Everyone is talking about, Janet Yellens first visit to capitol hill as head of the most powerful central bank in the world. How are the first few days on the job . Fed chair janet yellen, feeling good heading into the first testimony before congress. This is part of her job description, going to capitol hill twice a year to give her take on the economy. The pickup in Economic Activity is fueled further progress in the labor market. About one point 25 million jobs have been added to payroll since the previous Monetary Policy report. 3. 25 million have been added since august 2012. The month before the Federal Reserve began a new round of asset purchases to add momentum to the recovery. The Unemployment Rate has fallen nearly a percentage point since the last year. Beginning of the Current Asset purchase program. Nevertheless, the recovery in the labor market is far from complete. I am committed to achieving both parts of our dual mandate. Helping the economy return to full employment and returning ensuring to 2 while that it does not run persistently above or below that level. Part. T was the easy it was a written testimony. Then came the questioning. A big portion of it centered on the taper of bond purchases. Continue likely to reducing the pace of our purchases in measured steps. We have also indicated that this program is not on a preset course. If the Committee Judges there to be a change in the outlook, it would reconsider what is appropriate with respect to the program. It has been quite clear at the outset that as our recovery advanced, that we would wind down or reduce the pace of our asset purchases. As growth picks up and inflation comes back toward our objective overtime, eventually we will normalize our policy stance. The committee will meet in march. We will have a broad range of data on the economy to look at, including additional employment reports. I think it is important for us to take our time to assess just what the significance of this is. What would it take for the fed to consider increasing its asset purchases again . Instead of just slowing down. What would it take . A significant deterioration in the outlook, the job market or concerns, very serious concerns that inflation would not be moving back up over time. Emphasized that purchases are not on a preset course and we will continue to add value eight the evidence. This is not like any normal fed chairman testimony. After dr. Yellen speaks, a group of fed critics is going to testify. One of them is john taylor, a stanford economics professor and former treasury official. He has been critical of the intervention. He is known for the taylor rule which states for each one percent increase in inflation, Central Banks should raise the nominal Interest Rate i more than one percentage point. This came up during questioning. And reference to the taylor rule, you said it is what sensible Central Banks do. ,hat begs the question today using your words, are you a sensible central banker . If not, when will you become one . I believe i am a sensible central banker. These are very unusual times in which Monetary Policy, for quite a long time, has not even been able to do what a rule like the taylor rule would have prescribed. For several years, that rule would have prescribed that the federal funds rate should be in negative territory, which is impossible. Unusual times indeed. John taylors written testimony says discretionary economic and spending policies are to blame for the u. S. Recovery being as disappointing as ever. Stay tuned for the ongoing centralbank saga. Lloyd blankfein, he has some opinions about the rise in Interest Rates. The Goldman Sachs ceo is in a bloomberg exclusive coming up next. Service with a stunt. Inside dumb starbucks in todays wild card. Onhis is lunch money bloomberg television. We are also streaming live on bloomberg. Com, your tablet and smartphone. The world according to lloyd blankfein, the man running Goldman Sachs. He is watching the Global Economy as incoming fed chair janet yellen offers her own take today on capitol hill. We sat down with mr. Blankfein for an exclusive interview in hong kong. We asked him how markets will respond to a yellen said and plans to continue tapering bond purchases. What is being suggested is an adjustment will have to be taken. It is a normalization. Interest rates cant stay that low. Ultimately it is good for savers and investors in the long term. In the short term it might cause a disruption. How that bears on our business, ratesbably higher absolutely with a steeper yield curve. If growth appears you will have higher Interest Rates in the long run. That generally is good for banking businesses. It is hard to make money on spread, on Interest Rates went they are near zero. Probably better for the financial industry players to have Interest Rates higher in general and to have it be a steeper yield curve. One side effect from reduced fed activity, declines in emerging markets. A lessee makers have complained that the fed and other Central Banks are spreading turmoil by failing to account for the impact of their policies on other countries. Doesnt concern lloyd blankfein. He says it is better than what we saw in 1998. Cataclysmic event. There were a lot of things in 1990 that dont exist now. The central bank in those countries were very underwhelming. They were trying to preserve Exchange Rates that were not preserve of all in the context of valuation shift. And barriers were dissented they gave way, it was like a tsunami coming through a dike. Very aggressive and difficult. You dont have that now. There are more better reserves, more flexibility in Exchange Rates. Helps because peoples memories are back there. If you look at it in context, 1998 wasnt the end of the world. It was bad, people needed to be helped, but look at those economies. 1998 was 15 years ago and those countries have been doing very well for the last 10 or 12 years. It was an interruption but it was not that dramatic or that long. A hugea is going to play role in where emerging markets go from here. Frankly, the whole Global Economy. Just how big . The people who care understand how much they have at stake with the success of china. Aether or not china grows by next or 2 or 3 or not, whether it is 2 over 7. 5 or below, it has huge consequence given it is the second largest economy in the world. That swing of percentage is applied to the gdp is more consequential, adds more growth than the difference in u. S. Growth. Goldman sachs became the first wall street firm to start underwriting securities in china after winning a license in 2004. How is the firm going to proceed at this point . The most important thing is to scale our investment to the opportunities. We always want to lean into it. We want to be there. We are optimistic about the future but we would be making a mistake if we overfunded it, put too many people, too much investment. At that point, if we started to run big losses, it would be our p l that would start dictating our behavior and not our strategy. At some point, you cant afford to carry mistakes. What we have to do is keep an eye. We want to be there. We never want to put something in and then have to pull out. We want to keep growing our business. So there is one more issue we want to talk about on mr. Blankfein. Compensation. Eggs are cutting pay and jobs as profit declines. What is his take on wall street paychecks right now . Compensation for the industry has gone down, a lot due to pressure on people. The most part, because the firms havent been earning money and have to keep more capital. The earnings of an institution have to go to compensate labor for their services but also have to compensate the investors and give them a return on capital. You have a higher capital requirement, you have to allocate more of your earnings. In loweresulting compensation. You still have to compensate your people. It is still a market where you have to compete for talent. That is what we do. I am a shareholder at Goldman Sachs. We talked to our shareholders. We dont try to overcompensate our people. Watch our full exclusive interview with Goldman SachsCeo Lloyd Blankfein online at bloomberg. Com tv or just go to our tablet app, bloomberg tv plus. Youre going to hear from another banker, former Morgan Stanley chief. We are going to get personal with him. All those frequent flyer miles you have racked up might not be worth as much. We are going to give you the scoop in motors. You can get much closer to sky lining than this. These acrobats are throwing caution to the wind attempting to tight rope walk between two hotair balloons. Are you kidding me . That is insane. In motors today, airbus showed off its new widebodied a350 at the Singapore Air show. Half the jet is made from carbon fiber making it lighter and more fuelefficient. It costs about 250 million. Meanwhile, boeing is dealing with allegations its carbon fiber plane is not as fuelefficient as advertised. According to the times of india, air india once reimbursement for fuel bought a bath and beyond what was expected. The seniorin asked vp of sales about the complaints. You have to understand if you look at what air india has in the fleet today, they have clearly stated that [indiscernible] because of the unprecedented conditions. There is no airplane which will be as fuelefficient. I am glad air india was in the early part of the orders. Other airplanes will be delivered later this month. Continue to to improve the reliability of that airplane. Leader hes often his turn he softened his tone. Competition between airbus and boeing is obviously intense. Even the carriers struggle with which gets to purchase. We are in discussion with boeing. We have been in a waitandsee position on the 787. We think it is Great Technology and we look forward to considering that as we look at the 350 as you were talking about on the earlier segment or s. 777s or 330 there is a large offering of why bodies in the marketplace. We will be making those decisions relative to our longterm widebody strategy probably in the next year or two. Which planes to buy . Labor costs, rising fuel prices, it is not easy running an airline. As for your frequent flyer programs, fasten your seatbelts. Here is sam grobart of bloomberg businessweek. Good morning. 42. Ome aboard flight weve elect to extend a warm welcome to our frequent flyers. With this flight, you will be earning valuable miles for future travel. Except those miles arent going to be as valuable as that used to be. In february, both united and delta started to modify their frequent flyer programs. Not in any way that a customer is going to like. Those hardest hit are the ones normally cherished by the airlines, first and Business Class flyers traveling internationally. Here is one example of how they are getting hosed. You booked a first class ticket from new york to dubai before february 1 on united. It would cost you 150,000 miles. After fedora first, it costs you 100 80,000 miles after february 1, it costs you 180,000 miles. On delta, the increases arent as severe, about 10 to 20,000 miles depending on the flight. Why are the carriers doing this . A funny thing has happened in the past few years. Instead of rolling in and out of bankruptcy like they used to do, they stumbled on this new idea profit. That means improving their product. They do that by buying new airplanes and putting more video screens in the cabin. It also means squeezing their customers for every possible time in the universe. Mileageg frequent flyer is another lever the airline can pull to improve their balance sheet. There is another reason why the airlines are doing this, because they can. If you have racked up hundreds of thousands of miles with an airline, what are you going to do . Those miles arent portable. Your locked into what ever benefits the airline says those miles are worth. You will pay whatever the airline says you will pay because you are stuck with them. Enjoy your flight. Thanks, sam. Ever wonder what airlines do with all those old seats when they rejigger their planes . Bloomberg businessweeks ashlee vance found them nestled between farms on the outskirts of silicon valley. , theran across this place edge of where you might consider silicon valley. One of the Worlds Largest airplane repair centers. Never in my wildest dreams would i think there was a place that has tens of thousands of airplane seats stacked to the roof. It is one of those really neat businesses that you kind of stumble across. We are a relatively small company. We have got 12 people on payroll. Most of these guys have been here 15 years or more. They know the seats pretty good. What are the basics of this business . It is tremendously lessexpensive to refurbish an existing c. New seats today are five or six times more expensive. We modify old seats up to newer standards. Do you compete with mostly American Companies . There are probably five or six major seat refurbish people in the u. S. We do business on a worldwide scale. These seats are going to ireland. Airlines will reconfigure seats based on tell me about how that works. There is a tendency now for people to go with what we call a high density seating configuration. That is another word for packing people in. You sit there like this for an hour. You get out and hopefully you can stand up. And much what a set of three seats cost . Probably a couple thousand dollars. Six to seven figures per plane. You could easily spend a lot more than that. You have to restore the seat and it has to survive 16 gs of force. The new generation of seating is all 16 g. It is overkill but it is there for a reason. Is there anything really strange about this business . We were buying interiors from south america for a while. We noticed that the seats had been drilled in places i guess you wanted to you see things like that from time to time. It is the nature of what we do. Clays job cuts. Here is why one man says is his inevitable. Plus we look at how bill murray got involved in the Box Office HitMonuments Men. He explains later. This is lunch money on bloomberg television. We are also streaming live on bloomberg. Com, your tablet and smartphone. I am adam johnson. Today, the video is the story. England experiencing its wettest winter in 250 years. More rain forecast through friday. Waterlogged towns will likely see additional flooding. Theyre already under five feet of water. Reach 1. 6osts could billion. A new chapter in relations between china and taiwan. They agreed to set a formal highlevel talks since their split. Government officials made a breakthrough during a meeting. Shirley temple black has died. She was best known as the tyrant child actress whose movie roles lifted the spirits of americans during the great depression. She served as ambassador to two countries, was the first woman to act as the white house chief of protocol. Shirley temple black was 85. Barclays announcing 12,000 job cuts including more than 800 senior bankers. The u. K. s secondlargest bank faces a number of regulatory fines. This move will save about 2. 8 billion. Barclays also plans to boost bonuses for other senior bankers. The compensation debate is a conversation worth having says a former Morgan Stanley ceo. He joined the in the loop team for a conversation. It is a healthy debate that needs to take place. You need to look at it. At the same time, people talk about the cuts in compensation. The last time i checked, this business is still a business. It pays people extremely well. If you are a young man or woman coming out of graduate school or undergraduate school and you get a job at one of these firms where you can learn a great deal , especially if you are an analyst, the money you are being paid is very competitive and probably more competitive than a lot of the industries that people go to work for. Lets talk about ceo pay. We watch bank ceos get criticized day in and day out for their compensation. The highestpaid ceos arent in banking. You have larry ellison, almost 100 million. Elon musk, 7 00 a. M. Will you knowledge. 78 million. Worth 20 job is just million. Them stop love to see beating up on lloyd and jamie. That would make a lot of sense and i am in favor of that. The names you just put up are the hot areas of technology. People see how technology is changing their lives. They also see how the stocks have performed in these companies and the returns they are making. Too much or not too much. It is something that needs to be talked about and is being discussed. As long as shareholders reword if itmance, we can argue is 10 million to much or 1 million to much. As far as the layoffs, no big surprise there. The business has changed. We are less risk in the business. The Mortgage Business is half what it used to be. You think about the Global Economy, that gives you some insight. There is opportunity but we all over hired during the boom years. It takes time to adjust. Enough about all this banking talk. Lets get personal. Five questions, go. My first big break, i worked my last year of college as a clerk in a bank office of a local securities firm. That gave me some insight into the business. Were you going to go into finance otherwise . No. I was going to go into industry. My guilty pleasure, eating as much as i can need. I am worried about our country. I am worried about the deep freeze we are in in washington. I am worried are is no compromise. I am worried that we have extreme positions. We have a country of 300 million people. We are the leader of the world in my view. We need to cooperate, to compromise, to have meetings. Vitriol on one far side on the right and one far side of the left, that is what i worry about. Originally i was going to be in the health care industry. I was interested in health care back then. I am excited about working with people in their early 30s, how they think about solving problems, how they create business opportunities, how they start companies, how they take risk. That is what i get the biggest kick out of. You can watch our full exclusive conversation with john mack on bloomberg. Com or our Award Winning tablet app. Service with a stunt, here is how dumb starbucks came today. Lust, filmmaker ken burns is rewriting history yet again. He is going to tell us how in pop. Four we go to break, china preparing for the annual lantern festival. Lanterns illuminated the night sky. The annual lantern show is this year. In wild card, a popup shop in los angeles called dumb starbucks has become serious business. It was originally a backdrop for a show on comedy central. Now there are lines around the corner. Nathan fielder is behind the prank. Onreleased this statement youtube. Hi, i am nathan fielder, president and founder of dumb starbucks, a brandnew coffee experience in los angeles, california. By adding the word dumb, we are legally allowed to use the coveted starbucks name and logo because we have fulfilled the requirements to be considered a parody. We have a full menu including all your favorite starbucks items. A delicious selection of pastries and even some music for the ride home. Many of you probably know me as a canadian. This is no bit or joke. This is a real business i plan to get rich from. I need your support. Our Flagship Store is located at 1802 hill hearst in los angeles, california. Come in and get a free coffee on me. Just say nathan sent you. Been wondering what was going on. I guess now we know. This has been overwhelming. We didnt expect to have this much attention. There has been lines around the block. Very few Small Businesses get that from the start. Idea thishow good an was in terms of, you know, people are coming the cause they recognize the starbucks name. We are legally able to use it and operate an independent coffee shop. Since the Los Angeles Health department has shut down the shop for operating without a permit, mr. Fielder has another plan. Now this guy plans to open another location in brooklyn. Of known fors kind high profile publicity stunts. It is a welldocumented tradition there. It likeonfusion is, is a restaurant . Are they making money . There is a basket where you can put in suggested amounts of money. Donations. But they are not spending seven dollars for a latte like you do ibo are lining up because they want to get the mug that says dumb starbucks and sell them on ebay. Interesting part of this is that the marketing plan depended on using starbuckss corporate logo to get attention. It looked exactly like the adjusting one. The existing one. It is a parody. Nathan fielder says he loves starbucks. This and to what he said. He spoke to bloomberg to tell us why starbucks hasnt yet shut it down and why it probably want. A company of that size, they would have done something now. I think we can tell how smart they are because they are making the wise choice by not pursuing a case they cant win. Would you go to the dumb starbucks in brooklyn . I have my own espresso machine on my desk. The answer is no. [laughter] starbucks had this to say, we are evaluating next steps. While we appreciate the humor, they cannot use our name which is protected trademark. Dumb starbucks is not too worried. Starbucks has not contacted me personally. They have made statements ough the press that i am as a fan of starbucks, i dont want to cause, you know, a david or goliath thing going on. If they keep the pressure up, they do risk losing me as a customer. You may want to grab a copy yourself and check out lunch money this week check out Monuments Men this weekend. We are going to speak to bill merry, coming up next. Documentary film maker ken burns next. The starstudded film Monuments Men came in number two at the box office this weekend. Bill murray was part of it and he explained to charlie rose why he signed on. The story is a story that most people have never heard, a platoonof a clique, of guys going out to hunt down stolen art, who are artists rather than soldiers. Mature men, not warriors. The warriore passed stage were asked to join the effort and go on this hunt. We forget in times like this, in more, one of the casualties of war is cultural treasures. Iraq was a big one. We sort of cleaned house in iraq. We won the war in 95 minutes or something. The museums were looted and robbed. I dont know if that stuff has ever been tracked down. A lot of it has. And is something that really goes. Things disapar pear and this systematic looting of the western european museums by hitler took a lot of stuff that we are still finding. What did they say that was worth . There is the story, a great story. Ased on a book by robert edsel did you read the book before you accepted the role . No, george told me the story. F the movie a year before over past and salad. Wish george would ask me to be in that movie. Nine months later, he said, are you busy . I am busy, but i am not that busy. Do you like the character . It was great. It was sort of a composite. We didnt use anyones name. It was a handful of men. The character was great. It was just a wonderful character. Every actor in the movie has great stuff to do. Every actor is given a home run swing. Watch the whole interview with bill murray on charlie rose 8 00 p. M. And 10 00 p. M. Eastern right here on bloomberg tv. While Monuments Men is a History Lesson on the big screen. Ken burns has one on the small screen. He explained to us this morning on surveillance. While to look at it all. This is a way to curate all of that stuff into somatic things. As you work in American History as i have done, you begin to see trends, patterns. We have curated, done kind of next tapes of the ideas on innovation, on art, on politics, on war. You can look at an hour or so of curated material which is very cool. It is a wonderful app that is only on the ipad right now. Tom who has watched memorized baseball. Is he going to get anything new . What happens is that, you remember the novel slaughterhouse five, the hero was stuck in time. You can curate stuff Going Forward and backwards in time, going into films that i made 20 years before, followed by something that came before. You have little bits and pieces that come along. It is just what you would do for a friend if you made a mix tape. It an example of how you would take something on race, then from baseball, etc. That is a good example. I have an introduction. I come on and do my own introduction and have a scene from the civil war about the reality of slavery. Then we jump back in time to the master of monticello, talking about Thomas Jefferson who coined the term all men are created equal but owned other human beings. Then it jumps ahead to the end of the lewis and clark journey. They asked the black slave and the woman to vote and women and black slaves werent able to vote. You reinvented how we look at history. Parent watching this is going, but my kids wont read the books. It is not a substitute for reading about jefferson pbs. Org go to aggregated allve the individual websites. Every film we have done into one database that allows teachers and students and parents to reference this. This is a guide for individuals. You want to watch all 23 of ken burns awardwinning document arrays, it would take over 8000 minutes, about 136 hours. Fiveandahalf straight days. An author called ken burns americas history and for good reason. This is how bill gates celebrated after participating in reddits ask me anything. Check it out. It is approaching 56 past the hour. The merck television is on the markets. I am julie hyman. Lets take a look at where stocks closed the session. Chair basically staying the course from her president predecessor and bernanke and implying the tapering of quantitative easing will continue. The s p finishing up by almost 20. The dow rising by nearly 200. The nasdaq up by about 43, basically ending on the highs of the session. We saw selling in treasuries and yield on the 10 year funding up to two point 72 . All of it linked to that testimony. ,or more on the Market Reaction i want to bring in mark sebastian, director of trading and investments at swan wealth advisors. Today he happens to be in new york. He is here live and in person. I was talking about this earlier. Reallyction today represents a shift in sentiment. Especially when you look at the reaction to the jobs report on friday and the fact that it was worse than estimated, people were concerned does that mean a change in the tapering schedule . Today, the fact that it is staying the course is somehow a good thing. Based on that testimony, i would have been less surprised if you told me the s p was down 20 rather than up 20. However, as i look at this snapback rally we have had off the bottom, i see signs of wearing. Treasuries have stabilized. The s p is moving quickly. Rallies with a quick snapback ,ollowed by a slow grind higher half a percent, three quarters of a percent, healthy. Rallies where we get these 1 , 1. 5 , huge moves, are never as a sign of a healthy market. That is now four days up for the s p. The index gaining about 3. 8 or so in that time. That is the quick snapback you are talking about. What next . Does that mean the correction the correction and were going to see some fits and starts here . I think hitting those alltime highs is going to be tough. I have been watching the vix the last couple of days. One things i watch for is how are the vix and the s p moving together . I would expect to have seen the vix down 82. It is down three quarters of a point. Maybe two dollars. It is down three quarters of a point. A reaction shows that traders. Re buying there is a lot of people going to the Insurance Market saying, it has probably worn out. I would rather go in and buy protection. That is never a sign of a healthy market. People were looking forward to this yellen testimony. What is going to be the next big catalyst that gives us an idea of direction . I think china and emerging markets. When china announced that easing over Martin Luther king weekend, i said, people think that is a good thing. It is probably not. You will probably see problems. Emerging markets will start to drag the u. S. Market back down. Do i think we are going back down to something ridiculous . But i think we are going to an average of around 1710, 1715. I think we have to. Good to see you in person, thanks so much for coming into the office. For on the markets, i am julie hyman