Transcripts For BLOOMBERG Bloomberg Surveillance 20140130

Hsbc had a preliminary read. The chinese stocks are looking at the worst arch of year since 2010. In the u. S. , we have Economic Data at 8 30 a. M. With First Quarter gdp and initial jobless claims, 9 45 a. M. , bloomberg beforer comfort, 10 a. M. The bell, we have a slew of earnings. After the bell, it will be google and amazon. Those are two big ones in retail. Are they more optimistic off of what facebook did . And facebook has so much rising power. Lets get to the data check. Cable is out. Revenue was higher than anticipated and they increased their dividend by 15 . A lot of earnings are coming up this morning. There is the data for you. The yield is a big story. The fed meeting and there are the currencies. I am watching the yen and it is better than good. It is weaker. Is at thefor me bottom, a basket of euro and dollars. Chart and its ugly. If you are Vladimir Putin, this is not good as the world comes to sochi. The ruble appreciates and then it has been churning and you see this massive spike, some of the emerging market tension which we sought yesterday comes back on u. S. Investors. It is not a correction but getting there perhaps to rapidly. We will do a lot of markets today. We are scouring the papers and the web. The Federal Reserve appears to be uniting behind its strategy of a gradual withdrawal from stimulus. Policymakers said they are cutting qe by another 10 billion per month. Quantitative easing remains but less than before. This is the first meeting without a dissent since june of 2011. They did not talk about emerging markets. They did not talk about the turmoil and jpmorgan said it would take serious data to knock the fed off its course. I would agree with that. Courtesyy there is a among Central Banks never to speak about other nations and other Central Banks unless there is a major crisis. I was not all that surprised. Shares of facebook are up as much as 13 in the premarket trade. Facebook revenue jumped 63 last quarter, more than half of its ad revenue came from mobile. The average effective price of ads was up 92 compared with one year ago. Even though the growth of active users seems to be slowing down, facebook is extracting more value from each advertiser. Has become facebook a mobile company because over 50 as revenue comes from mobile and that is consistently increasing. Laterwill dive into this and particularly how the mobile part of facebook. Or to the other players. There is doubt about twitter and the others. The story perfect for of google selling Motorola Mobility. To lenovo for 2. 9 billion for it and bought it for 12. 5 billion. It holds onto most of the patents it acquired in the purchase. Lenovo shares are down eight percent in hong kong trading. Some site lenovo paid too much for this. The tech crew i thought did a better job of breaking it down. At 12 billiond but take away that, and there was a big loss for google. The official back of the envelope, this is my personal stationary. We thank all sorts of sources for this. There is the matter. Value of the deal of the patents. You got the tax losses and profits. Youve got the Cocktail Party indavos and the other expenses and you come out with an actual profit. You are saying that google did not lose money on this purchase . Frome reporting i hear experts is that this was a good deal for google. With the lenovo price was it a mistake to get into in the first place . Thats a fair question. Some said that google had apple envy. They said thats not where they want to go. I was looking at a citigroup Analyst Report and they said this removes one of the conflicts of interest that google had with samsung and other developers and companies that use Android Software and puts them in a better position and there will be less acrimony. Ever course that it can lift earnings by four percent next year. Lets bring it back to the markets and you see the financial challenges within emerging markets. We want to take a broader view this morning with Richard Falcon wrath. He is a principal at chertoff group, former deputy of Homeland Security advisor for the white house. I know you dont look at the ruble basket but i know you are looking at sochi. This is a jumble for russia. What is the back story for russia as the world travels to sochi . All eyes are on russia and its not just sochi, its also ukraine. Russia is entangled in ukraine which is hard for us to imagine. , is that moving the currency the domestic issues of a weaker ruble basket . Thats a good question. My sense is it is probably not having that much effect on the overnight rats rate but in its relationship to the west and the people who buy petrochemical, its a big deal. This is a country that is on the hot seat. All eyes will be on them. It will beere directly focus but they are watching in the wider world. Asked about Stanley Fischer and his work in 1997 1998. All the Research Notes talks about canaries spread around the world in the coal mines of the world and there is a contagion. Does your study of the linkage of finance to market turmoil is what we are seeing link into a larger crisis . It definitely can. At some point, there will be a change from the Vladimir Putin control over russia. Is living on the brink of crisis on multiple peripheries. The latest one is a Macro Economic not crisis but the early signs of something to come. If you have this spike, these are things that topple governments. Russia in 1998 was a. Of immense turmoil and led directly to Vladimir Putins ascension to power. You see that in argentina with the government there. We will talk about this throughout bloomberg surveillance. With targetarting narrowing in on the big breach of data. It says hacker stole of vendors credentials which were used to gain access to their system. Personal data for as many 70 Million People may have been stolen. They say the breach hurt holiday sales. Citigroup is joining other banks to improve working conditions. It is requiring junior bankers to take saturdays off plus, they must use all their Vacation Time each year. Goldman sachs and bank of america have come up with similar policies to improve productivity and keep anchors from leaving the firm. Europes Largest Oil Producer is posting a 71 drop in profits. They blamed higher costs and lower volumes. Shell is suspending and oil drilling ruddock to alaska after a federal Appeals Court says the government improperly awarded licenses to drill there. Are you using my Vacation Days . You have to use all your Vacation Days. I am. You never do and then you complain when youre on vacation. I want your Vacation Days. Every day is a vacation. Why do you yell at us all the time . Im like this is fun. The turkish lira i want to talk about shell and exxon. We are also looking ahead to ericsson. They used to sell cell phones. And we will go to microsoft next. This is error twitter question of the day this is our twitter question of the day good morning, everyone. An important interview after the president s state of the union he is the republican senator from texas. He is making a huge splash on number of months ago with a filibuster or some form of it. Senator ted cruz will be live at 10 00 a. M. This morning on market makers. This is bloomberg surveillance. We have better markets and i am watching the japanese yen as the global litmus paper. It is a weaker yen which is a calm that is out there. There is all sorts of news going on including a stream of earnings. We see that with the media focus particularly in the new york area with Time Warner Cable front and center. It beat earnings estimates. Revenue came in higher than anticipated and it boosted its quarterly dividend. It sounds great until you get to the line where customers are declining. Customers are down 85,000 in the quarter which is a consistent theme. Charger is making a bid for 132. 50 and Time Warner Cable wants between 100 50100 60. How do you make that argument when you are losing subscribers . The broader theme from Craig Moffett is cable is winning. That is his basic theme is that everybody wants in and the consolidation of the business because this is the platform that is winning. You see that with comcast in agreement with chartered to by certain divisions of Time Warner Cable business at the deal with charter ones of going through. John malone is front and center of that. Time warner cable shares are not trading in the premarket yet but we will look that you possibly gain when it opens for trading. I have been thinking about cutting the cord of Time Warner Cable a little bit. I like apple tv. It is more a microsoft interview that we have. Ericsson came out with earnings as well. The focus is on Profit Margins expanding to 37 that beat analyst estimates Britt Erickson shares are rising the most in five months. Stockholm, we have the companies ceo of ericsson. On your profit margin, margins are expanding and a lot of what you and other Companies Like yourself depend on is carrier spending and that is slowing down a little bit. What is the outlook customers to spend more in the coming year . We knew lastat year that we would have more growth in the first half. Half, we would have a diluted affect and our profitability would go up. In 2013. Hat we see we are in 180 countries and we are having markets that are doing well now. Russia came in well in the Fourth Quarter as well as china is starting to move. They have decided now on 4g and we have a little bit lower case in the u. S. But we are not losing market share. A stronger first half i want to bring up something that has been swirling there have been reports indicating you are under consideration as the next ceo for microsoft. What is your position . I dont comment on that rumor. What i am focused on is on ericson. I am here as long as the board supports me. Think this is a fantastically exciting company. And we are growing. You have has such good success after decades of trouble but its the same five form size of microsoft. You got over 100,000 employees and microsoft has 90,000. Youve had the global travel. Redmond,re to move to washington, what would be the skill set you would ring from ericsson . Its a good theoretical question but i am focused here at ericsson. As long as the board is supporting me, thats what i want to do. Its a theoretical question. I think hans is staying on script. Servicesd the global before and you have worked for ericsson all over the world. You have seen firsthand how quickly companies can rise and fall. What is the companys key to survival . And can go back 10 years who the competitors were 10 years ago. They dont exist today. You can transform very quickly in a company. We are in over 100 companies so my goal is to route this to move this company in the right way. Right now, we are going into tv billing systems to strengthen our portfolio and support our customers. I think that is the key. Thank you so much. He is considered by many to be a candidate to replace Steve Ballmer at microsoft. Part of what ericsson has discussed in the last in the past a security. What will it take for European Companies to feel safer . Am not sure its possible. , unless itstem fundamentally changed, allows the government access to data. You have to comply with u. S. Law. The entire tech space, theres an earthquake happening under the tech space probably because of these revelations. We could talk for an hour about this. Richardfalkenrath with us. A challenge that every Company Faces like ericsson and microsoft and apple. It leads us to our twitter question of the day the mobile phone business has changed cataclysmic late over the last few years. This is bloomberg surveillance, on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. So sick of the Denver Broncos. Mckee tells me on radio every morning he is a diehard Denver Broncos fan. He is so excited. Nd peyton that. Bloomberg surveillance, futures up seven and the yen has a calm in the developed markets. Even some of the emerging markets are challenged. In russia, they are challenged. Emer. Look at ian br he says joining us is richard falkenrath. What will happen in sochi . There is a risk of violence and bloodshed. I think they will do a good job inside the Olympic Village and stadium. They will do that through an iron hand with a security presence that its a very violent area and the terrorist groups that Vladimir Putin has to deal with over the last 20 years are capable of mounting spectacular attacks, very sophisticated attacks despite the best efforts of the security. Bremer is writing that Vladimir Putin is the most powerful individual in the world. I think you overstate the world. He is powerful but russia is not without its problems. He has had a few successes this year. Beneath the surface of russia, the economy is focused on extractive industries. It is not innovating and has terrible Public Health problems. He is losing popularity. He probably would win another election today. Will people not send their athletes . Is there just a safety question . Its not an easy place to get to. Findthletes i think will i dont think we will have a repeat of the 1972 olympics where there was a successful attack against the israeli delegation. The athletes will be in a very secure enclave. The supporting venues will be tightly controlled, it is the surrounding areas where these groups that are conducting the Violent Attacks in the caucuses want to attract attention. So the games will not be derailed. ,ming up on surveillance emerging markets continued to tumble but the fed pushes ahead with plans to taper. What is the take away from the mixed signals, that is next. Acquired the sens on washington as the Washington Redskins once again will not be at the super bowl. I am kidding. There is a beautiful morning shot of the Nations Capital with the president outselling his state of the union message. Washington wakes up with politics forward this morning. This is bloomberg surveillance. Looking at the gainers and losers from yesterday and weve got Earnings Reports and yahoo was a big decliner, down almost nine percent. Marissa mayer is having a tough go at turning around this company. Display ad sales continue to fall. They need to call facebook. Paging larry page. Lets do a data check. The 10 year yield comes in off the fed. They are tapering. Robert cinch has been decades liking economics and the markets. He is with Pierpont Securities and joins us now with markets in turmoil, good morning. Good morning. You have seen this so may times before, what is different this time . I dont think a lot is different. On the front page of the wall street journal yesterday, turkey was in a test case which is been going on for three or four decades since we have Floating Exchange rates. The history of this is that if it is going to be successful, it has to be right away. If there is a big short position and you raise Interest Rates turkey did a Dramatic Group move south africa did not. That will work in the short run because there are not fundamental changes that are necessary to come in behind it. Then this really does nothing. Did they have that discussion yesterday at the federal open Market Committee meetings . They may have mentioned it yesterday but i was not surprised that they did not mention what is going on in emerging markets. When the fed started doing quantitative easing, i think it was the second round, the dollar weakened a lot and the brazilian finance minister was accusing the u. S. Of entering currency wars but the fed did not acknowledge that. The fed does not want to get into a situation where you have to go to congress and Congress Says you are conducting Monetary Policy based on what is happening in brazil or turkey . It will just not happen. Lets bring in richard falkenrath. You are going to argentina in a week. Experienced a lot of turmoil and inflation is picking up in the currency is worth less than it used to. What are you looking for when you go there . The immediate thing is where you change or dollars. These unofficial rate is 50 higher than the real rate. For people trying to get their money out, its difficult to do it in an economic way. There is a huge thriving black market in dollars in argentina. This is georgemagnus this is George Magnus you take the Foreign Exchange space and link it into equities and bonds. For our viewers who have a 401 k , do they essentially go to cash well you play your games . It depends on how aggressive people want to be. Forward,youre going most investors and particularly the active investors, are off to bed start. They came into the year and wanted to be short on bonds and they want to be long equities and there was a lot of talk that he was equities have so outperformed emerging Market Equities it was time to shift from u. S. To emerging markets. In the bond market, everyone has been conned founded. It has been higher yields and lower bond process prices. You have a lot of active investors who are probably underwater. When you start the year underwater, in major ability to withstand positions is a lot less. Youre not working of profits. What is the job of the imf . Turkey wants to talk to the imf. Does russia . Do, but when the imf becomes involved, there is lot of conditionality. They want conditions to be met and that made you give up sovereignty over domestic policy. Its not clear that russia would want to do that. At criseso look back for fundamental policy changes which would bring capital into the country. Turkey runs a currency deficit right now and if they dont bring capital, the currency will go down. Is there a big or other lurking in the background to help out . In the mexican crisis, the u. S. Was there to help out. In the european sovereign crises, the ecb and the eu were lurking in the background. Its not clear who helps these present countries out. Im sure there is a trickle down on the ground with high inflation but no help is coming on board. What if people in argentina and the ukraine and turkey what will they do . Eventually they have to change governments. This is exactly what happened in the ukraine. The big brother was russia. The trigger for the current round of domestic crisis in russia was imf conditionality. That is jointly with the European Union and that is what forced the decision by the government to go to russia. This is an important question for bob sinche how good do your broncos look . Us older guys have to go with the older guys and i think they look good. We go for the more mature people to do well. Finally, information you can use here on bloomberg. Thanks so much. The yen which is a better number. There is some stability in the emerging markets as the japanese yen weakens. Things are quieting down perhaps a little bit. Lets take a break and coming up, we will look at who is spending the most money on super bowl ads this sunday. It has to do with beer and cars, surprise. Good morning, everyone, futures are up seven and stability to the markets off a rocky early asian morning. This is bloomberg surveillance. We are not looking at the emerging markets. We are looking at the denver seahawks game. Since none of us are going to the game, we will be watching tv at home. Here is a preview of who will spend the most money advertising in this sundays big contest. Over the past five years, anheuserbusch has been the biggest spender by far. Thanmillion 50 more number two shelled out. Will run five as. Adds. You get the clydesdale horses and they have other platforms. Pepsico is the halftime . Thats what they are spending on ads. Estimated they will get value from the verbal mentions of the pepsi at the halftime show. How many times have they said metlife . Bruneau . Bruneau mars . I dont think i would know him if i ran over him. Who wants to follow beyonce . His hair is like Michael Mckee. Plenty of people will be making their way into town to catch the big game. Where are they actually going to stay . We go to sam grobart. The 400,000ne of people expected to come to new york for the super bowl . . Have you not made lodging arrangements everyonen luck because is looking to cash in on your stay or it i checked out three different sizes you can stay during the big game starting with this one, guys apartment three miles away from metlife stadium. Good morning. Nice to meet you. This is chris who is listing his twobedroom apartment for 1800 per night. That might seem pricey but it does come with leftovers. I will not clean it out. If they clean it out, its not the biggest deal. The apartment comes with a supersized tv and a killer movie collection. You have steel magnolias . You are listing the place at 1800 per night. I only put up three days ago and i have had five or six inquiries. No one has committed yet. I am here in carlsbad, new jersey at the, lodge, just a stones throw from metlife stadium. They have a special suite they are hoping to rent for 800 per night. Lets take a look. Youve got your standard fare nice furniture, your fridge, microwave combo,bathroom ioh, wow a lot of hotels have a jacuzzi but how many of them have a jacuzzi in the bedroom . The marble heart is only one of the amenities you have here at the exxon a lot. Econolkdge. You have got a beautiful wholesale frozen fish distributorship right next door, what a view. On the other end of the spectrum is the new york palace hotel. This is the living room, its part of the 5000 square feet that make up this sweet. This goes for 25,000 per night. If i was an ordinary guy, i might take the staircase to go upside upstairs but i will not do that. Im taking my private elevator. I dont want to be hypercritical but where is my marble heart above the bed . Wheres my jacuzzi in the room . There is the jacuzzi. Its not in the bedroom, its up on the roof. For 25,000, not only do you get three bedrooms and six bathrooms, you get something your own private ride. If you spend that money, thats wonderful but most of us will probably watch the game the way it was intended on our tvs at home brilliant, just brilliant. Tot it all about being able rent their rooms . 800 for three blocks away. At the palace hotel, you have to get on a bus to go to the game. Robertsinche is with us and he is renting out his house. What do you get, 40,000 . I dont think so, not a big demand that far away. Connecticut is not that close. Econolodge is the best value. You can have all the gatorade you want in that guys apartment. That bigscreen tv was pretty good. Did you list your apartment . I am in brooklyn. You have to take a train and a bus, i dont think that is worth it. It would take 1. 5 hours to get there. Dont forget our conversation yesterday. They said they were taking the train. They said they were worried about the parking. Coming up, this is the big number 2. 59 billion that was the facebook revenue in just 90 days. It is on a tear after reporting earnings last night and we will talk about it. This is on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. Bloomberg surveillance, on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. This is bloomberg surveillance. Lets get some company news. Not make much of the lenovo big deal with google. Shares fell eight percent in hong kong and lenovo agreed to pay google 2. 9 billion for its phone unit, Motorola Mobility. Lenovo may have jumped the shark with this purchase but google it to keep most of the patents it acquired when it ought the unit. The apple ceo tim cook is going 500 25ppings rate, million has been spent on deals in the last quarter which is double what they spent one year ago. He has been buying up companies which products can be integrated. Among them maps and a search engine. A slump in personal computer sales is showing up at symantec. Falling pc sales get some of the blame and another robin is the growth of advanced hacking threats which have hurt demand for antivirus software. Facebook kills it. Itdays, it made almost made billions of dollars. What happens when teens move on to other platforms. . Are 18, you would have used facebook, right . What happens when it does not come cool . The users are moving to instagram which facebook owns. Overall look at their engagement numbers, they are improving and showed good engagement for the quarter. The company was mum about anything tenetrelated. Sheryl sandberg did not want to talk about it. They mentioned their study. Ically internal go to bloomberg, you can see if this was smart. This is the actual numbers. It goes long before the Earnings Call and it gets picked up that 26. It goes to 34 and now it is 30 now in this 70. What was the single thing you saw them that has maintained . It was pricing leverage that came out of their new ad formats which were working well for direct marketers. When you think about branded advertising, it was always social advertising but what changed is the performance advertisers, the guys focused on roi, it worked for them. You talk about mobile app quality. What is that . Basically, it is conversion when you show an ad to somebody and they actually do the intense the ire the advertiser has in mind. It is not something that is degrading the user experience. You can put a popup ad in front of someone and flashed bright lights and you will get somebody to convert. You will also degrade the experience. You have to find a way that they are satisfying the advertisers intent and giving them something they cannot get on other media. When you search on the web for Something Like a coat for the next five or six days, you get coat adws on the web. Does that drive you crazy . We have gotten so used to it. The computer knows what you want and soon you will buy it. I have a question about growth of active users. It seems to be slowing down a little bit. It goes up but not as much as it did in previous years. This is across the world. To face the challenge is extract more value out of each user. What kind of data does it have to make it more valuable than other companies . Does the proprietary data work better . It is the ability for them to layer on tools that allow marketers to make use of that data in a safeway. Notre ways necessarily compromising the users privacy but still getting the marketer enough information on the user that might help them understand which ads they should be showing that user. We are still willing to give away all of our information to any advertiser but we are so unwilling for the government to take our information to make us safer. Why is that . Facebook cannot arrest you. The government can. With facebook theoretically, it is consensual. You give them consent to do that. Those are the two big differentiators. Some people get value out of it. Some people like having more targeted ads. I think they dont understand there has not been Edward Snowden of facebook who has written yield their secrets. Who has revealed their secrets. They are very custodial of those trade secrets. The chart on the mobile ad quality and facebook and this is a victory lap but who is it for . Is Mark Zuckerberg driving the bus . I will say probably all of the executives at facebook. I think Sheryl Sandberg is very focused on the quality of the ad itself. In the Fourth Quarter, you saw a lot of demand common among advertisers and the additional advertiser demand gives them more as to potentially play with. Do they say no to a lot of people . Probably not. They dont technically sell out but if they have more at demand, they can combine the ads with users better and drive up quality. They might make a decision you might have to pay more for your ad quality. Is facebook making a distinction between tablet users and smart phone users . Maybe not facebook so much but advertisers do. The conversions on mobile are much higher. What facebook has on which is affective is youre not necessarily you are seeing a lot of ads as a percentage but in terms of the screen size itself, facebook takes over a lot of that screen size when you look at an ad on facebook. It is similar to a tablet. Thats where youre getting the engagement and that conversion that advertisers are seeking. For facebook on mobile, they have one of the highest qualities that exist. What did twitter learn from the facebook call yesterday . I think twitter is doing the same steps as facebook. They are allowing for advertisers to bring some of their own data and allowing for programmatic targeting. Clearly, you are seeing a shift in dollars out of traditional into this form. Twitter will benefit from that. There was a small transaction yesterday it had to do with motorola . We will talk about that in a bit. You look at the individual countries like south africa. , it has beenasket ugly for the ruble in the last two or three days. That is front and center. We want to thank our guest host, richard falkenrath. Final word on the sochi olympics . I inc. The games will go on i think the games will go on and there will be some great competition. I think that will rise above whatever happens in the background. Coming up, the former president of Madison Square garden will join us. This is bloomberg surveillance. The Federal Reserve ignores disruption in emerging markets. This morning, russia and turkey currencies weaken. Facebook reports an outstanding quarter as google jettisons motorola to lenovo. Frost bite reporter Michael Mckee lives to tell of outdoor hockey and the icebox known as Yankee Stadium. Good morning, everyone, this is bloomberg surveillance. It is thursday, january 30, i am tom keene. Joining me is scarlet fu andalix steel. I am a yankees fan. Oh my goodness. I have the number 42 teacher. Give us a brief. We will talk about emerging markets because chinese manufacturing is showing the first attraction in eight months. They have the worst starts of the year since 2010. In the u. S. , we have Economic Data. At 8 30 a. M. , we get the first read on for court or gp and initial jobless claims. 9 45 a. M. , the Bloomberg Consumer comfort report and pending home sales at 10 a. M. And earnings coming out before the bell. Time warner cable came out with a beat and many others. After the bell, it will be about who will and amazon. Lets get to company news we have to start with face but because the reported earnings yesterday and shares are up as much as 13 in the premarket trade and revenue jumped 63 . For the first time ever, more than half of facebooks ad sales came from mobile devices. Citigroup has joined other banks in trying to improve working conditions. It is requiring junior bankers to take saturdays off plus, they must use all their Vacation Time each year. Goldman sachs and bank of america have come up with similar policies to improve work conditions. 71 l dutch shell posted a drop in profit. Suspending an oil drilling project in alaska. A federal Appeals Court says the government improperly awarded licenses to drill there. Conoco phillips just reported results as well. Fourth quarter eps of one dollar 40 cents be the consensus of 1. 40 beat the consensus. It is all about the production numbers. They declined from what was estimated and thats the idea that big oil is having a hard time making consistent the money because its expensive to get the oil out. At 8 00. Mobil this surprised me last night lots of news out of Silicon Valley lenovo agreed to acquire Motorola Mobility for 2. 9 Million Dollars with mixed reporting. Two point 9 billion. 2. 9 billion. I did a back of the envelope on this deal. Thats an actual personal stationery. There it is google did ok on this transaction, right . I think so. From a Balance Sheet standpoint, you can save you can say that they are selling handsets now im keeping a lot of athens but importantly, it is allowing google to lose a potential distraction with a lot of their oem partners. They get rid of dogs, dont they . I think so but they will definitely take time to go through those assets and figure out what is strategic for them. Google is not getting out of the harbor business or handsets entirely. They continue to do their own products. It has taken some time and they knew early on that there was a good chance they would get rid of the handsets because they continue to separate it in their financials. It was confusing to follow google because you were wondering whether it was a google phone or motorola phone. At this point, it gives them other partners and insurance. I am just dazzled about the super bowl. I dont think this is a total winwin. They are into these patents and all theyve got left in this acquisition are these patents which they paid about 4 billion for. It is of questionable value. You question the value of the patents . Absolutely, i think it might be a liability. You invent stuff and you patent it and you build a fortress around your patents which is the way patents used to work. The way it works now is that holding a lot of athens, if youre a big company, you get sued all the time. Do you have this skepticism . He has a point there. The value of the patents are dependent upon the litigation around it. Into a peri whereo everyoned is suing and you need to have that defense. People are driving up that bubble. Motorola was going to sue google or that was in the works before google bought motorola. How much value to the patents provide considering how much Smart Phone Technology has changed . Thats a good point but there is always the opportunity for a company to go back in time a little bit and say what you are doing is still infringing upon what our patent from years ago says. Motorola gives google some defense there. Patent suits, they tend to lag three or four years for it the lawsuits going on now are about the iphone 3. What is the lesson for your bloomberg west valley from this transaction . My perception is they bought a stodgy company and it did not work out and they jettisoned it to look no and lenovo stock went down . It did go down. What is the lesson here . Big tex mergers do not work. I cannot give a single tech merger that has worked. Tumblr was bought for 1 billion and we will see if it works. A is expensive but it wasnt Big Tech Company going with another Big Tech Company. What about the pressure samsung might have applied to google . We knew that samsung was in development. There was the existential threat say samsung would someday that they might use microsoft maps and what would google do . I think google is a good that. I think they lose a distraction and get clarity and they also even the Playing Field little bit and make it less about samsung vs google and maybe samsung versus lenovo a little bit where google is enabling both of them to fight it out and google stays where it is best. These are two huge acquisitions. You could look at it as lenovo is looking at some dogs whether it is the ibm server business or the motorola handset business. They recognize that the Chinese Market is very different than it was five years ago. The Chinese Market alone, is penetrating that like it never has before. Look at what happened with huawei. It has been successful in china even as World Markets have closed in other places for them. They are still having Great Success in china because the chinese infrastructure business has grown and probably will grow so much. Googled will be reporting after the bell. What is the number one thing you are looking at . For us, it is growth on the core basis. We have been pretty strong on google so we feel tonight should be good. Great conversation, thank you so much. Lets do a data check with some stability off of an extremely difficult asia opening last evening. You have to believe that cold in the northeast and atlanta is affecting crude prices. Here are a couple of Earnings Report i want to highlight. Visa reported 2. 20 beating the consensus of 2. 16 and visa reaffirmed its 2014 forecast. Blackstone reported as well. For . Doese i stand it is a metric for earnings. Im guessing. Its a new number. Its better than expected in the stock is not yet trading in the premarket but it is forecast it would open higher with these latest results and Conoco Phillips is coming out with numbers. Production is falling but adjusted earnings per share are rising. The magic last night at Yankee Stadium, this is bloomberg surveillance. Everyone,ning, bloomberg surveillance. Moveing markets are on the , even more so following the fed decision yesterday. Michael mckee joins me now. Theresome stability out but i see no confidence among institutions. You see some stability in some of the countries we have been word about yesterday and others are losing ground. Russia is the big one everyone is watching today. We also had worse than expected manufacturing numbers out of china so people are concerned about the follow on effect there. It shows you what we have been talking about, that this is a differentiated kind of emerging market problem. Everyd is the overlay but country involved seems to have their own problems as the foreign capital flows out, those problems are advanced. When we read the literature of Stanley Fischer of 1998, flow is the word for it would look at Interest Rates and yields in the pros look at the flows of money. What does that tell you . When the fed went to zero Interest Rates on the big Central Banks followed, Money Managers were looking for yield and that went into a lot of these countries that were paying more because the risk was higher. Now, the fed at least is starting to normalize and everybody is rushing for the exits. These countries are exposed because they cannot pay their bills without the Foreign Exchange. Turkey has a problem with its government and has questions about growth prospects. You see everybody getting out of there. Why keep your money there when you can go somewhere else. Thailand has political problems with the same sort of thing for the third culprit is china. With china slowing down, the countries that trade with china are hurting. I bought any country with a lot of snakes and it them a thats my strategy. You should have followed harrison ford. I hate snakes. Is the feeling that retail out of retirement plans is about sell . Most of them dont know what they have. Many people did not reach for yield in that area. It has been a question where you have money in problematic u. S. Situations. You may have left your money too long in bonds or Something Like that. The exposure to emerging markets is not that great. What is the effect on the russian government when they see the ruble we can like this . They are happy because russia is suffering in large part because you are seeing Commodity Prices fall like for energy. The ruble falls on lowers the price of oil there. Thank you for the perspective. Were looking at equities, bonds, currencies, commodities. Atlanta was paralyzed by snowdrifts of one inch of snow. We will go to home depot and the regional Vice President. Good morning, everyone, bloomberg surveillance. Her guest post this hour is robert gutkowski. He has years of experience in the invention of a small startup called espn. President obama is wrapping up of four date tour where he is pushing his opportunity agenda. He was in maryland and pennsylvania yesterday and will hit milwaukee in nashville today. He is trying to build support for initiatives on higher wages, retirement, and education. The top democrat in the senate is pushing back on president obamas call to approve trade deals. Harry reid says he is against the idea. Groupsmocrats and union oppose fasttrack saying the trade deals can lead to job losses. Billionaire paul allen made his fortune by cofounding microsoft but recently, his Seattle Seahawks have been a better bet. It is valued at about 1. 3 billion, six times more than what he paid for them in 1997. Shares of microsoft have barely doubled in the same time period. They are also going to the super bowl. I think i will root for the seahawks. I think its a contrary imply. Michael mckee is making a face at me. That sounds good. Week features a high profile outdoor sporting event that takes place in new york that is not the super bowl. We are talking about ice hockey. Michael mckee went to Yankee Stadium last night to watch the hometown rangers defeat the crosstown rivals, the islanders. This contest is part of the National Hockey league bonanza of hockey games this season. Is the league diluting its product by spreading itself too thin . I is with us. Michael mckee has defrosted and joins us as well. This is interesting timing. You have the super bowl. Kind of ruined by the lockout and youve got the olympics coming up. Is the nhl trying to one up the olympics . I dont think so, i think this is a marvelous idea that they created a couple of years ago. It is probably the best marketing event the nhl has done and maybe forever. I think they want to do as many as they can. They are are concerned about doing too many. They hope it will bring in new fans to hockey and new fans to the nhl. The coo of the nhl says the Outdoor Games proves that the brand can be bigger. Are they a compass and that would six Outdoor Games . Their hope is to bring in fans that kind of like hockey but are not really committed to any team and make them fans and make them viewers and really grow the sport. That will be the question and the opportunity. I think they are on their way. Let me ask both of you i thought it was fabulous last night, i watched every minute of it. When we were kids, it was a fast game last night. There was fast eyes last night and the players had Trouble Holding onto the puck and there was not a lot of hitting. Does hockey translate to television . Is that its ultimate challenge . Thats always been the challenge and it really doesnt and it never will. What of the beauties of hockey is the sound of hockey. You never pick that up on tv. I think they should bring the cameras down. If they can come up with a way to bring you into the game, it is hard to follow anyway. By doing the stunts, it becomes the fabric of the season. We see these series in baseball where the mets play the yankees but people do not get excited anymore. All of the games have sold out this year and i think the fans loved every game this year. There was 100,000 people in michigan so i think it is working. They have to be concerned about how many in the future . This is an exclusive lundquist did better than good. Up six goals and two periods. When you look at how the puck will move unexpectedly and players were left the hind left behind, this is not something you can schedule in april when the games really count. Even sometimes in warm weather, it is not good indoors. Fuexcuse me, is scarlet shilling for sports . [laughter] did you say, odd man rushing you put in way too much time on this. A surveillance correction, scarlet fu called them the hometown new york rangers and we know she is a raiders fan but in the two games at Yankee Stadium which is in new york city, the new york rangers were the visiting team. This is true. Apparently, theres some sort of tax break that the Madison Square Garden Corporation gets but all their home games have to be played at Madison Square garden or they lose the tax breaks. It is a pretty good tax breaks a because of that, they were the away team for both games and its less money the league has to pay to the home team. What can hockey learn from football . I think hockey is learning from football. I think the Outdoor Games was the nhl saying we have to do Something Different and unique to create an event and build around that. They are taking their minisuper bowls to the outdoor arenas. I think you try to learn as best you can. You want to create something that makes sense. We are talking the business of sports. Thank you so much. That was great. I had fun at the game. How many layers did you where . Many. You watched the game on your phone. Our twitter question of the day shut down, people are unable to get home, children shot in school buses and people in home depot unable to get home. You are looking at some regional home depots with people sleeping on Patio Furniture and sitting on benches, curled up together on the floor. It is unbelievable pictures. This is all due to less than three inches of snow. Some stores of home depot took up to more than 300 people. We have the regional Vice President and he joins us on the phone from atlanta. With three inches of snow, we left at that in new york city. What made you open your doors . We saw the situation unfolding late in the afternoon around 5 00 and determined that so many people would be trapped and no way to get home with the weather with the temperature dropping down into the teens so it seemed the right thing to do. I had a friend stock near his office for two days and could not get home. He had seven or eight kids at his house that his wife was taking care of. How bad was it out there for you guys . It was a horrific event. Started to unfold, you thought it would improve over a few hours. Traffic in atlanta is pretty tough with commuting from the north side of town. As the ice started coming down more than the snow, it created gridlock. The tractortrailers started jackknife thing and blocking lanes and that was pretty much done at that point. What kind of panic was there . Did you have enough food to feed people . Yes, we got volunteers together that would stay all night and went to local establishments to buy food and put many things in our refrigerators back in the break room so we could feed people. We had a lot of snacks and coke and water and things like that that we sell in the store so we took all that product and marked it down and took care of our customers and associates. We also have our meteorologist with us who was a longtime resident of atlanta. Her greatgrandmother was scarlet ohara. It goes way back. We are so used to getting three or four inches here but two inches in the south, in atlanta, is different. Is there something in terms of the climate in the south that makes two inches of snow that much more difficult to get through . It is a combination of many factors. We get more ice than snow typically in the south. It does not happen that often. People tend to leave at the same time and thats what happened this time. In 2011, we had a similar event and i was stuck for a week at a hotel because i could not get home a few miles away. They dont have the snow plows. We wake up in the morning in new york and maybe the side streets have snow but the main roads are cleared to drive. They did not have the snow plows in the 1960s either, what is new . They say this is a one in 10 year event but in the past few years, this is the second event. I think the city was not prepared. I have heard many reports from government officials saying they were not aware the storm was going to happen and i dont understand how thats possible. The National Weather service offered a warning 24 hours in advance and meteorologist like myself are talking about it and we said it would be two inches of snow so there was preparation time and it was the ability to per pair in advance. What happens is the culture in the south is that you really dont expect it to be as bad as it is so people dont act the forecast seriously. You say this is a cultural failure. Know, i know the culture there. It is not having the experience or being used to it. When we talk about noreasters in new york, we know it what it will be. Some people down there have not experienced these type of snow events. Like us with the hurricane a few years ago. How is it looking today . Can people get home . It has cleared up considerably. You are now seeing the cars off the roads but there are still abandoned vehicles. We kept open five stores last time because we had people who needed shelter. We were going on todays across five stores. We appreciate it and im sure the people who stayed in your stores appreciate it as well. Thank you so much. The weather looks great for the super bowl . It does because we have had big snow events a couple of weeks ago here in new york. A Warming Trends of the weather looks nice for the super bowl. Very good, bonnie schneider. Before we get to the super bowl, we have data coming out including jobless claims at 8 30 a. M. And the first take of fourthquarter gdp. Ahead of those numbers, futures are rising. The fed said it will reduce quantitative easing yesterday by 10 billion per month as expected. That is something that is factoring into prices. Good morning, everyone bloomberg surveillance, on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. Scarlet fu and alix steel and our guest house now is bob gutko wski as we look at the business of sports. You ever get a sprained ankle and you want to find out what is wrong or you get bites on your hand and wonder if it is bedbugs . Those days are over. Capture proof is a new economy startup that lets doctors and patients share photos and video in a secure way. The founder and ceo joins us for it is this as easy as it sounds, i take a picture of my bed bug bites and send them to my doctor . Thats exactly it and its that easy. We have patients saying it is easier than sending a text. What about security . Uproot but what about hackers getting in there and taking that information . When you are a startup, a lot of people have questions on it further down the road. Doing something in medicine, you have to take advantage of security and encryption right away. At capture proof, we encrypt data on the go and when it is sitting still. Everyone has authentication similar to banks to sign into our sites. What is the enthusiasm in medicine for this . Doctors look at us like we are christmas day. They are excited because it is a challenge to manage her own personal photos. If youve hundreds of patients with thousands of photos, it becomes a real pain. For a physician, we have a lot of neurologists and orthopedic motion andr range of postoperative wound healing in addition to the Plastic Surgery and dermatology pictures you would imagine. To radiologists like you . Would havenk people would be diagnosed in india and bring it to their doctor here. Does this put them out of business . We are looking to increase communication with your doctor. We are not looking to replace your doctor. Need blood tests, presumably, the Doctors Office till charges the Insurance Company for that visit. How does the Insurance Company fit into this . Forwardcalled storing and 11 states actually allow for Insurance Companies to charge for photo analysis. Physicians that are overworked. They have too many patients coming in to see them. We have an influx of more patients coming to them and they are in the practice of giving the best care possible. If they can take a phone call and a photo and get their patient fixed, they are happy to do so. Are any of the acclaimed medical platforms taking you on . Is the mayo clinic or Kaiser Permanente saying this is great, lets do it . The opportunity to work with large institutions like that. Not only does this work for large institutions, it works for a small shops as well. There is a lot of Tech Startups in the medical field. These are Young Companies really making some headway. Was it about the industry right now that is so in need of disruption . Medicine is just behind as a whole. Have they adapted to technology as quickly as they should have . The idea of security is really important. That is a barrier to entry. The fda just came out in september saying they would or would not regulate specific mobile applications. Knowing what they are going to do with your company is important. We are being disrupted by taking a lot of information and behavior in our social sense and applying it into medicine. So when i send my photo, am i still paying my copay . You would ins with capture proof. Thank you so much. Another example of a new economy company. We want to highlight the cover bloomberg businessweek, an indepth look at facebook. It has matured since it was founded 10 years ago in a harvard dorm room. It is available on store shelves tomorrow. This is a vote bloomberg surveillance, on bloomberg television, streaming on your phone, your tablet, and bloomberg. Com. Good morning, everyone. Bloomberg surveillance. Futures are up five. Joining us now are achieved national correspondent, carol massar. She will hold court at 8 a. M. This morning. Mikeod morning, weve got jackson of autonation. We will talk about that but what we wanted dig down with him about his the car market has been doing well. Of new offerings and the automakers are very optimistic. He has a National View that is great. But he deals with used cars. Market is doing well, how is the used market doing well in a better economy . A better economy as we go to 8 30 a. M. At a look at jvp. At gdp. We can do in earnings calendar for 1. 5 hours. Autonation will be reporting live this morning but we want to highlight facebook. The shares are jumping in the premarket trade after it reported a 63 increase in top billion. Nue, 2. 6 everyone is fixated on advertising revenue from mobile devices. That is a home run for Mark Zuckerberg. They are now being called a mobile company. The sets of the sets us up nicely for this afternoon with google and microsoft. 23 hey are looking at growth sales year on year. I understand the Profit Margins are an issue but thats incredible. Is with usutkowski on sports. We buy tons of paraphernalia. Jerseys andawks denver bronco cap how big a deal is that to the Sports Industry . How big a deal is that to amazon as they report this afternoon . They are hoping that for this super bowl, merchandising and licensing will be over 200 million just for the one game. Anything that has the mark of super bowl xlviii in new york will be a big deal. Does Peyton Manning get a bigger check than a third string quarterback for the Denver Broncos . Players share about 50 of all the revenues that come in to the nfl. At some point, it trickles down to Peyton Manning. Moneyl be part of the that goes toward being able to pay the players by the teams. Thats what gets to them. Counterfeiting is a big part of that. It is a concern and the nfl has done tremendous work over the last couple of years to try to protect that. They have seven or eight different ways i want to buy in Anaheim Ducks hat. They are all sold out. You cannot buy one. I need seahawks paraphernalia because i am rooting for them now. It is becoming more accessible online. I am looking at amazon this afternoon. It is coming out after the market closes. Coming up, joe hendricks, the fourth president of the americas will join us to talk about the Auto Industry next. We have some results from ups with fourthquarter numbers coming out. Before we get to that, everyone is reacting to the full year guidance for 2014. Ups is missing the mark, looking for earnings per share in 2014 of 5. 05 5. 30 per share. For 5. 31. Us was this is a disappointment. In terms of the Fourth Quarter number, we have gotten April America number from ups and we can now say that officially, ups reported 1. 25 which is in line with what the company said on january 17. Do you see anything else on ups . This talks about how unprepared they were for the holiday season, having to hire more people. It caused a pentup them and later as we got to the holidays and the did not hire enough people and had to hire more. People did not get their packages. , the stock is trading higher 95. 50 per share compared with the close yesterday. These earnings are a backdrop for a lot of company news and markets are on the move. This leads us to our company news this morning. We start with investors not thinking much of the lenovo they deal with google. Shares of the chinese pc maker tumbled eight percent overnight. Lenovo agreed to play Google Pay Google 2. 9 billion. One analyst says lenovo may have jumped the shark and overpaid. Google gets to keep most of the patents it acquired when it ought that unit. The apple ceo has gone on a shopping spree. It has spent 525 Million Dollars on deals on last quarter which is double what it spent one year ago. He has been buying companies so product can be indic rated into future gadgets or services. The slump in personal computer sales is showing up at symantec. That revenue fell short on some analyst estimates. Falling pc sales get some of the wind another problem is the growth of advanced hacking threats. That is todays company news. Continuestor company to generate profit. They profit after decades of turmoil and labor in reorganization and did not go bankrupt after the crisis. What will be the future for the Ford Motor Company and their strategy . Is president of the americas for ford out of date and. He is looking at the future. He joins us this morning. Youve got an important announcement in investment in america this morning. What is that . Invest morning, we will 80 million in 350 job to grow our capacity to build these trucks because the demand for our fseries trucks begins continue to grow. We will add artie 5000 units of capacity and take our capacity up 15 . What do the customers think of aluminum versus steel . This reminds me of composites. How is the behavior of the customer toward a more aluminum vehicle . We did a lot of research. The underlying strength of the vehicle is in the core, in the frame which is steel. The capability of the truck comes from that capability. The aluminum shell of the willle for the new f150 allow us to take wait out. Weight out. Our Research Says customers are accepting because they trust the ford brand. Tell us about the relationship with labor. Youre making big money in the united states. Does labor won a big part of that . We are sharing a big part of it as you may have heard. We announced a record profit employeesth our uaw in the dates, in the states. The Profit Growth is playing out. Our deal had record profits, employees are getting record profit sharing, our business had record profits in north america last year. Everybody is winning and want to give this formula going in the future. Good things about cars right now is that gas is a lot cheaper. The selling point of the f1 50 in the aluminum cars that a are more fuelefficient. How do you keep people buying more expensive aluminum cars when they are happy that the gas prices are going down . Its a combination of factors. We believe gas prices will continue to grow. Secondly, with that weight coming out, it reinvests the capability of the truck. You lower the weight of that truck and it can do more towards payload and the hauling which is very important. What kind of Pricing Power might you lose in the short term . Greathink the truck looks but when you look at the strength of our fseries and we grew share last year with this line, we think customers will be accepting because they trust the ford brand. We will be competitive in the marketplace as well. Will you have 14 minutes of ads in the super bowl . Alan mulally deserves everything he gets and we will have something pretty special. Stay tuned come on, weve got to make some news, help us out on the super bowl. We will talk about it this week leading up to the super bowl. Weve got something really cool lined up. Get there early. Thank you so much, joe henrick. its real simple, they hocked the ford badge to keep the Company Going when others could not do it. They got it back now. Ford motor will have a surprise. There will be a lot of surprises on super bowl sunday. The talk right now is that it is not such a hot ticket and people are canceling and there is more stuff available and rooms available. Is this turning out to be a flop . I think the demand is less than they thought for many different reasons. The weather is one of them and the two teams participating are 4700 miles from this venue. Are reallyxecutives peeling off and not wanting to go because of the concern for the weather. The secondary market has been very weak, prices have gone down 60 . ,t is the distance of the teams the markets of the teams and fans cannot come in that day and go home that day because they are concerned about the weather. It is many Different Things but the weather aspect has the biggest affect overall. Who are you rooting for . I am rooting for the broncos. Peyton manning is a good player. Fan am not a huge football so how will you get people like me and young people to keep coming to the stadium when we can watch on espn . That is one of the questions that all are concerned about. Anddigital world is growing the comfort of your home is what it is. People are going a little bit less. 1. 5 ,l percentage, maybe how that changes and moves over the next couple of years will be important. It depends how pricing the tickets are as well. We will talk about emerging markets on radio. In the meantime, we want to answer our twitter question of the day do you watch sports on your mobile phone . Tunedont, im just not into that. I am an Old School Guy and i watch it in the comfort of my home. More and more people are watching it that way. That is something that has to be watched. This year, yes p. M. Has launched over one million subscribers but it is a percentage. People are not watching cable or satellite the way they used to. , thank you fori joining us. In the loop is next. Live from bloomberg world headquarters, this is in the loop on thursday, january 30th. I am Cristina Alesci here with kyle massar and cory johnson. We have the top stories covered this morning including google to lenovo. Orola selling motorola to love a enovo. Amazon set to report record sales and probably puny profits after the bell. See what jeff bezos is after. The ceo of usedcar chain automation has a verse that have a surprising answer for us. Two sets of earnings in the last two minutes including visa and Time Warner Cable. Interesting results from both companies, particularly where the economy is right now, both companies telling us quite a bit about that. Why dont we start with scarlet fu, our chief market correspondent, about what is going on with visa. Moving rights are now, and eps for visa, to dollar . 20