Transcripts For BLOOMBERG Bloomberg Surveillance 20140320

Four percent from february. Out. R and conagra will be also, nike. Today is the beginning of march madness. President obama will make remarks on the economy at 2 00. It has been a long winter. It is on the edge of warmth. I would not rule out that it is over yet. The groundhog did see his shadow. Easter is april 20. That is a long way. Lets do a data check. We saw Market Reaction yesterday. The yield goes up. It balloons. He euro dollar is 1. 39 crashed as yet no went weaker as well. I want to go to the chart. Two year yield 0. 42. Heres how far janet yellen has to go little move up in the two year yield. We have so far to go to get back to any sense of normality. Or 2016. Ay 2015 no other way to look at. We did see some market move yesterday. We scoured the papers this morning. There is one story front and center. I am all over this. It is day 13 of the missing Malaysian Airlines flight. There was a breakthrough. Satellite imagery the tech did objects in the south indian ocean. Planes went to check it out, but australian and u. S. Planes found nothing, at least for today. This location is 1500 miles south of perth, australia. To triangulate this in the middle of no year no where. It is new york to miami. Feet . Was 28 78 feet. They are south of sri lanka. This is on the road to antarctica. There is nothing there. The french team that found the air france team in 2009 is on the case. Theyre helping to look for the wreckage. The fbi is also involved. We will speak to the man who found that air france plane. Our second frontpage story is something you showed us. It has to do with janet yellen and the Federal Reserve meeting. The risky actions startuggested they could raising Interest Rates earlier than anticipated. She also talked about the move to drop that 6. 5 threshold. I thought bloomberg did a great job. The angle is she had one of flub. It is way too much information. She changed her tone to be more hawkish. What is she wearing . The hermes or gucci scarf . That is how silly this has gotten. The focus should be on what she has said. 6. 5 is no longer the indicator. She said she was not changing guidance. You are showing the flattening of the two year yield. I just i yearn for arthur burns. Our third frontpage story is what is going on in ukraine. They had to reinforce their eastern border with russia. They will draw their own troops. Prorussian troops they have their own currency . Eu leaders are meeting in brussels. They will talk about sanctions and the response. Ruble . T they take the i dont know. They have switched to moscow time. There we are. Sanctions . On there will be a lot of talk. We will continue to talk about malaysia air flight 370. As scarlet mentions, it is thursday in australia. The discovery of debris far off the coast of peterth about the distance of new york to miami. David gallo joins us. They say they cannot locate the debris. Mr. Gallo is legendary. He is at the Woods Hole Institute with m. I. T. He led the search for air france. Gallo, what is the single thing you would like to tell people that theyre not getting in the media frenzy . At the core of this, everything that is found is a piece of evidence. The tough part and now has been sorting out what is real evidence and what has been self generated. I think now we have gotten something that would honestly be a piece of evidence that will last more than one day before it is discarded. Is an ocean just another ocean . Aboutre something unique the southern indian ocean on the way to antarctica . They can be some of the roughest waters on earth. This terrain funny beaneath this. Goes down to about three miles. It is like a long volcanic terrain. We know that kind of terrain. Were not the only ones. There are other laboratories that do too. That is encouraging. If the plane is there, we know how to search for it. It did not appear that we had it did appear that we had a breakthrough. The planes returned having spotted nothing. What does that mean to you . As tom said, it is a long way from perth. It is an awfully big ocean. It is just a matter of time and good weather. We need some luck. We need the weather to break. Those pieces will turn out. Up. You led the expedition to find the air france jet. What did you learn from that and what should we avoid this time . I was a coleader. It was a huge program. It was very methodical. Circle so that certainee, joina we knew the plane was inside their and mapping the sea floor. I do not want to get it to classified information, but i am curious is about the about the aircraft and the work with the severance. How important our submarines to the search . They could be very important in terms of learning where the pinger is. The french had their summary and involved in the air france search. They never heard the pinger at all. The ocean can play funny games with sound. It could be very important. Thank you so much. Look forward to speaking to you again. Dr. Gallo with the Woods Hole Institute. Jason is the chief investment strategist i was dazzled by yesterday. Analysis,led by the syllable by syllable, of what janet yellen did. Have we reached a silly point . I think we have. Certainly, given the fact that Economic Growth is probably going to be 4 to 5 . It is only natural to expect Interest Rates above zero. I do think this is silly. It is important. You nailed this. You have right to the heart of the matter. Esterday, this is not about inflation. It is about Economic Growth. It is just not there. As someone who focuses on equity, i do not fear normalization of Interest Rates. That would suggest that Economic Growth is improving. I could also see this prompting Economic Growth. The shot clock is running out. Did you see march madness . You should invite him back rid back. Orif you think about m a buying a house, were getting into the late innings. You do not feel that there was a major shift from a quantitative bracket to a qualitative bracket . I think that is significant. I think the Forward Guidance is one of those things where you have to as a new fed chair, you have to do what you say. I think she is trying to have a little bit both ways. She is sticking to a target of something that is unsophisticated, like unemployment rate. It is only fair for her to change her tune on that. It is little the more nuanced. 2. 1 . Me, it was that does not get it done. Jason is with us for the entire hour. We will speak real estate within the hour. Lets get the company news. A setback for glaxo smith kline. They failed to help Cancer Patients in a late stage chemical trial. They will keep using patients with a specific genetic background. Offer 10 episodes of a show based on a comic book. It will be streamed to the playstation console, to make it useful for tv shows. Arbucks is st betting big on booze. Menu arend an evening available in 40 stores right now. They will start serving evening alcohol to increase sales. Surveillance copy of buries to. Barista. Shocking. I did not know that. I know you can now bring your own gun. Interesting you can also bring alcohol and carry a gun into starbucks. I know at chipotle you can get a margarita. Yes. Liquor licenses are so expensive. Why would a franchise do that . We were talking about the shot clock earlier. Nike is laying on the fullcourt press. Short . E swoosh come up good morning everyone. We have a guest for you in the next hour. If you are not in the market, you need to be in the market. You need courage. Phil miller will join us from llm Legg Mason Opportunity fund. Were looking forward to speaking with him about value growth. Olivia sterns demands that we talk about apple. This is bloomberg surveillance. Scarlet fu and Olivia Sterns join us. March madness begins today. It is not just the athletes who are looking to score big. Merchandisers think nike and todas are showing down dress the championship team. Kyle, nike needs to make up for a disappearing disappointing showing last year. How do the odds look for them this year . Pretty good. It is a fullcourt press. You have every cliche going here. They are flooding the zone. They have 45 of the 68 teams wearing their gear. Oddly good. They have the four number one seeds. If you look at what vegas is idas i son, ad chanceike, comes out 73 of outfitting the winning team. You have nike as the leader and adidas trying to be number two. Where do reebok and under armour fit in . They pick their spots. Adidas is big on a soccer. They have reebok in hockey. They are a value investor. Nike just goes all and . All in . Nine out of every 10 goes to demand creation. Louisville one last year. Isnt there more upside to sponsoring an underdog . They have louisville this year and they have kansas. I want to talk about all of the money. I am sure there is money involved. Who gets money for wearing nike . It goes to the schools. A lot of it is gear. Some of these deals are not huge. They get free gear . They get some of the bigger schools in the show every year. The athletes get nothing. Our guest host, formerly of the georgetown were you outfitted in nike . We are in the nit now. A little different. Were trying to get excited about it. Georgetown did not make it this year. Is nike and Apparel Company or a Technology Company . I think it is both. It is really the class of the field. Much about the company, but i do know they are there. Work, are you migrating from blue chips to bill millers mid cap space . I dont think that is a bad idea. There is more value there in some ways. Im big into the idea that there will be an m a cycle. Who does that benefit . The companies that announced acquisitions outperformed. It benefited both the acquirer and the acquiree. People are tired this is critical that Warren Buffett gets all of the headlines. It is a whole other m a space. It gets overlooked. We will talk about that in the next hour. Thank you kyle stock. Hour, up in the next along with bill miller, bill icahnsill talk on carl battle against ebay. This is bloomberg surveillance. You are watching bloomberg tv. We are streaming live on your phone, tablet, and bloomberg. Com. Good morning everyone. The euro, 1. 3788. Lunging euro off of the fed announcement yesterday. Weaker yen as well. I am with scarlet fu and Olivia Sterns. She went to sochi and survived. That was a calm and peaceful time. You would have solved crimea. Top headlines, not in russia, but china. We are starting with a discount brokerage. They are up for sale. Founder was the first to buy a seat on the nyse. She died this past august at the age of 80 four. The irs is sitting on unclaimed tax refunds. The money belongs to taxpayers who still have not filed their 2010 returned. April 15 is the deadline to claim the money. Has sped upt, Construction Projects for Economic Growth. They hope to meet the economy on track to meet a growth target of 7. 5 this year. The output of investment has put the economy up after missing targets. Which ise it is 6. 23, a huge move. That brings us to the morning mustread. We stick with the theme about chinese financials. It is all too visible to investors. George magnus is an independent and says that their Economic Transformation is happening. Its leaders have choices about how to manage it. You came back from a trip to asia. I was in hong kong, singapore, and australia. On one hand, i learned that youll probably see more of a willingness to accept it goes back to the u. S. There is a need for normalization of policy. You will see more defaults and dislocations. By the same token i have spent a lot of time over the last 10 years trying to follow china. That ify, we have found china says it will be 7. 5, it will probably be 7. 5 by hook or by crook. Is our guestt host. He will come back with us. We will talk about Janet Yellens first interestrate increase and what it means for your homebuying plan. Good morning. I am tom keene. Lets get to a data check. It is a post that data check. The 10 year yield is 2. 70 . 2. 78 . The euro is weaker. Oil gets a bit of a rebound. Lets get to gainers and losers. Users the losers are more interesting. Stocks are tumbling due to investigation by chinese government. Lots of questions over whether this has a Business Model that is legal. Whether there is something that is similar to a pyramid game. That is the suspicion. It has been trading with herbalife. Every time they go up, you see a change. Is it a suppose it pyramid . People wonder whether it is a pyramid scheme. Skin, but need nu that is a different story the other is con and. Con ed. They did receive word of an expected catholic before the explosion and harlem. The Federal Reserve has spent the last five years driving home a single message. Zero percent interest. It is preparing to change its tune. One of the biggest factors has been the Housing Market. Will this item into Housing Demand . Joining us now is the ceo of Miller Samuel inc. With our guest host Jason Trennert john, lets start with you. You say that rising Interest Rates could have a sober lining. Thee have to wean dependence off of the fundamentals have not been there. Unemployment is a problem. Credit has tightened. So, as we move forward, we will see the Sales Activity edge lower. From a longterm perspective, maybe that is how we see credit going forward. You think inventory is the biggest challenge . Tight,use credit is so inventory is a very low levels. A came up a bit last year, but it is still very low. That is one of the key reasons you see prices rise. How can you see the gains in 2013 how can you say those gains were not real . They were exaggerated. Leading up to the fiscal cliff, we had some demand from the prior proceeding years. We solve the release after relief after the fiscal cliff expired. And we had a short burst of activity. That is all it was. Going forward, you cannot have a Housing Market that is dependent on one factor. Let me bring in Jason Trennert. He needs to sell herself. House. S are there any fence sitters left . The fence sitters were almost wholly absorbed. I do not think there are too many left. Where are the distressed investors . They are essentially out not nearly as interested. That play has passed. Interesting, normal equity market . Not quite. I do not think the market is exceptionally expensive. I do think that what is good about the higher Interest Rate is it will mean you have a more normal economic level. Lets move to housing. Is this normal . I have no idea what normal means. I know that last year was not normal. This is more normal. We have bill miller coming on later. Housing is actually a nobrainer. That is what he says. He says economist are hanging onto data points and ignoring the fiveyear cycle. Do you think people are hyperventilating over the shortterm data points . Overthink the longterm the next three have in five years is probably good. Direction,eace, the this slow gradual improvement as opposed to the insanity. Is there a seasonal spring Housing Market . Isnt this when the realtors go mental . The Spring Market is the super bowl. Absolutely. What you will see over the next couple of years is more pronounced seasonality. We have less external influence to the market. A spike in Interest Rates. I know you look at the new york art. Wall street bonuses came out. Higher payments across a Smaller Group of people. What effect does that have . I do not know if you can prove a direct correlation. Over the years, when there is an uptick in bonuses even if it is a smaller pool, that helps transaction activity. Not only in new york city. One of the benefits new york City Real Estate was cyrpus. Cyprus. You would rather own a house and something somebody can steal. I was wondering where the problems and the emerging markets my continue to give a list. Life. Lift. That is one of the reasons for this boom. We have become a global safe haven. Any unknowns floating out there, this market benefits. Tell me about foreignexchange and what it does for skyscrapers in miami, washington, new york. Euro is stronger. It was off a couple of points yesterday. A stronger euro, is that busy for you . It is certainly a positive. A bigger complement is simply the stability, both economically and politically. It is capital preservation. How much money have you seen in a suitcase . What currency . [laughter] how many euros . I do hear stories of that. Came back when putin to power. There were stories with russians and the regime change. Not much now. The safe haven slogan, i have never seen anything like it. There are no tom is considering moving to brooklyn. You also note that the gap between regular prices and request is an alltime low. Should tom fry in brooklyn now . Now . Y in brooklyn inventory is very tight. The spread in terms of medium red 210 . , we had aman crash differential of 1100. It is compressed. That is top of the market. Whatever i say, do the opposite. You have to go to lloyds for. I would argue you could spend that on the cap. 10 seconds, Michigan State. How good are they . They will win it all. Thank you. Which country has the Fastest Internet beat in the world . We have the answer next. You are watching bloomberg tv. We are streaming live on your phone, tablet, and bloomberg. Com. Good morning. Going over his best couple bracket. I have kansas. Michigan state. Olivia sterns going with the green. We went march madness free is apple a value stock . This is a precursor to talking to bill miller. You know him from like mason value fund. Is apple a value stock . This is thursday, which means scarlet fu and Olivia Sterns. Olivia sterns has our top headlines. Ukraine is withdrawing troops from crimea. They will evacuate all military personnel and their families from the peninsula. The moves after russia announced plans to annex the region. Withdrawing troops is the best way to deescalate the situation. Sign of theor any missing malaysian jet continues to come up empty. Innes hunting for objects the indian ocean returned after being unable to locate them. The objects were seen on a caps on the late image according to australian officials. They failed to locate them and have gone back to perth. March madness gets into full swing today. More than 12 billion will be bad. Huge. That is about 2 billion that was wagered on the super bowl. That is according to a Las Vegas Based information firm. Excuse me. Thaney estimate that more 100 billion tournament brackets will be filled out this year. I will phone line out throughout the show. Michigan state is number one. I am doing the brackets. Here is the memo. No one is dumber than me. Thef you need proof of bloomberg intrinsic value, there is a function for the bracket. There are fast album algorithms. I take on cheerleaders and it got me nowhere. Those are my headlines. Very good. We love that here at bloomberg. Here is a single best chart. It might be on the same talk opic. This is on Internet Speed around the globe. What it shows is the average speed across a wide range of countries with 22. 1a is on top megabits per second. Toy have made it a priority make sure broadband is as fast as possible. More than 80 of South Koreans are wired. Under 10. S just israel i included because it is home to many so many internet startups. The country with the lowest internet average connection. 6 megabytesya at 0 per second. Is london way better than new york city . It used to be. Long beforeonger we did in the u. S. Do you have a line on this, jason . Quate. M woefully inade the last thing i streamed was a guinness commercial. Hold up your phone. Come on. I am still using a blackberry. Listen if google rolls out google fiber, we are talking about speeds faster. Maybe that helps google. That the need to say blackberry data service i got in afghanistan was infinitely better than what i get in east hampton. Why is that . As soon as the military came in, they set up effective satellites. Nobody cares about the eastern end of long island. Some people care. This speaks to a lack of a plan. Yeah. Especially when you contrast to south korea. Lets look at photos. 3 photos . Im going to start in india. Today is the first day of spring in the u. S. We look at elevations around the world. , the celebration of color in india. People distribute sweets. It looks like a rave. The last lunar month of the year. Number two is daffodils outside of the Treasury Building in london. That makes me nostalgic. My flowers have bloomed already. They will be crushed in a day or two. What do you like better . Tulips or daffodils . I dont care. Spring starts when you see the tulips come up. Snowe number one photo, outside of the u. S. Capitol in d. C. They got seven inches of snow, the third biggest snowstorm to occur so late. The Cherry Blossom festival begins with all of this snow on the ground today. Quickly, jason, when there is snow in washington, do they take today off . Dan never takes a day off. I have emailed the 2 00 or 3 00 in the morning. Someone is working in washington on a snow day. Jason uses his blackberry. If you are surfing or browsing on your mobile device, what are you using . Probably safari or chrome . Our next guest joins us to talk about how we consume or browse and how it is different. That is coming up. You are watching bloomberg tv. We are streaming live on your phone, tablet, and bloomberg. Com. This is bloomberg surveillance. I am scarlet fu with tom keene and Olivia Sterns. Beats music is off to a strong start. They signed up 1000 subscribers per day in the first month. 28,000 customers during the period. China mobile is seeing profits flied. They posted their steepest decline since 1999 on rising cost to build out highspeed networks. That comes down to just under 5 billion. Alibaba is taking a state in stake in tango. They are investing 15 million into the chat app. Have been among the hottest tech groups. That is company news. How can you pay 250 million for that service when one goes for 19 billion . A is the Biggest Ecommerce Company in the world. It is a marketing thing. Lets go. It builds up the buzz. Why did we come up with tango . Lets stay on tech. On your browse the web smart phone, chances are you use safari, chrome, or firefox. One startup is challenging those players with its new offering. The difference is you can share as you browse. Joins us now. Aul, this is rooted in the fact that we browse differently on a mobile device. Exactly. The web just turned 25 years old last week. I wish we could say we planned it that way. Lets pretend we did. When you use a browser on a phone or tablet, it is a miniature version of what you have on the desktop. You have the back and forward button. We have not evolved. We use the same browser we used 25 years ago. When you think of sharing, you think it is new. If you want to share an article, what would you do . Copy and paste, every time. Same thing you would have been doing decades ago on the web. What does your app do differently . We want to get rid of the text url. If i am rating a website, like bloomberg i take two fingers. You can tap and cut out anything on the screen. It could be text or an image. Share it across email, whatever. If i email it to you, you get that picture. The picture serves as a link back to the article. So i get the article . You get a preview, almost. Could i take a picture and put it into a photography app . Absolutely. What is the copyright push back . You are pulling apart a website. Has a lawyer said you cannot do that . Lawyer say you cannot do everything. Really . That is a breakthrough. Anybodyt quote me trade can take a screenshot of anything they see. We are making it easier to do that. The screenshot serves as a link. You still get a link, it is just not if i do a screenshot on my phone, it does not have a link to it. It is a dumb image. But dont be other big players have a version of this . It is not like you came up with this and they never came up with the aspect of sharing it. Butt is amazing to realize, no. The only way to share in chrome or surprise safari is with a tech url. There is no such thing as a visual share has alibaba called . No. Would you hold out . You are creating a mobile browser. This is a time when facebook and the big behemoths are more focused on making apps. Why do you think that now is the time to compete on the browser side instead of the app . The browser is an app. The lines get fuzzy. It is hard to share social media. I think that those networks are will will love this. This will run on top of chrome or firefox . It is its own a browser. This is an alternative. It is more design centric. If you like sharing, even email, this is far superior to anything else out there. This browser also launches as well. You can download on the app store for free. Thank you. Netti, jason trennart is with us. You just had your conference. What did you learn . We had general petraeus there. We learned from him that he is worried about tensions between china and japan. What did Mario Cavalli say . He is worried about activism. Carl icahn is your friend . We have that going. We had howard marks to spend more time on the behavioral side of investing. Richard chilton talked about deconstructing Business Models. It was a great day for the firm and investors. Great to have you here. The optimism of Jason Trennert. Bill miller was optimistic as well. He will join us in the next hour. The forex report euro is 1. 39. Weaker yen. And does not do much as ukraine leaves crimea. Bill miller will join us in the next hour. Australia leads the search for large pieces of debris in the deep southern indian ocean. The first planes come back without any citing. May containreserve Market Reaction. The new rules for janet yellin is discretion will be used in raising rates. There is growth in Value Investing. Bill miller joins us this entire hour. Good morning, everyone. Live from our World Headquarters in new york. Im tom keene. Joining me, scarlet fu and Olivia Sterns. William miller joining us. A lot today on, should you be in the market echo lets get your morning brief right now. China will speed up Construction Projects and other measures to support Economic Growth after a slowdown in industrial production. Theyre worried about hitting their growth target. We will get a slew of Economic Data out here in the u. S. Starting at 8 30 a. M. Initial jobless claims expected to show a slow slight uptick. The Philadelphia Fed Business Outlook and existing home sales. Earnings coming up before the bell. Will be allll, nike over. Im looking at them. The store is reinvigorated. Its like running a stock. Its also the beginning of march madness today. Have you finished your bracket . Im trying to finish it right now during the commercial break. President obama will be making remarks on the economy. Hes going for Michigan State. Its the first day of spring. I have an all caps this final finalall caps hisas two. Kansas final two. Glaxo will continue to study the treatment using a Smaller Group of patients with a specific genetic background. S sold more highmargin clothing and accessories than its last fiscal year. The operating margin widened by. 3 to a record 32. 4 of revenue. Starbucks betting big on booze. The coffee king will expand its evening ilng alcohol sales. Locations serving the evening alcohol and food. Stay meaningful increase in the sales. That is todays company news. I guess were heading over there after the show. I think we should. What time do they start selling booze at starbucks . We will let you research that missing malaysian jet. Continues to come up empty unable to locate them after they appeared on satellite. They were initially seen via satellite according to australian officials. They were sent to check for them but they failed to find them so theyve come back. The Prime Minister of australia announcing this within the chamber. Offe from here to miami lanka. Directly below sri what do you think about that theory that there was smoke in the cockpit and they turned off all the transponders and then ede plane was autopilot fo for the nearest airport . There has been way too much speculation. Its just another theory. An interesting study simplified is more that doesnt get wrapped up in conspiracy. They suggested this was a ocean shegh had an optimism within the airedy of finding their france. Gallo with that interview on bloomberg tv. Janet yellin a number of reports on it her virtuoso performance. The drum in washington peter cook joins us this morning. How did she do . It was a solid performance. Thefirst time chairing Federal Reserve and the meeting. She was calm, cool and collected. I watched her the whole time. She was steady. Exactly what you would expect. Not too much of a difference from ben bernanke you. There was one moment that people she made a on calculated decision to actually answer questions from reporters. She was pressed on when the bond buying ends. There is this considerable time before they start raising Interest Rates. What is that . She chose to answer the question. Define. Hard to on they means something order of around six months. That type of thing. It depends what conditions are like. Around six months. Those three words despite all the caveats and repeated mentions throughout the course of the press conference that the feds policy had them changed, markets did not see it that way. Ratesuggesting the increase will come sooner than some people expected. Maybe the middle of 2015. If the bond buying ends of the current pace, it would end sometime in the fall. Was this a mistake on janet markets part or our overplaying this . Probably a, nation above. How important is it that there are vacancies . Very big. We only had 16 policy makers in those survey charts. We will have as many as three more within a short amount of time. At least two more who will have their votes represented. We dont know where they are. It is significant that we dont fischer there. Ar the fed links into your finance. We are bringing you one for the entire hour bill miller, chief investor of lmm. We are honored to have him on the website. I want to get to the fed, which is a rising interestrate climate. When does that trip and where equities compete with those lower bond prices . For bonds and equities. When does that occur . Generally speaking, rising rates is good for equities. Is demand forhere credit in the economy is doing well. I think in terms of that, when people start to lose money in bonds like a year ago when rates 1. 63 , money to went to equities. Then money flew right back out. Youou just described what and i have witnessed any number of times. Is it different now with the new rates of the media and the speed of moving money around checkout we are moving at a much faster world. Will that be disruptive when a massive amount of bond money moves out . It will be good for equities. Do janet yellins words change anything . Were, itwords depends. They are engaged in an updated waiting for the data coming in. Say basian on tv. Its just trouble. Its datadriven. A lot of people are saying that we have moved from qualitative quantitative guidance into qualitative guidance because there is a broader range of data that the fed will be looking at. Do you think that is true . 1980, the fed has lagged the markets. They have let them tell them what to do instead of leading the markets. I think it all comes down to that. I found it so interesting that you said you dont read the minutes. Theyre not raising rates for of time. Od its completely datadriven. The fed has privileged access. Bill miller with us for the entire hour. His sharpe ratio for the last active year was an act of god. Its amazing. Coming up, bill miller is with us for the entire hour. We will discuss carl icahns campaign to press ebay to spin off paypal into an ipo. The morning come everyone. Im tom keene. Host bill miller, chairman and chief Investment Officer at lmm. It may surprise you that mr. Miller likes bitcoin. Why does a conservative guy like bitcoin . Bitcoin her buying slowly. We dont own it in the fun. When bloomberg can get a quote on it and it can be securely stored, its a possibility. We have moved from the hysteria to this workout. Are you an investor who sees a new stability within the socalled currency . Interestings an intellectual and technological experiment. Investing in bitcoin its like making a venture backed in the sense of you dont know whats going to happen. Is huge. Tial return the amount of gold in the world is a trillion dollars. The value of all bitcoin is about 7 billion. If it reached 1 10 the value of gold, 100 times your money. Efficiency to bitcoin. In the discussion on collectivity what about the theoretical underpinnings that allow bitcoin to be a source of stability . Functions. S three bitcoin has the potential to for fill all of those. People of complaint correctly about its volatility. Especially recently. Gold was 35 announce and then 800 an ounce and then 2000 announce. It has been volatile, too. It has the potential. Governmentneed supervision . A regulatory scheme around the . I think it does. Because of its potential functions, regulators will be involved one way or another. You went away one from School Washington and lee university. Will you be able to pay tuition in bitcoin . Theres no reason you it in a week or two if they said it up that way. Even if we are at a stability of 600, isnt that volatility every day too much to be able to do a retail transaction . When you do a bitcoin transaction with retail, they converted right back to dollars. Theyre not Holding Bitcoin in inventory in taking the risk. Youre doing it instantaneously. With us as we look at bitcoin. On malaysia 370, searching for objects in the indian ocean. The 13th day of the search for malaysia air flight 370. Good morning. Good morning, everyone. Our 20 question of the day our twitter question of the day is apple a value stock echo is it a growth stock . This is bloomberg surveillance. Host is bill miller. Chairman and chief Investment Officer of lmm. He has successfully run their opportunity trust. Olivia sterns has our top headlines. Ukraine is withdrawing its troops from crimea. The government says it will evacuate all of military personnel and their families from the peninsula. The move comes after an ash after russia announces plans to annex the region. Italys baby has rescued more than 2400 migrants from the coast of north africa over the past few days. Most were rescued from a wooden oats off the coast of sicily. They expect another 2000 migrants in the next few days. March madness gets into full swing today. More than 12 billion will be bet on the ncaa mens basketball tournament this year. 2 billion more than the super bowl. They estimate more than 100 million tournament brackets will be filled out this year. Im still working on mine. I have Michigan State for the win. Its fun. Stocks havehe media been a hockey stick straight up. Are they a value . We dont own any media stocks in particular right now. I happen to like a spinoff called new media. A spinoff of newcastle. They own community newspapers. The same kind of thing that Warren Buffett has been buying. So youre not choosing walt disney questio . Disney is fully priced. Retreat . L icahn in the activist investor backing away from his proposal to separate ebay from its paypal unit. Is billdiscuss this george, the professor of management at Harvard Business school. Has said he is willing to go for an ipo of 20 of paypal, do you believe that he is adjusting his strategy and going for something that is more feasible . I think he definitely is. One thing about perl, he is very tenacious. Thats one thing about carl, he is very tenacious. The next thing coming as a proxy fight with two directors who are close to him and that have no knowledge of the tech business. Now he is backing up and saying what he percent. He is looking for any opening to shake up the ebay board. The ebay board is very strong. They have an outstanding board. Could be the best board on silicon valley. It there are very clear with what they do. If i was advising the board, i would say stay the course. Do not deviate. You had tremendous returns for your shareholders. 465 since 2009. You mentioned his erratic behavior. Perhaps the strategic. What is the most effective way of dealing with someone like a carl icahn . You need to be preparative for you come in very you should not wait until he attacks. You need to think about all the things he might do, including proposing a spinoff like this. You need to justify to your shareholders like mr. Miller why having paypal as part of ebay make sense. Close contact in with all your major shareholders and always be justifying your portfolio. Show why this makes sense. Ebay has done that. Longer just say, well, its a great portfolio. Just connect the business. You have to show the relationship and how you add value. John donahoe has clearly passed the test of doing that. That is what you have to be prepared. You have been involved in activist fights with carl icahn over time warner and john who time warner and yahoo ebay is undervalued. We own ebay. I think he has brought up a weakness in the governance of said theyre both highquality guys. Having a board member recused himself and have his firm by something that ebay is not selling, they have to believe theyre earning an above average return on that price. Ebay is going to earn a below average return by selling at that price. As a board member, i think you should be arguing against that. Nicely said. This is the critical point if its a use of cash debate, can a board shift to make a better use of cash for shareholders echo is there an experience that that will occur at ebay . Acquisitionso for cash. I dont see any reason. I think the real issue is building up a platform. Their issue is as much google is anything else. They have to build a broadly based platform. They have been on the leading edge of mobile in that. They have competitors and facebook and google who want against the space. They have to keep moving ahead and keep running their platform. They should be looking at their cash right now. So they can broaden their platform and continue to be a growth stock. Nothing wrong with being a value stock. They want to continue to grow this business. Take you so much. Professor of management at Harvard Business school. Miller andes to bill carl icahn, do you think investors are writing on its curtails . They should, given his record. And investorsges finding there is value in following him as well. Wherever you are, it is the first day of spring. Here in new york, a sigh of relief. It has been a long winter. Simply colder than normal. We celebrate spring today. The factcelebrating that winter is coming. Game of thrones comes next month. Winter is coming. April 6. Season four. No spoilers. Ive seen the First Episode. It was really something. Does anyone die in the First Episode . Ok. Does anybody die in the first minute . Im here with tom and olivia. But get you some company news, starting with the playstation. Sony will be offering 10 episodes of a show called powers a comic book. Ome u all part of a plan to make playstation a device for tv shows and buil with your games. Sac hiring a cia backed Software Maker to detect activity and monitor infoation to the firm. Are bidding hsbc for one of the biggest ipos in saudi arabia in decades. This is according to people with knowledge of the matter. Commerce is the First Saudi Bank ipo in six years. It could raise 4 billion. The search for any sign of the missing malaysian jet continues to come up empty. Planes hunting for objects bond in the indian ocean return after being unable to look at them. Unable to locate them. Thank you so much for taking the time. How likely is it that this debris that the satellite picked up could actually be the missing . Light 370 theres a chance. Its not guaranteed. If there is a lot of debris in the ocean. A lot of different kinds of containers and ships that have sunk in. It is in the spot where it is most likely the airplane. Thats a real positive. How at risk are the search airline . The new boeing poseidon is an antisummary jet. . O they refuel out at sea they are not at risk even though that is a stormy area. This is their bread and butter. This is their mission to go out and search for things in the water or under the water. It is a long and grueling mission. They will have multiple crews on board. No more at risk than their normal Mission Every day. Ands this mission easier more directed now that australia has taken the lead . Thats a good question. The malaysians have struggled with trying to coordinate this effort. It would be a challenge for anybody. Andng australia focus having the area narrowed will help a lot. They continue to chop away. Now that they have the satellite imagery, they will continue to put more satellites overhead. This will be look at much quicker because theyre looking in a smaller area. Faa. Ur expertise is have you ever been involved in a search where summaries were used . Is there an advantage to having mary and some deployed having submarines deployed . Sophisticatedery Sonar Systems that can hear very small sounds underwater. It is something they can pick up. You have to narrow it down for them. Its a huge ocean. It you not surprised is day 13 that it has taken so long for some lights to turn up anything . Them not surprised given area involved and how stormy it is. There are other things that require a lot of analysis to determine whether its a solid object or not. The fact that the airplane did not have its Onboard Systems on is what is making this a difficult. Final question will the fbi being involved help at all in the search . I dont think it will help in the search. It is the right thing for them to do to have them look at the background and investigate the pilot. Thats a normal part of an investigation like this where you are unsure of what happened. I dont think it will help the search much, quite frankly. Mcgrath, thank you so much for joining us. When we look at whats going on in the markets, all the risky assets got a bit of its price yesterday when janet yellin was jumping on the twoyear. By 3. 5 this morning down points. Bloomberg surveillance on Bloomberg Television and Bloomberg Radio worldwide. Our interviews bloomberg tv plus. Olivia sterns with us today. Our guest host is bill miller. Years, for decades here to talk value as well. You are in a rough spot. You came storming back you have had a sterling recent track record. Is a too good to be true after four years of value and midcap growth success . Have we gone far enough . The market used to be cheap. It is not cheap anymore. Fair value is typically part of a journey from undervaluation to overvaluation, which is where we are headed unfortunately. The path of least resistance is higher. Is Value Investing different from the time of John Templeton its moret . Complicated and more sophisticated. Back then, you do not have the people owning technology names. Technology is a huge source of value right now. Where do you first look . A game of cash flow or traditionally to Balance Sheet analysis or is there a new method . Is very simple. We look at cash. Earnings are an opinion but cash is a fact. For us we look at everything. We use all kinds of analysis. That bottom is all about Free Cash Flow per share. Not priceearnings ratios or enterprise value. We look at all those things. The great conundrum is that Everybody Knows that the value of any investment is Free Cash Flows. Yet everybody is always acce obsessed with earnings. How do you fold what you just said into what you said earlier about carl icahn . Buybacks are the right thing to do with cash if you have true excess cash. The record is that most management by high and sell low. Only a buybacks few companies will buy stock when its cheap as it was in 2008. Are you still following the lines and buying stocks like groceries . We are rational. Thats the way to do it. Warren buffett may the point that Public Pensions will be the Biggest Issue for the west economy going forward. How much of what he projects do you agree with . I almost always agree with everything he says. Hes very smart and he thinks about things carefully. Said, what would you do to change your retirement system in the United States echo its a total failure. A better system that leads to Warren Buffett like Wealth Creation . Theres a plethora of ways to do that. The simplest is to have something where there is a requirement some forced savings. An elegant approach that. Put an amount of their future races into plans. People are willing to do that kind of thing instead of doing more today. You see any bubbles out there . We dont think of things in terms of bubbles except where they are egregious. I think right now, stocks are d we hope we are fishing in undervalued waters. We will get more specific takes on some of those undervalued names from bill miller. Apple is one of the holdings in lmm. And controversial. That leads to our twitter question of the day. Is apple a value stock . Tweed us. We will be back tweed u. T us. It good thursday morning. Olivia sterns and scarlet fu with us. Futures are at minus four. Check in with our chief international correspondent. He sat down with peter, the cofounder of paypal. What did he tell you about Consumer Confidence in Web Companies . Here at this tech conference. It might look like a giant party. There are two questions overhanging. Why havent investors really put a lot of money into berlin . Why havent there been any ipos . What will this noted revelations do to confidence in internet commerce . It looks like it can survive. Its not that damaging. They undermined trust in certain government institutions. I dont think it would be hard i have notse seen any data that is just that people are buying less ecommerce than they were before the Edward Snowden revelations came out. Tom likes his geography. Which direction does this river flow . East or west . You mentioned there are a lot of questions about why more money is not being poured into berlin. What were the questions . Did they press him on that . Were, whystions hasnt berlin taken off . Countries cant be afraid of failure but they also cant be afraid of success. He also made this point that sometimes people get out of companies too soon. They need to stay with it a little bit longer. Im going to take your silence thatt knowing the river has nothing to do with ukraine. You are safe on these waterways from anything in the ukraine. Hes too busy looking everything up on google earth to confirm what you pointed out. Hes like the king of junkets. He has been down all those rivers. Youre just jealous. Yeah. Absolutely. This is an Insider Trading that has hollywood written all over it. Madeeme that allegedly more than 5 million. Why are we watching Grand Central station . Prosecutors say it involves on napkins that a middle man swallowed under the famous big clock in york Grand Central station. The clerk is accused of stealing data from computers. The brokers lawyer is not talking. He says his client is presumed innocent. So oldschool. Bar, i go to the oyster will find somebody. You taken oyster and not get back. We know where to find tom at lunchtime. On thursday morning. Talk more with bill miller. This is bloomberg surveillance. Im scarlet fu. Bill miller is our guest for the hour. He cofounded capital management. Lets give you some company news. Beats music is off to a strong start. The Service Signed up 1000 subscribers a day in its first month. This is according to people with knowledge in the matter. They reached the 48,000 customers before reaching a deal with at t. China mobile sees profits slide. They posted the steepest decline in profit since 1999 because of rising costs to build highspeed networks. That income down 16 . Jesse jackson wants more diversity in the board rooms of tech buddies. The political activist paid a visit to hewlettpackard to make his case. He says the problem is not limited to one company. When it comes to boards of directors with ebay or amazon or they have no blacks or latinos on their boards. There is no shortage of people who qualify to serve on boards. Jackson singled out twitter, which he said had an ipo with no blacks, latinos or women involved. That is todays company news. As Stephen Colbert might say, its a bill miller rootstock. Growth stock. He is our guest host for the hour. You say apple is a nobrainer. It you say its chief rich model is a great deal. Free cash flow. Growth. They meet any metric you want. It has more cash on its balance in thehan any Company History of the world. It is the most profitable company. Yield ate cash flow 10 . It picked up cash on the Balance Sheet and devise that by the Free Cash Flow at 14 . If apple was a junk bond, it would be trading about 60 higher than it is right now. What do you want them to do with all that cash . What they are doing. Price, the best use of cash by far is buying back stock. People talked about apple making acquisitions. Thats perfectly fine. I dont think they do a bad one. Apple has not come out with a Game Changing new product since the ipad. It has left the growth stage and is perhaps a later date Technology Company. What about that . Its like telling henry ford, do something next. They dont need to do anything next. This is a key point. We had an author on yesterday talking about innovation and new products. Financial guys like you and me go, wait a minute. The cash flow generation is off the chart. Should a guy like tim cook care about the integration the innovation . Whats interesting to me is that apple has been extra nearly innovative. They are secretive. They dont tell you three years in advance what their innovation will be. They have exciting new products. He says, we dont do small things. People talk about a variety of different things. Until they actually come out with something, people cant innovate on a whim. It we have to leave it up to them. How much do you Pay Attention to whats happening whethernally at apple . Sticking to what they know or broadening. Apple has done a good job. They are extremely well focused on their ecosystem. They dont get distracted by a lot of peripheral things. Are they bluechip stock . How long does it take for a itune when does the ey iphone six come out . Next year. What is bill millers definition . By my definition, they are certainly a bluechip stock. They are a highquality company with a distinguished history of animation. Hows hard for me to see theyre going to get disrupted. Hard to get disrupted. But its all technology that has only been around for a few years. Android in the past three years has come up and now has the bulk of the Smartphone Market share. Apple is an asp racial brent. I think apple is much more of a Consumer Products company. Apple is an aspirational brand. I would want to cook to provide i would want tim cook to provide clarity. Thell get this off bloomberg terminal renna. , texas, the air is different from the arrogance in san francisco. Do the people in california feel they play by a different Capital Allocation than everybody else . I think theyre following what Warren Buffett calls the institutional parodist. They see what other Companies Like them are doing. If apple is a value stock, s the Shareholder Base changed to reflect that . The trading history of apple is interesting because at the margin, it is driven by estimate revisions. Basenk apples shareholder is shifting towards more evaluation driven people. The stock price tends to be driven by momentum people. Would you buy stock at this price . Absolutely. We asked everyone out in the twitter sphere, is apple a value stock e . Apple makes more money than google. Does a cool, wearable device. Unlikely. I dont get it. To follow those things that . Its an important longerterm trend. Costs almoststock as much as an ipad air. Is that a good thing . Its interesting. It lowers the volatility of the stock price. Lower volatility tends to equal higher valuation. Lets get to our agenda. In your agenda item, youre looking at valuations the behavior of america after a number of financial shocks. Still so shellshocked that we can look at value . Are the scars still there . Michael goldstein made a comment. He said that investors are information centric and volatility phobic. Thats bullish for you. If they are longterm careful investors, yes. The search for the Malaysian Airlines jet. Lanes from australia and the u. S. Went to go look for the debris that was spotted in satellite imagery. They came back without finding anything. Its in the middle of nowhere. Roughly the distance between new york and miami. A nice, tidy area to search. Folks do think it is a good sign. They have narrowed the search area. They will continue searching for tomorrow. Olivia . Madness starts today. 30 Million People will have filled out their brackets. Ine outng to fill my with bill after the show. We will submit it to the Warren Buffett lottery. 30 Million People have done so. We will get 1 million if we win. What is it, for quadrille ion to one . There are smaller prizes to. , too. Bill miller, thank you so much. We love to have you here. Let us get to the data of this morning. Ecodata jobless claims coming up. In the loop on Bloomberg Television with betty liu is up next. Have a great morning. Good morning, it is thursday, march 20 and we are live from bloomberg in san francisco. Side ofdig into the tax todays biggest headlines from silicon valley. I want to bring you my coanchor, trish regan in new york. What a market yesterday after the fed. We did not expect that. We were debating whether that was a bit of a mistake. They said it would take about six months for them to raise Interest Rates so the timing would still be 2015. It is quite possible that in her first fmoc conference meeting, janet yellen did not expect to be that specific. The markets sold off on that. We will get the latest results of the Bank Stress Tests aimed at telling us whether wall streets biggest firms could withstand another financial crisis. Now, at 30 minutes from jobs report. That thed yesterday