Its numbers were not necessarily going to be up to snuff. It said it would be doing some reorganizing. Out withit is coming the actual numbers, they are ahead of estimates. 217 is what analysts had been anticipating. In the fourth quarter. The estimate was for a gain of 2. 5 . Heres what seems to have gone on at macys. During the Holiday Season, the retailer was stronger than many of its competitors at time when most retailers were struggling. Because of the still struggling consumer and because of the weather. That weather affecting in january. Macys appears to have had a stronger Holiday Season but the fact that those same store sales are missing estimates is likely because of the weaker january. I january that most retailers had. That weather affect really hitting many of these companies. If its snowing outside and the roads are bad, people were simply staying home. How is macys holding up compared to its competitors . It has been doing better here. This earnings per share number means that it is able to ring in more profits out of the sales it does do than many of its competitors. Part of that has to do with macys size as the Biggest Department store retailer in the country. It has agreements with suppliers and it has to be more promotional. Offer more sales. It can have some sort of pushback and its agreements with suppliers so they may have to eat some of the added cost of offering things at a discount. It also has a larger private label business. Things under various macys brand. That can be a higher margin business as well. Leverage,e operating if you will, than some of the other Department Store companies. Online business for macys. That is growing pretty well. It is growing pretty well also. It is 11 of the companys business according to scott galloway, a marketing professor at nyu. He says that there is a relatively high level of engagement with the consumer. This is something that i heard from person after person i spoke to head of this report when there was analysis that macys Online Business across multiple channels, internet, and, etc. , that it is stronger than other competitors. Thank you so much. Moving and shaking this hour in tec is the google chairman, eric schmidt. He is telling consumers to sit back and enjoy this battle between apples iphone and the device is powered by google. Schmidt spoke to charlie rose. In the fight between apple and google over the operating systems, it is producing enormous reductions in the prices of phones. If google were not there, those iphones would be a lot more expensive. If apple were not there, all those android phones would be more expensive. Consumer valley was enhanced by this. Consumer value is enhanced by this. You can watch the interview at 8 00 tonight on Bloomberg Television. Neither apple nor google is at the mobile world conference in barcelona this week. Every other big name is in the game, including the ceo of blackberry, john chen. He turned some heads this morning when he mentioned potential plans for the new messaging service. What is there . What is the deal with the blackberry messenger . What is he going to be doing with that unit . I put a question to them. Sitting down with john chen, there is so much talk about messaging at the moment. Whatsapp going for 19 billion. Are we seeing a new valuation of blackberry . They have 85 million users of bbm. That adds value. Could he spend this entire unit on bbm . Running a public company, anything to help her our shareholders, have to take a look at it. We need to build up that base and deal with the engagement model. No immediate plan for john chen. He says, look, i am having to assess this. It could be beneficial to my shareholders. Is a big issue for these tech companies. Blackberry, given its own sort of credibility and the security blea, are they going to be a to cash in on this . It is is wind in their sails. He says it is like living in san francisco, nobody is prepared for an earthquake. Nobody is prepared for the expense of the nsa looking at our data. Everyone is getting interested in protecting their own data and privacy. He says, yeah, they are looking front and center at security. Messaging a secure messaging infrastructure. We are the only one who has it. It is important that we showcase and use that as a differentiator into the thousands of enterprise customers. Up the again, bringing messaging capability. We have the most secure messaging capabilities. Notays, look, as our time yet to spend 19 million. Letpriority is to shareholders judge. They are unleashing new products come april. All focus on emerging markets. On the ground in barcelona at the mobile world conference. We have a Great Program ahead. We will talk to the veteran california lawmaker about putting america back to work. Getting congress on track when it comes to the budget and much more. Plus, bieber fever may have passed. s legaldian pop star problems will not get into portage. Stay in the loop. Were just Getting Started on this tuesday morning. Oureres a look at Bloomberg Top headlines this morning. The Bitcoin Exchange has gone offline. Directing users to a blank, white page on its website. Immediately did not respond to messages seeking comment. It operates bitcoin wallet. It wants to reassure owners of the Virtual Currency that bitcoin is still safe. Home depot topped fourthquarter estimates this morning, getting a bottom line news from a rebound in housing thats bird renovation. Home depot returning some of that extra cash to investors, boosting its quarterly dividends 21 . Jpmorgan also making headlines this morning. The Bank Forecasting a cut of 8000 jobs in its consumer and mortgage banking business. Is saving about 2 billion in the face of slower economic recovery. Speaking about the economy, the pentagon plans to reduce personal by 13 with the army taking the biggest cut. The number of soldiers on duty will shrink to its lowest level in 15 years. How is this going to affect the economy and the job market . I want to turn to mike mckee, who has been going through those details. Critics have come out and said that we cannot afford to not have a big army. We can. We have in the past. Take a look at where we were before the iraq and afghanistan wars. If you look at the buildup up of the activeduty army over the last 1015 years come you can see in the 1990s, the peace dividend allowed us to cut our forces tremendously. The huge buildup of the wars that followed since the peak two years ago. We have been coming down and we are getting back to a more rational level to the threat level we face today. Take a look now at what secretary hagel is suggesting. The reductions will go from 522,000 to 490,000 by 2015. By 2019, 450,000. Not huge impact on the economy overall. Military personnel are not counted in the establishment or the household surveys. They dont affect the data that we see on a regular basis. They will not affect the number of people who are having or not having jobs. To the extent that some of them leave the service and dont find other jobs, they could show up in the unemployment figures. Were talking 30,000 over the next year. Its not going to move the dial. He plans on cutting spending. That will have some impact . Were getting back to the only in washington would you find it an increase if it were not a big cut. Were talking cutting personnel over the next five years. The budget is going to be rising. Total spending will rise but on different things. Take account of inflation and because these things are already in the pipeline. A certain amount of what the pentagon spends is already baked into the economy. We may not see as big a boost. We have not been seen that for a number of years from government spending. As sequester has an impact well. Because of these wars winding down, we are now having to spend less money. You are seeing a lot less spending overall. The total impact on gdp Going Forward is likely going to be limited. Thank you so much. Mike mckee. In lobbyists are all buzzing washington as well on something else. They are preparing to pour over the details of the first major republican tax overhaul lannon years. They are nervous about the details. Peter cook has more on plan. Ssman daves this is the most soughtafter document in d. C. Right now. If you could only understand the phone calls ive been getting in the last few days from lobbyists. Other players here in washington. They want to know what dave camp wants to do with the tax code because they are worried about what might happen to their individual companies and industries. They want to know how hard they are Going Forward. Be camp plan is said to unveiled tomorrow. It remains topsecret. He has been keeping a close to the vest. Nobody expects this plan to Pass Congress and its Midterm Election year. This proposal is a very big deal here in d. C. Because it is the most detailed effort to overhaul the tax code in years. It will become the standard by hich other tax proposals are measured. It is a chance for him to carve out a legacy before he asked to give up his gapless chairman of the house ways and Means Committee next year. A big moment for dave camp and a big moment in washington for anybody that wants to see an overhaul of the tax code. Give us a sense of what it will say. Been a tightlys ret. Sec they will not make it public until tomorrow. A lot of rumors. Some big picture things. He has said this publicly. He says that he wants to cut the individual tax rate and reduce it to 25 . He wants to cut the Corporate Tax rate to 25 . Any plan he puts forward will be revenue neutral and will not affect the deficit. He has said that he will not increase the Capital Gains tax. He will not make changes to the estate tax as well. The sand some lines in that he has put down. The question is, how does he keep it revenue neutral . What does change in order for him to lower those rates. That is what everybody wants to find out. What is out there for dave camp to target . The most controversial ideas . A couple out there. Some of these have been reported in other places. Take it with a grain of salt. Changing the tax treatment of health care benefits, particularly for wealthy americans. That is been a controversial issue for a long time. It could be based on your income level. That would be a significant change. The rumor out there the most, people up and talking about it, the possibility they will tax large bank similar to what the president proposed out of the financial crisis. That is getting a lot of attention from Bank Lobbyists and wall street analysts. Define some revenue, perhaps dave camp would target very large banks. Well have to wait and see with the details are when they come out tomorrow. Everybody is waiting for this document. We will have it for u. S. And as we get it. Thank you so much. Peter cook. Someone who knows washington very well, we can see him as part of washington. Is here. Enas he represents a mostly hispanic district in california. He is here in new york, joining us in the studio. Thank you so much for joining us. Good to be here. Were listening to the reports peter cook, discussing what is one of the most Important Documents to come out. This whole overhaul of the tax code. What do you want to see in this overhaul . I would like to see is to make sure that we can be honest with the American Public and collect enough tax revenue so that we can address our infrastructure issues and the needs of america. Reducing taxes while at the same time having enough its very hard. If you cut anywhere, there is going to be winners and losers. That is the biggest problem. Politicians, all we have to do is be honest with america and let them know why we need to do what we do. Lower it here and raised over there. People will be ok. When people talk about half of the apple and not talk about the entire apple, that is when america gets upset when they hear, that second half, you will raise this or that. Of thising about half or half of that, the same can be applied when youre talking about budgets. Here you have this defense sides and there is both something for both sides to fight about. Earlier,congressman on a republican from ohio, this was his take before this budget was released. Not going to be a safer place. This is not the time for us to begin to retreat and not the time to cut our military. You would were not agree with that . I dont agree with that. We can trim the budget when it comes to military. We have to be responsible with it. World is costly changing constantly changing every single day. At the same time, we can do the jobs we promise for the world and still do the job to protect democracy in america. It is unfortunate when people threaten to say that any cuts whatsoever are going to threaten our military balance. You can say that because your district is not heavily reliant on defense spending. We have a lot of companies in my district who feed the Larger Companies when it comes to the products that go into the defense industry. It affects the labor force in my district as well. We have to do what is responsible and what is right. Anytime we make changes, it is going to hurt somewhere. I think you have to be honest with the American Public and let them know what we are doing, why we are doing it and what theyre getting for it. Tell me about this bill that you have proposed a couple of weeks ago about offering stipends for people to allow them to relocate. I reached across the aisle and im working with the congressman from south carolina. A tea party congressman. Imagine that. Were working to make sure we can help mobility of america. Mobility so that people can go get a job. If somebody identifies a job and that job is waiting for them, in advance. It an what do you mean . They can get up to 10,000 in order to get that change, that move. Everybody knows, last months rent, you have to move across the state or across the country. Is allowre going to do people to go ahead and get that job and they can get back to work. Mobility by many of the economists in this country among both conservative and liberal are saying that mobility is one of the reasons why so many people are unable to get back to work. How is it revenue neutral . It is within the department of labor already. That money is already set aside. When summary files for their Unemployment Insurance benefits, we already say, this person is unemployed for the maximum amount of time and that money is already set aside. They take the 10,000 from what we already would have given them in the long run if they stay unemployed. Is revenue neutral edi are would agree that there some anecdotes of people who have not been able to move because they have been stuck in their jobs. Isnt this a bottomline problem . There are no jobs out there. There are 3. 5 million jobs opening around the country. We have about 3. 5 Million People who are chronically unemployed. There are jobs out there. The thing is, if you are sitting in los angeles and you have a certain skill set, maybe you need to move to illinois to get the job. How is somebody going to take on that expense if they are only getting the little bits to survive . It did not taken mincing so much as just the idea of saying, hey, there is opportunity for us to have a revenue neutral proposal in which we can increase mobility and put people back to work. Were are not having to increase taxes. Anytime i can talk to a Tea Party Republican about not increasing taxes, putting people back to work within the same envelope, we are together on that. On you benefiting the arent you benefiting republicans . It does not matter as long as we do the right thing. Are their economic policies on the tea party site you agree with . Is a tea party person who wants to have a proposal that is revenue neutral, we can work together. You have spent many years in california. You literally have written dozens of budgets in your lifetime. There has been big debate about californias economy. We are top six. One of your fellow General Assembly colleagues has written an editorial about the state of californias economy, comparing it to texas and singh californias economy lags because it is such a high tax state. Said, 12 of californias workforce is either in bureaucratic overhead or working as regulators. Telling fellow californians what to do and how to do it. Texas has half the percentage. This is chuck devore. What do you say to that . Isthing got our economy strong in california and coming back very strong. What people need to understand is that in texas, we need to regulators for Certain Industries to make sure those things dont happen. That is one of the nice things about california. You can raise a family regulation at any level of government, they are intertwined. When you have federal funds, they push it down to a local state safety. You will pay for your bodies to regulate this industry or what have you. California has a higher on up limit rate than the rest of the country. Everybody knew that california was going to lag, but we are coming back strong. The Unemployment Rate is going down. Revenue rates is extremely strong. We have had a tremendous job and will be reinvesting back in education. Because the economy is much stronger today. The revenues for the state is much higher. Thank you so much for joining us. Really appreciate it. Covering a lot of ground here. Tony cardenas of california, right here in our new york studio. Television is on the markets. You have s p futures a bit lower, racing some of those gains. Yesterday, we are raced the loss for the entire year. Morning,llowing this home depot and tmobile. 8000gan expected to cut more jobs in mortgage and Consumer Banking this year. Those are some of the stocks you want to keep your eye on. On the markets again in 30 minutes. Ebay has been in the crosshairs four months now. Member yesterday we learned that icon published an open letter to ebay stockholders, criticizing Board Members. Trish regan spoke with icon yesterday at on her program. She joins us now with some of the highlights. He is pretty worked up over this. He says he really is never seen anything as egregious as the situation. He speaking specifically about these conflicts of interest that the Board Members have. Let me just hes perhaps the most provocative sound to share with you. They compete with us. They say it is overlapping. We just bought raintree. Paying when he writes these letters . Bs on thislling conflict of interest. Carlfired back after issued his open letter to shareholders yesterday. He is getting at this conflict specifically with mark and scott cook, two members of the board. Made,es investments they including with skype and said, look, they took this from ebay and wound up selling it to microsoft and made a lot of money for himself. In karls view is very much an issue given that mark is on ebays board. I have been through a lot of these over the list 3040 years and i have sent in a letter and a mean it. Ive never seen one as blatant as this. But,ve seen a lot of them, it is almost if it werent sad, it would be funny. He is seen a lot in his days, but he finds this one to be of a particular issue. They have an annual Shareholder Meeting coming up in april. Shareholders will be able to vote for the four Board Members that are up for renewal. Is to changeffort at least two members of the board. He has twoates candidates that he is proposing. He said nobody wants to work for john donahoe. As a result, they cannot get the talents that they need at a place like a pal and ebay. Paypal and ebay. It needs to be spun off from ebay. That is the real future of the company. It is a separate kind of company doing a separate thing. It is a company that is growing tremendously off the ebay platform. 70 of its business is separate from ebay. That is growing at 30 . As a result, it makes sense for the company to be separate if it wants to stay competitive. Part of staying competitive is you attract the best talent. He believes that ebay has a very hard time doing that. Nobody wants to work for john donahoe. That is one of the things that he said to me. Skype was going to be sold by donahoe. He is naive or just asleep at the switch here. There you have it. The sounding off on Management Team and ebay, pushing again for this spin off of paypal. There will be votes that are nonbinding. That will happen in april. Perhaps their shareholders will like to see a spinoff. A message toend management. Biggestis microsofts element . Eric schmidt gives us his biggest proposal. Is this the beginning of the end of bitcoin . Of the take stock Virtual Currency. We are live on the ground in key kiev. H the latest in ukraine, the vote to select a new government has been delayed until later this week as leader struggle to fend off a default. More on the country stubble, we are joined by bloombergs managing rector for economy and government. What about hopi echo is there any hope for ukraine to receive this bailout that is being worked on by the u. S. And the eu . Been put off for two days now. Will not have a government until at least thursday. That will be the beginning of the matter. A sit down ofs t what exactly it is the ukraine will have to do to get this money. Gone that, theres a question of whether this will be acceptable to protesters. The imf is not renowned for giving away money for free. Theres a lot of questions to be answered. Crisis,his new fiscal and is to be put to an end. It needs to be put to an end. How critical is it for new leaders to know the whereabouts of the former president . Its pretty important in terms of closure. In terms of getting closer on the events of last week. The president and his followers declared this to be a coup in yesterdaya came very strongly against the administration and said it was like a terrorist regime. Therell be a lot of questions around the new leaders. We need to find them so they can put them on trial and show the supporters in kiev that justice will be served. There has been lots of talk that we could possibly see a split in ukraine. Is that a possibility here . Anything is possible right now. Certainly, if you look at the sort of rhetoric that is coming out of southern ukraine where russia has its fleet and in the east, there is some cause for a to vote onferendum whether that part of the ukraine should join russia. For now, it is seen as fairly extremist talk. There is no imminent danger that the country will break up. Motions are running very high after the events of the last week. You are seeing a lot of hot rhetoric on the matter. Thank you so much for joining us. On the ground in kiev. I want to bring in william tell, a former u. S. Representative to ukraine. Thank you so much for joining us. One of your specialties is that you help governments in transition in egypt him in syria, and libya. Ukrainethe key here for as it transitions here . Keys. Re are three , as john mentioned, the establishment of a government. A solid government. Has taken thekiev right steps. They have impeached the president. The president has been successfully impeached. They have begun to put in place a government with an acting president that will remain a Prime Minister and cabinet leader on this. The second key is for international support. Political support, diplomatic support. The third thing is financial support. That will be important. How important is it that russia is a part of this coalition . It would be great for the russians to be part of this coalition. Imf has the lead. They will have many discussions with leaders in kiev over what needs to be done. The International Community supported by the americans and europeans ought to be there. I think the russians should want stability on their borders as well. They ought to join. But they are reluctant to what will convince them to do this . Own decision, of course. What would convince them to do it is to recognize that instability, violence, financial instability, economic problems right on their border is not in their interest. Congressmanwith mike turner yesterday from ohio who is a Senior Member of the House Armed Services committee. He had a very critical view of the u. S. Role so far. I want you to hear what he said yesterday to us. I think the issue of the present uncertainty and foreign putin that given foo ability to lean forward and for a process that is already going. They were already in the process of entering agreements with the eu that were stopped by our weakness and putins strength. Certainly it is true that mr. Putin has been very interested in ukraine. They have been a key part of Russian Foreign policy. He has interest. The latest development is the recognition of the International Community that the people of ukraine ought to be sovereign. Hes saying that u. S. Weakness and weak leadership by tin president has allowed pu and the russians to act more forcefully and metal even more. What i am saying is that the people of ukraine have taken the role themselves. It is much less about the United States and much more about the people of ukraine. They have taken a decisive role and mr. Putin has to deal with that. The Opposition Leader in ukraine, why do you think she could be the best leader to emerge here . People of ukraine will decide who the best leader is. What i have observed is that she is the best politician in the country. She has been in jail for the last 30 months. Her health has suffered and she needs time to recover. If the people of ukraine are interested in having her come back as president , they will decide. It is not clear to me that the people of ukraine will make that decision. That are other new faces are as interesting as the people who have been around for a long time. Thank you so much for joining us. Though former u. S. Ambassador to ukraine. We are watching back on the markets. Futures ahead of home price numbers. Those will be out in just a few moments. You can see futures are mixed ahead of those that data. Back in washington. The enrollment numbers for healthcare. Gov. The state of maryland has just fired its prime state contractor. Megan hughes has more on the state problem. Went wrong . When when wro the Maryland Health statetion, that was the exchange. Huge problems as soon as it rolled out in october. Only four people could sign up. As of february, fewer than 30,000 have signed up. State officials but a lot of the health care rub solutions. They outsourced a lot of the work and have been infighting. Thereve been paid 65 million as of a brewery tents as of february 10. The fiveyear deal worth 193 point 4 million. A lot of money has been spent. State officials in maryland have said that they reserve the right to try to get some of that money back. We may see some lawsuits. As for the company, they make the case that there is still a supportive role here and implement hundreds of fixes. Qsii optum is now the Systems Integrator for healthcare. Gov. They were brought in by the state of maryland back in december. Now they are taking over as the prime contractor. Also interesting to point out about this company their , their headquarters is in columbia, maryland. Our washington correspondent. The Big Internet Companies are still dealing with the fallout from those nsa surveillance programs. Google and apple now have some information to tell customers about government requests for their data. Edward snowden first revealed that nsa had access information bout internet usage. Eric schmidt talked to charlie rose about this. There was a program called prism from the British Secret service and according to the snowden documents, they had figured out a way to get between our Computer Systems as they traffic information. We have no evidence that information was misused of any kind. We saw our protocols and close those doors mutely. Schmidt also spoke about problems at one of googles rivals. The problem microsoft has is that their model was focused around windows monopoly position that is now used in my forms that dont sell. Nokia is busy announcing an androidbased phone. Shocking. Just to give you an idea of the power of open source platforms. You can watch the whole interview with eric schmidt tonight at 8 00 Bloomberg Television. Coming up, it has been a rocky start to 2014 for who . Justin bieber. Some are calling for deportation. The pop star getting the boot from the west. That is next. Seth meyers invaded american living rooms last night. An as aoe biden guest. I plan on making a major announcement tonight but i decided, tonight is your night. Thank you. I hope you invite me back. Amy, your 2016 plans . I will run for president. J for amy. Yay for amy. Justin bieber was arrested in florida last month. Since he is canadian, questions have been raised on whether he will be deported. Bloomberg takes a look at the risks facing the biebs. Justin bieber has sparked a debate about come of all things, immigration. Recent reports have him on a bad behavior of rampage, fighting his neighbors, drugs found in his california home, his arrest in florida for driving under the influence and an assault charge in toronto. All of this has people wondering , what does bieber have to do to get deported . 250,000 people actually signed a petition asking the Obama Administration card. Oke biebers green that is enough to get an official response. Its not like we have the boarded up or denied entrance to famous singers before. Cat stevens, boy george and Amy Winehouse were all denied entry. In the 70s, Richard Nixon tried to deport john lennon. The circumstances of each of those cases is quite different from biebers. Thousands of foreign nationals are deported from the u. S. Every year. To it, if any, are found required for an area ability to sustain national or international acclaim. Authorities are unlikely to convictedunless he is of a Violent Crime or sentenced to more than one year in prison. Not the type of offenses that he has been accused of. Should he really be in such a rush . Two thirds of his shows were in the west. Sold more than 5 million albums here. He is investing in tiny startups in the u. S. Regardless of how you feel about his music, unless his bad behavior continues and he is convicted of more serious crimes, you can believe that he will be around for a while. What would we do without him . It is 56 minutes past the hour, which means boomer television is on the markets. Equity futures a bit lower, racing some of those gains we have seen yesterday a erasing some of those gains we saw yesterday. 30 minutes until the opening bell. This is in the loop. The countdown begins right now. Whatcom back to in the loop. Were 30 minutes away from the opening bell and futures are indicated that stocks will open in the red. Macys cut prices during the holidays, but that did not help sales. Fourth Quarter Sales missed analyst estimates. Has been of bitcoin plummeting today after mt. Gox went offline. Price index, we have the headlines. Prices in 20ouse thatcan cities it is 13. 4 annual growth, that is the best year for the Housing Market since 2008. It comes out or in november that was the highest 2006. In a month over month basis the s p case shiller price index is above estimates for the month over month number, but on the yearly number it is 13. 4 , the best since 2008. How futures check have been trading, remember that they were indicating a lower open. Not much change your based on the numbers that olivia just went through with the home prices up about. 7 . Our economics editor Michael Mckee has more details. The markets move on these numbers sometimes, only when it is off drastic of the estimates. I was looking at the numbers just before i came on louisburg radio bloomberg radio, and this is a little bit better news. Olivia is little miss sunshine, but i can top that comes she is giving you the 20 city number, im giving the national number. The increase is not as much, 11. 3 for the year of 2013, but is the best National Performance since 2005. We are enterpriselevel we saw in 2004. Not so good on a seasonal adjusted, they went down. 8 . The. Of this together said we are starting to see a little but of a softening in home prices. They have gone down, the rate of increase has gone down. Isnt that good though . So far, it depends on how far it goes down. We saw many increases in cities over the past year. Theyre the places we talk about him as everybody, las vegas for example, over 26 price increase last year. San francisco, san diego, los angeles, a lot of California Living cities on the list. Prices went up 16. 6 in detroit last year. Sometimes when they also far you cannot look at the percentage of to look at the level. Good for detroit. Thank you. Moving and shaking this hour, pope francis, he is overhauling vatican poss aging vaticans aging bureaucracy. Creating theso post of Auditor General who will guard against fiscal mismanagement. He is addressing complaints from catholics around the world that there is no transparency in the church. No one knows how much money the vatican has, or how it is being spent. Speakingamsung of overhauling, there they are debuting the latest and wearable. In wearable tech. Back at the mobile World Congress in barcelona where new gadgets of the stars. Stole therberg spotlight yesterday. He talked everything from whatsapp acquisition do how to get more companies on the internet. For twoting for iphone years cost about 2000 can sign costs about 2000 in the u. S. , we have to also drag have some dramatic changes. From theg us now mobile World Congress, you heard what zuckerberg said, would you agree with him that it is great to have these gadgets, it is great to talk about a technology, but you have to get people onto the internet . Absolutely. The cost for most people, theyve bought the phone, but then they realize that the cost for data is very high. He has a lot of supporters in the mobile space behind it. What was the biggest highlight for you when you were listening to Mark Zuckerberg . Think probably the last question, asking if anybody wanted to do another acquisition. He thinks we probably have enough so far. Thats got a nice laugh from the audience. There is passion for connecting everybody. Running a world is little video about how many people theyre going to connect, and he was a guy do that every month. That is why he bought that latest acquisition, to get the number of people connected. He was to get everyone connected to the internet. As they have said, they want to connect the entire world. Speaking of connections and how to do it, you have been texting out some of the new testing out some of the new gadgets that have come out from samsung and lg. 5. Ll me about the samsung s it is a very distinct rodarte. It is a night right screen, comes in nice colors, which is nice for making a statement of a phone. It has a much longer at her a life, has a really great camera, with very fast focuses. One of the problems has been that it does not focus back, this has been solved. It also has another capability, there is a heartbeat sensor so you can put your finger on this and measure your heart beat. Groundbreaking phone, but certainly an innovative phone, and they thought i will buy one of these days Going Forward. Is it an iphone killer . There are always going to be apple fans. About selling, 200 million of their father out there of their phones out there. Niche outeir biggest there. This is a Second Screen for your phone, and it is information like messaging, but it also does heartbeat, activity monitoring. A really cool device, nice and small, very nice. Can you hold that up to the camera a bit more . It is on your wrist, so we cannot see it. Correct. Can you see it now . Yes. Obviously they are not the only company that is doing Something Like this. Seeing,big trend youre lots of technology geared towards fitness . Wearable is all over the place. A lot of people doing wearable. This combines a lot of ink ogether. Things t but this has a sensor that is built into it to measure my real hareartbeat. Its not just telling me how fast im walking but how well i am exercising. It becomes a very powerful company should combination. Be completelyll outfitted in wearable technology. I can see it now. Thank you so much, gregg harper. Still ahead, pimco in the spotlight again today as new details are emerging, charging that bill gross may be to blame for the culture clash that sent Mohamed Elerian away. Will the waffle talk go win the breakfast warped . . Would you lead a waffle taco or in egg mcmuffin for breath risk breakfast . The breakfast wars are on. The bell is going to raise ante by launching a new breakfast menu. You have done quite a bit of research on the breakfast wars. And the breakfast market, mcdonalds still dominates, right . Mcdonalds is the undisputed leader in breakfast in fast Food Industry overall. Is fast Food Industry littered with chains that that they can do a better breakfast than mcdonalds, and mcdonalds is still at the top. , you havee struggling Companies Like taco bell saying maybe we can go a little bit earlier in the day and start selling breakfast items. How you think they will do . They look at the opportunity, and theyre looking for growth like everyone else. Stores that00 are not really doing anything until lunch starts. Theyre looking at the opportunity to drive her mental tales. They have had innovation with the doritos logos that have really accelerated their growth, and theyre looking to commute to doing that with breakfast continue to do that with breakfast. This is an opportunity for additional dollars and eight in an industry that is struggling right now. You could see why he what you would want to do this, but where do Companies Fail here . There are a couple of things that really drive reckless. What is the convenience factor, and that is where mcdonalds excels. They are so many locations that we cannot go three blocks without finding a restaurant for breakfast. The drivers are obviously keen. Tacout will that bell cannot overlook the importance of coffee going along with breakfast and they have a proprietary blend they are introducing as part of this, but it is important to do a very good job with coffee as walls the food quality which they have done a lot of work around. Convenience and coffee are the big keys to succeed at breakfast. You have mentioned that in terms of ratings, and it is interesting, with coffee so important, almost 80 of the people who go to mcdonalds say the coffee is excellent, but it taco bell it is 50 . Bell has not had those occasions where coffee is important, you do not typically buy copy with your talk goes. It is something they need to introduce to the consumer make sure that they are comfortable with them and make sure theyre getting into ending a good value. Other companies have tried to do this, subway comes to mind. Subway is an interesting concept is that they are also everywhere. They actually have more units than mcdonalds, but theyre not very convenient. They do not have drive throughs. It is important to get the consumer into the door in the morning, and what they are trained to do is get the consumer to buy a sandwich for breakfast and for lunch for later. Not and that anyone would consider it a rousing success of a because consumers will drive right by a restaurant if they cannot get and out for breakfast. What is mcdonalds to do in the face of this competition . They are the leader right now. Taco bell is more in that they are trying to be a number two competitor. They are competing against working and others were not doing breakfast particularly well. Mcdonalds is not particularly worried at this point about taco bell. They are worried about these movement,fast casual and how those other smaller players, while taken while one by one are not that big threat, but together they are a threat. Fast casual,end is and there are, and chipotle, they have to look at those four they are competitors for the share of stomach, and the overall things that go into a good experience at a fast food restaurant. Thank you so much. The breakfast wars between taco bell, mcdonalds, and every other fast food chain out there. Just a few minutes until the opening bell, we have your top 10 drains that you do not want trades that you do not want to miss. Welcome back to in the loop. Within six minutes past the hour, Bloomberg Television is on the market. See, futures are pretty much flat right now, the dow is set to open about one point higher. Intraday record, but pulled back before the close. Yearoveryear estimates showing a yearoveryear gain on caseshiller. It is the first deceleration since 2006. Taken keep an eye out for the Consumer Confidence board numbers coming out at 10 00 p. M. We are on the markets again in 30 minutes. When Mohamed Elerian announced he was stepping down from his post at pimcos as pimco ceo this year, it caught everyone by surprise. A new wall street journal report auggests behindthescenes conflict created tension. They say itas was an unhealthy working atmosphere. You were quoted in this article about the work that you did at pimco. What did you find in your research . I was doing a number of different things, but i was coaching a number of the Senior Executives with the exception of bill gross. Getting their 360 feedback reports that they got from their peers, superiors, and so on. I was doing oneonone work with them. I found that the environment was a Pressure Cooker. I have a lot of respect for a lot of respect for what i heard and what i saw in terms of her performance, but the environment was a Pressure Cooker. What i concluded was that it was unhealthy with respect to a significant number of people. They are very talented people at pimco, they have excellent credentials, they are hardworking. There are firstrate professionals, but there was undercurrent theme with almost 100 of the people. They were under a lot of stress. Tradingannot find any desk out there that is not a Pressure Cooker cover that is not high stress. What is different about it . It in the wall street journal article, and i am just reading it, it is the way the people are treated. Culture,a climate, and and one of the values would be the spec for the individual. In any organization you have to have respect for people. Of thesee in many firms, but pimco is the one that i was looking at. These people have a lot of money, but they are very insecure archive even though they are getting a lot of money. There are excellent credentials, so what is different is the way you treat people. Obviously, just my reading of the article, Mohamed Elerian basically said he wanted to try to change the culture and the way people were treated, and bill gross agreed. I think that was the number one thing i observed. I cannot speak of all of the company and all of the trading desks. Is it unfair of pimco to do this if people go into it knowing that that is what theyre going to get . Theyre going to trade off that insecurity for the money. Another hedge fund in the tristate area, someone who applied their saying that they know they treat people badly, but it is a great opportunity. That is not the issue. Would you have theres Human Capital of three kinds, the skill of individuals, the teamwork if you build that, and then a Corporate Culture which is an asset. In those organizations that can go beyond the money and provide a strong positive culture for people copy of something that builds and loyalty. Otherwise you have a hedging mentality. It is not that they are worse, or an unfair company, but the fact is that pimco or any other critic can build a strong climate and culture which would be an enhancement. In the article, it mentions mohammed area elerian Mohamed Elerian was trying to institute a more traditional corporate structure, and bill gross was not as favorable to that view. Do you know what he was trying to do . That actually surprises me, because when i was working there, Bill Thompson was the ceo. I thought pimco had done an excellent job of striking the balance between being entrepreneurial and putting in professional management systems. They were not fully del valle, but they have gone a lot further than other firms i have seen in the financial space. It sounds like Mohamed Elerian was continuing the initiative that Bill Thompson had put together. My understanding was that bill gross had basically gone along with l thompson on this. I think what is different now, what you read about malcolm is the stress they were all under when the performance is not there. Then a lot of these problems emerged, would performance is high, a lot of these things can be swept under the rug, or minimized. When things start unraveling cover you start to look for what is causing that, and that is a problem. Is there something you would recommend specifically for pimco or any other company in this area . Absolutely. Areas defined five key that all Companies Need to work on, and pimco did a good job with four of them. How you treat the customers, accountability, open to innovation and change, process orientation in terms of planning and decisionmaking very they are good on all of those things. The way they are weak is how they treat people. It is a deal that people strike, that they will get a lot of money, and i will get however i am treated, but it is a corrosive process. That seems to have been the tradeoff. Not knowing the situation there, the people were traditionally paid very well, and more than the industry average. Hours . T the you bumped into people who left, who i was coaching at pimco, and he was about ready to explode. He was a very hardworking individual, he was very unhappy. With someonefirm else, and was a different person. I had heard about Mohamed Elerian leaving and going to harvard, and basically people can take the pressure intellectually up to a point, and then it stops. Not everyone is bill gross, not everyone can handle that kind of wrestler pressure for 30 years. What you have done is you have lost Human Capital. When i brought Mohamed Elerian back, i thought that would solve their problems. You have a second iconic investment manager, it was a brilliant move. And then you lost him. When i read about that, i realized that it had gone back to a situation which i had noted. It was a corrosive situation, something they had to deal with. All they had to do was some fine tuning, its not like it is a terrible place. Mohammed has been very tightlipped about where he has added where he is headed. Able to goeen wherever he wants. Whatever his situation. Thank you for joining us. To Michael Mckee. Now we know why bill gross does yoga. To relieve the pressure. Baking up pressure, bitcoin wentnge site mt. Gox offline after a bug in their system allowed users to draw out more then they had. With me to discuss what this might mean for the credibility the founder of Circle Internet financial. Jeremy, i want to read part of your statement that the foundation put out, which was to commente unable s whether or not mt. Gox business protocol how do you does this does yourself from this distance yourself from this . Hast. Gox is a company that been plagued with issues for years. Suffered major security issuesbilities, ongoing Digital Currency and revealer currency in and out of its platform. A lot of leading emerging companies that are legitimate and venture backed that are building commercial products in some ways welcome what looks like to be the ultimate undermining entity. It is difficult for those who are losing money of and it does underscore the need for Consumer Protections around these financial exchanges. This was well known that company was having problems for a long time. Where are the protections for consumers, for users, to be warned that these problems are happening . Right. In japan, they have chosen not to regulate digital currencies. Unlike the u. S. , which has taken a leading role in establishing emerging Regulatory Frameworks for Digital Currency. Those kinds of protections are getting put into place. Companies like circle, who are required to register with the Treasury Department to put into ande compliance programs, to have appropriate consumer disclosures and collateral reserves, these are all part of the emerging revelatory machine regulatory machine which we are establishing. It will establish significant exchanges and consumer facing products that serve this market. The value of bitcoin has dropped dramatically. At the end of100 last year, and now it is around 470. Able are saying this might be the moment where bitcoin is on the out. I think that is not a correct thought. Were in the very early stages of the buildout of many significant is this is an infrastructures around the. Is. This is the prenetscape era of bitcoin. These companies are not yet executing effective consumer and business product in this space. Were looking at a market place that is trading on offshore exchanges that are largely liquid, where the Trading Volumes represent the Trading Volume of a smallcap stock. Were talking about a fair stock. Y nascent in new get established york, london, and wall street probation, that will change quite a bit. How do you know that the stains you are dealing with is not going to implode like mt. Gox . This is part of what we jointly issued in a Statement Last night, when it became clear that mt. Gox appeared to be going under, with very clear commitment to preserve the Consumer Protections that we put into place. Important toat are build Consumer Confidence. The services are establishing that, and you have great track records over the past year plus. This is a bad actor that is a growinged out in marketplace. They think you will see more 2014. Ng products in so you think this is the bad actor, not the victim of bad actors . They themselves had a very poor operational history. They had a lot of challenges, and then have that those for a while. There seems to be some agree of malfeasance here. We will know more over time to some degree. It does appear from leaked documents that a vast amount of was held in their platform was stolen over several years. No assistance was offered at all to mt. Gox . I have not seen or heard of any such assistance . Thank you so much. Up next, were going to hear from the cofounder of the Carlyle Group. ,ure watching in the loop live on bbg television and streaming on your phone, tablet, and at bloomberg. Com. Heres a look at the top tech stories on our radar. Ceo announced new plans for the messaging services. Even considering spinning off. No one has secure messaging infrastructure, we are the only one who has it. I think it is important that we showcase and use it as a differentiator into the thousands and thousands of enterprise customers. He also says he first needs to build up the company base again and boost blackberry innovation before he would consider a spinoff. The Worlds Largest private equity leader is meeting in berlin this week. Cristina alesci is at the conference, where earlier she sat down with the founder and director at the Carlyle Group. What did david have to say to you . David, unlike some of the other private equity leaders that i have talked to, has been quite bullish on europe. To groweurope is going at a much slower rate than the u. S. And china, but he has the opportunities. These to be here before the great recession, some of them have pulled back, and theyre not as large or well as they were before. Prices are cheaper, there are less competition, and growth is finally coming back. Europe will be positive this year, not negative. We have found europe to be more attractive than other parts of the world than last year. Just to put this in context, r lyle is raising the Carlyle Group is raising a fund dedicated to investment deals in europe. We will have much more from my conversation with david for you throughout the day. Thank you so much. ,ylan had, stocks and bonds ukraine rallied more yesterday than the last two years. Stay in the loop. In todays global outlook, ukraine is seeking up to 35 billion as default concerns search. Monetaryon their issues, Michael Mckee is back with us. An economicrted as issue. Denuded a loan, and they still need that love. They needed a loan, and they still need it. This is against the dollar, but it is the same story against the euro and other currencies. It makes your external debts more expensive. They own a lot. Here is a timeline of what they owed just this year alone. They owe about 10 billion according to areas estimates. They have to come up with that cash, that is the baseline scenario for what they need. They say they need as much as 35 billion over the next two years to make their payments, and to meet their government payments because tax revenue is dropping to very little, and the economy has slowed down. They do not have a lot of cash. The question becomes who will be giving them that money. The best case is that the imf does it. Theyre going to negotiate, and that could take some time. They have to make these payments on these calendar schedules. Some people are suggesting that germany and poland and might maybe the u. S. Might offer some bridge loans. Theres the patriotic issue, and the keeping them away from russia issue. Russiard possibility is renewing offer of a loan on some terms. Would be noreaction because the russians are mad that they have tilted to the other side, but a report this week said that russian banks are and could be in serious jeopardy. There is another question raised about whether they would be selling cheap gas to keep the economy going. That is one of the terms that the imf might impose. They have a gas a subsidy, people pay much less than the price. That is probably one of the things that they would force them to do, and that subsidy. They would want the currency to depreciate further, make their exports more competitive. Then cut spending, and corruption, and it is difficult to do in a country very quickly. Just quickly, this compares to greece . It compares to greece in terms of the outlook, but it is not as much money. It is less concentrated in the west, but there are also the National Security issues that we have been talking about for some time. Thank you so much. , live on bbgs back television and streaming on your phone, tablet, and at bloomberg. Com. On the market, next. It is 56 minutes past the hour, which means a Bloomberg Television is on the markets. We are about 30 minutes into the trading day, lets get you caught up on the markets brady physiology major benchmark indexes moving in the but lowering here. The s p down by. 3 . This is after they hit and all high and all new intraday high yesterday. Homeid get the caseshiller price index out, showing a growth rate of 13. 4 . Investors are waiting some Consumer Confidence numbers out at 10 00 a. M. It is time now for futures and focus of a gold is trading near a 16 week high, as markets are in ukraineurmoil with slower bullion demand out of asia. Larry, gold has seen some solid support this year so far, what he big is going to be the key driver for gold prices in the coming months . Are going the drivers to be the wholesale liquidation ending. That is what we are seeing right now. That is what has caused a runup , a string of bad data, and the effect and rates. 2. 73 . Re at that is going to cause us to digest and consolidate a little bit. We have to look at physical demand, it has been steady in china. India has been a driver and something most people are not there continues to be the speculation that they are going to repeal the 8020 import export regulation. The has called caused premiums that india to fall quite a bit. It has been dropping steadily since october. What is your yearend target . My yearend target is about 1280. I do not see it. At the end of the day, Monetary Policy is going to be the sort head. s had the normalization of policy is going to drive golds price. The bigs were going to see much bigger run ups in Agricultural Commodities later this year. Well baby is your yearend 280 is your1 yearend target, where are we right now on that supply and demand equilibrium . Supply is quite good, and inventory is stable. 13 60 area, we have a lot of people are going to want to get out. 1400 would be the next void, but there seems to be a lot of good uncovered supply at those price points. We saw that last week when we broke the 1300. Thank you so much for your thoughts on gold. On the markets again in 30 minutes. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Mountain crumbles. Exchanges top bitcoin vanished overnight. What on earth happened . What does it mean for the Virtual Currency . Bruce richards, cofounder of one of the sick one of the most successful hedge funds on the street will be what thats will be with us. Yoga, and meditation has become common practice for wall streets biggest names. You will meet the man who taught dan lo how to seek permanent