Transcripts For BLOOMBERG In The Loop With Betty Liu 20140115

Happening . Moynihan spentan time in washington meeting with people. I do not think his story is over yet. Why is that . Idea, anyt have any facts, but i would doubt they get off that lightly. You look at how much jpmorgan has been targeted, and it seems like we are in an environment where the government is out for blood. It is bank of america next. Who knows, but i think Brian Moynihan has been a hell of a job. These guys will go as far as they can go. Jpmorgan i thought was done, and then they came after them on madoff. There is never an end to this ticky bank attack piggy bank attack. I hate it. You do not think it is justified . The scale of these things are wild. So were the losses, the issues were high scale as well. You cannot fight the government. They win. When they come after you for a number like this, it is now becoming they repaid. Off. Ake mad off sec was told about mad and they threw it away. Jpmorgan, give me a break. What about the bad mortgage tons, bundling up mortgages investors that did not know any better. Fannie mae got part of the settlement. They did not know, come on. There is a lot of blame, but the most expedient thing to do is blame the banks because they are the ones with the money. They have the money, go to the bank, and everybody hates them right now. Specifically on bank of america, they just reported with a good quarter, relatively speaking, people were criticizing bank of america because so much of the business was generated in america. It does not look so bad anymore. They have done a nice job. They were down as well as you could get, and brian has brought the team back. What you think makes him a good leader . A nice, even keel, steady as you go. He is a lawyer. That is better than being a banker. That is one against him. Job, but hea solid has really focused on the team. Keel, part of what makes him a good leader. We have another person stepping into the leadership role today, mary barra over at gm, first day as ceo. Last night, the Company Announced a new cfo and a dividend, the first dividend since 2008. Have they gotten all of the big things out of the way, leaving her in a position to focus on innovation, or would you say it is more challenging because she cannot offer dividends . You have to hope so if those are her takes. She has the ticket punched. There. Rted she worked her way up through stanford. Lets give her every break in the world. I hope she knocks it out of the park. You have the chairman in a given row, the president in a whatrent role, the ceo does it look like when you have a lot of cooks in the kitchen trying to run the company . Ugly. Everybody goes shopping. Barra uphis set mary to fail . Lets hope not. There are multiple levels. If i go to you for a deal and i do not like it, i go to trish. How difficult is it going to be for mary barra to keep a guy happy . N he was the cfo, now he is the president. How tough is it because we have seen what happened to ge . Ammann may not be exactly what she wants, but she is getting delivered him. Will she ever fully trust him . He was always be worried gunning for her job . I do not know mary barra, so i do not know what her style is. She might have a style that accepts having someone nextdoor that is shooting bullets rather than giving hugs. I do not know. Big deal, a woman. I like to see that. You think about the change in corporate culture. We have jeannie at ibm. You could still lift them on one and. One hand. We are watching apple. China mobile is offering a free iphone with the most expensive data plan and it is subsidizing the phone if you get the basic plan. Part of the reason the child the iphone was not selling was because it was too expensive. What kind of revenue opportunity does that unlock in a company that is eating up all of the smart phones out there . A huge opportunity. That was the differentiating factor, the idea that the phone was so expensive. It is something. I think there is a lot of demand and this will only in the state. Jack, do you have an iphone . I have an iphone. To have multiple phones or gadgets . Do you still use the blackberry . I had been using the keypad blackberry, and now i have almost the tablet version. They have the virtual keyboard better than anyone. You are canadian, dont you have to buy a blackberry . Amks when you in rome, i doing as the romans do, im quite happy with a iphone or samsung, but i want to give these guys a shot. I think the big story is t mobile and verizon. That work could be destructive. At t, you verizon and are under siege with these deals. Theyey will pay you if switch. If you switch. It is a big deal. How sustainable is that revenue model . You know, it happens in televisions, all of these properties in consumer electronics. Ou watch the prices come down productivity increases as well. Absolutely. Razor thin margins. A does the industry me provocative or like john leger of at t . I do not think of jack welch. When i think of arnold schwarzenegger, i do not think of you that much either. [laughter] fighting words. Ouch. Characterbeen quite a , a charismatic force for the company. The ceo of tmobile we are talking about here. Party. Hed the at t we will see what happens to guys like that, the strategy of. Eing a disruptive with price disruptive with technology is one thing. Disruptive with price is another. All the disruptiveness means is the willingness to sacrifice margin to the point where you might be losing money. Any company can do that. It is just whether you think the strategy can gain market share to recover Pricing Power and take on the guys who had you over the barrel. That is a timing issue. It is working for amazon. Less than 2 . Do you think that tmobile is losing money on this, chalking it up to marketing . I do not know. Before we go to a commercial break, i want to bring everyone up to speed with the agenda. Its firstment issues report on Producer Prices for december at 8 30 a. M. This morning and economist except to see prices up 1. 1 . Christine lagarde will give a speech at the National Press club and focus on the prospects for Global Growth over the next year. At 2 00 p. M. , the fed releases the beige book, and anecdotal look at Economic Conditions around the country. That is the agenda. How much should workers get paid . I was is debating the minimum wage, and so will we. Staying in washington, d. C. , do not miss charlie roses conversation with former secretary of defense bob gates. That is tonight at 8 00 p. M. And 10 00 p. M. Eastern on bloomberg tv. I think president s have been too quick to pull a gun to solve a problem, using military force as a first choice rather than a last resort. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Steelrish regan with alix and our guest host jack welch. How much should workers get paid . Some in congress are pushing for 10. 10 an hour with the idea that people who make more money spend more, and others worry anything about 7. 25 an hour would hurt job creation. There are so many views, and one way to look at it is who is on the hook for worker pay, and this was discussed by varying the halt and he picked apart the walmart pay plan. Because walmart is not paying their workers enough. Is a complex issue. You want to say something, i see it. Wouldk, the law of demand suggest that higher prices mean people will purchase less of them. Does that also apply to labor markets . A prices go up for labor at mandatory level, are we in a situation where fewer people might be employed, and therefore we will be stuck with the exact same Tax Obligations that Barry Ritholz is talking about . Government intervention labor markets is by definition disruptive. It is not a free market. It messes things up. On the other hand, there are more studies saying it will hurt jobs and studies saying it will help the economy by giving money to people to spend. I will not enter the debate on who is right on each side, but i know you cannot totally disrupt with two rapid of an increase. Does that mean you want to get rid of the minimum wage altogether . No, i am for a minimum wage, increasing it. The New York Times has an editorial page saying we have to 8 theyre, and on page a have the story about queens casino that had a cafeteria with 180 employees, and they doubled the wages. In. Arbitrator came they were making five dollars in chips, and they raise the two 12. What happened to the cafeteria . Gone. 180 workers are they had to close down. It was not economically efficient. At the end of the day f they take it up slowly it did take it up slowly. No, they did not. You cannot adjust when you go from one and double it. Too much, too fast. Indexing to inflation might work. Gei took a look at wages at in 1981, and were 3. 35, adjusted for inflation they are 10. 75. Pay 10. 75, i will tell you that. In july, 2009, congress up wages by 10 , and in six months jobs. Ost 600,000 teen 250,000 nonite teen jobs being added to the economy. It had a direct effect on the minimumwage jobs, you could argue. I know people who have kids care about teens, but this is not about teenagers. It is about the single mother working parttime who is making 55 less than the fulltime worker. Versus sam at costco club, the productivity there can be so much higher, and that is where you will find a career. People are famous for being for starting up the floor and becoming to be division managers. Walmart builds more leaders than just about any company in the game, and they build them from the floor up. Doug macmillan, i think he started as a check out boy had as long as they get their. Oot in the door as a boy as long as they get their foot in the door as a fulltime employee. They have cheap candles. Will get over to Erik Schatzker for a quick discussion on amazon. It is a critical day for amazon. 30 employees in delaware will decide whether to become the companys first lowcost union and challenge the model that has allowed amazon to become an e commerce behemoth. Julie hyman has the details. This would be the first union in the united states, and were not talking about a lot of people, 30 workers who will vote tonight whether to join the union of machinists. Machinists, and repair guys. We are talking about a factory that employs about 1500 people, and a company as the last filing that employed 80,000 people. So, proportionally, very small. But symbolic. Milestone for the company. It has been resistant to unions. In a statement it released, and it has said this consistently, they prefer to have opened communication. If you were jeff bezos, you might be similarly assistant if you are running and operating margin of less than 1 . Of course. You are working with tight constraints. At the same time, the analyst i spoke to said the workers are known as being relatively wellpaid. They receive benefits. Amazon provides a program that will provide people with Higher Education that is paid for by the company. These analysts allege that is why there has not been more unionization attempts. Do we know if this particular group is getting more support from organized labor . We know they are getting some support, but amazon has high powered attorneys to help prevent this from happening. Great update on amazon. We will be watching the vote closely tonight, 30 employees deciding whether to form the companys first u. S. Union. That was julie hyman. Back, google goes shopping, trying to hold onto its dominance in technology. Spending more cash than its rivals will it pay off . We will ask jack welch. Stay tuned. You are watching in the loop , everybody, live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. I am Erik Schatzker with trish regan and our guest host, jack welch, who led ge for a couple of decades. A famous guy. Alix steel has a check on futures. It is 26 minutes after the hour. Bloomberg television is on the market. Stock futures are inching their way higher with the nasdaq in. 3 ,ead up almost indicating stocks could extend the biggest rally we saw yesterday in a most four weeks. Bank of america quadrupled, which helps stocks as well. Thank you. As theyalking google, are outspending the top five als combined diversification, largecap companies. If you look at the numbers, 17 billion spent in the last two years on hardware and software, and the deal announced this week, 3. 2 billion for next. This is a company on the acquisition trail. Jack, i would think this should give us hope when you see a company like google putting money to work, investing in new technology, it has to mean that google believes in the future, and there is a lot of text that could be coming our way. Without question, google is taking swings. When a company is flush, one it has a dominant position, it is time when a company is flush, when it has a dominant position, it is time to spread its wings, what can i do with all of this money . . Like microsoft i do not want to criticize microsoft. I want to talk about google, and affected the keep going after different stuff, it is a big deal. I think we do need to talk about other companies because they are not doing what google is doing. Of hearing ceo after ceo complain about an action in washington, but they are not taking risks, not balance cash on their sheet. The demand is not there. It is a chicken and egg argument, hire people, to create demand. Google has a days, where you think, freeeek off, this, free that, they have the world by the tail. I have 15 or 16 private equity companies. We are grinding out 1 , 2 growth in a crappy economy fighting to get a little bit of cash flow. That is because you have optimized your Balance Sheet and you have Debt Service Payments you have to pay off. The facts are there is no demand. In this economy you get happy talk about things looming. Booming. They are not, i will tell you that. Does this go back to the washington argument . Dysfunction, not enough of the right kind of rhetoric . We have a recession in europe we are barely out of, china is slowing, and we have a better global position than we have had in the last five years when there is more of a synchronized, slow growth, but it is slow growth. A company like google, you do not realize how flush they are. They are loaded. They would be criminals not to take some of this enormous cash flow they have and spend it, and they are doing this. Made a private Equity Portfolio Companies cannot do that, but what about microsoft, apple . The reason carl icahn is in a war with apple he wants dividends. Right, but the company has to make a choice, we have cash, what do we do with it . Invest it in a zero percent rate environment . Invest in the business . Make acquisitions . You do not let it burn a hole in your pocket. Dont they run a risk of becoming the next blackberry or hp . There is no question, but you cannot say that about microsoft d budget. F their r they are spending a crazy amount of money, but they have not had the hits. Should they be on the acquisition trail, trying to find things that have already succeeded . That is a choice they are making. You could argue that there profits have grown. Everybody beats them up, but their profits have grown up. The last time i talked to you, Sam Paula Abdul was who you wanted to see. I talked to you at the World Business forum. I thought i would get traction. I thought sam would be a great ceo of microsoft. Mulally is not going to do it. I did not think he had the background. Sam, it is not going to be who is it . I do not know the answer. Thehen we come back to point youre making about google having the world by the tail. Maybe it is a cultural problem. If google has the dream days and the world by the tail and google can make it work we do not know what these acquisitions, but the nice thing about google is i always say when you are in this position, bat. Get to there is no sense in staying in the dugout. Google has this juicy position, tons of cash, swing at it. One of my favorite expressions from wayne gretzky, you will miss 100 of the shots you do not take. Eq think its sam got the call from microsoft he would do you think if sam got a call from microsoft he would take the job . You have till he will former ceos there, which makes it tough from the outside. From the inside, he would be comfortable. Jack welch is with us. We have breaking Economic Data. Scarlet fu has numbers. A big lead on empire manufacturing, showing a 12. 5 read when the consensus was only 3. 5, one of the first indicators for the month of january. Wholesale inflation prices came in line with analyst estimates,. 4 gains. Backing out food and energy, they gained more than anticipated,. 3 . Retail sales came in better than expected, and the world bank said it was updating its global gdp forecast. Morein the loop for conversation and Economic Data added. We will be right back. Hello accenture the management of healthcare. Gov was awarded to accenture after the troubled rollout. Accenture is not squeaky clean. Too, as inuble here, a Bloomberg View column is being asked why the government is entrusting accenture, who switched their headquarters to ireland to save money on Corporate Taxes, and his view is ideally the u. S. Would set a good example and take a contract that is not a poster child for clever tax shelters. They switched from bermuda to ireland. They were not even doing it right in 2009, and by the way, this is not the only company. This has been an issue of federal contractors that use tax havens. As politicized as obamacare has been, im surprised this was not politicized. If you are asking which you rather have an incompetent Company Running a website that is good he two shows, or someone that knows what it is doing that has the affection for tax havens. I would rather have the company that has the affection for tax havens. I would pick the second one. At the same time, how is this not become an issue . Republicans will not call out the tax haven, democrats will not call out something negative about obamacare. Accenture switched from bermuda to ireland, and in may of last year, the senate excoriated apple over its use of ireland as a tax shelter. Apple is based in the u. S. , and ireland is like the new cayman islands. How did this not show up on anybodys radar . I think it also brings up the question of what is wrong with our tax code system that we have all of these companies doing work for the u. S. Government that feel the need to be headquartered overseas . I think the issue is our tax code, not accentures capabilities in technology versus where they are residing. If we had a territorial system, like everybody else in the developed world, we would get on with the game. I do not think anybody, by the way i am not all that excited about repatriation. I do not think anyone is not investing because they do not have cash. Do you not think they are leaving money overseas . There is 2 trillion in overseas profit. Money it is not like there is some cave over there. They cannot build a new because of taxes. They could borrow money at no rate. Going back to apple, exactly what carl icahn wants them to do. He wants them to borrow the money to do the stock buyback. Which is what they wound up doing with the buyback here. I wonder if there is another question. I was reading an article in the New York Times where the idea was floated, do away with Corporate Income tax altogether, and we all pay more personal income tax to make up the revenue. That is controversial. It leads to a huge short run 8 ,ow of capital, output by and real wages of skills and on the skilled workers and unskilled workers by 12 . It brings us to the argument of the flat tax. Know if the idea of letting corporations get away with no text jack, would you pay more taxes for ge to pay none . A good soldier. No, no, no, the idea that the tax code is a mess is well defined. Playing the in game, but this is a real mess. Solving this with a no Corporate Tax, you could not do that conditions. Or any there are arguments the corporations should not pay taxes because in the end consumers pay them. It would never fly, and it does not make sense to talk about it. Do you think there is any cents we see meaningful Corporate Tax reform this year out of washington . No [laughter]. [laughter] no. [laughter] both sides are talking about it. President obama says Corporate Taxes are too high. Republicans say the same thing. They seem to agree in principle. Even if they did, they would street toodges on k get out of things in a matter of minutes. I am not optimistic at all. We have to go. With this for a long time. , who you, Jonathan Weil can be read at bloomberg. Com view. We have been talking about banks, especially bank of america. Scarlet fu has more. This comes from the Conference Call management is holding with investors. Cfo Bruce Thompson says conditions in fixed income markets are very favorable,. Eferring to the steep curve Brian Moynihan spoke on the Conference Call and he says bank of america still has not approached its earnings potential, and it has worked to do on legacy issues. Shares of bank of america are fourthhigher after quarter revenue and profits beat analyst estimates. , next hour on in the loop republican congressman from ll joins scott rige betty liu. Were back with jack welch. One of the stories that has been dominating the media was Chris Christie with his bridgegate scandal. He took to the microphone with his state of the state. Lets play a bit of that for you. Actually, we are not going to basically saidhe i take responsibility, i am sorry. Is does it to you say anything about him as a leader, as a manager, that he had a deputy chief of staff, effectively an employee that could think they could do what they did . Look, i think Chris Christie has done everything absolutely right if he has not done anything wrong, and i mean that. He has handled this crisis cleanly, and has taken responsibility. He has not walked away from it. Now, the question is will anything come out that he was involved in telling them to do things . Now, the interesting thing to me as a republican is to look at the Hillary Clinton discussion and her hit list with john kerry, the prominent democrats, ted kennedy, Claire Mccaskill who they had on their list. It will be interesting to follow the Mainstream Media and see how many lines of coverage the Chris Christie thing gotten come hillaryen, and how much clinton has gotten. That might be a fair exercise, and political retribution is as old as politics itself. There is a difference between what we are hearing about Chris Christies people and Hillary Clintons people. People decideds to play god, Hillary Clinton, did not. It is different than retribution privately. We do not want to go back to the irs and benghazi. Dont we . I do not want to do that. This argument could go on forever. I think the coverage of Chris Christie is comforting, stupid, all of those words, but it was not a nuclear war. A perhaps he is playing into stereotype that people have of new jersey, a stereotype of him in some ways and the story takes on a life of its own. The story is the Democratic Party is so much more charges andirecting leading a carefully orchestrated plan than the republicans. As i said before, they cannot ipad. An i need a better method, or marketing campaign. Marketing campaign. It is terrible. They drop everything. They have no way of selling things home. Jack, we need to take a quick commercial break. When we come back, well talk about three of your favorite words, ranked and yank with jack welch. Jack welch has been with us all our. It has been a pleasure. We want to talk about something you are passionate about, ranking employees. No matter what you call it, rank and yank, stacking, differentiation you evaluate employment employees, eliminate those on the bottom, and more companies have been abandoning this practice, including microsoft. Shortly after that happened, you take to the pages of the wall street journal and said the debate makes you want to scream. I want to hear you holler like a banshee. What is the problem . How could you not want to have candid evaluations of your team . They spoke teams, football teams do it. Business is a sport. The best team wins. Why when people want to know where they stand in a company . Does your boss like you . A daughter who lives and works in hollywood and she lives and dies on her bosses mood. Transparency. You want to see transparency in the workforce. Everyone in that room over there, how many of you know where you stand in bloomberg, what you have to do to get at her, what happens if you get that or, what will happen to you compensationwise, careerwise . 180,y couldnt we do a instead of just employees, managers . Tomany companies do 360s, your manager is going to determine your future, generally. Have an honest conversation about what you are doing right and wrong. One of the new buzzwords in the debate is calibration, the idea that you cannot trust managers to rate each group of employees equally. Manager let cezanne lets say it is on a scale of one to 10. Anothers five. You never have a manager that can do it arbitrarily. That is a stupid argument. Why would you ever want to put people against each other . You do not. ,ou have a set of values behaviors in your system. If teamwork is what you want, that is a value. But it is subjective. I migrate my team all 10 i mighte my team alls i , and alexam all 10s might say it is five. Who is a softyy and who is not, and you do not look like a softy. [laughter] great to have you here. I love the show. Qe4 have any. Thank you for having me. Stay in the loop. Bob benmosche will be with betty liu for the hour. 30 minutes to the opening bell this is in the loop with betty liu. The countdown begins right now. Welcome back. You are in the loop. I am betty liu. Bank of americas fourthquarter quadrupled,than earnings came in three cents better than one year ago. Equity futures are climbing as well. Equities could extend their biggest rally in almost four weeks as the World Bank Raises its global forecast. Manufacturing in the new york area also rose. Is our Bob Benmosche guest host barely without a lot of his business, washington smartcs, and how he works. Another ceo is getting attention today. Mary barra starts her first day at the helm of general motors, the first time a woman has set up the helm of the global automaker. Jamie butters has been following her rise to the top. What we knowabout about her because this was really her first public appearance at the Detroit Auto Show since getting the job. That is right. Her barra has been with gm whole adult life, starting as a College Intern and working her way through. She is an engineer by training. She was a Vice President for vehicle manufacturing engineering, ran Product Development, and did some time r where she brought the engineering ecosphere to streamline paperwork and plify if those there hr, where she brought the os there to eth simplify and streamline paperwork. What does she need to do what are the must dos she needs to take part in in the next year at gm . Gm needs to stop losing money in europe. Continued toave lose money. They say they are on track to stop losing money by mid decade, and somewhat think that is 2015 or 2016, but gm seems to be on track. They need to keep that focus however they do it. They have had stops and starts, partnerships, will they keep or sell opel they have to get that figured out. They have to keep on the throttle in china. They announced aggressive expansion plans there this morning and elaborated this morning. 5 millionget to vehicles a year in china. North america is still the most profitable, also valuable market in the world, and the need to get cadillac competitive with lexis and bmw, and keep making chevy matter. She brings the right skill set. Mark rice is for Product Development chief and with her running the show, they have a shot at doing all of that. Jamie, thank you. We are watching mary barra. Jamie butters, are on auto editor in the trade. I want to bring in our guest host, Bob Benmosche, president and ceo of aig, who is coming off of a successful 2013. Two weeks before new years, he aig announced the sale of its Aircraft Leasing business which will bring in over 5 billion and relieve over 20 billion in debt. He was also named the Insurance Leader of the year by st. Johns University School of risk management. A lot happening on your front, personally and professionally. That is true. That is true. Great to have you here. I was thinking about mary barra and how she is at the helm at general motors, which was part of the bailout and it been on a tear since then. Same story for aig bailed out, and you helped to bring the company back from the brink. To start out, i imagine americans are saying are we out of the woods . Aig, havingomes to paid back all we have given in terms of support and giving america a profit, i think we are in great shape. We are doing extremely well. We continue to have solid growth in businesses across the board. Aig is in wonderful shape as a strong Global Insurance company. I can only speak for aig. Business,s of your there was news that you are ,iring 600 more advisors diversifying the retirement products you are selling to the public, annuities, fixed and variable those sorts of product. Why are you diversifying into that . First of all, we are already diversified, so we have a broad array of businesses. We are diversified around the world. This says we want to do more. We want to move more upscale in terms of some products we offer in the u. S. In particular. So, we do have a good, strong access to thirdparty distribution of independent service producers. We have our own career agency, and the feeling was lets broaden the ability of that group, train them to do more, get them to do more. It is not just about selling insurance products. It is about having a relationship, dealing with the needs of our clients. Being a part of their everyday life. Sure, thinking about their immediate problems, dealing with investments and retirement and so on. 600 . Uld you hire more than we could, but we want to do it right, though slowly, do do do it since. Our advisors are dealing with due diligence. Our advisors are dealing with peoples lives. People is to make sure are trained and supervised the right way so that they are making the right recommendations now, putting people in the right products so that when the time comes that the promise has to be delivered, it is the right promise. You finally sold an Aircraft Leasing unit. Analysts were hammering you on this when will we get the deal done. End of it done at the last year. What will you do with the cash that you got . First, we are going to get it. [laughter] you have not gotten it yet . We want to close at the end of this quarter, and once we close the deal, we will look at what makes the most sense at that time. We want to deal with effective capital management, make sure the company is well capitalized, and has sufficient liquidity to deal with very an usual stress in terms of financial stress. We will do all of our stress testing, look at what is actually available, and at that point in time figure out where we get the best bang for the buck for our shareholders. What happened with the Chinese Group of investors . Why couldnt i do not get done . Deal notwhy could that get done . China was going through a regime change. It was not clear what the chinese who were involved in the deal could do. In addition you had the hong kong group, part of the consortium. Right. When some people in china began to withdraw from that consortium, they started to find people in taiwan or other places to fill the gap. Do you get to keep the 500 million deposit . Were in the process. I am leaving that to the lawyers. Hang on, bob. Scarlet fu has breaking news. This is from raytheon saying the ceo William Swanson is stepping down after 10 years on the job. It is not a huge surprise. He turned 65 next month. It sounds like he is retiring. The coo will replace him, thomas kennedy. No trade on raytheon in the premarket on this news. We will keep monitoring it. Thank you, scarlet fu. Coming up, republican congressman scott rigell is in the loop, weighing in on the budget bill and the democratic push to raise the minimum wage. The 13th season of American Idol debuts tonight. How the decadelong run of the show has changed the way we watch tv and view musicians. They stay in the loop. Hair is a quick look at the top company news this morning here is a quick look at the top company news. Google has been on a shopping spree, spending more than 17 billion in the past two years to purchase hardware, software, and Advertising Technology companies. Burberry says demand for coats help to drive sales and people spend more money in Digital Channels and boutiques. Aeropostale might consider going private. They have contacted at least two private equity firms to explore strategic options. The company is not in negotiations to sell itself quite yet. Congress is back in session, loading on a new trillion dollar spending bill, but it failed to agree to extend unemployment benefits. The pats are said to push for a hike in the minimum wage. We are joined by democrats are set to push for a hike in the minimum wage. Are joined by scott rijo scott rigell and my guest host, Bob Benmosche. Scott, do you support this spending bill . I certainly do. We are kicking off this year in better shape than last year. We have reduced spending to 2009levels. It is somewhat competent. It might be interesting for you to hear me say we have gotten positive results here in washington, but as it relates to discretionary spending, it is true. Like you,r ceos washington has been a big part of your story. Now, in 2014, is a nonstory or a story . Washington is important because of what happens to our economy and our country, and it is important to recognize we are competing in the world arena, and for america commit is not america,it was it is not the same as it was 40, 50 years ago. This is the first step. We have to become solvent. Back Something Like this is important. It is an important first step because we have big issues to face and we have to get this one behind us to deal with the other issues. You and i have talked about finding areas of bipartisanship, agreement. Thisyou might support spending bill, but there is another issue creeping up, hiking the minimum wage. Democrat have said this is the year where we make a push on that. Where do you stand on that . Im open to bringing it up to an inflationadjusted number. The last time it was adjusted was 2007. I think it is reasonable. All along the way we will look , creditrtunities to ask colleagues to address the real issue job creation. Offshore energy in virginia, i am a strong proponent of that. There are other things we can and should do that will lift productivity and raise the standard of living for all workers. Well, bob, do you think we should raise the minimum wage . I think the states have to understand what the costs are, and the system works reasonably well. The federal standard says we not set a minimum you do agree with that. You should focus on the market you are in, and have an appropriate minimum wage for the state, location of what your costs are in that part of the country. You want to make sure there is reasonableness in america. Are you of the opinion that if we raise the minimum wage to 10 an hour it will actually hurt Small Business and force some jobs to be cut or people not to be hired . What people generally say is money,fford this much and youre talking about minimum wage, which means you have minimum wage work. This is an issue that congress is talking about how do we raise the skill level, encourage people to do more where they are not doing minimum wage work, but they are doing better quality work, more skilled work . F it is a minimumwage job but the reality is people are doing minimum wage work, and they are in the minimum wage, so how do you live their standard of living . Look at where you are in the country. Of new york is very different than the cost of houston, which is different than arm or relocate to texas. You have to look at our rmillo, texas. Congressman, people would say this is 10 an hour, a book cannot survive on the current minimum wage. Each state can set its own minimum wage and they can set it higher than the federal standard. There is flexibility. The people closest to government at the state level can do that. Part of what i am saying reflects political reality. I think there should be some standard federal minimum wage is it too low . I am willing to vote to adjusted on inflationbased basis to where it was in 2007. I am still an employer. We have some employees at the lower end and some of the much higher and of the scale. This is real to me as well. You continue to increase the minimum wage, you can price yourself out of the market, and i asked my democratic friends, if 7. 25 is not enough, why not make it 20 . I point is you cannot legislate out of this beautiful holding, basically, a standard of living, and increase everything from washington. It just does not work. Congressman, great to see you again. That was a republican congressman scott rigell of virginia, and Bob Benmosche will be with me throughout the open. Stay with us on in the loop. Moving and shaking this hour, mariano the belly, who is the vice chairman of one of the bidders eligible to take part in an fcc air wise auction airwaves auction. Give valley he was charged with using Sham Companies in earlier fcc charges before he settled. We will be back. First. Bloomberg. Welcome back. You are in the loop. I am betty liu. It is 26 minutes past the hour, which means the television is on the market. Alix steel, we are higher again. 4 . Nasdaq futures are up 0. A couple of reasons bank of america profit quadrupled and european stocks are at a 5. 5 e year high. In manufacturing the new york region came in better than estimated at 820month high. We are on the market again in 30 minutes. Thank you. We are back with guest host this morning, Bob Benmosche, president and ceo of insurance giant aig. Some would say this will not be like 2013 this year, we will not see the same gains. And do you agree . An above we will see average trend because business is stronger. The comments coming out of the fed, concerned about when it is time to taper, that is all about the strength of our economy, and the issue we face, in my opinion is the lack of job growth because we are not dealing with the fundamental need to make it easier for businesses to not be afraid to invest and grow their business. Were you as shocked as others about last weeks jobs report . It is a month. People are nervous. Down. Is some up, some i was not shocked because i am not an economist, but i know the core of people working in this country are doing well. Young kids to have coming who are coming out of school that might not have gone through the red education that deals with sophisticated jobs the fact is, if you have the right skills and youre prepared for the needs of corporations today, engineering skills and so on, and you will find a job. You will find great jobs. We know the fed has made a promise of where they will keep Interest Rates until they can see a significant fall in the jobless rate. Are you concerned the that will continue to taper this year . We do not make bets. We look at what happens when we are there. We think Interest Rates might trend up a little bit, but we do not see massive changes in Interest Rates over the next several years, so that is what our internal team is looking at. I think tapering is important to get it behind us and to restore the economy for what the economy can produce for itself. I do not think will be a big issue for us. But you are buying mortgages from banks, right . We buy mortgages, but we also by directly. We are looking at our Mortgage Insurance Company for people who originate mortgages. We are coming up with an ability to buy those mortgages, which gives us a better yield and there would be if you buy mortgagebacked securities. As rates go up slightly, the biggest effect will be on refinancing. You will see a dramatic dropoff of people being able to refinance their existing mortgages. I was going to say, do you expect all of us to have a big impact on housing . I think you will still see growth in housing, growth in the economy. People who have have good jobs will be able to afford more. You will continue to see gradual improvement. Janet yellen are you glad that she is at the helm . I think ben bernanke did an outstanding job during this very complex period. You did not agree with everything he did, right . One does not agree with everything, but when he did was what he did was make decisions. 2020, and you can see what is going on. But do you believe she is essentially going to be another version of ben bernanke . What is important is she needs to come in and look at the banks and the Financial System not as the enemy but as the energy and the core of what grows this country. So to the extent we want to regulate, which is great because we should have regulations, but we cannot keep this period of unknown out there as long as it has been. I would like to see us come to terms with not only u. S. Regulations but for her to be on with all thege, competing regulators around the world, say lets get this right, lets get the banks back to doing what they do and do well, andt how they lend and fund grow the economy. The fed is very aware of the public, that the public Still Believes wall street and banks are still the enemy, and they are looking to regulate, the said reigning in what they see as risktaking on wall street. The wolf of wall street. Sort of reaffirming to people this cavalier attitude on wall street. Michael lewis is coming out with yet another book on wall street. I know you are a friend of jamie dimon, a friend of many of the wall street ceos. Are you still disappointed by how much of this there is on wall street . I am. As a wonderful life basically says, there are periods of time where ad bankers do bad things, but basically all the industry is made up of people who come to rightanting to do the thing for their shoulders and customers. It is time to stop vilifying, and maybe the Community Needs to beat upether and not George Bailey but to say he is part of our community. To you feel beat up at all . Feel thet i undercurrent that is out there, and just the slightest move, there is still that group of people who want to blame wall street and banks for where they are, and that is unfortunate. Did you watch the wolf of wall street . No. How about michael lewis, his book . I dont know. I have read your book. Which we are going to talk about. Rate segue, bob. We are going to talk more about my book. Martin sorrells shares the smarts that helped him build wpp. Amazon has avoided unionized workers in the u. S. , but that all could change tonight. How certain people could change the course of the Worlds Largest online retailer. We are a few minutes within the trading session. Stay in the loop. Smarts,new book work i asked some of the biggest leaders in business warren buffett, bob in motion a what they believe helped them get to the top. Greatus on what makes leaders. The founder and ceo of the largest advertising agency, wpp, sir Martin Sorrells what is his secret to success . The biggest difference it is is it is personal. You give birth to an idea, you start something from scratch as we did at wpp some 28 years ago, it is very much a personal thing. Get into an industry that you enjoy. Counter to what people say nowadays, you should sit around and move from opportunity to opportunity. Build ath the company, reputation, and when you are my age was 40 go off and do something that you like. Do what you enjoy. Do not have the objective to try to make money. It does not work that way. Dont do something that you are ill at ease with. You can apply that principle to advertising, marketing, campaigning, corporate strategy. You can go deep as opposed to broad and be superficial. That is very important. About. Ency is what it is for more advice on how to get ahead and work smart, stay tuned all week long to in the loop. I want to bring in bob o inmosche. You said you answer every employees emails. You said every employee who emails you, you respond. How do you do that gekko simple, there is a reply button. How do you find the time to do that . When you go through a minute here and a minute there, it is important that you dont put it off. Just a simple thank you is important. In sure that they know fact, emails are easier to do. In the old days i used to get letters or notes and i would handwrite on the note thank you so that they knew it was coming from me. Anybody who sent me a note or letter, i would handwrite thank you very much, keep up the good work. I make sure they get Something Back from me pretty quickly and it comes from my email so they know it is not some assistant. Because it takes a couple of , and maybe i dont have long, drawnout statements, but enough to be able to acknowledge what the person said. Again, if nothing more than the thank you. You have had one of the among u. S. Ceos, where you had to bring back the company from the brink. What was the secret . What helped you get employee more out up at aig . My mother always told me respect the people that you work with and do not take yourself too seriously in life. Dont think you are so important because at the end of the day you will not be that important once the job goes away. You will be a human being like everybody else. I learned early on to respect the people. The people of aig have been through hell. They have been criticized and vilified in the press every day. People are afraid to have aig they were afraid to have aig on their badges and so forth. My job was to let them know i was going to work for them and i was going to protect them and we are going to get this vision worked out and make the company viable again working together. That is what they wanted to hear. Make sure that people can get a sense of vision, where you want to take them. Make sure you show respect for them, then keep people from attacking them, which is what i did. It is interesting. Is it almost harder to lead a company now that is out from the brink, successful . Stocks going up, everybody is happy . Is it harder to lead now than when you had to be sort of the commander of the troops . Every time a ceo takes over, whether it is calm or not, you need to make sure you create a sense of urgency and do not allow complacency to set in. Is that the big ainge are now . That is the big danger now. You are going to be the ceo for how long . For we areed going through a Succession Plan ,nd i can find the 10k firstquarter of 2015. Everything seems to be ok and they are next ready for the next leader and i am prepared to step down. I will be close to 71 years old then. You dont look 71 at all. I appreciate that. Are you interested in moving on to another job, or are you going back to croatia and enjoying the good life there . As i get older, i feel pretty good. I still run 12 to 15 miles per week. To the extent there is a challenge that i can enjoy doing , whether it is at aig or someplace else, i am prepared to do that. I am also prepared to spend more time with my vineyard, marketing or i only make about 5000 6000 bottles of wine a year, but i can have a lot of time with wine tasting at small shops around the country. A second career then. Bob, ray to have you here this morning. Bob benmosche, the ceo of aig. Bezos employees will decide tonight whether to become the companys first union. Senior markets correspondent julie hyman has more details on this. The workers at the plant in delaware the Warehouse Distribution center are machinists. They would join the International Association of machinists and Aerospace Workers if indeed they vote to join a union. To put this in perspective, we are talking about 30 workers voting and being affected at a 1500 person Distribution Center out of a company that has at least 88,000 employees. That was the latest number at the end of 2012. The latest filing during which they disclose that number. That puts it in perspective. There is definitely symbolic significance because this has never happened before in the united states. Amazon has never made an attempt to unionize resistance. Met an attempt to unionize with resistance. If you look across the country and how many different Distribution Centers and warehouses there are, there are 96 facilities globally. Amazon does not break out how many there exactly are in the u. S. And what percentage are distribution workers. But this gives you an idea of the geographic breakdown of where the warehouses and centers are. Theell us more about chances of this spreading. The first question would be, are they going to vote yes. It looks like there will be a question whether they even will. Amazon has pulled out all the stops, hired a law firm to prevent this from happening. But the analysts i spoke to said there is not much of a chance of it spreading. Said it isd, they not because the company has been so resistant, although it has. It is more a question of how amazon treats its workers. If you look at the industry, they are relatively wellpaid. They are offered the opportunity in some cases to get Higher Education on amazons dime. They have health benefits. That is why we have not seen more attempts to unionize. Itzon made clear that it negotiates individually and has open communication with its employees. Julie hyman, our senior markets correspondent. Boeing, a from battery problem with one of its jets nine months after returning to the skies. Can the new lineup of celebrity idol . Rescue American Time for todays this versus that, where we compare two items with a common thread. This is hiphop artist kanye west, dropping albums for 10 years since he debuted. Money that hehas has won multiple grammys he has won multiple grammys. Ye, which cannot be stopped unless it looks like a dollar, a dog, or a cartoon picture. Kanye west has filed a lawsuit , saying it is trying to cash in on his name and ruining his invitation. Kanye. D, you win, of American Idol kicks off tonight, but it is not quite the franchise is what it once was. It has been 10 years since they debuted gekko yes, over 10 years. I love the first season. What you dont watch it anymore. That is part of the problem. Had about 10 Million Viewers last two years. Part of that came as the voice gained traction. This season it will be interesting that the voice premieres earlier than usual. They will go headtohead for about three months straight. On top of that, you have the olympics. It did not do so well when stacked against the olympic back in 2010. One thing it has, it is still the most expensive show to advertise on in prime time, commanding 356,000 dollars for a 30second spot, second only to monday night football. , i just remember the judges the big cups of coke. Lay cement. It was Event Television before people even knew to call it that. It kind of was a big disruptor when it first started. Everybody has copied them since then. When American Idol first started, it aired in the summer. Cbs broke out survivor in the summer, but this was a live show that encouraged people to call and text in. They had call in and text sponsorships. Product placement. It was Event Television. They had used social media before we knew to call it social media. And you talk about the judges. People really embrace the authentic moments. Paula abdul was a little bit of a train wreck. But tell me about the product placement. Cans. Talk about the coke you also had the coke green room, which the audience saw. The singers drove around in cars , and the tiein with at t. This was a way to advertise on aut deborah ties show that did not cost as much to make. Harry connick jr. Comes in this season. You just convinced me to watch. Fu, of bloomberg surveillance. In thailand, the Prime Minister says the february elections will proceed despite protests. Protests have been going on for two months, aimed at erasing the influence of the Prime Minister, whose brother was ousted as premier in a 2006 2. A battery problem on a boeing dreamliner two days ago. Some liquid was leaking through a safety valve. That does it for today. Tomorrow, we discuss work smart. Thanks for watching. It is 56 past the hour. We are on the markets. Here are what stocks are doing. Green across your screen on the nasdaq, up. 4 . You also had bank of america earnings coming in better than estimated. You also had the manufacturing region up in new york, coming in at a 20month high, all of that fueling optimism, helping stocks extend the biggest value jump in the past four months. Old futures got up to a strong start, but two weeks in the tide may be turning. Goal down yesterday, a huge decline midmorning. I am joined by ken hoffman. First of all, the rally we saw in the first two weeks, do you expect that to continue . What is interesting about gold, here is a metal that was up 12 years in a row. Everys down last year and analyst is just killing gold. One major firm came out and said it is a slamdunk short. Low and behold, old started heading up in early 2014. Like i mentioned, gold is down today. What part of this is index rebalancing, where basically to buy gold,orced but that is just a shortterm phenomenon . It could be a shortterm phenomenon, at one of the things we have talked about the past year, is part of the thing rechecking the downside of gold is the cost of producing gold. Yesterday you saw a pretty big r, colossus, file for bankruptcy. There is under no gold there. A lot of the Big Old Companies , production, and that keeps the downside limited. The bears and gold are saying the fed is tapering, that is what why we want to short gold. The fed is saying at this price there will be a lot less gold reduced input into the world marketplace. One company make a hostile bid for another. The level where miners get scared . In 2008, we saw a seven goldnt reduction in production. Its cash costs were lower than goldcorp. They have been trying the to buy the company for four years. The Gold Companies are really struggling to make profits. They are doing Anything Possible to stay afloat. If they can go out and buy a lowcost producer, they will try. People to buyeed this stuff, and that is where we are running into some issues. We have investors very burned from last year, leaving a lot of burden for india and china to pick up the extra supply. Have you seen the lines in india and china gekko they are showing lines out the door. The chinese are buying it like crazy. You saw an increase in gold buying. They are buying this. Is a big giveandtake between china and the rest of see ifld, so we will this is going to be a slamdunk short or not. Fascinating for gold geeks like you and me, ken. Markets in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Penny wise, pound foolish on wall street. Big banks try to save money by cutting bonuses. It is no jackpot. New jersey is counting on online. Ambling the strategy looks like a real longshot. The way we were. The film fest is nothing like he used to be, and we will tell you why. You are watching Market Makers, wednesday at 10 00 a. M. In new york city. Im Erik Schatzker. Im stephanie ruhle. We have