Spirited discussion about the themes here. That ford on bloomberg surveillance, Arnie Sorenson from Marriott International has a global feel for the ebb and flow of American Global business. Ken rogoff joins us in a bit, a lot to talk about. Whereeems to be a davos the business crew, the corporate crew is taking over the meeting. Corporations are everywhere. Hans nichols was showing the helicopters with london tv, they are out. Joining youe shortly. We need to get to Michael Mckee with our morning brief. You are going to play weatherman. So coldannot avoid it, and so much snow on the east coast. Over in england, bank of england has released minutes showing that members saw no need to raise rates soon, u. K. Unemployment is supposed to be the trigger at a threshold of 7 , they are supposed to consider raising rates. Like 6. 5 in the u. S. The u. K. Reported unemployment is at 7. 1 , going to raise the question of what they do sooner rather than later. In tokyo, no change in bank of japan policy, 671 billion a year in stimulus even though that economy is starting to pick up at inflation is going higher. In the u. S. , a light day. Only Mortgage Applications out at 7 00 a. M. Earnings, not as many big companies, coach is going to lead our list, motorola, general dynamics, after the bell we get netflix and ebay. Talking about netflix this morning. Also, the weather. It has stopped snowing in new york. Finally. Schools are closed in philadelphia and d. C. , students of new york are going to school even though wind chills are like 10 degrees. That is affecting the markets locally. Need, up to get what you Natural Gas Prices in new york 20 pert a record 1 british thermal unit, seven times. We are paying up. You have a data check. Right now we are lower across the board for equities, the s p futures down by three at the moment. Not a whole lot of movement. The 10 year note yield, said of we have settled into the range, 184. Crude oil reacting to the weather, up . 42 on the day, that spreads through the energy complex, natural gas. We mentioned the new york city spot price. Up to a two your high. In boston, dont look. Heating oil futures, paying a lot more than those who use natural gas. The tom keene watch, swiss franc a little weaker again today. Toms time at the pn a bar gets a little cheaper. 1,239. Tures, the website of bloomberg. Com, the shakeup over worlds Biggest Bond Fund manager. Ceo Mohamed Elerian will be leaving. A surprising departure. This is a bombshell. He was seen as the heir apparent to bill gross, not clear why. He is not speaking on this, clients pull a lot of money, 41 billion from pimcos bond funds last year, pimco did not do well with bond losing favor. He was charged with diversifying and building inequity business, maybe that has something to do with it. Maybe he is looking for a different job, a policymaking job. He has been very active on the oped front. Bringing,ll be continuing to discuss this. Im sure his phone will be ringing, continuing to discuss this. Bill gates was here yesterday at bloomberg headquarters. He sat down with michael bloomberg, the founder of bloomberg lp, majority shareholder. Were talking about challenges to philanthropy. I am naturally optimistic. The facts are on the site of the optimists. It is dangerous that people are focusing on the bad news and not seeing progress. It means they do not look at the best practices. It makes them less generous. We are raising poor countries, most people live in middle Income Countries now. Health,be done, agriculture. The success, if you do not see that, you are not going to participate in what we need to do. There will be no poor nations by the time we reach 2035 . None, landlocked countries in africa, north korea, less than 10. All i was born, almost countries were poor. Now we are down to about a quarter of them. The next 20 years, if we focus on it, we can make it really exceptional. , some bold countries predictions. Our final frontpage story, amazon approaching u. S. Media companies to get rights for online paid television. Offering a Live Programming similar to paid tv, this would expand on their prime subscription service. Do you use that . We do, the kids love it. It brings more options. Lets bring in our guest host, media analyst at rbc capital markets. Going onconsolidation in cable tv, yet you have amazon coming in as new competition. I think this is pretty astounding. One single data point for an industry is interesting, but not meaningful. When you combine this with the fact that sony is has announced they are launching a streaming service. We are pretty sure that is part of the verizon strategy in acquiring the intel assets. Now you have the chatter about amazon. All the sudden, think about that. In an industry that was essentially a monopoly between guys who built the cable and the ground and a handful in the have satellites and all of a sudden you have a whole bunch of new competition coming in just as you are starting to get concerned about cable guys consolidating. Hopefully for media companies, putting some of the leverage in their hands. Media is the gift that keeps on giving. In terms of their ability to monetize content and grow earnings. What about companies can they all survive . Great question. The Business Case for any of them is i think we saw with intel, they were going to launch the first overthetop cable system. Ultimately, they sold the assets to verizon. Have had a must not terrific Business Case for a standalone, nonfacilitiesbased cable operator for them. Of someone who has customer relationships, who could use it as a customer becomes an tool, it more interesting Business Case for amazon or what verizon could do as well. Rolling into the mobile products. Good news for anyone who generates content or tv fans. Our twitter question of the day. How do you watch tv . Do you cut the cord, do you use netflix . Tweet us bsurveillance. Keene has been watching bloomberg tv through his ipad app. 12 noon in switzerland. Hearing the church bells in the background. He studied the 15th century, Kenneth Rogoff joins us from Harvard University to kick off our davos coverage for bloomberg surveillance. Good morning, bloomberg surveillance from new york city thedavos, switzerland at World Economic forum. The themes are many and diverse. A lot of talk about strategy. The idea that the air afford could be different. As we do every time we come to coverage withed ken rogoff of Harvard University. One of our most astute international economists. This time the era, is different. Has anyone read it cover to cover . Some people claim to. Of theratulations enduring effect of this time is different. Bringing forward the new. What is new in 2014 . Data on how this crisis has unfolded. Into past crises before world war ii, all the way back to 1857. Trying to measure, we know it was bad, how bad . For the u. S. , it is the worst t world war ii recession. A little worse than average. Europe is worse than you might think. I heard that this morning. The imf joinedof us. Europe is distinctive. 101me ask you an econ question, if Christine Lagarde has a caution, why are the markets doing so well . Why did we have four great years of equity markets if the ken rogoffs of the world have skepticism . We have other crises, had a similar pattern with equity markets for the first few years. This is not after this is not out of character. We are looking recently, there has been some measure of stability in europe, it is hardly growing gangbusters. Improvement from blowing up. In the u. S. , it is growing. There has been a natural arees do end, maybe we starting to move away. It is still a long way from full recovery in europe. We could go two hours or three hours nonstop. The issue of the moment is inequality, the frustration of a forget about 1 , maybe 7 . Then theres the rest of america. What would you like to see our politicians do . Prescriptionogoff for the president and the next president . In the big picture, technology and globalization will drive the story. There is a political side that we see it everywhere. Labors share is plummeting and has been for 25 years. Before that, we had technological process and we had Technological Progress and do not have share plummeted. We have to see changes. It is permanent, structure. It will come back you naturally. Technology will go where it is expensive. Replacing highly endowed individuals. Tax system is the clear. Infrastructure investment, it is incredible we have not had this. Why . Do you know why we dont have swiss railroads . We have sent a guy to the moon and we cannot do this. Aside from politics, there is imminent domain, it is hard to tell somebody we are taking your land to build a railroad. That is part of it. There has been a political paralysis in recent years. I had not anticipated i thought the crisis would energize our political system. In 2007 inwith you the Bloomberg Radio studios in new york, you were two years ahead of the discussion on the need for investment. This is a theme that davos. Lass officers invest to create jobs . Is it washingtons, berlins fault . We live in a world where politics has become more paramount than it has been a long in a long time. You care more about washington is doing. Recovery it is the taking hold. Over time, maybe we will start to see the investment. That is the last piece, when we see that pick up, we will feel better. Public and private investment. We are teaching at Harvard University, what is different about what you are teaching now, may 2007 before the crisis . For example, real Interest Rates being zero distortion why interest of rates are so low, nobody really knows. Does janet yellen . She knows the seven explanations, it is hard to calibrate. She knows pieces where the fed can do something. Financial crises, my students are more interested now. I will go without. To talk to you at davos about the year forward for the u. S. , some nice surprises, the u. K. Doing betterthanexpected. Did austerity work there . Think that is over rated as being the single driver of everything going on. Showed at the meetings, it has behaved the same way it always has with that size debt and deficit. Do anything more anything less, you cant complain about the sequester. The Credit System taking time to heal is number one. I would have like to see debt writedowns. Prepress progress or kenneth drove off professor of Harvard University. Executive officers have to sleep in hotel rooms. We will talk to marriotts ceo. From new york city and davos and the World Economic forum, this is bloomberg surveillance. Stay with us. This is bloomberg surveillance, i am scarlet fu with Michael Mckee. Tom keene is in davos. Mike has our top headlines this wednesday morning. Good morning to folks in japan, bake of japan bank of japan will continue with plans to expand the Monetary Base by as much as 600 70 billion annually. There was a change in the a reference tong uncertainty. Bank of englands 7 target, reason too immediate raise rates. The Unemployment Rate fell to numeral set the unemployment. Ate fell to 7. 1 the winter storm on the east coast, look out the window, thousands of flights are canceled. A foot of snow in some areas. At midnight, 11 inches of snow in central park. Washington dc and Boston Clothing closing schools. A wave of arctic air adds insult to injury. We have got negative five degrees wind chill we have got 5 degrees. Polar vortex has entered our lexicon. The people at the Weather Bureau called the polar pig. Something from the new over work. E cult of after junior bankers at goldman sachs, credit suisse, and bank of america were told not to work on saturdays. Grinding out hundred hour weeks health spankers think of themselves as more dedicated than everyone else. Think ofbankers as more dedicated than anyone else. David banks, you remember when you were a junior banker, putting in your hundred hours a week. Become more challenging today versus when i in an analyst, at first boston in 1990, the Global Nature of the market and the 24hour news cycle makes it impossible to not be reactive. When i think about the sell side of our business. It would be great to say everybody take today off. When the Supreme Court rules on a friday night that they are going to hear the aereo case. We need to be reactive to clients. It is interesting but difficult to execute in practice. Companiesing other face. The snowstorm hits new york, they called people into work. Does it didnt really benefit you to sit around 15 hours a day . Were you that much more productive . Clientsnk the appreciate a timely insight, that is what we are in the business for. That is the choice we make to go into the Financial Services industry. You get paid. That is nice, too. Of mostroductivity knowledge workers is hard to quantify. When we come back on bloomberg surveillance, heading back to davos. In thee is shifting Power Industry with the head of ges power and water industry. Want to clarify something. Amazon and a paid tv service, nevermind. The wall street journal had content they approached providers. Amazon, and an email to usa today, denies that. Are not planning to license Television Channels or offer a paid tv service. It looks like talk of another entrant into that field is premature. Bankme thoughts from david at rbc capital markets. Is this surprising . Before, one data point to the sector is not really that meaningful. Thematically, a number of them are. What i would focus on whether or not it is amazon or someone it looks ass, though verizon is. There are buyers for this content. We are clearly on the verge of seeing streaming over the top cable products launched. It is nots though going to be amazon, never say never. Now, soon. Mike has our top headlines. Clashes between protesters and police in the ukraine have turned deadly. Two people reported to have died sincev, the first deaths ago. Sts began two months new antiprotest laws are going into effect. Police have been cracking down on protesters. John kerry and representatives of dozens of other countries in geneva for the start of peace talks on syria. To jumpstarte host progress and end the three year civil war in that country. Fighting has spilled into lebanon, turkey, and he rocked as opposition groups try to topple president assad. It seems like a safe bet, Berkshire Hathaway backing a 1 billion prize to anyone who picks any winner every winner of every game in the march madness tournament. A joint effort between buffett and quicken loans. One. Dds, 9 quintillion to 0s. Llowed by 18 we will take those odds. I always get knocked out really early. Do you study the teams or pick them by the jersey color . Isolate him backwards. I fill it in backwards. Very interesting. Bragging rights. 1 billion. Real money. Trouble ahead for hbo, showtime and other premium pay tv channels. This is from npd group, subscriptions to premium paid tv channels is the yellow line, they are slipping. Falling to 32 , down 6 percentage points. Subscription videoondemand netflix, hulu plus, gaining strength, the white line. 32 versus 27 two years ago. In terms of who leads the way, netflix, 80 nine percent overall. Hulu plus has a 10 share, and amazon prime at 2 . David bank, looking at netflix gaining momentum, balance that with content costs it needs for all the content. Is it a credible threat to the premium paid tv channels like hbo . I dont think it is one or the other, at the end of the day, investors are focused on two things when they talk about media. They often talk about a macro cyclical, advertising and consumer driven. Then they talk about secular headwinds, generation not watching television, buying netflix. I think there is something people forget, there is a content cyclicality. If shows are not good, people do not want to buy services. Data, i would the point you towards the subscription data at showtime. Homeland. Cbs is the parent company, it has been a success because of homeland. While hbo is doing well with game of thrones, we are past the air of sopranos. Some element of share shift going on, really benefiting showtime. By the same token, if the shows are better, people will subscribe. Our twitter question of the day, how do you watch your television . Amazon prime, netflix, cut the cord and on the ipad . Tweet s bsurveillance. This is bloomberg surveillance. This is bloomberg surveillance, i am scarlet fit with Michael Mckee. Tom keene is in davos, switzerland. The big banks have finished reporting earnings, they are free to talk about their financial outlook. Brian moynihan of bank of america spoke with Erik Schatzker yesterday about the recovery from the financial crisis. There are still uncertainties, we have investigations by the department of justice. We will deal with those. Reallywere able to and had to get to over the last few years to start to clean the Balance Sheet up, take uncertainty away around the company. We did a lot of work and it cost a lot of money. A lot of it has been spent. We still have more to do, tom is joining us from davos with special guests. Brian moynihan speaking pretty candidly. Very visible here in the early hours of davos. Up to the early hours, stephanie with has finally graced us her presence this wednesday morning. Erik the crack of 12 22, schatzker was here at 5 00 a. M. Harassing financial types. You harassed Brian Moynihan. A very perceptive interview. Distancing himself from fortress dimon. I need to clear something up. At 7 00 a. M. , i was here before both of you. Surveillance bank of tell us america distancing themselves from Deutsche Bank and jpmorgan. He wants everyone to know that just because jpmorgan had to write a 13 billion dollar check does not mean bank of a 70a will have to write check. A 17 billion we were there first, we bought countrywide, we have written all kinds of checks and had to pay money here and there. A lot of what went into jpmorgans 13 billion bank of america has already you cannot forget, we are seeing jamie dimon paying fines, what inning is Brian Moynihan in he just had a fantastic fourth quarter, trading at record highs. The beat goes on. Postcrisis highs. Under a huge amount of regulatory pressure, there are still finds to be paid. If you look at what is going on inside bank of america, it does not seem like those employees are crying like a few years ago. What is different from a few years ago . We talked about it with one of the best performing hedge funds managers in the world, exclusively and financials. He said banks have made the turn from being capitalintensive businesses to a utility. Utilityus a bank like or a utility like bank is a beautiful thing eight beautiful thing. I wonder where their head count will be years from now. Heads, whatre the are their job fountains, you are seeing hiring go on in compliance. Highflying traders it is a gorgeous day in davos. Pioneersded a tech dinner. Ande went around the room came up with new businesses. I know davos is about bringing the biggest names together, we are talking to them. There is another different track, the young leaders, the changers. Mike bloomberg has said the people you should know are the next gen. 28 yearst to a guy, old, started a data company and sold it to tpg because the president of mexico said the Mexican Government needs to figure out what to do with the data. Big data. What are the next big businesses . People said we need to figure out how to cure diseases, teleportation, self driving cars. Hedge Fund Managers would say are you kidding . That shows the dichotomy in davos. Three or four conversations, we will touch on that throughout this wednesday, thursday, and friday. Erik, lets come back. How was the key in a bar . How was the piano bar . It was lovely. Ianoy is the p player. Here in davos. Stephanie ruhle, Erik Schatzker, and tom keene in davos. This is bloomberg surveillance, i am here with Michael Mckee. Tom keene is in davos. Some company news a from of a global in a row for ibm, a drop in sales for a seventh straight quarter. Revenues fell 5. 5 to 27 . 7 billion, shy of estimates. Weeding the ceo to say they will not take their annual bonuses. Blackberry selling most of its real estate in canada, almost 3 million square feet of space. Plan tojohn chens raise cash and turn of the company around. Nokia may return 4 billion to shareholders, they could pledge some of that in the form of an annual dividend as early as tomorrow. Nokia has not guaranteed any payouts. That is company news from bloomberg west. They will be focusing on netflix today, reporting earnings after the close. Up in europe, no early trade in the u. S. David bank, you do not cover netflix specifically, but you look at the effect it has. What about the net new trolley rolling what about the Net Neutrality ruling . Thenvestors ask about threat of cord cutting. Going back to the chart you theed on the potential, suggestion of share lots of traditional cable of hbo. Net neutrality will come on the earnings call. More expensive to watch Television Online because of the cost of the data, all of a sudden, traditional viewership, cable, watching television over cable becomes a more attractive proposition. The way people think about cord cutting. Looking at what are they doing respecttent spend with to Big Media Companies and how much they are doing on their own. Issues of how long does that last . More strength of the internet, how much leverage and for how long do Cable Companies have . With respect to making ittrality, more expensive. Bill, mymy cable unbundled cable bill about 70 a month. An unlimited amount of bits coming through to watch television, the Value Proposition of the ecosystem. Really think about the concept of metered bandwidth. The more you watch online, potentially the more expensive it could get. If we migrate viewership towards the online basis, it changes the model and the way we think about things. I do not know when, but i do know i think few people are thinking. They think of both of them as unlimited. The best of we have both worlds, david bank, media analyst at rbc capital with his thoughts on Net Neutrality. ,e want to get back to davos switzerland. Feet, the new 753 marriott in midtown manhattan is the tallest in the country. Torres and and Business Travel m expanding andis looking to emerging markets. Tom at davos, room service research. Little things you pick up with a beverage of your choice. Sorenson,agnet, arne ceo of Marriott International joins us right now. The normal hotel business. Are you a gdp business or is there a thrust of doing better than Global Growth . I think we are doing better than Global Growth, but demand is stricken by global gdp. Gdp. T demand is driven by global gdp for the world as a whole. Manhattan has benefited by the growth of the u. S. But a rising mass of middleclass people from around the world. People who never had the resources to travel before. Where do they want to go . New york. You have just built the Largest Hotel tower in new york, previously it was mandarin oriental, high end. Inn, we wereidence eal estate r prices. A great return. Floor to hotel, ceiling windows and fabulous views. What does that say about our economy . Could have a highend property, why wouldnt you . Canhere are people that that group is growing. Family travels as an entourage. 1000 a night. You are going for the middle market, what is the distinction about the middle market in america . People are very different, they stay in Luxury Hotels for an anniversary trip or a business trip when somebody else is paying, maybe they stay in a less expensive place. We look at people coming out of china. Many like to come to new york and love to shop in new york. Sometimes they are shopping for goods that were manufactured in china, ship to the u. S. There is Something Special about buying it here. Many travelers want to stay in a moderate tier property to save money for shopping. We hear more and more that travelers when the boutique experience. There was a New York Times chic, they want a experience, not about marriott points anymore. I dont think it is eitheror, you look at the residence and we have just inn we the residence have just opened. Three floors of original art, very unique. Customers are telling us, give me a place where i remember. Experience, something about the architecture, too. The moment i have left, i have beige roomwhich the i stayed in. Do you redo washington or build something new . You do both. The Regency Hotel on park avenue. Reinvented. Donald trump in d. C. We have 4000 properties, many of those are beautiful. Sun capital and they will get capital. We are not going to get rid of them, we will get rid of some. What is your biggest headache in 2014 . We need bodies, what is the biggest labor headache . Big place, wes a open in developing markets, finding people with Language Skills and skills we need to welcome guests to our hotels. It is very different from what we have in the u. S. In the u. S. , because unemployment is so high, we can find people we need. Stephanie. You just had an announcement in south africa. South africa is the future. Why . They give out scarves. For the First Time Since independence, you are seeing a number of countries with strong government empowering people to grow, encouraging entrepreneurship. Growing middle classes, not just strength and south africa, that has been the story for the last decade at least. Strength in markets like kenya, ethiopia, nigeria. As we seek Regional Travel grow, opportunities are great. Kenya is next . Absolutely, we will be in kenya soon. Stephanie ruhle on safari. One of the greatest trips of all time, east african safari. The sky is like nothing else in the world. Marriottorenson with international, getting us started on our discussion with officers of corporations. A forex report. Outrageously expensive in switzerland, what they look at in europe. A few years ago, dollaryen, abe speaking at davos, the keynote speech of the day. So much more ahead. A perfect day in davos. Economics, finance, investment, business on bloomberg surveillance. All through the day. Lets take a look at davos, good morning. Companies like amazon, betting that more of us will cut the cord. Is the internet giant looking at licensing Television Channels for new online purposes . Private equity making quick moves. We speak with a Boston Celtics coowner. Government auctions off airwaves amid surging demands for the wireless sector. Why arent the big Telecom Players making a bid . Good morning, this is bloomberg surveillance. Is wednesday, january 22. I am scarlet fu, here with Michael Mckee. Tom keene is in dollars, switzerland. Our guest host for the aisle is for the hour is craig moffett. Tom, we want to get to you, first of all. You had a late night at the piano bar . Ofholding up ok, the start 220 two 28 hour days. Outlook herequity with the owner of the celtics, butets a lot of visibility, he is here less for basketball and much more to capture the relationships and Transactional Energy of a busier 2013 for private equity. An interesting interview with someone looking global, coming up. All right, we will rejoin you shortly, but we need to get the setup for the morning and mike does that with the morning brief. A big move this morning in the british pound after bank of england notes show that they do not need to raise interest soon. Toay their trigger fell 7. 1 . No change in the bank of japans Monetary Policy either. Backers,rtgage Mortgage Applications are up for third week. Earnings ahead. We are waiting on Motorola Solutions from freeport mac moran, general dynamics, and netflix. Out the window you will notice that it has stopped snowing along the east coast, philadelphia, in d. C. , new york city Public Schools open, but the cold has moved in. Windchill of five degrees below zero. If you are going anywhere, check with your airline. In the meantime, lets get you some company News Headlines as well. Mohammed elerian, quitting pimco, leaving his door open as coach and Investment Officer in march coming as he struggles to reduction. Cord he was widely viewed to be the followup chief Investment Officer. Amazon says they are not planning an online paytv service, telling usa today that they continue to create original shows and amazon studios. Media responding to reports that they were taking content rights for the paytv service. Seven in a row for ibm, reporting a drop in sales for seven state for seven straight quarter. To 27. 7 billion. That is todays company news. We want to bring in our guest host for the hour, craig moffett. Netflix reports earnings later today, as Michael Mckee was just telling us. They have been making a lot of moves to become more of a Media Company and less of a technology company, but at the sake the same time the stock price makes it look like there are no challenges ahead for the company. Are they in a good position, from where you sit . Company, but the challenges and what the stock has been responding to of late, in the last week or so, giving back its gains, netflix today arbitrage the transport, meaning they get free transport from Cable Operators with whom they essentially compete. That may not last forever. In the wake of the fcc ruling about Net Neutrality from last week, there are now real questions about whether they will start to be charged or, from an economics perspective, if the customer being charged would be the same thing or if that transport function essentially remains free. If it does not, a lot of the appeal of netflix is given back. A lot of the appeal of netflix, lets face it, is that it is cheaper. Absorb raising fees from the Cable Companies . Would they have to pass it along . Like i would expect that they would have to pass it along. The way i think about the cable industry is different from most people. I do not think about the margins aboutss margin, i think the video gross margin as the transport charge and the content that you buy from your cable operator is just a passthrough. Money that is passed along to disney, viacom, what have you. The challenge is if you start to see the charge move over to online, the Value Proposition radically changes. We will continue to get more thoughts from craig moffett, but in the meantime we want to go back to. Most, switzerland. You have a lineup of guests for us this morning. Who is with you now . We have an allstar lineup looking for an allstar in basketball. Known for his ownership in the celtics, this may be one of the reasons he is up the valley in switzerland. The managing director of bain morning. Oins us this why are you in. Most . What is your specific to do list . A Meeting Place for ceos, government officials, economists. It is great for us, we try to build notices, but you have to do that in a macro environment. You learn about what is going on the world, you meet all sorts of bankers and ceos, we could learn a lot about technology. Jargon alert. What is tmt . Services. Marketing it benefits marissa mayer, all of those things. More of an intellectual practice. Asit is also an opportunity, well, to identify things you might want to buy and sell. There is no question that private equity wants to build the business, but once built, you need to exit. People talk about 2013 as being the year of exits. What will 2014 be . If you were here a few years ago, it was kind of doom and gloom coming out of the banking crisis, but now that has kind of flipped. I do not think that multiples are out of control in a lot of the companies. We see opportunities in investing in that environment. You do not think that things are too expensive . You have got to be selective. We are looking at Building Companies to take more market share. To go more global. You have to be very careful, mo they are not low, for sure. There are Public Market multiples, private market multiples. Panies are not motivated ceos are not motivated to do things right now because they are being rewarded for just sitting still. How do you persuade these ceos to actually get off the pot and start doing things . Things go in cycles. Just like anything else, there has not been much in the last few years. Pent up demand. You are talking about cycles, the championship celtics, i was born that magic night in 1984 when the celtics did better than good. I remember that night as the most memorable. Bird, alex. Sorry. But steve, it is a rebuilding year for you. You have 47 draft picks in the next six years . Incredible. We have great gross in the club. When we bought the club, 12 years ago, we looked at it as a business and we thought the key issue was doing great on the draft, bringing in people like danny aims. We ended up drafting some great players. The rest of it is history. Now we are back in a situation where we have developed a few young stars that we have supplemented and traded for fantastic revenue. The key thing that you learn is you have got to be patient, just like in business. That is why i love right equity. We can build to the longterm. Too many make the mistake of wanting to turn the team around in one year or two years. Is television your friend in sports . Or are you beholden to television . Television is big time your friend. The rights fees are fantastic. It is your friend because the nba and sports in general are mustsee tv. Is in the mustsee Toronto Maple Leafs and canadians . Teams, theyof those have been busy. Do you see this . You recognize this. A fantastic company, canada goose. Do withare you going to them . It is a real fantastic strategy. That this company has a great brand with fantastic products. Very good. Thank you so much. Is a canada goose waiting for you right now. Now you know more about it. Thank you so much. We are in. Most. We have much more with tom keene and Stephanie Ruhle here. This is bloomberg surveillance. I am scarlet fu. Time for this matters now with our guest host, craig moffett. We are going to talk about housing information. When the Housing Market sank, it put the brakes on new households. Now that housing is in full recovery mode, has household inflation kept pace . It has not and there may be reverse causality. It may be that the failure to create new households is what is keeping the Housing Market back, but there are two fundamentally separate issues. There is the question of our children moving out or moving in . Are the children moving out or moving in . The industries that i follow are very much driven by household formation. Household formation has ground just about to a halt. Is it causation or correlation . I think in some ways it is causation. The failure to create new household units is creating less and less demand for new housing stock. So, you are seeing some decoupling of those things in how the stock is increasing as we get a recovery, going into second homes, weekend homes, that sort of thing, but the issue of whether we are creating new primary household unit is a key driver of all kinds of parts of the economy and it has been very weak. What can companies do to decouple . It is much more of a macroeconomic issue than anything that any company can do. Here is the problem, right . If the household formation stays the weight is related to population, historically population growth has been in the range of one half. Results have fallen back to three quarters of one percent. At the same time, household formation is usually faster than that, now it is slower. Has of course had huge impacts on the areas that you cover. Absolutely it does. Craig moffett, thank you so much. We are going to head back to dominos, switzerland, where the power ceo will be joining us right here on bloomberg surveillance. Right here on your tablet, phone, and. Com. This is bloomberg surveillance. Tom keene is an dominos. Our guest host for the hour, craig moffett. Isnt almost. Is in doubles, switzerland. Switzerland. There was a change in the language of the Bank Statement following the policy meeting, bank of japan cutting a reference to the economy facing uncertainty. Clashes between protesters and the police and the ukraine have turned deadly. Two people have been reported to have died. The process began two months ago. New antiprotest laws went into effect and the measures backfired as police began cracking down on protesters. The winter storm roaring of the east coast has caused thousands of flights to be canceled. Call your airline. 11 inches in central park. Snow cover not just new york, but washington, d. C. , closing schools, making this mornings commute very tricky. Now we are getting intel on injuries and arctic air moving in behind the storm. Temperatures are plunging. Anyone who has been outside artie knows that one, it is cold. What was the real temperature . Minus five degrees. Out. Is there an effect on Natural Gas Prices . They are at a twoyear high, nationally, alltime record in new york city. And Natural Gas Prices are sky high, youre at davos home. Tom, you are in davos, switzerland here at home. ,om, you are in davos switzerland. Stephen from general electric, how about bull to division . Outsideheir businesses the United States of america, yet they are one of the industrial juggernauts. Heat, power, duke of University Electrical engineering, taking the industrial world go. Great to have you here. What is your message to your International Clients . You walk into one of 25 meetings, you have to send a message. It is great to come to davos, the community is here. A number of our utility customers, as well as partners around the world. Our message is that the industry that we know is changing. Age of gas, transformation from renewables, and a shift from centralized power to decentralized power. Our message is we need to come to a consensus of where the industry is evolving. Me is apple, to apple, facebook, google. Change up to pandora radio. You are creating jobs in america with your international expansion. Can you say that there will be investment in american jobs . Or do you just pour them over to catholic stand . Port them over to as malaysia . A lot of that is done in our factories in the United States. We speak with our customers not only about bringing jobs to hear, but to the United States. When you look at five years from now, general electric, ge capital being pared down, just a melt about an industrial ge. Translate that into english. What is an industrial ge looking like as opposed to your first week years ago . For i have been with them 21 years. They started in this area. Edison went to bring products to the market. We are looking to get 70 of the revenue is a company in Industrial Power and water. It is the largest piece of the company, but so is health care aviation. Our businesses will grow more. You will continue to see acquisitions like you saw in the last few weeks. You will see power and water going forward. You will continue to see a differentiated Product Service where the glow where the growth is primarily global. 70 of the Energy Around the world will be in development. What do you say for a congressman what do you say to a congressman who is up for election. Anothera dialog for time and place . I have spoken to our customers and partners around the world. One of the things they look at in the u. S. Right now, based on energy costs, the u. S. Is really one of the most competitive in the world in terms of shell gas. We are actually building up our for our footprint. That is not only for servicing and product development, but also in terms of how we ship rodartes out. The time that we have left, all the rage is talking about engineering. What is your guidance to people worldwide watching us . Listening to us about the proper balance between engineering, science, math, education, and the liberal arts . Technology,hat in education is terrific. My son is an engineer right now. It is a great grounding point. But you have to make sure you have a great commercial knowledge as well. Make sure you understand how it ties in with the dynamics of the world. Technology is not good enough, it has to fit in with what is required. There is so much change in the industry right now, you have to make that connection. People with technology backgrounds and a Firm Understanding of industries and business knowledge. How do you define manufacturing renaissance in the United States . We are calling it advanced manufacturing. 3d printing, things like that, already having a big impact on our business. It willrward revolutionize manufacturing. Steve, thank you so much. Here in dominos, someone coming here to actually listen to their customers. There is a lot of that going on. It is a perfect wednesday in davos, switzerland. Get out the snow shovel, i will he home to help out. Maybe i needed ge snowblower and then i will not have to do it. We will be right back from davos , switzerland. This is bloombergs surveillance. Good morning. Coming up on Bloomberg Television, the ceo of Morgan Stanley will be sitting down Erik Schatzker and stepnie ruhle. It is a bit of a tradition for him to speak with eric every year at davos. This is bloomberg, surveillance bloomberg surveillance. Tom keene is in davos. Mike has our news this morning. We will start with france, cutting more jobs there on top of the 11,000 positions they plan to eliminate by 2015. Reductions come as they struggle with production overcapacity. Has made Sheryl Sandberg a billionaire. The companys coo passed the billion mark after they closed at a record high yesterday. She is one of the youngest female billionaires in the world according to the bloomberg billionaires index. Target is ending Health Insurance for its parttime workers. They will pay 500 to the dump any losing coverage and a Consulting Firm will help them find new obamacare plans. They have joined trader joes and home depot with other companies who have scaled back. That is what the critics of the Affordable Care act predicted it predicted would happen. Men of the many of the companies claim that you get Better Benefits out of obamacare. Be determined. We will see how it plays out. Ryan moynahan yesterday, the bank of america ceo joins Erik Schatzker in davos. He discussed moving forward from the financial crisis. Lets listen to what he had to say. In terms of the best financial decision, it is to help clients and customers with their lives. We have done everything we can. As we continue with compliance and the risk infrastructure we have been building on, you wont find those types of things repeating. Tom are with us now, the key words there are compliance, problems, and cleaning up. No question. You captured it perfectly. It was about the simpler bank of america, the idea of a narrow framework. A phrase that i really associate with mr. Moynahan. The new bank of america, all the other banks spent so much time on it, they are going for a simpler plan . That is what they say. So far you can believe them. But that is partly because the regulators want the banks to be in the business of Client Service only. So, it sounds good to us because we want to see banks fulfilling a different role than they used to, and it certainly sounds good to regulators, but the big question is five years from now, is that what they are going to be doing . Do you just assume that these are Smaller Banks . Viewers and listeners wondering about headcount, are there just going to be fewer bodies . Perhaps in the short run, but there is still a huge opportunity to do more in Financial Services as the World Economy grows faster. There need to be intermediaries for filling that role. Of course, there are operations act up by the ceo of Morgan Stanley, who does private lending. Are never going to get to the scale of a bank, because they are not leveraged financial institutions. Were two metrics, Deutsche Bank and the challenge at the top, with bank of america at the bottom, taking a victory lap this quarter. What do they have that the others do not . Bank of america, Morgan Stanley, the largest Financial Advisory firms in the world, tucked inside a bank of america. Bank of america moves past litigation issues, Morgan Stanley did the same thing, you are starting to see that model based on Client Service is beginning to generate the kind of earnings leverage that you cannot get right now. Forming later today . Correct. Well, one of the most acute ceos we all have different characters, we do not put them all in the same blue blazer snow boots blue blazer snow i will get it out. The piano bar did its damage, of course. Killed me. What i find interesting is the way we heard from different banks during the earnings season and how they are trying to differentiate themselves from each other. Jamie dimon is at the top of this, too, right . I have not seen jamie dimon yet. Maybe he is coming up by sleigh. That would be the canadian thing. That is certainly one visual image. It would be. They have to be sensitive about landing on helicopters. So 2006. Tom keene in dominos, switzerland davos, switzerland. New economic data, lower by one point right now, s p futures are at 18. 37. This is bloomberg surveillance. Mckee, with scarlet fu. Our guest host for the hour, craig moffett. And of course, tom keene, as you saw, in davos. We will be rejoining him shortly, but we want to talk about something that is taking place here, today. The u. S. Will be auctioning off where airwaves for the first time in five years. The auction is expected to raise one . 6 billion. What is interesting is to is not planning to bid. Would thinkt, you that the big Telecom Players, at t, verizon, tmobile, sprint, would be very invested, but they are sitting out. There is this consensus view that all spectrum is good steprum, but you have to back and question that sort of simplistic notion. If four out of four of the big carriers said that this is something we did not need all spectrum is different. Some spectrum bands are more attractive than others. Some fit that are into the portfolio of what someone art he owns. But it is a striking development that all four Companies Said that they could pass on this spectrum. Can you explain what that means . The average person may not understand. Technologically it is complex, but you have different spectrum bands at different frequencies. The same way you might have a radio at higher or lower frequencies. As an engineer, designing a wireless network, you want low frequencies for coverage, high frequencies for capacity, and a coherent portfolio so that they fit together in a sensible way. The problem with what they are auctioning today is that it does thefit terribly well with existing holdings of the major for carriers. What would explain why someone like an Institutional Investor might want to come in and make a bid on this type of spectrum . What might they see in this particular purchase . Data emand for the belief is that the demand for data will be so great, they will go after whatever they can get. Little you have to be a circumspect about that, right . If you are saying that you know better than what at t knows about what will happen five years from now historically we just published Research Showing that the returns that you get from buying spectrum that must be spectacular because there is this demand, this is about the return you would get from corporate bonds. Gotcha. Mario gabelli will be on Bloomberg Television, what would you want to ask him . Isthe question i would have if i look at the spectrum bands they will be auctioned over the next several years, the auction is the beginning of a multiyear process. If i look out over the band, the expectation is that there is 50 billion of Capital Spending about threel to years of Free Cash Flow in the Wireless Industry. It means that the industry is not going to generate any money for years. In order to pay for the amount of spectrum that the industry supposedly needs. Money going to come from . I guess that is the real question. If all of this spectrum keeps going up in value . In the long run it comes from us. Is there a possible new use for spectrum that we are not thinking about right now . Talking about the big for carriers, could someone create a data carrier for someone just like that . We have seen a couple of people try that. Square is in Bankruptcy Court right now, unrelated to fundamental demand. Dish network, the satellitetv operator, is also amassing spectrum. Is thatthe expectation whatever they do will eventually be tilted towards providing Data Services over traditional voice and text. Becomesially as wifi more prominent as a way for people to get their data. Us as theett, joining guest host. The twitter question of the day linking this together, how do you watch television . Are you cut the cord . Are you paying 200 per month, like Michael Mckee and i are . Bloomberg surveillance, on television and radio. Bloomberg surveillance. Tom keene is and ill post. Betty liu, the anchor of in the loop, with us this morning. I know, i actually made it in. Well, i only had to walk a few blocks. Hotel overnight . Exactly. We were talking about wireless spectrum. You have someone who is bidding on the spectrum today . Right, there are what, two dozen or so applicants . We are hearing a lot about this, now. Controlling a shareholder in a Company Called lynch 3d communications. They are bidding on this spectrum against the big wigs like charlie ergen. Greg, i know that you have questions. What would be your biggest one . Last segment we were talking about this where is the money going to come from . The Wireless Industry today, i always thought about spectrum is fully and changeable. From an engineering perspective you can either add more Capital Spending or put more on the test. They really are completely interchangeable. Over the next couple of years, particularly if we are headed into a price war and it looks like we are. You have to question where the money is going to come from in terms of the major wireless players who are paying for all of this incremental capacity. But you need that capacity, though, right . That is right. Things thatof the people are struggling with. What is the return you will see him all of this before we dip into the price point . Show me the money. You are exactly right. I will be asking all those questions. Coming up at 9 a. M. . That is right. You did my job army. [laughter] to my earningset to our earnings calendar this morning. Cooks, tumbling in the premarket right now. North american comparable sales dropping 13. 6 , double the estimate revenue option in markets. Overe are just not headed to the malls and going into grocery stores, i guess. One reported idea last night, down in the premarket, by 3. 5 , sales were down for seven straight quarter even though earningspershare came in better than forecast. They were having trouble with their server unit. The one that bonobos is talking about buying. They are still in advanced discussions. That is what we heard from the companies yesterday. In terms of what is on the earnings calendar, thursday mcdonalds, starbucks, and Southwest Airlines will be reporting results. Friday we have png, stanley, black decker, xerox. Looking ahead to next week, apple is the next big one, then caterpillar and royal caribbean. After todays close, netflix is reporting in addition to ebay. Interesting technology week. It is. Much more is coming up, we have our agenda on airbus and boeing. We speak with the ceo, next. This is bloomberg surveillance. Our guest host for the hour, craig moffett. Mike has some company news from the files of bloomberg west. Amazon says they are not planning an online paytv service, telling usa today, plan y do continue to to plan to continue making original shows, but not television. Ofckberry is selling most its real estate in canada. The company will sell almost 3 million square feet of space and then lease back what it needs. It is their plan to raise cash as the ceo looks to turn blackberry around. Nokia may return as much as 4 billion to shareholders, speaking of cash. Deutsche bank predicts that the British Company could return some of that amount in the form of an annual dividend as soon as tomorrow. They have not guaranteed any payout. That is todays company news. What about news stories that are like names from the past . It does not take long in the tech world. What is the saying . The graveyard is littered with tech relics . There has to be a saying about companies and how long they can live. Speaking of relics, if you think that airbus and boeing are the only airplane companies in the skies, think again. We discussed one companys new airplane and why they do not anticipate any problems with their launch. Listen. I know we have got a lot of work up front, a lot of testing of front to make sure that where we go, what we do, that it is just confirmation of the work that has been done. I do not anticipate major issues. Tom and eric are over in. Lous. What else did you learn from him . What we were talking about there was the new series of jets that lombardi a is making isardi bombardier making. Why is the cseries delayed . This is a problem for them, because as you know, when you are airbus, boeing, you have got to have an airplane that the customers want to buy. The problem is that until 2015, they will not have one. I want to go to your financingon canadian and industries. Brazil, all of that, this is a competitive landscape. What is it about them that you, as a canadian, when you look at this Wonderful Company and their wonderful heritage, what is it about them that causes a struggle . It has to do with a lack of timely development, more than anything else. I asked them about whether it had to do with anything about them being in quebec. He said absolutely not, for two reasons. That the canadian government and Quebec Government realize that they need to be more closely related and as a result, in canadian and ontario corporate taxes next door, it is lower than they are most places in america, meaning that there are some incentives to manufacturing beennada who they have with. 15,000 people in the Aerospace Division alone. It is hard to pick up and move that operation somewhere else. Steve, from ge power and water, the competitive mill you a business that we see in. Lous means that people have to react a lot quicker. The idea of a fiveyear Business Strategy he coming an 18 month Business Strategy, what would you suggest . There is a danger in that. They did have an 18 month Business Strategy and it has turned into a 36 month Business Strategy. You cannot get overly aggressive. To airspace, for a second. What a debacle the 787 has been for boeing in terms of confidence, trust, deliverability. All of the things that Airlines Need to be able to count on. Now the thing is getting off the ground, peace people still have doubts about it. You spoke about china as well, ibm missing yesterday on the challenges. Revenue growth. What did they say about the eventual business . That they need to get close to the customer. So, they are opening up. Does that mean canadian jobs . It means they might be going to places like mexico. They want to get close to the customer. The mexicans are interested in a highspeed rail network. You have to be a part of the supply chain. The same goes for china. My question to him was do Companies Like yours need to be afraid that if the chinese decide to get into the Aerospace Industry . He said no. If i were him, i would be afraid. This is as close to skiing is i will get. Is there enough snow for you to ski in davos this year . Absolutely. Look at the expression on my face. You do not have to bring your water skis . Like snow. It is different this year. Last year was amazing. We lost Erik Schatzker in a 10 foot snowdrift almost to italy. Is anyone board out there . They do get bored a little bit. You do not get off so easy, tom. We want to hear your agenda. And it has to be more than wearing sunglasses. We talked about it earlier, the challenges of the Affordable Care act. We spoke to the president and ceo of aetna, he is in. Most, trying to get the pulse of where health care goes. He will join us tomorrow. All right, we look forward to that. Tom keene, joining us from dominos, switzerland. Mohamed elerian is on my agenda this morning. We doubt that he will be ,tepping down as ceo and cocio so speculation has begun, what will he do next . Matthew klein writes about how one possibility is to join the central bank. It is possible, he says, is that Stanley Fischer is looking to push a trusted deputy into that slot. Also fillerian would a crucial void that the fed, where they lack significant market experience. Does have that macro role that is so essential in that market experience. The interesting thing is he would not have to go ahead of time. Some people are promoting him for president of egypt. It must be nice to have those kinds of choices. Be possible that he wants his own operation. In davos, are people talking about it . There was a good feeling for him. The real issue, to be blunt, was would he push out or not . Then the idea of going forward, yes. When people asked me to we is he is the number one guy on theory, practicing economic gain. Like no one else. I am sure there will be a place for him in the coming months. I am sure he will not have any trouble finding gainful employment. My agenda this morning cannot be avoided. Back. Nter weather is storms have stopped, the cold is here. Taking windchill into account, tenant 10 degrees below zero. Mess. Mmute is a the good news is we will get more snow, probably, according to computer models. If you are traveling you probably do not want to go anywhere, but 2600 flights delayed so far today, 16 hundred canceled. You just told everyone everything we need to know about the weather and its affect on us. The Weather Channel is still not on directv, but they say they are essential to subscribers . This is the kind of weather where they make all of their money and get their ratings. This is their super bowl. Well, the super bowl could be there super bowl if we get that kind of cold. This is a great test, right . As you are faced with a winter storm, where do you turn for your news about the weather . The question facing a channel like the Weather Channel, missing from 20 of American Homes do you turn to the Weather Channel or to your smart phone . If so, it is going to be a challenge, going forward. Thank you so much, craig moffett. Tom, we want to go back out to ,ou in, switzerland in davos switzerland. Tomorrow, from the nasdaq they will be with us. From all of us here in switzerland, to our chief in new york city, watch continuing coverage of bloomberg surveillance on Bloomberg Television and radio throughout the day. Good morning. Live, from bloomberg world headquarters, new york, this is in the loop. I am pimm fox. We have betty liu, matt miller, good morning. Here is what i am watching this morning. Sheryl sandberg, becoming the ceo of facebook, the newest minted billionaire. Shares of the social networking a record this at year, passed the 1 billion mark. She is now one of the youngest female billionaires in the world. Good for her. Blackberry, shares of the smart phone maker rising again this morning after committing to a cell on most of the canadian real estate. Blackberry shares have been making a tiny, teensyweensy, in eentsyto come back weentsy come back. Winter storm that that stranded thousands of commuters, traders have been caught up, Natural Gas Prices are