Transcripts For BLOOMBERG Market Makers 20140107

College football. I am Erik Schatzker. I thought i wanted to be in vegas for ces but there is great inc. News. I do not want to miss that. What if rove a few minutes ago. The news on jp morgan. They have agreed to billions that they knew obvious warning signs to the bernie made us ponzi scheme and failed to report them to authorities. What the allegations amount to a much jp morgan has admitted. It looks like jpmorgan had concerns that bernie made off was running internally. They were saying the returns are too good to be too. All that good stuff. They failed to escalate that you proper regulatory authorities. Are they required too . Yes. All banks have to have a very have the they compliance program. Know your clients. In failing to do that, it cost them 1. 7 billion. The money is going where . According to the southern district, it will be going to madoff victims. We do not have any details on that right now. Commented ongan this at all . They said this is jamie dimon just wanting to start 2014 with a clean slate eared they may not be as culpable as it sounds. We cannot go through the ringer anymore. We have arty pay the 13 billion fine at the end of last year. Heard anything from the company . I have not spoken to the company. That is definitely the sentiment for jp morgan. They want to get these things settled. They want to get onto reporting record earnings as they have in the past. There are a lot of things outstanding for them to settle. That may be the case. There is more to come. Is incriminating evidence here. There are emails but established wrongdoing. Absolutely. A deferredigned prosecution agreements. They admitted to criminal activity. The first thing in america to do that. This is jp morgans second. A signed one in 2011. This is a big deal for them. Admitting to criminal charges, not a lot of things to that. Have they retrieved the e mails . Are they going through this process with the regulators who should have been regulating madoff . I can only hope they are taking as close a look as internal employees at made off madoff clients. Hoppe was opinion does want to hate on banks right now. Taking a hit. Nes people have been charged criminally, individuals. I have a hard time walking down the street of new york seeing ruth madoff taking her kids off to school. The bank is to blame. Know if theyll go after individuals. Absolutely. With targets can come out at any time. We saw that with another case. Two people were charged criminally. I want to get more. Joins us now. What is your take on this . With you that jpmorgan is definitely trying to put this behind it. That a deferred prosecution agreement is the right approach in this case. Coveragesn some suggesting that maybe it is a problem to not actually convict them. Is this all about too big to ja il . I think that is a miss understanding of corporate and criminal liability. When we say jp morgan committed this crime, it did not. No publicly held firm commits a crime. Why does it jp morgan want to call out its employees . Couldnt they say we have a few bad apples in here . For several reasons. Want to encourage those employees to go to the government to cooperate and then bring in new evidence. Cases, i ame of normally an individual liability hawk. I am concerned when i see no individual charges. Normally i think you should bring them. Act and thesecy laundering charges are different. What is a little troubling about this as a crime is that the people who allegedly committed this crime, the individuals who would have had to have committed it for the bank to be viable, they did not actually help madoff committed the crime. They may not have even known he committed the crime. They just knew it was too good to be true. Series ofu take the it, you have to know your clients. Years. D at a bank for 14 you have to understand your clients. They are culpable on some level. That is the reason you take the exams. Like i read. I agree. Would you be as confident if you were the u. S. Attorney that a jury would want to send someone to prison for failing to fire a report, particularly if the jury is likely to think what i think was that if they had added this report to the 200,000 reports a year they foul, i suspect the government would not have done anything. The ftc did not do anything. It is a little troubling to send someone to jail for that. It is you saying he has difficult to charge an entity with wrongdoing that there should not be terminal allegations against jp morgan . Think it is because it is difficult. I think the o. P. S. Foremost cried i think the focus for most crimes should be on the individual. The entity has responsibilities. If there is criminal wrongdoing by the individuals in the banks, the prosecutors will find it and charge them. Theyre highly motivated to do this. They can go after the bank easier because the burden of proof is lower for an institution. If they are going through hundreds of thousands of emails and documents, they can find criminal wrongdoing and they will charge people. They have done that. Like cases like this where it is disbursed. If you look with a bring individual charges, it tends to be Insider Trading cases where there is one person who commits a crime that is not part of an organizational decision. Find clearen evidence against this person. Here the responsibility for reporting is likely to be diffuse. Someone may have had a suspicion and consultant with someone else. This is not aiding and abetting. To fire out a report. I could see the government being itvous that a jury would persist. Too goodonly say it is to be true . Yes. Couldnt they have said this is too good to be true russian . Ar ofthey lost billions dollars. In the end they paid the price. Getting their homeboys and saying this is fantastic. Good and anyone asked the question before we said these are victims . Investors met lots of that have said im not going anywhere near the guy with the bargepole. Holes in their compliance program. That is a lot of what they are here. What in their program is not looking . Is it a shake down . It is not a shakedown. I think what you are seeing is a big shot across the bow of all of the banks saying we have had the statute on the books for a long time. Have not done the level of compliance that would have taken to really make sure. We are now coming after the banks, saying if you are getting hit with a 100 million penalty, think again. If you look at hsbc, it ratcheted up compliance by nine full. It was spinning 240 million a year as a result of trying to bring this up. It is saying we want you spending real money on compliance. That only works if the government can do something with the information. That Means Congress has two funds the kind of big data effort it would take to go through these reports. There is not enough dough to do this. Investors have not said we are seeing the stock go down. They are backed into a corner. Jpmorgan and the other banks are not getting back to a fighting position anytime soon. To know where it will end. We know there are multiple cases against jp morgan. If we could see the horizon, year theyre the new were settling things at a fairly rapid clip. Can we be confident that investigators at the fbi continued to do what kerry says which is go through the emails in an effort to establish individual culpability . Once we see a settlement, is the inclination to wash our hands of it and say one point 7 billion, lets move onto the next target. Is in some cases they do go through there. They also do have jp morgan in the crosshairs on the issues of foreign bribery in china. They have to decide where to target their resources. If they hire the person it is much less a diffuse. If that is foreign bribery, that is an affirmative crime. While this is a crime, it is dell your to prevent a harm, not the preventing not because of of a harm. If i have limited resources, i would target individuals who caused harm. We have limited time. E will have you back the bad news it is because the cases are not going away anytime soon. They use so much. Jennifer is part of nyus law school. Will we come back, but very. Oins a back to the keyboards i love the keyboards. Welcome back. Is electronic world gathering in las vegas at the consumer electronic show to show off their cuttingedge goods. Blackberry has not been known for cuttingedge anything lately. He knew ceo wants to change that by going back to the future. Jon erlichman is out there. Nightoke to mr. Chen last who probably watches Market Makers every day when i talk about loving my blackberry keyboard. We are all influenced by you. There is no doubt about that. There are two parts. It is the company has said is getting awfully difficult to compete for the average phone buyer. We have to shift the focus back to the is the side. He had alicia keys as their partner. No longer the case. Theyre going to go after the business and government crowd. That is what john chen is focused on. The focus for the last 12 months has been on these devices that do not sell that well. Now the question is between the touchscreen and keyboard devices where they will focus their energy. They are the have this big deal to outsource the production. Immediately people were theering what the first of ice that comes off the Assembly Line will it be a touchscreen or keyboard device . Is a touchscreen what they want to do . When i asked him about that, heres what he had to say. I personally love the keyboards. We will look to blackberry Going Forward to keyboards. I would not use the word exclusively, but predominately. Go. Here you he did just higher a new head of devices guy. He says i am a Bigger Picture guy. We just higher a former hcc executive to lead the business. Perhaps they will have a different view of where they will be focusing the energy. What do we know about this hire from htc . What this is back row . Could this be how he will take it to the next level and be a turnaround kid or is this a retirement trade . He has been in the industry a long time. Tricks bringing some old as opposed to new tricks. Someone who understands a look and feel and designs. It may highlight the fact that this is not necessarily the most important. One of the challenges for john chen is he is dealing with trying to shift business on one side and not give up potential Revenue Opportunities with stuff that maybe is not doing as well. Maybe the traditional handset business falls into that. There is a Company Called typo that make this slip on keyboard that you put on an iphone. Library is suing them. We talked about that. We have a patent portfolio a we will go after them. How much money do they have to make there . That is the balance. Inryan seacrest has invested it. You do not want to bet against him. That guy wins. We will check in with you later. In las vegas. Toohen we comeback, you can buy a souvenir of finance. We are talking about a sweatshirt with the letters s. A. C. On it. The we know you will spend on a yoga mat. I want to know how you will pay capital flees. Jacket or vest . One ebay user for 1500. Ll four that is his minimum bid. Soldunds like it is being i and x employee. The fact that it is a flees and not a sweatshirt, i do like that. It is a tragic wall street uniform. 1500 bucks. They have a description. Own a piece of history. You do not even need to get screened at to be told you are useless and sell your soul, have your hair go gray or worse yet lose it altogether they have a very good sense of humor. There is a competitive market or memorabilia firms that have aced either federal prostate you shin or that sees to exist. Today you can buy a Lehman Brothers sweatshirt for 295 dollars. I am going to give you an actual cell that took place a few years ago. A boutique brokerdealer went to auction and bought Bernie Madoff slippers. Mmed i would have bought them. How much to think they went for . Eight grand. He made a ton of money. Likes in 2008 a used bear stearns tshirt sold for 100 and one dollars on ebay. I would rather go with the slippers. Were going to be back with more on extending benefits. Withis is Market Makers Erik Schatzker and stephanie rowe. Expecting laste year stocks to continue, this has been a disappointment. Fear not. Our next guest says the new times are going to continue for equities. It is good to see you. In some respect, you are even more bullish than you were at the onset of last year. I am. How can you not be after a year like that . Most people would not agree with you. Upy would say the s p 500 is almost 30 . How could i be more bullish . Still all about the fundamentals and what Central Banks are doing. Theres nothing on the horizon to me that suggest accommodative policies if they are needed are going away. The backstop is there. For the last three years we have had to argue with people about this backstop. That was the basis of my career, going into meetings and talking to people about the backstop and people not believing it was there. Even the most hardened of the haters have realized that the backstop is there. They have given up. I think we have won that argument. Wewe had a different fed would have a different discussion. Knowk at the ecb and i they will meet later this week. People are getting excited about another move. Thereve always been slow and and. Their economy tends to be the one that languishes the most. Ecb has always been dragged in. An. S barely taking investors are buying into it. Laster was pretty poor returns. Theyre buying more into the bonding credit market than into the equity markets. That has a lot to do that the policies remain very restrictive compared to everybody else. Easy better word. Nonaccommodative. Lane would work. I could go with lame. I would certainly be far more aggressive. Make like the bank of japan. I would announce a doubling of the monetary ways. Do you think this is a tough year . It is stricter than it has been. For the last few years we have been in a position where they are just stepping on the gas and printing money. Figuringrickier time out that balance . Absolutely. I took this four times or more qe the dosage of recovery site. The day we get it right . The Unemployment Rate is back to 7 . Everybody is right revising after a pretty killer q3. We have equity at a market high. House prices are up. Could it be better . Of coarse. Of course. It was a pretty good set of policies that got us to this level. Goingis no way they are to get it right the first time. They will put too much or too little in. You just do not know. Your point about janet yellen having our back. What it didot doing at the beginning of 2013. It is exactly what stephanie just said. Are they trying to withdraw stimulus . Makingpoint that you are the fed will withdraw stimulus so long as it does not affect risk asset prices and if it does theyll adjust pump more in . I think they told you that. Miss a few meetings. If it is going really well we might step up the pace. Look. At the end of the day, for every one billion of new issuances they are buying 2 billion. Every day. It is not like the pace of accommodation is significantly lower than it was. We are still adding significant amounts of liquidity. These guys want to remain accommodative. 7 unemployment is not good enough year the amount of jobs is not good enough. They want more. They see they can do it because the inflation rate is low. Are you bullish and so many are long because they believe in the economic recovery or because you simply think the fed will do whatever it takes . Wo different things. I fundamentally believe that the risk taking activities that we have all been incentivized to take over the last four years will generate real returns on capital, innovation, hnological it cant, advance and a real recovery. I will not get into the camp of it is all been good in the past but we have nowhere to go. I cannot buy this argument that every good invention has party been invented and we need to close the patent office. Effectively making the argument that it does not matter. It does not really matter for the shortterm whether you believe in a selfsustaining recovery or not does that is not what is driving the fed to act. I think that is right. It will end one of two ways. It will keep pushing on the gas and we will not get the real growth as quickly as we would like and the technological advance and we will end up with a little too much inflation. That is two or three years out. It actually is going to work and we will get the real growth and it will be reliving of the 1990s. I think were going back to the 70s. A great fashion time. You are more bullish. No hedge. No more staying too low for too long. Markets could find themselves in a position where they start to price the short and rates. I do not think there is a great benefits. They have marty tells you what theyre going to do. Have already told you what they are going to do. If the equity market back up in the recovery does not generate a selfsustaining real business cycle, they will push more. David zervos. He likes the 90s. Happy new year. Thank you for joining us. The maker of the popular angry his a Business Model. You will get the games for free but how will they make money . It is all about the mediums. Premiums. Welcome back. I am continuing to follow developments we told you about the jpmorgan story agreeing to pay 1. 7 billion to resolve claims that they played a role in the burning madoff ponzi scheme. Picard 325 million. More updates. Jpmorgan going to pay pica under 25three million. We will continue to follow this and bring you more details as soon as we get them. Thank you very much. Thes talk to a moment about private settlements. It is really not surprising given the statement of facts that the Justice Department laid out and which are jpmorgan admitted to ammunition for those who felt done wrong by madoffs action. To facilitate responsibilities under the bank secrecy act. And let the regulators know what they believe might have been going on. It is interesting to see where the money will be going to. Saying we regulate it we go after some of these organizations. It does not come back to us. It is nice to see jpmorgan has to pay the fine. It is truly going to the big dem. It is all going back to the victims. Lets go back and talk about rovio. They are letting the birds fly free. Freeish. They are letting you download the apps for free. There is a catch. Users will have to pay for certain features. It is called the premium model. Our next guest says it is the only Business Strategy that works. She is the ceo of the free to play Gaming Company. Ium the only game in town. It is a win for the consumers and content for raiders creatures. By removing the barrier, umass and will he expand the audience of people will actually play your content for the actual content creators. We are turning what is a simple transactional relationship with the consumer into a permanent relationship, and ongoing service. We are providing what we can match the effective demand curve to each and every individual consumer. It expands the market, and told reagans and builds brands. How much more money . I let my kids upload games about even think about it. Within hours if not minutes we different two levels of a have to pay for the third level and the fourth level. At the end of the month, my bill is much higher if i just bought the games. How much more money are you making . Apple has made 10 billion of money in the app store. Model is 75 of that. A Business Model is 75 of that. We made the pivot from premium reemium in 2010. We have been going since 2001. It is hard to get a direct comparison. From our own internal estimates and experiments, a factor of two or three more as we move from premium to freemium. Adult. Are a grown you might look at the free game and say it will cost me this much money to a lot of these atures and decide you do not want to spend all that dough. It is not so easy with kids. If it is not kids making up the majority, they are way up there. They are a large percentage. What do you do about that . Is to have access to a credit card account and then it is bombs away. I reject the notion that there are not really strong Parental Controls for the android and apple systems. Apple truly cares about is brand. So does google. There are quite restrictive controls parents can put on these stores. You do not have to give your children your password to your itunes account, etc. Of millionsndreds of people everyday that are playing a free to play cap. There were always be a parent or two that probably unwisely give their children a password. Every transaction has to be doubly confirmed for. Whether youre spending a dollar or 10, apple and google will say are you sure you want to spend it . You say yes. You put your password in. As a whole, the environment a rewarding environment for the consumer and content creator. The vast majority people pay nothing. Not spendinge money. Theyre just looking at advertising. What complaint volume are you getting for those that messed up and their kids have their password and the next thing they know they have played for six levels. How many complaints . It is a low rate for apple and google. It is a very userfriendly system. What we do in the free to play model is a cross between a console game and a website. We thank you for joining us and sharing your experience as the ceo of a Gaming Company that operates on the freemium model. When we comeback, it is a storybook finish. It seems like the nfl this weekend and a big payday. It is not for the players. You know who it is for. The coach. We will have that next on Market Makers. Von is out of competition. She will not be competing in the Winter Olympics in sochi. That is not good news for nbc which made her one of the centerpieces in the olympic marketing campaign. Scott is here with me to talk a bit about her and some of the other big business. How big of a problem is it . I do not think it is a huge problem. You are going to see lindsey vonn. Does anybody think lindsey vonn is not going to be hired by nbc to be there with a microphone commenting on not only skiing but other events as well . Those are two different things. When my kids watch the only big stories they fall in love with the athletes. They are going to say i love lindsey vonn. Theyre going to say other skiers are doing a bang up job. You will get to see her. That is a great point. And john white was a commentator my kids would love that. White was a commentator my kids would love that. It is another recognizable face. She will be around as well. Of debate a matter how much nbc will suffer. For sponsors will suffer some. She will have surgery on her knee and will be out of competition until next season. She is having acl reconstruction. Skiing . Ey want to yes. They align themselves with the brand of lindsey vonn. Pg e, red bull. You know risk of injury has to be Something Like dirty percent. Not a new injury. They had time to prepare that she would not be ready. She opted not to get surgery a year ago. She reinjured her knee not too long ago. What do we do if she cannot go . It is clear to make her the face of nbc, how do we get are talking about red bull. Decision did the play a roleactors in not getting the acl reconstruction . At her course she is an athlete. This is probably her last games. She wants to be on the mountain more than anything. Into allhat factored the decisions. Can i speak . What is in my best interest . We have to transition to football. Are producer will tell us. She will be on the mountain. She is right. College football. There is a new national champion. The coach is getting paid a handsome bonus. Perhaps not as much as the auburn coach. He will take home 550,000. On top of the 2. 3 million in salary. Does this bring back into focus the players in that College Athletes are not getting paid . See coaches getting paid millions. We see the value in the coaches. We are not seen the monetary value in the players. Will this bring this back into the limelight . It is always in the limelight. The Players Association for a plane over the rows ball talking about concussions. Rose bowl talking about concussions. It is there. This College Coaching staff is no big deal. 3 million is not one of the highest eight coaches. Jimbo fisher did leverage. Gardens that mean he will stay through the contract. Now he has even more leverage. Did you think auburn was going to lose . I am not surprised. He was a Heisman Trophy winner for a reason. We solve the games one and the last 60 seconds. Have they just increased the value of life professional sports . They are the most valuable thing on tv. The answer is yes. The nba is up next. Those are the next two b iggies that are up. The1 he is dealing with new. Tuess who got the firs three . You have to pay a billion dollars to the nba. I love it. Will be back. Stay tuned. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and Stephanie Ruhle. Turning up the heat on congress. In a few minutes, president lawmakersks about why should extend benefits to the longterm unemployed. The senate is voting on it right now. Show revolution that has turned the gas industry upside down. We will talk to the top lobbyists. It is more than just a bit bit and google glass. The next generation of wearable technology, we are going to head out to the Consumer Electronics show and check it out. I am Stephanie Ruhle. It is 11 00 in new york. I am Erik Schatzker. We have more on jpmorgan. There are more settlements relating to these bernie made off claims. They have agreed to pay 325 million and pay 218 million to classaction link does. We did not get latest. We did not get enough. It means that the madoff situation runs deep and there are a lot of people affected by the ponzi scheme. The classaction lawsuit was trying to claw back a lot of that money for the victims. The settlement is another part of jpmorgans putting this debacle behind it. Given the fact that they admitted to it as part of the settlement, what has been impossible for jpmorgan to fight the claims being made by the private plaintiffs . When a Company Admits to wrongdoing, it handicaps their ability to fight off a lawsuit. This is the case for this. They settled for half 1 billion on this. That is on top of the 1. 7 billion dollars we found out about this morning. Ifif we are taught we are talking about the bernie scheme ponzi scheme, it is jpmorgan who did not benefit. If jpmorgan cell that had a case to make against the private plaintiffs, the government prosecutors have more power than the private plaintiffs. Yes, there was a statement of fact that jpmorgan admitted to, but as the bank fill that had a case, i can i think we can assume that jamie dimon would have pursued that line of argument. They would have tried to fight it as close to settling on the same day that they announced the settlement with the day doj was announced. It was mf Global Global that they had to find the money from. Who underwrote it . Did jefferies have to pay . I guess that is where i am unsettled. Jpmorgan ran madoffs accounts for 20 years. They had suspicions there was wrongdoing and how it was running. They failed to escalate that. They admitted this in a statement of fact. Private plaintiffs a gives them a very strong hand to play. Absolutely. It is a fraction of what they are asking for originally, but it is a substantial amount of money. You so much. Still have work to do. Thanks for joining us. Newsis our own bloomberg reporter giving us the latest on jpmorgan. The senate is voting on whether to extend Employment Benefits for the longterm unemployment. , peter cook the vote is still happening. Everyone thought it was going to be defeated, what is happening . It is closer than we thought. Democrats needed five republicans to join them to at least take up the bill to extend unEmployment Benefits for another three months. Unofficial tally, they have gotten those five republicans. We are waiting for the final in, assuming all 55 democrats are voting for it. This would be a victory for the democrats and the president. They can bring the bill to the floor and vote on it later this week and extend the unEmployment Benefits retroactively. Reid was lamenting the fact that he would not get republican support for this piece of legislation. The political pressure that democrats have brought, including the pressure of hot home states with high unemployment states has come to bear. By my tally, five are on board that i have heard say yes on their tally. Is not necessarily guaranteed that if this vote to bring cloture passes that the bill will it is almost certain the bill would pass the senate. What happens after that . Does it not have to go to the house . Of course. Passes it, they will face political pressure to come up with and talk about how to move this forward. Basis. T on a temporary the question will be, how do you pay for . 6. 5 billion is the price tag. Republicans are insisting it has to be paid for. If it does pass the senate, it forces the conversation. We have to assume that until we get a yes vote it is not a done deal. Get a chance to say so, but they do have the 60 votes required to bring closure to the debate. It will be up for a full vote in the senate and the assumption is it will get the same level of support and then the bill will go to the house. The assumption that the bill will pass the house, no matter how much pressure john boehner will be under. Lets assume the bill does not pass the house. What does that mean to the u. S. Economy if unEmployment Benefits are extended . All the money going into the economy does not get spent. Itis deficit spending, but adds to the economy, particularly because these are people who do not have money. They spend everything they take in. There is a Multiplier Effect to this. Once those dollars are out there, because they are spent immediately, they build throughout the economy. There is some subtraction from growth. The other impact is you have to be looking for a job to get unEmployment Benefits. If you are not going to get the benefits, you will tell the survey are you are not looking for work anymore. That you are not looking for work anymore. That puts pressure on the Federal Reserve to scale back on their stimulus programs. Hopefully the fed will look through this and realize that 6. 5 does not mean what it used to. In terms of what the real number is . The fed as said we are going to raise Interest Rates once we get to 6. 5 , but you can lose a quarter of the Unemployment Rate or even a half a percentage immediately if all of those people dropped out, which would make that pledge meaningless. People raise concerns about the quality of growth that you get from unEmployment Benefits. Are those legitimate concerns . They are. There is debate about whether extending unEmployment Benefits keeps people out of the labor force. They say they are looking for work, but theyre not making the changes to their career that they need to, taking a job that pays less. In some states, they have seen that the Unemployment Rate goes down as the unEmployment Benefits go down. What we have seen is that the hastterm unemployment dropped. Theyre finding jobs. Those that have been out for two years or so have been having a hard time. People say there is a big hole on your resume, what is wrong . Michael mckee and peter cook bringing us the latest on the debate over extending unEmployment Benefits. Coming up, president obama will talk about the senate vote. He will be in the east room of the white house and you can guarantee his staff will have set up the perfect photo opportunity. Time to give you the news feed. The top business stories from around the world. Starting next year, the chinese automaker backed by Warren Buffett will sell cars in the u. S. D plans to introduce about four models. The focus is on the electric calls. They took a 10 stake back in 2008. The record cold snap in the midwest and northeast has made travel a complete nightmare. Close to 6000 flights have been canceled in the last two days. Some state highways were closed and amtrak scaledback train service. Will not defend her downhill skiing title in the olympics. She is undergoing knee surgery. She reinjured it in november. Is a big disappointment. Nbc had made her the centerpiece of its olympic marketing campaign. It is a declaration of independence. When well imported oil be a thing of the past . We are going to ask one of the Industry Cost top lobbyists. Top lobbyist. You can watch all of our interviews on demand on apple tv. The breaking news we brought to a moment ago, a rare surprise in the u. S. Senate. It has voted to advance a bill that would extend unEmployment Benefits for the longterm unemployed. Five republicans voted with all of the democrats. And virtually guarantees passage. House must still approve it. Beenericas industry has revolutionized by the shale gas boom. The economy will be, too. Is the top lobbyist that runs the American Petroleum institute. He is presenting an outlook for the industry for the next decade. He is with us from the museum in washington the newseum in washington. There is a lot you want government to do. What is at the top of your list . It is a combination. A lot of what the government needs to do and what they shouldnt be doing. That is to interfere or distort markets. Today is an unprecedented opportunity for the United States to become a major player and to become the Energy Superpower in the world. While doing so, creating jobs, bringing millions of people to work with highpaying jobs that pay about seven times what the minimum wage is. Going back to your earlier story about the debate in the senate. We need to think differently about energy in this country. We are the number one natural gas producer and have the arabianity to pass saudi as the Number One Oil producer. This is a big deal. It is a great opportunity at a time we need it most to restore our domestic economy and put our people back to work. To cite five things that you have identified in this report that you want. Among them, opening up federal lands and waters to drilling, ending the crude oil ban exports. Thewing construction of keystone pipeline. Among those things, what is the most important . If you look at the short run, the key factor that has been talked about for too long is the keystone pipeline. It has been under review for five years. That is longer than it took us to prevail in world war ii. Almost as long as it took us to build the Transcontinental Railroad 155 years ago. The president can approve the pipeline with one single word, the word yes. It would put thousands of americans to work and bring energy from north dakota and montana regions down to the gulf coast to be refined. America is already on track to become energy selfsufficient. Why are you making the case for more oil and Gas Production if we are already going to get there . It is unclear if we are going to get there because the concerning consideration for us is the intervention of policy. When you look at what is thisning today, resurgence, this outbreak, if you will of energy production, has occurred primarily on private and state land. It is beyond governmental reach. Unfortunately, we have assets and resources on federal lands in the outer continental shelf. Of theoff the coast United States, 87 of it is off limits. The question is do we have the ability to seere those opportunities and to allow for their development. Only will we become energy selfsufficient as a nation, we will be able to ourher enhance and improve trade imbalance. Today, oil and natural gas is the number one export sector that has closed our trade imbalance by 16 in just the last year. This is a big deal. It requires government to implement policy that allow the free market to work. We are restricted from exporting crude oil. We are not allowed into many areas where these resources occur. With those openings, as we protect the safer the safety of our workers and environment, we can become the superpower of the world in energy production. Why do you have little faith in the ability of american oil and Gas Companies to generate more production of their own accord . Oil exportsn crude in place and drilling on federal lands and waters, we are where we are today. The shale gas revolution has a lot to do with the capacity of american oil and Gas Producers and explorers. One could make the case that they would not have been incentivized to find that gas and oil in the shale deposits if it had been easier to drill on federal lands and waters. Let me give you one example. Direct result of the innovation and entrepreneurship of the oil and gas industry. Technological developments have brought us to this point today. Lets look at a governmental policy. There are numerous requests for permits to export natural gas. Those are being held up at the department of energy. Approved, you will see more natural gas produced in the United States. There is a market for it. We have many in europe clambering saying send us your natural gas. It will help wean us off our reliance on russian gas today. Pressure ondownward global prices. Those are opportunity. It is being restricted by governmental policy. That is the difference and that is important. I want to get this in. There are those who would argue that the ban or the restrictions on exports of crude oil or gas are appropriate because they want Natural Gas Prices to below. Able talk about a revolution in the American Economy that is going to be fueled by cheap gas. They would save we opened up the floodgates, the gas exports would rise and that is going to inhibit the ability of American Manufacturing and industry to take advantage of that plentiful gas supply. Quite the contrary. Study after study has shown there will be minimal impact on price. That gasrtantly, production is looking for a market. What you are doing by restricting exports is you are limiting the work you place, discouraging Economic Development and production of that gas resource by allowing those markets to find their own equilibrium to find that balance and say and you will enhance the economic productivity in the United States. It puts downward pressure on prices normally domestically, but globally in the areas where traded in the price is set on a global scale. The more supply we put in that market, the better off we are as consumers and as a nation. Thank you for joining us on Market Makers. For thee chief lobbyist u. S. Oil and gas industry. , talk aboutome back an epic fail. Wait until you see what happened when samsung unveiled their new tv. We will have that when we come back. This is Market Makers. It is time for on the markets. We will show you what is happening today. Best day so far for u. S. Stocks this year. The dow has been up as much as 125 points. Stephanie, what is going on . Andoesnt appear there is explanation for the market advance. A couple of big Health Maintenance got upgraded a couple of big health names got upgraded. Some isolated stocks that help to explain that. We havent seen the index start the year on a downturn in 1928. Days in a row since six of those seven times turn around. Were you did you start to go bearish the last few days . No. Is a company that is rarely turning car wheels, but today they are. Blackberry. The struggling Company Wants to go back to the physical keyboard roots and people like it. Were going to talk to John Erlichman about wearables. I love them. Consumer electronics show, coming up next. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and Stephanie Ruhle. Is live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and Stephanie Ruhle michael bay is not used to huge flops. The meltdown were samsung had enlisted him to show off the new 105 inch tv. He had some problems you might find more in a place like this, reading the teleprompter. I try to take people on an emotional ride. The curve how do you think it is going to impact how viewers experience your movies . Excuse me, i am sorry. Im sorry. I i am going to tell you how feel. I am not cutting him a break. How do you feel about this . Do you say, i feel bad for the guy, things happen. Anybody can get stressed out . Im not cutting him a break either. Paid you are going to get tens of thousands of dollars to speak, even if you are prepared even if your prepared remarks go afoul, how about turn around and say look at this bad tv. Makes are a guy who movies like pearl harbor, you make the explosions, that was an authentic response. Later said, wow, i just embarrassed myself at ces. Live shows arent my thing. He is a superstar. He makes blockbuster movies. This starts to make you think, why do these Companies Want to have famous people be their spokesman if all theyre doing is reading scripts. They should put in a clause. No scripts. Lets bring in John Erlichman. He is on the floor at ces. Were you in the room when that happened . No. There are so many opportunities for blunders, you can be at all of them at once. It is all people could talk about for 24 hours. I would ask the question, is this a hit for samsung . Them taking a hit as opposed to this being a hit. The amount of video traction because of the blunder because versus what it would have run had this gone smoothly is a different story. The ceo of sony did a presentation or they showed off some Tv Technology and they had some booboos. Was about thet technology, in this case, it is about a prompter and michael bay. Samsung gets into the conversation. Unofficially, you have to wonder if samsung thinks this is not a bad thing. If you run into michael bay, i think you should take that video and add one of those michael bay patented explosions in the middle of it. I think that would be his true and tweeted out. That would be amazing. The at t party is also happening. This is a great one. The ceo tmobile has been trying to disrupt the traditional carrier business. He has an announcement planned at ces. At t trumpet last week. John shows up at an at t party out night, he gets escorted and even today he is tweeting about being escorted out of the event. Tmobile is expected to unveil a new part of their uncaring air ier plan. R at t did the same thing last week and he was angry about it. Is it possible he might not have known it was their party. He then walked into a product presentation. He is theople think cool crazy type, others things he others think he is calculated. He said its a party and here is a good emotional opportunity for me. Youre looking at what is supposed to be one of the hottest areas, wearable technology. What have you seen . Theres a lot of stuff here. If thisre talking about is the next smart phone conversation category. Heres some of the stuff we saw. Weve heard of google glass and Samsung Smart watch. We are entering a world of wearables. There are lots of wearable devices. Why not wear myself out . This guy is the. It is a wearable camera. It tells that if the light has changed or if i have changed my speed and it can take pictures when i make those changes. This is the isleep which measures heart rate variability. It knows when i am ready to work out. If i did a heavy workout the day before, it will say, hold on, wait another day for your big workout. This. We have it measures fitness and your sleep. It also has an emergency button which i can push if i fall. It will alert the a gps, somebody that i am in trouble. Via gps,l alert, somebody that i am in trouble. Additional per month to place called your parents from this. Or to have calls from your parents to this. Also, you can create this gps safe zone so that if the kids go outside the safe zone, you can send them a text to say where are you . Health thatwearable is measuring things like how sweaty i get. It is 200. On my right wrist i have the fitbug. It is 50. I am feeling a little worn out. I love that. There is a little taste. Knowr as game changing, i where you are going to weigh in. Weigh in, erico might like a lot of those devices. John, the abuse that i take sitting next to this lady, can you believe this . Do i look like a slab bomb . . Sweat bomb you are having the best timeout there. We wish we could be there, too. Were going to check in with you. Enjoy yourself in vegas. When we come back, were going to talk digital. I am bringing back my favorite guy of the year. That is the digital prophet of aol. I am going to be back with david digital prophet. The president is expected to speak from the east room of the white house. You can see them getting prepared. Stay tuned. Youre watching Market Makers. Another day another prophecy. I had a chance to sit down with david chang ching. Second prediction. We are going to see the evolution of the information age, the advanced social age, however we are going to move into the age of context or interest. Move out of the big city and into smaller villages with like minds. When you say collaboration, people think these companies will collaborate with social media, people who look and sound like you. Should they be collaborating with the white hairs and their offices who have been in the company for years . Absolutely. You decide what the right collaboration is . Companies likeo ibm, people know them and do not when you look at Companies Like ibm, people know them and do not look at them. How do they decide what the program is . They go with one big tagline, they hacked they hang on the tag line and say that is what we are about. What we are trying to do is create intimacy. We dont go into the big subjects and say that is what i want to talk about. That the biggest difference in branding . Before social media, they didnt have the chance to have a conversation. With or without the brands permission, people are going to mess with it. Shing, the digital prophet. I want to bring in jason dont land deland. Are a branding expert. Do you believe it is not about branding awareness but about having a conversation . I dont think it is only about having a conversation. The role of advertising and marketing has many components. Conversation has been added to it as a result of the proliferation of social media. Wordofmouth marketing has existed for a long time. Now there is a mouth with a megaphone. There are millions of people that may or may not be listening. No one is waiting for your next ad or your next social media post. That is why im having trouble understanding this notion of collaboration. It is easy to get people on social media to start seeing bad things about you. It is hard to get them to see good things about you. A fight is more interesting than a parade. Isnt this a risky not juston for Companies Marketing departments, advertising firms . It can be if you dont know what youre doing. Most dont know what they are doing in the world of social media. You have to be yourself and have a voice. Authenticity is important. They know it when it is phony and fake. It is an environment where transparency will always win out. Beingve to be mindful of your self. Management 101. The last thing you try to do is spin it. Do is say ing to made a mistake and this is what i am prepared to do about it. Smallof Big Companies and ones this takes me back to where we were seven minutes ago. Samsung made the decision to bring in michael bay and say we stage ando get on a talk about our amazing new television. He got out there to do it, the script didnt work and he walked off stage. A lackes that say about of authenticity . Are these Companies Making mistakes having conversations when maybe those people are reading scripts like a vegas actor . You can see through it. If michael bay went to samsung and said i love your technology or they had delighted decided to collaborate and build him into the process and he came onto the stage and said i have been a process part of this process for a long time and i want to tell the world about this. Then you have something. If they just paid him 100,000 to show up on stage, most people can see through that, especially when it doesnt work. Stephanie had an idea earlier that i loved. Michael bay should turn this into a genuine michael bay moment. Melts down, explodes, puts a special effects around it, say look what happens to me at ces. And then tweeted out. Exactly. Being human, be real. It is an easy thing, but so many people miss it. Morning, there was an oped about how millennials dont want to buy products. They want to buy experiences. A basic rule of handpicked happiness is dont buy things by experiences. Buyont buy things, experiences. They want to do their work in the lobby on an ipad. Is that true . Do people want to buy experiences . They are taking inconvenience for a story . Always want tole buy experience. Theres a lot of talk about millennials and what they think. People ask them questions because they dont understand them and we are looking at them through some strange lens or microscope. If you are making a product, and we have done this for a long time, we build experiences around products. The trend of conspicuous consumption is over in terms of buying physical goods and i think there is a bigger trend into doing experiences for people. I dont think it is just millennials. I think it is all of us. Why . We have everything we need . If you want to bring theyre coming out of the postwar. In their stuff they dont have. To draw to social it adds something to you. Build your own the brand it builds your own brand in the social media world. This foreign equity apply equally, as much as it does to michael bay, celebrity endorsements . Blackberry and alicia keys . Sony and alicia keys . Welle company that does it is nike. It is not borrowed equity. They are taking these athletes. Nike is built by designers. It started with a frustrated athlete that said i am going to make a product. It started with authenticity. It is different. Wrote a letter talking about how his Running Shoes were superior and he signed a letter off by saying you are no longer unimportant. That is the voice of nike. That voice should transcend not just what is penned in a letter. That they behave, the culture they have as a company. I think it is cool. What . How all of this is changing and you have to be authentic. A is no longer the sky as Football Player and he is sitting on a car saying you have longer by it is no this guy is a Football Player and he is sitting on a car saying have to come by this car. Buy this car. Relevancy is important. Social media is like running a newsroom. You have to be relevant and have your pulse on the audience. What are they interested in and what is driving them . You have to create stories to create content, provocations, questions, or answers that are relevant to the audience. Not just of them in general, but thinking about context, what is going on in the wider culture. Respond and create very quickly. It is great to have your thoughts. You better come back soon. We have the super bowl coming. Audubonland agrees hnuld be a great autoba would be a great name for a car dealership. The president is expected to talk about the unEmployment Benefits. The senate voted to cut off the debate on the measure. It assures it pretty much assures the bill will pass. Is standing by. We know the president is going to take the stage with several people whose unEmployment Benefits have been cut off. Who is he talking to . Alsouse republicans, but senate republicans. Motion thatocedural happen. Republicans want is paid for and they want some type of job improvement issue tacked onto it. This is going to be a big push by the president. We are going to try to come back to you. Stay tuned. President obama is about to speak in the white house on extending unEmployment Benefits. He is about to take the podium. Phil mattingly is standing by with a little more perspective. But nowo go to break, we have you back. Give us more context. Seeing right now, the president is going to try to put the pressure on republicans, both senate and house to move this forward. Im sorry, phil. I wanted to get your thoughts, but he is going to start speaking right now. Happy new year, everybody. I hope youre keeping warm. A few weeks ago i said that 2014 could be a breakthrough year for america. Think about it. Five years ago, this month, our economy was shedding 800,000 jobs. Just in one month. Buckle down and work hard and sacrifice, we began to come back. Businesses have created more than a million new jobs since we at the bottom. Our Auto Industry has gone from bust to boom. Is Housing Market rebounding. Stock markets are restoring , the promisecounts of independence is actually inside. Health care costs you left of our economy. Costs have grown at the slowest rate on record. Since i took office, we cut our deficit by more than half. America is getting stronger and we have made progress. The economy is growing and we had to do more to make sure that all americans share and growth. To help businesses create more jobs, make sure the jobs offer the wages and benefits that lets amys rebuild lets families rebuild security. This recovery must not leave anyone behind. We have a lot to do on that front. I am optimistic we can do it if we do it together. Before the holidays, both parties copper mines on a budget both parties compromised on a budget. As a consequence, we may see more stability when it comes to economic growth. That we alone in saying are all grateful in the new year anotherwont have partisan shutdown Going Forward. [applause] that was a good sign. We should build on the progress. We need to extend insurance for the unemployed. [applause] the senate took an important step in that direction this morning. Join americans that a the join me today that were laid off through no fault of their own, Unemployment Insurance has been a vital economic lifeline. For a lot of people, it is the only source of income they have to support families while they look for new job. These are not folks who are just , waiting for things to happen. They are looking for work. They desperately want work. Although the economy has been growing and we are adding new jobs, the truth of the matter is that the financial crisis was so devastating that there are a lot of people who are struggling. If we dont provide Unemployment Insurance, and makes a harder for them to find a job. You heard catherines story. She is far more eloquent than i could be. Say please let those who think i am sending a home enjoying being unemployed know that i would much rather be working. I had a chance to talk to katherine. It is pretty clear that is the case. Catherine went on to say that i have applied to everything for which i am possibly qualified, to no avail. I have worked hard all my life, paid taxes, voted, engaged in political discussion, and made the ultimate sacrifice, my two sons serve in the u. S. Military. Job loss is devastating. If i would. Challenge if i could fix it myself, i would. [applause] have the mom of two of our troops who is working hard out there but is having to wear a coat inside the house, we have a problem. It is one that can be fixed. Catherine is not alone. Woman watching from home in california wrote to me about her hunt for new job. She was laid off 13 months ago and she sends out hundreds of resumes. She has volunteered, done seasonal work, she has been taking online courses to learn will to learn new skills. Without Unemployment Insurance, she will not be able to pay for her car