Yellen Takes Over: Surveillance (2/3)

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Feb. 3 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Hardeep Walia, Rich Clarida, Ted Murphy, Matti Leshem, Peter McGuinness, and David Woo. (Source: Bloomberg)

Is a "bloomberg surveillance." it is janet yellen's first day on the job.

They are in crisis.

Japan equity fund are down 10%. can microsoft surface and when the consumer product or be?

-- and win the consumer product it is a sleep deprived bloomberg surveillance.

We are live in new york city.

It is monday, february 3. i am tom keene.

Deep assignment, olivia will be filling in -- scarlet, rather will be filling in this afternoon.

She's watching the super bowl.

Lets you to our morning brief.

A lot going on.

Markets on the move.

A measure of chinese manufacturing sliding to a six-month low.

Emerging market selloff looks like it is going to continue as tom said.

We are going to get some eco-data.

That is expected to show a slight deceleration.

Sales and individual numbers throughout the day.

Also going to get some earnings before the bell.

Cisco numbers.

After the bell, younger brands wanting to know how well chicken is selling in china.

Futures are negative for.

They have a weight to them right now.

You can see in the 10 year yield.

272 before the festivities.

We go to currency market and you can see it there with the vix.

Elevated over 18. the yen is the number one story today.

Blows through 102. that is my number one metric.

The ruble basket, the sum of euro and dollar, 40.71. that is a weaker ruble and gold futures.

This is a bloomberg chart from the terminal.

You can see the red.

It is a challenge.

Argentina a huge challenge.

Russia, we go on to some other noise.

Full faith and credit, the only green on the screen is the yen.

The losers are by a much greater percentage point in those have gain.

Everyone is going to the end because you want to get out of the concern -- the currencies that are in trouble.

It is not good for autonomic's -- abenomics . we have scoured the weekend and the morning papers.

Here's michael mckee.

Ben bernanke's last day was friday.

Today is janet yellen's first day.

She was acting fed chairman over the weekend.

She begins at 9:00 this morning.

She has a week to prepare before she heads up to her first testimony.

She delivers the testimony that used to be called humphrey hawkins.

It is going to be very interesting to see how she performs, whether she can keep the straightfaced as ben bernanke and alan greenspan when they ask her stupid questions.

They need the body.

Janet yellen has been there 20 years.

She knows what she is doing.

They do not need anyone to guide what is going on.

Stanley fischer has a lot of international experience.

People want to see a steady hand at the u.s. central bank.

We have been talking about lenovo and the things they're buying in the u.s. they are buying servers from ibm.

They have to get federal approval because they are a chinese company.

They have hired lobbyists, people who used to work for homeland security.

They want to get approval of the motorola mobility purchase as well.

The issue is foreign investment in the u.s.. chinese investors are subject to more than double the number of reviews.

In washington, they love acronyms.

50expected to get approval.

Americans are not in favor of the idea of big chinese companies buying up tech assets.

Seattle, 43-8 win.

It was really a push in the odds ahead of time.

Four turnovers.

Re-by peyton manning.

-- three by peyton manning.

Was in that unbelievable?

That was bizarre.

This was a blowout.

What happened to the broncos?

They were not ready to play.

The good news, pitchers and catchers report that the arizona diamondbacks on thursday of this week.

Forget football.

That is over.

Our guest host for the hour, richard clarida.

Years associated with columbia university.

On microsoft and technology, terrific value.

We have the former microsoft head of corporate strategy.

How much more complicated is chairman yellen's today than it was three weeks ago?

We focus on the monetary policy pieces of fed.

They have an active set of issues they are involved in.

The international dimension -- she will move from vice chair, focusing on policy and communication to running a large complex organization.

She is prepared, but it is a much bigger job than focusing on the monetary policy piece.

The fed is going to have to forget about emerging markets.

The way the fed uses it and they have been clear, their mandate is full employment in the u.s.. you are right, they are not calculating the possibility or the guidance based on a sell off in an emerging market.

Stanley fischer writing in length, what is distinctive this time in pimco?

You have a big capital inflow into these countries.

Many of the countries did not deliver on a growth agenda.

Most of what are called the fragile file, growth -- i am glad you bring this up.

Brazil in the headlines.

Under three percent gdp.

I do not frame a brick as 3%. two out of the five bricks are growing -- beware the acronym.

It was good when money was flowing in.

Now money is flowing out.

As an investor, how important is it for janet yellen to establish credibility or does she are ready have it?

I think she does.

That was one of the reasons she stepped into the role.

Give us predictability, stability at the fed.

I think this is expected.

The new company, it focuses on the idea of themes in investing.

Do you have an emerging market theme?

Would it be get the heck out while you can?

Like anything else, we like to take broad perspectives on different trends, so there is still room.

Times like this, when people are fearful, it is a time to jump in.

What is interesting to note, the extreme frontier, knees -- the efficient frontier economies are attracting this as well.

103, 102, they both are that in the early japan warning.

Japan now in correction, 10%. let's get to company news.

Here is olivia.

Lloyd's, the british bank says it will not ask for permission to renew payout until the second half of the year.

The move is a disappointment to investors hoping for dividends on the bank's 2013 earnings.

United continental holdings dropping cleveland as its hub.

The cleveland hub has generated tens of millions of dollars in annual losses.

The comments were part of an employee memo.

United will eliminate 500 jobs as a part of the cost-cutting move.

Joseph a bank setting its sights on eddie bauer.

The news comes after joseph a bank told men's wearhouse it would not enter into buyout talks with that chain.

We have lots to talk about in the emerging markets.

Also in washington, there is some really -- something really important going on.

Peter cook will join us to brief us on the debt ceiling.

Also the weather.

Forget about atlanta.

That was so january.

In february, a storm up these coast.

Good morning.

Coming up on bloomberg television, scott o'neill, ceo of the philadelphia 76ers, the new jersey devils, joins "in the loop" as a guest host.

Looking forward to that.

This is bloomberg "surveillance." joining me, michael mckee, particularly on the emerging markets.

And olivia sterns.

Scarlet fu is on sleep in assignment?

What is that about?

She got the short straw.

She gets to host "street smart" this afternoon.

Why didn't i think of that?

I think the percentage will be higher than seattle.

Once more, it is upon us.

Friday, fairbury seven, the debt ceiling will expire.

The secretary of -- friday, february 7, the debt ceiling will expire.

Is it not a big deal, or perhaps this time is different?

It is a big deal.

Phil mattingly has been looking into this.

Debt ceiling -- haven't we been here before?

It is a big deal before because you never know where congress will push it.

Who are you watching in congress this time around?

It is always john boehner, house republicans.

Senate republicans have pretty much already thrown in the towel and are ready to go for a clean debt ceiling.

House republicans are not.

What they will propose to start the process before they get beaten on this, that is the big question.

Why do they want to get beaten on this?

It is an election yield.

-- an election year.

They have obamacare.

Why do they wanted get caught up in why the republicans want to do this?

They want a fight.

They have to show some fight.

If they end up having to buckle, they can blame it on the speaker, senate republicans, but they have to look like they are trying this.

Richard claretida, why are we worried about a debt ceiling if the president and congress, frankly, should be taking a victory lap on a better fiscal framework of the nation?

Absolutely, and the key point is many republicans recognize that if they want a fight on spending, the chance is to do it on the appropriations bill.

They just passed the ryan murray compromise.

There are other things to talk about on a partisan basis, and i do not think that's ceiling will be a big deal this year.

It is a big deal for pimco and people who have to invest.

It was certainly a big deal for global markets in the summer of 2011 when we got close to the precipice, less than a big deal in october, and a pretty minimal deal right now.

How much to the showdowns over the debt ceiling her business confidence?

It was huge in august of 2011. the shutdown was worse than the debt ceiling in october.

It is clear it will not resolve.

I think it is getting better.

Look at all the -- i think the republicans learned last time you cannot shut -- it works to their disadvantage.

So let's move on, we know we will get it solved and business is not paying attention.

What was the president's report card on the state of the union a week on from the debris?

How was it taken?

Republicans thought it was a sign of a shrinking presidency.

I think the administration and democrats, congressional democrats thought it was great from a campaign perspective on a number of issues, particularly minimum wage.

From the white house perspective, they think this is what they can get done.

The one momentum.

They think there are smaller issues, executive orders, and possibly immigration they can get done.

So they get through the debt ceiling and then they focus on immigration?

Is that the game plan?

Yeah, house republicans made a big step last week, laying out a list of principles.

The white house is giving them more space than house democrats won the white house to give them.

There is a small window, particularly in an election year.

Phil mentions immigration.

You came from microsoft.

How important is this to get done gekko one of the biggest shortage right now in technology is qualified engineers.

We are not producing enough engineers.

This is something, the tech companies have been lobbying for quite some time.

We are finally looking forward to getting something done on immigration.

Would you look at this, are you anyway optimistic that we will get something done in 2014? on anything -- on immigration?

On anything.

If you don't get anything done by july, the year is over.

The august recess, and they are not coming back after that.

That will be it.

I think there is a window, probably may to late june, where they want something big on immigration.

That is where they do it.

Phil mattingly, thank you for joining us this morning.

Futures at negative five.

Some real movement in emerging markets.

We have to ask our twitter question of the day.

You will understand -- who had the best performance during the super bowl?

It certainly was not peyton manning will stop -- it certainly was not peyton manning.

? good morning, everyone.

"bloomberg surveillance." i'm tom keene.

Olivia sterns and michael mckee are here as well.

Scarlet fu is on important assignment.

Michael mckee has top headlines.

We started china where the manufacturing gauge start -- falls to a six-month low.

The latest sign that government efforts to rein in excessive credit, also -- u.s. and european union are working on a financial aid package for the ukraine, according to "the wall street journal.

The protests there were sparked by its president turning down a cooperation agreement with the eu in favor of closer ties to moscow.

At the box office, where what -- if you are watching the super bowl, you might have been watching "ride along," and universal pictures will ring up $12 million in sales over the super bowl weekend.

It'd taken in $93 million in ticket sales in the three weeks since its release.

Walt disney's "frozen." -- it seems like a down time for movies.

Certainly an ugly time.

Transformers, i saw their ad in the super bowl.

You wonder if michael bay will be able to deliver the interviews to go along with that.

Right now it is the high point of my morning.

I want to kick it off with the keystone pipeline debate.

The department issued their fifth report, and what i saw was a note in "the wall street journal" say no more excuses.

He says the state department says the project will create some 42 thousand jobs.

Many of the muni jobs.

Mr.

obama has cared more about the lobby of san fran cisco billionaire tom steyer.

That goes back to the wall street journal plus decades of immigration friendly policy.

20, 30, 40 years ago, they were way out front.

The report concluded it does not matter whether the pipeline happens or not.

The same amount of oil will be extracted from canada.

If you are a green activist, you should want to go through the pipeline because he will limit more carbon gas then goes on a train.

In this case, the republicans have been arguing that the keystone pipeline will create jobs at a time when we need them.

When you look at this, richard claretida with us.

Immigration, the keystone pipeline, creating jobs, -- certainly keystone does, and immigration obviously overtime as to the labor force and to gdp , and longer-term, my two years at assistant secretary, one thing i learned, especially with social security, a lot of the demographic trends look a lot better.

My morning must-read happened last night in new york.

Everyone you're shaken not by the super bowl.

That was the entertainment.

Philip seymour hoffman passing away at a terrible age.

For me and cory johnson, it is personal.

He grew up a street away from me and literally down the block from cory johnson.

From his oscar award, "she stayed up with me to watch the ncaa tournament, and went on with that magisterial speech." i encourage you to listen to fill up seymour hoffman.

The morning must-read on "bloomberg surveillance" is sponsored by columbia management.

Let's go to olivia sterns with breaking news.

Herbalife surprising the markets have time, fourth-quarter earnings beating initial estimates, coming in at $1.26 to $1.30, with investor and stash investments of one dollar $.15. guidance does not look as good.

They are seeing a range of one dollar 20 four cents, $1.28 versus one dollar -- versus estimates of $1.48. just a mixed picture, and it is a preliminary number.

You wonder if they are trying to get the first quarter guidance a little light.

We should say that senator markey now is looking at this company.

Interesting.

Let's go to our chart at front and center.

Here is michael mckee.

The news revolves around you, tom.

That has been the real change.

Bill gates and microsoft ran the tech world.

They ran the tech world, and you were either an apple user or a windows user.

Now look what has happened.

With the introduction of all the new apple products, those lines have been crossed and you have now got most windows users have some sort of apple device.

It is over 70% now of people who use a microsoft product also have an apple product.

That is up from 20%. it was one or the other, and now it is a dual -- the management issues as well.

Haddeep is with us with tweaked a terrific perspective.

It is becoming one world, isn't it?

Yes, the consumer, the enterprise, it is one world altogether.

I use an ipad, i use windows in business, too.

Everyone wants access to whatever they want on whatever device they prefer, and they have preferences.

A lot of people, nine out of 10 pc's are still pc's, but the tablet takeover is explaining what you see on the chart there.

These devices are driving growth.

It is a byod world -- bring your own device -- right?

Absolutely.

Since eating -- succeeding steve ballmer as ceo, do you think we are going to see satya nadella fill that role?

Confidence, faith, and pretty the ball from implementing a strategy.

What microsoft did by picking him was saying that we do not want to change the core strategy, we want someone to jump in and operate.

He is a great choice, the best internal choice by far, but he is a collaborator.

Microsoft is a culture that likes for chen, clash with management is almost encouraged.

He likes to bring people to the table.

Where does john thompson fit?

He is known as, i am not a schmoozer, that is disrespectful.

When you look at john thompson, what do you get?

It is interesting how suddenly he has come front and center.

Everyone -- with steve moving on, everyone is asking the question, the board was complicit in a lot of steve's decisions in the last several years.

This was an active board and having bill on there.

He has driven the ceo selection committee, and there are rumors he might be the next chairman.

We should mention that bill gates is talking about coming back to work on a more regular basis.

But the question i have for bill gates and for the della -- and for nadella, is what are they going to do?

Is microsoft the company that will just continually update windows, or can they innovate?

There are some transitional shifts happening in the country.

The whole one microsoft plan was designed to integrate but also take away some of the internal politics.

Microsoft has always been about integrated innovation.

With a shift towards cloud, that -- two thirds of the profits, and the infrastructure am a microsoft has always been strong.

A mature company that just kind of does what it does?

Are we going to talk about next week routes will be lining up because microsoft has this great new product, or will they become an ibm?

It is a less sexy parts of microsoft.

They have these two cash cows, and they are making them informational.

This goes to pimco, richard cleary to -- richard clarida.

We forget how big microsoft is.

They drive a bit.

-- they drive ebitda of $30 million.

And 2/3 of that comes from -- he has control of the core growth art of the company.

Nadella would be the third leader of microsoft in its nearly 40 year history.

Anytime you have strong personalities like bill gates and steve ballmer, the fact that they are there, that is why there is a big question on will they allow satya to grow into this role.

That is why external candidates were concerned, you have these two strong personalities.

How much room to grow do you have?

At some level, the job description read like a coo than a ceo.

They double down with the nokia acquisition.

This is more of a finesse, the operating plan then let's have a strategic operating discussion.

I think it is a hard equation because you do have to keep your existing business to fuel new growth.

Their are some interesting questions about what they do in the consumer.

They need to bring all the -- this goes, richard clarida, to international companies.

We talk about the people like they are startups, but they are not.

These are giant transitional companies -- giant transnational companies.

Absolutely.

When we talk about the s&p, all the companies we recognize, but for the most part they are huge.

Absolutely.

You look at revenue growth, 5% in the united states for microsoft.

12% abroad.

It is a double, conservatively a double abroad.

What is the threat to microsoft?

What with the new management have to worry about?

They have to get mobile right.

We just talked about your apple numbers.

That is a huge threat.

They have to control the device, they have to continue.

Their last earnings release showed promise around the cloud strategy.

Are they going to continue to play in places like bing and traditional?

Can they get rid of bing?

Do you use bing?

I look at microsoft like i look at the photo in the journal of the radioshack commercial, where the guy from cheers, hulk hogan, and highway patrol guy.

Erik estrada.

That is because we always judge from the consumer perspective.

We keep forgetting about microsoft's enterprise strength, which is the core growth section of the company.

The reason xbox does well is because there is a huge infrastructure behind it.

That will be a huge advantage for microsoft.

Coming up, we will take a look at the super bowl ads that got the most buzz.

That is next stop at leads to our twitter question of the day -- who has the -- this is bloomberg "surveillance" streaming on your tablet, your phone, and bloomberg.com.

Good morning, everyone.

Bloomberg "surveillance." tom keene with olivia stearns and michael mckee.

Scarlet fu is on a top-secret assignment this morning.

You can find out at 3:00 this afternoon.

Here are top headlines.

Good news and bad news for the same time for the u.k.. manufacturing grew but at a slower pace than forecast in january.

Lowest level in three months but still pretty high.

A 10th straight month of growth in january.

Almost 90% of thai voters cast ballots yesterday.

It was the third election in the last seven years.

The antigovernment protesters disrupted voting in dozens of districts.

We will not get the results for possibly months until they are certified.

Janet yellen will be sworn in as chairman of the federal reserve this morning, 9:00 this morning, sworn in by fed governor daniel tarullo.

She is expected to make her first appearance as fed chair next week when she testifies before congress tuesday.

Janet yellen front and center.

Many domestic challenges, far more immediate, chaos is not too strong a word.

Perhaps france would be an emerging market.

I'm sorry, excuse me this morning.

Japan's equity market has entered a correction.

That means we need to speak with richard clarida of pimco.

Certainly for dr.

Yellen, there will be no fed honeymoon.

She needs to hit the ground running, doesn't she?

She does, but she is inheriting some favorable initial conditions.

There is pretty good momentum in the u.s. economy.

Chairman bernanke did her a huge favor by getting the tapering out of the way.

She's not out there having to sell a yellen tampering policy.

She has a good set of initial conditions, but absolutely how much she will have to improve said communication, build a new federal reserve board.

How will she change communication?

Some would say we have two bank much communication now.

-- some would say we have too much communication now.

She will have to pivot away from the threshold of 6.5. the fed has been good at telling us what they will not do.

They have been saying they will not raise rates as long as unemployment is too high.

Now they have to double down and focus on what they are going to do.

It will be a long time until -- one thing people want to know is, are they going to change, under her policy of news conferences, just half the time and have them every time?

I imagine we will see that this year and perhaps even in march, which is a scheduled press coverage.

She says she will do eight of them a year.

Back to emerging markets -- the bank of india governor has been talking about more global court nation.

How did janet yellen respond to that?

India is incredibly lucky -- he gave a provocative speech last week, saying that countries like india and others are suffering because of a lack of cooperation.

There has been a lot of pushback on that speech.

I am pretty much in the cap of both roderick and ted truman.

We have danny roderick, the esteemed global international economist.

Widely associated with turkey.

And there is a guy at princeton -- what's his name?

Krugman.

We talked about this before the screening.

Krugman is saying all the problems we are seeing in the emerging markets are things we are seeing in the fed, the tide pulling back.

Roderick is saying these countries make these problems themselves by having poor fiscal responsibility, and clinical standards -- political scandals and particularly turkey.

We can probably always design a better set of cooperation.

The challenge in all these countries is that when the capital is flowing in, they did not put in place a growth agenda.

Their growth rates are being marked down.

The tortures that did put in place and agenda, they are doing much better.

The markets are distinguishing between economies are doing well with the money and those that did not.

Is this just political design for domestic consumption in india, or is there some sort of international cooperation the central banks should be doing now?

In practice we are getting a level of cooperation we haven't seen in years.

The emerging economies benefit from the u.s. economy growing at two percent or three percent and not collapsing.

You have to factor in the good as well as the part that you do not like.

At bloomberg surveillance, we are pleased to announce it is geometry february here at bloomberg surveillance.

There is a thing called islm fra mework.

The answer is there is monetary and money and fed stuff and central bank stuff, and then there is the real economy.

Is this just about the real economy?

Is this just about economies slowing down as they cyclically go up and down and now we are in a slowdown?

I think the reason why the selloff at em has been so says dan shall -- so substantial as people are coming to recognize in those countries it is not a business cycle.

When you change your view on an economy's growth rate, it has a big impact on the price.

That is what we are seeing.

In the financial times today, etf's may be a problem here because what you have is the ability to move back sums of money.

People are moving in and out of these emerging markets without discriminating.

Before etf's we had mutual funds.

People view this as an asset class.

Of the bricks were great when the money was flowing in.

I know you are not going to talk about pimco management that i will do a shout out here.

Hamed el-erian, he was -- mohamed el-erian, he was we out fronts during the slowdown.

I remember him the linking -- him de-linking market moves.

I can't even frame that in my head.

It's like a 5% china.

It is one of the countries that protest the most when it started quantitative easing.

Now they are quitting.

Them a new york university totally focused on the yen -- new york university totally focused on the yen.

A lot of people will be talking today, not just about brazil but about the weather.

It is starting to snow in new york city.

Peyton manning will not be able to get out.

He is probably already gone after what happened to him.

It will be ugly out there today.

? them a everyone.

I am tom keene.

We are looking at the capital, a storm on the move.

For new york it is sort of rainy, turning to snow.

Let's call it partly february.

The groundhog saw his shadow.

We have six more weeks of winter.

The denver broncos saw their shadow.

At least paul allen finally got a break.

Microsoft board is considering replacing bill gates as chairman.

This is according to people with knowledge of the matter.

He would be involved with product development.

He may also return to work one day a week.

At&t rolls out a flam -- a family plan.

The price tag, $160 per month.

That is $40 per month less than the previous package.

Apple is facing $800 million in anti-trust claims.

The company is also fighting over -- a federal appeals court will consider their request to hold that oversight tomorrow.

That is today's company news.

We are going to do our first look segment on the super bowl, the part of it that was watchable.

If you are not in seattle this is what everybody is going to be talking about today.

The theme of warm and fuzzy.

The commercial that was watched the most, the budweiser commercial fees hearing -- commercial featuring a clydesdale horse and a puppy.

Tom is crying.

I liked the other budweiser where they go to the guy in the bar and he gets in the limo.

He plays ping-pong with arnold.

Where is the actual bottle of budweiser in this commercial?

This is the story of a love between a puppy and the horse.

Look at how many 33 million youtube views there are of that -- how many views -- look at the 33 million views on youtube for that added.

-- for that ad/. another added, using bob dylan in a way people are wondering about here.

Did he sell out by doing a chrysler ad?

He said we are going to build your cars.

Get your watch from switzerland -- get your watch from switzerland and your cars from america.

Maybe you can answer this because you are the youngest one of the table, how relevant is bob dylan to young people nowadays?

People your generation have more money than people my generation, so they are probably buying the cars.

A maza roddy commercial -- a mazaradi commercial.

This is their lower price model.

This is the biggest form into the u.s. market.

Let's see the foreign exchange report.

I'm watching yen more than anything.

103, 102. a huge deal.

You see that in the euro-yen.

138 down to 137.57. i am also watching the ruble and the argentinian peso.

We think the cofounder of motif investing for joining us.

We will be back in a moment.

? it is janet yellen's first day on the job.

Japan equities and their correction down 10%. bill gates team won the super bowl.

Now ken microsoft window consumer derby?

The big boys capitulated to a small farm in upstate new york.

We're live from our world headquarters in new york.

Of it is monday february 3. i am tom keene.

Joining me is michael mckee and olivia sterns is in for scarlet fu.

She is sleeping in.

She needed it after the super bowl.

A lot of fell vida.

We did the velti the thing.

Our guest host is senior manager at brand energy.

Let's start with asia, sliding to a six month in south korean exports, unexpectedly declining.

It looks like the emerging markets selloff is continuing.

We are getting some eco-data out today.

It will show a slight deceleration.

And we will get individual numbers throughout the day.

We have some earnings before the bell.

After the bell, yum!

Brands.

Michael mckee, house company news seattle we are starting with lenovo -- company news -- michael mckee, how his company news?

We are starting with lenovo.

The attorneys previously held jobs at the cia and homeland security.

Herbalife, their earnings better than expected and a stock buyback plan.

They will offer money to help finance the share repurchase.

Initial buyers of the notes include credit sweeps and morgan stanley.

United continental dropping cleveland as a hub.

The cleveland hub has generated tens of millions of dollars in annual losses recently.

United is going to eliminate almost 500 jobs as part of a cost-cutting move.

I spent a little bit of the we can try and figure out my frequent flyer miles and united is the valuing today and tomorrow.

I do not have a lot of united miles.

It is one big game.

Cleveland is not the hub it used to be.

, airline business is on the move.

-- airline businesses on the move.

Let's go to washington.

He loves the redskins.

Just when you thought you could ignore it, they are back.

Congress increased the debt ceiling once again.

Either cook is in the district.

What is different this time -- peter cook is in the district.

What is different this time?

There is no appetite for any sort of confrontation over the debt ceiling.

There are zero options on the table for dressing it.

-- for addressing it.

Tom, zero interest in the field but right now there is no deal on the table.

Phil mattingly was with us the past hour and he said house members feel like they have to have a fight over something.

Do we have any idea of what they're going to demand?

I went to the public and retreat in eastern shore maryland last week.

They had an entire session devoted to this issue.

They left that retreat without any sort of consensus as to what they're asked would be.

They talked about spending issues, forcing the president to commit to spending cuts down below -- down the road.

He talked about targeting one specific aspect of the health care law.

That was which provision will be a potential benefit to insurance companies.

They have not unleashed -- not released a consensus.

This thing is going to remain mired in limbo.

I don't want you to catch on towards here but twitter lit up over bill o'reilly.

I don't want you to comment on the interview but i would like you to inform our audience about important -- about how important benghazi is as an issue.

I was thunder stock -- thunderstruck about how they went back to back about that.

It is a big deal to republicans in washington for sure.

They like the health care law.

They believe there are questions unanswered about and ghazi.

He believe the president -- about benghazi read he believes the president has not answered all questions about benghazi -- about benghazi.

He believes the president has not answered all questions about benghazi.

I don't think the president was totally surprised about the questions he got from bill o'reilly.

It was his opportunity to reach a large number of viewers.

That is why he cannot turn it down.

I think that is why the -- he did not turn it down.

I think that is why -- at one point he said the only reason he was asking those questions is because the network keeps bringing them up.

In washington they are going to be talking about how the president played.

How did he, fiasco -- did he come off?

Nolen in washington things benghazi is going to step back in to the forefront unless something comes out here.

Irs, same thing unless something new comes out.

We will continue to raise questions not only about the president's handling of his job but the democrats handling their job in congress.

That is what it is all about right now.

It is really hard to convey to you how we have already reached midterm election fever here in washington.

That is all people are focused on.

The fundraising numbers came out on friday.

Everyone is running for either a primary challenge or running for reelection.

Thank you so much, a briefing on the first monday of february as we get to the first tuesday of november.

Michael?

We want to talk about the ad site just mentioned in the super bowl and bring in our guest host for the hour.

He is the ceo of protagonists, which is a brand strategy firm.

Radioshack has had brand strategy problems.

It's a prized with its honest approach to its dated storefront.

The 80's called, they want their store back.

For those of you on the radio, all of these characters including mary lou retton, prominence 1980's people strip the store bear.

-- strip the store bare.

Is this a strategy that is going to work?

Can radioshack get out of the idea that it is a dated company?

Consumers like rands who recognize who they are.

-- like brands who recognize who they are.

It is an ad that works.

The question is will they follow it up?

What is so cool is we have such an 80's star with us.

You were in "self impressed" a few years ago.

He knows all the words to loverboy.

That was in the early 80's when i was an actor.

I'm quite angry with you for bringing that up.

Did you get a call from radioshack?

, they said if i can grow hair again i can be an -- they said if i can grow hair again i can be in the ad.

Making fun of yourself is very dangerous.

If you do it in a way that is fun and funding -- fun and funny -- self referential humor is critical.

Don't we live in a world with social media where one of the things they have done has gotten give dish has gotten big companies to give up on the idea that they own the brand -- has gotten big companies to give up on the idea that they own their brand?

You serve yourself well by acknowledging that and trying to move them away from that.

It is a bit more confiscated.

It is true you do not have as much control as you did in some level.

If you do it in the right way you can control the uncontrollable.

I think radioshack is going to have some real success with this commercial.

Amanda is joining us later in the hour, you don't even know who that is.

Let's do a data check in honor of james i'm in.

-- of james wyman.

It is better than the gloom we saw at 9 a.m.. the great deal or towards -- great yogurt wars.

That is when we come back from the break.

? them a good morning, everyone.

This matters now to our guest hosts.

He used to work at microsoft, that was his day job for a few years.

He assumed the chief selection officer -- the chief officer selection process.

Interesting guy, he is not like a front-line academic anybody would expect.

What are the tools mr.

Thompson brings to the microsoft future?

, i think he brings an understanding of software.

He -- i think he brings an understanding of software.

I think he brings an alternative voice.

If you look at the board of microsoft, they are light on tech.

He can have serious discussions about product and the future of microsoft.

Did mr.

Gates and mr.

Ballmer make the board of light on tech on purpose?

I don't think that.

I think they want to broaden and get different ranges on the board, different use on the board.

Having a completely tech centric board has its own disadvantages.

Are they a consultant based company?

Are they going to bring in the animals to consult and advised the troubled consumer division?

, they always use consultant companies as a way to bring in an outside voice.

-- they always use consultant companies as a way to bring in an outside voice.

If you look at the enterprise business, we were talking earlier about the size of microsoft.

The consumer is truly a bolt on, isn't it?

That is true.

That is why having an enterprise to centric person at the helm is good for the company.

Have they messaged better?

I think this is a serious attempt to win back the hearts of consumers.

Apple is very good at that.

Even google is very good at that.

This was a reminder that microsoft is more than just some of these devices you see.

A affect peoples lives and that is the mission of microsoft -- they affect people's lives and that is the mission of microsoft.

Can bill gates work one day a week?

I don't buy it for a minute.

I think he mentioned that his passion is the foundation.

He is an amazing person.

I think satya's request to bring him on as a product expert, bill was the best.

He has that visionary deal, that depth of knowledge very few people have.

That was hardeep walia bringing us some perspective on microsoft.

Greek yogurt, i love it, you love it.

Also the weather on the eastern seaboard is grim.

? them a good morning come -- good morning, everyone.

I am here with michael mckee and olivia sterns.

Scarlet fu will be on later tonight.

We look at branding and the debris of the super bowl.

It was groundhog day yesterday, today is manufacturing day.

Our headlines center around manufacturing.

In china, the manufacturing gauge falsely six-month low.

Export orders are shrinking.

The government tries to rein in excessive credit.

Going to england manufacturing growth, it is also a big story.

Slipping 256 .7, the lowest level in three months -- slipping to 56.7, the lowest level in three months.

We get our number at 3:00. box office, "ride along closed quote grabbing the number one spot for the third -- "ride along" routing the number one spot for the third straight weekend.

It is at $93 million in ticket sales.

Maybe denver fans would have been better off going to see "ride along." between peyton manning's three interceptions and the many touchdowns there were some great ads.

A bear attacks a convenience store in a desperate attempt to get his hand on some honey flavored yogurt.

Joining me is the chief marketing and brand officer, peter mcguinness.

You are a startup yogurt company, why spend millions of dollars on a super bowl ad?

, we are america posner number one yogurt -- we are america's number one yogurt.

We have very little awareness.

Two thirds of the country have never heard of us.

The more we can increase awareness the more we can continue to command the lead.

How do you measure that return on investment?

We have sophisticated tracking studies.

We will measure sales.

Do you run the ad again?

What you do with a super bowl ad after the super bowl?

We ran it this morning.

There were a lot of morning shows about the super bowl.

Then the bear is going to go into hibernation.

Does the pair have a union card?

No, but he was a bit of a diva bear.

My favorite moment is when the bear is at the checkout counter and he sort of glances over at a copy of us weekly and on it it says "hai9rriest celeb ever." did us weekly pay for the ad?

Unfortunately not.

They are partners with us.

We did tweak them out last night.

Everyone is pushing social media.

Your ad did not seem to have a social components.

We trended last night on twitter.

We are very happy.

Was there a hashtag?

#howmatters.

How your product is made matters.

You have had trouble with the number one grocery people on the health of your product.

I think the story is a bit sketchy.

I have changed from gm owes to exclusive products.

-- they have changed from gmos to exclusive products.

It was 0-.4%0.4% of our business.

We have a great durant -- -- they have a great brand.

I do want to point out that there actually shoplifted.

He stole.

I know that's how matters but when you have stealing bears, i'm not sure.

I think chobani is on target.

It is about scale right now.

It is interesting you are emphasizing how matters.

Your competitor came out with a different style of ad for their greek yogurt.

They called it a beer ad for checks.

-- ad for chicks.

If i had to hold the ads up against one over the other, i will hold chobani above.

No one in america can pronounce -- how do you respond when the big boys, onto your territory?

We love competition.

We caught everyone sleeping a few years ago and now the sleeping giants have woken up.

It makes us sharper and stronger.

There is competition on the field, competition off the field.

There were some mismatches on the field and some mismatches off the field.

Congratulations.

How many employees?

Them a 3000. most of them -- 3000. most of them in new york?

We have few manufacturing plants.

Great story.

Coming up, you have been talking about it all morning, a little tea in the currency markets.

-- volitility in tehhe currency markets.

We are streaming on your tablet, phone, and bloomberg.com.

? / we need to issue a bloomberg surveillance correction.

Peyton manning threw two interceptions, not three.

Look at the hateful eyes you have.

That was my mistake.

I take full responsibility.

All of you are sleep deprived in denver.

I'm going to company news.

We will start with lloyds.

The british bank won't resume the payout until the second half of the year.

This was a disappointment to investors who were hoping for a dividend in the post 2013 earnings.

Cme group is settling from the mf global bankruptcy.

They will pay $14.5 billion to settle the lawsuit filed on behalf of mf customers.

They say cme failed to properly supervise mf global.

Joseph a bank is setting its eyes on eddie bauer.

They have had parliamentary talks to buy eddie bauer.

According to people familiar with the matter, this comes after joseph a bank told rival men's wearhouse it will not enter talks for the exchange.

Them a competition among wireless carriers is heating up.

At&t announced a price cut in one of their plans as t-mobile is gaining customers.

Mike, you have some of the details.

They are cutting the price of one of their family plans by $40 per month.

They can pay $160 per month for 10 gigabytes of shared data, unlimited calling and text messaging.

A plan like that used to cost $200. for rise in costs even more than $200 -- for rise in the cost even more than $200 -- verizon costs even more than $200, $260. them i you have a family of four kids.

Would 10 gigabytes work?

, i'm not sure -- you have a family of four kids.

Would 10 gigabytes work?

I'm not sure.

We are moving away from, you are locked in, -- from "you are locked in" to new price plans.

It is a utility, we all know that.

Do you do a different brand strategy with a utility than you do with a normal business?

It is a utility but unfortunately the consumer does not perceive it that way.

They believe it is their god-given rights to be connected at all times.

That is when we are going to see -- we are at a point we are going to start seeing price slashing.

Their last ad was all pink.

It was really effective.

There were no stars and that was the point.

We are not going to spend money on stars and we will tell you what the news is.

How loyal are people to their mobile carrier?

, not at all.

-- not at all.

People are happy to switch.

When you're talking a deal the slow, -- talking about a deal this low you are going to see people switch back and forth, back and forth.

It is interesting.

In europe that they are already there.

You have a lot more flexibility in placement plans -- in payment plans.

Is this something that will affect the hardware manufacturers?

I think the distinction of utility is coverage is not universal.

Of i'll -- i live in so con valley.

Phone hardware, we used to be a big differentiator.

I think there is still room to be that unique differentiator.

You carry for phones?

What carrier?

At&t. why do you have for phones?

, i am in the software business so we have to test -- i am in the software business so we have to test.

The driving force for t-mobile is dads and moms writing four or five cell phone checks per month.

Well, if you can get a better deal -- the coverage you get matters.

I don't have a choice for t-mobile where i live.

No matter how attractive the incentive, until we get a network that is universal we are behind europe in that respect.

A lot more to talk about.

A quick data check.

Things are moving from earlier when you gave a gloomy report.

S&p futures just turned positive.

Money is moving out of bonds.

The yield moves up a little bit.

There is a churn to the european the oil markets have turned as well -- to the euro.

The oil markets have turned as well.

The manufacturing index is important.

That may be key.

Good morning, everyone.

We are on bloomberg television and bloomberg radio.

All of our interviews are on bloomberg plus.

Olivia sterns is with us today.

Scarlet fu will be on at 3 p.m. our guest host is a former microsoft executive.

Also with us is chief executive -- is the chief executive officer of protagonist.

Foreign-exchange markets are a real issue.

We saw the numbers go up and down for quite some time as we try to figure out whether or not people will start to differentiate among the various markets.

You have been talking about that for a while with respect to the markets emerging and developing.

The correlations are coming in.

I think what we see with the ruble basket weakening and the argentinian peso -- i would say the argentinian peso is more discrete than others.

Wouldn't you agree?

It appears that way to me because they have their own set of problems.

Of the countries are a little more interconnected.

David wu has done currency research at david lynch.

You have been a busy man.

Is there contagion underway?

I think there is a little bit of contagion.

I think contagion has been a lot more limited in the past month.

Last summer, it was very much asia.

This time around asia has been doing very well.

If you think about the worsening of the political situation, the bond has not been able to selloff.

I think the position has been lightened.

When you look at the drama with janet yellen coming in today, how much of this is about slower gdp and the raging debate over china?

How critical is china to the future of the emerging markets?

If you recall in december when the fed tapered unexpectedly, the stock market went up and rates went up.

That was because in december people were more optimistic about growth.

This time around markets selloff into the fed me link.

I think -- into the fed meeting.

At that point if you are tapering and growth is holding up, then the glass is still half full for the emerging markets.

And people start to worry about growth, that is when tapering hits the major headlines.

-- when people start to worry about growth, that is when tapering hits the major headlines.

The last couple of years is the weather can wreak havoc on the financial markets.

Last spring we had the coldest spring in europe in 50 years.

In 2012 we had the warmest spring on record in 50 years.

This time around we're going into a very cold february, following the cold january since 1988. david wu, the weather guy?

I have a question, what is the source of this turmoil in the emerging markets?

Krugman is saying it is the fed pulling back the punch bowl.

Where do you weigh in?

I personally think five years into qe by the fed, the fact the emerging markets have imported u.s. problems -- the fact is when you look across emerging markets most of them have a housing bubble.

They have seen the deterioration of their current account balance as a result of the loss of competitiveness.

They look like the u.s. five years ago.

David wu is with us with the bank of maryland -- of merrill lynch.

As michael mckee said, markets do better all in all.

Futures were negative for.

I am watching the yen.

-- were -4. i am watching the yen.

We are talking about this more as bloomberg surveillance continues.

? that is our moment of silence for the orange sweater that stephanie ruhle wore last night.

She is here with two hours sleep to tell us about the 8 a.m. show.

I would love to say i am a diehard broncos fan but i had a orange sweater, i have a blue sweater.

I kind of wish i went with blue.

Which added did you like the best?

-- which added did you -- which ad did you like the best?

I love the maserati ad.

Who won?

Bruno mars.

No one could pull off a super bowl like new york did.

We haven't talked about the scientology ad.

If you go to youtube there are a number of really good ads.

I'm going to sit down with scott o'neill, he runs both the 76ers and the devils.

We are going to get to talk about chris christie.

When you run a big arena like this you have to deal with all the bosses.

The devils are doing better than good in the nhl.

Here is michael mckee with the morning movers.

Mastercard is down in premarket trading.

They get a cut in their rating from the sbr -- from the fbr.

They are down 4/10 -- they were down as much as one percent.

Them a -- i am watching herbalife.

They were accused of being a pyramid scheme i bill ackman.

-- scheme by bill ackman.

Sales move 20%. summing up the u.s. markets, david wu is with us.

At your team on bank of america maryland -- bank of america merrill lynch, how threatened am i from the turmoil in argentina and russia?

I think 500 earnings coming from abroad, given that em is a bigger share of economy -- of world economy than it was a few years ago, it will not be able to escape entirely.

How warranted -- how worried are you about china?

It is not just emerging markets but world markets.

I am less worried about the trust issue.

I think the problem china is going through is corporate profitability.

Keep talking because you are improving a weaker japanese yen.

It was grim three hours ago.

Not grim, but troubled.

We are doing a little bit better in the last hour.

We have gone negative four to a plus.

Dow futures up 21. ? good morning everyone, i am tom keene.

Michael mckee and olivia sterns is with us as well.

Look at scarlet fu at 3 p.m. this afternoon.

It's time for company news.

Microsoft board is considering replacing bill gates as chairman.

Ace would remain a director and be involved in product development as part of the change.

He may also return to work at microsoft at least one day a week.

And lenovo turns to u.s. security insiders to get a deal approved.

They have a bid to get acquisition of motorola mobility.

And apple is facing more than $800 million in antitrust claims related to its e-book deals.

It is also fighting an oversight by a court related that court-appointed monitor.

-- court-appointed monitor.

That is company news from bloomberg west.

It is february 3. this is a back story on the weekend.

We had the super bowl.

Facebook dropping a bombshell.

Schedule today, facebook trying to give you news.

This is a newsfeed, it is a failure, and we have to find a different way to get news to people.

The reality is facebook has innovated continuously and they will figure this out.

Or are people that go to their newsfeed and they tweet that is fade -- tweet that newsfeed as a filter for their news.

We will find -- they will find a technological answer.

It isn't working right now.

What do we need to do to make newsfeeds smarter?

The reality is there is too much news out there.

I don't want to just rely on my circle of friends to filter my news.

There has to be a technological way to approach this where people actually get just the news they want.

It is out there be if just have to filter it in the right way.

-- out there.

We just have to filter it in the right way.

We have another agenda item, that is michael mckee looking at day one.

He were talking the 1980's and the $6 million man -- we were talking the 1980's and the 6 six million dollar man.

Now we are talking about the $6 trillion woman.

Janet yellen had her official swearing in this morning.

They have to figure out the $4 trillion balance sheet.

No mention of the turmoil in the emerging markets.

Over the weekend we did hear from the central bank governor of india, calling for more global coordination.

Will janet yellen respond?

One of her distractions to start with our how will we address chairman yellen, is a chairman or chairwoman?

She wants to be chair but most news organizations will call her chairman.

We haven't really talked about the fact that she is the first woman to head the federal reserve.

We have been talking about her because of her qualifications, not her gender.

Of that is a break through.

It is 8 -- that is a breakthrough.

It is a huge deal.

Them a the chair -- the chairman has to go through the confirmation progress.

The way congress is going, it could be late summer before he gets into office.

Then there are several other seeds that have to be filled.

Michael mckee is a trooper.

Taking a loss today and not going into therapy.

What happened?

Yesterday the denver broncos did not play in the super bowl.

Some team wearing orange jerseys showed up.

I was at the game it was a vicious start.

-- at the game, it was a vicious start.

Peyton was throwing interceptions like his little brother.

She wanted last week to be colorado and now she has thrown them under the bus.

I am looking at walmart.

It is the first day for the ceo at the world possibly largest retailer.

They posted -- world's largest retailer.

The closed stores in china -- they closed stores in china.

I think a branding strategy -- they helped arkansas -- helped elton bill arkansas -- they do a good job of reaching people.

They are going to have to find a new way in now.

They certainly have pr issues across.

They constantly have to innovate.

One of the big problems for large companies is they rest on their laurels and hopefully a new guy, new strategy, new vision.

Them a he has been there -- he has been there since 1984. this man has been there for several decades.

We need marilou retton.

It does not mean he has the reins.

He may have been chomping at the bits.

People think walmart, they think big stores and low prices.

Beyond that what do they sell?

If you spend any time in walmart, there is a lot there.

There are niches in the walmart store.

There are going to be ways for walmart to be able to start the hitch -- more and more of those niche constituents.

It goes off of the 2009 bull market.

We have seen these stodgy companies turn it on.

Other than share buyback, you wonder where it comes.

How much do you think public labor disputes are hurting the brand?

, it is not great but the reality is when you are a juggernaut and people -- it is not great but the reality is when you are a juggernaut and people don't have anywhere to go other than your walmart, it is good for the brand.

It is time to answer our twitter question of the day.

Who had the best performance during the super bowl?

"the lights, which didn't go out here: -- go out." i thought bruno mars was phenomenal.

The pepsi halftime show was the best part of the entire night, including the game.

You said earlier the crowd slept -- until the pepsi halftime show.

I don't know if the national anthem sounded as good in the stadium as it did that sounded as good as it did in the stadium -- sounded as good

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

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