Ukraine in Flux: Surveillance (2/24)

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Feb. 24 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Richard Falkenrath, Jeffrey Sachs, Christy Wyatt, Michael Wolf, Hans Humes, and Rep. Randy Forbes. (Source: Bloomberg)

There is a manhunt for the former president of ukraine.

After sochi, putin and russia assessed their relationship with the west.

Jeffrey sachs of columbia university joins us for the entire hour.

Mobile technology leaders meet in barcelona and ask what is up.

Good morning, everyone.

This is bloomberg "surveilla nce." it is monday, february 24. i am tom keene.

With us is adam johnson and scarlet fu.

The ecb president mario draghi said policy makers ready to add stimulus if the race in -- deflation risk rises.

Yesterday german business confidence unexpectedly climbed to the strongest level in two point five years.

Chinese stocks fell the most in seven weeks.

The problem in china.

Economic data and the u.s., the chicago fed national activity index.

The dallas fed manufacturing activity also.

We are so about 20% off of the highs.

We have earnings today.

After the bell, solar city.

Doing a monday data check for you.

An interesting week as we raced through the first quarter 2014. futures flat.

16,103. euro advances.

That is important.

And in elevation there.

Hydrocarbons elevated.

Onto foreign exchange handle with a little bit of oil as well . is gold currency?

Russian ruble does better.

In the last hour it has come back a little bit.

All in all come the stability off of the cacophony of the weekend.

We have scoured the ski slopes of northern new england to find scarlet fu returning from a snow bank.

I survived.

Well rested.

Nine hours of sleep one night.

I love the photo drop of you coming out of the helicopter.

Likes the ukraine topped the front page this morning.

Issued an arrest warrant for the ousted resident who has fled the country.

They are on the wanted list for their role in violence that killed more than 80 people last week.

He was last seen in a pro-russian region.

A lot of interesting stories of his palace and mansion.

Also, documents word dumped in the ukraine that were years of lavish spending by the president.

You know what is curious about that, you think of putin, a man that respects strength him and yet demand that they backed is now on the run.

As the same time, the ukraine interim government says it needs $35 billion in aid to avoid default.

The numbers keep getting bigger.

The imf alleging support.

That is right.

More about later on.

The second front page story could be a landmark deal.

Netflix agrees for more direct access to comcast broadcast network.

We do not know the amount of the deal.

Millions of dollars per year is what we're hearing.

The reliable speed and make sure viewers can watch the latest season of house of cards without an eruption -- interruption.

They're paying money to get this.

This has been widely predicted we would get to this point.

Craig moffett i think.

You wonder what this means in terms of net neutrality going forward.

In other words, a disadvantage?

I must say my goal is to understand what net neutrality means.

Third -- front-page story.

Mobile congress gets underway in barcelona.

A lot of products being unveiled.

Samsung botching the next-generation smart watch.

A smart bracelet as well.

Apple everyone is waiting for some kind of watch later on that could come out later this year maybe next.

This is like las vegas but in barcelona?

This gets a lot of people excited.

Talking about the kind of economy it generates, to.

Mark zuckerberg giving a keynote address as well.

Wearable technology, mood rings.

They knew back then how we felt.

Like front-page stories.

We are focused on the events in the ukraine.

For that matter thomas our guest host of the hour, richard falcon last -- richard falkenrath.

To be kind, one of the great authorities on the economy and interesting relationship, jeff sachs.

Cannot do better than that.

We will talk about russia in a bit.

Is bouput trying to make a new russian blockin ? of course he is trying to maintain the strong russian influence in his region, middle east and syria and elsewhere.

I do not think it is so much a soviet bloc, but russia does have important interests with the eu.

I think the eu has neglected that.

This is the country in the middle.

If the eu pushes all the way, ukraine, you are hours.

As you see it, where well the compromise be?

I think if ukraine is going to continue exist, it will need some form of federalism that takes into account of the difference.

The base of the rupture in and russia.

1954 when it was transferred to the ukrainian process.

It is -- if there is one single flashpoint, it is this.

We had two votes and two shifts.

Mount whitney and taylor.

Do we put shift in the black sea or eastern mediterranean with the 6'8" as a signal to the russians as a year port -- as an importance.

-- with the wardens as a signal?

Goes to war sheep -- warships work under the aircraft carrier would be over it.

They had to say in the context of a larger dispute with russia in the earliest part of the 20th century, turkey can control the street come up but it cannot let in non--waxy warships.

You are a former advisor to the government of russia, trying to help grow the economy.

How much is about this, the flow of oil?

I think first of all ukraine is a sizable country and sizable part of russia's trade.

Again, russia has interest in ukraine.

It was deemed as part of russia through most of modern history.

It's a restaurant -- russia has strong connections in and shipments and of gas but across the economy.

Last year when ukraine was negotiating with the eu on succession, i think there was a lot of neglect.

It was not that russia was stopping the deal, but a lot of the correct about russia's real interest in what would otherwise be massive trade version.

Why has russia been so silent officially streaking to what is going on in the ukraine?

There has been talk about a western engineered to.

It was amazing on friday across the bloomberg terminal to not see what was there.

Some of the closest western observers are saying russia has not played it strong hand, the idea that he was just a russian puppet is not right.

What is interpreted as all putin's manipulation has been denied by observers.

He is not delivering.

They did not want offense in the village of the olympics.

The circle of the olympics that did not work, that was jeffrey sachs fault.

We have blamed you for everything else.

Jeffrey sachs with us.

On this monday, getting company news.

Here is scarlet fu.

A cost-cutting drive at hsbc falling short of the goals.

Disappointing cost savings and a drop in revenue causing the bank to post estimates that trail.

Profit was 26 .6 billion, 2 billion lower than forecast.

Hsbc has closed or sold 63 businesses as it tries to reduce cost.

Ubs wants immunity in the global investigation of currency markets.

The swiss bank trying to become the first two report the conduct to american and european regulators.

Ubs employed a similar strategy last year when it disclosed is -- it's role in the libor scandal.

Las vegas sands targeting japan.

They are ready to invest $10billion $10 billion in the country according to the ceo.

Casinos are banned in japan but confidence is growing they will eventually be legalized.

He said he would consider working with a local partner in the country.

Never thought about it.

We call it las vegas sands, but 70% of the revenue comes from -- we ought to call it global sands.

I can see the logos all over tokyo.

We have much more coming up.

Including dumping microsoft software for blackberry.

How will this affect them?

We will discuss that next.

This is bloomberg television streaming on your tablet, television, and [indiscernible]

? lex good morning, everyone.

I am tom keene.

Bonds are up.

Yields are low work.

-- lower.

Still front and center in the news.

By them at 11.5. he will join us later in the hour.

The only american on the debt restructuring committee.

If you have german afford recently, you might have problems trying to deal with the platform that was microsoft.

Guess what?

Microsoft is out of their.

They said with auto sales peaking, this is where the battlefront will be.

Trying to find a new way to trade in the vehicles for newer vehicles, particularly those with other integration of technology.

-- better integration of technology.

Choosing blackberry instead.

A little bit of a surprise here.

Here is the thing, ford has slumped in jd power and surveys because a lot of customers have cited my functioning -- my functioning tech systems.

This is a top selling point for 39% of car buyers, compared to say power and speed up 14%. the ability to make phone calls or do searches just by using your voice in the car.

Jeffrey sachs has a 1937 ball willvolvo.

We do not get this.

Black hairy?


They have been using this system for 30 years.

Who knew?

They are ready have deals with nissan and other companies.

It is the stuff that links all of the telecommunications equipment, not just the phone but everything else in the car like gps.

Managed to control nuclear power systems and drums.

Directing guidance systems.

There are other vendors for the drones.

And may have applications in the area, but there are a number of niche workers for drone off rating systems already.

I did not see blackberry practicing that.

Like apple is in bmw in the song.

Carved up among the big tech layers.

Google in gm.

We mentioned in ford in blackberry in bmw.

You are suggesting people buy a car because of the systems.

People are buying a car in terms of what works for them like technology.

39% based their decision, top selling point for a cart is the in car technology.

This is technological process -- progress.

We would not have this conversation five years ago.

Of course.

We will see information technology penetrate every single sect or, transform every single sector of the economy.

Where is samsung in this?

At this point not even in hyundai or hyundaionda.

Probably more focused on hardware right now.

I did not see this.

It goes 40 miles.

Faster than the corvair.

Fair enough.

Coming up in the next hour, and radio, the founder of activate, michael wolff will join us to discuss the implications of the netflix comcast broadband.

This is bloomberg "surveill ance." we are everywhere you are.

Good morning.

? good morning, everyone.

I am tom keene.

Gorgeous washington.

It a look gorgeous sundaes.

We get up at the crack of 8:30. sleepy washington.

The only one up in the entire city, peter cook.

Futures up one.

That futures up to.

Top headlines.

In bangkok, and the explosion at a main shopping district that killed three people, including two children.

The attack came at the heart of the city.

An area where one of the protests have been staged for antigovernment rallies.

Jason collins became the first openly gay nba player by signing with the brooklyn nets.

He played 10 minutes in the victory over the lakers.

He was signed to a 10-day contract.

10 days.

He is a 12 year veteran of the nba.

At the box office, the lego movie held off.

I walk in a movie to keep the number one spot.

Have you taken the kids?

Watched at the first weekend it was out.

Would you go?

I have not gone.

It would be creepy to go to the lego movie.

Worse if i went.

Tom and adam can go together.

Time for the morning must reads.

Jonathan golomb working at ubs.

A great research note.

Tapering expected to continue while u.s. import should rise on stronger u.s. gdp.

Emerging market concerns are likely exaggerated.

We recommend overweighting u.s. companies.

The optimist jeffrey sachs is with us on the resiliency of of -- of the american economy.

You are front and center of the mix of stimulus.

Are we the locomotive running the engine and will do better because the u.s. is doing better?

How can you have it both ways?

The stimulus of 2009 was in the final review.

There was a eulogy in the financial times yesterday as well.

I never believed in that.

I think what we need is a long-term strategy.

Stimulus came and went.

It did leave us with that.

But where is the old politics of another time and place?

They are the ones that did the long-term strategy.

Where is the interstate highway system of the 21st-century?

It will not be a highway system that could be fast rail.

Could be a revolution in the country that changes health care and education.

That is what we are not seeing.

That is not shovel ready.

That is what was missing then and still missing now.

You are long america, right?

The potential is phenomenal.

The skills, what this country could do but are not doing it right now.

In that sense, i am annoyed.

Is that because when you talk about technology, it is not jobs.

It is just deficiency.

It is quality of life.

Making the health-care system not the most expensive in the world.

Making it possible to get what we want in terms of what we need in health and education and systems failing right now.

Our infrastructure so antiquated you come back from any trip abroad and you are back in the middle of the 20th century, and you feel it.

La guardia, italian for sitting on the ground for four hours.

Joe biden highlighted that as well so eloquently.

A lot more to talk about with jeffrey sachs.

Russia won the medal count in the olympics, but it -- but didn't win the games?

Tweet us.

? good morning, everyone.

Adam johnson survived the perfect spring weekend in new york city.

Doing a data check right now.

I went away for a week and turned out stocks did not do much.

Futures right now not doing much either.

Up by less than a point.

10 year yield taking a bit lower.

A lot of questions on why the euro remains resilient.

Current oil down slightly.

Olivia sterns returning from sochi head to tail in the russian olympic outfit.

This went viral.

She wore the russian uniform at a usa-russian hockey game.

How can american room for the russians?

Speaking of the olympics, they are over.

The government seeks his arrest.

Jeffrey sachs have seen this before.

I will never forget the young jeffrey sachs is the return to america from the soviet union after the collapse.

I remember your voice on all things considering.

Is this anyway and related to old russia or do we get that wrong and a new putin trying to develop a new russia ? i think it is a? i think it is a new putin.

The country is economically stable.

It has had a decade of growth.

Of course buoyed by high international oil and gas prices . when i was there and listen to the economic debate, it was found, serious, forward-looking.

I was pretty impressed.

You wrote this up and project syndicate as well.

The focus is on the northern shore of the black sea.

Does russia consider that to be their territory?

Russia considers it to be a strategic interest without question.

It has military stakes, historic stakes.

It is the neighborhood.

If china side -- signed a free-trade agreement with mexico, the united states would take notice.

We would say excuse me, we have quintess -- have interest also.

I am looking, what has been written this morning in the financial times.

It is a potentially brilliant he's by him.

This is his neighborhood.

He says do not over do it.

That was my morning must reads.

National security advisor to jamaica carter.

He writes irrespective of what happens in the near future, i continue to believe sooner rather than later will be part of the democratic europe.

I saw this over the weekend and i'm thinking of dr.

Chicago -- shaveago.

Why is there a finland option?

That means they did not join nato.

They were seen as a buffer between the west and russia.

Russia is very sensitive to its neighborhood.

It has been invaded from the west throughout its history and take seriously not to have nato reach against it.

Finland was neutral but clearly aligned with the west.

That is as much a threat -- that is a threat to the russian president in a way that 50 years ago tank divisions would be a threat.

He has a different point of view about how the country should be governed.

It is not as if the people outside the ukraine are moving chess pieces around and can control this anymore.

What happened over the weekend was a result of the street.

What happened in the eastern part of the ukraine i think will be a result of what was ethnically russian ukrainians do . it still does mean in the u.s. and eu certainly have to be very careful and treat the ukraine issue together with russia.

They do.

They did not have much time because of the macro economic conditions.

You have a great euphoria of toppling the old regime.

There was a map of lemonheads where they toppled the statue.

What kind of role should the u.s. be playing right now?

Clearly we are in the backseat.

The foreign ministers of germany and poland are the ones who negotiated the deal that preceded the final collapse.

We are just in a supporting role.

Here is the thing, there is almost something offensive about those of us comfortably sitting in new york or in paris or in russia almost playing chess with the pieces that are internal.

How do we insert influence while still respecting the fact that this is a sovereign nation trying to figure out its own future he?

Precisely that outsiders have been playing chess.

When the you made its move last year, that triggered a resentment and divisions.

Today he says be careful.

I've the same time, a german writer writing in the new york times says germany must lead to get ukraine all the way into europe.

To take this back to my book about early winter, rick atkinson about moving from normandy to berlin.

Almost 100 pages on the basque -- backside.

Most people think to you all to.

The first observation was the amount of alcohol consumed out of record level.

Take us away from the myths and stereotypes we get wrong.

What is the thing we need to readjust in our thinking about the ukraine.

Ukraine was a battlefield for centuries.

Armies and tanks and coppery divisions marching back and forth.

I think those things are over.

The idea of any no attorney intervention, forget about it.

This is beyond what he did in georgia at the beijing olympics.

If there was the idea that anyone is coming to the rescue, forget it.

I want to go to a wonderful new book on russia and the united states.

What would be your to do list for vladimir putin right now?

As i said in a recent column myself about his economic to do list come a russia is a petro state clearly, but it needs something more than that.

It cannot just survive and flourish as a petro state.

What was arco -- also remarkable was how much know-how and technology but not integrated into world markets.

Russia still has the potential and i think should pursue it to build the high base economy.

That is what it has not adequately done.

Jeffrey sachs with us on russia.

Coming up on surveillance, we will take a look at inflation and productivity, the relationship.

As high inflation kill additivity?

Single best chart is next.

? good morning, everyone.

Bloomberg "surveillance." adam johnson making me feel ancient right now.

Good to have you back, scarlet fu.

Young adam johnson is here with top headlines.

Venezuela, the president accusing rivals of being fascists and banding with the u.s. to de-stabilize the economy.

The president made the comment and a tv interview last night.

Arrival fired act to save the world is starting to use the word genocide to describe you.

At least nine people have been killed in anti-government protests in the country happening over the past few weeks.

A u.s. army said to strength that shrink.

Proposing a defense budget that will cut the army to the smallest force since before world war ii.

Goes back to 1940. it calls for eliminating an entire class of air jets.

In egypt, the has designed.

A presidential election year.

The surprise recognition -- resignation follows weeks of speculation.

Those are your top headlines.

Peter cook will join us in the next hour.

The stunning headline back to 1940 on the defense budget.

They did a movie of the venezuelan road test, which is one level up.

Not just a protest, real heat to it outside the ritz-carlton.

This is a country that has more oil than any other country in the world.

If you look at total theoretical reserves.

Look at how the country is acting.

There was a real heat to it.

The lease working overtime in new york city.

Single best chart.

Our single best chart is on the relationship between inflation and productivity.

From ian shepardson.

The line line is inverted.

Shows inflation.

As the line rises, inflation is not -- is falling down.

"mind measures non-foreign productivity.

You can see there was a pretty clear relationship for a while, but it has broken down a little bit.

This is all depressed productivity growth, which has been struggling for 40 years.

The white minority official he suppressed because of the shock of the financial crisis.

Click the federal reserve and all the other banks with interest-rate policies.

Did you miss a single best chart on vacation?

Every single day.

Best photographs.

We have it covered.

The sochi olympic have come and gone.

Today taking a glance at favorite moments from the final days.

Number three.

Look at the angle.

It is shocking to think you can get down the mountain going that aggressively.

This is during the alpine skiing . look at the edges.

I love the fact that they're going 80 miles per hour.

Like shocking.

Ted ligety reaction to running off course in the second of to slog home runs last night during the men's alpine skiing.

Here is what happens.

You get to go down twice.

13 members of the field dropped out.

They are going down the course and could not hold it.

I sprayed the course with nitrogen.

Completely change the ways the skis interact with the snow.

13 guys stopped and lost it.

Could not hold the course.

It is crazy.

All we really had to do was go to winter park where there is plenty of snow.

Number one on the general -- drum roll.

The core just fireworks display at the closing ceremony.

An interesting run.

Fear of terrorism.

Overall the games ran smoothly.

Look at that.

Did russia when gold?

In the medal count they certainly did.

The u.s. got 28 medals in total.

The question as it may have run the medal count come up but did it when the olympics overall?

Or did someone else when?

Going to jeffrey sachs with columbia university.

A did better than expected, but quite a price tagged.

They carried it off well.

Maybe this is one exercise in massive public investment to get the best practices down.

I am afraid i cannot go down that road with 50 billion in so cheap.

In the end, with all the adults they pulled off quite an event.

What a price tagged.

You ready?

Here is your number.

33%. guess what that is.

The percentage of market share control of samsung last year.

One third of all the smart sold in the world.

The new -- will the new phone stave off a maturing market?

That is the conversation coming up next on bloomberg television, streaming on your tablet, phone and

? this is bloomberg "surveillance." getting you company news now from the files of bloomberg west.

We start with for dropping microsoft from black hairy.

The nexus someone values the blackberry qandx system.

The company believes it will increase flexibility.

Microsoft plans to push into mobile software.

Microsoft said it is working with qualcomm on the low-cost phone defined.

This will be targeted to developers and handset makers to be used in making their own devices for emerging markets.

Ibm extending cloud services.

The company making it easier for developers to build and adjust apps in the cloud.

Part of the plans to spends more than $1 billion on cloud software development.

That is today's company news.

Apple with security issues, and as we speak, i will download my ios 7.something.

I agree to the agreements.

By the way, not disclose for three days.

If you have problems, you were at risk for three days.

The gerbils turning.

Even apple.

An attacker with the privileged network position may capture and modify data.

This has existed since september 2012. this is a disastrous coding problem on the part of apple that affects the mobile devices and the desktop devices for which -- saturday at 3:00. it is still compromised.

It is a protocol that allows a browser to interact with the server and a way that they trust each other.

What it does is it defeats the ability of the handshaking device to figure out the person on the other side is who they say they are.

It is systemic and the problem with the underlying infrastructure that is disastrous for apple.

They are really caught red-handed.

This is not that they were hacked, this is just horrible coding and maintenance.

Thinking of all of this, we have the perfect guests to speak to this, christy wyatt.

She formally worked for motor roll up, apple and palm.

Now the ceo of the technology.

Providing secure mobile platforms.

Perfect person to speak to on this.

You heard that this is a problem with the coding and maintenance in less of an issue with how it puts together the software.

What is your take on this?

How big of a deal with this security flaw at apple?

I think the thing we have to always remember is these are consumer products and every consumer product will have a glitch here or there.

Every company does the very best they can to look out for these things, but i think organizations putting data out comes the high-level peace to remember, what are you doing to wrap around the data?

Security is never done.

You never point to our product and say this one is absolutely secure.

These things come up.

I think when you're thinking about mobility and security, you have to think about multiple layers.

They certainly come up, but is apple to focus on design and execution and less about the boring things like maintenance?

I do not think you could say that every security issue that pops up is the result of neglect did security or not mature processes.

You have to remember, these are complicated devices.

The processing power is what you saw in the pc a few short years ago.

They are doing rich experiences.

It is not as simple as saying if they just have that.

I think the true testament for country -- company is how they respond in the crises.

I did being transparent?

Do they know what is going on?

And do people know what tools will protect them in these kinds of situations?

Given the hold we have seen from apple, is it safe to assume samsung has technology gaps and problems with software?

I tell everybody that you should assume every product has some sort of issue.

We design our entire product on the assumption that every device is compromised in some weight.

There was a report that talked about the number of android devices that experience some kind of breach or compromised and the surprisingly high percentage.

You have to assume every device is susceptible in some weight.

Whether it is because the technology provider left the door open or someone trying to be malicious on the device.

Whether it is your personal data where your company data, i think that the discussion around being risk possible with data is becoming increasingly loud.


Thank you.

Former senior vice president of motorola mobility joining us from barcelona.

Headlines out from the ceo of what's app.

They commented about how the inter-release voice function.

The company purchased by facebook for a whopping $19 $19 billion.


Let's you are effectively putting verizon and at&t out of the business for $.99 per year.

It is incredible really.

Jeffrey sachs, thank you.

The ukraine and russia and the american economy.

Richard falkenrath will continue.

The forex report indicates stability coming up the news and ukraine.

Rubel was a little bit stronger.

We have much more for you worldwide on the ukraine.

On the markets, bloomberg surveillance.

Good morning.

? turley, the industry is disrupted.

Congress is focusing on getting reelected.

The rick rain -- ukraine in affairs are distant.

This is "bloomberg surveillance." i'm tom keene.

Joey and -- joining me a scarlet fu in adam johnson.

Michael wolff from activate is with us as well.

Overnight, policymakers are ready to add a stimulus if deflation risks rise following the g 20 meeting.

German confidence climbed to the strongest level in two and a half years.

Chinese us stocks almost after seven weeks when property plunged.

We have the chicago fed national activity index at 8:30 a.m. there is not a lot as far as earnings go.

That is a we will be looking at today.

Scarlet, you have some company news.

Netflix is paying for faster web access.

They paid a calm tack -- comcast for more direct delivery.

They will be able to deliver the content more efficiently.

A custody drive falls short of its goal.

It is difficulty -- the u.k.-based bank is trailing estimates.

It is $2 billion less than forecast.

They have sold 63 businesses in the last three years as it tries to reduce costs.

An activist hedge fund targets the tribune company.

Blue harbor is taking a two percent stake in the company.

They are talking to tribune to -- about selling real estate holdings.

It is a busy weekend.

Statues are toppling in the ukraine.

That continues to unfold as protesters become leaders.

There is an arrest or out for former president viktor yanukovych.

Our reporter has given us a traffic perspective.

He is on the ground in kiev.

Tell us about the streets of kiev.

Is there any sense of normalcy?

At depends -- can you repeat?

Is there any normalcy on the streets of kiev?


I took a walk around.

I can tell you that there are signs of getting back to normalcy.

There was bad traffic yesterday.

Today there are no traffic jams.

When you look at the western ukraine, do they consider the crimea to be part of the ukraine?

Or do they consider to be part of russia?

Day considered part of the ukraine.

Even in the east and kiev, they talk about integrity.

They fled for a couple of days.

Then they came back.

Will they be back to power?

They will work to stay united.

Even in crimea, it is divided in terms of if they are ukrainian or russian.

It is not that clear.

We only have another 30 seconds.

On the western side of the country, it declared independence.

Is a softening in that zone?

Will the country be able to stay together as one nation?


There is a chance the country will stay united and move forward as one nation.

It won't be -- they are pretty certain that they will say one.

Thank you so much.

The reason we focus on it is viktor yanukovych was last seen there.

He was detained and then presumably let go.

He got in a car and he is on the run.

We want to bring in our editor and a former white house deputy state -- security advisor.

Russia has not given a response yet.

What -- people are not trying to probe invoke -- provoke moscow.

Events have their own dynamic.

It is internally driven.

It is what is happening on the ground with kiev.

The smart thing to do here is watched carefully and pay attention and keep your mouth shut.

Wait until you know what is going on so you don't create more problems.

I look at all of the tumult.

What should americans observe or be watching for with all the media coverage?

The markets have to watch i would deal with the situation.

The general political situation, we need to the eastern half of the country.

This is a revolution and there might be a counter revolution.

The pro-democracy movement on the western side of the country will enjoy it euphoria or they figure out what is going on.

It is up to the east to decide what to do about it.

Thank you so much.

Scarlet, you have something.

Before prime minister and -- prime minister is making comments according to riaa, a russian news organization.

They hope the organ and forms tomorrow.

She did not say if she would run for president.

She hoped the government forms tomorrow.

There is talk about a better economy.

There is also a technology led economy.

Michael wolff is founder of activate.

He is a yahoo!

Board member.

He joins us this morning.

We have a caroline hyde in barcelona.

She is talking about whatsapp.

How much of a game chance at just game changer is that transaction?

Facebook would pay over 10% of its market capital for a company.

Just the sears -- sheer size of it.

This is a application that 450 million users use.

They are very few of these giant web supernovas tom and these companies a come out of nowhere and hundreds of millions of people are using them up.

It is very smart for them to snap them up.

Facebook finally gets another revenue stream other than advertising.

They charge about a dollar a month -- a dollar a year.

It gives them the ability to charge something for its service.

It creates a precedent.

Here is facebook.

You can see the reaction is perfect.

Facebook is barely blinked.

The market loves this deal.

Facebook has taken out somebody else, a company that could have as much or more reach than they have.

We want to highlight some headlines that came out of that session.

They aim to release voice functions in the second quarter.

It will start on the iphone and android.

How much of that is significant in this purchase?

I think what is most important is the fact that now facebook gets into another area, another part of our lives.

Their ability to take over a piece of what has historically been the wireless carriers domain.

That is voice.

I can go to over-the-top services.

I can go around of the carrier who is charging for the service.

Facebook is going to be massively disruptive.

Your take -- the face of growth is a reminder of how much faster technology moves to benefit consumers.

No laws or regulations were needed.

The thing about the internet is it is easier to beg for forgiveness than ask for permission.

Whatsapp gets distributed and no government has to approve them.

Michael wolff, he is our guest host for the hour.

Russia won the medal count, did it when the actual games?

Tweet us at surveillance.

We are streaming on your smart phone and tablet.

? our guest host is michael wolf.

I there is momentous news this weekend.

Scarlet fu complaint with the streaming quality of netflix and how they will receive money from netflix to have better streaming quality.

This is a big deal.

Netflix gives money to comcast for quality streaming.

The consumer wins.

All you have to do is look at message boards and you can see what a lot of people were noticing, the quality of the streaming was declining.

It is big and it isn't. partially, netflix is recognizing that they need a faster route into comcast.

Comcast has created an interconnection deal which is the ability for netflix to stream it directly into comcast instead of going through an intermediary.

People have wondered if this is the end of the free internet.

Nobody should worry.

35% of all streaming is coming from netflix.

Netflix has to do a deal like this.

Should they go to the government and say we are trying to be consumer friendly.

It looks that way.

At the same time, comcast is in a position where it can say to its users, we are giving you the fastest speed to netflix.

We are not blocking netflix from reaching your home.

It does say something about our tech.

We need a trunk line into our home.

There is a massive amount of bandwidth required.

50% of streaming is to services, netflix and youtube.

The rest of the internet should not have much trouble getting into our homes and delivering at high-speed.

Were old enough to river that it is a miracle that we can do this stuff.

It will be interested to see how fast we can reserve -- receive these on mobile.

I promise i will get cable tv . i am going to get rid of the zenith with the rabbit ears.

It is tough in the middle of new york to get the rabbit ears just right.

You're getting over broadband instead of having the cable box.

Come in up, this is a stunning headline.

How about the united states army back to 1940's. that will be our conversation next on the future of american armed forces.

This is "bloomberg surveillance." good morning.


I am tom keene with scarlet fu and adam johnson.

Our guest host is michael wolf, the founder of activate.

Egypt's prime minister says the cabinet has resigned.

The move comes ahead of a presidential election that may see the country and the defense minister make a run for office.

There is planned to be a partial shuffle of the government.

And venezuela, the president accuses rivals of being fascists.

One of his rivals fired back on twitter saying the world is starting to use the word genocide to describe you.

Nine people have been killed in antigovernment protests in the last few weeks.

Jason collins became the first nba openly gay player by signing with the brooklyn nets yesterday.

He played 10 minutes in the win over the los angeles lakers.

He was assigned to a 10 day contract by the nets.

He is a 12 year veteran of the nba.

Further headlines from the ukraine, what is the legitimacy of the institutions?

We are getting more russian headlines.

There is starting to be some official comment.

The bottom line is the ukraine needs money, $35 billion.

Viktor yanukovych flees the country.

The u.s. wants to help finance ukraine.

He is the only american investor who served on the debt restructuring to me for greece.

He invested in argentina and knows about distressed debt.

He coupled his stake in ukraine bonds.

Michael wolf of activate is also with us.

You bought bonds last week, your bed in the country will not default.

I don't think the issue is they were going to default.

Our assessment was that when the shooting started on wednesday and the market sold off, it was a good time to start stepping in.

I do vaguely anticipated things would resolve as quickly as they did.

They were downgraded to triple seat last week.

They're in a pre-default situation.

Are you confident there is value in these bonds?

In these situations, you don't need to pay attention to the rating organizations.

It is just to go.

These public statements are a great way to get the u.n. and yes -- u.s. to step up.

Bonds are above five percent this morning.

The yields are down a. that is a good sign.

What should viewers look at?

Should they look at the russian ruble?

Do we look at bonds or credit defaults?

I don't really pay attention to anything besides the bonds.

I suppose if things get war out of control, you might start looking at other used -- eastern european countries.

If russia wants to protect their naval base, you can look for some other signals.

Right now i will look at anything other than bonds.

You take seriously this kind of crimea move away from russia?

There is public support there.

They are two areas that seem to be on the ground support.

The polling suggests a quarter of the population would support russia in this.

The naval base is the activity, you don't have to worry but the entire region.

Politics aside, what about the bond payment coming due later in the spring.

They have the money to do that.

I think the markets are looking for an indication that it is going to get back.

There is a huge amount of pressure on the west to do the right thing here.

I would be surprised if there were issues in terms of the debt prices.

You're the only american investor in the greece debt organization, what parallels do you see between what is happening in the ukraine and what happened in those countries?

Increase in argentina you had an unsustainable debt load.

The situation in ukraine is purely political and economic management.

The debt to gdp ratio was 40. this is liquidity and not solvency.

Would you talk about a bailout, they can be bridge financing.

In the case of argentina and greece, they needed restructuring.

This goes to the imf.

You see this as a worldwide investor in these matters.

It is the lender of last resort.

They are out of line.

You don't need the imf?

There in no better position then analyzing.

It hasn't been better than anybody.

I think like any other process, a dialogue of negotiation and sharing of different views is probably more efficient.

In debt restructuring, the committees have been historically the best way to resolve.

Thank you so much for joining us this morning.

He is with us on the ukraine.

Coming up, we will speak with randy forbes, he is on the armed services committee.

?? this is coming up.

This is "bloomberg surveillance." is get you some company news.

We start with las vegas sands.

It is targeting japan.

They are investing $10 billion in the country.

Casinos are currently banned in japan, confidence is growing they will he legalized.

Ubs wants immunity.

They are trying to become the first to report conduct in the currency market to regulators.

This is according to people with knowledge of the case.

They disclosed their role in the scandal last year.

Another setback for bitcoin.

The foundation is a trade group that wants to adopt the digital currency.

Title problems, bitcoin rices went tumbling.

With the sunset is michael wolf, he is a former yahoo!

Board member.

We talk about bitcoin, -- there will be a virtual court -- currency.

I love the concept and so do a lot of other people.

It doesn't necessarily mean that bitcoin will survive.

There is no transparency.

Nobody really knows how this is created or how gets traded.

The system is not secure.

We will see virtual currency, one or two in the next five years that will be widely accepted and stable.

Maybe being first is not a good thing here for bitcoin.

I am betting on fucoin.

The q2 coin in asia has turned out to be an alternative currency.

The army is getting a downsize.

This is according to the new york times buried the pentagon will shrink the armory to its smallest force is before world war ii.

Think of that.

It will eliminate a class of air force jets.

You could joins us from washington dc.

I can understand how the republicans are respond how about democrats question mark members of congress we scrutinizing this defense budget that chuck hagel will unveil at the pentagon.

They will make some changes to it because they see risk going forward in terms of national security.

The reality is that the budget deal that congress signed off on between paul ryan and patty murray, it sets a topline number.

Chuck hagel knows that unless they make changes now to things like benefit package for active duty personnel, it will start to consume a vast majority of the budget.

This is just reality going forward.

Is this about manpower and headcount?

Or is it about the a-10 fighter?

They may both be outdated.

You can have the same troop level you had over the last 10 years.

We will not be at war in afghanistan and iraq.

You know me his many active-duty troops.

The warthog has been a staple within the u.s. military in the air force, according to the our times, it is on the chopping block today as well as the u-2 spy plane.

There try to be more agile and future looking.

There try to be more noble as well.

This just doesn't cost as much.

If some of the old craft are out, how about new ones like the f 35? is passed most of his recent tests.

There have been some problems with the marine version.

It they are working to restore those, to fix those.

It is the future.

You will see a commitment to keep going with the f 35. may the total number ordered will come down.

It looks pretty safe.

Figure so much, peter cook, our chief washington correspondent.

Is a 42-year-old plane.

You're talking about technology from the 1910. during world war ii.

And note any these aircraft.

Is a guy thing.

Lex let's get to -- there's not a lot of economic data coming out.

There is a dallas said manufacturing report.

Futures are somewhat elevated.

The euro is weaker versus the dollar.

I am tom keene.

We are on bloomberg television and radio.

All of our -- michael wolf is our guest host.

For more on the u.s. and its involvement in the ukraine, we go to randy forbes.

He is with us in new york.

He represents the fourth district of virginia.

Good morning, congressman.

Do we have a projection for the base in italy?

Especially with these defense cuts that are looming?

The building we have, the problem with that is you would think we are doing that because of efficiency.

The reality is most of us have no pre-decisional analysis.

We are now allowing our budget -- budget to drive our strategy.

Number crunchers are where it is.

If you go back to secretary gates, no pre-decisional analysis was done.

They do get a little geeky for us guys look at aircraft all the time.

If you have a fifth generation plane, and it goes up against a fourth generation plane, it does not matter who the pilot is.

The fifth generation plane will always win.

We had 32 different studies and said we needed 350 f-22's. they cut that back to 187. reality is you represent a lot of the armed forces in virginia.

A lot of americans agree with you are saying we are done with two wars.

What is your day to day goal to protect our soldiers and make those budget cuts?

Excellent question.

We want people to ask the question that is been asked in washington, how much can we afford to spend?

Nobody is asking the question what is the risk to the united states and those men and women?

They won't go into the black sea, we heard that.

Our naval projection, are those ships battle ready question mark they are battle ready.

We are increasing modernization.

We're reducing the number we have.

Almost every study suggests we need at least 300 40 six ships.

We are on course to go down to 250 or 260. we cannot do what we need to do in the world with the numbers that we have.

The new york times says the pentagon plans to shrink the army to world war ii sizes.

Are those numbers right?

They are correct.

The problem is nobody in the pentagon has said we have done the analysis and this is the structure we need.

They are saying based on these budget cuts that we have, that is all we can afford.

That is a big difference.

What about the argument that our defense budget is larger than the next 20 combined.

That is a wonderful question.

We are spending more on the navy and look at all these other countries.

He said if you only want me to defend san diego, i am good to go.

If you me to defend all the notions of the world.

Is there common ground on defense?

We work very closely together to find that common ground.

If you simply ask what do we need to defend the united states, we can never justify these budget numbers that we have right now.

Let's have the debate.

We will have democrats and republicans agreeing.

By 2020, the chinese will have a two submarines and we will have 32. we got through this whole thing without mentioning house of cards.

Congressman randy forbes of virginia.

We want to bring up our twitter question.

Russia won the medal count in sochi.

Did the country when the olympics overall?

'stuna said bloomberg surveillance.

? good morning, everyone.

Dow futures are up 28. the 10 year yield is 2.74%. we had a lovely spring weekend in new york city.

It was glorious.

Scarlet fu and adam johnson are with us.

The glorious betty liu is with us.

It is 25 days to spring.

The polar vortex is back this week.

Just without was safe to be outside.

I know.

I was wearing a t-shirt and shorts this weekend.

This -- did anybody have a myspace account?

The cofounder of myspace is joining me.

He has moved onto other things outside of myspace after it died on the vine when it was bought by news corp.. your governor david paterson will join us.

Is teamed up to create a new company called the jobs channel network.

There we as social media to get people jobs in the united states.

It is time now for our morning at numbers.

Futures are up five.

We see a downgrade from apple.

This is not a standard brokerage.

The share prices down a quarter of one percent.

That is about as close as it gets to avoid.

The deal between comcast and netflix where netflix is going to pay comcast in order to be assured that it will get bandwidth so the movies are clear.

Comcast is up one and one half percent.

Netflix is down because it is paying money.

It is curious they were able to put this deal together.

We not know the -- terms of it.

Verizon shares are the most actively traded in the market.

They are down 6/10 of one percent.

They are gaining four percent -- targeting four percent solid growth.

Four and half percent yield.

That just does not get it done.

Basically, it is a utility.

That a lot of pricing power until recently.

We have michael wolff with us this morning.

You were looking at microsoft.

There has been one of the most overblown stories, the fact that ford has traded out like barry for microsoft -- like barry for microsoft.

It does not mean blackberry is coming back.

It just goes inside the car.

It doesn't mean anything at all.

We will get to excited for blackberry just yet.

When we are back we will go to barcelona.

Caroline hyde is speaking with the whatsapp chairman of.

? good morning.

Tomorrow, jerod: joins us.

-- jared cohen joins us.

This is "bloomberg surveillance." i'm there with adam johnson and tom keene.

Our guest host is michael wolff.

Let us get you some company news.

Ford is dropping microsoft for blackberry.

This according to people briefed on the matter.

It'll be cheaper for ford.

Cool increase flexibility and speed.

Bikers up plans to push into mobile software.

It is working with qualcomm on a phone design.

It will be used to divide -- provide devices for emerging markets.

The company is making it easy for developers to put apps about loud.

Ibm will spend $1 billion in cloud where -- cloud software development.

Pages are up for.

Where going to head to barcelona.

She is at the mobile world congress.

She just spoke with whatsapp.

What was the room like?

Do they hang on every word that he is saying it?

There was a cheer when he came to the stage.

Everyone was so excited to hear from the man of the moment.

He is the new addition to the billionaires row.

He is a very humble guy overall.

My first question to him was it was born from his own personal of grain -- upbringing in the ukraine.

There is very little privacy in terms of phone calls.

It was hard to connect abroad.

He wanted to make it cheap and affordable.

He has four at 65 million users.

Woman look at this technology , it is very international.

Can they make whatsapp a domestic success in the united states?

Is very much pioneering the emerging markets.

They're doing very little television.

They are not going into any of the main television for grams in the u.k. or europe.

Their main focus is turkey and indonesia.

They want to grow their bases in the emerging markets.

That is really are focused on the moment.

They are continuing to grow.

Of course, they want the u.s. to be a big win as well.

I was really interesting was in the panel, he made this new announcement.

It is not just going to be messages.

It is going to be calls as well.

They're going to provide free phone calls via whatsapp.

That will be a maybe blow to mobile.

It would've the move is to data for mobile providers.

Yet another announcement.

To call it free is headline grabbing.

It is $.99 a year.

Is are some and criminal amount on top of the nine cents a year?

They say they're sticking to the point of $.99 a year.

He was very keen to tell me that nothing is going to change under facebook.

They will be the same.

They have just 50 employees.

They may get up to 150, but they will remain independent.

Thank you so much in barcelona.

It is a confab.

Is a confab of all sorts.

Mark zuckerberg is giving the keynote speech.

Why can't i get to barcelona?

Our guest us for the hour is michael wolff.

Won't they do it they want in the end?

They need to continue to grow users.

Thoughts of people, when facebook only had 15 million users, people said were you going to monetize?

Now with have to do with whatsapp is grow the business.

With only 30 engineers, it doesn't look like that will cost a lot of money to do.

Can they do that without massive changes?

They can continue to grow the business.

The costs are tacking to ash taxing -- taxing to their system.

I am looking for the payout.

Whatsapp has a net income of $450 trillion.

Net income it facebook is five times that.

I what point is this deal become accretive?

I don't know.

That is not have the technology companies are buying other companies.

They are focusing on users.

Users first, then we will monetize.

Identically will see this valued as the way a normal company does a transaction.

Should we look at what yahoo!

Has done?

To look at it in a new light?

Twitter has about the same number of users is valued at $30 million.

The question is how much money are they going to be able to get out of these acquisitions?

It will take a couple of years for each of these businesses to be able to show that growth.

There are very few of these companies, very few that can grow so quickly and gain this many users.

It is now time for our agenda.

We look at stories show today.

We had a glorious weekend.

Now we have a cold snap come in and.

We have retail sales coming out after the fashion show.

Vivian westwood is selling men's kilts.

This is for spring.

This is not going to give you a bump in retail sales.

Definitely not at 6:00 in the morning.

Optimism reigns.

The dallas fed is coming out -- he says you have to get back to normal.

My agenda is the deal between comcast and netflix.

Netflix will pay comcast for faster web access to improved speed and reliability.

This is a multi-year agreement.

It is a landmark because it forecast future deals.

Russia won the medal count and the lipid games.

Didn't actually win the x? -- the olympics?

They did not win the hearts and minds of the world.

Did they win?


other the coverage was great.

Reality is people did not feel any better about russia as a country.

They felt great about the olympics but not about the host country.

They have to get a sense of humor into it.

Did nbc get any sense of humor?

That is the second answer.

Athletes won the olympics.

How about this?

Did the olympics even happen?

Debbie downer.

Such a misanthrope.

The world was watching.

I look for more follow-up from the figure skating uproar.

Michael, they do so much.

Agosto's for the hour was michael wolff.

Have a ? wonderful morning.


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