Headlines today. Megan hughes follows the story on credit card hacking in the wake of the massive data breach at target. Lets begin with julie hyman in todays big rebound in stocks. Good afternoon. Declinesund from the we have seen to date. 2014 not off to an auspicious start, with the s p 500 falling almost six percent yesterday, then coming back from that today. Factory orders coming in not as poorly as had been estimated. Affecting matters, some of the earnings news we have gotten. Discretionary stocks are leading gains today because of a couple of stories. Michael coors shares are soaring after the retailer came out with earnings that Beat Estimates. Those shares are doing much better than the overall market. They are also catapulting michael coors himself into billionaire status. Analysts say these numbers bode well. In brands shares are also the Consumer Discretionary category. They are doing well today after that companys earnings report. The combination of factors is driving up the numbers today. Stocks may be rebounding, but shares of jcpenney are tumbling. It reported its first sales gain since 2011. Whats going on . Everybody kept saying that the Fourth Quarter is really pivotal and that holiday sales were going to be key for jcpenney. Here it is, it comes out with a sales gain of two percent. Initially, shares rose, but since then they have tumbled. It looks now like they are trading at a record low. There have been a lot of questions raised about the future of jcpenney. Could it run out of cash and when might that happen . Here are a couple of things driving shares down so decidedly today. Even though shares were up two percent, some analysts were more optimistic, looking for a gain more like four percent. Also, some analysts are now talking about trying to make it precise. When are they going to run out of cash . Some are saying the jcpenney may have to raise more funds in the third quarter. Thise were talking about prior to the end of 2014. And some analysts still are, but there are a lot of concerns about the future. Julie, thank you. Is underway at microsoft. Jon erlichman first told us this news last week. in the dela is the first ceo first nadella is the the third ceo in microsoft history. Bill gates is stepping down as chairman of the board. Think about this . This tells you a lot. The differentbout strategies microsoft has been working on, the one that gets the most press is the idea of making its own Consumer Devices softwareg to fuel its through that. But this is tied to the ideas that dela has been working on. Taking things to the cloud so that people can access all their stuff anywhere, anytime. The is no is microsoft has been able to build alongside Amazon Web Services it has been a key part of the microsoft story. Not dela did a lot in terms of Satya Nadella has been someone thinking about where the company should be and the need to have a startup like mentality and to understand what Young Technology companies are doing to better understand where microsoft should go. Whited this search take so long . Search take so long . This is a big company. These searches can take time. They spoke to dozens of dozens of potential candidates, internal and external. It is a lot of work to figure out what the best mix is for the company. At the end of the day, there were some concerns from external candidates about what exactly. Hey would be able to do in turn only,e coupling him with a new chairman and having bill gates play a role behind the scenes seemed to be the right mix. You alluded to bill gates stepping aside as chairman. Lets take a listen to what he had to say about his new role at microsoft. I am thrilled that satya has been asked to step up. Over one third of my Time Available to meet with product groups and it will be of to define this next round products working together. How will his new role change things at microsoft . I dont know that it is going to change things more so. It could be an important partnership. Bill gates will weigh in on issues. I think at the end of the day, that is where he will spend more time as opposed to dealing with John Thompson can now deal with in a bigger way. Speaking of mr. Thompson, what do we know about him . He is very wellknown in the world of technology is a leader. I think if youre somebody leaving this search process, he obviously felt he was in a position to add something to the table. You would expect help with the transition, especially with investors. This is a Company Investors expect a lot from. They want to see where it is going. Trying to position this company in terms of the technology and where it is going. Joining us from los angeles. Thank you. For all things tech, tune into 1oomberg west twice a day at p. M. Eastern time and 10 00 a. M. In the west. Easternin at 6 p. M. Time and 3 00 in the west. Up, the question of accountability for cyber theft. Welcome back. Decembers credit card breach at target was the subject of a hearing today on capitol hill. The companys ceo issued an apology. The unfortunate reality is that we suffered a breach. All businesses and their customers are facing increasing threats from cyber criminals. In fact, reports indicate that other companies have been subjected to similar attacks. To prevent this from happening again, none of us can go it alone. We need to work together. From targetwe hear beyond apologies . What are they doing in terms of security . They are trying to move the ball forward a bit. They said we are trying to make this right. They are talking about new chip technology, getting rid of the magnetic strip and using technology that encrypts data at the point of sale. This breach may very well have prevented with this technology. It has been in place for years in other countries but america has been slow to adopt it. The industry is expected to adopted in late 2015. Target, mulligan today saying this breach has accelerated the target date for that company. What about the way target handled this after the breach . Brought up . Absolutely. I huge issue here. Interesting to point out for , they already have systems in place to deal with a cyber attack or breach. For retailers, there was a seven day lag between the time the parliament of justice notified them the department of justice notified them that there had been suspicious activity and when they went public with it. When they went public, they did not notify customers directly. Some lawmakers take issue with that. I believe that if somebody has an account or uses credit at an institution and their data is preached, they should be notified so they can protect themselves. We felt given the scope of our breach that public dissemination was called for our would let all of customers know immediately. We also heard from we also will hear from the Neiman Marcus cio today. They had a breach in january. They did notify customers directly, but again, no laws on the books. Megan hughes joining us from washington. Thank you. The Senior Vice President for the council on the National Retail federation spoke about protecting Financial Data for consumers. He joins us today. Tanks for coming on. Thanks for having me. What are the economic consequences of these Security Breaches . What numbers are we talking about on an annual basis . The numbers are huge. The fraud loss is estimated to be about 11 billion. The time and inconvenience for customers. The risk of an Identity Theft breach that customers could be adversely affected. And then many billions of dollars the companies are spending trying to lock down their systems, trying to keep these criminal hackers from breaking in and the first place. The Credit Union NationalAssociation Says that credit betweenill have to pay 25 million 30 million to provide new debit or credit customers affected by the data breach at target. Is that fair considering the Credit Unions were not responsible for the breach . This is a very complicated issue. And iointed out yesterday think other members who testified made very clear, we have a fundamental problem with cards in this country. Cards are authenticated with a signature and a Magnetic Stripe. The Magnetic Stripe can be by, frankly, a reasonably sophisticated 12yearold. And in terms of the signature, they are worthless. No one knows were signature looks like. What your signature looks like. We need to move to a more secure card system. A pin so that the customer is protected and she knows no one can use that card except her, and a chip so that the bank is protected, so they know that is the card they issued. Why are u. S. Sanctioned Card Networks still using a magnetic strip, and technology from the 1960s . Thats a very good question. You know, they have been promoting pin in chip all over the world in virtually every other developed nation, and frankly, many underdeveloped nations already have pin and chip technology. About the lastt place to move forward. If we move forward, it will not solve all the problems, but it will remove fraud dramatically and make our whole Payment System more secure. It sounds to me that you are talking about cost. That seems to be the only reason the u. S. Is not moved forward. Is the upfront cost of a system upgrade worth it considering the reputational damage, not to mention the possible litigation that results from a Security Breach . We certainly think it is. We will potentially save a good portion of the billions of dollars of fraud that is going on right now. There are several billion cards that have been issued in the u. S. , and the banks will have to decide if they are going to reissue those cards with more security . We think it is a good investment. But we all have to work together. Members of the Senate Banking committee one retailers to articipate in a nine in National Data breach system. They also want the ftc to have wider authority to investigate data theft. Is the National Retailers association in favor of these moves and should they be voluntary . Stateht now, there are 46 laws that require breach notification, plus district of columbia, plus three other territories. Almost everyone is covered by the laws on the books now. For several years, we have argued to congress that it would be better to have a Single National standard, not the weakest standard, a good, solid, strong reach notification law out there, and we fully support that. Seconds, there30 have been other breaches, but the target one got the most headlines. Is this something that did not have to happen . , it is impossible to make a system that is bulletproof. There will always be one more sophisticated and dedicated hacker who will find a way in. Our goal is to keep the system away from personal data and we have to upgrade the system and all in order to do that. Unfortunately, we are not able to do that. The Senior Vice President and general counsel for the National Retailers federation, something to be continued. Hopefully we can have you back onto talk about this in the near future. I would love to come back. Thank you so much. Thank you. Coming up, we have been talking about the farm bill for months now. We will discuss what made it into the 956 billion bill, next. Within the hour, we expect the u. S. Senate to begin voting on final passage of the farm bill. Us now from capitol hill. This bill passed the house easily last week. It is expected to clear the senate and then president obama plans to sign it. If these folks were so easy in the end, why was it so hard to get here. What you have seen is a twoyear struggle over the cost of food stamps. It is a very divisive social welfare debate. Has historically been a nonpartisan bill. At a certain point, i think frankly is just getting kind of tired of it. They get to the point where they understand that this is the best deal they are going to get. They have to get some sort of policy done. In time, theyoint the to give the legislation goahead. What exactly is in this bill . You see a comprehensive look at food policy in america. A lot of this gets to be about crop subsidies and the farm part of the farm bill, but the biggest question is the food stamps. The tenyear spending will actually be a bit under 800 billion. It is about the size of the taxpayer bailout of the banks in 2008. This ended up being a lot bigger of a stronger than the bank bailout because when you are dealing with poor americans, there is a lot of controversy and a lot of people who do not want to see more money go to social welfare. This legislation has been referred to as the Crop Insurance bill. Why is that . If you take a look at the farm insurance subsidy program, what you see is a program that gives money to farmers for being farmers. It was very unpopular. That has been replaced by more insurancebased programs, which means that Companies Like wells ever more important part of the farm safety net. Snap program, the the official name for food stamps. But you we but we will not see cuts to who is eligible for the program. That was a win for the democrats. What might make the price tag go higher . Onthat is going to depend the weather. A lot of Congressional Budget Office assumptions were based on regular weather for crops. We have subsidy prices for commodities. If you see Commodity Prices actually fall, that is going to trigger bigger payouts. Allen joining us live from capitol hill. Thank you. Again, we are waiting for the senate to take action on this. As soon as we get more information, we will bring that to you. Now, here is our senior markets correspondent, julie hyman. Stocks are rebounding today after the lows yesterday. They are led in part by Consumer Discretionary material Consumer Discretionary and materials. Inare seeing buys treasuries, which means that yields are pushing a little higher today. On thee now up 2. 62 tenyear. You heard alan just talking about the effect of commodities when it comes to agriculture. Lets look at natural gas. Are on theatural gas rise for the first time in four days. Thats unfortunate for us but fortunate if you are long on natural gas. There is more cold weather expected in the u. S. We will have more on the markets in 30 minutes remo bottom line after the break. Welcome back to the second halfhour of bottomline on bloomberg television. Im Mark Crumpton. U. S. Home prices rose 11 in december compared to one year ago according to a report from corelogic. That is the strongest annual growth since 2005. Nevada was the state with the biggest game. Prices there were up nearly 24 . The second winter storm of the week is headed to the northeastern United States. Snow will start falling across boston and new york late tonight. According to the Natural National weather service, new york could get 48 inches before the snow turns into freezing rain on wednesday. Reported,omberg first microsoft will name Satya Nadella as its chief executive officer. This is after a fivemonth search. Bill gates has stepped aside as chairman to devote more time to product development. That is a look at the news this hour. Today is facebooks 10th birth day. The company Mark Zuckerberg started in his harvard to arsity dorm has grown worldwide enterprise with 750 million users per day. Look at a startup built on consumer migration to mobile. He created a news apt to get news on the go. Welcome to bottom line. Thanks for joining us. Before we get into your app, lets talk about facebooks evolution. How has the company matured from those days when Mark Zuckerberg started it in his harvard dorm . Obviously it starts out as kids couldollege access and has grown to something used for social access worldwide. It is amazing an amazing transformation. Involvesrocess also Mark Zuckerberg. How has his thinking expanded and how has phase forward facebook transformed the social media landscape . I think that the changes happening at facebook are really telling an really interesting. They are moving away from the sort of behemoth of one site and one experience, onesizefitsall kind of thing, and beginning to split the experience into a lot of different apps. You see this big transition for distributing all of their work into a lot of different spaces and i think it is interesting how the company will continue to evolve and probably be an example for the rest of the industry. How is the facebook interface changing the facebook experience . For a while, i had facebook on my phone on my home screen. ,t ended up being a distraction so i took it off. Paper brought a backup. How was it a distraction . You have a constant feed you are swiping, swiping, swiping in going through, and it tends to be a distraction. The new interface really focuses your attention on specific content. It is an interesting change. What did facebook unleash on the world . I think it ended up being a people glue. You are gluing components together and people connecting worldwide. But also, there are very few applications out there today that dont have some form of social dimity and using them as glue that binds those social interactivity and using them as the glue that binds that activity. Tell me about circa. How did you start it, what was the genesis . When you are mobile, when you whenn the go, which i was i started the company, i kept feeling like i was confronted with long articles whenever i open the news apt. I realized it took a lot of work just to get through a handful of stories at a time. We wanted to create an experience or you had news specific to a mobile lifestyle. We created an experience that is stored of like cliff notes for news where you are paring down to just the facts and able to get through all the new stories of the day very quickly. I imagine what is key for you developss as the story. Absolutely. We created a future where you can follow what happens next in the news. As the story progresses, you are going to get notified as it changes. A perfect example was we found out about facebook intentionally launching paper sometime ago. We produced a story about that. Anybody that follows it, from then on, we notify it when it launches. Are you a news junkie . I sort of became one. I didnt start out like that, but now that i have this opportunity to stay in touch with all the things i care about, yes, it definitely has changed how i think about the news. Twitters going to get first earnings on wednesday. Assess the companys performance. It has been pretty amazing, honestly. Their transition to mobile has really been impressive. If you just look at the Stock Performance alone, we are talking about an incredible bump. I think despite whatever the earnings may be tomorrow, the company is on the rise. What is next in social media in this age of Cyber Security and nsa spying . Are we going to see more apps with user privacy at the center of their features . Absolutely. We are going to see that happen more and more. And cap recently launched called secret. The idea is that you are connecting with your friends but everything you share is completely anonymous. Whereas i know the things being shared are from my friends, i have no way of connecting who that is. It is interesting. I can share more intimate things that i would not share publicly. Thank you for joining us from our San Francisco bureau. Thanks so much for your time. It was a pleasure to meet you. Thank you. When we continue in just a moment, for those living outside the u. S. Who wanted to watch the super bowl on sunday, they were able to do so via service. Roviders we talk to the ceo of a company who tells us how mobile is transforming his business. And as we had to break, a live shot of the floor of the u. S. Senate were members are getting set to vote on the farm bill. We will follow that story and bring you more information as we get it. We will be right back. Lex americas young ceos are getting more bullish on the economy. Officegressional budget willthe federal deficit shrink as Stronger Economic growth increases tax revenue. At the same time, the deficit will surge to more than 1 economicin a decade as growth eventually slows down. Like most companies in the communications business, this one wants to tune into the migration to mobile. The israelibased Firm ProvidesSatellite Services to broadcasters. We spoke to the ceo in tel aviv. We began by asking him where he plans to make acquisitions. The main thing for us is to find the right targets, to find the right ones. Acquiring companies is easy. Making it work is harder. What we do today is provide services to media, broadcasters and content providers. Our goal and we are very close to it is to provide content. As you know, as the consumer, the choices are increasing in terms of how to view video. Complexity is another thing that needs to be done. Content is increasing. We are looking at several things. Taking content, preparing it for all the variety. Is the shift to High Definition the main driver of growth overall . Yes, it does create complexity and increase our business. However, as there is more and more streaming over the is also a great opportunity for us because we get the content. We broadcast to cable. The same content goes to a whole bug which a whole bunch of other aspects that people want to watch, phones, devices. Are service we can provide in seamless way, that is another major goal for us. That there are multiple ways to watch bloomberg television. We are on the web at bloomberg. Com, on your mobile device and on apple tv. Coming up, hot shots. Would you change your name to win an all expenses paid life in berlin . You may be surprised by how many people said yes. As part of a publicity stunt, lufthansa made the proposition to the people of sweden. Hans nichols caught up with lufthansa. Meet michael eric anderson. The 24yearold swede officially added german names to his own name to promote german culture in scandinavia. I dreamt about driving on the autobahn. Is that true . Not really. He beat out 41 contestants who also legally changed their names. The prize . A rentfree year in a spacious berlins in one of trendiest neighborhoods. Do you have any friends in berlin . Do you know anyone . Not really. But a lot of people have offered to get a coffee with me. Berlin is banking on new ideas to help shed germanys stiff reputation and attract tourists. Have you been out clubbing . No. Are you a big club or . No. Helping him navigate the new city is a personalized guide from lufthansa. Rest ofwants to see the the country, he can fly to frankfurt or munich for free on lufthansa. He also gets a weekly grocery voucher for close to 70 and the museum pass. So, he has delayed his studies to explore berlin. He claims he now answers to his new name. If someone says your new name, are you going to turn your head . Definitely. Changing your name twice cost money, so michael will have his while. E for a youre going to die with that . I think so. And he wont succumb to the german fear of rule breaking. The swedes still jay walks. Thats a little troubling. Frequent fliers beware. Starting this month, your frequent flyer miles may not be worth as much as they used to, maybe not in berlin. We have details. Morning and welcome aboard flight 42 with nonstop service from new york to bonn. We would like to expend extend a warm welcome to our frequent fliers with this announcement, you will be earning valuable miles for future travel. Except those miles wont be as valuable for as they used to be. Modified united have their frequent flyer programs, and not in ways customers are going to like. First and Business Class fliers are getting hosed. Say you book a first class ticket from new york to dubai before february 1 on united. It wouldve cost you 150 thousand miles. After ferree first, it is will cost you 180,000 miles. And get this, if you want to fly that same route on a united partner, 280,000 miles. Other increases are not as severe, but still, why are the carriers doing this . A strange thing happened to the Airline Industry in the past few years. Instead of rolling in and out of bankruptcy like they used to do,. Hey came up with a new idea on the plus side, improving productivity. On the minus, decreasing customer service. Is another reason why the airlines are doing this. Because they can. After all, if you have racked up hundreds of thousands of miles with an airline, what are you going to do . Those miles are in portable. You want to lock into whatever benefits the airlines say those miles are worth. You will pay whatever they say you will pay because you are stuck with it. Enjoy your flight. Sam commandeered a jet. This time for hotshots. A look at the most compelling images of the day. You may want to rethink lo mein from this village. A villager made and noodles several hundred yards long in time for this festival. Hundreds of locals snaked through the town carrying the. Oodles cuts considered unlucky to a noodle strand. What is more charming than a giant panda on a rocking horse . Pandas on a rocking horse. These giant pandas have their own club to entertain visitors. After day of play, they cuddle in the nursery. They were all artificially bred and are less than a year old. Stay with us. Another check of Market Movers is on the other side of the break. Bottom line returns in just a moment. You are looking at a live shot of capitol hill. The United States senate does have the votes to pass the farm bill, which would cut foodstamp spending. We will continue to follow this and bring you more details coming up in the next hour on street smart. Get the latest headlines at the top of the hour on Bloomberg Radio and streaming on your tablet and on bloomberg. Com. Edition oft for this bottom line. I am part i am Mark Crumpton in new york. On the markets is next. It is 56 pass the hour. That means bloomberg tv is on the markets. Im julie hyman. Lets take a look at where stocks stand in our from the closing bell. We did see a rebound after yesterdays steep drop which took the s p almost six percent lower year today. We are recovering from that somewhat. We were helped by earnings news. Also, shares of the drugmaker are upgraded in the wake of positive test for a cancer drug. Analystds Beat Estimates and saw an increase in sales in its international division. We are also watching the airline. They are having a rough time lately due to cancellations and delays due to severe weather, but they have found ways to charge you money for everything from food to checked bags. Todays sector report focusing on the airlines is a representative from an Aviation Consulting firm. Mike, thank you for joining us. When you look at the fees being charged, how much has this become a part of the Airlines Business model . It is the Business Model today. Your ticket price is your down payment. Anything on top of that you are going to pay for. It is the new model for pricing and how they make their money. Has there been any pushback on the part of consumers . I have not seen it. I thought American Airlines initiated this when American Airlines initiated this about five years ago they were dead meat. And then everybody paid the fee for the first bag and it has gone up since then. Out ofline that is business now actually charged you five dollars if you wanted to use your ticket. We will not go that far, but they are close. Gregs youre not getting as much return necessarily now if you are a frequent flyer. A lot of airlines are now saying you need more miles in order to qualify for certain flights. Frequent flyer miles, they dont need those programs anymore. Originally, they were there to they werethat competing with twa or ozark, but now those airlines are gone. Now the frequent flyer club means you will be less inconvenienced than if you dont have miles. Is there anyone there really stands out to you . Obviously, American Airlines, delta, they are going to be at the top of the pile in terms of handling capacity and cost. Watch those too carefully. Thank you so much. We appreciate your time talking with us about airlines and all the changes that have gone on. We will be on the market again in 30 minutes. Street smart is next. Live from bloomberg World Headquarters in new york, this is street smart. We are one hour from the closing bell. Lets walk you through the top stories of the day. First off, the northeast getting blanketed by snow, getting hit by the second winter storm of the week, and the last one left off with eight inches. Came hereeople who for the super bowl have not been able to leave. Those of us who live here are getting whacked with higher natural gas