Transcripts For BLOOMBERG Bloomberg Surveillance 20140114

Nfib Small Business optimism and we will get retail sales at 8 30 a. M. And earnings before the bell. Scarlet fu will take us through jpmorgan at 7 a. M. With earnings. Bill cohan will join us. How many big banks are there . Five or six. We will have earnings all week. We will have a lovely roundtable like states of the bank. Falling revenue. This is a data check. Everything is up a little bit after the fade yesterday. There is a lot of other Global Statistics just as weighty. Vxx was under 12 yesterday. Gold was 1250 when i walked in the door. The chinese currency is strong. Lira moves through new weakness. I dont want to overplay this. This is the beginning of the year and you can see we faded yesterday after 10 p. M. Its not a plunge. Busy yesterday about 3 p. M. And then it got even busier. We skerritt we scoured the papers. A new year, new leaf for congress . We have seen the house and Senate Negotiators agree on a budget through september. They unveiled a 1. 1 trillion spending package. Republicans backed off on the get rid of obamacare language and democrats agreed on the irs. It seems like there is no quick no clear winner or loser. It was a compromise. Something has cut their sequestrations back. It is backandforth. I believe them making sausage is the apt phrase. Peter cook joins us by phone with more details. The spirit of compromise is in washington but both sides stopped short of addressing any controversial issues like entitlements . There is no mention of right,ments and youre both sides of a wooded big issues. They have avoided confrontations over the president self care law a whole host of issues. They have decided to give each other a pass and fight another day on other issues. This is a deal is a compromise and its the continuation of the ryan and marie budget compromise from a few weeks back. The two sides are forging a compromise and choosing not to fight. Not everyone will like it. You mentioned paul ryan, is he pushing the tea party aside . Thiss deal called for package. He set the top line number with patty murray. This is a vote that will prevail with democrats and republicans joining together. There will be conservative republicans will vote against this but there is no question this will pass the house and the senate. It will avoid a Government Shutdown thats what paul ryan and john ayre wanted all along. What does it say in terms of the prospects for reaching an agreement on Unemployment Benefits . It does have some collateral benefit. They reached this deal last night and will put it to the floor, it lowers the temperature of little bit in congress. It perhaps raises the prospects for elisa threemonth deal and that works separately in the government. That is still not a done deal. It does not hurt the chances the fact that they have reached this agreement. Peter cook, thank you. Lets get to the rest of our frontpage stories. There are a couple of high profile deals to kick off the new year. Charter friendly makes a bid to takeover of Time Warner Cable but Time Warner Cable rejects the 64 billion offer. Put ourd we did not house up the sale and got a lowball offer. That is around one. This will go several rounds backandforth. This is a bit of posturing to get the price on this deal upper Time Warner Cable. I do not want to settle for less share. 50 per the shares are trading above the offer price we saw yesterday. They are up since june on speculation of some kind of deal. You will see it go higher. The next deal is google expanding into the connected Home Business by buying a company that makes digital thermometers. The price tag is 3. 2 oh yen dollars, double what that that double what they paid for youtube. Investor inready an the company. It seems like google may be a biting by the fact that hardware is the new software . Real splash into divergent things. They think of them as a Search Engine and they make cash but what do you do with the cash . This is a vision thing and tim cook has been criticized for this, i think incorrectly. Sam grobart showed that beautifully in business week. Google wants to do interesting things. One of the articles was about taking complex issues and simple find them. They are making a big bet on internet things. That is the front page. At 8 30a retail focus a. M. We have the chief executive officer of wayfarer. He is in the online bricks and mortar battle with a good perspective. Gilbert harrison is with us as well. You what is the strategy topic at midtown luncheon tables for the likes of you . We went through the season and i want to know the view forward. Moore, moore, more, consolidation and acquisitions, revamping and redoing of retail ,usinesses, new ideas coming in multichannel retailing i can go on and on. Over the weekend, i had to go to the Makeup Department at barneys and the money they put in all of them are spending millions on bricks and mortar. Why are they doing that if amazon is winning . Consumers love this. You ladies would know very well between shoes and makeup, weight, are we tapped out . Is the female consumer tapped out and will men be contributing more to the growth story especially domestically and even on the cosmetic front . At our ceo dinner last night, i was sitting next to a famous Retail Executive and she has 250 pairs of shoes in her closet. That is in her new york home. That sounds like emelda marcos. How does online compete with amazon and we will talk about this. Online will keep taking share. Amazon is a juggernaut but if youre talking about fashion or a home, these are categories that does not quite work. You say amazon is boring and you are cool . I like that. Amazon gives Free Shipping to anyone who spends a certain amount. I think they are in the sizing the convenience of online they are emphasizing the convenience of online. They are promoting categories that do not seem obvious. Decor, itture and becomes reasonable to buy these items online. Amazon has been a big catalyst for that. Mastercard last night said 8. 2 of all retail sales over the holidays were online. Total retail sales includes gasoline and nobody can buy gasoline online. 92 was not online. We will come back with lots to talk about. We will see retail statistics at 8 30 a. M. Weve got more details on m a deal from yesterday. Plans to borrow 12 billion of financing. Providehi has agreed to money to pay for the takeover. One analyst for decks that the suntory Credit Rating could be cut to levels because of the deal. Lamborghini is rolling out its first suv in 20 years. It plans to introduce the yue yuris in 2014. It is part of the push to expand in the United States. Credit suisse is telling his junior bankers to take saturdays off. They want them to be out of the office from 6 p. M. Friday until 10 a. M. Sunday unless they are working on active deal. They are still expected to reply to email. I dont believe it. That is the stupidest thing. It is time for a surveillance rent. They will go home and study forcfa level one. Thats what they will do as they get ready for the june exams. Just stop it, big bank people. They are just covering themselves. Exactly, the lawyers said to do this. The big banks began reporting earnings today. We will break down what to look for this earnings season. That is coming up. You can now watch our interviews on bloomberg and apple tv. This is bloomberg surveillance. Good morning, everyone. At 8 00 a. M. Live live with betty liu. This is bloomberg surveillance. Big banks will start reporting today. Today kicks off bank earnings. We have two very different banks reporting j. P. Morgan and wells fargo. David morgan is relying on the Mortgage Business for its bottom morgan thatj. P. Wells fargo is relying on the Mortgage Business for its bottom line and jpmorgan is a different bank. Jpmorgan will have higher investment fees which will not make up for trading revenue and everyone is looking for details on regulatory settlements and legal costs and return on capital with perhaps higher dividends, maybe a cutback in a Share Buyback plan. Whats interesting about the plans to pay out fees because of the regulatory actions is whether or not analysts will be asking questions about the ongoing cost of compliance. Once you have paid the fines, what happens them . You can guess those costs can get pretty high. They have been getting high in that different banks have had to hire more people in the compliance and legal department. Wells fargo had to trim a lot of its mortgage banking business. We dont pay as much attention to wells fargo. Today, wells fargo, those are two very different things. Wells fargo moved up its earnings to report the same day as jpmorgan. Really . So they can get a little bit of the glory. John stomp was talking to you in chicago about housing and how the bank relies on it. Today, the affordability of Homes Remains very attractive. My First Mortgage in 1976 was eight percent. My second mortgage was 11. 5 . If youre less than 50 years old, you think four percent is normal. These are enormously attractive rates. Mortgage origination should fall about 25 . Back to theto go event in chicago and listen to that entire interview. Repoguy started out in the business and has built himself into the number one banker in mortgages and housing and he is the pulse of where they are going in 2014. Wells fargo was responsible for one in five u. S. Mortgages last year which is stunning. What will we hear on the Conference Call . The key question is the status of outstanding lead litigation with jpmorgan and we want to hear more about the impact of rising rates. It is the operational side of the business. I think they are wondering how many layoffs there will be. I dont mean this quarter but in the next few quarters. Expense control will remain a big theme for these banks. And then what happens to bonuses as a result . What happens to the banks ability to keep talent . The modern thing with bonuses is they will pay more as they reduce the headcount. Yes, they will reward the best. That is the talking points the banks are going out with. Jpmorgan is the biggest of the big banks with will probably put market share gains in the consumer and wholesale businesses. This is the twitter question of the day its a philosophical question. I did not come up with that. It is not just tom keene but pj orourke. He will be joining us in the next hour of bloomberg surveillance, on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com. Book, the baby boom. Good morning, everyone, bloomberg surveillance. Lets get right to scarlet fu with top headlines. The Federal Reserve may limit Commodity Trading by banks. It will last for comments on trading and decide whether or not to restrict the activity. This move comes as regulators and lawmakers focus on commodities trading and how big a risk it presents to the torment he financial system. The Weather Channel has been dropped from directv. It was dumped off this morning after a fight over fees. The amount itt pays Nbc Universal to carry the channel. The Weather Channel was asking for a one percent price increase. Teamex rodriguez and his of lawyers are suing to overturn the suspension from major league baseball. He says the arbitrator reduced his suspension to 152 games was biased. Only 26 days until pitchers and catchers report to spring training. Those are the top headlines. I am worried sick about the red sox this year. I am more worried about the yankees. We spoke with bloomberg sports yesterday and they are adamant about this appeal. There is no come back there. Once the sponsors pull their support there is one legal loophole that he could report to spring training. But the yankees dont want him there. They did not want him there all last season. They will save a little bit on his salary. My morning mustread was inspired by the Chris Christie problems. It brought to mind the bigger problem of an overinvestment in a living arrangement with no future according to a writer for politico. We spent a lot of time filling our houses with that stuff. Are malls dead . But it isffic is down still a Gathering Place and still a place which is part of our social fabric. The ones that have entertainment is important. We seem to be overmalled. I think we have 82 square feet for each person in the United States. In the u. K. , it has 20 square feet. What is the retail story with Entertainment Centers . Smallere are making stores and creating smaller space but the consumer still loves the touchy feeling of shopping. They will buy basics online and televisions and cars but they still want to go to the stores. We have too much real estate and many redundant companies. You sell Furniture Online and show rooming is a big part of getting into that part of retail. You managed to do that with out touchyfeely. To aline you have access fewer selection and do it when you want. This was causing online to grow so fast and pull share out of the stores. The stores are not convenient for many purchases. That fact will continue for a while. Isnt it important that we are fixed in our learning mechanism. More i use online, the more i use it. It is all about click and pick. We will talk retail when we come back. Good morning, everyone. Lets do a data check. Yesterday, we are still very much elevated where we have been the last six months. The eurodollar doesnt nothing but the turkish lira stuck out. Turmoil huge political there and nymex crude, 91. 90. There are also many deals out there. Beam is up from the suntory news. Juniper networks is looking to cut costs and get more stock buyback to make other changes to boost their top price. Extends its plunge, down by almost nine percent. Doubt about it, retailers have had a rough ride. Between the data breaches at theet and Neiman Marcus and American Consumer is still not recovering completely. We are starting to see a real divide between the winners and the losers. 2014 can anyone keep up with amazon . We have the chief executive officer of wayfarer, what did you learn about amazon this Holiday Season . As astomers have amazon goto for commodity type items. This was a shorter Holiday Season with faster delivery that mattered. Amazon benefited. Are you confident that amazon can build margins or will they continue to spend to crush everyone else . I think they can get to the margin. Their business is complex. Underneath everything, they will profitability. What are you going to do for 2014 to compete with bricks and mortar . The key thing for us is because we focus on home which is style based, there are many things we can do to help you with inspiration and help you find the perfect item. We carry 7 million items in that focus of what gives us an is what gives us an opportunity. Ethe holy grail of commerce is sameday delivery. Who is who is furthest along on that front . Amazon is obviously the furtherance along on same day. Is the furthest along on the same day. Then you have these thugs who have different versions of it who want to provide things like this like ebay and google. How did their u. S. Postal business work last year . That was a small volume of packages. They cannot get enough capacity from ups and fedex. They needed to fill it in and the second part is it got them press. The downside of ecommerce is the possibility your security data might be stolen. I bought a couple of days over the holidays and the next day i had on authorized transactions on my credit card. We sat down with the new president of saks fifth avenue and asked about the Cyber Security breaches at her competitors. We feel that we are doing Everything Possible to keep the consumer safe. Its a very big issue right now. Can withpent all we security and technicians and it technicians and brought to an ex turtle people and i think we are doing everything we can to make sure and external people and i think were doing everything we can to partner with the brand. The consumer is so price sensitive these days that with retailers and merchants making investments into ensuring people cybersecurity, does that mean that eventually the consumer will pay for that investment . All costs end up back in prices. When you think about the target breed, it was at the physical stores. While online is at risk, this was about the stores on the fact that they have technology at these endpoints and it added vulnerability. In your world, who is doing online best . Terms of the Big Department stores, i would say macys and nordstrom are the leaders. In the Specialty Stores, i looked for bowties the other day. They are useless. Who gets the Specialty Store award . To 3y are doing close billion, three percent of their business online. Nordstrom has bought two or three online retailers in addition to their own online. It is extremely good. You still have to go back to amazon every time. They have links with other retailers and its amazing. Specialty retailers, whether it is joseph bank where 10 is online or American Eagle outfitters, these companies have developed and spent a lot of money developing their online. They are still not there yet. I think all brands are struggling with this idea of how to get online. One person we spoke to yesterday was tommy hilfiger. If they are shopping online, we have an amazing ecommerce site. Here and in the rest of the world. If they are not shopping in the stores, they are shopping online and when we close our stores at 8 p. M. , they are shopping around the clock. Its a benefit to all of us. Reaching your customers everywhere they are is probably the biggest challenge out there. How do you do that . We have a huge selection and the key is to have different ways for people to find what they want and have it and have aggressive advertising. Amount on tremendous advertising and we have 1 billion in sales last year and we will spend 100 Million Dollars in advertising online and offline and when they check it out online, thats when they find the convenience of selection. We will continue this discussion in retail. This is a huge issue with american consumption. Martin feldstein said to be cautious. He said the American Consumer goes. He is bullish. Our single best chart is coming up next and it puts the bull market in perspective. Good morning, everyone. Cristina alesci and scarlet fu are with us. We start with inflation in the u. K. Growing to two percent hitting the Central Banks target since 2009. Prices fell from 2. 1 in november as a drop in food offset a rise in electricity and gas prices. Iesand behind thebeanie bab may be sentenced to jail today. The head of the company hid his money in a Swiss Bank Account and he will be sentenced today. Johnny manziel signs on with lebron james marketing manager. Towill work with the manager work on projects. He will eat texas a m to enter the draft this year. Will leave texas a enter the draft this year. We will see what he will do in the coming weeks and months. I am not qualified to comment on the nfl. It reminds me of doug flutie. It has the same energy going. Best look at a single chart on the equity markets. I am 110 in cash. It shows that although the gains may have faded in 2014 in the u. S. Stock market, there is still room to go based on the Capital Markets chart. The white line is the current bull market that began in march of 2009. We are entering year six and the yellow line is the average of the prior fourball markets. Four bull markets. Bmo Capital Markets is a little more reluctant. They say the current levels of valuation may make it difficult for the market to continue a sustained run. Pastar pe levels in the have shown the returns are a lackluster. Gilbert harrison is with us. Does harry winced and do bang up business airing the season . Winston do bang up business during the season . Every one is buying things on credit cards over christmas. The best holiday decoration on 5th avenue is bulgari with the snake . Cartier has the red ribbons. And the tigers outside of the building. How are they doing . They are both phenomenal upscale luxury companies. They are the two biggest luxury companies. They have done a phenomenal job in terms of keeping luxury where they are and are massmarketing throughout the world a lot of the lowerpriced items whether it is Duty Free Stores or other places. There it is, you see it with the stock market, linked into yes, we can get that. Lets take a look at some photos. Pictures ofng at the Costa Concordia sinking. 4000 people were on board when the ship hit the rocks off the coast of tuscany. 32 people died. I like that time lapse. There was a lot of environmental damage. Heads will roll on that one. The next picture is protests in thailand. They continued overnight and we have protesters occupying the streets, i think it is victory square. Victory monument. They were there overnight. Baht. But theai turkish lira suffered. I wonder what this means for the wealthiest thai and whether they are staying put or fleeing the country. It is complex. What else do we have . We have japan because it is celebrating age day. They have a lot of people to celebrate this. Dont they look like Jennifer Lawrence . That is a shot of people waiting into the water and it is 12 degrees. We say good morning to all of you but good evening in asia. Coming up, we were talking about the stock market earlier. In 2013 but an early fade in 2014 and what it means for Luxury Retail. That conversation is coming up on bloomberg surveillance. This is bloomberg surveillance. This is company news apple loses its bid to block a monitor in its pricefixing battle. A judge denied the companys request to stop the Court Appointed monitored for top executives. Apple said the monitor was charging too much in demanding interviews. The judge said it is not up to apple to define the duties of the monitor. Ceo says the Company Needs to dig itself out of a hole and will hold the hardware and Services Business as a way to turn the company around. The Chinese Tech Company will post the Third Straight annual loss. Google moves into the connected Home Business. It is buying nest which makes digital thermometers and other Smart Devices and the price tag is 3. 2 billion. That is todays company news. Bloomberg west smart on technology twice a day and amalie chang will enter and emily chang will interview the ceo of nest at 1 p. M. This is a slap in the face to apple because tony faell came from apple and will be joining google. It is a cupertino soap opera. Luxury retail sales grew faster than the rest of retail in 2013. This year, Economic Growth is expected to strengthen but many more are cautious about the stock market. Which path the Luxury Retail follow . Gilbert harrison is with us. Luxury retail is so intimately tied to the Capital Markets. Is it necessarily the stock market or can you look for another market . I think it is both the stock market but also the psychological market and the that that is on the side the consumers have built up over time. Has aalthy one percent tremendous amount of money to spend. They are concerned and want to put things into assets. They want to put things into things like the art market or or other luxury goods. The people are spending. We dont consider Luxury Retail the equivalency to what goes on at christies or southern these. Yes and no. People are buying art and spending 30 million. I dont think there was anything for less than a Million Dollars in the fall auctions. I know people who buy chanel bags and use it as an investment. How can i make all that stuff . They dont. They keep such a demand for their products and you go into the store and you want to buy a bag, you what you have to wait six month or year unless you know someone. They are out of bowties. It is a major crisis. I know the president of one company. He is my new best friend. Wheat sat down with andrew rosen yesterday and asked him about price sensitivity. Its about the product. Its about doing something that moves the needle that inspires people to buy. If you can do that and have a value attached to it, you have something that can really scale. It depends what your Business Model is. Where he can about the creativity and not worrying about the price. At other companies, we have creativity and value. Its more part of the equation. We are having a debate earlier whether serious luxury it is aspirational luxury. What is the difference between aspirational luxury and highend luxury . Price points. Who is more sensitive to price, it would probably be the aspirational luxury . \ absolutely, the aspirational companies were hurt during the recession because the lower income people or the middle income people that tried to trade up to do not have the money to do it. At one point does the super highend luxury buyers become pricesensitive . For periods of time. One great Retail Executive said the women are told to stop spending and they stop spending for months and they come back bigger than ever. This,n you look at all are we going to end up buying luxury online . I think so. Certain categories are easier online than others but the convenience is still a big driver. Also inventory. I go into some fancy store and they do not have the product. Porter probably does the best job. They were there at our conference yesterday. It was a shameless plug, gilbert harrison. What did you learn at the conference yesterday . Retail is alive and well and people are optimistic. You were there. Of a lot ofot enthusiasm for all sorts of retailers for the future. Everyone feels like the economy will hold. There is some talk of online and it is a pure investment area. Is luxury too dependent on the emerging markets . There is a lot of talk about that. They talk about china but what about the rest of the world . International is growing. I think its becoming increasingly dependent outside the United States. There is a huge amount of money outside the United States. Because its available everywhere and online, it is being spent. The emerging countries, the people want to spend. They want to show their well. Less rice sensitive in the emerging markets than domestically . There is no question, yes. Too much ofback to everything. To find something online, you need a curator. How much more important will that be as we go forward . Ration is your critical and the key is to have a huge selection and have curated ways for someone to easily find what they are looking for and let them narrow it down rapidly. We have curated brands where we see people want to start with that filter and we have brands that have a big selection. That is the downside of selection. Thats what amazon needs is a curator. The key is setting up your website correctly. Words to live by from gilbert harrison. A quick four x reports and a. M. , retail sales dollaryen is firmer. This is bloomberg surveillance. Republicans and agree on a spending bill. Policing of the irs. And a book about me tj or work considers his and my jen urke considers his and my generation. The baby boom is getting very old. We are live, we are living from our headquarters in new york. I am tom keene. Not members of the baby boom generation scarlet fu with me and Cristina Alesci with us as well. Is with us. E author of the baby boom howard. That way, it wasnt my fault, and ill never do it again. You canf the few times claim you are young, tom, because you are part of the younger class of 80 boomers. Inflation unexpectedly slowed in december. Englandshe bank of two percent target for the first time in years. Climbed and here in the u. S. , congress unveiled a 1. 1 trillion measure to fund the government through september 30. Nfib smallbusiness optimism and at a quantity we get retail sales. 10 00 a. M. , business inventory. On the earnings front, jpmorgan just out. We have a one dollar 30 earningspershare. Revenues coming in less than expected. 23. 2 billion. Analysts were looking for 24 billion. A lot of items to get through here. They helped to push the share up earningspershare up, i should say. Manhattane chase added about eight cents to earnings. 5 items. Is my head is spinning. Is 22, eight is 29, 27 32 iis 22, minus think it is . 11 is my media take. We also have anticipated the provisions would be less than anticipated. About 104 million for the first quarter. We will continue looking through this. Jamie dimon making some reference to moving past a couple of challenging periods. We see a lot of predictability before they mentioned the fortress Balance Sheet of james dimon. 6000 300ed again, over military veterans. We have hired william cohan, country bidding editor, written 17 books, one more than p. J. Orourke. Bill cohan with a terrific perspective. Let me ask you the question i always ask you are we truly beyond the financial crisis . Is a bigll, that question this early in the morning. The answer in part is yes. It is clear what is happening in the financial sector, it is clear where the vibrations are basically going. Its clear who the survivors are. It is clear the economy is getting better. There are fewer survivors. You suggest with your own spirit i know you hedge it it is essentially a monopoly profits. Cartel, oligopoly i like oligopoly. Lets go with that. Absolutely oligopoly. Its about time there were hundreds of Investment Banks competing but there were 15 or 10 players. You know you are as old as i am baby boomers, it is not our fault, but we are. Once upon a time there were hundreds of firms competing. Goldman sachs was a blip on the screen once upon a time. Jpmorgan, of course, was the great jpmorgan. That is not the same Jpmorgan Chase we have today. There is fewer and fewer players, the economies in britain, demand for their services is continuing to improve, the economy is approving, demand for the services is continuing to improve, you cannot have capitalism without wall street firms p. J. Orourke wr ote the classic parliament of whores. Are you willing to say banking of whores . With these 2 ancient people onset to my feels i feel so comfortable. Jpmorgan stock is up 20 in 2013. Did well. Paying 22 after billion in fines. Any other company that paid 22 billion in fines would be bankrupt, out of business by and large. Jpmorgan stock is up learnrlet, do you anything about fines within this report . I dont see anything off the bat but adjusting adjusted earnings per share is 1. 40. An update year adjusted earnings per share for the Fourth Quarter, jpmorgan, 1. 40. The consensus was 1. 37. The big theme for jpmorgan this earnings season was lower trading revenue. Higher Investment Banking because the ipo market. Is that enough to continue paying bankers hefty bonuses . There is going to be pressure on what the bankers are going to be paid because the thing we both know we talked about it so many times the biggest ongoing cost in any Investment Bank is the expense paid to people in terms of compensation. If you pay 40 to 50 of revenue in the form of compensation, that is the obvious place to cut. Permanent shift. Absolutely. Return on equity down with Profit Margins down. The only place you can squeeze for the benefit of shareholders if these places exist division between the banks that pay and the banks that dont pay i think all banks are going to have to pay people less. Or this is a critical distinct mesh are they going to pay people less, or will they just lay off people and pay others the same amount as always . That does seem to be a favored little trick of wall street is to instead of paying people less across the board, they like to lop off. She was. Are we going to debank retail branches . No, because retail branches of the best way to click run material. Collect raw material to Jpmorgan Chas Jpmorgan Chase, that is their right material and they get it for free. We will look at this later with Erik Schatzker looking at jpmorgans earnings. We have this theme of grey hair on the said this morning. ,oining us, p. J. Orourke sitting here with flies going in and out of his mouth. Within 20 billion short on your Balance Sheet . If i had to write a check for 20 billion jamie dimon and the other executives of these banks are on the back end of the baby boom. What is the parsing of the baby boom you and i know . We will talk about this through the hour with the younger turks. They are 20 years behind us, 15 years behind us. Have a different view, dont they . They do. We still come out of the old economy. We were very innovative. We knew who ever turks and was, we knew who Scoop Jackson was, and the rest. Typical baby boomers, talking up how important they are. We were very inventive. They used to be, what, one derivative to shore things . And then thetive kids 20 years and younger took this and ran. The governor of new jersey has been in the news recently. I hear that. The people of New Hampshire wear a fleece. Fleece thong. That is how cold it is in a New Hampshire. This is family tv. Be careful, p. J. We are dying to get her thoughts on what the action is for Chris Christie. Termsputted injures the to put it in new jersey terms, fuhgeddabouit. This is a slow news week. Sharon, it is sad that he died, but he had been in a coma for years. We have traffic jams in a new jersey . What do people in ohio think about this . His political opponents are not going to let him forget about it. How does he handle that Going Forward . He lets benghazi trump it. P. J. , you are known as a libertarian. Democrats think you are wrong public in, republicans think democrats think you are republican, republicans think you are democrat. Of thehe ethos Republican Party. Is the libertarianism you know . The gopit is there, and better get in touch with it or they will have another they will never have a voter under 60 for the rest of their lives. Youngerare not voters are not trending democrat but they cannot stand republicans because of the republicans insistence on social issues. Which party has more baby boomers . Thats interesting. That is really split down the middle. We are in this situation where we are really in favor of more government benefits to be paid for by other people. Ok, lets come back. We have p. J. Orourke. Scarlet fu of course with earnings of jpmorgan and wells fargo. Can the millennials fix the problems of p. J. Orourkes baby boomers . Good morning, everyone. Bloomberg surveillance. I am tom keene. This is our guest host and surveillance philosopher, p. J. Orourke. The author of books Like Parliament of whores. About me, the baby boom. One day childhood is over. Lamest generation. This is very funny. What made you cry writing about the baby boom . I remember what morons we were. You know what made me cry . How we treated our parents. There was a period in the 1960s we hated everything about them. Before the 1960s we did not get that they fought 2 wars. A lot of parents living and injured and a lot of parents who had lost brothers and sisters. You fastforward, are we speaking to our children . Yeah, no. Understand. Dnt we were so close to this and yet we didnt understand what a horror world war ii had been, what horror the depression had been. There were guys who had fought world war i. I had a guy show a medal to meet in college once, or world war i veteran. It was out of body. When you look at the ethos of the midwest, because when a lot of people think p. J. Orourke, they think new england, New Hampshire. Im rustbelt guy. Where are the conservatives more . Where is that measured view of the midwest . I think it is pretty fractured. One of it is just the expansion of sheer size of government. Lets not even talk about the quality of the government, lets just talk about the quantity of government. It leaves people very confused. We want all the social benefits, but we want them to be paid for by other people, and that we realized we are the other people. I am confused about it myself. Part of the time im a medicare and part of the time it is april 15. You have a photograph in your book. I think your sleeping bag was bigger and uglier when you went to camp in 1962 than mine. What was it like the first time you slept in a real sleeping bag . Wasnt that like an act of god . I couldnt believe a sleeping bag could be warm. We would go off to camp with these things about the size of a modern prius. Is president obama in the baby boom . He is, technically, but he is in a very tight end of the baby boom, and that tag and is kind they grew upcause swimming in the sea of the 1960s but sort of like a fish p. J. Orourke on president obama, sort of kind of like a baby boomer. Going up, we look at the super bowl and march madness. Good morning, everyone. I am tom keene in new york city. Scarlet fu, Cristina Alesci with us could a guest host comments elevation of his 42nd book, the baby boom, p. J. Orourke is with us this morning. Lets get to the top headlines this morning. Here is scarlet fu. The Federal Reserve may limit commodities trading by banks. It will decide whether or not to restrict this activity. This according to people briefed on the discussion. Regulators andas lawmakers focus on commodities trading and how big a risk it presents to the financial system. Inflation is. K. , slowing to two percent in december, adding the Central Banks target for the First Time Since 2009. Prices fell from 2. 1 in november as the drop in food offset a rise in electricity and gas prices. Socko moves onto the courts. Alex rodriguez and his team of lawyers are looking to overturn his suspension from major league baseball. He says the arbitrator reduced to the games was biased. Headlines. Our top how many days, 26 . 26 days and counting and the yankees are moving on from arod. That would be very, very good. Overnight action in washington, nothing is change. Washington is still a parliament but they did pass a 1 trillion spending bill last night. Chief washington correspondent peter cook joins us this morning from our district of columbia. P. J. Orourke with us as well. There is a parliament o there is parliament of whores, truly classic book, with Andrew Ferguson writing it up as well. What is the new new of the spending bill . You give them too much credit. They have not yet passed it. The house is going to take it up on wednesday. They will miss the january 15 deadline, but that is ok. He will pass this threeday temporary deal for the time they need to get this done. What you need to know about this piece of legislation is that it is one of those omnibus allencompassing spending bills that everyone in washington heights, but they will hold their nose and pass this again because they dont want to see another Government Shutdown in the election year, and both sides get a little bit of what they want. A couple of shots taken at each side. At the end of the day, this is a ceasefire of sorts, a continuation of the murrayryan budget deal. How does the sausage get made . Is this done by assistants to the assistants, or is this time is men and women arguing about 7 different items and agreeing on a 3 and 4 . The people who work the hardest on this are the staffers on the house and Senate Appropriations committee who, ever since the murrayryan budget deal in december, have been working basically nonstop to put this 1582 page bill together. Separate federal agencies, tom, everything from a to z. The key negotiators were 2 veterans of congress hal rogers, house Appropriations Committee from kentucky, and barbara mikulski, Senate Democrats from maryland. The 2 of them worked in a closeddoor setting for several weeks to nail this down, and they are confident they have the support of their respective caucuses to move this thing forward. Peter, stay with us. We are thrilled to bring in fiscal analyst p. J. Orourke. We really have to go back to parliament of whores, that lasted. No kidding. What is new now versus when you wrote this classic . I wrote the book 22 years ago and i gave it to a friend of mine, and andy ferguson, the best political writer, and i said, would you update this book . He said all you need to do is move one decimal place on over. Are the partys fading away within our massive independent registration . No this is what is so weird. Basically, americans are politically independent, and yet the parties remain strong. Why . Because of their fundraising mechanisms. Their brilliant fundraising mechanisms. Moronic. Ally, they are practical politics, they are useless. But boy, can they raise money. You have social media, mobile technology. It keeps congressmen from talking to each other facetoface. It used to be that they would reach across the all and have discussions with each other. It was more than that. They would go across the street. And take shots together. What is wrong with that . Cigars d hotel and what bourbon do you drink . I drink scotch. The hawk and dove. One of the worst things that spousesd to washington and families started to come along could once that got in the way . That got in the way of the drinking. If you have a kid at home and a spouse doesnt Chuck Schumer live in a townhouse with 3 other senators . He does, but that is rare. Why arent the baby boomers holding commerce accountable Congress Accountable . Because of that thing we are getting a tremendous amount of benefits from the government and yet we hate the government. How do you reconcile how do you reconcile your relationship with your parents . It is like being permanently 16. Here, you guys can have 20. Cant let it go. Here is a quote from a few years ago. James morris, we are glad you brought it up. Giving money and power to government is like giving whiskey and car keys to teenage boys. Peter cook, wheres the money and power this morning in washington . First of all, as someone who , who has aoy dh boy, i think that is an insult to teenage boys. The money and power is where it has always been could the Fundraising Efforts are driving the ship. Think thatd i ever peter cook could be more cynical than any given guest. P. J. Orourke with us through the hour as well. The head of h r block joins us next. This is bloomberg surveillance. I am scarlet fu, here with tom keene and Cristina Alesci. Lets get you company news, starting with Time Warner Cable, shooting down Charter Communications takeover bid. Bywas called a lowball offer the ceo, saying we did not put our house up for sale, we got a knock on the door, and someone made a lowball offer. Credit suisse is encouraging junior bankers to take saturdays off. Unless, of course, they are working on an active deal. Asterisk. A lot of asterisks there. Jpmorgan fell 7. 3 in the last hour as the firm pays 2. 6 billion in settlements linked to Bernie Madoffs ponzi scheme. Net income declined to 1. 30 a share. Profited eight analysts estimates and a couple of other notes here. Fixed income currencies and commodities trading coming and higher than anticipated. Equities trading revenue at 873 million, down 30 from the third quarter. Scrutiny. That bears scrutiny. Compensation as a percentage of revenues 30 in line with the same time last year. A lot of noise. A lot of noise, you could say, too, in the role of sports, because this is the season for sports retail. The big kahuna, the super bowl,s coming up in nyc on february 2. The of march madness thereafter. Doorsers cannot open the fast enough and Stephanie Ruhle is joining us you because she spoke with the ceo of modell sporting goods. Indeed i did. He we are, super bowl in new york, new jersey. Obviously he says you have got to go to mos. Huge for his business, not just because Everyone Needs jacket. Mediaprobably more the play than financial play. So many different things. Sponsorship with the nfl, media events, just a lot of events going on. You have to spend a lot, too. You could also make a lot of money selling here. Selling gear. Not really. We are part of the dna of new island, new long jersey, westchester, they will have a piece of it, but the real action will be in the 4 manhattan stores. Got to go to mos. Is not necessarily a game changer for him. It is a game changer for under armour, because he has tom brady. As important as it is to have these wearables and technology, at the end of the day the kids by the jerseys and the cure any criminal their favorite athletes. That is tom brady, jerseys favoriteear of their athletes. That is tom brady. He is an under armour guy. You also spoke to him about arod. Arod jerseys, what are they going to be worth . Are people buying them . Not now, but also not last year because he didnt play. The fact that he didnt play last year, thanked on we did not stock a lot of inventory thank god we do not stock a lot of inventory. Are we going to see it on ebay worth more or less . When arod comes back, if he comes back, and the yankees win the world series, they will love him all over again. That is what the fans are all about. This, a championship like we will love you. Think about it, it is the kids. Your kids love who they see on the field this year could they are not thinking about arod being injured. Who is on the field . Derek jeter . That is why one. That is who they want. I have a nineyearold kid and it is gronkowski, gronkowski. Even though he hasnt really played this year. Really . Could you please explain who mr. Gronkowski is . Thats right, not everybody is a patriots fan. Wonderful great big tight end i could catch anything thrown by anyone to anywhere. He has spent most of the past year on the injured iswhat he is talking about the cult of celebrity, the new cult of celebrity. How is that different in your book the baby boom . It was a different place and time forget 40 years ago. Even 15 years ago. There were only a few celebrities and they existed in this liz and dick rld. Like liz taylor cristina, she was a movie actress. Ive seen more old movies than you have, tom. Probably true. Perfect example of inflation. We have one million celebrities, none of them are worth anything. [laughter] we have to say goodbye to our own celebrity, Stephanie Ruhle of market makers. Also worth nothing. Lowerorgan treading a bit in a market that if you exclude some beat analyst estimates. Good morning, everyone, it is bloomberg surveillance Bloomberg Television, bloomberg radio, streaming on your tablet. Tv plus and a bloomberg tv plus and critically for those of you in the tv world, apple tv has picked up Bloomberg Television. Im getting anecdotes about that being a good and beautiful thing. It is a good idea. Shameless plug, tom. P. J. Orourke with us of the baby boom. He owned the original macintosh computer and thought it was like an ibm minicomputer think that cost 842 no, i didnt. I had an ibm electric. We cant not talk about health care when it comes to baby boomers. Lets keep in mind, 2. 2 Million People overcame the complicity of the Affordable Care act and of course, the website problems, and signed up for Health Insurance. But do they know that the irs is in charge of enforcing the acas policy . The ceo of h r block hopes that confusion will create opportunity. What is the what does the aca meet for most of your customers tax bills this year . It doesnt mean a lot for the tax bills this year. However, when you do this year will impact you next year. You need to know your status this year so that you get prepared. The law of the land now is that you have to have Health Insurance or face a tax penalty Going Forward. About one third of your customers are going to get some kind of subsidy, right . What about the two thirds who may have to pay a penalty . Are they going to be angry with you because they are not getting as much money back from the government . I dont think so. They realize that we are not buying or selling on this law. We are just trying to interpret it. But if they understand it . No. Complete confusion out there. It is not a subsidy. It is an advanced tax credit. You think of a subsidy like something you are going to be given that is what the government is calling in. Up against your actual income in 2014 when you do your 2014 taxes. That is going to add to the confusion because a lot of people think that without the subsidy it is, if you will, free money. P. J. Orourke with us today. He wrote parliament of whores, the first cynical look at washington ever written in the United States of america. Some say that you please our hatred for the irs police are hatred for the irs. Is the iris a police force . I dont get into the politics of this. We stay right down the middle and we have to interpret the law and do that but the lies that we are using the irs to affect the Affordable Care act for people the law is that we are using the irs to affect the Affordable Care act for people who wish it would go away. Seal team six for obamacare. How does this legislation directly impact your business . It directly impacts the Business Unit 2 ways. One is tax returns. The irs is going to be the agency that administers this law. There are 40 text changes that are occurring because of this law. We try to repair accurate tax returns and get a refund for our people. Got to rip up the script and borrow one of toms phrases. To baby boomers fundamentally understand the Affordable Care act . No, and the ones who signed up, they sat on their smartphone and it happened by accident, i swear. The people who walked into h r blocks offices, are they for the most part from that generation or are they the younger folks, millenials . We serve all sizes and shapes should be happy tax and health care review. We wouldve will give this out to everybody who comes in this will give this out to everybody who comes in this year. What we are ultimately about this year is providing an accurate tax return and adding people to maximize their refunds. Thank you so much, bill. Coming up on bloomberg surveillance, is a 75 the new 55 . How the aging population affects health care with p. J. Orourke. He just ripped his new book, the baby boom, and that exist to our twitter question of the day. This is bloomberg surveillance on Bloomberg Television the millenials are down in peru. Oh, stop your whining. That is your fault. Dont go to thailand. P. J. Orourke making me smile this morning. It is bloomberg surveillance. I am tom keene. Im older, their younger scarlet fu and Cristina Alesci. She is not a member of the baby boomer generation. In the loop anchor betty liu. I am so amazed im sitting next to p. J. Orourke that i forgot my contacts. Never too early to be funny. The Weather Channel the ceo is going to be on with us. They have this dispute sourcestinue to be huge of contention between the content creators and the cable operators, or the destination platforms. Now we have one between the Weather Channel and directv. You may get blacked out possibly. With the weather, like it has been lately . I know we get it off our smartphone now anyways. Greatly appreciated. It is time to take on the earnings calendar. We need to start with jpmorgan, which reported earnings at the top of the hour. A lot of noise including the sale of visa shares and one chase manhattan and a settlement over the bernie made off ponzi scheme. When all is said and done any back out from the onetime items, 1. 40 per share beat analyst estimates. But within trading, big focal point for so many investors given the kind of Fourth Quarter we had, Investment Banking fees topping earnings coverage goes right onto wells fargo. Wells fargo reports in about 15 minutes, next hour during betty lius show. Bank of america is reporting earnings tomorrow. Blackrock, goldman sachs, citigroup will be announcing their results on thursday. In terms of other nonfinancial firms, cfx will be announcing results tomorrow as well. We will try to go beneath the headlines, beneath the simple revenue and earnings analysis for you, trying to document the right decisions. We want to take a turn to something lighter literally take a turn. You do not want to be this guy driving the next time you head to the airport. The chinese driver setting a record with this daringly over a river. The staring leap this daring leap over a river. Windset wide, strong pushed the car off course while he was in the air and it landed in a pile of corporate box cardboard boxes. The driver survived and we have another record daredevils can break. P. J. Orourke with us. The baby boom. Do you remember awful knawful . I do indeed. We are going to rip up the script here. Having teenage daughters, this is a drug that makes teenage boys drive slow. How bad can it be . I am all for that. Mother of future teenage boys. That looked like beer. [laughter] try marijuana instead. Back with more bloomberg surveillance. This is bloomberg surveillance. Tom scarlet fu, here with keene and Cristina Alesci. Our coast this hour our guest is the sort, p. J. Orourke, noted political satirist. A judge denied activities request to the companys request to have a monitor including ceo tim cook. Apples of the monitor was charging too much and demanding interviews. The judge says it is not up to ine the monitors duties. Acer ceo says the Company Needs to dig itself out of a hole. Tech giant is on its way to posting a Third Straight annual loss. Google moves into the connected Home Business. The company is buying nest, which makes digital thermometers and other Smart Devices. The price tag is 3. 2 billion, double what google paid for youtube in 2006. Bloomberg west, a detailed interview on this transaction. Google nest . Or separate unit. It will not have google branding per se. And the first Energy Crisis p. J. Orourke will know this your father would go up to the thermostat and instead of looking at it head on, he will look at it and an angle and set that puppy oh, yeah, exactly. P. J. Orourke with us on the baby boom. Frontmentioned earlier, and center is Chris Christie. He is a friend of the president. How are the new frenemies . What is catch me about this story is that it seems to me like the democrats are desperate to hang something that they are really scared of Chris Christie. Should they be . I think they probably should. They made their move too soon over something that in the heartland, flyover people are going traffic jams in new jersey. To local, isnt it . Way too local. Why are republicans are struggling to find not a lead candidate but even a set of people to follow on from the bush family . They got themselves all tangled up in the social issues. A big part of the support for the Republican Party has got stands on social issues, whether it is gay marriage or that just dont resonate with the voters. The voters hate these things. I hate them , too. No matter what my personal opinion is about drug legalization or gay marriage, this is not political stuff. Abortion i mean, i am catholic, it is a sin, im against it. What, being catholic is a sin . You know, it has been. It is not just about traffic in new jersey. It is the broader point about him bullying people, right . This is what is at issue big old jersey politician turns out to be a bully . I think that is part of the agenda here, to bring out the bully side of Chris Christie, which aint that hard to do. I know you were on short list for man of the year. Pope francis is a different pope, isnt he . He is good he seems to be like a great guy, but i dont think he knows much about economics. He is not gregory peck, is he . Actor from ais an few years ago. People make references about George Clooney and gregory peck. The way he speaks resonates with a lot of people, and authenticity you dont see in politicians in washington today. No, i think the guys a great spokesman. In evangelical friend of mine said that evangelicals better watch out because this guys got those things going. At the same time, a he publishes i can never say that right that is because he is more accepting. We like all that part, but he doesnt seem to show much fundamental understanding hes got an argentine understanding of economics. We dont want to go there. That would be difficult, to say the least. We want to get to our agenda right now are we look at the stories shipping today. Baby boomers i hate to bring this up sign up skewing older. Ash sign of skewing older sign up skewing older, p. J. Older, tomewing keene skewing older. Im working out every day. Were just not giving into it, are we . This generation, we are going to be young forever. The pharmaceutical industry is betting big on you guys. They are, correctly. We are not giving up. We had so much fun as kids that we are not giving up. Years dcs in 10 where do you see us in 10 years . Games for wheelchairbound does that mean that me and scarlet have to pick up the bill for that . In a way, we have to pay the short answer, absolutely. Within your world travels from one of the solutions is a retirement plan, complete failure for the nation. A we all going to move abroad . Do we read 13 of your books about slumming in europe . We will have to move to someplace cheap. Either that, or the millennials will put us on a nice load. Where is someplace cheap . Europe isnt cheap. Sochi looks good. Central african republic. Youre going to have to learn how to ski, tom. And then we will be paying for the cost of when you get your mri. That would be true. We want to bring our twitter question of the day into this conversation. We asked everyone, can millennials fix problems caused by the baby boomers . There is the optimist take. Ah, payback. That is going to be tough. There is somebody who is still up, as opposed to somebody who was awake right now. I read the wikipedia on phil cheese. Lveeta that is what you will live off of, tom. Food of toledo, ohio. Tom, you have got to head over to the radio trade. P. J. , thank you. I have my eye on the time warner deal. We have been waiting for charter to make a move and put out its formal bid. They did yesterday. They took the offer directly to 1. 32, ands for obviously, we have time warner come out and say no way, you need to get you need to go higher. This could drag on for weeks, months . Months is probably a bit longer could both sides want to get this resolved sooner rather than later. I have my eye on wells fargo, because earnings are coming out in just about four minutes from now. U. S. sargo is the biggest home lender. Everyone is sitting in Mortgage Origination revenue, which is set to drop about 25 from last quarter because higher Interest Rates certainly one reason why. The Housing Market is losing a little bit of steam, perhaps. P. J. Orourke joining us. You have written this book the baby boom. We could get Hillary Clinton as a president ial nominee in 2016. Is she a baby boomer . Absolutely. She and i are about the same age. That would make 4 baby boomer president s in a row. We can count president obama as a baby boomer . Oh, yeah. He has a younger one, but its 46 to 64. He seems more like a gen xer to me. He wears mom jeans. Hillary clinton as a baby president , is she going to turn the clock back . I dont think so. There is no turning the clock backwards. But there will be more of this baby boom obfuscation. One thing we cover on this program is technology. One place i dont see a lot of baby boomers is in silicon valley. Why is that . Baby boomers dont seem to get their head around what is going on right now. It is the younger cohort of the baby boomers as opposed to the inventors of this stuff. Steve jobs, bill gates, born in 1955. Guys my age, no, we are analog. P. J. Orourke, thank you so much. The baby boom, noted political observer. In the loop those quote is next on the television. From bloomberg World Headquarters in new york city, this is this in the loop. I am trish regan. Betty liu will be here in the next hour. Our guest for the hour will be steve case. He eased ceo of his own investment firm, revolution. He is ceo of his own investment firm, revolution. I like to support startups. Fargo earnings are coming out. Scarlet fu breaking the numbers for us. Earningspershare of a dollar that appears to beat the consensus estimate of 98 or share. First quarter provision for credit losses 300 53 million. That appears higher than what analysts were looking for. Anticipating 320 3 million in terms of putting aside money. Efficiency ratio speaks to wells fargo effort to bring down expenses. This is the targeted measure for cost cut. 5 . Ope ratio is the ea they were