Transcripts For BLOOMBERG In The Loop With Betty Liu 20140124

For the new world . We love the canadians and rbc has been great. Intell me what is going on the u. S. Particularly with the stock market. We had this great run and everybody is concerned we are down about two percent year to date, which is really just noise. The real story is that corporate rockets are coming in really strongly during earnings season, the beats are coming in about 2. 5 , and it is all on the margin line, and that is a real surprise for people. I think it is actually a very bullish call or a list signal that profits are up. We have two Big Companies reporting, procter and gamble 121 versus 120, you had kimberlyclark coming up, they beat analysts estimates. But as he said, sales lower, profit higher, what do you think . Expansion of multiple that will lead this market higher . This year in a 2014 will be very different than last year. It is the earnings story that will come through. When a lot of who have been concerned about is the budget, they cannot go any higher, companies cannot squeeze any more out, and therefore the earnings soar he going to stay week. Like that at the that is the barricades. And frankly that is the consensus estate on earning. Really . My read is that it will expand, but the surprises that earnings were going to come in much better than expected throughout the year, and it has to be on some margin improvement, and that is why this earnings season is so encouraging for me. Yeah, but can you master earnings improvement by doing things like buying back shares . You talk about Companies Like ibm, right, what are they doing echo huge share buyback. You look every day and someone is offering a new share buyback. I think can color came on doing the 1. 5 billion dollars share buyback. That makes the numbers look great, but if you are not selling more, i mean, this is a little bit how long can this go on . It is like squeezing the air out of the same balloon. Every year we put up these donings trends, and what we is we exclude buybacks. We look at organic learning because exactly the point they said. For example, this corner, th is quarter, it looks like earnings are higher, to have nothing to do with buybacks. The eps number get looks good with buybacks, but we are thoughts about earnings, not eps because of that situation you talk about. What kind of companies though because not everybody is beating their estimate . No. I will take were the most upside are and that is where the groups are most economically sensitive. They had seven good in a row. Up. S are going to wrap materials and industrials are the places you have the greatest of sites, and they are doing quite well. The one area that is going to see the greatest weakness is the energy sector, and that is only because oil prices are soft but the margins that you make on refining businesses has been have been weakey for a while, and even though you would think a better economy, oil prices go up, in fact, it is a glutd to be they have of product and they are not selling for the price they like. Right to every much, Jonathan Jonathan gullit, to every thank youcapital very much, jonathan golub, rbc capital. Ed markey said it might be a pyramid scheme and ask for a probe into herbalife. Bloombergs julie hyman has been looking at some lobbying experts by the company and by bill ackman. It seems that they are on the same page, senator markey and bill ackman. Although markey was careful to cnn i am not saying that these allegations are true. What he does proposes a series of questions to the company, he poses questions to the sec and calling for anis investigation. It doesnt want to be done by february 28. At least he wants the answers. I i read the letter. He is careful not to make specific allegations. But the letter is obviously damning. Well anybody who reads it and planning was well understand. He is calling them out. Well, he says there is talk that this is a pyramid game hurting his constituents. Yes, he brings a couple of examples of his constituents. If you look at this as symbolic of the battle that is happened between herbalife and bill ackman, ackman has spent according to open secrets. Org around 100 30,000 over the span of last year making him one of the top according to 130,000ts. Org, around over the Senate Last Year making him one of the top spenders on politics. Our blood has spent herbalife has spent more than 1 million, it is a Large Company relative to the size of bill ackmans hedge fund. None the less, doing a lot of lobbying. The former mayor of los angeles is now an adviser to herbalife. Madeleine albright is doing some consulting. That is more on an international basis where that firm focuses. That in some serious credibility. That is what our blood has been working for all along. It has various doctors and sciences on it payroll as well as advisers. I was talking to an herbalife investor the other day, and he says bring it on, we want to make our case in the public sphere. Now what happens . Markey gets the answers from herbalife, but the sec and ftc only provide positive, not a negative. In other words, if the sec find something to be wrong, it will come out with a complaint. If it investigates the company says nothing is wrong, the sec will not come out and say is not a pyramid scheme. Exactly. So there could be some damning questions even after markey sure, the accusation could hurt the company even if it is not true. Although, i mean the shares fell yesterday, but overall it has not really hurt the company. And has done very well. All right, betty . Matt, heres a good number for you guys 1. 2 5 billion. That is how many chicken wings people will eat during super bowl sunday. This year, fans will pay less for them. Bloombergs alix steel with me. How many chicken producers rely on the super bowl . If you take a look at the look at the if you take a look at the Buffalo Wild Wings world, 5 in the first quarter, primarily due to the super bowl, which also estimate that for Buffalo Wild Wings, each store has a little less than 900,000 in sales a day. On the big game day, i could be 2. 5 times more. You and i might not eat chicken wings i like chicken wings. Really . They have competition. We talked about this yesterday. Mcdonalds is going to be selling chicken wings in the near price a various through the super bowl in the spring. They have a surplus, right . 10 million pounds. So the super bowl, though, i do not know this the second biggest eating event in the United States. Unbelievable. Right after thanksgiving. And we will eat 20 million more wings busier year than we did in years before. 1. 2 5 billion wings would stretch from the centurylink Metlife Stadium in new jersey three times. And the biggest difference between this year and last year. Aret of all, the wings really cheap. They are at their lowest price since 2011. A big part of that is more supply. This takes about 3, 6 months to get a chicken ready for slaughter, so it is really easy to ramp up production if there is demand. That is a big tail waiting for some of the guys like Buffalo Wild Wings. They are paying 1. 20 for wings now versus 2. 10 last year at the same time. Bonein wings account for about 20 of their total cost. Alix steel on tape in wings on chicken wings, thank you. Matt, what you think . I have my reservations, but i still eat them by the pound. Lidia head on in the loop. Lindsay ahead on in the loop plenty ahead on in the loop will notoehner why he be a president ial candidate in 2016. You want to show what you did when i asked that question before . I like to play golf. I like to cut my own grass. I smokenk red wine, cigarettes, and im not giving that up to be president of the United States. [laughter] quite that is right. That is not worth it. In just about half an hour, Goldman Sachs Ceo Lloyd Blankfein is in the loop live from davos to talk about retaining talent and much more. He looks more likable with his beard. You never say that about me. A big beard. Not the more sort of trendy, manicured beard. Im going to tell people who bill is. Please do. I know he knows and you know, but you never know. Bloomberg contributing editor bill cohen joins us now. He has written three books, including money and power. Bill, are you tired of dealing with the details of wall street . Int you say you know what, cannot make this up, the truth is a much better than the fiction . Well, it is endlessly fascinating, as we all know. Jamie dimon, the chief executive of jpmorgan, is going to get paid more, reportedly paid more or whatever it is, where there is smoke there is fire. Preks ok. How is it possible that when you are not risking your own capital, i understand you are risking a lot of other peoples capital, but if youre not risking your own capital on a daily basis, how come you get compensated at a level that implies that you are risking everything that you have worked for . Wow. You like that at 8 00 something in the morning. This is a very interesting topic obviously. The first point is that if you were to sort of poll ceos and Hedge Fund Guys and private equity guys around town, you would they do the blue risk their own capital, you know, the bill ackman, the dan loebs of they are, carl icahns, the ones getting paid, you know, 500 Million Dollars a year, 1 billion a year. Right, so jamie dimon, who got paid what, 13 million last year 11. 5 million. Ok, a down year for him. This year it will we closer to Something Like that, we all scratch our heads as to why if you are paying 22 billion in fines. Itow, that is, frankly isnt, but for the guys who kind of are in the Hedge Fund World it is a lot of money. It is chump change, and thats what you get paid if you are managing to hundred thousand people in a complex business. It is easy to see why they pay him that much because he has made them the investors, the shareholders to the extent that they are active in that that she has made them a lot of money. And they think of them as the best ceo on wall street, and if they do not pay him enough, he will go somewhere else. He is an exception. First of all, where are they going to go . It is not there are thousands of companies that will pay that kind of money. A jamie dimon to go into private equity and make more than that. On the flipside, you could say who else out there is as qualified as jamie dimon to run jpmorgan . As de gaulley, said, the graveyards are filled with indispensable men. So jamie dimon seems indispensable, and he has made himself and is visible i am not saying he is indispensable there are plenty of people and there will be people to run jpmorgan after jamie dimon. They will say jpmorgan will be 100 a share stock. They came in and 2004, 2005. Now we are in the mid 50s. Did he deliver on his promise . That is an open question. He is always the very qualified to run a firm ilike jpmorgan. This segues into is there a brain drain. Goldman sachs is cutting their bonus pull down. Does that mean they are losing the best people you go it jpmorgan pays jamie dimon less, does he go somewhere else . Point, exactly, you are not raising your own capital, there is no better job in the world and working on wall street. Where else can you get paid even less than you get paid . Even if Goldman Sachs cut its bonus pool, where is there anywhere you can get paid anything like on wall street not risking here are the numbers on it. Goldman sachs in this last year, i believe the Second Lowest they, or the compensation ratio is the Second Lowest since they went public, but if you average it out, each employee at goldman, would still be owing earning about 300,000 a year, compared with the average american that is better than the nfl. What if that have to do with anything . What i am saying is in terms of what is that have to i am saying, compared to the americanscome of that 50,000 the year, you are and what the risks are you taking . You are working long, hard hours, putting up with a lot of stuff, and it is relatively complex, but lets face it they dont have to do it. You get paid very well. Lets led to the idea of bonuses and the pay that is being talked about. Matt, you brought up something inside you understand very well why they would pay the chief executive of jpmorgan such a sum, granted, but does that mean that that chief executives compensation should only be tied to the share price and to the dealings of the shareholders . Because in that case, you would say all right, theres nothing wrong with that, let the shareholders worry about it. That is their problem. He is their agent. He works for the owners of the company. And they have a banking license, and word is that banking license come from . Are you going to get into too big to fail now . No. Let me get into too big to fail because you all saw the headlines about berkshire sathaway, Warren Buffett company, theyre going to a way whether berkshire is too big to fail. Remember that berkshire is rated aaa, so and a great story by the way about Jonathan Weil who writes aboutnkfei Bloomberg View berkshire is this a story or nonstory . It just makes Berkshire Hathaway more valuable in a sense because now, if the government says is too big to fail congo that it will not fail. And creditors will will even better about it than they already do. If you get this tbtf license, put 1ou can go out and bu billion on the ncaa bracket. Why not . But you do set it, they have the license. Who grants them the license . Who owns the fed . Other big banks only fed. It has got the appearance of being owned by the american legal, but it is not. Can we just disclose that since we have been talking about banks and jpmorgan, that you have a legal relationship with them that is adversarial at the moment. That is true, does been fully disclosed, be my guest and go look and see what jpmorgan is trying to do to me. Suing you. Price bill, you were in the middle of the lawsuit, and a still invited you to the jpmorgan conference. They are making a frenemy out of bill. Things Stranger Things have happened. Anyway, bill, you are taking a look, as the company, it is not a bad mark, it is not a red mark to be considered to be to fail because that just means you will get bailed out by the government. Look, youre going to be scrutinized anyway if you are a big Financial Institution by the government family. You might as well have the too big to fail select creditors think that you are not going to default on your debt. You spent a lot of time with Warren Buffett. Based on your experience with him as a person, what do you think his reaction is to this news . I cannot see for Warren Buffett, but i would assume he just rubs his shoulders. He is the kind of guy that declares evil of derivatives and then makes huge bets on derivatives, right. Matt, weight he is glad to take hate on, they are not huge bets. 1 billion on the bracket . Youre talking about two separate things. Theyre both derivatives you are talking but ensuring be quick and long bed and then saying that derivatives are weapons of mass destruction and he has been a part of underwriting those derivatives, they are very small, though, in proportion to the balance sheet. Price right like like jimmy dimons portion compared to carl icahns. Bill, do ive also been having a, starbucks said on digital. We will is when the next. Welcome back to in the loop live on Bloomberg Television in streaming on your phone and bloomberg. Com. I am matt miller. Take a look 26 minute after the hour, Bloomberg Television always on the markets, and futures coming down today, continuing the negative trend from yesterday, so the s p futures down about. 5 as our dow jones and nasdaq futures, concerns concerns about the chinese economy really fueling concerns about the u. S. Stock market. In a few minutes, live from davos, well talk to Goldman Sachs ceo lloyd blank line and we are on the markets again in 30 minutes. Pimm . One stock we are watching today is starbucks. The companys earnings load yesterday in the close of trading revenue. Sales missing analysts estimates. More people shopping online perhaps meant fewer people in the mall buying those peppermint lattes. A Bloombergs Julie Hyman has been following starbucks and is looking at how traffic has expanded and how they are trying to change the menu. Bought another company, what are they pay, 100 million for that . A San Francisco company. They are running out the product or all of their stores, but there have been questions a sense it was introduced because you have to heat up the stuff, and even before that, about the crowds at starbucks. We all know especially in new york city, if you walk into a starbucks, there are a lot of people, so there is than this question about how fast you get the people through these stores. Throughputs no problem. Look at what Howard Schultz said on the call last night. Not only is there absolutely nothing to suggest that there is a turbulent issue, but i would remind you that because of the andbucks caller gas card the adoption of mobile payment that we are speeding up the level of service and our stores, when you look at the amount of withe that are now paying a card and the unbelievable rates of adoption and how the payment is, there is no issue whatsoever, this is a myth that has no legs and for all of you listening on the call, you should just eradicate that thoughts. It does not exist. I am sorry. Have you been to a starbucks lately . All right, so a couple of things here, first of all, we live in new york city, so yes, the starbucks are very crowded. We are in our nice Little New York bubble. The company would they, and the analysts i spoke to with a part of it is these new la boulange things are new products, people are trying to figure it out, what to get, and as a pair of being heated up, there is more of a crowd waiting, so starbucks has said the perception is because there are more people in the store waiting for their stuff, there is this perception that it is slowing things down. Starbucks says that is not the case. He brought up one of the ways that starbucks is trying to speed things up even more, and that is the risk Loyalty Program and mobile payments. It has now an enormous number of people who have signed up for that program, so that is going to be quicker at the register. You just wave your phone, you pay that way. There has been some talk about an app that would let you order before you get to the store and it would know as you enter the starbucks it is time to make your drink. The company has not confirmed or denied that it is developing Something Like that, but the thought among analysts is that technology will be one of the levers that uses to speed things up, and the other is labor. Starbucks has a lot of energy, a lot of time testing different scenarios, where did the people in the store what are they doing, who has which job, how do you make all of that is quick as you can . Theres something to be said, pimm, for when you go into a store and you see a lot of people crowded around the register, it seems like a hot story. What i was going to say is what the big issue is from my understanding of this la boulange experience is they have figured out a way in seven seconds to 15 seconds to instantly heat the food, whatever it is, whether it is a sandwich or croissant or anything like that, and that these are special ovens, and the issue has been what you need also are very big freezers. You have just one freezer at every starbucks, now youre going to have two, and the big wheel is you need this to be cooked very quickly. In fact, they did not have enough stainless steel to build all of the freezers that were going into all the different starbucks because of this massive rollout. But it is like a technological change that has allowed them to make your pastries and your danish and your things went like fresh oven. Taken from a frozen state to i want them state in 10 seconds. It is amazing. It is amazing. Technology. There you go. So, matt, tell me. Here is what is happening at 8 30 a. M. Procter gamble ngs last hour. Profit came in higher than analysts were looking for things to sales in emerging markets. With earnings, microsoft posted record sales yesterday in its secondquarter report. Revenue was up 14 to a record billion dollars. Ceo Steve Ballmer kicks off the companys biggest transition in more than a decade. But also blowing away wall estimates. Speaking of succession at microsoft, could tmobiles ceo john the guerre be a name on the short list . The Bloomberg Chang caught up with him at a macklemore concert. Could you even picture bill gates and i sitting in the same room . It is a great company, they have a lot of work ahead of them. I hope whoever they bring them, they empowered to take aggressive action like i was allowed to take a tmobile. Have a talk to you . Talk about that. I have no comment on microsoft. Thing it now, i realize it is legere. And considered widely the most incredible commercial at all time, the genius behind 1984, next in the loop. Steve jobs unveiled the first macintosh computer 30 years today. Apples growth mostly comes from sale of mobile devices these days. The macintosh brand helped set the tech giant on the path to being the Worlds Largest tech company. Here is a look at 30 years of macintosh. Today, for the first time, i would like to show you macintosh in person. Hello, i am macintosh. [applause] that is what a computer is for me, the equivalent of a bicycle for our mind. All right, so ad campaigns during the super bowl can be incredibly successful and maybe even make your product into the next mac computer. Lauren angelo is the director of marketing, and they already have the next my computer in some of their product. Lauren, thank you for joining us. Obviously, your brand is already incredibly successful, but you have got some ad campaign coming up in the super bowl, really carmaker seven at the top of the list as far as advertisers. Last three years in a row. Is it really that effective . It really is. We have been focused on getting america to see audi, to bring audi into the conversation so we are a brand that gets noticed, and what we are seeing is extensive list right after the super bowl, driving consumer interest and bringing audi into the conversation. We have seen some pretty cool ads from 1984 to darth vader for your parent company, volkswagen. What have you got planned for this years super bowl . We think the super bowl, as you know, is the greatest opportunity for creativity. Best whene are at our we start to make statements. Give america a point of view and bring a little bit of American Culture into the story, so whether it is talking a little bit about the different take on luxury or talking a little bit about the vampire trend being over, we have brought some interesting stories in years past. This year, we have a phenomenal product we will be releasing the super bowl for the new a3 the car clearly to be the engineering luxury sedan without any compromise, that drove us to a great story this year went Sarah Mclachlan loren, does every company strives to get to that level thats these jobs did 30 years ago with that 1984 commercial . Is that the pinnacle, the big statement that Everyone Wants to make year in and year out when you advertise in the super bowl . The goal with the super bowl is to connect with america. Weve got to bring a certain level of entertainment. In some cases it is humor, in some cases it is more emotion, but you have to do something that is big. That is what people are looking for. They are there to watch. And the goal is to make sure that you put those proper ingredients in. It may be a celebrity, it may be a big powerful emotional story, or it may just be something that is truly humorous and connects to the cultural phenomenon. We are showing kate upton right now, by the way, not to distract everybody from your used a, but they have big celebrity, and you are using the doberuaua. It is a little different than kate upton. We think Sarah Mclachlan takes a little more out of the premium audi take and puts a little different position of what you can expect from automaker, and that is the big surprise, and that is what we plan to do. Matt, you are a Sarah Mclachlan fan, are you . I own all of the Sarah Mclachlan records, i will say, but i change the channel instantly when her commercials, for the aspca. [laughter] im guessing they will play on that this year. Loren, am i right, you play on her for those six minute long terrifying. Torture commercials . You are going down the right path, matt. When you start to look at sarah, she has got a great reputation with her association with the aspca, but she has another great things was up she is a great songwriter, she has a great personality, and what you will see they slight change to what her traditional take has been with america, and that will be part of the funny nature of the story that we tell on super bowl sunday. Matt is waiting for it. I love it. Im a big fan. Clearly. Loren angelo, direct marketing for audi of america. I want to turn to more advertising industry, when it comes to the super bowl and spending money. Our next guest has worked with client such as subway, for their, and audi super bowl ads. What is an ad like that cost . Well, you have got to understand the cost of the time in the super bowl is averaging about 4. 5 million, which is at record highs this year for 30 seconds. 4. 5 million for 30 seconds . Yes. That is not the only cost. Today, this becomes a multimedia , multiweek Marketing Campaign that includes esa tv spot but also digital, social, teasers so all in, what do Something Like that cost . Plus there are mclachlan, verythe doberuaua, a rare animal. With a glance onto the lucky super bowl inlet they plan to spend 6 million to 10 million plus. Scarlett johansson will be doing an ad for soda stream. How much do Something Like that get . Talent negotiations they really depend. You could think of anything from a couple hundred thousand dollars to i was a cap at a price on scarlett johansson. You know what i had think i would not put a price on scarlett johansson. You know what i think is a Big Marketing tool . The weather. Is it going to be a blizzard or not, and if it is, i think it will be one of the most watched super bowls ever. It breaks records every year. People want to see what like a disaster. Yes, it really adds anticipation to the game and people are talking about it. There continues to be plans for the super bowl, everything from in case of a real bad blizzard, moving the game from monday to thursday of next week. That would be kind of a disaster, wanted it . To have it on a sunday, that would just be weird and interesting. And if the gamestop intermittently, there is an opportunity to buy into it with their calling the blizzard real that will show highlights it will be an opportunity for other advertisers to get in the game. Go to thend i did super bowl together in indianapolis. That was a very good one. Not together. We just happen to bump it together. We were together, we were not together, i dont want anybody to get the wrong idea. Overe spend has increased the last years. This is a relatively new phenomenon. In 2011, volkswagen was one of the first was the first advertiser that prerelease a commercial, and that really started this whole multi Marketing Campaign before and after the super bowl. We worked with them and released with the many darth vader. That was the first time it had been prerelease before the super bowl and it was a big risk. All the commercials have been released on the big stage. This was on youtube. Nobody knew it was going to happen, and by understanding the consumer, we knew that it would be a hit, and we got 14 million views free super bowl, and i kicked off all the spending that you see today. To go to your question, how do you measure that, it is to be a lot harder to measure super bowl advertisers because you are only talk about 30 seconds or 50 seconds in the game. Today with all the social and always and mobile, we suggest to our clients to set up some kind of retail activity to capitalize on the momentum they have built, you do measure things i does in awareness but also in Consumer Engagement and also in sales as well. I was going to say there is a new Samsung Television that actually allows you to buy a product while you are watching television, and that is a new thing and also fox sports go i think its going to be offering the super bowl three on the free on the ipad app but they cannot offered on a verizon phone because they do not own the transmission rights. You have to go through verizon in order to watch that. Or to sit in front of your tv and watch it. Just to do that. Are people going to watch on a small screen . I think multiscreen engagement is getting bigger and bigger. One of the nice things about sports and live events, the super bowl, but other things that happen, is that this is primarily a tv and live so advertisers are much more excited these days. I you are not going you are not going to watch the super bowl on a small screen. Pimm might. You want the biggest screen possible. That is the point. Television sales for that reason. Thank you very much. Who do you think is going to win by the way . I am not a sports writer. [laughter] denver. I say broncos. Thank you very much. Coming up, Lloyd Blankfein space was live from davos, switzerland. Plenty of big voices sounding off in davos today including House Majority leader had eric cantor. We will be live on Bloomberg Television at 11 00 a. M. Will be sure to tune into that. Washington and wall street have flocked to davos for the World Economic forum. Case in point, Goldman Sachs ceo lloyd blank five. He is right now with Stephanie Ruhle and erik schatzker. Guys . Preks to every much, betty you very much, betty. It is not happening here, it is happening in argentina, big evaluations, some worries about exactly how the government is going to respond. The obvious question is kennedy contained . From what you see, cap from what you know, from what you have been into the bidding, or is there a risk of contagion . Both come off easily. It can be contained and there is a risk of contagion. I think right now, one of the things on the market, is that emerging markets are under some pressure. Why not . They are higher yield, risk yields, people know what theyre getting into when they have them post about them. At this enzyme, they will go through fits and starts. This is an example of each of these countries have their own dynamic, but here in davos you hear argentina love them with china lumped in with turkey. And of course different dynamics, but there are moments in time where you do not distinguish among them him a they are just the emerging markets like it is a single macro event. But do investors truly know what they are getting involved in . When we look at the last year and we spoke with economists to warn us about the tough road thed, they looked like full, and then markets push iran investors bought in. With will be pulled out from under them now . Which countries are you talking about . We talk argentina, south africa, turkey literally. Right, well done. [laughter] but thereifferent, are times when, just like in credit markets, where the dynamics of a specific company over roles what is the strategy, what are the returns of a company, but sometimes the market is overwhelmed by macro concerns and you just go credit. And then every credit instruments moves together. But everybody by credit last year because the market went so well. Everybody body emerging markets, so now if the market turns, are we ready . The market could turn a good rapidly, but we are in a very high place. I would wait a while before i say there is a complete reversal. In fact, if people are looking at their watches, waiting for consolidating im not suggesting that is the specifics of argentina. Those have separate dynamics, but on the whole, everyone is the markets have gone up very far in a kind of a single direction without much of an interruption or a turnaround. Itt have to stay doesnt have to stay that way . No, but i do not have to express anxiety. There has been an anticipation that the fragile 5 wood have trouble at the fed went through liquidity. Could this be the event that starts to trigger the testing of the fragile five and maybe some other emerging markets . It could be, but we are at a very high level. Do you expect it . No. It might. Im in the Risk Management business. I spend 98 of my time wallowing in anxiety over the 2 worst possible events. Of course we spend time thinking about this. Of course it might happen. If you are asking me if it is going to happen, it would be very normal very abnormal. For 7. 5ave been ceo years. Seven years ago, would you have would youhe at have said i am in the Risk Management business . We are always in the Risk Management business. There is more scrutiny, more secondguessing, more adverse consequences to making a mistake, which you inevitably do. Moreover size, more wanted to record your state of mind, your present state of mind every time you do something because life has made us a little bit more aware, but the value of a record as to what you are thinking, what you are doing. But basically then and now, we are the other side of what people want to do, and that is not always easy. People who plan to do transactions and make ybeestments, they have ma been thinking about it for six months or a year. They want to see the other side of introduction, and can you tell me in 20 minutes . That is our business. People unrolled their risk on us. Rights have a major qualityof life worse . Hasnt made your quality oflife worse . Life has not been in front of my. Wanted to go into work, saying i love this job. Like a lot of aspects of the job, i like the problems, i like the challenges is, i like dealing with people who are ambitious and want to handle difficult new things, the ability to deal, like we do here at davos, deal with innovators, but guess what . We had big problems how to deal with that. To this day, i am dealing, spending a lot of my mind dealing with legacy issues, and i need to. Resolving the legacy issues for the sake of the past, but also resolving the legacy issues for the sake of doing things better in the future. I would rather be doing all those other things. Pricing, listening to people pick their companies, asking me whether we can raise capital for them or not, trying to decide whether therell winners or losers, talking to our investors that is what i find on for, but you do not always get to whack it is like marriage kind of. It is like the president , you know, so much omissions to be a peacetime president ambitions to be a peacetime president , guess what, there is a war. You do not always get the period of time the waffles a price of timee you worried that you want. Where are you worried the most . I would say one of the biggest sources of and by the of anxiety has to do with technology and the levers that comes from doing things quickly, instantly and in a way that cannot be intuitive. Just think of what happened to target. Somebody enters a system that could have been entered from any one of tens of thousands of places, and from that has the leverage to steal over 100 million identities or Something Like that. People have exposure to that. You could make, you know, you can have an arms race, defensive measure and other people that is a very hard thing to have perfect assurance. Thatry about the things the world and we assume we have control over. There are some aspects of things i could go wrong that you not feel like you have as much control over. By the way, when i say technology, i am thinking of terrorisms well as or intentional behavior. One of the consequences of technology is the leverage which has good effects a lot of times, but leverage goes the other way too. Prior to 50 years ago, could anyone have made a mistake really that would have cost 100 billion or a billion dollars . Can a mistake today cost 1 billion . Easily. It is not just in our business, just think of industries. Could you have had an industrial accident 50 years ago that could have killed over 100,000 people . Today, could you imagine an industrial accident . If that is the case, to give you pause when you think about what they call the aggravation zation of equities fixed . Use technology to reduce costs and eliminate different jobs. We think about that, and every time we do, we build in another redundancy. When you think of equitization taket me put it this way, a good thing, when we impound independently, it rolls that we require it. We think of risks as a 20 year storm or a 50 year storm, there some things that make it safer for a 20 year storm but more dangerous for the 50year storm. And some point, having a clearinghouse of his or as a source of safety as opposed to biological trait, what happens in the storm that is so big that mailed happen once every 50 years, but it threatens the clearinghouse itself . Wow. When everybody now has an exposure to the clearinghouse. So i think in a way there is a law of conservation risk. You can kind of move it around, but you cannot make it go away. What do you do as a result . Given these preoccupations, have you reevaluated , you do it, we build in know, we build in more redundancies on it. We check certain things what seemed like a good idea that you abandoned because you recognized that there was too much technological risk . Let me say, there are some things that we do in our business could be doing in our business that could make a but there is a lot of Operational Risk. For example, if you do certain kinds of transactions that involve a lot of volume, very itrgin, you might have might be a profitable business, but we thanks to a greater extent than we would have previously the Operational Risk and better than that because the risk of something going wrong, guess what, compounds with the volume that you do. You say you are excited about innovation, but when we speak to investors, they want things to look more like utilities. Where do you fit in the middle of all that . I think investors want banks that maximize their safety and their revenue then how do you do both . There are tradeoffs on certain things. You know, are we in the terms of what utilities are . At the cost of that return, you might not need your across the capital guts, but lets face it, i think the benefits and i do not think it is that i think it is more nuanced than that. People want a heightened degree of attention paid to the risk and reward of things that you do. Very and they are very focused on requiring its as if it return for a specific level of risk, and the improving the value of your company is to increase your returns and decrease the risk you that you take. For example, banks today are not going to make the roe that they did at a time when they had less capital, but guess what . The cost of capital for those institutions are lower because theyre so well that they are safer. Even though you are working hard, you remain public enemy number one right now. Really . Of all the people in the world . If you look at a popular opinion on things, do you think america is feeling it . And there are legacy issues we have to deal with. Those are going to be hard and tough. Until the economy starts doing better, the banks themselves prove that they are better run adaptations, and the best way to prove that would be to go for a few days, a few weeks, a few months, a new years a few years without opening the paper and finding a bad story. And a lot of work has been done, a lot of work still to be done, and we will be in the penalty box of the american public. And why not . Trauma, therebig were a lot of causes, but one of them has to be poor risk judgments made by certain banks and to the extent that banks benefitsing a lot of from their good Risk Management and it turned out to be flawed, you know, it is fair that that hits your reputation when it does not go well. What about the repetition that may not have anything to do with something that goldman does . For example, look at the benchmark fixing candles, libor or fx. I dont know what to degree that the fx goldman or not, or that the mortgage hangover persists. You have litigation expenses to do what. Less than others, but its advocate is neverending. That is what i said. The second you asked me what would it take, and i gave a litany of things, but he was supported in to take would be out of the news with a respect to bad circumstances. Listen, if there is a risk of the erosion of almost these shows will of the social compact that exists between government, regulators, and banks, i think you can you can trap it in those terms, but the fact of the matter is Capital Needs to be allocated. There are professionals who do that well and others who do it poorly, the one to do it will get rewarded in a say in business. He wanted to a poorly get out of business. It is a necessary function that , but the cost of doing it the benefits when it is unwell well and the cost when it goes badly does not only fall on the institution. It falls on the Wider Society because the misallocation of capital affects the banking institution, but it affect the general public as well, so havebody deserves to input. If you did not think that way before, everybody thinks about it after the crash, and so the banks themselves are training hard, but guess what . Whether they are trying harder not, we have people standing over us looking over our shoulder making sure no way that we try hard but to punish us if we deviate. Another thing, herein davos, it is all about innovation. We are seeing all of these tech people. 20 35 they are bringing yearolds. There are no young people. You need to capture what is so special but that generation that other industries seem to care so much about. As you know, we recruit every year, is almost an industry, our recruiting of new people to join our firm and to be traded to our firm, but and we have them, but guess what . It is not cost you, but do you know what it cost us for a ticket to davos . They can wait. We read about some of the stuff. You talk to your colleagues and peers. Have you had to make pages to the way that you run the firm or the way that you treat employees to make it more attractive so that people do respond to your recruiting efforts and to make the decision to come to goldman instead of going to a company that they might perceive to be more dynamic like google, for example, or a startup . Well, we have had no problems attracting people. People want to go. Kids the age, my kids are getting out of school, both graduate school and undergraduate, and goldman is still a place where people want to go. I think and we watch this closely if people are competing for kids and somebody coming out of school gets a job offer from multiple sources, more than 80 accept the goldman offer. The top ofs, we get the class, we survey our population. Independent People Survey the population, one of the big justess magazines validated us for the umpteenth of the a row as one best places to work, the destination, the people at the top of their classes in schools. So listen, a lot of people want to come to us because they want careers in finance, and i am also aware of the fact that a lot of people come to us not because they want a career in finance, but because they think it is great training for whatever they go into afterwards, so they will come here for three years. But i will tell you surely want to put a stop to that. If you get great people, dont you want them to stay . They do not know what the industry is like, they do not know what they are like themselves. There are the bogota was for 20 years, and in others who come for three years and stay for 20. You dont know. Lloyd, to every much. That is alloyed blankfein, that is Lloyd Blankfein of the Goldman Sachs group. We are here in davos, switzerland, and betty, time to send it back to you. Quite great interview, guys. Great interview, guys. Makers Stephanie Ruhle and erik schatzker. Listening in from lake another old place, chicago, with his saction to blan blankfein reynolds, lou Capital Market ceo. Jim, always great to have you on the program. Great to be here, betty, thank you. Lets are with one point that blankfein made, which i that was interesting. One of the key questions that people have for wall street firms is can a rich can they attract and retain talent . And as lloyd said, yes, 80 of the people who are applying to his firm and others, which is goldman. Is that true . I think he is spot on. First of all, let me say, that is a very outstanding interview. Very wide ranging. I think we heard them kind of redefine a little bit and clarify the way they expect to do business, but also the Way Investment banks are doing business. Overwhelmingly, young people still want to come to wall street. It is kind of amazing that given the image that they have painted of wall street in the press, obviously and washington, d. C. , in middle america, from what he indicated, i think he is absolutely spot on. , he is spotiting on. The desire to enter the Investment Banking field by young people, i do not see and doing. Ending. We were recently looking for three and turns to one of our areas in the new yorker, had three schools in the northeast and had over 100 applicants for just three spots and very anxious top of the class type applicants. So i think he is spot on. Are you able to pay less, though, that you were a few years ago . Generally that speaking, compensation on wall street has come down. The folks that have felt that the most are not the analysts and associates that enter the business. The folks that have really felt that on the top line, the senior vps, those are the folks weve seen the compensation compression. On that in that area where you were seeing the new compensation has remained relatively static. Preks jim, one of the other things that struck me that blank said early on is we are dealing with a new situation, regulators want wall street firms to be safer, but he is so pressured to come as he said it, increase return, but decrease the risk. It is very difficult to try to both. And you are now seeing this bifurcation of firms who can do citi,ell and firms, like who are not doing it well. Right. That was one of the point that out with striking about the interview, and also the part about legacy issues. But to get back to the question that you just asked, it is fairly interesting because Goldman Sachs has always been sort of the Gold Standard in balance, striking a balance between risk and reward, and for whatever amount of risk, get the maximum gain from whatever that commodity is, whatever that trade is theyre going after. I think what i heard him to say is that we can really expect to see a different expert a different approach by Goldman Sachs, and we are seeing it. The approach is as we are not going to go take huge positions in our fixed income book, but we are not going to take huge positions in a some prop trade because we think we can double or triple our money in four or five years because the risk of doing so, and the downside of doing so, might be something that we could have tolerated prior to 2008, 2009, but something that the ramifications of which we do not want to take right now. The reality of what i am hearing them say as he redefined the, and as you can see what happens has happened in Investment Bank , and stephaniee betty kind of touched on it, is that those big trades, you know, those big transactions that used to fuel a Goldman Sachs where you would read about and hear about it are not as attractive as they used to be. To get back to just a debt underwriting, equity underwriting, doing new issues, doing ipos, taking moderate reasonable positions and seems to be what i thought and say saw him say you can excitedly from Goldman Sachs Going Forward. Jim, hang on, we will talk more about the meeting between wall street and washington. Coming up, House Speaker john onnard gets a few laughs latenight television when he tells jay leno why he is not planning to run for president in 2016. No president boehner for the u. S. This hour,nd shaking House Speaker john boehner made his first appearance last on the tonight show with jay leno and he got a few laughs when he was asked why the host if he plans to run for president. Eyes you ever think of running for president . No. No . Do you want to show what you did when i asked you before. I i like to play golf like to play golf, i like to cut my own grass, i drink red wine, i smoke cigarettes, and im not giving that up to be president of the United States wasnt quite right, that is not worth it. Spoken like a true american. Are you glad there is not going to be a president boehner . Yeah, i think he would have to sacrifice quite a few things that he is very passionate about in order to do so. From listening to what he said, i concur. I do not think there were any extra patience for president boehner. Its like he has got a pretty good job the way it is. At think he has written to risen to about as high as he is going to go and i think that is a relief. I think he is happy where he is. I think so, too. We have been watching the whole Chris Christie new jersey governor debacle play out here and what it means for his president ial chances. You have made no bones about the fact that you are a supporter of president obama, you are a fundraiser for the democratic party. Do you believe that his president ial hopes have been dashed significantly . I will say for the record as i always say, i live in chicago, and we are all democrats in chicago, so i am one. Not all. Greg said i have followed this and ichristie story have followed this Chris Christie story, and what the Republican Party are going to have to do to be relevant again to win a National Election they have to put somebody up like a Chris Christie, like a jeb bush, somebody that can really galvanize the center because that far right is a losing proposition, and it has proven to be so and it will continue to prove to be so. Chris christie is the type of person that can do that. He can pull the far right into the center. If in fact it nothing more comes out of it than we have seen to date, the only thing that we could say about him is that ok, he should have been a better leader, maybe he shouldve been a better manager, but if he in fact did not orchestrate this debacle and we dont see myriadg else out of the of investigations that are surrounding this now, i think and by the way, remember, betty, it is still early and he hasnt even announced yet. You can get past it. Iscks it is still it still way early. President obama is going to be giving his state of the union address. What do you want to hear from him . He has got pretty low ratings right now. He does, and i dont think we can expect to hear and this is just jim runnels view, i do not think we can expect to hear any of the large, big risen very big visionary type of statements from him. Last time was very modest, it sounded like a governor. Some of the things i think he has to address, though, is the income disparity in the u. S. When the gap between the wealthy and the poor get as wide as it is now and continues to widen, things do not end well. We have already seen that. The other thing that he is going to on the income inequality issue, one thing he will have to do is get mayors, local officials on board. Michael bloomberg, who is a former mayor here in new york city, majority owner of , addressed the issue of mayors helping to achieve some of these agendas. Even take a look at most of the progress that has been made in climate change, for example, has all the. The city level, very little even in this country, even when we are fighting guns, obesity, trying to improve the School Systems those are not of the federal or state level, those are really done at the city level. Quickly, jim, your reaction on that. Spot on. I think what we are going to have to see if some support out of washington for the state and local governments to support bringing up that bottom tier of the population for sure. Isoray, jim, thank you so much for joining me, jim reynolds, chairman and ceo of luke n chicago. We will be back in two minutes on in the loop. Welcome back. You are in the loop. I am betty liu. It is 26 minutes past the hour, which means Bloomberg Television is on the markets. Alix steel is here. I think it will be another down day. Quite fit futures are any indication, it might be another if the futures are any indication, it might be another ugly day. Futures closed average for the snp, it is something that traders attend to watch a do a lot of trading runnels levels. All is a levy tends to pick up. Tradingyone is that around these levels. The s p goes below a twoon one on, all of that really is spurred on by dows emerging equitiesmergent market was a we are on the market again in 30 minutes. Lets get down to the open with the top 10. These are the only traits you need to know about today. Joins in. Rns lets start with number 10, ladies. Transocean, wells fargo downgraded along with a two notch downgrade overall. The firm sees the industry as a traffic here and predict there may be some more serious rate cutting. Number nine is to poll a. Another downgrade this morning. Otle. Chip they are not changing their price target now. Number eight, intuitive a 23 al, reporting decline in fourthquarter sales from the year earlier. The company blamed the sales says salesmacare and this year will probably be lower than in 2013. Number seven, the largest drug deserter in the u. S. Acquiring 75 of its european rival in a 5. 4 billion deal, it will boost mckessons earnings. 65,000 pharmacies and hospitals. Number six of apple. d lawmakers i phone makers samsung has been struggling to get bug with apples appeal to the high end customers. Number five, International Game technology shares. Following the premarket this morning after fourthquarter earnings and revenue missed analysts estimates. The company which makes computerized casino games said they have potential further downside risks. Downgraded to neutral from a buy. Juniper networks is number four. I reported fourthquarter earnings beat wall street estimates. The company is benefiting from increased the demands from the telik mitigation deals as carriers bolster their networks to handle surging web traffic. A rival for cisco. Number three, it kansas city southern. Andite record or quarter 2013 revenue. In thepany earned 1. 03 Fourth Quarter, missing analysts estimates of 1. 10. Two, Bristol Myers squibb, shares were up 16 from a year ago. Stop, our number one guys, none other than microsoft. The Software Maker reporting record sales things to the Xbox One Game console and sale of its tablets compared to previous quarters. Microsoft is firing on some signals at least here. It is time for a call to markets. Matt mccormicks call lets get back to blue chips as evidence of a sign. Matt, youre going back to what we heard 12 months ago, get into blue chip stocks, get into dividend payers. Why are you going back to that . Lasttty, when you look at year, it was decidedly a risk on situation where lowquality stocks, high ids, companies with paltry earnings seem to excel for sub aesop cyclicals were, use all small caps work, it was a phenomenal year with the s p up over 32 over return. Why,you look at the reason many people thought gdp would be stronger than expected, earnings would be stronger than expected, china would still be solid. That narrative seems to have changed. Earnings are slower than expected, chinas emergent work this emerging markets are showing weakness. It behooves investors to take ships off the table but keep the blue chips was up a look at active in this environment is volatility picks up, which a look sightedness. Asked what you mentioned was procter gamble, and alix, you have been looking at pngs earnings. Analysts estimates mainly held by sales in emerging markets, the company did see a slight contraction in the Market Growth in all markets. Herein lies the issue how can these Companies Increase sales . Euromonitor says global home care sales may rise only 2. 2 per year from way 14 to 2017 2017, below the growth rate of about. 3 . Take the charging, about 54 of global sales. It is leading price declines to people like us, we like the discount, we used to them, and that means that Procter Gambles of the world make less money. Like that is a good point, matt, because you might enjoy the dividend at png, but where is the growth . Sure, proctor has grown their dividend for 37 years in a row, is a quite essential consumer staple stocks, it is great when the markets get choppy. I think when you look at ag last lease challenge Going Forward is to drive growth. I think the possible catalyst could be the selling off of duracell. They need to shrink to grow, become a little nimbler, be great at handling the Consumer Prices challenges. Proctor is growing earnings at 7 . To we are interested to see what ag ffly is going to do. When you look at the board, i cannot believe he has been hired to implement bob mcdonnell. You know understand how netflix is at that price and also that they may be in this publisher is territory we have talked about. Olivia, you have been working you have been looking at netflix. Performing the best stock in the s p 500 for all of last year, but i would just point to what we heard from netflix is earnings this past order they think they will sign up even more subscribers than analysts forecast the last quarter. Plus the ceo is experiment in with a tiered family price plan. Analysts think that could really boost profits, plus net flux has done a great job with a lot of their original programming and that it had breakout excess nfl put them on the map, shows like orange is the new black and arrested development. Speaking of orange is the new black, olivia, we here at in the loop cannot help but notice that you look like piper. I hope there are a few glaring differences, like the fact that i am not a convict. White fang on a second, all you blonde blonds look insane. Hate on a second, all you blonds look the same. Wait, not all blondes licking thing. Met onny case, netflix that angle. Look, they do have a growth. You see these outstanding numbers, maybe they deserve best that price . And sure, netflix is something we do not own, it is not have a dividend, it has been a great stock, but anybody can agree it is expensive, just like amazon. They seem to be the exception to the role. But when you look at companies that have been driving the s p best buy is a great example. The stock fell 30 , so i think people are paying an extreme high premium for a very narrow stock that propel the market higher. When you look at these lofty valuations, they have to have marking monster earnings, or if they missed they will get smoked. If you look at the premiums being paid for nondividend at thestocks, betty, 28. 4 times, versus dividend at 18, that spread is the highest since a third and Fourth Quarter of 2007. Investors have to understand that in for an order for that to continue government have to be strong, gdp has to be strong, it has to be betterthanexpected better than expect it, and i dont see that happening right now. That is why think of blue chips look attractive, better valuations, and you get paid to own a stock for a choppy environment. That is why i am lost the mistake that is why i am optimistic about that. Matt mccormick, Portfolio Manager at ball again or bahl gaynor, thank you so much. And we will bring you an interview with george soros coming up. Randyake shack ceo garutti, Opening Stores in istanbul, dubai, and london. Stay in the loop. Clamming the rings and any company is no easy task, and in the last few weeks, we have been ceos and work smart, the name of my latest book. Joining me now is another ceo who has worked smart his old life, somebody who has transformed a hot dog cart in manhattan to a global fast food chain, shake shack ceo randy garutti. Great to have you back with us. Congrats on the book postup thank you. We have a lot of fans here of your food. Theyre like, where are the shakes. Tell me, first off, what has been the most surprising thing for you being the ceo now of a Global Company . The Biggest Surprise is that shake shack started as a hotdog carts in Madison Square park. The fact that we just opened our 41st restaurant in Harvard Square in boston a few weeks ago in itself, the scale that we have been able to achieve, the way that people associate with shake shack has been a blessing and a great surprise. Biggest thing you have learned so far . Startedd true to what this thing. The bigger we get, the smaller we need to act. That is how we talk of a company. That means looking back and saying what we make the same decision we made today that we made when we had one shake shack . And if we do, that is going to merit our success. Ask biggest mistake you made and how did you recover from that . Was earlythe biggest on, we started to grow a little fast and we started to go to Sun Communities before we were ready or before the community was ready. We went to a community in new york and london that community andnot ready for the lines the big buildings of shake shack to be there, and we pulled out of that deal. That was a very early mistake that taught us so much about the kind of sites we need to do and the way we enter and the way, most importantly, that we connect with our communities through our charitable efforts and you work in a Community Within a whole hospitality group, union square, which is danny meyers group. What has it been like working with danny meyer . Danny is great. I have worked with him for 14 years. I met him when i lived in seattle, and he gave me the reason to move back to new york, where i was from, 14 years ago. I worked in a fine dining company. I think the best part about shake shack is that we are most of us are a bunch of people who started in fine dining. So when a shake shack manager starts, they get to hang out with a chef from gramercy tavern. They get the egos in the training that our fine dining, Union Square Company is known for. About yourg restaurants i notice you have expanded more overseas, and i think we have a map of all of your locations around the world. You have expanded more overseas than you have in the United States. We have done it earlier than most companies would. It is an opportunity in the beginning. It has turned out to be one of the best things. We decided that the world is a collection of great cities, and shake shack as an urban experience belongs in those great cities of the Community Grad during a Community Gathering place. Last year, we opened in london, is simple, and most recently moscow. And you were there at every opening. I have been to all of those. Is it just because you want to travel . Just ask my wife that. We have to go, we have to understand it, and we have to understand how shake shack spaces at how the Community Wants it to work. You have gone through your most difficult decision, from frozen fries to fresh fries. Why was that so difficult . The bigger we get, the smaller we need to act. Most countries are looking for easier ways to do things. We are looking for harder ways to do things. Is, you know, when we can look ourselves in the mirror and know we can do something better, and we can have frozen fries that our guests love for nine years but know that they can be hand cut inhouse fresh, we know it can be better, we have to admit to ourselves that does it taste different . It does. Frozen fries taste like frozen fries, and the ones not taste like potatoes. And as much as i and so many of our guests love the original one, we have to make that change make thatut of the change. So about a third of the chains have changed. We have covered mcdonalds quite extensively on this program. Is fast food going through a a seculartion, transformation, where people are no longer enjoy eating is much as they did years ago . I think the difference is they are still enjoying it, but Companies Like shake shack allow an opportunity for someone to say i do not eat fast food, i cannot take my kids there, but still of a burger, i so want a shake, so when i do it, i want to know i am putting good ingredients in my body. That has allowed for people who know more about their food and are requiring to know where their food came from to come over to places like shake shack. I think that is what is what we help to define in the industry here. All right, randy, great to see you. Thank you for joining us. Randy garutti, the ceo of shake shack here. Starbucks shares are higher today after sales rose 5 in the americas in the last quarter, missing and the summits missing estimates. There have been some complaints that it hasnt slowed down its service with food. Julie hyman has been following starbucks looking at how traffic isxpanded venue is the impacting sales was a price when we talk about la boulange, and packing sales. When we talk about la boulange, the food company that starbucks bought last year, and it has been rolling out in its stores, did they get the stuff needs to be heated, so there has been some reporting from the various stores that this has slowed down the way times a little bit. In fact, the research group, ipg, did a manager survey and said the managers are selling more of these la boulange pastries and they are selling at above what they expected, but some consumers are complaining about the time it takes. It takes what, about 30 seconds in some cases to heat up this stuff. The company says there is absolutely no problem whatsoever. Howard schultz, the ceo, has been adamant on that point. And that it is a perception problem not an actual problem. Not only is there absolutely nothing to suggest that there is an issue, but i would also remind you that because of the starbucks card and the quick mobile payment that we are speeding up the level of service in our stores. When you look at the amount of people that are now paying with a card and the unbelievable rate of adoption and how creative mobile payment is, there is no issue whatsoever. This is a myth that absolutely has no legs and for all of you listening on the call, you should just eradicate that thought. It is not exist. I dont know how he can say that, julie, given what we see at starbucks was a they say basically that people are now ordering these pastries and there is a bigger volume of people waiting for them, so there is this idea that the stores look more crowded. A lot of the analysts i talked to say starbucks store a clay has been amazing in execution, and that it is moving around the labor and increasing labor where it needs to to move those lines are the stores. In addition, more and more people are signing up for starbucks Loyalty Program where they pay with mobile at the register, and that also should speed up the service. All right, julie, thank you so much. Julie hyman, senior markets correspondent. We will be back in two minutes on in the loop. Time now for the global outlook. Bloomberg television had a chance to sit down with legendary investor george soros and davos who has made a billion dollars by reading Global Trends was up we asked him about the civil war in theory and what russias responsibility in the middle east really is. Certainly the russian stability in russia is very big. They have demonstrated that the regime is assad their clients, and they had the power to intervene and deliver on the chemical weapons, so why can they do it i had a humanitarian level . It is really their choice. I think that iran also has an interest to improve its image in the world. After all, they want the sanctions to be lifted, and they on the nuclear weapons. The syrianly, situation is not actually within the power of the elected president rouhani. It is the revolutionary guards that are in charge of syria. Very actually used to be a welldeveloped country. Destroyed, and it will be a big effort to rebuild it. The important thing is to stop the bleeding because while the talks dragged on, the situation is actually deteriorating because the assad regime has a people. F starving in five, their slogan is star for surrender. Steve schwartz will be in the loop to talk about transforming the media landscape. In his 56 at the hour which means Bloomberg Television is on the market. I am alix steel. We have a second day of sellouts, the dow jones down by 25 points, above its 50 Day Moving Average with just slightly and the nasdaq off by 34. In emerging selloff markets stocks as well as emerging markets currencies. You have can a cord Equity Strategies tony dwyer says this could be the correction we have been waiting for, the second of four, a 7 drop in stock. Isuld point out the fix surging, the volatility definitely increasing vix over 15. The indexes, Information Technology sector have started to outpace the Broader Market fo. I am joined by anna louise jackson. 5 , what isgained the role genesis behind this . We look at the relationship between the performance and the earnings at quotations earnings excitations relative to the s p. These have ab den floated together for a long time, and last year, that relationship broke down. So that with the earnings doing better than the top performance. That was one signal earlier this as theto last year that sox werent catching up with the earnings, that was a good time. As the stocks were catching up with the earnings, that was a good time. A widem is once was basis, some of them are doing better. Also, for investors who have conviction that Global Growth is going to be good and u. S. Spending will be good, thatll bodes well. That may be by having concerns about c apex, about how it may not be as great as we thought over the last four years, there is a distant judgment between the oldest tech versus newtek here. Some like the old tech a little bit better, and one reason that i think of microsoft, ibm yes, microsoft, intel, cisco, newtek would be facebook, linkedin. So the old tech did not do very well last year. So there may just be potential for them to do well this year, you know, with some of their fundamentals getting better, some big company changes, obviously. Amazon, microsoft was not and microsoft was not terrible. They had a decent quarter. This quarter may be a mixed bag. Intel was week, microsoft was strong, but looking ahead for the year, so for people who have conviction about the year, you know, this may be a place to look. All right. What is the strong as Revenue Growth record for the old tech . Is there a consensus im not sure. I do not know if there is a consensus on that. Example, see for why so much, anna louise. We are on the market again in 30 minutes. Market makers next. This is a special edition of market makers. The special editions keep coming here on market makers. We are at the World Economic forum. Big day. Another big day. It has been a big week. Unfortunately, it is about to end, but not before we bring you one of the best shows you have ever seen. One of the biggest stories and tagged, the internet in tech, the internet of things. One of the Biggest Companies in this business is nest. Its main product is a smart thermostat. It is also