Transcripts For BLOOMBERG Market Makers 20150324

Hbos hit fantasy series gets ready for the fifth series. Welcome to Market Makers. I matt miller. We are going to talk to erik on the phone. He is on location in malaysia. We will get to him in a moment. I will start off with breaking news with new home sales that it and a scarlet fu is in the newsroom with headlines. Scarlet we have new home sales unexpectedly rising to a sevenyear high. 539 thousand, which tops even the most optimistic estimate among economists that we surveyed. This is an increase of 7. 8 from january when economists were looking for a drop of 3. 5 . We should mention that the previous month numbers work also higher. It was originally a decline of. 2 . That has been revised to 4. 4 increase. A 539,000 annualized rate and a sevenyear high for new home sales. It appears that weather did not really stop the buyers necessarily. A lot of people have been anticipating a weaker number than what economists have been looking for. It certainly was a drag on data points we have seen. Right now, this is not affecting newhome sales. In terms of the effects on markets, this is u. S. s stock index. We are a little change on s and p and dow but it does represent a move up. The dollar has turned positive. The 10 year yield is pretty much where was before at 1. 9077. Matt much better than what we saw yesterday. Sales were really the concern for economist, so this says a lot of good about the housing market. Thank you very much, scarlet. I will kick off the top business stories of the morning. Authorities say no when is likely to have survived the crash of a german airliner in the french outs. Eight 320 was on a flight from barcelona to distal dwarf when a pilot sent out a distraction signal. It was about 650 feet high and 144 passengers and six crew members. French president says that survivors are unlikely and investigators are trying to find out what happened. It is a new tragedy. We are going over this tragedy. We need to find out all the causes and tell the relevant authorities. Spanish as well as germans. And the families of the victims. It is a sense of morning that we feel because it is it it is a tragedy that took place on our soil. Matt it is an airline owned by lufthansa. Mortgage morgan is at leaving to take the same job at google. He has been with the bank for 28 years and she is one of the most female senior executives. She grew up in Silicon Valley and is a member of stanford board of trustees. She will be going back home. The socalled inflation rate rose. Prices of full food and fuel were up to. 20 . Feel prices of stabilized and fed policy makers are looking for inflation to pick up as they consider raising Interest Rates since 2006 for the First Time Since 2006. Greece is now a loselose game and the country could go down the drain. George there was spoke with bloomberg and he talked of the possibility that greece would leave the eurozone. George soros spoke with bloomberg and he talked of the possibility that greece would be the eurozone. It is heading south. Is it a 50 50 possibility . I think so, yes. Matt we will have more, so stay with us. One of the worlds Biggest Mining Companies is being hammered by lower commodity prices. Theyre cutting the dividend by 84 and they are considering spending cuts in asset sales. Freeport says they are looking for funding for oil and natural gas projects. The company has been trying to reduce debt which totaled 19 billion at the end of last year. There is a report that israel was spying on talks with iran over the countrys nuclear deal. The wall street journal said the white house was not upset with the spine since both countries regularly spy on each other, but the administration was unhappy that israel shared the information with u. S. Lawmakers. This was in an attempt to sink the president s field. Israel has denied directly spying on those talks. Lisa more on the tragedy in the french outs. A News Conference right now in germany. A spokesman is saying that the plane flew into barcelona this morning and dusseldorf was leaving. He said it reached the height at 10 45 and began descending one minute later. He has saying this is very tragic and there were two debuts on board and 150 people are feared dead in the crash of airbus 820. Rudy bloomberg has more from paris. Rudy, what can you tell us. Why did the plane go down . Rudy it is unclear for now. I have to look at the weather conditions at the time of the crash. It was at least at about 4000 feet. 1. 2 kilometers. There was a mild breeze and no rain, no rain showers in the area. It seemed to be a fine day. Obviously, that does not tell us what happened at 11 00 at 11 kilometers. Certainly at the mountain level, the weather was fine and conditions were quite benign. Lisa the plane crashed in a pretty high area. What is recovery effort going to be like . Is it going to be difficult to determine what caused it and how severe these implications are for other planes . Rudy it is hard to say at this time because we have not got word from rescuers reaching the area. It is very rugged. The mayor from a nearby municipality says helicopters are not able to land at the crash site, so that is how rugged it is. Rescuers will have to get to the site on foot. Some more on the passengers that were on board. There were some reports in german media that there was a German School class on board and the spanish newspaper reported that there are at least 45 people with spanish surnames on board. Matt i wonder if we know anything about the plane obviously, lufthansa would likely operate and maintain the plane with the rest of the fleet, but this company was wrought in by lufthansa from another company a few years back, so what do we know about this a320 . Rudy it has a pretty decent track record. In europe, the regulations apply. If the plane is not airworthy, it will not take off. Most of the subsidiaries of the Major Airline operators seem to have the same major standards as their parent companies. Lisa where are the families right now . Are they gathered to find out more information . Rudy again, we dont know if families have been informed because we dont know yet even who was on the passenger list exactly. They were representatives of german wings at dusseldorf airport waiting for families who are going to pick up their beloveds coming off the plane. Obviously, we will need they will need support when they find out the plane will not arrive in dusseldorf. Matt i am how deep the plane was in the french alps and if there are areas so big that there were no landing ships to diver two. Does it get that harry in the french outs . Does it get that hairy in the french alps . Rudy within a couple of kilometers off the coast, it gets pretty rugged. The alps get up quite steep there. They are higher than 1500 or 2000 meters. So 6000 feet. Yeah, it got to be pretty hard for an a320 which is a pretty sizable aircraft to find a landing. To add to that not sure that the plane couldve landed with the report from the French Civil Aviation Authority is that there was a rapid descent from 30,000 feet to 5000 feet. That does not suggest a lot of recovery possibilities for the pilot. Lisa 04, horrible tragedy. Thanks for all the information. Bloombergs rudy rutenberg in paris. Matt coming up, one week to go before the deadline for reaching a deal with iran on the nuclear program. We will talk with the state departments former lead negotiator with the Islamic Republic. Stay with us. Lisa time tolisa bring you uptodate on the top stories of the morning. The pilot of german airliner sent out a distress take note moments before the plane crashed in the french alopps it was carried. 10044 passengers and six crew members from barcelona to dusseldorf. Authorities say it is unlikely that anybody survived. The plane was a german wings and a Lowcost Airline flown by lufthansa. The surprise report on real estate. They unexpectedly rose to a sevenyear high last month. He climbed almost a percent from an annual rate of 539,000 homes. That is the most optimistic forecast of economists surveyed by bloomberg. A lot of people were saying that a stronger job market may have helped. Scientist from argentina say they discovered a secret hideout built by nazis who escape from germany. The buildings were found in the jungle with argentina border with paraguay. The swastika was etched into one of the buildings, but it is not certain the buildings were used. Nazis fled to argentina after the war and they were able to live without hiding. Those are the top stories. Coming up in 10 minutes, Morgan Stanleys ceo was headed to google after three decades with the bank. Plus, interview with billionaire george somos. He says there was a 5050 chance greece will leave the eurozone. Lust, get ready for season five of game of downs. Matt down to the wire for nuclear negotiations. Secretary john kerry once a deal by the end of the month that would relax western sanctions in exchange for a rollback of Irans Nuclear program. Any agreement will be opposed by members of congress here and hardliners. President obama said that the Islamic Republic needs to offer more. President obama what is going to have an impact on whether or not we get a deal done is number one, iran is iran prepared to show and prove to the world that they are not developing a nuclear can we there are five that in an intrusive, consistent way . Matt lets bring in Nicholas Burns who served as under secretary of state for Political Affairs and the Bush Administration and was the lead negotiator on iran issue at the time. Now he serves as an advisor to secretary kerry and as a professor at Harvard Kennedy school of government. Welcome to the program and thank you for joining us. Let me start by asking you professor, what negotiations were like previously . Because chile did not negotiate directly with iranians in the past. Nicholas no, the problem in 2005, 2006, 2007, 2000 eight is that iranians were not negotiate with the u. S. And european powers. We spent most of our time in the bush admin station sanctioning iran and driving up the cost for them or the fact that we felt they were heading toward a Nuclear Weapons capability. The Obama Administration has taken up the same structured policy and i think they have done really well in sanctioning the iranians turning the use of force, but finally we are able to get the negotiating table with iran in the last year and half. As you said in your lead up to this interview, it seems like the u. S. And other powers are down to the last weeks of that negotiation and it is unclear whether or not it can succeed. Matt can i first ask you then is it still a valid concern that the iranians are headed toward your weapons capabilities . Because as you said, we thought that since the bush admin station we continue to hear it is coming but it does never seemed to materialize. Nicholas the object here is to prevent iran from becoming a Nuclear Weapons power. Obviously, they have a Civil Nuclear program and they are able to mine and convert iranians and enrich it. As i understand it, just looking at the press reports, the object here is to try and diminish their ability and cap their ability to enrich uranium. As the president said in the interview with the Huffington Post is to have an intrusive oversight and inspections by the International Atomic agency of the u. N. In there program and to have enough reasonable affirmation that they are not going to get close to a Nuclear Weapon and to have space to be able to judge that. So all of this comes together. An additional issue here is that if there is an agreement, to a point are the sanctions lifted and what graduates the scale . Because u. S. And europeans would want to leave the sanctions in place in order to guarantee an sense advice that the iranians would make obligations. Lisa is there anything iran could do to improve that iranian enrichment is forcibly and purposes . Is for civilian purposes . Nicholas a lot of people have been commenting on the fact that we should probably modulate that phrase and say dont trust iranians, but there are five. There was no reason to trust them because they have lied and cheated in the past about their new year program. I think the Obama Administration has been very toughminded in them trying to build up a verification program. Not to trust iranians but to make sure through verification procedures that iranians are adhering to the agreement that they will ultimately signed. That is a big part of this negotiation and the u. S. And the europeans, i think, are trying to drive a hard bargain. Lisa what has changed for iran that makes it seems like they are operating in good faith with these negotiations . Nicholas i dont know that they are operating in good faith. I think they are at the table because the price of oil has dipped for them and they have lost a lot of hard currency through the drop in the price of oil. Secondly, sanctions have been very intrusive. Particular leave the oil embargo by the europeans and financial sanctions by the United States and the european union. So the sanction is a bit hard and they have heard the iranian economy. Iran was not in good shape to begin with. I think that is the principle reason they are at the table. That means we can combine leverage sanctions, all with diplomacy which is what i think administration has wanted to do. I think i hear the administration has been effective in setting this up and we will now have to see whether the iranians are willing to make the fundamental compromise at the end of these negotiations that are always most difficult. In most negotiations, the toughest issues are left for last and that appears to be where these negotiations now stand. Matt the u. S. Congress, u. S. Senate, have done their best to undermine the president s negotiating power and his leverage. What do you think of that open letter that they published sort of address to iranian hardliners . Nicholas i think a letter by the 47 republican senators was a mistake. A procedural mistake. Congress has a right, obviously, to exercise judgment here. Congress can at some point, both up and down on what they think of the deal. The administration will have to bring a completed deal back to the congress and the american public. They will have to be persuasive and exciting like this is the best move for the United States. Congress in my view, does not have a right, does not, to intervene directly in the negotiations. By sending a letter to the iranian leadership effectively saying, dont deal with it meant the Obama Administration because the future administration will counteract what it does, that is interrupting or basically contravening the president s Constitutional Authority to lead on a Foreign Policy and be the lead negotiator. We cannot have a situation where 535 members of congress try to be at the table even virtually with iranian government. You have to trust the president to lead. Congresss role comes later. A role of oversight, a roll of funding, congress controls the Purse Strings and congress will have a big impact on these negotiations because if it is agreed upon, congress will have to lift a vote vote to lift or not some of the statutory sanctions that have been put in place by previous sessions of congress. So that is where the role comes in, but not in the middle of negotiations. Matt that yahoo seems to be undermining the president does well netanyahu seems to be undermining the president as well. Nicholas you understand why the israelis are concerned, but i do think tactically it was a mistake for Prime Minister netanyahu to come to congress when he delivered the joint speech in the joint session of congress and effectively try to deceive president obama on the iran issue. Thats allies should work behind closed doors to discuss differences and there are obviously differences between israel and the United States but to take the president on public week and try to defeat him was a tactical mistake by Prime Minister netanyahu and seems to have back. Matt professor burns, thank you so much. Nicholas burns, professor at Harvard Kennedy school of government and the number of the red sox nation. He is a big red sox fan. I guess you would be if you lived up there. But we are not. Coming up, george soros says there is plenty of good to go around in the greek nation. Matt coming up, the most powerful men on wall street is leaving for Silicon Valley. Morgan stanley seat f o root is going to google. Lisa plus, time to return to the city of fire and ice. Cory johnson mingles with the stars of the red carpet premiere of name of thrones. Game of thrones. Matt welcome to Market Makers. By matt miller. Lisa i am lisa. Matt i will kick it off with top business stories of the morning. More details on the crash of german airliner in the french alps. Airbus a320 crash into the mountainous region in france. There are 144 passengers on board, six crew members, and it was unlikely there were any survivors. The airline says it reached cruising altitude and also mediately started an eight minute descent. The pilot was able to send a distress signal. The plane had been checked in germany just the day before and it was on flight from barcelona to dusseldorf. New home sales no unexpected new home sales to be like this. It grows almost 8 last month. The most optimistic forecast. At the annual rate, 539,000 homes, was the most in seven years. The median surprise of a new home is about 275,000 which is up 2. 6 from one year ago. St. Louis fed president James Bullard says it is a good the central bank has gotten rid of patients. They removed the word from the Statement Last week hinting that an Interest Rate hike would come sooner rather than later. James bullard told a conference in london that the u. S. Economy is heating up. James bullock i think unemployment will go below 5 by the Third Quarter of this year and i think that is going to be relatively speaking, boom times for the u. S. Economy compared to where we have been over the last five years. Matt James Bullard said the fed risk running behind the curve of inflation if they do not start raising Interest Rates soon. It sounds a good golden parachute for the ceo of office depot and he may not even be going anywhere. Smith to get up to 47 million following Office Depots plans to sell to staples. Including equity awards, smith would almost get 8 million more if his role changes after the acquisition. Office depot shares are up 79 since smith became ceo in november of 2013. Facebook may get in the News Business, kind of. The New York Times has had says facebook has held talks of holding conversations within the social network and set up outside. Facebook could Start Testing in the next few months. The partners, New York Times, National Geographic, and breastfeed. The long winning streak in College Basketball buzzfeed. The long winning streak in College Basketball has come to an end. Princetons dream year ends. They had won all 31 of its games and maryland moves on to round 16. Lisa big news for Morgan Stanley. One of wall streets most prominent women is leaving silicon leaving to Silicon Valley. Ruth perot will take over as ceo of google. We want to bring in someone who knows her well. Our main man erik schatzker. He is on assignment in south east asia. Plus, news supporter Michael Moore covers Morgan Stanley and bloomberg west editor at large cory johnson covers google. This is a big deal. Eric, you chat erik, any sign this was coming . Erik i would say it is not entirely a surprise and i will explain. Probably the Biggest Surprise i woke up to or at least bred in my inbox as soon as i landed in bmr. In myanmar. When i say i not entirely surprised is because the last time i saw her, which was about the weeks ago, we had lunch and she was talking about things that were not Morgan Stanley, if that makes sense. She was talking about some of the big ideas that she has and she is a big idea kind of person for higher education, for example. It just made me think that maybe ruth had Something Else in mind. Something that she wanted to do that wasnt being chief Financial Advisor of stanley Morgan Stanley. In the course of this in conversations, you could tell that it was a little bit of tedium with the unbelievable requirements that firms like Morgan Stanley has to meet in the new world of banking regulation. And that cfo is on the front lines of that. We were talking, for example, about the lengths of filings that Morgan Stanley has to make to the Treasury Department and to the fed. And, like i said, you could tell there was a little bit of i wont call it boredom, that is not boredom because it is always challenging, but she identified years and i am not surprised she is ready for Something Else. Matt michael, what do you think that we are essentially losing the most powerful woman on wall street to the west coast . In one sense, it has to be a disappointment because you no longer have such a par 4 role on wall street. Michael the Tech Industry faces the question of a par 4 meant and this is definitely a bump up in that world. Matt ceos, Sheryl Sandberg leading in the west coast seems much more diverse in this sense. But here, we no longer got a female who was a cfo or ceo of an wall street bank. Michael right, especially among big firms. I think it will be a continuing question. They are in that second layer and there are a lot of business heads who are females and maybe who were a few maybe we are a few years out from that, but certainly as you say lisa what does it say about the appeal of a wall street jobs right now . Based on whate erik was saying it seems like the appeal of Tech Companies is part of a migration you are seeing from wall street. Michael you are seeing it at the bottom in with people coming straight out of college and tech is definitely a more viable option. At the top end erik, as erik at the top and as erik mentioned, it is a grueling process for the cfo role. Going through that tasks and paperwork associated with it. I can see it being a grind and the rules keep changing. That is the complaint that wall street has. Every time they think they have got their arms around it the rules change again and they have to adapt and come up with new metrics. It is certainly a tough job. Matt i would to correct myself and say that marion lake has also gone through the difficult job of ceo of morgan job of ceo. What does google get out of this . Lisa asked him i think earlier a pressing question, what will google get into new businesses that are more banking related or financed . Certainly, she has a bigger banking she to work with. Google has a lot more cash in Investment Grade securities been Morgan Stanley does. I think it is more poorly google has had a really important place in changing. The shift to mobile, google has been as well as anybody. Essentially googles business has an predominantly on the desktop and moving to the mobile world has been difficult for google because the revenues are a lot less. Every ad pays less, the value of a lcclick is less and it is it difficult time for google. Add to that, what has gone on the last few days, which is the use of this Justice Department investigation and noncharges is a big problem for google because google is still facing potential charges about asking as a pernicious monopoly. Matt, when is the last time he did a search that was not a google . Google is a business that is dominant in directing business for all of the businesses for the rest of the world. So the news from this ftc investigation that led to noncharges and the Justice Department is really important for this company because it is the very heart of their growth which is using their search dominance to grow other businesses that are not as good as their competitors businesses because they dominate search. I could be a real problem for google in the future and the new cfo. Lisa thank you so much cory johnson, Michael Moore, and to Market Makers erik schatzker. What are you doing in Southeast Asia exactly . Erik well, i have to keep some things a secret, lisa, but it is no secret for the world that this country from italy this country formerly known as burma needs to open their economy. Like i said, i will get to too much detail but im here to see how the burmese economy is opening up. If you think about it, you know, burma opening up leaves north korea as the only last closed economy to the rest of the world. So what is happening here is very much an experiment. It is fascinating to see how the west is responding. To see how western companies are responding to the opportunity that this creates and obviously exceeds me the challenges that they encounter is what brought me here. Matt we are looking forward to seeing what you bring back when you do get back. Thank you so much for joining us. If only by telephone. Coming up, what does billion on what is going Inergy George Soros think about greece . He says the country could be going down the drain. Arts was an interview, coming up. Matt time to bring you uptodate on the top stories of the morning. A sign that inflation is picking up. The cost of living excluding food and kill rose more than expected last month. Core inflation was up. 2 of 1 . They debate went to raise Interest Rates at the fed. One of the worlds Biggest Mining Companies is being hammered by lower commodity prices. Freeport is cutting their dividends by 84 . The company is considering asset sales and spending cuts. Freeport is looking for funding for oil and natural gas projects. The company has been trying to reduce debt which totaled 19 million at the end of last year. Utah has become the only state to allow firing squads to carry out the death penalty. Governor gary herbert signed a bill permitting the use of firing squads with when no lethal injection drugs are available. It has been difficult for states to obtain chemicals. Those are your top stories. That is a rough want to end on but coming up today, it is the return of hbos game of thrones. We will hear from the networks ceo. Plus, what caused that airbus to go down in the french alps. We will have the latest and they call it runaway production. Hollywood battles for business against states offering producers make tax breaks. We will cover the business and movies. Lisa george soros sanding off in an interview. He said greek negotiations have been mishandled by both sides and there are at least a 5050 chance the country leaves the euro. Francine joins us from london. These are unsettling words. Francine they certainly are lisa. I caught up with george soros in up in an interview. There was a stark warning not only on your claim, but also on greece. A 5050 chance of them leaving the euro zone. He also said this is a country that may end up going down the drain. He says it is now a loose game because it was very, very badly handled from the beginning. George greeces performance has greatly deteriorated so doing what they are doing, they are hurting themselves. And europe also, it it pushes greece out of the euro would hurt itself. Francine is it a 5050 possibility . George i would say so, yes. Francine george soros really saying that there is a concern that they could keep on pushing the proverbial can down the road, they can keep on pushing it back, but as he says, there will be no surplus just because greece wont be able to repay their interest. This is very interesting because it is topical. We talk about greece on a daily basis. The Prime Minister is trying to negotiate the terms so that he persuades the creditors to give him more money. Lisa he is also very vocal on it ukraine. What did he have to say that . Francine he was very vocal on ukraine. This is what he wanted to talk about. He said he is worried more about ukraine than greece because he says ukraine was a unilateral active force where one country try to change, of course the border. He says with that more external without more external financial assistance, the ukraine government will gradually deteriorate and this is what he is most worried about. George it is really a political decision on the part of ukraines allies that they must do whatever it takes to help ukraine. Not only to survive, but to actually make progress in the myidst of war. Francine whether he was talking about military system for financial military assistance or financial assistance, he talks about political will. He thinks europe together with the u. S. Or west, if they stand up to russia by saying look we will do whatever it takes not to defend ukraine but to rebuild it because that would be a powerful message to russia. Lisa thank you so much, francine. Anchor of the pulse. Matt coming up, inside season five of game of thrones. The creators answer white attracts so many leaves and dorks. I love that show and do not consider well, maybe. Matt San Francisco became the city of ice and fire us to do yesterday as game of thrones posted the fifth season premiere. Cory johnson talked with the stars and executives behind it. Corey is back with us from San Francisco. Cpry you are denying you are a dork dweeb . Matt typically, i dont go for the game dungeons dragons things but it is incredibly funny and dirty, so it fits my criteria. Lisa your main criteria. Matt im guessing my that you like it as well for that reason. Cory i talk too much of the cast about this notion of Technology Community really digs game of thrones. You have your then diagram of overlapping groups but this show is so antitechnological and so medieval has a strong appeal to people and Technology Community. I think that is one of the reasons a possible partnership with apple that they held the premiere of the new season right here in San Francisco at the opera house. A big party afterward in San Francisco city hall. Indeed, i talked to the guys who started the show. In fact, i talked to the ceo of who try to claim some type of ownership which he has no right to. It sort of speaks on the level of affection that this show has. Listen to what the guys who started the show had to say about the role of technology in the show. It was created by dweebs and dorks. We grew up playing dungeons. We cannot make fun of any of the other dorks. I think the geeks are in another world. They are crazy. Cory that happened. Matt im pretty sure he is married to amanda peet. Cory he is married to amanda peet and i talked to her last night and she is not dweeby. Matt thats pretty great. He is doing fine. Cory i also talked to peter gingerich, one of the great stars. Peter dinkel glitch one of the great stars. Listen to what he had to say. The brains are shut out of it. You dont need to remember your moms home phone number. It is crazy and right there. What do detectives do . Back in the day they had to go down the rabbit hole and now you go on the internet and find out stuff about anybody at any time. Matt my favorite character. Cory ive got to say that there are at least six people i talk to on the red carpet last night who all claim to be they hate technology and find themselves working on a show with swords and fire and knows mark phones and hacking. Matt and dragons. Right . Cory yes. Matt did i just pull out a little wall street trivia for those game of thrones fans. The guy who ran Goldman Sachs and the Federal Reserve of new york. Cory his conversation i will have to go back to delivering pizzas are doing a morning job. When he know about the financial history, ive got to say, San Francisco turned out last night. There were huge crowds outside of the opera house last night. Blue suits were in fashion. Lisa you look great. Cory yes george r martin, the author of the books on which the series is based was there. His thoughts on the lack of technology and innovation. It is interesting because he has a perspective as you imagine, a lot of the back story of game of thrones is the war of roses that took place in england in the 1600s. He talks a lot to technology and how it has not always gone forward and that is an important part of the series. The question is is technological process something that happens to all societies . And the answer is, no, not necessarily. Cory a heck of a show and season. Lots of funny and lots of naked, you will like it. Matt very cool. Thank you for that. Good job reporting out there. Stephen friedmans son is a show runner in game of thrones. He also a great book called city of deeds. City of thieves. Live from bloomberg headquarters in new york, this is Market Makers. Matt investigators want to know why a plane crashed into the mountains after an unexplained dissent. The feds next move after it raises Interest Rates. Matt california is fighting a battle against a set have taken away production by offering millions in tax breaks. Welcome to Market Makers, i am matt miller. Lisa lets get caught up on the top stories. It was maybe the worst air accident on french soil in three decades. The german airliner with 150 people on board has crashed into the french alps. It is unlikely any survivors. It was on a flight from barcelona to dusseldorf when it went into rapid descent of from 38,000 feet. Investigators from germany and france are going to the site. Right now, we have three hours after the incident and we have to investigate properly with all of the professionals what went wrong. The moment we know what went wrong, of course, there will be measurements immediately in place to have an incident like this never happen again. Lisa german wings is a Budget Airline owned by lufthansa. One of the biggest names on wall street is headed to Morgan Stanley. He is leaving to take a job at google. He has been at the bank for 28 years. She she is leaving a job at google. She is been at the bank for 28 years. A surprise report on real estate in the last hour. New home sales unexpectedly rose to a sevenyear high. Sales climbed almost 8 to an annual rate of 539,000. This beat the most optimistic forecast by bloomberg. Radioshacks largest shareholder has come out on top in a bankruptcy option. Their shareholder wants to take over about 1700 of radioshack boss stores radioshacks stoprres. Now the real story can be told ryan says the Team Owner Woody Johnson had to fire him after last years lastplace finish. He said johnson is like a big rather and he will always think of the owner as a friend. Ryan is now the head coach of the buffalo bills. Matt theres no sign of what caused the crash that killed at least 150 people. Lets get perspective from robert francis, warmer price chairman of the National Transportation safety board. He joins us on the phone from washington. Lets get perspective from robert francis, former vice chairman of the National Safety board. The concert, they own german wings, and they say that their Safety Record is impeccable. They say there is absolutely nothing that could be wrong with the plane. What do you think about that statement . Robert from their point of view, that is a reasonable thing to say. If the maintenance has been very good and when they go over it and they do the maintenance, they check everything and they dont find anything that is awry. That does not mean that things cannot go bad in the hours that the plane flew down to spain and back. So, the investigations will be looking first at the recorders. Those are the most valuable things that you can find. They may if something went wrong with the plane, the flight data recorder will probably indicate or give you an idea of where you should be looking more intensely. Matt what could cause such a quick percent . Could that be an engine failure, could it be colliding with geese . What could cause that kind of dissent . Robert it is hard to speculate. Its something had gone wrong with the air Management System you have a risk of not having enough oxygen in the air at the cruise altitude. That is the first thing i would think of the first reason to go into a series and quick dissent. Again, it will remain to be seen. Who knows. In the cockpit, one of the pilots having a health problem. The number of speculative things you could come to is almost indefinite. Lisa the images that you are seeing is a rescue team by the crash site. There seems to be a lot of crashes recently, from the malaysia crash to the singapore crash. Do you think that standards are loosening and it is becoming less safe to fly planes . Robert no. Matt do we just hear about them more and they hit home because they are so rare . Robert when there is an accident and when there were thousands and thousands of operations every day. It is very newsworthy. And it warrants the best investigative process. The germans and the french are capable of providing an accident investigation. Matt is that as good as anyone when they are running a lowcost budget . I wonder what you think of this. They are now all over the place. I am sure they cannot skimp on Something Like maintenance safety, or pilots experience. Robert you have to be careful. These are Budget Airlines in terms of what they charge the passengers. Matt i wonder about the expensive pilots you hear more and more about that. You hear more and more that these airlines are hiring less experienced pilots because they can pay them less money. Robert ive not seen any evidence of that. Pilots unions are winding all the time about something. But apparently the pilot the captain had 6000 or 8000 hours or whatever it was. He was not a rookie. The german standard for safety is as good as anyones. Matt it is good to have you, robert francis, former ntsb vice chairman. We will learn more quickly because we are showing live images there. They have reached the wreckage seen and it looks like it is not incredibly mountainous terrain, so they can get some work done. When we come back, fed officials are making sure we get the message. There are more hints that in interestrate hike is on the way. Lisa hollywood tries to get runaway production back to Southern California. Even if it takes millions of dollars. Matt time to bring you the update on the top stories of the morning. Search and rescue teams are headed to the side of this mornings jet crash. It crashed into the french alps after plunging in 30,000 feet in eight minutes. The french Prime Minister says the helicopter has managed to land nearby and that there are no survivors. A local official says there is debris the size of cars. Prices is putting food and fuel were up 2 10 of a percent of february, overall prices rose the same amount as fuel prices stabilize. That policy makers are looking for inflation to pick up as they consider raising Interest Rates for the First Time Since 2006. Facebook has something the News Business doesnt have enough of and that is eyeballs. Facebook has held talks with half a dozen Media Companies with hosting their content inside of the social network. The content would be inside. Facebook may Start Testing in the next few months. Its First Partners are the New York Times as well as National Geographic and does feed. These are the most xrated words you can say in hollywood, runaway production. We will tell you what california is doing to get movies and tv shows back in the state. The new president of afghanistans meeting with president obama. Both of them have a list of things they want from one another. Lisa the first fed rate hike in a decade could come in the next few months. They expect the economy to keep improving and for inflation to start picking up. Next guest think that bullard is dead wrong. Dan alford is here, managing partner at westwood capital. Welcome. So, you think he is dead wrong of the economy . You think that they should raise rates . Dan Stanley Fischer gave a speech yesterday here in new york, basically saying that we really do need to raise rates. They are determined to get some control back over Monetary Policy. One of the things he said was we dont know when the next downturn is going to come. Right now, we have no control over Monetary Policy other than resorting back to qe. They are very concerned about getting that rate higher. We are going from an ultra low ultrahigh level of accommodation to a very highlevel of accommodation if we go up to a quarter point. Lisa the argument is that you have to raise rates because you have to drop them back down. Matt if you are going to raise rates, dont you bring buyers of certain assets who might have been sitting on the fence and not worried about making the decision because rates will stay at zero . Dan lets say we raise the policy rate by 25 points. The question is what will happen at the long end. If you look at what the long end is telling you, it will not move. Those are the rates that really determine investment, the issue of taking risk free risk, no risk, but buying a treasury bond. The notion that somehow the increase in the policy rate is going to have a direct impact on the long rate i think is wrong and i think a lot of the media misses that. The bond market is telling you that bond rates will not go up just because of the fed increase. Matt lets listen to a little chunk of what James Bullard had to say. And implement will go below 5 by the Third Quarter of this year and i think that that will be relatively speaking, boom times for the u. S. Economy compared to where we as been over the last five years. Matt under 5 . Ted cruz was hammering on this yesterday at Liberty University saying we are in such bad shape, you cannot get a job if you graduate from college. Dan the employment position rate is at an alltime low in the past 30 years. The other problem is that we have an accelerated level of people working parttime who would otherwise prefer not to be. That is not a healthy labor market. People are focused on the Unemployment Rate but they are not focused on what the denominator is. They are only focused on the numerator. The quality of the jobs when you look at wages, not so good. Lisa why should they hike rates at this point . Just to have some kind of ceremonial move away . Dan my position isnt that they should but that they probably will. That is very important to policymakers at the fed. If you talk macroeconomics for your entire life like Stanley Fischer, that would be important to you. The degree to which they realize that we have lost control over the fiscal stimulus side. The governments will not spend money. We dont have an environment where governments will step in. Matt to take your sailing metaphor, if you are headed into the wind, you have a tight jim, you cannot pull anymore, you take some flack when you can get it. Dan we have a windstorm, a very weak europe, china, japan. We have the rest of the emerging markets not doing every well. Either everyone is out there competing, either on price or currency. If we were talking about this three months ago, nobody would say 109 is euro strong. Lisa maybe moving 25 basis points is it necessarily going to do anything. Dan it sends a message. Whether it happens in june or september, i dont think its germane. Will the data between now and june enable them to do it at all . On that, i will say, 5050. Matt certainly if unemployment falls below 5 . Dan you saw the bounce in cpi. Everyone has said, cpi will recover. The official position is that it is transient. I dont leave that will sustain itself. You saw oil drop again after these figures after the test period. Lisa what happens if rates dont rise that much and we have this low rate environment for the next decade . Dan at the end of the day, it is the japanification of the United States. We have this enormous volume of labor that came from the emerging markets. They are competing, they are not consuming adequately. In the fullness of time, chinas will rebalance their economy. That will take a long period of time. The same thing did happen to japan in the 1990s. You had taiwan, hong kong show up and compete with them. Lisa what do you like . Dan dont ask me. At the end of the day, there are only two things to invest in. If you believe in the world that i believe in, you are seeing low Interest Rates, bonds today. As you have seen, they have accelerated significantly at the long end. I believe that is correct. At the end of the day, if we have low inflation rates and a very strong dollar, we will have a problem in terms of trying to bid up equities. At the end of the day, it is prices. If topline prices are corrected matt doom and gloom. A little bit more breaking news. I want to bring you on the tragic plane crash. The president has been briefed and there are no signs of terrorism. A spokeswoman says u. S. Officials have offered assistance to authorities in france, germany, and spain as they show off their investigation. Say with us for more Market Makers into. Stay with us for more Market Makers in two. Was started in crime era a year ago has turned into a war zone. We go to the wars on to find out what is next and what it might mean for you. We go to the war zone to find out what it might mean for you. Matt hollywood is fighting fire with fire using tax credits to keep movie and Television Production in california. We will talk about how they do that, why they care. Lisa the new president of afghanistan has a message for president obama. He wants u. S. Troops to stay in his country a little longer. Matt apparently Olivia Sterns used to work for this guy. Lisa doing what . Matt she was working at a think tank. I hope she stays with us here at bloomberg instead of moving to kabul. She is a London School of economics graduate. Maybe she could join his econ team. Hopefully she will stay with us here on surveillance. He gets more wellliked than hamid karzai. We will talk about it, stay with us here on Market Makers. Matt welcome to Market Makers i am matt miller. Lisa i am lisa. We are in for erik and 70 today. What do you see, scarlet . Scarlet an update on the breaking news youall have been discussing all morning long. Airbus shares are declining after a crushing of an a320 jet. You can see the dip at around 6 47 a. M. New york time. That is what headlines of the crash first across the wire. We have seen that stopped the race its lost and it is marginally higher, but you can see the Movement Following headlines. Here in the u. S. , a lot of focus on netflix after two analysts raised their price target areas i started. Netflix has more room to run and after seeing a pickup in momentum under tv unbundling. It will benefit netflix. Also to mention, petroleum taking the biggest plunge in four months after the oil producer gave up on finding a buyer. It is selling 35 million shares at 35 apiece, 22 premium discount discount until monday it is issuing 1. 9 billion in debt. You are seeing Chesapeake Energy getting a boost after carl icahn increased his stake in the company through his different funds. He has raised his stake to 11 from just under 10 previously. Very quick mention of ruth porat soon to be a google. Leaving Morgan Stanley as cfo and joining larry page and company at google. They were looking to the bloomberg terminal and found interesting numbers. He says ruth porat will have a big raise in her job because her compensation at Morgan Stanley was about 40 million. Google cfo meantime, was compensated about 85 million during the same. During the same period. Lisa that is an incentive to take a move. I was optional i was actually looking at google and google shares are up. They made a good move according to stop. Thank you so much. Matt i hope she buys a yacht or finances of film. You may not clear Lights Camera Action as much but lucrative tax credits in states like louisiana and new york are luring filmmakers away from california along with thousands of jobs in economic the meals. California is trying to stop the bleeding by boosting tax credits for 100 million a year to over 300 million a year. Is it too little and is it too late question mark lets ask amy, executive director of the california film commission. You margaret joining us. Let me ask first about the size. The not here on wall street 300 million does not sound like a lot of money, especially when we are used to hearing about these blockbusters the cost that much to make. Amy right. It was expanded last year at the end of legislative session of from 100 million a year to 330 million a year. I think it is important to talk about why our program can be so carefully targeted. There are so many advantages to filming in california. Every producer will tell you that this is the first choice as a place to film. We have so many competitive advantages, starting with armature plentiful skilled technicians. The diapers and plentiful onscreen talent. The amazing diverse city the diverse and plentiful onscreen talent. The emerging amazing diverse cities. We can match so many locations. We also have abundant facilities from soundstages to postproduction facilities to small support businesses that offer Specialty Equipment and small services. As i forget about the weather. You can never underestimate the importance of good weather when you are trying to shoot outdoors yearround. Think about all those protections that were struggling back east trying to film this year. It is incredibly expensive all of those delays. Our program was really structured in a smart way to carefully target those projects that are most at risk. For us it is not just about growth and retention. We are seeing the results. Lisa there was a study out by Southern California association of government showing that movies cost california almost 50,000 jobs. If this just a matter of other states offering better tax subsidies or Something Else that is causing the other states to have competitive advantages . Amy nowadays, they weigh heavily on production planning and where the decision and productions are going to locate. It is not the only factor they have to look at the maturity of infrastructure. They did have a loss of temple projects in our legislation that was passed at the end of last session address that. Previously, in addition to the funding it was expanded for five years and expanded eligibility for those types of productions you are talking about. As well as the wider array of script television. Matt how important is it to keep these jobs and keep this industry 330 million is what you give out. Im guessing you also help the studios in other ways, but what do you get back . What does california get . Amy oh, we get jobs and support small businesses. Matt how many jobs . Amy it is about the economic impact. Our industry in california spends about 30 billion a year and a little over half of that, 50 million, is in paychecks and wages every year. It is a heck of a lot of jobs and so many regions are interested in luring this industry because of that jobs. We do support about 170,000 jobs in california and in the entertainment industry. Lisa can you talk about any success series stories where you have brought a movie back to california . Amy we had a dramatic story which was a production that was set up to film in canada and then they were actually on the waiting list and we gave them a call to see if they were still interested in filming here and we caught them just in time before they had really set down roots and they moved the production back to l. A. We have had productions that moved from outofstate. There was a tv series on now called teen wolf, and they originated in atlanta, georgia, and they got into the program and moved the whole production back. We have had a couple of those. Also, really almost every production because they are doing their planning and when they are at able to act as incentives, they can start roots and start filming. American psycho shot in california, los angeles american sniper on california, los angeles, and they did a lot of iraq shots here. We have a lot of that desert look and we have done a lot of those sorts of settings in recent years. What about the impact from unions. Lisa how much is Union Presence of workers affected keeping productions in the state . Amy pretty much worldwide and across the u. S. And in europe, it is a highly unionized industry and that means they are really highly skilled technicians and you cant afford a fiveminute delay. Any delay is very, very expensive, so you want to hire the most trained and experienced technicians. We definitely have a mature infrastructure for that. Matt lets be honest, we would all rather be in california. Autumn wind, it is a better place to live. You got a cooler by. Bottom line, it is a better place to live. Youve got a cooler vibe. Thank you so much. Market makers will take a quick break. We will be right back. Matt president Obama Meeting at the white house with the afghan president. At the top of the agenda, a request to slow the withdrawal from u. S. Troops from the country. Peter cook has more on the meeting. It is not an easy decision for president obama because on the one hand, he gets a lot from this guy that he likes nes to get a little in return. Peter that is right. President obama has made a pretty Firm Commitment to winding down u. S. Troop involvement in afghanistan by the time he leaves office. The original plan was to have the currently roughly 10,000 u. S. Troops to about a thousand troops at that time. Specifically there to protect the u. S. Embassy. Now the push from president is that he needs more flexibility, please keep the troops there. So we can deal with the spring of fighting season and restore more stability to afghanistan and keep hold of the successes that u. S. And afghan troops have had over the last couple of months and years. That is the pressure on president obama. The new president trying to succeed in afghanistan or on a commitment he made earlier to withdraw those u. S. Troops. Lisa what is you will what is present obama asking for a return . Peter everyone i have been talking about is really impressed with the president of afghanistan. They think first about, the fact that he is here and has acknowledged the u. S. Sacrifices, particularly the troops who have given their lives for his country, has made a big effort while he has been in washington to make that point. The flipside, they do want some things from president connie in return. For example, greater crackdown in afghanistan and more unity government and more of an opportunity for others within the government including the ceo and second in command after the election battle where they want to make sure it is in an inclusive government. These are some pressure points they will bring to bear with president ghani. Matt how much pushback will president obama get with withdrawing troops there . Some think it will keep the region stable and others want their family members back and we are spending a lot of money. Peter 60 billion and more and many lives lost on the u. S. Side alone, so there is pressure to bring u. S. Troops home, particularly from democrats. They are questioning that u. S. Commitment in afghanistan for some time, but the reality is matt, that what happened in iraq and we have seen the problems there with the withdrawal of u. S. Troops in the interim period. That has colored a lot of the debate and the people on capitol hill who were pushing for u. S. To get troops out could be having second thoughts. It could not be a political it may not be as much of a political pushback. More than 50 of u. S. People surveyed in the u. S. Think the u. S. Should keep a larger troop residence in afghanistan. Matt what do you think about the transition here . Peter it is hard to gauge exactly how that is, but the u. S. Has moved on from president karzai. They saw him as erratic and more of a challenge than anything else. They do see a real change in tone from president ghani. He knows the u. S. Really well and lived here for 10 years and worked at the bank in bethesda, maryland. He knows u. S. Politics and has really gone out of his way to reach out to the u. S. Officials here in particular, the u. S. Troops who have served in afghanistan. Really in every single turn he has thank them and will do so again tomorrow when hes things in a joint session of congress. Matt thank you so much. Either way, weve got lots more coverage coming up later today. Tune in this afternoon at 5 00 p. M. Eastern with all due respect to come he will speak with the first all due respect. They will speak to ted cruz and former governor rick perry. Ive not sure if john is down there, but mark flew down late last night or early this morning to do the interviews, so im excited to watch that. Of course, you can catch it all online at bloomberg politics. Com to get that and a lot more. Lisa time to bring you uptodate on the top stories of the morning. The white house says there is no sign that terrorism was involved in the crash of a german airliner in france. The german links airbus a320 went out in the french alps after a pledge from 38,000 feet. 150 three people were on board and the plane was on a flight from barcelona to dusseldorf. I have spoken with french president as well as the spanish Prime Minister by phone in the last hour, and we agreed that are countries with help each other in every possible for them to determine the cause of this catastrophe and to support the crews at the crash site as well as at the airports. Lisa german wings is a Lowcost Airline owned by germanys flagship carrier lufthansa. One of the most senior female executives on wall street is moving to Silicon Valley. Morgan stanleys chief financial officer, ruth porat is leaving to take the same job at google. Ruth porat has been with the bank for 28 years and grew up in Silicon Valley and as a member of stanfords board of trustees. And as the price support on real estate. And a surprise report on real estate. Thatbeat the most optimistic forecast of economists surveyed by bloomberg. It he could it could be because of the strong joe market. Marketmakers is back in a moment. Matt that is all we have for you on Market Makers today. Lissette co lisa there is an m. I. T. Scientist who came up with something that you basically put into some kind of container, your shampoo bottle, your toothpaste bottle matt you essentially line the container with this lubricant. Lisa yes, and it all can come out. Normally, you have a little bit left. This would make it all come out. I think that is so cool. I did not realize that a quarter of skin lotion is wasted because people throw out the bottles. Matt yeah, it would make it easier to put the lotion on the skin, right . Put the lotion on the skin. Lisa it would. Matt it sounds a little bit repeat to me. Im already bothered by the whole Plastic Thing am a but i guess he would use it on glass, as well. Maybe we will do a piece on that. I will look a little deeper into that. Lisa you do that to her thank you for having me. Matt that is it for today for tomorrow, time for some hot wheels. The forbes chief operating officer will be here. They will have a dozen new models are he is going to bring before focus rs to this very building. Hopefully he will give me the key and let me drive it around. Stay with us or come back i should say, for that. Stay with us for money clp ip. Inc. Is a 56 past the hour and we are on the markets. Midway through the trading tempting to come back and they are succeeding and the nasdaq is higher by. 4 of 1 , taking aim at that 6 that region back in march of 2000. The dow and s p 500 struggling to recover from yesterday was tonight in the first backtoback advances in about one month. As you can see, the dollar recovering erasing earlier losses. Inflation coinflation rose more than expected. A 10 year yield has a little change in. 19 . Joining me today is kevin kelly he is chief Investment Officer at recon part recon capital partners. Is this good for the market or bad for the market. How do we interpret this now that the federal move before september . Guest sometimes good data is good for the market or bad. What we are seeing is actually in Options Market and yesterday you could see that traders were anticipating a big move and that is happening not only in you can see it in s p 500 index. You saw calls being called an two times the amount of puts being brought in the s p 500. A lot of people are taking this opportunity when that good news is flowing into the market to put on a bunch of hedges going into earning season. Scarlet it is quite right now, and it took a lot of people by surprise as far as index. Index took a late stumble yesterday. We do we have any intelligence on what happened . Guest no it is hard to see. Bloomberg even reported on this story this morning that buybacks are going into a blackout. Some of fim is being pulled out and people are going into the Options Market, like you said, and putting on insurance is. With a lot more insurance is being put on, that could have affected taking down stock market prices. Scarlet so there might be something technical. Your trade for us today is not on a specific companys stock, but rather on the s p 500. Im curious, why an option on the s p 500 as opposed to the etf . Guest that is a great question that people are trying to figure out. Options, profits on industries are treated by 60 longterm and 40 shortterm, no matter how long you do that. There are some Tax Advantages to trading index options as well as a very deep and liquid. Market makers and Institutional Investors are pricing them out. The trade we are looking at and that we talk about going into that will capture the big height of the earnings season is going out to april 24. You are going to buy on the market and you can actually have a lot of insurance because we do not know how the stronger dollar is really going to impact earnings. As well as guidance, because companies dont know how that is impacting their sales. They can see how it is impacting their current profits, but not the sales, so this really protection is very cheap right now. Scarlet if we could pull that tried again and that really shows the protection to the downside of the s p 500 does decline. Regarding reports coming up. Guest going back to september when earning season started and the dollar started impacting then, we had a deep last move. Scarlet thank you so much, kevin kelly joining us from recon capital partners. Money clip is up next on number television. Pimm welcome to money clip and i am pimm fox. Here is a rundown. In politics, senator ted cruz begins Media Campaign for president. In world, the killing and instruction that began in houston ukraine when youre ago in Eastern Ukraine one year ago continues today. A russian we will take you to where the russian and the ukraine militaries continue their fight. An investor, conversation with the man who boat broke the bank of england, millionaire george soros. His greek prophecy