Transcripts For BLOOMBERG Market Makers 20150109

And im stephanie ruhle. We have to begin with our top story the past three days it has been the same. Special forces have cornered the 2 suspects in the Charlie Hebdo massacre. Reportedly they have told police they want to die as martyrs. In eastern paris there is been a shooting at a kosher supermarket. Reports suggest that he is demanding freedom for the suspects in the Charlie Hebdo massacre. There is a connection between these 2 events. Caerleon, lets begin with you. What is the latest . The latest we are seeing here 2 kilometers from the site where the kouachi brothers are still there. There is a high school and a secondary school. The parents the Police Taking the bus to another at the moment the police does not want where the kids are going. Obviously, theyre been very conflicting reports about what is happening on the ground. I think that is from the police to avoid any media frenzy and any reporting developing. Hans, give us an update where you are. There is a widening sense of insecurity in paris. Just behind me is where the kosher supermarket is, where we have reports of five hostages and 2 recording to afp have already died. Throughout the afternoon we have seen several stretchers come through. This is a line of policeman and a wall of First Response vehicles ambulances preparing for the worst. We dont have a good sense of where the negotiations are between one or two gunmen inside the Kosher Grocery store. We do know that the French Interior minister has been dispatched and he will be arriving to take command and control on the scene, on the ground. This is the actual security crisis as a political crisis, and you have seen the french political establishment try to stay in front of the store and project an aura of confidence and authority as they seek to assure voters and citizens that the city is indeed safe. To the police have a sense yet of whether the hostage taker at the kosher supermarket knows the suspect in the Charlie Hebdo killings who are cornered by the airport . That is the connection, erik. According to local reports, this is the suspect that was here and it had to do with the shooting in the south of france yesterday the left one policewoman dead. The suspect here and the 2 brothers are friends, they are associated. The question comes from are they part of a larger cell, a larger network, or is there just a casual connection between the two of them . For the entire region around here, the Security Threat level has been lifted. The terrorist threat that was raised to the threat level they are expanding the zone for what they come up french authorities, think good eventually be targets for terrorist attacks. Hans, do you feel safe . There are a lot of Police Officers around. I am not overly concerned about my security. I do think there have been some reports in a city that is been fueling rumors during the day, all shops in a jewish part of town have been asked to close. That is potentially where a great deal of security concerns there are an additional 850 Police Officers that are guarding cultural institutions as well, it should be said, as newsrooms men with big guns defending printing presses. Caroline you just heard stephanie asked hans if he feels safe. What about the typical parisian now that the terror seems to be spreading to different parts . How are parisians responding reacting . To the parents of the children here, they have been very worried all day. They basically were barricaded inside their homes because the police prevented all the people leaving the area, to go out. As i was saying earlier i have family members who live very very close, just a couple of blocks down. They have been barricaded all day. The police the entire area around me here. There are at least a dozen police cars and Security Forces wearing bulletproof vests come heavily armed. As we know, as it stands at the moment, the police have tried to establish some negotiations. At the moment they of not holding at least one hostage in the Publishing House on the industrial zone. There is possession another weapon. Caroline, thank you very much could the latest from caroline connan. We will be checking in with her and also with International Correspondent hans nichols later in the show. Hans thank you as well. You have probably heard at least a few details from todays u. S. Jobs report. The economy added 252,000 jobs last month more than economists forecast and capping the best year for employment growth since 1999. There are two frustrating, persistent trends in the labor market and both worsened in december. Wage growth stagnated even as the Unemployment Rate dropped to 5. 6 . If anything, it makes it even harder to call the feds next move, but rick reader is going to make one anyway. He is at black rock, the Worlds Largest money manager. Also with us economics manager michael mckee. Wage growth is frustratingly only a 1. 7 yearoveryear and the Labor Participation rate is going down. What can we define from these lines . Couple things. First is you have an economy that is moving along quite nicely. The topline headline numbers are pretty impressive. However, there are structural changes to the economy taking place in a pretty powerful. You think about technology impacting structural change in the system. Youre creating what is very difficult. Think about what happened recently in terms of retailing. A huge change in how retailing is taking place in the country. There is a lot of disinflationary effects on the economy one more time, what does that mean . Take energy as euphemism for what is happening in the system. We have horizontal fracking incredible growth in the system. You have Technology Changing from Data Transmission to robotics to systems to software that is allowing you to operate your business more efficiently. The number of routine jobs in the system are going away. But skilled workers are insignificant demand. You are changing the demand of dynamic of the economy and you are changing the dynamic of the economy. And with todays number, it was the perfect example of why that is taking place. Does it dul what the fedl where the fed has to go . Monetary policy cannot alter these forces. It is time to move on and by the way, the ecb and the bank of japan are giving you an incredible window to do it because of the pressure it will keep on rates. You dont think there are members of the fomc who look at those numbers and many more on the dashboard and say hey, wait a second, there isnt nearly enough pressure in the labor market to justify an increase in the fed funds target . By your statistically accreted 3 million jobs, the highest 1999. We are growing at 290,000 jobs over the last three months. And you are seeing, by the way, 200,000 was the benchmark the much mark upon which you could start raising rates. Meaning the fed we shouldnt be a 0 funds rate. The key represent funds rate in an economy like this makes no intuitive sense. As you said, it allows the fed no inflationary pressures allows the fed to be patient. I would argue it has been incredibly patient moving the funds rate 25 basis is over 4 periods to get to a 1 funds rate. That is easy policy. Michael mckee has also been incredibly patient, so lets give him a chance. What do you think, michael . It is a little bit like having too much to eat. Happens to me all the time. There is a vague feeling that theres something wrong out there. A couple things play into that. There are different wage measures. The employment cost index, which the fed follows more closely has been rising faster than the wages here. We will discover that when we get those figures later in the month. The other is that at this point it is really hard to say why wages went down this month. What is the conservative factor . What is the contribution factor . The biggest decline of all came in the oil and gas area. We did not lose any jobs according to the jobs numbers but we did see a 1 drop in wages in that category and that may be the result of people fracking thing. Of the whole fracking thing. It gives political cover. They dont have the inflation pressing on them that they would otherwise have to respond to. The question now, as they get towards the middle of the year disinflation is a lagging indicator. Do you move based on what you are seeing and figure inflation will follow, or do you take a chance, as Alan Greenspan did in the late 1990s, and say maybe it is not going to end we can be lower for longer . Whenever the fed does move presumably in anticipation of the feds move, there will be movement on the front end of the yield curve. Most of the attention remains on the 10year and a 30year, 2. 6. There are many people ive talked to who say he doesnt make any sense for the 10year to be at 2 and makes even less sense for the 30year to be at 2. 6. Given the inflationary impacts for a fact the structural changes you believe has happened to the economy, do those number smack sense . Do those numbers make sense . Fair value of the 10year is closer to 2. 5. We live in a world of extraordinary policy. If you are a Global Investor you have to put money to work. It has been able told story about you have got to put money to work relative to the rest of where the rates are. There is another dynamic at play weve talked about the system is not creating enough fixed income because globally we are deleveraging. Theres not enough assets at a reasonable yield, and 10year treasurys serve two functions. One, they give you some yield in a world that is not giving you enough and they also provide a hedge against risk assets. You think about october and is part of a balanced portfolio which we believe in today, holding some 10year treasuries and long municipals and the interest rate, even though you are not at fair value, they give you some balance to your portfolio. That is the way to invest. This is a really important point and brings back the greenspan conundrum from the early 2000s. Bernanke said it was because there was excess of saving in the world, so much money coming into the United States that it was putting pressure on rates. Bill that they said we may be seeing the same thing and then in a speech in december because what is going on around the world, people are looking to buy longerdated paper with higher yields and they are coming to the United States to do it. If that is the case it raises the question of does the fed misinterpret this and leave rates too low for too long because they are protruding into these outside forces . Does this number mean more investors will flood money into u. S. Investments and out of European Investments . Europe looks i wouldnt say weaker than ever but certainly doesnt look good. What is it going to mean for your . For europe . The answer is yes, the dollar will continue to appreciate. You think of cash flow in the u. S. Relative to leverage and liquidity and compared it to the rest of the world, the u. S. Is in a stable equilibrium. Think about where european rates are on the distortions created by Monetary Policy. It is hard to argue that europe is in equilibrium. You and not creating enough growth relative to the leverage. Europe is about to create even more distortion. What is that going to mean . When you think about the way markets go in cycles and you think about every four years or you go back to 1994, 1998, 2002, markets do well, do welcome to do well, and every 4 years they create volatility and recalibrate. From 2002 to 2006, Monetary Policy was very easy. We are six or seven years into this and now we will press further into more distortion. What it means is you will have a bigger recalibration. You are distorting levels and you are going to have a bigger recalibration. One of the things you have seen in the markets the last five days as people start thinking about these distortions and so much is on the back of mario draghi that it is going to create when you talk about recalibration, you are talking about affiliates continues replacing of assets. Yes, markets get concerned that you are putting pressure on the markets you are distorting levels and at some point you have to recalibrate back to fair value. My guess is he doesnt come for a number of months but we are closer to it today and the markets told you in the last few days than we were a year ago. Interesting couple of months. Genuine 22nd, the ecb meets. Derailment, thank you so much. Gentlemen, thank you so much. We have more coming up. Keep the faith. The herbal life investor who refuses to sell any of his shares in this embattled company. Plus, it was a sellers market for people seeking retail jobs during the holidays. Will those jobs stick around . Welcome back to Market Makers i am stephanie ruhle, along with my partner, Erik Schatzker. John stated gives us a window into the hiring cap jobs data gives us a window into the hiring trends. Julie hyman has been crunching these numbers. How long are they going to keep those jobs . Lets look back before we look forward to see what happens next. The retail job excluding autos and gas stations because that is not capture the regional trend and then you have data back to 2007. With my husband bought me a Christmas Gift at a gas station we would have a problem. A gas card. You are seeing the best hiring trends. This is the octoberdecember period going all the way back to 2007. We are seeing the job market overall comeback to where it was at that point in time, and given that additional demand they were doing this extra hiring over the Holiday Season. But to your point, the question is now will those workers be staying on at a higher rate than they had been in previous years. We dont have anything except anecdotal evidence at this point. There is one economist Gary Rosenberger puts out a note where he talks to a bunch of different staffing professionals who staff retailers during the Holiday Season and beyond. The anecdotal evidence he is seeing is that we are seeing a higher retention rate. Not only that, hes using a word to describe the job market that i have not heard too many other people use, and that is tight. What does that mean . It is hard to hire people. Exactly. Why . Because demand is high and he says theres not that many qualified people. Across the country or in certain markets . He is talking across the country in retail. When retailers during the Holiday Season wanted to hire good workers they actually had to offer wages and bonuses etc. Again, it is anecdotal versus the data we are seeing in the overall average hourly earnings, etc. Nonetheless, potentially could be an encouraging sign going forward. We just need to go through the next month and go through the data and see if it is borne out. On wednesday we will be getting the december retail sales. Again, excluding autos and gas stations. Were you surprised it went under . Yes and no. There was talk about it for a wild. The retailer that you are talking about as some he told me yesterday, they were surprised because they thought he would keep pouring money into it but he decided to stop. Julie, thank you. Julie hyman with the latest on retail hiring. When we return is haiti open for business . Five years after the disastrous earthquake, critics say politics are standing in the way. It is a day of high drama in france. You will see in a moment pictures of a town near Charles De Gaulle airport. In fact, that is what were looking at now. French forces have counted the suspects in the Charlie Hebdo massacre. The suspects, as you know now, our brothers and have told police they want to die as martyrss. Meanwhile, a gun man is holding hostage at a kosher supermarket. According to abc news, these are connected. We will have more on that when we return and also one way to tell us hate he is recovering from the earthquake, you have got a pretty boots on the ground, and that is what i did. Live from bloomberg headquarters in new york, this is Market Makers, with Erik Schatzker and stephanie ruhle. I am Erik Schatzker. I am stephanie ruhle. It has been five years since the 7. 0 earthquake that devastated haiti. I went there to see for myself if it is setting ready for business and setting up shop. Five years later, great progress has been accomplished. We have managed to relocate 97 of the people that were homeless. We started the reconstruction of the public infrastructure. Part of two buildings, 10 buildings are being read on the reconstructed. Read on, reconstructed. We were in a disastrous situation to where there is a glimmer of hope for a better country. Our next guest, he disagrees. He is the author of for whom the dog spies looking at haitis current politics. We are five years out from the earthquake. Has haiti recovered . No, title think it has recovered i dont think it has recovered. I heard what the former Prime Minister said, but no buildings have been inaugurated. We have a lot of buildings being constructed. But they are all barred. You cannot see what work has been accomplished. No building has been inaugurated. What is the hold up . Almost 9 billion of foreign aid and ngo money supposedly going to haiti. Where is it . I would add more to your 9 billion. Congress says it was 10. 4 billion of the International Community. It also said that the u. S. Had put in 3. 6 billion. Ok, now we are up to 15 billion. No, no, no, that is of the 10 billion. There is this organization in washington that said only 9 of the money went to the haitian government. And of the contracts given by usaid 62 percent went to beltway companies, copies around washington. Companies around washington. Only 1. 5 went to haitian companies. The u. S. One guest past 8 the u. S. Congress passed a law in july of last year assessing the aid in haiti, asking the secretary of state to give quite a report on progress of the u. S. Money in haiti. We dont know where the money has gone. No New Buildings have been inaugurated. Five years since the earthquake. We talk about the billions of dollars that have entered the country. Where should haiti be right now . I think myself that it should have been developing the way it should be developed. For example, the former secretary of state hillary clinton, went down to haiti in october 2012. Her husband was there. He was the u. S. Envoy to haiti. Dignitaries were there. They inaugurated an Industrial Park. That Industrial Park was supposed to bring 20,000 jobs in five years. And 55,000 eventually. Well it only has one big company there. It is a korean textile manufacturer. And only 4000 jobs. I take it as a real example of how bad things are. I spoke to one businessman who was make huge investments in haiti and you think it is the right move. And he thinks it is the right move. Theres this view that caribbean countries are corrupt and it is difficult. If i talked to an indian or asian investor, they would not be looking at the problems that they want to know what the opportunities. Whereas americans and europeans say look at all the problems, how do we get over the problems . To be honest with you, they will miss out on the opportunity. Why does denis obrien see great opportunity . I see great opportunities also. Haiti is only 80 miles from u. S. Shores and it has an inexpensive workforce. Motivated one. Haiti has a lot of opportunities for companies. However, the political situation in the country is such that people are not feeling good about investing their money there. That is the big problem. Do you think it is worse now that the Prime Minister is asked to step down . Well, the Prime Minister had to go. Sorry to say. He created so many enemies within the president s entourage. Who cares if the president s wife doesnt like the Prime Minister . This is about a country in crisis. That is what we believe, that is what i believe. But it haiti when the president takes over, it is for his group his family, line up their pockets. Lining the pockets of wealthy politicians while there are children dying industry . Exactly. What do you think about 20,000 per diem for the president when he goes out traveling . And he goes out traveling often. I think haiti needs to address corruption. How . It has been ever thus. We only need to bring up the name of the duvaliers to highlight the fact that haiti has a complicated and not particularly attractive political history. Well, you know, my book deals exactly with that. I thought the duvaliers i fought the duvaliers all along asking for reform in that country. Exactly in the election where president martelly was elected the International Community is the one to solve that problem. Started to take an undemocratic road the International Community is going to rule out corruption in haiti . Point to when theyve successfully rooted out corruption. Help bring institutions that can deal with these things. We will eventually root out. Did clinton help haiti . Well, the story is right there. Bill clinton was there. He was there for the reconstruction organizations and asking you, do you believe bill clinton has helped haiti . I dont think so. Thank you for joining us today. It was an absolute pleasure will stop please do not miss bloombergs primetime special haiti open for business this monday. There is a new twist in the fight between bill ackman and herbalife. Welcome back to Market Makers. I am stephanie ruhle, along with my partner, Erik Schatzker. We are moving on to bill ackman and his battle with herbalife raging on and guess what . Neither side seems to be backing down. At this point they really cant. The stock is down 15 from last friday alone, and get ready for this number. 60 on the year. One of herbalifes largest investors says he will maintain his stake you went and spent time in his home a year ago. He told you right, left, and senator why he believes in the company. What is going on here . So far it seems to be, from what we know he is holding onto his shares. He is really feel strongly about protein shakes and obesity and that this is an answer to obesity so he sees this fitting perfectly into the health and wellness trends that are raging now in food and beverage. Apparently despite the fact that the stock has plummeted in the way it has and his personal wealth is at stake couple hundred Million Dollars even at this point hold on a second. What kind of money does he have . Can he afford to be down a few hundred Million Dollars . I am im not sure many people can stomach a couple hundred Million Dollars down. From what we can tell this will be a significant investment in him for sure. We are just showing everybody the top five holders of herbalife shares here. There was some speculation that one or more of the top shareholders are selling and that might explain the recent drop in the stock price, not that it has been trending down but it got pretty sharply the past two days. Great debate over whether it is a big holder or potentially a lot of people just dumping their shares. There is a heck of a battle going on behind the scenes. Anytime the stock makes a significant move you see any number of rumors. It seems to be possible that there could be a major seller and everyone wanted to know whether it was stiritz. Apparently it is not. You see icahn, he has his shares. You have soros farther down the list u. S. Sold most recently can icahn even sell out of his position, given how deep he is in . How much flexibility does he have . Well, the flexibility that carl has . Hes got five board seats right now. Avoid he can sell stock yes to make this good before he can sell stock he has to make disclosures at least showing that his position on the company is significantly different. The market should get a fairly good flag before he actually starts dumping shares. Duane, i want to play you a necks of of the conversation stephanie and i had with bill ackman last month. A fair amount of the conversation was about herbalife. Here is bill ackman. The more public we are about this, the greater the possibility that distributors say this is a ripoff, i will step away from it. It has a protective effect with respect to new people being scanned and also has an economic effect. It is much harder for herbalife to recruit distributors in it world of transparency. It is going to be a lot harder for them to recruit distributors. You see that in the results. The company that claims they are a health and Wellness Company when the obesity crisis is worse in 2014 than it was in 2012. The reason the business is deteriorating is it is much harder for them to recruit distributors. Is that another explanation . Maybe on the one hand there are big sellers but on the other they are reevaluating the strength of the business because the fundamentals are deteriorating. If bill is right, they cant recruit new people to what he would allege is a pyramid scheme. I think that is just as likely. People are getting nervous about the longterm prospect of the company. While they are still growing, the growth rates are nowhere near where we saw before. A lot of what people are betting on is that they would get past the investigation with the ftc and still be turning out these doubledigit rates. As soon as they are not doing that they wonder whether some of what bill ackman said about the shenanigans that could happen in the distributor ranks could be happening, being pulled out now and heard their earnings. It is interesting talking to people even people who are critics of bill ackman who ultimately dont believe it is a criminal enterprise and a pyramid scheme, they are they believe he has done a great job of going after this company and making the case that some of the sales may not be fewer sales and that there could be some recruiting happening. I think there is admiration even for the fact that he stuck to this so strongly and been so vocal all the way through. How much has bills very public crusade affected the culture and egos of the company . I sat next to an herbalife distributor on the plane yesterday a random guy with the Nutrition Center in astoria, and he seemed to know everything there was about bill ackman. Has he infiltrated all parts of the company that they know about him . I think that is a real question. There are some people who believe that absolutely this is the kind of business that as soon as people start getting afraid, they dont feel as excited they wonder what is going to happen, and that hurts sales. And you can sell for other companies. If you are limited on how much you tell people that they can sell these products easily, that could hurt. At the same time you talk to the company and other district they seem just as excited as ever to dismiss bill ackman as somebody who is just a profiteer. I think clearly when you look at the sales there are in other countries you can find reasons that sales are down in certain countries. At the same time, it is hard to believe this is all just a coincidence now that the bad things happen in other parts of the country. There seems to be a good case made that there is a slowdown. The company says some of the changes theyve made with distributor is to create better longterm business has basically will make a Better Business overall. Thank you so much for joining us. Isnt it amazing, too i remember ron johnson and jcpenney feeling that jcpenney employees dont know what bill ackman is up to and the customer certainly dont, but it seems like herbalife coasttocoast all know who big bill is and what he is up to. Free Community College president obama is making the argument today. The problem, as usual, who is going to pay for it . There are two separate houses taking hostage taking situations playing on right now in paris and officials are monitoring these developments very closely. Phil mattingly is traveling with the president , who is in knoxville, tennessee this morning. The president is going to be speaking about education but you can be almost certain he will give himself up at on the back of the jobs numbers as well, but the worlds attention is on france right now and in particular the situation playing out in paris. Some of the reading ive been doing this morning suggests that u. S. Intelligence knew as much and possibly more than the french about these suspects. What are you hearing . Yeah, that is absolutely right erik. U. S. Officials over the last 24 hours made clear that not only were they aware of these two prime suspects, the two brothers that are currently hold up and surrounded by french Law Enforcement, but they were on the u. S. Nofly list, on the terrorist watch list, and had communicated with french intelligence about these two brothers and what they were about. I think that the concern right now i am hearing is the fact that the oldest brother traveled to yemen to train with al qaeda in the arabian peninsula, by far the most dangerous al qaeda Splinter Group in american eyes. They were still able to pull this off. I think it is raising a lot of red flags to mystically, red flags domestically erik, and with the french as well. What kind of assumptions could we make maybe people are telling you about the way individuals like that with that kind of travel history would be treated here in the United States. It would be very difficult for them to get in. If you look at what is an interesting comparison here, and why this makes a lot of people nervous, is you look at the Boston Marathon bombing. Tamerlan tsarnaev was also on the nofly list. But there was such a miscommunication between all the different agencies within the u. S. And the lawenforcement infrastructure that he was still able to travel and come back and not raise any flags. In this case with the older brother having traveled to yemen, u. S. Officials being very aware of that, his ability to get back into the country would be almost nil. But american officials, with such large timber watch list in such large numbers of people they are tracking right now this is the type of thing that raises a lot of concern. You know that these questions are being raised in the french government as well. We will be hearing from Phil Mattingly and the president himself later on, making some remarks about education. 56 minutes fast the hour pretty close to it anyway and that means it is time for on the markets, and here is scarlet fu. We need to start with what is going on in equities. If you look at bonds and currencies as well, we will see if i to quality. The dow industrial is losing as much as 179 points, off its worst levels of the session, paring back that decline when the eight two 148 points. The 10 year yield has gone south to 1. 97 . Take a look at what happened with crude oil. It was writing a bit of a twoday rally but that seems to have faded and now we are down to 9. 8 so far this new year it is trading at about 40 a barrel. The gandy year at 53 and change. Began the year 53 and change. After the wage gains result in the summer or not much to speak of for investors. Live from bloomberg headquarters in new york, this is Market Makers. Ager medic turn of events in france. Special forces surrounded the two suspects in the paris massacre and the other gunmen linked take hostage. Money managers. They pay big books to make sure their pictures disappear. Going for the gold. Going behind the scenes as the comedy jane the version is up for a golden globe award jane the virgin is up for a golden globe award. Fastmoving developments in france. Reportedly, they have told the police they want to die as martyrs. There has been a shooting in a kosher supermarket. The gunman is holding a hostage or several hostages. This gunman is threatening to kill his hostages if authorities launch an assault on the massacre suspects on the other side of town. We have hans and goals and Caroline Cannon on the ground. Caroline, what has happened . I hear that there have been multiple exchanges of gunfire. Just in the last five minutes , we heard a few gun fires. Explosions near the site. Where i am is one mile from the site. We clearly heard the gun fires and explosions. We are on a parking lot. We are waiting for more information. It may be an indication that an assault is about to happen or is happening. What do you mean it is about to happen . What exactly . All we heard was gunfire and explosions. I cannot confirm 100 that the assault has started. The police and special unit were in touch on negotiations with the kouachi brothers a few hours ago. They have been trying to establish contact. They have not moved inside the building where they are being holed pup. The building is completely surrounded by the police. We just heard some gunfire and explosions. I want to mention to you that french tv is reporting that an attack has been launched. The gunfire and explosions that you are hearing suggests that what you believe is happening is true, according to french tv. Smoke has been seen. Lets take everybody to hans nichols. Given the threat that the terrorists near you has been making to either injure or kill his own hostages if the Police Launch an assault, the tensions clearly have to be rising now. The tensions are rising. We have not heard anything. There have been no shots fired here. We know that the suspect inside is a 32yearold and police are looking potentially for a 26yearold female associate and that may explain why some of the other roads around paris have been shut down. They have shut down part of the ring road that circles paris. They raised the entire threat level to that terrorist level in all of paris. That is the situation we are at right now. The actual kosher supermarket is a few hundred meters behind me. We are waiting and listening and hopefully we can report back to you more. This is all according to police reports. There is a report that two individuals have been killed to read we have not confirmed that report ourselves. One other note is that when the suspect opened fire here he said, you know who i am. How difficult is information to come by right now . It is trickling out. The difficulty is similar to the Boston Marathon. Signal noise and what you believe on social media and what to believe in terms of local press reports. There are excellent local reporters and french radio, but we are reluctant to Say Something really happened until we have full on additional confirmation from the interior ministry and from the police. They have not been that forthcoming. Their focus right now is on freeing the hostages staying safe, staying calm and bringing peace to the city of paris. They dont want to tip off the hostage takers on what they might be. The reticence with the media may be understandable. Thank you very much. Both of you, i just want to mention that we here at bloomberg have confirmed that French Police have started a raid on the suspects in the massacre of the Charlie Hebdo journalists and policeman. 12 people died in that attack. Lets go to the top Global Business stories of the morning. The job market has not been this strong in 15 years. Employers beat forecasts with 252,000 jobs this month. More than 2. 9 million jobs were created this past year. The Unemployment Rate fell 0. 2 . The house approved the Keystone Pipeline and the senate may do the same next week. President obama has suspended a state Department Review of the pipeline while the nebraska case was ending. The president has expressed opposition to the overall pipeline. Activist investor nelson pell is taking aim at dupont. He says the company should be broken up to unlock shareholder value. I want to talk a little bit more about the keystone decision. It faces at least one fewer hurdle. The high court in nebraska cleared its path and it came just hours before the house was set to approve the pipeline. That puts new pressure on the president to decide the project cost fate. Peter cook has been following the situation for months. We have to imagine that it is a big win for keystone but that it is not a deciding factor ultimately. This is a big win for keystone supporters. The decision is coming from nebraska pasay court. Nebraskas high court. The house is set to vote this morning on the 10th proposal to bypass the president it approve the pipeline going forward. Of the nebraska decision, the president wants to allow the state Department Review to finish its work. He would veto the house bill. What is the chance that keystone becomes a bargaining chip . You have a republicancontrolled congress. The president has made his feelings clear, yet there are so much you would like to do in his last two years in office. It has to seem like this could be an issue on which compromises possible. Compromise is possible and it could be a bargaining chip. There is precedent that the white house is very hesitant to mess with and that is the notion that these kinds of projects, whether it is a pipeline or other energy project, that that has to go through the regular review process, the regulatory review process. If congress can bypass that on keystone, there is precedent that maybe the next project, there will be some intervention as well. They are sensitive to that. But this is a project that several democrats would like to see moved forward, especially in light of this nebraska decision. If there is a surprise and todays vote or the senate votes in the next several days, what could it be . That more democrats and up supporting the proposal, putting added pressure on the white house to do something other than stamp it was a veto . Absolutely. The vote to watch is not so much the house vote. We will be looking to see how Many Democrats back the proposal. In the senate, as soon as next week if there are 67 votes in favor of the project, then we have enough to override the president ial veto. So far, they were at 53. Democrats were with the president because they were waiting to see what nebraska was going to do. Now we have a new ballgame. It is hard to imagine that they will embarrass the president with a veto override. I still expect this to be a decision that rests in the hands of the president and it is not entirely clear whether it will be a you a or a name. Ya or a nay. What is next on the agenda for the republicans . More controversy is right around the corner. They have been meeting behind closed doors here to decide on legislation to approve more funding for the department of homeland security, which expires at the end of february. They are holding out on that funding because they want another attempts to roll back the president S Immigration executive order. They will vote on that next week and that sets up a showdown with the white house with democrats in the senate over whether funding for this agency could be in jeopardy because of the president s actions. In light of paris, it has become a much more political atmosphere and it much more contentious atmosphere. This will be a big fight right ahead of the state of the union a dress. Address. A vote on the house coming up this morning on keystone. Peter cook, thank you very much. When we return, we have no pictures to show you about our next story. It is all about superpowerful Money Managers who will do anything to keep their faces from public view. It is friday. Time to play the yearbook game. Have a look at this billionaire. He graduated from Roxbury Memorial High School back in 1951. That is all our producers are telling us. We want you to tell us who it is. Tweet your guesses to us. Do you know who it is . Not immediately, but i will try to figure it out. More breaking news from france. Police have launched an assault on the building where the two main suspects have been holed u p. Lets take you back to caroline. Unfortunately, she is not available. This is the building where the two main suspects have taken refuge. You can see smoke at the top of the building and the flash of gunfire. That is police trying to resolve a hostage situation. The police appear to have decided that now is the time to strike we are awaiting further updates to find out what the results of this assault was. It looks as though there was a pheromone to firepower involved. You can see all of the smoke clearing. I think we are going to bring and hans the. Nope, we are not. A picture of the two suspects. This is said and cherif kouachi. Those of the people in the building. There is another hostage situation on the other side of town and that is where hans nichols says. Lets take you to him right now. Erik we just turned four loud explosions, followed by a fifth one, and then intense gunfire. 2025 reports. It sounded like automatic weapons 250 meters away. We are seeing several ambulances coming in. There is a row of ambulance lined up. That is the situation right now. There is reporting saying that if the hostage situation here was connected and contingent on the two suspects of the magazine shooting being released. Maybe closer to 18 minutes ago we started to hear reports that there was gunfire we lost him. The flash and explosion could have been from stun grenades which could be a tactic from the police. The french press is reporting right now that the two suspects the ones against whom the raid was staged not the one you heard from hans, but the one near the Charles De Gaulle airport, that the two suspects have been killed and that their hostage has been freed. We have not been able to confirm that but much of the reporting over the past couple of days has been accurate. We showed you images of the raid taking place. The smoke rising from the top of the building. I will just repeat in case you are tuning in. A raid against the two main suspects in the Charlie Hebdo killings has been successful. The kouachi brothers are dead and the hostage they have taken and whom they threatened to kill has been freed. That is all subject to confirmation and more or less at the same time another raid appears to have been taking place on the other side of town where another hostage situation was in progress. That is where hans nichols is. Now that his shot is back up and running, we will take you back to hans. Give us another up eight on what you have seen transpiring over the past few minutes and what you believe to be the case. I was just telling everybody that according to afp the kouachi brothers are dead. The hostage taker here had linked their release with him letting the hostages go here. By my watch, there is about an 18 minute difference between the five percussions we heard here and i dont know if they are percussion grenades or not, but they were followed by intense gunfire. A report of about 20 shots fired. It sounded in first. What we are seeing now we are seeing several ambulances we have just seen one ambulance leave. That is the latest from here. We will report back more when we have a little more firm. Four explosions followed by a fifth one. That was followed by intense gunfire. We are also reading just now that several hostages were freed at the jewish kosher supermarket in paris. That is where hans is. Information is flowing in fast and furious. Afp is reporting that the hostages at the kosher supermarket or at least several of them have been freed. Lets bring caroline back in. Tell us what it is like there right now. What we hear is that the raid according to the information we have from afp, that kouachi brothers have been killed. We will need to double check the information in the next few minutes. This is all happening live as we speak. We just saw a Police Helicopter leaving the site. Earlier, we heard a few explosions. As we know, the brothers were armed with ak47s. We dont know if these explosions came from the weapons the police were carrying or from the gunman. Apparently, the gunman have been shot in the hostage that they were keeping in the Publishing House has been released. Caroline what is going to happen next . Who are you going to be hearing from next . How close are we in contact with the police onsite there . We are not very far from the site. They told us that we would have a press conference as soon as the operation was over. We will be waiting for that. Hopefully there will be a press conference on how the Information Operation went. It seems like it is about to be over. We hear police cars leaving the site. We see there are still a very heavy police presence. Are you in the street or outside . I am just on a hill which is about one mile from the Publishing House. The police of been keeping all the journalists year to keep them safe. Obviously, closer to the site, all the streets have been locked down. That is one mile down the road. Have you heard at all from the police that any effort to free hostages at both sites would be coordinated . It appears to have happened. Both of those operations appeared to have taken place within minutes of each other. We did not hear from the police year about this. But of course, this is what happened and earlier we heard that the other hostage taker was demanding the release of the kouachi brothers here. [indiscernible] they wanted to coordinate. We are losing your connection just a little bit. We will come back to you shortly. Lets take everybody back to hans nichols on the other side of town. Caroline just mentioned that the hostage taker who was near you was related to the kouachi brothers. Have you heard that as well from the police whom you are speaking with . Police have confirmed that there is a relationship and suspect there is one between the suspect here and the two hostage takers up in the northeast, outside of paris. We have seen maybe half a dozen ambulances roll out of here may be about seven minutes after we initially heard those loud explosions. I want to say they are about 3040 meters away and you could see two medical workers inside the ambulance leaning over. I dont know if there is a patient. You could clearly see an iv drip. This is not confirmed. It could be an indication that either a hostage taker or a hostage was being rushed to the hospital. There have been multiple reports possibly to hostages had been killed, according to earlier reports. We heard that that gunman is now dead. Are you getting confirmation on any of this . We dont have confirmation on either the gunman or that there were two deaths earlier. No official government confirmation on that from the police or the interior ministry. The interior minister is on the premises here. He is overseeing this operation. We are hoping we will get some sort of briefing now that the shooting appears to be over. The shooting is over, but the questions remain. It is going to be difficult to answer those questions if the perpetrators in both of the crimes are dead. Did you have any sense heading into this operation as to whether the police were aiming to shoot to kill where they would only do so if it was a matter of selfdefense . I have no information. If your goal is to discover more, you are always a little more judicious. That said, one of the interesting things about the age we live in is that there could potentially be electronic records left behind. I suspect french authorities will betray turned to hoover up all that information. The swat teams, what their orders were i simply dont have any information. I want to get a sense of how dangerous it feels. Who is in the streets besides you . Are there any civilians around . Downtown paris, last night it was very much a party atmosphere. They were having a demonstration for freedom of expression. There were maybe 3000 people. They were all holding up pencils , which is become a symbol to signal your solidarity with slain journalists. Another 300 meters that way is where we heard the explosions. Normal civilians are probably an additional 200 meters back that way. As the crow flies, i would say the eiffel tower is three or four miles away. When you get into central paris it is heavily armed, but it does not feel unsafe. Im sure the threat level remains fairly high because the shooting yesterday that killed the from email female Police Worker and the subsequent hostage taking was not clear immediately that it was related to what happened at Charlie Hebdo. There was a great deal of uncertainty yesterday. Today, there are appeals to be appears to be in this. The 32yearold here may have had a 26yearold accomplice. We dont know she is still at large. That is a bit of information i suspect police will want to disseminate before they alter their threat level which is that the terrorist threat level for the entire paris region. Howard, you are not on the ground or dealing directly with the situation, but you have a lot of experience in this realm. What you think about the way it has been handled . I think it has been handled very professionally so far. It is difficult to make an assessment, but the paris services very well trained and equipped and they will deal with what has to be go with. The unknown is how many innocents are going to be left dead. We dont even have a firm answer as to what happened to the hostages on the either side. The hostages held up with the kouachi has been freed. That is an unconfirmed report. There is also an unconfirmed report that to hostages at the supermarket have been injured or killed. What is on the mind of the Counterterrorism Police as they initiate an operation like the one that we have seen play out similarly in two separate locations within minutes of each other in paris . The first thing on their mind is to free any hostages. They want to determine how widespread this is. They want to know whether there are going to be other incidents. If they go into the situation they want to know if there will be secondary devices. They want to know who was in command and control of the situation. Whether infected is al qaeda from yemen. In fact it is al qaeda from yemen. Is there an Incident Commander who is directing all of these incidents so that there is a minimum loss of life to the innocents and the officers. Trying to figure out how to get more intelligence so that they can contain and arrest anybody that is involved. Isnt it hard to do that with the gunman killed . There are lots of sources of information. Look at the very fortunate thing. The gunman who appeared to be so professional and carrying out there executions left their identity in the car that they stole. There are all kinds of things and techniques that Law Enforcement and the Intelligence Community will use to get as much information as possible. Knowing what we know now, how differently would Police Approach the situation . Think they would approach it with great caution. The french and u. S. Intelligence services have tremendous amounts of information on both the organizations and apparently on these individuals as well. When you have thousands of potential terrorists you are dealing with come you dont concentrate every single day on each individual. It is just not enough resources in the world to do that. This is going to be the total focus the individuals and everybody around them. It is early days yet, but any conclusions about what else could or should have been done . Our White House Correspondent told me earlier today that some of the u. S. Intelligence officials he had been speaking to said that if information existed that he had trained in yemen there is no way he would have been allowed back in the United States and yet this individual, it was known about this guy, and he was in france. Hindsight is 2020. Yes, if they had known about him and if he was observed coming through border he should have been detained and a threat assessment made to his potential threat to the public and action should be taken. Can we said that that has been done 100 in this country as well . I know for sure not area not. I remember a 1997 incident when we rested arrested two palestinian men hours before they were going to blow up the new york subway with backpack bombs. They had been through the border at vancouver three times, including getting detained three times. This is such a difficult thing to do because you are not dealing with people in uniform are people with signs on them that say, im a terrorist. It is a very difficult thing to do. Thank you so much for joining us and giving us your perspective on the situation in france. I want to take you back to paris, where hans nichols is standing by with more information. There is a hospital very nearby which could explain where the ambulance was going. Le monde is reporting that the hostage taker here is dead. There is a separate report from french radio that said that three hostages were dead before the operation started and that the hostage taker had been neutralized. We now have two separate media reports saying that the hostage taker is dead. We are still trying to get a precise figure on what happened with the hostages, how many there were initially, how many may have been that at the start and how many may have died in the operation. We do not know how many of the hostages died in the operation. What have you been seeing around you in the past few minutes . There has been a whole train of ambulances coming out. At the same time, some motor police have been coming in. Behind these lights, you see a bank of ambulances and then you see of their some lights flashing where it sounded like the initial explosions were localized. We are seeing quite a bit of activity here and we make it a press briefing from a Police Officer shortly. Standby on any information. Or the Police Providing you with any word as to whether this is being called were not a Successful Operation . We have Nothing Official from either the police onsite or the interior ministry further down in the center of harris. We still waiting on the official confirmation. At your location, the kosher supermarket, it is believed reports suggest that the hostage taker was killed and that as many as three of the people taken hostage were injured or killed before the Police Operation began. Is that right . That is what we have from local media reports. Thats correct. According to afp, bloomberg has confirmed that an assault was carried out against the building where the two kouachi brothers were holed up. In that situation, the brothers were killed and a single hostage they had taken was freed. All of this information and much more we presume, has been communicated to u. S. Authorities and that is why we are going to go to Phil Mattingly right now. What are you hearing . Can you hear me . Yes. Got you there. Tell us what you have been hearing. The president has 10 off Board Air Force one. He has been getting minute by minute updates. He really is. He was briefed early on with the second hostage situation, with how everything started to come together, with the primary suspects. The president gets his Daily Briefing every day, but this one was almost entirely dedicated to paris. They are watching in the same way we are, as terms of getting information as to whether or not this was a successful assault. They have people on the ground and are very involved with the process. Thank you. I would like to bring in gary nessner. What you make of the latest news . Obviously, the police felt as though they had to act in an effort to take the hostages and the situations. That was no doubt driven by information they had gathered through dialogue with the hostage takers and maybe some other source that indicated that failure to act would jeopardize the lives of the hostages. Those are tough decisions. For gunman threatens to kill his hostages and make him suffer a martyr, how does that change the calculus . I have for this repeatedly through the news media about putting too much importance on someone saying they are willing to die. We hear this all the time. You have to look at the behavior. The fact that they did not stay at the initial crimes scene when they killed those people, the fact that they were fleeing from police, they are holding hostage to prevent the police from getting them that would also be countervailing information that would suggest that at least part of them wanted to live. We need to be careful about not giving them too much credit. Terrorism is a technique. It is not a personality type. Can you explain that one more time . Terrorism is a strategy. There is no terrorist personality. It is quite easy for us to assume if someone has done terrorist training that they have all these attributes and will behave certain ways, one that often is not those preconceived notions we have. These guys are basically losers and they have not succeeded at anything in life and they were having trouble adjusting and they glommed onto this radical jihadist ideology. We have to be careful that we dont turn these into superman or carlos the jackal. That is a concern of mine. You are saying these are discontented losers looking for purpose. Let me also suggest that someone like these guys, they can be extraordinarily dangerous and difficult to deal with. One of the big problems is that they were probably very uncertain about how to get out of what they got into. They probably did not have a master plan and they were playing at moment for moment. We have to be very careful on the Law Enforcement side of things that we dont give them too much credit for having a master plan that may not exist. What you know about the way al qaeda tells its trainees to handle a hostage situation like the one that played out near Charles De Gaulle . One of the brothers allegedly had al qaeda training. How does that change things . I dont have any current information on the kind of guidance that al qaeda makes. I can tell you historically that the knowledge and skill set they have in terms of countering our techniques is pretty rudimentary. They would typically take a position of not negotiating and making a demand. Im not sure if youre uptodate on the latest and i want to make sure all of our viewers know that French Police have conducted two separate operations in both distinct but related hostage taking situations around paris. Near Charles De Gaulle airport the two kouachi were holed up. There was an assault. We understand that the two brothers have been killed in the hostages free. On the other side of the city there was a hostage situation at a kosher supermarket. One gunman had taken several hostages. French Police Conducted a raid. There was much gunfire and explosions in both cases. That gunman is also reported to be dead. It is possible that several of the hostages were injured or killed either before the raid began or in the course of the raid. We dont have Firm Information on that. A reporting is coming from multiple sources and we are seeking to confirm it as soon as possible. Afp is confirming that both of these operations are considered over and we are awaiting further information area let me ask you given the fact that these were connected situations was it almost a foregone conclusion that police would conduct the rates almost simultaneously . It is highly likely that the police coordinated the two assaults. We dont know what triggered it. Did the police have enough intelligence or did the terrorists trigger the action. That is certainly a testament to the French Military and assault and rescue team. It sounds like they did an excellent job of revolving resolving the situation. How often do Counterterrorism Forces in Different Countries communicate with each other and share information . There is a sharing of information there is a working group that meets annually and it is the chief negotiators from about 20 countries that have organized Negotiation Team programs. There is always a presentation of what happens. Yes trillions, the canadians the fbi of course this situation will be shared with others in that community so that we can all learn the lessons. Assuming things quiet down after this and everything is handled, when people wake up in paris tomorrow du believe this is going to be an isolated incident or do you think the danger is still strong . I cant speak for what the french people will do. I think they should be quite proud of their Law Enforcement agencies. France has a different kind of a problem than we do in the United States with a larger number of jihadists that live within the territory. There is a lot of work to be done. Clearly there was work to be done. Can you join any conclusions about what might have been done differently . There is always armchair secondguessing about what happened. The cartoon office had some level of security. There was an awareness of the threats against them. It is very difficult to say. That will come out in a postmortem of this incident. These are very challenging issues for all of us. We have freedom of the press, freedom of religion. Nations are put in a real quandary as to how they can monitor and control their own natural born citizens who have disparate perspectives. Two incidents like the ones that we have seen transpire in paris over the past three days serve as a reminder to the Intelligence Community and to everybody else how important data gathering is and the challenge of balancing liberty and on the other hand security . I think youre absolutely right. It certainly does remind Law Enforcement agencies around the world that they have a very important job, a very critical one. It is very hard to accomplish that and safeguard their citizenry. You certainly have to be regulated by human rights and laws that allow freedom of speech. These are some real challenges that we have to deal with in our modern societies. We certainly have this in the United States as well. Do you worry that the debate over privacy in europe, which is Even Stronger in the United States, that it perhaps went too far and that opportunities to gather intelligence on these brothers and the gunman at the kosher supermarket were denied as a result . I cant speak to that. I dont know the extent to which the french were able to do the job they knew to do. There was a report that the guys at but monitored for a period of time. Because of the location of resources, they were not able to be watched. Judgments have to be made by Law Enforcement agencies. You cannot follow everyone all the time. When we have people come to our country and we see activities that are very problematic we need to leave it there. Were back in two minutes. You are looking at a live shot from paris. This is the area outside the kosher supermarket where one gunman has taken hostages. Police launched an operation against that supermarket against that gunman. Police are reporting that he is dead and that some of those hostages have been freed. Ons nichols is on the scene. I should also mention that an operation was conducted against the kouachi brothers who had taken a loan hostage not far from the Charles De Gaulle airport outside paris. We have confirmed that the raid was successful, inasmuch as the two brothers, the main suspects in the Charlie Hebdo killings, were killed and the hostage was freed. That is a quick update on what has been happening. What have you been seeing . The operation here appears to be dismantled. Afp reports that the hostage taker was killed and there is a local report that four additional hostages may have been killed. Before, we thought the number was at three. Four hostages taken at the Kosher Grocery store have been killed. All around me, there are nice apartment buildings. There are photographers that have their long lenses out. Those long lenses are taking remarkable pictures and one of those pictures were shot from up there which is about 50 meters away and they got a shot of the hostages leaving. Some of the freed hostages leaving after the explosions took place. Hopefully we can get some of the pictures on air. You saw a child slung over a Police Officers back. There were at least several survivors. The current reports are that four people perished inside the Kosher Grocery store. Four people were hostages or four people total . For people total is what i have. Let me say four people total. That could mean that one person was the hostage taker and three hostages. Thanks for checking me on that, stephanie. It could mean that just three hostages or died have died. Police have not confirmed that. We have a Police Officer who is briefing five to 10 feet away from it. We will come back to you if we get something from that. For now, back to you guys in new york. We are going to bring in our paris bureau chief. You are familiar with the bloomberg reporting. Can you add anything to what we have been telling our viewers . It does not seem that it is confirmed, but four debt amongst the hostages. We have two because she is. We have no confirmation for now. Many media are saying that for hostages have been killed at the kosher store market. What is your latest information on what happened at the site near Charles De Gaulle airport where the brothers were holed up . It looks like they were coming out of the building shooting at the Police Forces and this is when the Police Forces started their assault against the building. This is how they were killed and also whether hostage was safe and sound. Your most current information is that there was only one hostage, where is there were multiple hostages at the supermarket. He is safe and sound. Absolutely. That is the latest that we have, while the two brothers have been killed by the riot forces. While they were trying to get out of the building. Have you heard from the police how long it is going to be before we get a comprehensive briefing on what happened in both operations and a tally of the total . A briefing is expected later on today. We have been told that one would be near where near port de vincennes. We are expecting the french government and the interior minister to come out. The latest stories saying five people have been killed including the shooter. For hostages four hostages and the shooter. Thank you very much. Our bureau chief in paris. That will do it for Market Makers. Our coverage of these two separate situations