In the First Quarter, a drop from the First Quarter. Analysts were looking at increase. That really speaks to the idea that the volatility we have seen in the Fourth Quarter is not necessarily helping revenue. Reporting its first training revenue since the financial crisis. The volatility people thought would be good has turned out to be a bad volatility. Also in the citigroup report, we have a Net Interest Margin of 2. 92 . It is a little bit better than what analysts have been looking for. An improvement over the Third Quarter as well. Wells fargo at 2. 4 , slightly better than what it had been anticipated to report. Still looking at 20 year lows. It is a continued weight on the banks. Trading right now is down about 2 . Thank you. We will check back in with you later. I wanted to give our viewers a look at the top stories. Definitely at the top of the list. The central bank has rocked the Financial Market this morning. Its minimum Exchange Rate against the euro will no longer fund an artificial ceiling. Further increased negative Interest Rates on deposits. You will have to pay them more to keep a hold of your money. The record against the euro rose 15 against the dollar. Many investors see that currency as an ultimate safe haven as do many rushes looking to get out of the ruble. Meanwhile, reports showed inflation is slowing. A lot of movement in currencies and we will definitely focus on that throughout the hour. The former head of the European Central bank has advice for its successor, mario draghi. It is time for client native easing. Nextgeneration is a purchases for securities is clearly what is needed at the present moment. Whether or not it would suffice to get inflation which would be satisfactory, is another story. Policy makers are expected to adopt some sort of bond buying a gram when they meet next week. It has been a roller coaster ride for black very investors as well over the past 24 hours. Shares today fell as much as 17 in early trading after black area in and samsung denied a report that samsung wasnt tossed to by the canadian smartphone maker. The report sent shares soaring by as much as 40 yesterday. Back to the big story yesterday bank earnings. Citigroup fourth order results out moments ago, coming on the heels of bank of america. For more perspective, i want to bring in Bloomberg Intelligence senior financial analyst allison williams. Also with us is the managing director and analyst who has a market perform rating on the shares. Let me start with you. What you think of what we saw this morning . The results were not surprising after j. P. Morgan reported last quarter. Ankles america came in with a 2 drop. We are expecting the trend to continue through the reporting see season. I am not surprised. Fortunate lee, asset quality is improving across the Interest Rates. I think that is a bit of a tailwind. The Company Still posts actual losses. A very benign environment. I do not think that could last forever so i am waiting for that trend to turn. Lets talk about the problem with trading revenues. What is it . Shouldnt volatility be good for trading outfits like bank of america and j. P. Morgan . Some volatility is good. Some can be back. High volatility is good, but spikes can actually stop the activity and can also cause potential profit hits for the bank. Some analysts say maybe they got caught in a bad trade year. Is that possible . If you look at the overall results, they are not overly surprising. I think j. P. Morgan was right in line. They have all said they were looking at roughly 45 declines in early december. Bank of america was a little worse. They had a big recovery a year ago. Cities numbers, which i have not gone through yet, also coming in. I think equity numbers are really the big surprise there. They have had past issues with different hedges. Over half of their revenue comes overseas. With the strong dollar, that has got to have an impact on the translation of the revenue into the reported earnings. Right. Absolutely. I want to get back to the releasing of the reserves. Brian moynihan said earlier he thinks they have the majority of the lawsuit issues behind them. Should they be holding more reserves for bad loans Going Forward or do you think he is not right . I think he is right. I am not spec expecting any measurable things Going Forward. As far as regular, the reserves are still covering actual losses. I am not worried right now, but i know it will tailwind across the industry for the last several years and that cannot go on forever. At some point, i inc. Losses are still going down and the company will have to build reserves Going Forward after that. Its sort of plays into my market reform recommendations. Thank you so much. We really appreciate your time. It is a huge week. Definitely the top story for us this morning if you put aside what is going on in switzerland. Lets go right back to the huge move from the Swiss National bank this morning. They said they would scrap the policy that would limit how much the euro can fall against the swiss franc. Unexpected any cost gyrations in the Financial Markets. Stay up here in london with all the action. Jonathan, why do you think there would they were driven to this. Some talk about the ecbs finally getting to quantitative easing. Maybe they were worrying that would push put more pressure . Yes, that is one of the reasons why. Think of this as a dam and water is building up behind it in the last three years. You get rid of that, the floodgate opens and the money floods into the swiss franc. Two major points as to why the Swiss National bank, one is the ecb. It looks like the fed would introduce Monetary Policy next week of activities in which further weakened euro, puts more pressure on them to be able to defend that cap. The other reason is russia the safe haven flow that has made it even more difficult for the Swiss National bank to defend that here that was one of the reasons they took the negative deposit rate, even more negative this morning. Clearly, you settle with this and you hope that stems some of the flow. This morning, that is not happening. The swiss franc is surgeon swiss stocks taking an absolute beating. The surge to me says they could charge even more for holding your safe haven money. Why only 0. 7 . It could have ramifications for the Banking Sector as well. They will have to see if this shakes out and see if it is enough. The one thing i would say is it illustrates something we put our faith in. As to what they can do. This morning this is a real sign that is not the case. In the last month, the Swiss National bank said they would defend that. The president of the Swiss National bank this morning contradict that this morning. It is quite weird. They do not make sense. They just abandoned. Central bankers, they cannot solve everything. In this say in this case, they certainly capitulated. Aside from watches and pocket knives do they really export that much . Yes. There are big exports there. You see this morning, the ceo coming down and saying this is certainly not one they wanted. They do not want it and the element of surprise, nobody was prepared for this. He spent three years saying you would defend this and then you let it know. The other thing i will say, a lot of viewers heading this week, that trip got a whole lot more expensive. Two out of three you mentioned worldwatch makers. Look at the list, matt miller. I will tweet them out for you. I realized. Thank you very much. We will stay all over this story this morning. Meanwhile, back in the u. S. Republicans are holding a joint retreat in hershey pennsylvania, to lay out their strategy for next week. Peter cook is in hershey with more. Real business here on the agenda, as well as a few laughs at the joint retreat in hershey, pennsylvania. Mainly laughs so far. Not entirely because they did have jay leno here. The house and senate, the first time theyve met together for one of the streets since 2004. They got some laughs, serious work to get done, and they will also hear from the british prime minister, tony blair. To try to inspire the republicans and give them ideas for what they will do in the legislative session. The author will be here. Heart of the pana last night of columnists talking about the legislative agenda. Part of what will happen is they will try to bridge some of their own differences between more conservative members of the party and the leadership as to what they will really accomplish. They will set those priorities and talk about arcane things like reconciliation, the budget process, that could allow them to move things with only 51 votes in the senate. They will also set the expectations as to what could get done in 2015 to not only undo a president obama signed to do but also who else are they hearing from . Jay leno, who else . Hopefully someone who at least challenges them a little bit . I would not expect too much of that. Most of them are fellow conservatives. You have got a host of people coming to talk on specific topics. For example, outsiders coming to talk to them about what is going on in the Digital World distortions, how to reach to millenial. Saddest of the discussed in you have what it should be learning on ethics right now. If divisive policies for about what they could get done and how things will be different in the senate and the house of representatives. Honestly, even though they work up on capitol hill a lot of folks in the house do not understand how it works in the capital and vice versa. Place we will check back in with peter in a few moments from now. He just sat down with senator john hoeven, and office of senate please dont build fairly low talking more about that from north dakota. Coming up caesars betting on bankruptcy. Its largest operating unit has filed chapter 11. We will explain why. Radioshack may not be too far behind. The reports the struggling chain may seek bankruptcy protection as early as next month. Stay with us. The chips are down at the nations number one casino chain. It filed for bankruptcy protection, sparking a showdown with a group of creditors including david, who filed his own case earlier this week. Bloomberg intelligence bankruptcy with addition analyst. Thank you for joining us. This is a story of leon black versus david kepler. They have got one group of shareholders who basically bought the company out before the financial crisis. They have just gotten been down ever since that purchase. Refinance stuff left and right. Classes always hard to buy a Consumer Discretionary asked that. It is something from which they never recovered. To your point, i think they have had three major operating entities. Resort properties and then you have Caesars Entertainment operating company where david is. They have a lot of that debt number one and they sold a lot of assets to the properties and resort properties which left them with cash flows able to report less than half. You are in a situation where they have david and his group saying, lets try to get these back to give them a better chance of recovery. How typical is this . As i was reading these stories i thought, this happens a lot. You have different groups involved in corporations that filed for bankruptcy. Yes. This scenario happens a lot we have a company that has a number of transactions before they send this ailing faction from chris from the credit agency. Bankruptcy judges have been around and they know what is going on. Can they figure it out and play the adult in the room . Yes, certainly, the judges definitely looked at these issues that come up and want to dive in. That is exactly what the creditors want the judge to do. They want the judge to report an examiner who took all the good assets out of the operating company and left that wants to file for bankruptcy. Surely theyre just doing what they can to save their money, right . That is what private equity firms are supposed to do. The question is whether they will be successful. There are questions in terms of the nature of the transfers, when and how they happened. If you end up in a situation where they are negotiated and derailed, it starts to get very messy and you not only have the caesars enter it entertaining operating company play, but uggla the assets at risk. There are creditors there as well. As someone who loses money every time he lost in imris a casino i have got breaking news here on target. The retailer will seek canadian operations. We will give you more at the top of the next block. We will take a quick break and when we come back, we will have more on the surprise move to switzerland. Really seeing a spike. Take a look at equity futures and the dow futures turning negative. We have breaking news on target here they are seizing their canadian operations. That is right here theyre getting into their operations. Target has really struggled with its expansion into canada. The ceo left as well. In terms of the actual cost theyre looking at 600 million in expenses related to the shutdown of the canadian operation, mainly a factor next year or later. We expect the results for the earnings coming out later this month. In terms of its Fourth Quarter adjusted earnings per share, it also updated its outlook here. The company said that may not compare with the dollar . 22. This is an interesting one. Target says it sees fourthquarter u. S. Comparable sales up 3 when it has been looking at 2 . It looks for better than expected numbers in sales in the u. S. And is looking to shut down its canadian operation. Target is up 5. 8 . Investors seem to like what they hear from target. In order to hear discounts canadians would cross the border and shop at other places instead. There are stocking issues and Product Selection issues at the targets in canada. It is sometimes hard to get stuff out there. It is snowy. Getting up there into the great white, you need ice truckers. I am kidding a little bit. At the expense of canadians. I want to give you a look at some other top company news at this hour. The big shareholder is now the mexican billionaire carlos slim. An option to buy 16 million more shares of the company. 250 million six years ago and made a pretty penny on that investment already. The worth quarter earnings fell more than 3 . The worlds is money manager blackrock. Declined because of volatile markets and the collapse of Oil Prices Still profit. Blackrock beat analyst estimates. Back to the top story were following this morning, it is obviously switzerland. Stocks in the neutral company tumbled. The Swiss National bank unexpectedly exited its Exchange Rate. Joining us on the phone is a currency strategist at swiss bank. I was joking a little bit earlier about the fact they only make watches and pocket knives. Of course they have huge exporters in drugs, for example. And the banks have an account there. What do you think this will do to the swiss economy . At this point, we take a big hit. There is important damage on the real economy because nobody was expecting such action from the national bank. It is a small company, a very international economy. We have payment schedules hedges, and they all have been done accordingly. When you do similar damage sometimes, we recover and we see huge losses this morning. It is a blacktie in switzerland. How important is this for the Banking Sector and how big is this still for the Banking Sector . We traditionally swiss banks is that the case . Question is still the case and i do not think it will do significant damage on the Banking Sector. The banks will also take a serious hit on the balance sheets, most probably because of what happened. Most importantly, it will change their plans. The negative rate will get the taking sector in switzerland. We should just put together a game when to cope with this new situation, the unexpected one. Thank you for joining us, a currency strategist joining us on that developing story. We have breaking Economic Data as well. Scarlet fu is coming back to us with the numbers. We have got three big reports, it better than expected number. Manufacturing the new york state area, a read of 9. 95. Certainly, a recovery on the negative session in december. Price index measures wholesale inflation. Year on year, we are looking at a gain of one point 1 , slightly better than what economists were looking or, a gain of one cent. Fairly tame price increases on a yearoveryear basis. Jobless claims, 316,000 jobless benefit higher. It is not a great number but i need to go into it more to see if there is a seasonal factor that leads to that increase. The one we have seen very frequently in the last weeks and months. The job market seems to be one of the bright spots in the economy. In terms of the effects are futures, not much of a change right now. We are basically not changed with futures. Not much of a move here in 10 year yield either. It is amazing we see huge moves in currencies not only because of switzerland but also our interviews in india. The futures market right now, u. S. Equity futures really little changed. Everyone is very fixated on what the fed will do. Whether he will just focus on the state of the labor market very do not forget a lot of Corporate News is coming out, target, which we told you about. And all the banks reporting earnings. People are looking to fixate on a couple of earnings movers in the equities market. I will talk to someone who almost went to the fed. Jerry siegel will talk to funny other side of the break. On why he is bullish on the markets. We will ask him about the central bank move. The Bush Administration, they wanted them to join the Federal Reserve and he will decline. He will discuss the gop agenda. Stay with us here in the loop. We have a breaking story here on target. Completely closing its canadian operations. Julie hyman covers retailers for us. Was this unexpected . Somewhat unexpected. The target can operations have been struggling for some time. Scarlett was talking about it a little earlier. A lot of its customers on the border between canada and the u. S. Were coming over from canada. They thought, if the canadians were coming here, why not bring them their . Really, it has not been successful in canadian operators have gone after targeting aggressively and pricing and it has had operating problems in canadian stores. The new ceo of target, when he came in my late last summer, he said i look at everything top and bottom and figure out what needs to be changed. This is the most dramatic move he has made yet on that front. I was emailing with an analyst who said it is not necessarily in overdue move, but it makes sense when you look at financials. Looking at the profitability prospects it will be 2021 before the thing will be profitable. He is cutting his losses and china move on. I feel about canada being constantly covered in snow, but obviously, it is not that far away. Why was it so hard to get stuff up there and get the Stores Stocks and the prices down to what they are here . Cause it was a question of not truly understanding the market. It seems to be part of the problem, the assumption that the market is not that much different there than it is here. It is not all molten and hockey pucks . Any other canadian jokes you want to go for . I am sure there are more. So not understanding the sort of Competitive Landscape as well of the Canadian Retail industry. All of these things contributed to what is going on. At the same time, we should note that in terms of the holiday season, the federal sales were up 3 , which succeeded its own expectations. On that front, it seems things are going better for target. Shares have recovered a bit since the big data breach last year as we last the oneyear anniversary of that. Thank you very much. I am sure you will continue to look into this story. The main story were following today is what is going on in switzerland. Unexpected moves by the Swiss National bank this morning. The implications they could have on the ecbs decision next week. I want to bring in jacob, the senior fellow at the institute of international economics. Their research focuses on economies and his research focuses on european economies and reform. What you think about this . It calls into question the credibility of the Swiss National bank because they said they would hold the ceiling. Yes. It is a dramatic change of policy here and i do not think there is any doubt about it. The bank, what they will say we had a position until things change, and then we have a new policy. The question is what things have changed. Clearly, something in their mind made them unwilling to continue to defend this currency. My question is, of course, what would be an additional likely capital inflows into switzerland, and my conclusion is the Swiss Central Bank must have concluded qe by the ecb next week is a given and therefore they, like private investors have to position themselves forward. That is the underlying reason. A draft their negative Interest Rate to 0. 75 . You pay them if they will hold your money. Why wouldnt they drop it further . They are up 15 against the euro and the dollar just today. It seems to indicate they could have gone a little bit further and with that. I would not rule out they should do so in the future either. How low you can go into negative territory, at which point, you hold even though it is costs associated with cash. I certainly would not rule that out as a future change of policy again by the central bank. Thank you very much jacob. We will continue to cover that story all day long. In the last 24 hours, a wild ride for black area. This could have been the major story of the day, but it was bogus. I will tell you what it was when we come back. Congressional Republicans Holding the first retreat since 2004 in hershey pennsylvania to block legislative agenda. Peter cook is standing by with one of the participants. John hoeven has been leading the push for the Keystone Pipeline. I will hand it to you. Thank you and thank you for the time. I appreciate it. There is word of a plot to bomb the capital. What you know about it . You have shown the importance. Between the house and senate republicans, there has been some sense you bridge differences among yourselves. It is part of it, finding a way to Work Together between the senate and put forward an agenda squarely focused on jobs and the middleclass. We want to pass legislation through the house and senate, get it to the president s desk and show that we want to get things done for the hardworking american people. You have been leading the push as matthew just mentioned. Is this a reality check . You have democrats as well. It is clear the president has got that veto threat and it will not happen on his watch. It is a great example. Economic growth and all the things we are talking about, it is important to middleclass americans. We can move to the house on a bipartisan basis and do the same in the senate and we ask the president to move with us join with us and tell us what you need to get something done for the country. Any conversation to trade off here, something on the environment to satisfy the white house . We are open to ideas. We have an open amendment process. Republicans and democrats will bring forward ideas. We will vote on them and we have also reached up to the white house. Lets talk about other proposals you have there. Is this the right political move to make for republicans in the wake of harris, that we just heard in the plot against the capital . Does that make sense . The same time, we have to push back and block the executive order. This is about the balance of power between the legislative branch and the executive branch. We will go to work on the bill to pass the bill and make sure Homeland Security is funded but at the same time make sure the president is not exceeding his constitutional authority. You do not think at the end of the day, we could see a partial shutdown . Less we will see Homeland Security but at the same time, homeland make sure we can do everything we can to have border security. It is a priority for americans. By the end of this retreat, do you think there will be one or two things that can get done and things the president will back as well . Infrastructure. You hit two i think we could do. We need to pass a sixyear highway bill. I think well get that done. It is used for america and jobs. You also format you also mentioned tax reform. Everyone wants to do and i think it is doable good for our economy and Economic Growth jobs and middleclass. You heard from jay leno. Who else are you looking to hear from . Prime minister tony blair at lunch. Very impressive him. He is tremendous. J leno is tremendous, just what you would expect. He had great political jokes we really enjoyed. A great job. Thank you for your time and enjoy yourself at the retreat. One of the participants in the joint senate house. Thank you very much. Peter cook speaking with senator john hoeven of north dakota at a joint retreat in hershey pennsylvania. Take a look quickly at futures. We are seeing gains now in the massive move. Wild swings in currencies continue. Stay with us. An incredibly busy morning for the markets. A turnaround in the future is an amazing moves in the currencies. Scarlet fu noticed a move in banks. We are fixated on the macro. I want to tell you about johnson and johnson. The reason is that slowing pipeline of new drugs, what would make it more positive . An aggressive allocation strategy, maybe use the cash and a slim down. Revenue in the First Quarter will miss its own estimate. They spent a lot more on expenses to generate medicare marketing than they had shares were cut in half. There might be more to it. This is a big move for the health. Lets tell you about pilgrims pride. This is a company you will recall to tyson foods. 14 13 now. About a billion and a half for shareholders through a death a special dividend. Shareholders who stuck with it. I think you can get turkeys, probably chicken. It has been a while since i have looked at the brand there it i usually go to a Chinese Grocery store. That is a storage or for a different day. I will ask you during the break. Cory johnson, a bogus report yesterday that samsung had approached blackberry. It sent the stock up 30 , i am sure causing a lot of investors to cover those. Cory johnson joins us from bloombert west. Cory, what is the deal here . Both Companies Selling Bloomberg News they are not in discussions, directly contradicting the story that cited the unnamed document. It does raise the spotlight on what is going on today. Very different than even a year ago. Maybe there is value there. As you alluded to 25 a lot of people betting against the turnaround of the company. This causes temporary pannus people look through the screen and saw this immense move in the stock. They might expected to turn back around when they opened for trading today. That said, interesting things with changes in the business. They really focus on business customers and focus on security and giving up the World Domination plans and blackberry in the last ceos continuing in spite of the consistent failure. We have seen in the marketplace they have lawn out a lot they were trying to sell. The average selling prices are probably about to rise there it gross margin Gross Margins dramatically on increase for black berry. Three cash flow positive for the first time in years. We really see how sometimes, it is the kind of time you might ask that them to start sniffing around to blackberry. Maybe that gives credence to bogus consumers. They went back to basics with the blackberry classic. It is all about the keyboard. Cory johnson, talking blackberry in waterloo. Moose hunting. A quick look at futures. Just a half hour away as the market opens. We turn positive across the board. Stay with us in the loop. Welcome back. Were 30 minutes from the opening bell. I am matt miller in for betty liu today and here is a look at top stories. Stocks will be little changed at the open. Unexpected jump in jobless claims last week. Wholesale prices fell last month by the lowest in three years. Energy costs obviously holding down inflation. A real shocker for the switzerland central bank. It did away for its minimal Exchange Rate for the central bank. Up 16 against the euro and the dollar. It was working, but now it is done. The swiss stocks got hammered as well. The benchmark swiss market index is down 10 . In the u. S. , bank of america posted fourthquarter earnings 11 lower than a year ago. The problem, a drop in revenue and fixed income trading. City, trading lumps more than slumped more than forecast. It is clear opec is not counting on higher oil faces anytime soon. It expects weaker demand for its oil this year. It also predicts a slump in price. There is little changed and yesterday, west texas intermediate rose the most in 2. 5 years but still low. Daredevils celebrated and historic climb with champagne and a shower, which they desperately needed. 3000 foot vertical wall. Using only their feet and hands. It took them 19 days here before that, there were years and years of failed attempts and a lot of climbers said this would never be done. It was awesome. A nomination for the academy reward academy rewards awards being announced. Bird man, the grand Budapest Hotel, the theory of everything and with less. The oscars will be presented february 22. The interview was not accepted . The guy who plays kim jongun, that was a gripping performance. Were 30 minutes away from the start of trading. We are counting it down to the top tech headlines. You notice, you surely did not miss from the m a team. The mexican billionaire is now the largest shareholder of all time. He more than doubled his stake in the media company, more than 17 . This guy made a ton of money on the deal. He is now even getting a big stake. A ton of money he will get him in a much higher price. We have seen a ton of the anas buying newspapers. The question, does he go on to i this . To buy this . It was clear, it was his own money, he want to lose money for a long time, a longterm bet, and he was just curious. You can also be curious if you are carlos slim. It is a new thing to do. He had already gotten like 120 million in interests and early penalty payments. Then he gets this. Were skeptical any of us want to invest in media. Number nine, the u. K. Prime minister David Cameron on the way facebook and other Internet Companies according to officials familiar with those plants. What is the deal . There were extremists talking about it . A soldier who had been killed, there was chatter about it before. These companies are still not prepared to be a part of geopolitics or they say, we believe in free speech. They have takeout policies, but they are not really equipped, as hard as they tried, to respond quickly to government and the and intricate part of crime detection. It seems like a hard thing to ask them to do. There are troves of information. How do you know what is legitimate threat and what is not . It is a huge task for these companies. Number eight, the chips are down for Caesars Entertainment. Led by leon black. They filed for bankruptcy protection in chicago in an attempt to end a bitter feud, in an attempt to get as much as it could for itself and forget the lesser predators. Those guys piled i think in delaware last week and now theyre in a loss to. It is a shell game. Press it has been fascinating for the last years to discover what a terrible business gambling is. He saw these states roll over there laws. It is not that high of a margin business. You read the onion . Every now and then. One of my favorite headlines is house has a great night. Every, going to the casino and im sure this is true of most of us, i lose money. I like this. I like it. You will go to Atlantic City and hold a candle . I will never go back to the vatican city. I went there once and it was a horrible experience. Number seven, even worse than Atlantic City the Company Preparing to file for bankruptcy. The struggling Electronics Chain had reached out to lenders who could help fund it. Nobody else seems to go there. I love radioshack. I do as well. The problem is, what they now sell is electronics and it is a terrible business to be an. When i was in the seventh grade, my brother helps me build a robot and nobody does that anymore. If youre stuck in the electronics business, it is a terrible business. This is much more than a 15 billion dollar company. That is crazy to think about. When is the last time you went to a radioshack . Start selling something else. Our radio shack served beer. Sold a Remote Control vehicle. If they made it all about the drones, they would really have something there, but no one is listening to my advice. Number six, move aside, apple. The chinese manufacturer releasing its eggs and most expensive smartphone yet here it is six feet tall. It is not really, but the chinese love gigantic smartphones because, apparently they make their faces look smaller. Have you heard this . It is actually true. I am not making it up. I spent the last 10 years getting apple wrong. It is a luxury brand. I do not know if apple needs to be terrified about this. They did not fall into a rabbit hole with cheaper and cheaper phones. They did come out with this big iphone 6 plus their request there are more and more people i have friends saying they like the system better, so there is a threat there to people who are addicts, switching. Your friends are nerds. [laughter] i am only kidding. I went over to the dark side for a while but i could not yet in to whatever they call it over there and i had to come back to the apple products. I feel like i am back home. Warm and cozy. I am fine with it. Next up, the slide in oil prices took even seasoned investors by surprise, including this guy. Warren buffett was hardly immune. We will look at how much he had at stake. All right, we continue our countdown to the opening bell. Time for a deep dive. Number five, Warren Buffett year the brutal drop in oil prices caught even the savviest investors flatfooted including, arguably, the most seasoned of all. Berkshire hathaway was grilled with exxon and Northern Railway serving north dakota oil shelves. With oil prices cut in half, it is almost like the Keystone Pipeline is open. This bloomberg reporter joins us now. Thanks for coming on the program. Even Warren Buffett was not prepared for this drop in oil . And interesting thing to be said here is that Berkshire Hathaway is a company that got so big, if you look, there are a number of ways it will be affected by lower oil prices. Some of the things he said in the intro, he has got his railroad and they benefited hugely from Oil Production in places like north dakota. It is a real question if oil stays at this level, what that will do for volumes on the railroad. You also mentioned stock pictures about two years ago. He bought about 3. 7 billion worth of exxon stock. That has obviously been pretty challenged here in this stretch. There are a number of other ways it has affected berkshire. Let me ask you about the railroad and the idea, is it just conspiracy theorists who think Warren Buffett was one big man standing in the way of Keystone Heights wine . In a word, yes. But, what is super interesting about this and i get emails from readers all the time talking about this, what i find interesting is that he said publicly a number of times that he would support the pipeline. I think with the more interesting question is lisa is behind closed doors. That may be. What i think the more interesting point here is, when that pipeline gets filled, or if it gets filled, what will that do to the rail volumes going . It is an interesting question. It certainly remains to be seen what the answer is. What is the biggest hit . Is it exxon . Or is it the biggest problem because they make so much money shipping stuff . My comes down to dollars and cents, it is probably too early to say. We certainly know the Financial Impact when the stock pictures go down. That is pretty transparent. It is a lot harder to tell what the impact will be on the railroad. We do not yet know what the volumes will be. We do not have transparency into margin that they are shipping. It is a good point. Obviously, even with the price drop, they will continue to run and what they pull out the ground, they will continue to send either rail for now. Exactly. A great point. One of the things my colleague went out in the article this week is that they had huge congestion problems on its northern line last year and that was a combination of things. A lot of oil being shipped. They just got totally gummed up. In response to that, they have been spending really heavily to his and capacity. The question now is, can they dial that back to accommodate the change in volume on their railroad or not . For now, they said publicly they do not plan to do that and they will keep going ahead with their spending plan. All right and news in seattle. Thank you very much. Coming up, the swiss franc soaring against the dollar and the euro today. Well take a look at the impact their and also asked the question why. Plus, big banks being hammered by a drop in trading revenue. Welcome back. We want to bring you continue getting you caught up. Brendan and brooke are still with me here to save me. Number four, the m a reporters. Blackberry and samsung, samsung in talks to buy the canadian carmaker. Yesterday, shares soaring 30 . Today, not so much. I wonder if they will stand behind this story. I think everyone is trying to figure out what is true here and what is going on there the price is very high. Basically, what if value back in 2008, it had more of a 50 more than a 50 share. They had what . More than 50 . Back in 2008. 2008 was a few weeks ago. I know. I think the reason we will keep working on this deal is that it makes sense. Black berry has amazing encrypted security. It needs to be inside a phone that people are buying. Caps on has said and is a deal that makes sense. The question is why do you buy the whole thing . We will see. Youre getting the meal for free. Apparently, it has documentation. The number three story, target will abandon things of dollars in losses. It is, apparently. Look at the maple leafs. Canada is not america. It is different challenges. That is right. 310 million here and we just have roaming the aisles. It was something that made sense. They really got it right and they had the cultural sweet spot. They moved north of that transition, evidently a different culture. They have people crossing the border coming to target in america. It makes that seem more luxury or more american or Something Like that. But it is Something Different you cannot find in canada. Maybe it is just not appealing. Yesterday i noticed a cafe called hockeytown and i was thinking only in canada, but i was in detroit. Number two, bank of america and citi both reporting earnings. And 11 decline in profit hurt by a drop in trading revenue. City dropped 86 are trading is not a Good Business to be and i guess. No business is a Good Business to be in. It is holding onto peoples money and business. You point out some and did not realize. Banks traditionally take deposits and then make loans. That is what they do. You take peoples money, and Community Banks are still doing this. Of 200 million in assets, that is what banks are doing. Only the larger banks open trading books are having this kind of difficulty. Theyre doing what banks do. I am a big fan of the credit union. I love it. Lets talk about the credit union. Right now. Do you use credit union . I feel patriotic. I think it is a good thing for the community. I am not joking right now. All right. It has been a pleasure spending time with you. Is there a special name for the test you guys will come back and we will take a quick break. Futures have settled ahead of the opening bell. Take a look at where they are. Green arrows there across the giant screen behind us. We are back in a few minutes with the open. Welcome back. Lets get you back to bringing you the most important stories you need to know before the opening bell. The number one story we are looking at today, obviously, big moves out of switzerland. National bank sending shockwaves out of the market after an announcement sent it sent socks stocks tumbling. Basically, the central bank trying to keep an artificial ceiling on the currency maybe because it is worried everyone else is trying to sink there is. You can see this with saying, please get it together. They put it in and they go, if you have got to do something right, you have got to do it yourself. It was clear, right . It was. I heard the story this morning. I was reminded of back in 2011 when a big mac costs 17. The problems the country has had because people historically think swiss franc is a safe haven. Especially when russian oligarchs are doing anything they can to get money out of rubles, this is a great place to go. Switzerland has had a great time to adjust. It does not seem that is the case. They finally reached a cap today. My brother went to school in switzerland and the park melissa was filled with for Aris Ferraris and lamborghinis. Is your brother safe . He is ok. Obsessed with lenin. You see the trade opening here with green arrows there. The dow adding 14 points at the open. The nasdaq futures have been opening, not gaining as much at the opening. We are joined by Jeremy Siegel here. As the market opens, stepping in to help us figure things out, let me ask, not a lot of people remember or know that the Bush Administration wanted you to join the Federal Reserve. You declined. We are seeing centralbank action at its best. What do you make of this move . I am not surprised at all by the move. The reason is because of the sinking euro. The euro has gone down to around 115 and might go down even more. Basically, swiss said, i will not time i shift to a sinking boat. So really, what theyre doing is revaluing it. I really do not think they had terrible international consequences. It is almost entirely due to the euro sinking. You would not see this swiss bank action. Was this also in anticipation of a move by mario draghi coming up . Yes. I think the market is discounting a healthy around of qe by the European Central bank. Mario draghi kind of smiling at the Exchange Rate. I was oh is puzzled how it stood up there at 135 40 at so long. Finally, we are getting that move. I think the move in the euro downward will produce a better 2015 for the european economy than many People Project right now. I think mario draghi wants to bring it down. We have heard talk and certainly, that is possible. Maybe he wants it not to go quite down that far. But that is the reason for the centralbank move in switzerland. Anticipation of mario draghi and the 20 decline we have artie seen in the euro. The swiss have always culturally held themselves to be distinct from europe. This island at the center of the European Union that has nothing to do with what is around it they are not as distinct as they were. No, clearly, theyre not hear the swiss currency has been i would say maybe the strongest in the world after japans policy has fallen back. The Swiss Central Bank thomas was Monetary Policy, it has been the lowest inflation. They have maintained their economy despite the fact that the rest of europe is going down. Theyre saying, listen theyre not really in terms of the u. S. Dollar. They are not as high as they were six months ago. They only brought themselves partly back and they probably want to bring themselves a little bit further. With the euro, i cannot tie my boat to a sinking ship. I am not surprised and i do not think this would really cause serious repercussions in the world. The sinking euro we have seen over the last six months. It looks like it will sink more under further policy by the European Central bank. I have to ask what you think the reasons were behind this beyond the centralbank policy. They have throw problems with demand. Does that affect us, and does it continue there . Yes why was it stays alive for so long, the reason was because europe despite its problems, and germany, would still run the healthy trade surplus. Currency traders did not really want to put a lot of bets on depreciating currency. When you have a trade surplus. But given how low the economy has gone given the anticipation of quantitative easing, further easing by mario draghi and the centralbank finally, currency traders have said, yes, they want to talk down the euro and i want to resist this. Despite the trade surplus, theyre moving down. The trade surplus in europe they will probably get stronger. I think the weaker currency will help grace spain, different countries. In might be one of the cheapest around. It goes down to charity, that could be one of the best things happening for the greek economy. The same is true of spain and portugal which really rely a lot on exports to some extent. This is good for europe, the economy the not sinking euro, and it will help the european economy. That will help the World Economy and the u. S. Economy. Brendan and i will bring you a bottle of olive oil back from our cruise. You are welcome to come as well. We will have to pick a different destination. Jeremy siegel, i really appreciate your time. Thank you very much. We will take a quick break but i appreciate your time as well. Will you stick with me . Whatever you need. Coming up, the swiss bank is surging thanks to a surprise move. We will continue, what does it mean for exporters . We will talk to thomas of switzerlands pharmaceutical group. Stay with us for that. Lets go back to the breaking news. We are not going to breaking news. You came to us. You have got breaking news for us . , to take another look at the currency boards. They are unwinding that. The Swiss National bank did not want to tie themselves to the sinking euro. The euro continues to sink ever lower. On a normal day, the ruby would the a pair to fixate on because of unexpected rate cuts. I know we are talking about the indian rupee on our stories but i assume the markets are firmly fixated on the swiss francs. Gainers you might not have realized, fourthquarter profit steady and uneasy. Target, which i know you talked about earlier, putting its mouth on it. There you go. Knowing people to put their money there. Target, we wanted to highlight 2 early training. Not quite as big a move as indicated in the premarket. Expenses, shutting down canadian operation. Is committed, but it is not sure. Yes, it is not a done deal yet. Also, the ad loads look like they are increasing a bit. I want to bring in hans nichols to talk more about what is going on in switzerland. He is currently in berlin, but i assume on implants to see how much a big mac will cost tomorrow. Big move. We are also joined on the phone by the association of Research Based pharmaceutical. I want to start with you, what is the feeling in berlin because it has to strike at the credibility of the centralbank. Switzerland will always be a safe haven. They defend the swiss bank at the 120 level. No indication they would do this. One of the things the Swiss National president said is it is important there is no other way to do it, it would have been painful. Matt remind me, if ill ever get a bandaid ripped off in switzerland, they will rip it off weekly and do it when theyre looking the other way. I want to bring in thomas talking about that bandaid. Thank you for joining us. What do you think about this . We joke about watches and pocket knives being the biggest exports in switzerland. That is obviously not true. Big drugmakers over there, as well as other exporters like net whats. The biggest exporter since our pharmaceuticals. We have exports of 70 billion swiss francs a year. Because we are very much interested. Having said that, of course, im traveling to brussels tomorrow. I would pay less for the future for traveling than i did for the last few months. Pharmaceutically, probably in a better position than the swiss economy to whether the impact for the reason that Global Companies tend to be geographically diverse and have investments, employment research, in the u. S. As well as in switzerland. Therefore, to some extent, the impact bounces out, but a shock it is. I assume these drugmakers, the biggest ones especially, are producing all over the world have rmb all over the world, and they try to limit themselves as much as possible from the volatility of the frank. This is not a new story . Know. Over the long term the swiss franc has always been a strong currency and it was never expected this would change. However, over the last few years, imposed and it of course but some predictability and stability to switzerland. But pharmaceuticals are less exposed than tourists. If i could jump in here yes, the industry will be inherently more expensive but talk a little bit about some of the Small Companies export driven that extends to germany and elsewhere in the eurozone, how will they be inspected . My sense is for some of them, it will be great quite dramatic. You work with low margins in a highcost country. You have to absorb the shock of shortterm, almost 20 . It is tough. It was rightly said if you change the policy, you have to do it as a surprise. There is and remains a strong consensus in switzerland and also an economic circles about the independence of the Swiss National rank about the support of the Swiss National bank. All right, the secretarygeneral, thank you so much for joining us. Hans nichols, Bloomberg International correspondent. Thank you very much. I want to give you breaking news as we head to break. Consumer comfort index improved to 45. 4 from 43. 6. Stay with us. Today marks the First Anniversary since mary barra took the helm at general motors. A recall because of faulty ignition switches. That has been linked to 42 deaths and those are just some of the companys struggles. For more, i want to bring in matt. It has been a year since mary took over. I have a very different feeling now. Absolutely. A professor at the university of texas when people raise their hands, he always says, a good president and not a great president. The only way to be a great president is for something terrible to happen on her watch your watch. It is too early to say she is a great seo, but if gm is a Strong Company in two years or three years, i think we will look at. It looks like the recall issue is largely behind them and it will cost them 3 billion in change. That is not terrible considering what happened. What other challenges do you think she faces the on that . Cut globally, it will be tough for automakers. Carl is a great choice. What they have done is they have done better by cutting costs and not by growing market share or selling more cars. That will be tough for them. I think people are too worried about catalog cadillac, actually. I think they have really good products for the first time in a while. They have a Brand Perception issue. Pickup trucks. If they want to keep a 10 margin, which is their goal, i think they will eventually have to cut back. Strong products. I agree about cadillac. Ford struck out with lincoln at the Detroit Auto Show and the u. S. Seems to have hit a weird at least a triple. Yes buick knows what it is doing. It was the original concept car maker. They came out with a large, fullsized vehicle. I do not know if they will actually build that, but it goes to show you, the rear wheeled the rear wheel drive. I think that is a huge hit and it is the model for cadillacs. They have to fight it and change ran perception, admit they have a problem with it and go forward. Classes you are her teacher what would you give her as a grade . A tentative be plus. She has done well enough, but we do not know yet. Good progress. I would have loved a b plus in college. I guess mary was a straight a student straight a student. Coming up, we will head to l. A. For a roundup of the biggest surprises and snubs, like the interview. Here is the look at the top tech stories. Shares of blackberry down as much as 17 in todays trade. That is after they were up 30 yesterday on a bogus report that samsung wants to take the Canadian Company over. So, big, bad report. Big gain yesterday and today. The higher end of the smart phone market, a Chinese Company has released its biggest and most expensive smartphones yet. It is bigger lighter, and thinner than the apple iphone 6, plus the cost them a 371. Is now the thirdlargest smartphone seller. An investor, now the biggest in the New York Times company. It exercises options to buy 16 million shares. Leading the paper 250 Million Dollars to get through the financial crisis, they got paid back 150 of its money in interests and late fees. No early fees. Catch all the latest in tech and media every week that 1 00 the eminent 6 00 a. M. Eastern time only on bloomberg west. Now turning to media ourselves, nominations for the Academy Awards came out last hour. And word man was nominated for nine oscars. It tied with the oddball comedy the brand boot test hotel. We are joined now from los angeles. I am struck. A film like word man, i would expect them to pick one of those. The grand Budapest Hotel i am a diehard wes anderson fan. It was not that great. It was no rushmore. I completely agree. I am not the worlds biggest wes anderson fan. It seems either someone in the academy love this moody or people felt the need to award a guy who has been overlooked in the past. His previous movies, he has gotten a couple of nominations for screenwriting but never got a nomination that was one of the leaders. He gets one for writer director and best picture. That is pretty great for a filmmaker in his position. Other than this, because the grand Budapest Hotel was well attended, and well talked about for a wes anderson film especially, but a lot of the others, bird man, they were smaller films. Arthouse kind of movies. Yes bird man and boyhood were the two front runners and combined, they made about 80 million in the box office. Compare that to a movie like argo, which made 201 million, or lord of the rings. It is a smaller profit here. I saw it floating around that the nominees have gross more than 4 million collectively at the box office. One thing that may change is that american sniper which just got nominated, is expanding to a lot of theaters. People think that will do well. A lot of these movies may get a boost at the box office or may be released to ride the wave of nominations and attract viewers who did not see them in the first place. Anything you think was snubbed . People are surprised soma director did not get nominated. I really like nightcrawler which did not get nomination for best picture and jake juvenile did not get nominated for best rector. Some people were surprised Jennifer Aniston did not get nominated for best actress. I did not see it so i cannot comment. Thank you so much for joining us. Staying in switzerland. Stay with bloomberg television. Live, from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. And avalanche and the swiss alps. Switzerland swiss switzerland centralbank stuns the markets. Leon black changing the rules. He could be facing billions in losses for his bad investment in caesars. Mary barra wants
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