Address a section of congress tomorrow. He wants any deal to be delayed. He is speaking at the invitation of john boehner. John kerry eight cysts insists there is no problem between the Prime Minister and israel. It was all, if not it was odd if not unique that the administration was not included in this process. Alix they agree iran must not build nuclear weapons. Democrats want no part of an. I think so. I am not going to suggest it because it is not. Remember what it is causing this, the president of the united hates overreaching. Alix samsung unveils new challenges to apple. The phones are on display today. The screen extends on the sides of the phone. Both include Payment Software compatible with most card readers. Congress will hear from facebook founder, mark zuckerberg. Who will fill warm buffets shoes . Who will fill Warren Buffetts shoes . Those are your top headlines. Back to our top story. Peter cook joins us. Is John Boehners job safe . Peter his job is safe for now. In large part, no one stepping up to replace him. In the process of ousting, it is an extremely complicated process. The reality is, the fiasco on friday weekend him substantially. Weakened him. He had 25 of his fellow republicans not support him for speaker a few months back. This time he had 52 republicans of voting against his plan. The just say no caucus is growing. With that, John Boehners power is weakening as well. We have republican control. Alix what is at stake for john boehner to make sure it doesnt happen again . Peter the clock is starting to tick as we get down. Does he kicked the can with another shortterm extension or does he acknowledge reality . Does he bring full funding through the end of september . Does he bring that to the floor . Does he risk the ire of conservatives . That is likely where we are heading. Alix is in there a lot of ice there, no one can get to work . Peter that might be a good thing. A two hour delay for the federal government today. I cannot imagine that is going to be something he can count on Going Forward. Alix a little snow, a little life, get to work. Staying on the subject of politics, bruce ratner. He is with me. A known political donor. He was in the running to host the dnc before losing out this year. What do you make about this latest this function in washington . The politics going on, it is a little bit different this time. The stakes are very high. This will not affect them immediately, but you have to look at the underlying issues. Nuclear weapons and Homeland Security. What you have here is a situation where you have extremism and you have to look at the underlying issues and how you handle them. One thing we can say is the way to handle them is not the way it is being handled now. You need to take the politics out. You need to deal with the whole problem. This is all part of something much bigger. You have to look at it this way. You cannot get lost in the weeds. What is going to happen tomorrow is going to happen. You have to move on and deal with the real issues. I think that is what people are frustrated with. Politics and the fact that we are dealing with serious things. Whether it is boko her fromharam, or isis, it is all tied in together. This netanyahu visit has made it difficult for some democrats to figure out the right path. It has. It has exacerbated the situation. It is unnecessary. We should be dealing with the issues. What has to be done, politicians have to look at the big issues and not the results of small issues. Netanyahu has dominated with the real issues are. Alix i do not think the u. S. Dealing with iran is a good one. That is the serious issue. As the public, we do not have enough information to judge it. Netanyahu says i do and i do not like it. We are going to find out soon. We will get a better sense to make a judgment. Right now, we do not have the information. Alix we are going to talk about more stuff. We want to talk about politics overseas. People marching through moscow in honor of nemtsov to show support for russias opposition. Critics are betting on unfolding economic crisis. Give us a sense of what it is like on the ground. A real state of shock. Yesterday, when i attended the march, the feeling i got the feeling was of pessimism about where the country is heading and fear of the future. Alix is calling it an opposition legit . Does it have enough support to be called that . It has been squeezed by president putin since he came to power. Television has basically become prostate. They are a real minority. There are a few charismatic figures. One is a form on blogger lawyer who is currently imprisoned. He was prevented from attending a planned march on the day that we had this procession in honor of boris nemtsov. Alix there was an article written by the editors. Most frightening interpretation is the Alliance SecurityService Officers and thugs couldnt has released is beyond his control. What is that kind of sense . That is one of the fears that this is what can happen. You will find very few people who will subscribe to the theory. The only thing that makes sense is the ultranationalist forces because the way the murder was carried out was very professional and in such a location that it is clear that they had assistance from those kind of circles. That is a risk. He no longer controls them. Alix any chance that we catch you did this . That we catch who did this . I do not think we will see a change anytime soon. Alix thank you for the perspective on the ground. Still the come, the hsbc whistleblower. The man who lifted the lid on the tax scandal and the 20 billion valuation. We will discuss. Alix a look at our top stories. John kerry will hold a high level meeting. The israeli Prime Minister is in washington preparing for his major before a joint session of congress. The man who took a trove of data from hsbc has proof senior managers knew about tax evasion. He made the allegations in an interview with francine block lacqua. A deal to tell you about this morning. Cardinal health will acquire Johnson Johnson unit. Cardinal seized the deal closing towards the end of this year. Hillary clintons longawaited and is reportedly near. The wall street journal says she might make her president ial bid official estimates april. It would speed up her fundraising. A president ial announcement also expected from marco rubio. Three Los Angeles Police officer shot and killed a man during a struggle over a gun. The struggle was caught on video. The lapd says it will use the video in its investigation. Those are your top stories. Air b b just raised a new round of financing. This puts the company on par with some of the Largest Hotel chains in the United States. It is backed up against the market brands, like Marriott Hilton and his worst seven times more than that. Lets get some reaction. Bruce ratner, 20 billion . Bruce you are taking an inefficient industry and it is a terrific, amazing, remarkable thing. 20 billion is a high number. The more we can help people for less people, the better it is for everyone. Alix will it hurt the rental business . I do not think so. I do not think it affects that in any major way. Alix you added we work. Tellis about why and what you think the growth could be. Bruce a company that begins to do things more efficiently is an excellent idea. It is an idea that has been around, but he is taking it to a new level. Fewer amount of square feet are used per person. We have more vacancy. It is great for startups and allows them to share and network. It is a good thing. Alix they take over the floor of a building and a parcel it into smaller offices and they rent them out to entrepreneurs. Does this make areas that we have not thought about good developments . And when going to see something am i going to see something . Bruce they will put something in spaces that are not necessarily the most popular spaces in the city. It is connection of the user to another user. They have everything from Legal Services available to health care available, food networking, computers backandforth. It is a Membership Organization and that is the key. Alix when you look at the marketing properties, what point do you say bubble . Bruce it is doing careful growth. It has a nice market cap. It is not excessive. Air b b, i do not know yet. It is catching on pretty fast. It may not be a bubble. It is real services. It is working. Maybe bubble in terms of price but as an idea, not a bubble at all. Alix do you see new businesses in this area . Bruce it is difficult. These are not easy businesses. They are services. You have to provide services. Look at hoover. It has issues of who the drivers are. It has to provide services to their members. These are more an amazon drive. More about execution. That is what i think is significant. It is a bit different. Alix when i drive down flat push, where are the prefab apartments . Bruce there you have it. We started modular a couple of years ago. It has not worked out. We had a difficult time with our partner. We have bought the factory back and we are back in business. We started manufacturing modular pieces that are putting up the building. It should finish in about a year and a half. When you do something new youre going to have falls and trips. Alix Hillary Clinton would you donate . Bruce i would donate. I think she will do well. I think it is good for the country. Alix bruce ratner, casting his vote for Hillary Clinton. Great to see you. Coming up, new data on personal income and spending. We will bring it to you as soon as it breaks. Samsung ups the ante. We will talk about it. Hes out there. Theres a guy out there whose making a name for himself in a sport where your name and maybe a number are what define you. Somewhere in that pack is a driver that can intimidate the intimidator. A guy that can take the king 7 and make it 8. Heck. Maybe even 9. Make no mistake about it. Theyre out there. I guarantee it. Welcome to the Nascar Xfinity series. Alix Warren Buffett and the person who will succeed him. The annual letter to investors was published over the weekend. Plenty of hints for buffet waters. The right person to take his place is already on Berkshire Hathaways board. Charlie monger added to the speculation. As we head towards the opening bell i want to get to scarlet fu. She has futures and focus. Scarlet gold looking to post fourth straight day of gains. This upswing has put gold at a twomonth high. With Central Banks easing Monetary Policy is 2015 the year for the gold . Here is chris, the director of portfolio management. Welcome to on the markets. Central banks are easing Monetary Policy, but i want to start with the technicals of gold. Chris it is a series of higher lows. We saw it hit 1155 and maintain that level that it held most of last year. On this pullback, a lot of these traders see them move up as a move higher. A lot of traders speculate if we see the vicks creep above 18 we will see the 1300 level in the next few months. Scarlet you talked about the relationship with the dollar. Chris it has broken down in the last two quarters. The fact is you had oil go down and the dollar continued to get stronger. Gold still held the level that i was talking about. The fact that it continues to hold, that means that relationship is a little off. A lot of traders are speculating shortening longing the gold index and shortening the dollar index. That puts us in a great position for a full run. Scarlet the fundamentals, we talked about Central Banks. There are a lot of there is a lot of sovereign debt. Almost one third of european sovereign debt has a. Chris there is no yield in gold. I do not want to make that mistake. It becomes more attractive if you are a bond investor. Negative yields do not look as good as taking a chance on gold. Especially since it maintains key levels. The 1500, 1600 level we have seen is going to come back to the table. Scarlet lets go to other factors such as india. India is making changes for reduction of tax on gold. What effect will that have . Chris lower the tax consumption will go up. China is making some moves to allow consumption to grow. India and china, being big gold buyers the appetite will come back to the market,. Scarlet can you quantify what that will mean for volume . Chris an increase of up to 25 . With that increase in consumption, you will see such an appetite hit the futures that 1300 level by next year is going to be a forgot number. Scarlet that would be a breakout. Thank you. Thank you for joining us. Alix lets look at our top stories this morning. John kerry will hold a highlevel meeting with Russian Foreign minister. The secretary of state is expected to discuss ukraine in the meeting with surgery lavrov. In geneva yesterday, kerry met with irans foreign minister looking for a deal that would shutdown Irans Nuclear program. The talks with iran are the focus of Benjamin Netanyahus trip to washington. The israeli Prime Minister will address a joint session of congress tomorrow. He wants any deal to be delayed, saying it would threaten israels security. He is speaking at the invitation of House Speaker john boehner, who did not consult the white house. Kerry says there is no problem between the United States and israel. Secretary kerry i speak to the Prime Minister regularly including yesterday. We dont want to see this turn into a political football. Obviously it was odd if not unique, that we learned of it from the speaker of the house and the administration was not included in the process. Alix kerry says the interface agrees that iran must not build nuclear weapons. The edge has a screen that extends on to the size of the phone. Both phones have Payment Software that is compatible with most part readers. Later today congress will hear from facebook founder mark zuckerberg. In moscow, tens of thousands marched for a murdered political activists. Boris nemtsov was gunned down friday night near the kremlin. He is a former deputy Prime Minister who opposed president vladimir putin. He reportedly been working on report about putins involvement in the ukraine conflict. Putin said he will oversee an investigation into the killing. Iraqi Security Forces are trying to retake the Northern City of tikrit. It includes allied sunni and shiite fighters. The next few weeks will be crucial for the career of citigroup ceo michael corbat. The Federal Reserve will announce whether it will accept the capital plan after rejecting it last year. Corbat said he should be held accountable and some analysts say he may lose his job if citi fails a second time. Breaking news on personal income and spending data. Lets go right to julie hyman for the numbers. Julie we did get these numbers a couple minutes delayed because of delayed openings in washington because of weather, but now we have the numbers and it looks like spending and income coming in worse than economists had predicted. Personal income rising only. 3 . We got a little bit of a hint of this from retail sales data, which already came out and came out lower than had been anticipated. Personal spending falling. 2 twice what economists had anticipated. Also we have the pce deflator, essentially a measure of inflation, one that the Federal Reserve pays a lot of attention to. That falling by half of 1 . Prices falling. If you look at that pce core, you see a bit of an increase up. 1 . The income and spending numbers coming in worse than estimated. Also want to mention other headlines. Hewlettpackard is buying aruba networks. This is something that bloomberg had heard was in the works last week. The price on this deal, 2467. It is about 34 higher than the aruba close on february 24 before the possibility, the possible news of this deal came out. Alix want to point out that aruba builds operating systems for wired and Wireless Network infrastructure. A 3 billion deal in equity. Falling crude prices have servicers leading cash. Which rig operators are feeling the most painted and are feeling the most pain. Alix we have got less than an hour until the start of trading. Lets go to our desk where scarlet fu has the movers. Scarlet im starting with the breaking news, hewlettpackard will be buying aruba networks. 24. 67 a share, 34 premium to the left for the news trickled out that hp was interested in this company. It is worth 3 billion in the company says it will close in the second half of this fiscal year. Hp adds that the deal will act to its earnings in the full year. Aruba networks is down because the price tag, 24. 67, there was speculation that this was in the cards. Plenty of m a to talk about. Cordis is a business that makes cardiology and endovascular devices. The price tag here, 1. 49 billion in cash. Cardinal health will be funding this purchase with cash and also 1 billion of new unsecured notes. Finally, lets go back to the tech sector, because nxp semiconductors, i guess company, will be acquiring Free Scale Semiconductor a dutch coming will be acquiring freescale semiconductors. They will get just over one third of each annexed the each nxp share that they hold as well. Stocks moving on m a monday. Alix m a monday, they call it that for a reason. Crude prices coming off another week of losses ending the steepest drop off in drilling on record. All of this means huge pain for oil services companies. Bloomberg News Reporter david wesley joins me now. David what is the first country that is going to go out of business . David hard to know what the first one will be, but hercules came out last week with not the best news. They had to announce that one of the biggest customers cancel the contract for the second highest rate rig. They canceled the contract for that, and later an analyst downgraded his estimates on hercules to sell with a price target of zero. Bankruptcy is not a foregone conclusion but at the same time things are looking bleak out there for hercules. And for the rest of the rig contractors as well. A lot of them have been building rigs over the last two years. It takes three years to build a brandnew rate. Brandnew rig. Favorite chasing they were chasing the market when it was really good. You have these new expensive rigs when the demand is falling back. Alix we saw the chart of Hercules Offshore and it saw a 90 decline in the last year. The company must have been struggling before that. David the company and certainly the rest of its peers as well. This has been a problem for the rig contractors that it before the fall of oil prices in june. The production copies have been pushing back on the contractors to bring the prices down. The cost to go out and drill and offshore rig, 50 of the cost is the rig itself. 500,000 a day in deepwater has been for the rig. The customers have been saying, listen, the cost for offshore development have been getting more and more expensive and we cant make our money back for the oil we are drilling in some cases. They have push back on the prices to bring the rigs down. Alix we are already seeing a merger between halliburton and baker hughes. You see more of this consolation continuing . David yes, especially within the rig contractor industry. Maybe picking up one or two as they are coming off the ship yard line. A lot of the investors who have been building brandnew rigs and adding to this glut are people who have not even ever operated and offshore rig before. They are speculators trying to build a rig. And sell it to somebody. You have a lot more rigs there will be priced at a cheaper price but you could see consolidation as well. Alix make a rig, see what happens. Doesnt sound like a Good Business plan. Where is the loss really being felt . Is it would be shelled drillers or elsewhere in the community . Diavid certainly the shale drillers are feeling the impact, but even more so offshore is where the biggest pain is being felt for the longest. Sort of a slower moving kind of deal in offshore because you have to sanction projects way in advance and you have to sign contracts and these last four really long time. You are still waiting for some of the more expensive contracts to end and the customers are ordering a cheaper contract. That delays the recovery for the offshore rig dies. That rig guys. Shale guys can turn on a dime and offshore drop rig and turn things off a lot quicker. Alix lets talk about the leverage here. Hercules, Shallow Water player. How leverage are these companies . David yeah, that will be the question Going Forward for hercules, just to pay the interest over the next 12 months, probably. Cash crunch there. Some of these are looking for ways to just whether it over the next 12 months, probably. Different possibilities exist. You could sell some rigs although you will not get a lot for them. You could put out a lot of equity. Right now hercules can tap into its revolver. There are chances in the shortterm. Alix a chance to reevaluate what they are worth. I love talking oil nerdiness monday 30. David wethe in houston, thanks a lot. Will she run, wont she run . And what new tech will we be buying this christmas . We will have more from the mobile world conference. Here is a look at our top stories this morning. Hillary clintons longawaited announcement is reportedly near. She might make her bid as soon as april. It would ease uncertainties in the Democratic Party and allow fundraising. An announcement is expected soon from senator marco rubio. According to reports that aired last night on 60 minutes, the flooring allegedly comes from mills in china. The investigation used undercover reporters and hitting chemistry sure that managers of three factories admitted to using false labeling. A man who took a trove of data from hsbc says yes proof that senior met he has proof that senior managers knew of tax evasion. He met with Francine Lacqua and declined to identify Bank Executives, saying only that is files provide logical proof falc iani was a target of new of the tax evasion. The wall street journal says Rebekah Brooks may end up overseeing Digital Initiatives at Rupert Murdochs company. She formerly oversaw his british newspapers and quit in 2011 over the hacking scandal that prompted the company to shut down one paper, news of the world. It is a question that comes up every time this year, who will succeed Warren Buffett . In his annual letter to investors he says that Berkshire Hathaway has the right person for the job, just wouldnt say who. Vice president charlie monger added to this peculation, saying that 2 senior managers are executives who are in some mice better than buffett. In barcelona some of the biggest tech players are placing bets on the future during the mobile world congress. Just, services, and alliances, and leading the charge is samsung. It has a mobile payment system. Joining us to catch up on all the product announcements, john butler of bloomberg intelligence. Before we had to barcelona, i want to touch on the hewlettpackard news, buying aruba. John hewlettpackard has a fairly big networking business. They really do quite well there. They have a large switching business. But theyve never been in that wireless lan business the Wireless Local Area Network that we used to connect our computer wirelessly within the office. Aruba is a big player there. It is a pretty good fit for them. Alix you like it even though they are going to split off into two businesses at the end of the day . John it is a good fit strategically for them. Alix now lets head to barcelona. John i like it. Alix is it enough to help apple in the highend market . John i think it is a good answer. The knock on samsung for a long time was they use too much plastic in the casing. The s5 and s4, which i have, have not a cheaper feel but it did not feel like solid, highend ramie and phone that you get with an iphone, for example. I think the s6 is a perfect answer to that. It has a glass front and glass back. What i like about it is that it has a rap screen. Alix why do i care about that . John you do. You can put tickertape on the side, icons on the side. It is more than a gimmick. Alix they are replacing the qualcomm chip with their own ship. Talk about the potential for securing the entire line and also taking customers. John in terms of the chip business, really what it means for them is vertical integration. Samsung their real wheelhouse in my opinion, is the chip business. They are really good there and they are leveraging that expertise now to integrate those chips more and more into their phones. It makes all the sense in the world. I think the s6 is going to do quite well. They will benefit from those volumes. Alix what caught my mind is htc, still around, and getting into virtual reality. I mean, come on, does anyone care . John ive tried it, actually. I was at the Consumer Electronics show early in the quarter. It is available in best buy and like any technology, it is going to take time to catch. It is interesting. Alix they also unveiled a smart wristband. Was the product of surprise . John no, it wasnt a surprise. The one that was a suppressed me was this greatlooking watch. Alix arent they the low end . John i wouldnt call the watch lowend but 2015 is going to be the year of the watch. Have to watch. Alix h a ha, a pun at 9 00. I like it. Is the ceo of citigroup about to be shown the door . We will break it down, next. Alix coming up the hsbc whistleblower speaks to bloomberg. He says that management was aware of lax controls of the swiss bank. The new ceo of mcdonalds takes up residence at the golden arches today. Kenny turned the biggest restaurant chain around . Alix welcome back to in the loop. I am alix steel come in for betty liu. Stocks will be little changed at the open. Personal spending fell more than estimated in january. John kerry is holding a highlevel meeting in geneva with russias foreign minister. The secretary of state is expected to discuss ukraine and the murder of russian dissident with surgery lavrov. Sergei lavrov. In geneva kerry met once again with the Iranian Foreign minister looking for a deal that would shut down the nuclear program. The talks with iran are the focus of Benjamin Netanyahus trip to washington. The israeli Prime Minister will address a joint session of congress tomorrow. He is speaking at the initiation of House Speaker john boehner, who did not consult with the white house. Still, kerry insists there is no problem between the administration and israel. Sec. Kerry i talked to the Prime Minister regularly including yesterday. We dont want to see this turned into some great political football. Obviously, it was odd, if not unique, that we learned of it from the speaker of the house and the administration was not included in the process. Alix kerry says the u. S. And israel agree that iran must not build nuclear weapons. Republicans want to link the department of Homeland Security ajit to a clause that would stop president obamas immigration reform. Democrats want no part of it shock ofer. Rep. Boehner i think so. Im not going to suggest it is easy, because it is not good but remember what is causing this. It is the president of the United States overreaching. Alix Homeland Security could be forced into a partial shutdown at weeks and if a deal is not reached. Hillary clintons longawaited announcement is reportedly near. The wall street journal as she could make her bid official as soon as april. It would ease uncertainty in the Democratic Party and beef up fundraising. Lets count you down to the open with the top tech headlines hitting our radar before the bell. Julie hyman is with me. Good to see you. Samsung is unveiling its new smartphone at the mobile world conference in barcelona. The phones have three sided screens and Payment Software and a fingerprint reader. Samsung is trying to reverse market declines and profit losses to apple. Can it solve the problem . I love this battle between samsung and apple. It is so good. And it is great for innovation. Alix but the deal with samsung is that they have plastic phones, not the same caliber. Julie it would be nice for them if they were successfully offering a range of phones. You have apple on the highend more luxury phone. Other things on the lower end. You dont have something that really bridges the gap, do you that does that six is fully on both ends. Alix i was looking at the revenue for iphone and ipad products. There is a huge gap there. I will respect the ding. Apple is prime for the release of its smart watch. Companies are racing to complete their own devices to compete with apple. Apple is holding an event in march for the watch and plans to ship the device in april. I think this is the secret apples integration of all the products that make it so great. All the stuff just works great together. Alix you buying one . It is the first time i will be out in front. Normally i wait a little bit but this watch has a ton of utility. Julie i will be waiting. Im addicted to my devices. I dont need something strapped on me all the time. It seems also that in this case the fight is over something that is relatively small. Even if you are going to be a first adopter, you are talking about a 39 device that is a supplement for some than you already have. At this point it is so early alix when apple julie in the smart watch process. Alix apple tends to get into these products once they feel it is already established. Is that the case here, that they feel there is enough stronghold, or are they jumping the boat a little bit . Michael corbat, we will know in two weeks if he starts looking for a new job it the Federal Reserve we will hear if the Federal Reserve has approved the capital plan after rejecting it last year. Corbat said he should be held accountable and investors say he might lose his job if the firm fails a second time. Julie but they also said he probably wont. He has put himself out there bo nobody wants them to fail. Julie the fed seems like it doesnt want the bank itself to fail this particular test, either. It seems like he is safe at this point. Bo it is remarkable what they are holding these guys to. Alix and it is not just about holding enough capital. Bo it is a full stress test, it really is. Alix 180 million to improve the program. Bo it is hard to run a bank. Alix aw, hard to run a bank. Julie especially right now it is hard to run a bank at alix . Alix and the fed doesnt really want to criticize the Business Model. The mcdonalds new chief is officially at the helm today. He is deemed an agent of change. Yes pressure that he has pressure he has pressure on him. He has a meeting with Restaurant Owners and franchise owners and suppliers. Bo talk about the wrong job. Mcdonalds is just on the wrong side of history. Everything is going against these franchises and this type of food. It is a tough, tough job. Julie there are these two schools of thought that the wall street journal talks about today. There is one school that mcdonalds should go more to partly and another that says mcdonalds should should go more chipotle and another that says mcdonalds should go more mcdonalds. Make the burgers better bo in my neighborhood there is a mcdonalds on this corner and chipotle on this corner. At lunchtime the line for chipotle is out the door and there is nobody for mcdonalds. It is all about the food. Alix and you think it is better food bo demonstrably better sourced food. Alix will you source your food better bo this is where peoples tastes are going. They want to know where their food comes from and all of these things. Alix number six investors are watching closely for signs of Berkshire Hathaways next successor over the weekend. In Warren Buffetts annual letter he says they have the right person for the job without naming names. Charles munger did highlight two berkshire managers as world leading executives. Why not just announce . Bo this is biblical like jain and abel. Berkshire hathaway is like its own religion. Julie buffett has got a shtick. He is folksy its all this for breakfast it is all part of the shtick. This is part of that michelle g. That mythology. Bo showmanship. Alix he says his son would be a safety belt so if someone doesnt like the ceo they can go to him and say hey, can we talk about this . What is that say about his confidence level . Bo stirring the pot. Alix really . Bo does a great job with it. Alix coming up, airbnb is on a chair. The startup is valued at 20 billion. But what is really justifying this valuation . Alix we continue to count down to the opening bell. We are halfway through. Number five airbnbs growing warchest. The company is set to raise funds that would value it at 20 billion or more to it would join the ranks of the highest ranked Companies Like spacex, uber, and snapchat. What does that mean for the guys who invest . If you are a Venture Capitalist and you invest the 20 billion valuation, white . Bo lets get one thing straight, it is not really the Venture Capitalists. T. Rowe price has one, there was a bunch of them out there. They are doing these late stage deals. They have made money before. Facebook and twitter did this stuff. And it worked. There are situations where they havent made money. There is one that nobody knows about anymore because it went out of business that raised money at these high prices and it didnt work out. What i love about this is that it allows the big swing companies, the companies that are trying to disrupt an entire industry, to stay private while they work out their Business Model before public investors are exposed to these securities. I think it is a really good thing for the economy in general so i am supportive of this new class of private fundraising. Alix how much time is theyre usually does between this type of fundraising bo it depends. Theres a trap between growth at the top line tradeoff between growth at the top line and figuring out the profit model. It is about modeling how long can we go, should we go, before we focusing on creating ebitda . Sometimes it can be a year sometimes it can be five years. It is helping the company stay private longer which is a good thing for everybody. Alix speaking of creative valuations uber is partnering with starwood, starbucks. Does this save the startups bo they do. We have a Company Called button for these partnerships. Consumers know what uber is and they know what airbnb is on the but these are young brands. By partnering with older brands it adds credibility to the newer brands. Alix do the older brands need them as well . Bo absolutely they do because for them it is not that big a deal. It is a little bit of a risk, but these brands are so strong it gives them this sort of air of innovation to be partnered with an uber or airbnb. I think it works for both sides. Alix at what point do we see these startups turn into these big, Boring Companies that face the law of large numbers . Bo facebook has done it successfully. I think twitter is doing it successfully. These things become ebitd agenerating businesses over time and they become what the Bigger Company counterparts are and they look at the quarterly numbers and they behave like everybody else. But if they have to do that too early, it sacrifices the growth and innovation of the business. Alix how much of that, though for these funds is due to hey, i love your Business Model, or hey, guys bo there is some a gathering going on at these firms that are doing the preipo financing but for the most part these things are going to work because these are the big ones. The way it is like Venture Capital is that you only need to get one that goes really big and will pay for the ones that dont. Alix does this lower the barrier to entry for the startups . Bo oh absolutely it has. We see this at the early stage because there are so many deals right now. The one who should be the 20th best engineer at a Midsize Company is going out and starting their own company. Alix why is that not a bubble . Bo it is. There is separately a bubble in the private market, but that is ok. As long as it doesnt get into the Public Markets. All of these creditors and investors are in the business of losing money, losing money to create innovation. It is when you let these stocks get into the Public Market, where they are exposed to people with e trade accounts, that is bad. And that is it good i call it the private Market Companies and Public Market sobriety i call it the private market drunkenness and Public Market sobriety. Alix some investors in uber or lyft were made it to sign nondisclosure, i will not invest in the competition even before i can see financials. Is that unusual . Bo again it is a different class of Venture Capital and we are making up new rules for these funds. These companies where they have excess demand for their stock, they can make up their own rules. They are testing the limits of what investors are willing to do. Alix fascinating. Love to have you here. Wegreat conversation. Still to come the hsbc whistleblower. Bloomberg speaks to the men who lifted the ban on the scandal and cosco announces a new partnership. Alix lets get back to bringing you the most important stories teenage noble or the bell. You need to know before the bell. Julie hyman and bo peabody joining me today. A whistleblower at hsbc says he has proved managers knew about extensive tax evasion. He made the allegations in an interview with Francine Lacqua. He declined to identify any Bank Executives or described his evidence, only that it has logical proof. I dont know if logical proof is enough to deal with senior management. Julie if he has any logical proof that isnt already out there because the older other stuff is out there. All the other stuff is out there. Hsbc like the other european banks is just digging itself out right now. Between Public Perception of the real things they have done that have damaged the banks and the broader banking systems, hsbc have to take out an ad in the paper talking about the allegations of this whistleblower addressing them and saying we are trying to move past on this. Alix ceo saying offering sincerest apologies apologizing, it was a different era. It continues to drag them back to just when we get out, they drag us back in. Like that from godfather there. The dollar is surging and the yuan fell to twoyear lows. Bloomberg news excuse me, the economist here at bloomberg had a great article on this over the weekend, saying that there is a distinction between cutting rates annex already growth versus providing a floor for decelerating growth. That is an important distinction to make when you see this easy money policy out of china. Julie what should they do in this case . Alix providing a floor versus accelerating. Julie very interesting. Bo i am no macro economist but s to get creative. That is good for innovation. We have seen capital get to creative, which is not good, but i like the overall trend. Alix that is sort of the issue as well, that when you have a weaker currency, you have more rate cuts to come and perhaps that is the risk of longterm structural reform growth within the economy versus relying on exports. Number two, cosco will join visa and citigroup after ending a Longtime Partnership with amex. Citigroup will become the exclusive issuer of the cosco card. Julie it seems to me that this was a much bigger loss for amex then again for c a gain for citi and visa. Amex is not accepted everywhere. It not only lost costco, a lost jetblue in the past several weeks. If you look at citigroups business and visas business this seems more incremental. Bo we are seeing more earlystage deals in the payments than in any other category. This fight at the top, the guys who provide the rails, is indicative of that. There are all these Small Companies building on their rails. This is an incredible fight. Alix are you a believer in the early stage bo we are huge believers in this category and payments is the largest in the category. Alix interesting. As we head to the opening bell, lets get a check on where futures have settled. Pretty much flat. Maybe the dow up a little bit maybe nasdaq up a little bit. Top story coming next. Alix welcome back to in the loop. Lets get back to the most important stories you need to know before the bell. Julie hyman is with me. Number one drumroll, merger monday. We had a big deal from hewlettpackard. The company agreed to buy aruba networks. Aruba is the maker of Wireless Network infrastructure used by hotels from universities, and shopping malls. Bo theyve got to do something. I wouldnt necessarily call this a hail mary, but with all this going on around hp, they need to make moves, and this is a pretty big move. Julie it might be a risky move. The timing of this is really curious. This is the same thought i had when the news came out that this could happen. This company is about to split and you were going to make a 2. 7 billion acquisition . It raises the question of was some rails perhaps going to buy aruba and hp got wind of it, or maybe meg whitman just felt she had to make a dramatic move. Bo i think that is what it is. She needs to make a statement. Such a classic move. I think she may do a bunch of these and confuse the market a little bit. Alix we need more confusing bo aol has been doing at the past few years, just buy a lot of stuff and the accountants get confused and you have a 3 billion market cap. Alix all righty. Getting ready to kick off another trading week. I want to bring in a fund manager at rbc global asset management, who oversees 1. 7 billion and is heavily focused on emerging markets. Welcome. Thank you. Alix lets start with china. Did you expect the latest rate cut . We were expecting some cuts for the past few months. China has been slowing down dramatically. Only year ago we had 10 growth then 9. 5. There has been a lot of questioning around that. We are actually quite positive on the slowdown of growth. We think we should not be afraid of it. It is rebalancing of the economy. China was growing fast but it was mainly on cheap exports, and more recently on this huge increase in credit. That was not sustainable. China wants more consumption and a higher value export. In order to do that you can have a phase where growth is going to be a little bit slower. What they are going to do is they are going to manage the slowdown. Not too fast. We are probably going to see a few more during the years. Inflation is getting much lower right now. There is quite a lot of space. Are there areas in china that you think are going to do better in this great environment . It is the big driver for china. In general the environment in china has been changing. That is a big difference compared to a few years ago. I know people have been worried sometimes. 80 of the stock market in china is made up of enterprises. The market hasnt been doing much if you consider the growth of the economy. It is also a big thing. They have been fairly successful. In particular there are enterprises that havent been in favor in the past. The Companies May become more efficient. We made our First Investment in china recently with the square of china. The Payment Company doing 1 billion per quarter in transaction volume. It is hard to parse through all the regulatory issues with getting capital in and out. When you are looking at these kind of investments, china does a halo does have a longerterm Holding Period . We are unsure. We certainly go in thinking it is going to be 57 in the 10 year hold. There are some companies out there. I think our team did for trips. You have to be the extreme the careful. As we see more rate cuts, the yuan continues to weekend. Does that come at the expense of structural reform . The government is very conscious of the need to reform the country otherwise. The country. Otherwise the country. Otherwise they cannot continue to support growth. I think the reforms ought to be made and we are going to continue to see that on a daily basis. If you want to be sure that your growth and sustainable you have to do it. What is your take on the focus of real estate . Im sure the story that everybody has seen with condo buildings what is i think there are some pockets of places. There have been few big projects that have been a complete disaster, especially the one in mongolia. I would say that a small part of the recent market it also has been speculation. Really trying to be sure that the speculation is under control. For they dont want is lending the property market. We appreciate you joining us today. Thanks to julie hyman. A pleasure to have you for half an hour. We just got some breaking news on lumber liquidators. It is delayed. Warren buffett promised wall street and epic notes this year. We are just a few minutes into the session. Stay in the loop. Lets take a look at the early movers this morning. I am starting with number liquidators. It is expected to be a big loser after tumbling to just under 40 per share in the premarket. Specifically that it doesnt meet California Health and safety standards. The stock had lost 20 last week going to 52 after an upcoming story would put the company in an unfavorable light. David strasser called this a bad accusation. He says it already is reflected in todays opening share price of 40. It hasnt begun yet. This is a 3d printer maker. This tends to be a big mover after earnings. It dropped 11 on the day. It rose 15 in august. This could be a big volatile day. Thank you scarlet fu. This was it a message to shareholders of Berkshire Hathaway. Often told shareholders they should only look for such a capital deployment if they are prepared to hold shares for the longterm. Berkshires earnings and Capital Resources will retail level that will not allow management to reinvest all of the companys earnings. Tom russo is a partner at gardner. At 12 of your fund, what did you make of this dividend chat . I was extraordinarily impressed. I heard a sense from berkshire of difficulty putting to work 50 plus billion dollars. One way to get around that is to obviously have a relief through dividends or share buyback. So long as they can find great opportunities to reinvest, the mountain of cash generated each year, plus the balance sheet, we are in a great position. Does not speak to the issue that berkshire is too big . That is the topic of the discussion at the moment. I dont think so. They have the ability to play n so many different ways. Lauren no longer laments warren no longer laments the burden. What would happen of carl icahn bought shares in berkshire and went to the board and said we have to talk . The great thing about berkshires they have a blocking pill. Warrant controls 35 of the stock and they can lycee go away. They can simply say go away. Within berkshire, the businesses that gets them off argue have higher value because lauren because warren provides protection. Why wont fit name someone . Why wont buffett name someone . He has put in tee new cios over the last five years. If capital deployment is the number one job at berkshire, they are great capital to lawyers. We have great managers that are young. They want the next ceo to lead for a certain amount of time. They are quite young but deeply talented. My dream is those people that we are considering will retire well before Warren Buffett does. What do you feel comfortable with taking his leadership . There are so many parts of his jobs by other people. I think 6 billion last year even. Partnerships with groups like 3g. Partnerships deploy a lot of capital extraordinarily well. Warren buffett said if you dont like the ceo you can go to howard buffett. Originally warned us guide howards role as a keeper culture. At some point the board is going to keep all this right. The have a lot of options. There are many options and they have time. They have a great team on deck to get it right. Doesnt that undermine any confidence Warren Buffett would expect to have as a ceo . What is interesting about the discussion at the moment is that it doesnt presume we have to leave it there. That was valuable insight into Warren Buffett. Tom russo of Gardner Russo and gardner. Scarlett. We have a fourmonth high for u. S. Market pmi. But this is not the isf for manufacturing, which so many are accustomed to. It is a final read of the february manufacturing gauge. It increased from a preliminary read a 54 point three. Right now we are looking at a fourmonth high for the month of february, 55. 1 is the final read. Certainly we are still doing well in that capacity. If i look at the story right now, a floor of activity toward the end of the month hopes production spiking a little higher. In the loop, we will be right back. Then things arent looking so good for the auction house, profits falling 18. 5 in the fourth quarter. On top of it, disappointing earnings and facing pressure from activist investors yet again. With me is Market Makers anchor stephanie ruhle. Walk me through the drama here. If not bill ackman, dan loeb. He got his which, he got three board seats. Bill wont leave until they find a replacement. Mark caught up capital was knocking at their door, i would say in a more friendly activist position, asking the cfo to step down. Do activist investors really work . Dan just got in the building. Rupert was asked to step down not long ago. Its going to take some time. If you ever read downloads letters, he wants this company to fundamentally change the way he does business. It is going to take some time. Isnt it unusual mark otto has been there before loeb was. It seems they may not be working together but they are on the same page. If you look at the way these Companies Run many people say they needed to change the way they fundamentally to business. Is a ceo really going to be able to make that kind of difference . We are not going to see it happen in six months or nine months or a year. Dan is looking to fundamentally change the way they do their business. They have a great digital platform as well. Something that has not been able to capture. They are living in the dark ages and they need to get into the now. It is not going to change over six month period. Stephanie ruhle, anchor Market Makers. Coming of the whistleblower speaks to bloomberg. He was aware of lack of control with the bank. The man who lifted the lid on hsbcs management was aware francine how did this all begin and what is he saying now . This began in 2007 when they stole a lot of aida from hsbc. Of course this has been good been an ongoing investigation. Now i have a 50 minute conversation with him on friday. We talk about hsbc. We also talked about the swiss authorities and really his daytoday life. The top management is aware and was aware of the problem that was phased by private bank. I was really surprised the top management and even try to get inside. He declined to identify any Bank Executives ended and declined to describe to me his evidence. He also doesnt have any signed documents by the management. There could be some software that links back to management or certainly the way the accounts were set up. What has been their response to this, considering they have been trying so hard to get the bank back on track . Them are they declined to comment on what he told me. They said please refer to the earlier statement on the ici g report. In a fullpage advertisement ellis taking three weeks ago, the ceo offered his sincerest apologies for the Swiss Private Bank and wrote that the unit had been completely overhauled. When and what kind of data will you end up seeing next . We know he has more data and has more information. He did suggest there is plenty of information that is likely to come out of hsbc. He didnt want to focus on that. What he seems to suggest is he wanted to be part of some kind of dialogue to improve accountability and transparency. He seems to suggest that if he didnt see that dialogue happening, he would release this information. There are accusations of corporate espionage to him as well. Are they getting out in front of that . They said switzerlands that it wasnt fraud, it was theft. He may go back to switzerland and the allegations. Is his case forward. Thank you so much. Randy loeffler joining us from london. That does it Francine Lacqua joining us from london. That does it for in the loop. His comments closely watched as he introduces one of the strong as providers. Have a great day. This is Market Makers with Erik Schatzker and stephanie ruhle. Russia at a crossroads, the murder of an antiputin politician has many pointing their fingers right at the kremlin. Republican rebels handed House Speaker john boehner a humiliating defeat. Can he get that Homeland Security bill passed . One billion viewers but no profits, we will see what