor for what we have seen so far.

Ahead of global fixed-income strategies at jefferies says the spirit of jeffrey -- lindsay lohan has taken over the mild mannered marketplace.

What had been a simple stroll in the park to start 2014 has morphed into lohan meltdown inside the betty ford clinic.

She looks ok there.

She looks ok.

Robert burke with us.

He looks ok.

Fashion week in new york.

Do celebrities still matter?

Celebrities still matter.

They sell close.

Look at the red carpet in grammys, and they influence without a doubt.

I am not watching lindsay for what she wears.

She is just one hot mess.

I would not know her -- yes, you would.

She was in "parent trap." this is my morning must reads.

A big deal.

Happened last night with twitter.

The death of a close conference call.

Twitter investor relations.

We believe divine -- combined changes over the course of the year will start to change the slope of the user growth curve.

David kirkpatrick with us.

I was thunderstruck by the openness, transparency of the blogs in the conference call.

I suggest in there that twitter is setting a model for what it should be like when companies disclose results.

Twitter understands how to use twitter if nothing else.

You have to give that much to them.

Michael kors will give -- use twitter for the next conference call.

-- you have to give that much to them.

Coming up, fashion week and michael kors.

? bloomberg "surveillance." the memories, the thoughts.

One of the two gorgeous to see girls of switzerland.

They are on the river as a goes down to the lake.

A gorgeous day where i cannot afford a single thing in zurich.

He is there, manus cranny.

Joins us right now from zurich.

You were there on business with an important earnings release from credit suisse.

I am indeed.

A big week.

Brady dugan.

They missed.

They missed because they are taking provisions.

You know the irs?

The tax man in your country, trying to sort out issues with the sec and department of justice.

Those are two big agenda issues.

That is what is feeding into the overall numbers.

Half a billion swiss.

For the u.s. viewers, what is the major distinction between ubs and credit suisse?

I would say, two banks going and very different directions.

Credit suisse has 50% of the revenue coming from investment banking.

Fixed income did not do well.

Ubs is valued as a wealth manager.

Valued more in the market then credit suisse.

It is a wealth management company, with about 30% of the revenue coming from investment banking.

If you really want to look at the differences, it is about capital.

Credit suisse has about 10% for capital.

Almost 13%. that is when we get the payout of nearly 50% of the income.

Thank you so much.

I will see you at the bar tonight at 6:00. really wonderful american p&l player playing in zurich, switzerland -- piano player.

Very stylish.

I wonder who he is wearing.

The reason i ask, because michael cores of officially became a billionaire this week.

The company posted a profit that impressed analyst.

Rose the most in two years.

He owns about two percent of the company valued at 390 million dollars and has collected more than 700 million selling stocks since the ipo.

Not bad.

How about rimo, montclair ski jackets cap go there was a point where they beg for attention at you nor -- new york fashion week.

There was a time where they begged for a cup of coffee.

Robert burke used to run a cash depository called bergdorf goodman.

It is like goosebumps in new york and frankly, all across america when a new york fashion guy makes good.

A great story.

How did he do it?

Michael cores has been in the business 20 plus years.

He was invested in by a very smart group of people.

-- michael kors has been in the business 20 plus years.

He has surrounded himself with a great team of people.

Very strategic about how they built the business.

Kind of a perfect storm with project onerunway getting the name out there.

They had a strong accessory business and ready to wear business and was underdeveloped from freestanding stores.

They have had tremendous success.

What you are seeing now is they are opening retail stores in the u.s., brazil, and they have a long road ahead.

You know what is interesting, if you want to be a billionaire these days, you either go into tech, property, or fashion.

Those are the three industries where they are minting billionaires by the dozen.

Why fashion?

What is it about the business that is creating so many of the billionaires?

I think we're focusing on the really successful ones obviously.

What has happened is it has become a global business.

Before it used to be a business based in the u.s. or europe.

Today you have the influence --i was in kazakhstan last week and there are plan on live streaming the new york fashion show to the customers and saks fifth avenue stores.

Today you do not just draw from a few countries, you draw globally.

The strength of fashion is enormous.

New york has two fashion weeks per year.

As some point it gets to be too much, doesn't it?

There are a lot we do not talk about, berlin, i'll stroll you.

-- australia.

Are they as influential as they once were given at the speed at which social media myths and the speed at which people expect change?

They are as important if not more important than ever.

If you look at history, it was always an industry event.

You had a small group of editors and writers, and now today it is a consumer event.

Explained the split of stuff that is outrageous.

I think of alexander mcqueen as an example, versus i need to wear it to work on wednesday.

Tory burch.

People making the money.

Scarlet, i can see you in this.

These shows armor getting.

In a lot of ways, that is not what you are going to wear on wednesday.

But they send a message.

Each brand has a particular reason of why they show what they show.

It is a global platform.

Why not a dedicated men's fashion week?

We are surrounded by metrosexuals.

They wear makeup.

By a lot of close.

Why not cater to this segment?

-- buy a lot of clothes.

It is a good question that continues to get looked at.

For the most part, it is not the kind of venue to promote men's fashion.

It is never really -- when he think of the big names like ralph lauren who has done a few presentations and a few runway shows but very -- product placement on tom's show.

In my world in david's world, forget about the fancy fashion stuff, it is a black t-shirt.

Men's fashion -- black turtleneck.

Can i ask robert a question?

Angela ahrens of forburberry went to apple, does that make it more fashionable?

I think it makes perfect sense.

What she did was make it more relevant through social media, online, a huge investment in their online sales.

So she really connect and the online world to a brand.

I think apple has not really been so social.

Apple has not been so social.

She really gets it.

Maybe that is a way she can help apple in a way that has not been discussed as much.

Outside of apple, she really refreshed the burberry line.

It was for older women.

She came in and helped make the brand younger, right?

Isn't that part of what she did?

Younger and elevated it and made it more accessible.

It grew an enormous amount during her tenure.

Is apple going to get more fashionable?

It is already pretty fashionable.

Apple is a prestige brand and fashion brand.

I love that thinking.

We talk about wearable technology.

Some of the technology out there makes you look cool.

I look around the newsroom and everyone is wearing -- like google glass.

It is a fashion statement, some of the technology coming out.

It is.

Apple is a sexy product.

The iphone and ipad.

I think it relates to fashion.

I am sending a movie out right now.

This is tom's. it is my fashion movie that just went out.

I have robert burke with the dogpatch filter.

Worked out perfect.

He will tweet that out.

Seriously, so far from meryl streep and " devil wears prada." thank you.

We want to bring your attention to the new cover of " businessweek." this is bloomberg "surveillance." streaming on your tablet, television, and bloomberg.com.

Do you bake?

No, i don't. ? it is peaceful.

It is gorgeous.

We had snow in the month of january and now into february.

New york city on a crisp, gorgeous thursday morning.

Possibly we will get another store in this week.

Boycott we have had a lot of snow.

This is bloomberg "surveillance." -- boy, we've had a lot of snow.

I have practically broken all my shovels with the snow coming.

The clusters in the ukraine were on the move with our march toward parliament.

--protesters on the move in the ukraine.

They repeated demands for presidential elections or changes to the constitution.

The olympic torch has finally arrived in sochi.

The torch traveled 39,000 miles to reach the olympic the nest -- destination, the longest relay in the history of the olympic games.

It was transported by cars, trains, and reindeer sleigh and stopped at the international space station.

Call it a protest beer.

Just in time for the olympics.

A scottish burberry -- brewry has introduced a beer of vladimir putin wearing makeup.

He says he is protesting russia's anti-gay law.

I wonder how that went down the?

Top headlines.

You really wonder with the reporting we have seen so far out of sochi, you wonder where we will be in three or four or five days with the media and doing what the media does.

Watch out for toothpaste tubes.

See our interview on bloomberg tv plus with ian bremmer yesterday.

Sharp lyrical comments on so she -- sochi.

Since the start of the year, the s&p 500 has fallen almost six percent.

Correction has become the watchword in markets right now.

According to dan greenhouse, corrections are not normal.

We do not get a lot of them.

No 10% corrections during the last rally, 2003-two thousand seven.

If you go all the way back to 1960, only a couple of instances where the market falls more than 10%. from 1990-19 97, no 10% corrections either.

-- from 1990-1997, no 10% corrections either.

They are not frequent.

We have the ecb this morning and then the press conference and then janet yellen's first comments to congress.

You wonder where the level of distortion will be and how it plays into the markets a week or two from now.

There may not be a lot of corrections in the u.s. stock market, but we see a lot more of them in the emerging markets, whether it is china and japan, given the volatility -- the usual metric is 10% is a correction on the dow and s&p. 18% is a little controversial, but 18% would be a bear market.

We are really not there right now.

We got some great photographs today.

Betty liu came in at 2:00 to sort through.

What do you have?

Let's lighten things up a little bit.

Rockets.

Iin grand central station, a new preview of the show.

This is what they do when it is not the holidays.

I guess.

Lex my reaction was, they still exist?

-- my reaction was, they still exist?

I do an exercise class with a rockette.

You never want to stand with her.

Putin visits a leopard breeding center at the national park in sochi.

The leopard is one of the official mascots of the winter games.

That guy is just always looking for a good photograph.

In his defense, what guy like him isn't? they are all looking for photo ops.

The way he is with his shirt off writing a worse.

Now posing next to a leopard.

It is a little much.

Leopards have doorknobs on their cages.

We took this really cool picture from space showing the aftermath of an asteroid smashing into mars.

The crater at uc is up 100 feet in diameter, a fourth of the asteroid that caused it.

It sent debris as much as nine miles away.

Mars is called the red planet.

The crater appears blue because the impact removes the reddish color.

Nasa got the picture.

So fascinating some of the pictures we're getting from space.

All right, that is reality.

Not to reality.

Sandra bullock looks especially good in " gravity." have a great fashion week.

What is the one brand you are looking for quickly?

I am looking at jason wu for hugo boss.

He is the new creative director and is launching a women's line.

Showing in new york for the first time ever.

He has been fantastic.

Michelle obama.

Very cool, jason wu.

My next bowtie.

Thank you.

Coming back, we will talk about the jobs report coming out friday.

What are we expecting ahead of it on friday?

That is coming up next on bloomberg "surveillance." ? good morning, everyone.

Bloomberg "surveillance." the focus tomorrow will be those that keep the statistics for the jobs report.

We will have.

On bloomberg news, radio, and television.

We will go underneath the headline data.

I am scheduled to speak to william gross at 8:30 tomorrow morning.

Joining us is michelle meyers.

Senior economist at bank of america merrill lynch.

How does the weather, how does the cold of this january play into what you and ethan harris do?

It fairly complicates forecasting.

I think in general it dampens economic activity.

People are not out spending as much.

Manufacturers have supply chain issues.

Clearly construction will be hit by cold weather.

Here is what is complicated about forecasting jobs.

You have to look at the survey week.

The survey week for january was the one week of the month that was a little bit warmer than normal.

Relative to the december week am a witch was cold, we expect to get a little bit of a stronger number friday.

We are at 185 am close to consensus.

There is a real mystery to all of this.

There is a mystery to interpreting the data once it comes out.

If you get an upward surprise, and that a weather refund or tell us something more fundamental about the economy?

What about ism?

Seems to be the one point everyone focuses on.

Is that the right way to measure how we are doing globally one country versus another?

It is a good comparison.

That is why i think it is the same index that has measured in every single country.

A nice way of looking at global comparisons.

In general, manufacturing is something that is easier to measure than services, for example.

It is harder to measure in real time.

The other challenge is it tends to lag a little bit more.

Manufacturing is more cyclical.

I have a quick question.

I am a tech guy.

Do you think we are looking at the right data at?

We have what we call a programmable world.

There are more and more things we can measure.

Many of us feel that the fed is not taking advantage of the resources available to get a more real-time view of the economy?

I think that is one of the challenges in general.

In real time to measure the true underlying strength of the economy.

They are constantly doing benchmark provisions -- revisions and trying to incorporate the change in technology.

With the gdp benchmark revision, they incorporated more technology.

I think they are trying to adapt.

Would we get to a more real-time, not waiting to announce a once per quarter end of announcement or get to her real-time measurements because it is certainly possible based on the data out there?

I am sure it will continue to evolve.

I think we will get more and more indicators.

I think this is just one of the challenges of trying to get a comprehensive measure of the economy.

It takes time.

You need to have smoothing fx, and need to have something to account for the weather effects.

You need to know what to look for.

As we are looking for more accurate forms of data, we are also looking at the data we have now, and saying maybe they are not as accurate as we once thought.

The jobs report that comes out friday, mohamed el-erian writing that it is becoming less and less important.

Employment will become a widely followed releases, but unless analyst at the forecast really wrong, we should expect it to have a diminishing role as a mover of prices and policies.

I think the markets pay attention to it.

The unemployment rate has a diminished importance.

It has been falling much faster than expected.

In terms of gauging the economy in real time, i think looking at non-foreign payrolls is one of the best indicators.

Michelle meyer's with us.

I will talk to her about housing in the next hour.

Speaking of the fed, they threw a going away party for been burning goal -- ben bernanke.

The theme was baseball.

They made up these ben bernanke baseball cards.

Dressed in a nationals uniform.

On the back are his stats.

Chaired 86 fomc meetings.

And appeared on " 60 minutes" twice.

That is cool.

I love that.

That is actually kind of fitting because today is the first day of spring training.

I wrote my first article today on baseball for 2014. i am pleased to report the yankees infield looks shaky.

After hearing about curt schilling?

Curt schilling of course a true hall of famer.

Did not say what type of cancer and no details on prognosis.

But did say he has cancer.

Not everyone knows -- everyone knows curt schilling will do the best ever to fight cancer.

Here is the report.

Dollar-yen, that shows calm.

Euro-yen 137. argentine peso does better for the first day in ages.

We will have more.

It is bloomberg "surveillance." ? this is bloomberg "surveillance." twitter shares plunge.

Little u.s. growth of users.

More online america.

In this hour, betty liu has a conversation with timothy armstrong of a oh well.

Puerto rico downgraded to junk.

You have to take advantage of tax-free bonds, but should you avoid san juan?

Good morning, everyone.

This is bloomberg "surveillance." it is thursday, february 6. i am tom keene.

Joining me is scarlet fu and betty liu.

Guest host for the hour, michelle meyer, senior u.s. economist for bank of america merrill lynch.

Getting right to the morning brief.

Here is betty liu.

We have lots of economic data this morning.

Trade balance and initial jobless claims will be out at 8:30. our own bloomberg consumer comfort index will be out.

Breaking news coming out from the bank of england.

They will hold their interest rate at 0.5%. that was widely expected.

No surprise there.

We are watching the ecb as well.

Their decision comes out at 7:45 this morning.

Four of the economists expect him to cut rates.

This is a big deal.

It could really move markets.

We are now from boring to actually a big deal.

Ecb press conferences are never boring.

The parade of earnings continues before the bell.

Edna, gm, 20th century fox and ao well reporting.

We will be speaking to tim armstrong, ceo of ao well.

The olympics begin today in so cheap.

The opening ceremony is tomorrow.

The torch, as we mentioned, has arrived.

Has putin arrived?

He is in sochi, correct?

He is an earth guy.

A sensitive company news this morning.

Scarlet fu has that.

I want to start with aol.

Revenue of 13%, 670 $9 million, beating estimates.

Adjusted earnings per share of $.64 per share.

-- revenue up 13%, $679 million.

A lot of critics around tim armstrong.

There are.

A lot of them centered around the cash part of the company.

He would not say disasters, but startling.

He started the company and sold it to aol.

They have offloaded it to an investment firm.

There will be a lot of questions about what went wrong and where do they go from there.

The mobile part of the business just did not work.

The other part will be how will they drive core display advertisement growth?

How will they do that through google and facebook?

That interview in just a little bit.

Getting to the other company news.

A shocker from sony, forecasting a $1 billion annual loss.

Three months ago predicting a profit.

Sony said sales of the mobile product have been weak and revenue of the communications unit will be below forecast.

Also, 5000 jobs will be cut in another round of cost-cutting.

They are ready announced 10,000 job cuts.

Shares of green mountain coffee roasters storing more than 40% in the premarket on news that coco: is buying a 10% stake in the company.

They will help green mountain introduce a new cold beverage system.

Look for that.

His name' -- disney's "frozen" helping the company top profits last quarter.

They have taken an $865 million worldwide.

-- taikken in $865 million worldwide.

? let ither go ? we spoke with bob geiger about the potential for mobile.

I love mobile technology.

Particularly in television on the when you think about it, if you wanted to watch tv before, you had to watch it on a fixed screen, typically attached to a wall or on a of some sort in the home.

You could not watch tv all square.

You now have the ability to do that, and that is only going to grow.

If your ability to access products grows, then your consumption will increase.

That is a great thing for creators and distributors.

Disney reported record attendance of the three theme parks.

Have you gone to disneyland or disney world yet?

I went to disney world in florida a few years ago.

I survived.

I used the app that tells you where the lines are the shortest, and that helped a lot.

When they open up the "froze n" parts of the theme park, you can go there.

Traditionalists.

Getting to the news.

Twitter came out with earnings.

We talked earlier about the conference call.

Let's talk about why the stock is down.

Things are slow there.

User growth plunging in the premarket.

A are a social media giants as they look to build a mass market presence.

David kirkpatrick with us.

His book " the facebook effect" which i feel is a must read.

Michelle meyer with us with bank of america merrill lynch.

If you wrote the twitter effect, what would you write?

I think you have to think about the company and stock in separate universes.

The stock is crazy.

The company is a very good brand, a good company with a great strategy and nice -- good ceo.

Using the revenue run the ipo to improve its business aggressively tom up but it is nowhere near worth what the market did it up to in my opinion.

It is not a company in my opinion that deserves the comparisons that are so frequently made to companies like facebook and google.

It is a relatively small business that is a very important mutations company but a massive -- but not a massive global powerhouse.

It is an incredible brand, and the media uses it to let leslie and obsessively.

-- uses it relentlessly and excessively.

I love twitter.

Do they need an instagram purchase?

What kind of acquisition?

It is funny, the kind of thing facebook is trying to do, they will probably try to do like buying snapchat.

If they had 5 billion or whatever they want, they would probably be well advised to do that.

Facebook has an interesting strategy of building a portfolio that is not just facebook products but they have instagram, messenger, and a groups product.

Those are almost like a conglomerate of internet companies.

Twitter needs to go that way probably, because the core product is very hard to use.

Do we see an effect on the real economy?

Our attention span, information flow?

You would think it would make us more productive to a certain extent on the one hand, because you have a share of information.

Or businesses, consumers, you know what the most efficient way to and spends -- way to spend and invest in.

But you have to ask, it is a distraction from our day to day jobs go it depends on how it is used.

I think in general social media technology is productivity boosting.

I totally believe that by the way.

Do you use twitter?

We are not allowed.

The lawyers are saying you cannot use it.

Before we go here, the idea of microsoft, you have some strong opinions.

I am trying to write something today about it.

I was able to sit down with him in november.

I was so impressed.

I have lunch with him the day his name first appeared on the shortlist.

It was not something he could really talk about, but the centrality of the cloud business to everything they do and how they will develop the inner's -- the cloud apps.

The one interesting thing he said is they no longer have singular developers.

The backwards engineer a product they can sell to other people.

When you look at the effect at microsoft, will he go on to microsoft or deballmer tehe company?

I am not sure what that would imply.

He is a much friendlier face than they have ever had.

Till gates is a genius, incredible visionary, but pretty rough character to deal with.

Ballmer was so intense he was not very friendly.

This guy is super nice, super smart.

I think he will prevent over -- presents a wonderful face to the company.

He is an indian national.

A truly global company.

He is in american now, but born in india.

A different kind of personality.

I am a huge fan of what he is capable of.

Is he well liked in the company?

Loved.

Although not necessarily the one they thought would get it inside the company.

David kirkpatrick bullish on microsoft.

I just got a tweet that i am not singing the "fronzen" song correctly.

This is a shattering moment.

Michelle meyer, guest host for the hour will be staying with us.

Coming up, we will talk about puerto rico on the brink.

$70 billion in debt.

We will dig into the island economy coming up on bloomberg "surveillance." on television and radio.

? good morning, everyone.

Bloomberg "surveillance." i am tom keene.

This matters now to the guest host.

Michelle meyers was way out front on last years housing recovery, writing about supply and demand dynamics that would lead to double-digit gains in price.

2014 looks to be a different beast, to say the least.

Is it about supply or lack thereof or the lack of demand?

A little bit of both.

In general what we have seen is inventory remained very low.

Part of that is supply was slow to come onto the market.

Construction has been very slow.

There is a big lag from start to completion.

We have not seen much of completed homes into the market.

That slows turnover and sales.

We are still in a low inventory environment.

We talk about distortions.

We have the ecb coming out in this hour.

Distortions in central bank and this and that.

Is the housing market still distorted by so-called distressed properties or is that old news?

It is not as distorted as last year or the year before that.

We are far from the normal market still.

There is plenty of areas.

Florida for example.

New york has a high level of distress inventory that is still word -- waiting to work its way through the system.

We are not in a normal mortgage condition either.

We are still adapting to the regulatory framework and the future of fannie and freddie.

In the interim, we are in a network of tight credit.

I need your view of single digit market, but what is the exact number?

Five percent home price appreciation.

Historically, not all that bad.

We will take it and say thank you.

Yes, i think it is perfectly reasonable home pricing.

The cliche is wages.

Where are the wages?

Wage growth has been extremely lackluster.

That is a factor that is why hang on primary home by yang.

The big source of appreciation in 2013 was from clearing out distressed properties through investor buying, all cash by yang.

Second-home purchases.

The incremental demand.

The challenge going forward for the housing market is to get the first time homebuyer back into the market.

That is where we struggle.

Michelle meyer from bank of america merrill lynch.

She will be with us through the hour.

This is really important for each and every one of you taking advantage of tax-free bond.

Talking about train wreck puerto rico.

We will do that on this busy thursday morning.

This is bloomberg "surveillance." good morning.

? good morning, everyone.

Bloomberg "surveillance." i am tom keene.

With me this morning is scarlet fu and betty liu.

Our guest host is michelle meyer.

Lex protesters and the ukraine were on the move with the march towards parliament.

-- protesters in the ukraine were on the move with the march towards parliament.

They repeated demands for presidential elections or changes to the constitution.

One month into this.

Hundreds of thousands of people that -- jammed downtown seattle for the parade honoring the seahawks in the super bowl win this weekend.

Layers and coaches traveled at two mile route.

Police estimated the crowd at 700,000, which if accurate, is more than the city's population.

An australian woman has won the race up the stairs of the new york empire state building.

She climbed to 86 flights of stairs and 11 minutes.

The winner of the race long the time of 10 minutes.

They would take me probably a day.

-- it would take me probably a day.

Nice work.

I took two steps at a time.

That sounds about right.

Betty liu, thank you very much.

Very cool.

You and i should do that.

We could hold hands.

Two weeks into it.

This is serious.

This came up the other day front and center.

Puerto rico is simply on the brink.

70 billion in debt.

Eight-year-long recession.

Interesting politics with the united states him at the relationship somewhat affiliated with what we know of guam.

Digging into the economy of the island, michael mckee.

What is the number one thing i do not get about puerto rico?

Most people do not realize how indebted they are and how much that could influence the overall muni market and mom and pop because they have a lot of investments they do not know about.

Some people say this could be the next greece.

It is possible.

They have 70 billion in debt him as you mentioned, and they cannot pay it at this point.

The island has been in recession for eight years.

The question is, can they continue to borrow to fill the whole?

Which is what they have been doing.

They keep borrowing and expanding the amount they owe.

650 million dollars is the deficit this year.

You and i got to scathing e-mails saying the market is wrong on this.

-- two scathing e-mails saying the market is wrong on this.

You have to read between the lines.

They can continue to pay the debt.

You look at the yield and trading at emerging-market levels, about 400 at the basis point spread to normal aaa ratedmunis.

-- aaa rated munis.

So many bond funds, three quarters of all bond funds own puerto rico debt.

A lot of people do not know it is in there.

So if they -- the hedge funds can take advantage of it, but the average fund will not be able to.

They could face the possibility of having a lot of the portfolio default.

What could policymakers do?

Obviously one comparison is it cannot be valued at currency.

What are the other options?

Puerto rico has a real problem.

There are not a lot of options, except to pray for time and take steps.

They have raised taxes significantly.

They are also trying to stimulate growth and cut spending as much as they possibly can, which of course is always politically difficult.

Bringing down the deficit and, while at the same time hoping the market tanked in for them.

Is congress thereir imf?/ in theory you could ask for a bailout.

Detroit went bankrupt and they did not do anything for them.

How would you do that politically?

Wasn't there a backdoor bailout a couple of years ago?

Manufacturing facilities were being taxed.

The goal was to raise money.

The multinationals were able to claim the taxes against federal companies.

It is considered foreign income.

So the irs has been letting it go as a credit against the taxes they owe in the united states.

While they have raised taxes and puerto rico, it has offset for many of the companies in the u.s. the obama administration says we are not doing anything for them publicly, but at some point this is a little bit of a backdoor help for them.

In what hostile bull scenario could puerto rico be like greece?

--in what scenario could puerto rico be like greece?

A company headquartered in virginia, 31% of the portfolio is puerto rico bonds.

If those default, everyone defaults and the portfolios will start to default.

Are we anywhere near -- you and i have been talking about this for at least five years.

Are we near, mom and pop watching the show who have a national portfolio need to start to worry about this?

Yes, we do need to start to worry about it, but whether or not we are really close to it is a real subject of debate.

We talk to someone on the show a week ago who said we are very close.

We will talk to john carmel later who says no, there are opportunities to make money off of this and hang in there long enough.

After the s&p downgrades, there are real questions.

Michael mckee on puerto rico all through the day on bloomberg television.

Lex we are keeping our eye on aol.

Delivers the strongest revenue growth in a decade.

Tim armstrong joining us in just a moment.

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

We are seeing live shots of sochi, russia, where the games begin today.

Shaun white is somewhere in there.

Lex olivia sterns will be there.

I think in the building on the left.

-- olivia sterns will be there.

She will be watching hockey.

She is going.

She is very brave.

Ian bremmer tried to warn her.

A big debate, should you go to sochi?

Quiet right now.

Would you go?

I would not go.

I do not know.

I have not thought about it.

Going to company news.

A legal win for bear stearns.

Winning a dismissal over a lawsuit.

Srm lowball lamed it lost more than $2 billion for lying on a statement about securities.

A judge ruled it took too long to file the suit.

Meantime, legal costs taking a bite out of credit suisse bottom line.

Missing profit estimates after setting aside $570 million in legal provisions.

They are facing litigation related to mortgage securities and faces an investigation into whether it helped american clients evade taxes.

And, subway will remove the chemical from its bread after health activists criticized - the chain.

Apparently it is used for the same reason in some breads as a dough edition are.

Subway says it is in the process of removing the chemical.

That is today's company news.

I would not want to go there.

Iowa state there was something weird about their bread.

-- i always thought there was something weird about their bread.

Revenue is a little bit light.

45 billion versus the estimates of 49 billion.

Eps is a significant miss on first blush.

European operations continue losing money.

North america making 1.8 billion dollars before interest and taxes.

You have to believe it is a kitchen sink quarter.

They want to clear things out.

The first earnings report as ceo.

Dealing with investors as well on the conference call.

Certainly the clock starts now.

She is under pressure to continue to grow general motors.

Yesterday, speaking of under pressure, sam delk, the billionaire investor feels the one percent are under pressure.

-- sam dell.

We got into a conversation about the income inequality debate, and i asked him whether he agreed with tom perkins of kleiner perkins, venture capital investor who made waves last week, saying he feels the one percent are being demonized.

Persecuted like jews.

Sam, who is jewish by the way, agrees completely with tom perkins.

This is part of what he said to me.

Teh qhe quote one percent are being pummeled, because it is politically convenient to do so.

The problem is the world in this country should not talk about and be of the one percent.

It should talk about emulating the one percent.

The one percent work harder.

The one percent are much bigger factors in all forms of life.

It was the last part that really angered people.

The one percent work harder.

That you should emulate the one percent.

What are you trying to say is what people are getting at?

Michelle meyer with us with bank of america merrill lynch.

The pew research trust goes to seven percent.

With all the work that you do and the wonderful perspective you have, how much are the haves and have-nots?

Certainly, and this is a great deal easily number there has been a widening and income inequality.

You see it in the data and in terms of household balance sheets.

The large gain in financial assets we experienced last year is highly concentrated in the upper income individuals.

So i think this is a challenge for our society and something we have to consider.

Something that sam said that we should pay attention to, he said regulations are making it harder for people to start businesses.

It is making it harder for small businesses to grow, so she -- so we should look to the government to try to close the income gap.

Is that something you agree with?

I think in general, yes.

Another approach is how about education reform?

Trying to create opportunities for people to get higher education, and perhaps have the higher income.

We will continue the conversation.

A data check.

Futures on the move.

S&p futures.

Jobless claims.

It comes in front of the jobs report for january.

Good morning, everyone.

Bloomberg "surveillance." on bloomberg television and bloomberg radio.

All of our interviews on bloomberg tv plus.

Look for us on apple tv as well.

I am tom keene.

With mia scarlet fu and betty liu.

Joining us this hour is michelle meyer of bank of america merrill lynch.

Aol came out with earnings half an hour ago.

Beating earnings and revenue estimates.

Revenue growth was the strongest in the last quarter in a decade.

Shares are up to do six percent so far in the past year.

They are higher in the premarket as well.

-- shares are up 56% so far in the past year.

We are joined by the aol chairman and ceo, tim armstrong.

Good morning.

You must be feeling pretty good about this quarter.

The question that analysts and investors have for you, and have always had for you, how do you continue to keep growing the advertising revenue, particularly display revenue, which is a big part of your business?

First, congratulations on your book.

The theme of your book is the way i think we will continue to grow, which is leadership.

The focus of the company has been to choose very large spaces we can compete income display advertising being one.

When you look at the result, we have record results for the past decade, and a lot of it is driven by advertising.

That is coming from video, programmatic, mobile, and really the absolute tailwind from consumer usage on digital services, not just our properties but 40's -- 40,000 publishers we put content and advertisements on.

People say part of how you will keep out -- adding users and growing the revenue is by bumping up your premium content, which i know you have been doing consistently over the past several years.

What premium content do you want that you do not have right now?

Sure.

Our strategy overall is to be the leading media technology company in the world.

Within that, we have focused on three big areas.

One is rebuilding aol service.

The second is content.

Third are platforms that scale not just through aol but across the web.

In the content rand pocket we have focused on things that are long-term human need.

-- contrent brand bucket, we have focused on things that are long-term human need.

The third one is women.

Women we think are underserved on the internet.

You have been involved with this with the makers project.

We have the first conference next week in l.a. i am a big believer in brands and would love to have more content brands and more platforms to serve, not just the ones we own but across the internet.

Speaking on brands, i know you sold a majority stake in patch, a local news service essentially.

Was it hard?

It was a pet project of yours.

I think it is the right outcome for aol, because it is 150 billion dollars space.

We have almost won a million consumers in that space.

The product had to be restructured.

I think it will be restructured more successfully than it would on our own.

We will hang with hail, and we are big owners of the property still in will work with them.

One thing we have been able to do with hail, and the rest of the content partners, we just purchased content brands that will get more personal.

What will hail do that aol could not do?

They are focused on the community platform.

We have great editors reducing a lot of content, but really, the focus on the technology stack for what they will bring to the table, i think they will bring a faster way to restructured the product.

A few more seconds.

A lot of rumors about a possible tie up with yahoo!

At some point.

Is this possible ? we are are ready tied up with them.

A further merger perhaps?

That is above my pay grade.

We are focused on turning aol around.

That is what i am focused on right now.

Great to talk to you as always.

Tim armstrong, chairman and ceo of aol.

We will be right back on bloomberg "surveillance." ? good morning, everyone.

I am tom keene with scarlet fu and betty liu.

Gm right now.

Starting with garlic you on twitter.

Twitter shares are down big time.

Down as much as 21% earlier after the company reported a first earnings report as a publicly traded company.

Still losing money, 500 $11 million loss.

Twice as big as expected.

The big story is growth in users.

Slow down to a 30% increase.

The stock is taking a big hit this morning.

It makes you wonder how many will join twitter.

Green mountain coffee roasters up over 40% in the premarket on news that coca cola, the soft drink giant, will by a 10% stake in the company for $1.25 billion.

That will help them get into colder drinks.

Coca-cola will help.

A big boost.

Gm.

earnings crossed about 10 minutes ago.

A big profit missed, but if you act out one-time items, still a big decline.

$.67. i would suggest a real mess.

The gm cmfo says it is due to restructuring costs and higher taxes.

Look at china headline.

Non-china losses across-the-board deterioration.

It shows revenue light.

39 billion versus expected 41 billion.

With michelle meyer here, this goes what to madame lagarde was talking about of the imf.

A dampening about brazil under three percent.

How does that dovetail into the american economy?

We are clearly an opening economy.

Manufacturing in particular will get hit the hardest.

You are seeing that in the automakers.

European business is obviously still a very weak spot for manufacturers.

Looking to take market share and china, and that has been a big supporter.

You guys lead on gloom, and then we got better.

Are you going to revert back to ethan harris' gloom?:; no, we're still optimistic.

We think the fundamentals are supportive for growth.

We are sticking with the forecast for three percent growth.

The household balance sheet is a lot healthier.

If you look at the head winds out of washington, much reduced relative to last year.

Sticking with a much more optimistic call.

The driver of automotive manufacturing will not be a good headwinds for the economy anymore.

Inventory is so high now.

Right now we do have high inventories, and that will have to be worked

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

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