Transcripts For BLOOMBERG Bloomberg Surveillance 20140325

Back on the airplane . 10 days ago we were talking about an ipo and i go away for a week and come back and it its done. We will talk about it in this hour as well. Lex we thought of you. Do you waste the most time on . Candy crash . Checking the weather . It was inspired by the ipo. Tweet us. That is a good one. Here is my answer without question. Check on stocks, bonds, currencies and commodities. Futures up three. 10year yields comes in a little bit. To the next screen. Gold is a big story. 1370 an ounce. Has pulled back nicely. The Australian Dollar continues to get a tough day. Australian dollar a little bit stronger on the back of china news and commodity news as well. Where are we in the equity. Arkets . 1947 inflationadjusted dow. Up we go. A lot of the collation. Here we go again. Is that a bubble . I do not think so. Does not look like a bubble because you have 12 and three. Jeremy grantham with a great interview yesterday. He is a bear but says be in stocks. More money has made than you, me, our relatives going back 2000 years but is always a bear. Always been invested their. The headline is he is in stocks while he waits for the bubble to happen. Thank you for bringing that to my attention. He scoured the webpages this morning to look at the front page. Story, theontpage industrial nations essentially kick russia out of the group of eight. It is now gseven for all intensive or buses. Leaders are meeting in the hague right now and threatening more sanctions as well. So i can bring back my old g7 baseball hat. Were going to go to hans nichols to get more on this. Is this a wrist slap . It suits us seems like it. They have cap it limited to a close number of all. It might tip russia into recession. You wonder how Vladimir Putin will respond to this response. Everything, he has he needs given the fact that they import half of its energy from him. We are checking in with hans nichols. Second frontpage story, president will call for an overall a collection of phone records, emails, and internet eta. The government will no longer willthe information and require issue orders requiring at t and verizon and others to search files for information. Is this a surprise . The president did promise alternative. All comes in the wake of revelations by Edward Snowden. Like some of the provisions go underffectively to 2001 george w. Bush when there were no questions asked. At that moment in history can understand. Triple blast from the past. Ive former aides to bernie made off were convicted helping to pull off a 17 billion dollars scam. He hired the men with little or no financial experience. By a federal jury in manhattan after a fivemonth trial. The claims they were ignorant of the fraud. They probably were. We can go over here 50 feet. The avenue. Down i cannot convey to you to each of us have been touched by running into people who directly or their family lost money. There is something about being in a bar. This is current news in new york city even though so many of the did notand listeners think it was a big deal. Closure for a lot of people. Those are the frontpage stories. In they two, meeting hague. The president and other leaders tossed out russia. Hans nichols most of west wrist slap when he sees one. Here is essentially what happened in the past 24 hours, they canceled the party in sochi , transferring the party to brussels. Five party, i mean the geight summit. Increasing talk of additional sanctions, but no real sanctions, just the threat of sanctions if and only if russia incurs further into the eastern ukraine. Crimea will stay in russias hands, unless there is the future incursion. Exactly how coordinated or how much in agreement is the gseven on sanctions . They have some agreement on that. The canadiens and u. S. Are pushing a little bit stronger. Perhaps the closer you get to russia, the more you get to sympathetic view. That is germany. Everyone here is on the if then page. If nothing happens, crimea stays the status quo. Russian troops are in crimea. That is the status quo. That may be with the take away is. We were talking earlier about the fact that russia effectively accounts for about a third of the Energy Imports into the eu. Why are we not hearing more about that . We try to press on that. Gas. Except natural there is some talk here that europe needs to rethink the energy policies. Most of the time when they rethink the Energy Policy it is more renewable, more wind farms and this and that. There may be something more fundamental going on. You may hear drilled they be true in german or french. Not quite there. There is a sense europe needs to shore up energy sources. Our guest this host, michael chasen. Platform thatia developed mobile and special apps for the iphone, android tom and google glass come at which you are wearing this morning. Is this because of the deal that bloomberg has with the Eyewear Company. Certainly excited to get better looking specs. I am thrilled you wore this this morning. Is it getting traction . I think it is still the earliest stages. I am using it because our application will soon be available on google glass. Shameless plug. Get it out there right now. Think it is an early prototype that will be widely adopted in the future. Are they able to work around the band taking place . I do not think google glass helps with the ban in place. That is what the whole entire issue with twitter is about. Vehicle foranother that. Where will technology be in 12 month . Now these a year from types of devices will start to be made more readily available to the public. We will see more people besides just the early tech adopters. He will start to see an array of applications coming out. I was like are you kidding me . I have to admit, i see more people. Just like your fbi guy all the time. You read about people who fall and trip as they are texting and not a tooth out. I was not seeing right in my google glass. I will holding on for dear life. You can walk down the street. You. Ts not awkward for able towkward but being read the email or going throughout the day and there is an email or an Important News alert. Here. Hael chasen the biggest nerd. You do have new glasses. If we are not know comparing glasses. I think these might be a little cooler. Put those on. Bird i look like a sue work with these . You look like harry potter in, pretty cool. This tracks does down women in bars . A lot of people come up to me all the time. We are all about innovation today from google glass, biotech stocks have been booming over the past three years. We are having a little bit of fun here. I am glad we are back from vacation. Bloomberg surveillance. Good morning, everyone. The next hour, ian bremmer will join us, president and founder of eurasia group, the book on the g0 world. Ian bremmer with us, the top of the 7 00 hour. This is bloomberg surveillance. I am tom keene. Adam johnson barely back from aspen, whatever that is about. Every time i go it is rain and slush. Biotech bubble, boom and bust, whatever you want to call it the sector has outperformed the Broader Market since the bull market began five years ago and now is lagging behind, leading to questions about whether it is a bubble that has popped. Andrew behrens is a Senior Analyst with bloomberg industries. Better to speak with on the Biotech Companies . I was think of investing in biotech as a study and optimism because we are looking for us in the realm of story essentially. A lot of these companies are profitable in futures betting on one singular drug getting a breakthrough. By Andre Companies that large have to rely on the fda for approval and you are really taking on fire. Certainly one aspect of a. Iotech company you have to look at the Science Behind it. What has happened in the past couple of days that has led to the today slump that has pushed Biotech Industries down. Tom has it on the screen. Some people sitting on the sideline and some people look at it as a buying opportunity. Different now than it was a 1999 or 2001. How is the biotech business different than the last time we went up in the way . I think there are key fundamental differences. Large pharma is flush with cash and pipelines have lost a lot to generics. Has lost a lot to generic competition. A lot of the last run we have had was stimulated by a gilead acquisition with small biotech company. They paid 11 billion for stage two drug that was unheard of at the time. Now looking like it is a good acquisition. Lex that i think has really simulated a lot of the current production. There is a lot of pushback. One of our reporters wrote a story about managed care rushing back on the actual pricing. Pricing is a big issue. Expensive,s really tens of thousands of dollars. These companies have Pricing Power. Will they continue to have Pricing Power . I do not think you will ever see the government pushback where they have negotiating prices or in germany the same thing happening. The freemarket is part of the society and constitution. That being said, the u. S. Government has assumed a much greater role into health care they need to cut costs. Year the number one ranked analyst in the group has said make it easy on a handful oft by these things, whether it is roche. Or roach that is one way to play it. Certainly for some investors that is one way to play it. Meetings, to medical talking with physicians a lot of people do not have the time or ability to do that. When do the Big Drug Companies are buying these again . They are doing it right now. Deal in the history for phase two asset. Do by,ow you do not hold, sell, but would you be enthusiastic about biotech starts . I think there are a lot of ways to play the sector right now. Certainly gilead having the best coverage. They are having pressures. Not typical you see 100 plus billion dollars company relying on one drug but so much of the value is in the one drug. Product,lieve in the you will have binary events coming up. I like the way you said that, binary event. Senior analyst at bloomberg industries. On the verge of a correction, down almost 10 in february. Coming up in the next hour, the last cap a winter weather. The east coast break bracing for yet another winter snowstorm. Discussing the effective stream extreme weather on the country and the economy. Good morning, everyone. I amberg surveillance. Tom keene. Joining me a scarlet fu and adam johnson. Lex u. K. Inflation drops to the lowest rate in more than four years. The report gives the bank of england room to keep Interest Rates at a record low, trying to support economic recovery. The search for victims and the mudslide and washington goes on. The slide was triggered in a creating a told away wave of mud. 14 people have been confirmed dead. More than 100 still missing. At least 30 houses destroyed by the mudslide. Family members of passengers on , theissing elation jet group accused the airline and leaders of a coverup to handling the search for the plane. As for the search, suspended due to weather and the indian ocean. Gale force winds and heavy rain were forecast it. They hope to resume tomorrow. Today. Vy of them for you scarlet fu getting us started on china. Lex henry paulson, former treasury secretary, head of Goldman Sachs writes that chinas leaders must put reforms to the test. Pointed out now the reforms in undertaken by china cannot be undertaken by fundamentals. Economy. To remake the the real test is not whether it will advance but how. Embracing meaningful competition. The Financial Services sector where the foreign banks are leaps and bounds ahead of chinese banks. Michael chiasson with us as we look at technology and too many issues. Are they Technology Companies . I absolutely did not put an asterisk next to them. The reason china is able to quickly accelerate the Adoption Technology is they were larger distributors and had more before it became popular in the u. S. They were a prime market for the mobile internet allergy. It is absolutely taking off. They have the size to make a viable. Coming up talking about housing. The big week for housing data coming up. It is new york city. It is spring. A storm coming. We will look at that in the next hour as well. Was going to be a big storm, i guess it is a lesser one, but who cares. It is march, gorgeous. Building and Empire State Building in our view this morning. We welcome you. I am tom keene with scarlet fu and adam johnson ringing you conversation on a lot of interesting topics. Looking at the data check, not much of a conversation. Data comingsing later this morning. Adam johnson has gainers and losers. Lex one of each. Herbalife gaining seven percent. One of each. O has two directors in place. This has been the big battle, the battle of the billionaires, is it or is it not . Bill ackman says it is. Back and forth and back and fourth. This is a legitimate debate. Are we making too much of this . The central issue is how revenue. Sites if you sell to someone who is already a distributor, should not be counted as an outside customer or internal . We talked about this yesterday while you were skiing in colorado. John denver. I was playing oldschool jazz and needed to mellow out. If i went down oldschool moguls i would have an oldschool root canal. It was scary but i survived. Talking about netflix with a mere 780 million. Biggest drop since october. Apple is potentially streaming Tv Partnership through comcast. Netflix agreed to by comcast for millions. Now it throws into question what is really happening. Tvthere a deal between apple and netflix where you are effectively bypassing . No one really knows. It is all in talks right now ins will could fall apart but people are wondering if this is a new generation of streaming television. Question, whate is hardware and is it nothing more than nothing more than a front entry into content . Within the hour with michael chase. Right now looking at housing. The headline, housing is recovered. Where is the recovery compared to 2005 and 2006. Can housing advance, given flat wages . Vice president for tax and analysis, National Association of homebuilders. Receiving counsel. Ohio state crushed by eight and in the ncaa. Ray to have you here. How miserable are the homebuilders right now . Not miserable. Things are a lot better than 2009 2010. The last few months have seen soft data but we have had growth, that is good. There are headwinds but things are ok. If you were to go to a convention of homebuilders am everyone talks about land, getting land. What is the dynamic right now of acquiring the land to build the home . You have to have land, a developed lot. That is a key supply chain issue that is holding back the growth in housing starts. The Land Developers slow down production during the recession and takes credit and opportunities for them to get back in place. Now,is is not 2004 right still not a normal housing recovery. I do not think they approach the boom years. Certainly have room to grow. Housing starts are 900,000 pace. Over the next few years we expect that to grow to 1. 5 million. Wayre about a third of the with construction. If you look at the case schiller index, we are still 20 below the high. Looking at since 2000 and nine. Since 2009. Are you saying were never returning to those levels . And nominal terms we will probably get back to those levels. We saw a lot of price appreciation that was investor driven. First home buyer share is a weakness in the market. I think for existing homes you expect to see the rate of price depreciation to slow a little bit. For the long run prices should trend and income should rise. Our guest host is michael chiasson. You are based in washington, d. C. , and from what i have heard the housing values have stayed pretty buoyant. I think it is not just because of the federal government. Certainly that is a big use of it. Really the economy continues to draw more and more people into the city with underlying infrastructure into the housing market. You areis what you do, from ohio. Do homebuilders want to build in a lowercost, lower risk area like a given spot of ohio, or do they want to build in bethesda where it is big money, big affect . They want to build where there is demand. It might be bigger profit in a highcost area but input will be more expensive, to. The land, cost of labor. Mostly they want to build where there is demand. A good example is a small market of the dakotas. The fracking boom has led to a massive amount of housing demand. I want to ask you, because most of the nations home sales are existing home sales. Glimpse into the broader economy do new home sales tell us . Newhome sales are key driver in terms of job growth. Every Single Family home bill will create about three jobs, 1. 5 being in construction. 1. 5 in business sector. You need to look at home sales in home starts to look at the impact of Home Building on gdp. Ofthe Vice President economics for the National Association of homebuilders joining us from bloomberg studios in washington. Speaking of land, a big scene yesterday on the latenight shows. Jimmy carter spoke with David Leonard David Letterman and were talking about a potential u. S. Landgraf. The United States decided ,hey wanted windsor, ontario which is right across the river from detroit or Something Like that, unheard of, and we went up there and sent the tape tanks and, could we get away with that . I doubt the people would approve. Por canada, always the but of our jokes. 90 in october. 90 years old. Incredibly well spoken. Some would say the smartest president of the 21stcentury. He was a bright guy at the naval academy. Very humble beginning. Fabulous to see the president. Almost 90. Very cool. I am only five years away. Coming up, single best chart is next. China getting smarter. Take a look at the number of graduates they are producing compared to how it looks in the u. S. We will discuss that next. Good morning, everyone. Bloomberg surveillance. I am tom keene. Wikia scarlet fu and adam johnson. House republicans and democrats will unveil a plan to end double election the data today. It is covering a Security Agency gathering a phone a to and email gathering. It would keep the bulk of the information and the nsa could obtain some of it with a court order. Stay tuned with the developing story. U. S. Embassy in venezuela no longer issuing visas to firsttime applicants due to unrest in the country. Planningd affect those a spring trip to orlando and other places in the u. S. In theevery eight deaths u. S. Can be traced to air pollution according to a study. The group cents killed more than 7 Million People in 2012, more than diabetes, aids, and road injuries combined. Those are your top headlines. Gets your attention for the dynamic here in china. Isn the optimists say it ugly. I was in china three years ago, and in some cities i thought there were wind storms but it was not. We have those that are just coming back because they can no longer bring breathe the air. Isspeaking of china, here single best chart. A chart that shows big numbers. Looking at the number of College Graduates produced by china in diversity. The total number of University Graduates in china when from nearly 7 million in 2012 from 2 million in 2003, up 250 over the past decade. Just on the basis of comparison, look at how the u. S. Thats of stacks up. This is why my kids will not be able to get in. Like i do not agree. I think there is smart stuff. Levin talkedchard about this with great ability. There are quality academics in china. It isis a whole subset, like wait a minute. We have great inflation. What you are effectively saying is they have diploma inflation. The academics of it. Linear all jerome. Did not get anywhere today. That chart probably under represents the full potential of what china is trying to do with the education system. When i was ceo, we were over there a lot. They were trying to figure out how to get those that were seven and eight hours out of the city into the education system. Record to the a less prestigious academics . Copying the model in many ways. They are actively making investments to improve the education system, oath from a physical place, as well as online. Online kobe the way to solve the infrastructure problem all mine will be the way to solve the infrastructure problem we were talking about. Its a number of schools putting education not just on the internet but on smart phones as well. It is interesting. That was a great chart to tell the story about the debate. Getting to photographs now. The first lady visiting china. Number three photograph, the first lady and her daughters. Malia. I am a little clueless sometimes. They got bigger. Dare they getw bigger. It is light game of thrones. It is completely empty. People that criticize this, i think it is great to see children of the president out doing this. They went Business Class on air force one. Having been toy, the wall, it is an awesome experience. One of the few things you can view from space, believe it or not. I knew this would eventually grow to fruition. The president right now, they in the white house. They have a lot of speaking engagements coming up. Two, first lady learns tai chi from students during her visit to a high school later in the day. The powder blue. That is the instructor. Or she is. Look at that. She could hold the plaintiff for 90 seconds. . Hat is the plank position this is strength building, core work. Are you saying i got junk in the trunk . Soft to the core. Save yourself. You should have seen me yesterday, i was tough. Plenty of core strength. Ready for this . The first lady jumping rope, doing something in my sober . She was invited by a young woman to jump rope. She challenged accepted the challenge. How do you like that . I cannot imagine a first lady of china doing Something Like this. What do they call it when you do the double dutch . I am not that clueless. Surveillance,n will can be crushed be a sweet ipo on wall streets . The expectations behind the game maker ipo. This is bloomberg surveillance. There is your high score. This is bloomberg surveillance. I am scarlet fu here with tom keene and adam johnson. Company news now. Legal issues lovin down. Wants to list his online Storage Company on a new exchange. Fighting extradition to the u. S. Megag the previous side of offloads. The biggest Copyright Infringement case in United States history. Public. Ng revenue has doubled to 124 million in the fiscal year through january. That is also according to the filing. Jill sandberg says she did not avoid hiring google inc. Will use when she joined facebook. A number of Tech Companies are involved in an antitrust suit that alleges they have agreements to not hire each others workers. That is todays company news from the files of bloomberg west. Expected total price the ipo today after the close. 2124 is the range they are talking about. Michael chase with us. Media platform that develops mobile and social apps to the androids, Iphone Google class. Makeis expected to take 2. 50 this year. It has earnings. One hit wonder or legit . Deftly not a onehit wonder. Three games extremely popular. What they have managed to do is manage to take the early lead, all of the users and cross pollinate them with other games and technology. I do not think this is a onehit wonder and think the sox could do very well. This is the one company that has figured out mobile gaming. Microsoft is stuck on the xbox. Farmville. Ve go mobile. Gle to is this the one that has figured it all out . They are definitely a company focused on mobile games first. They really have it down as far as whether what the focus is and what the kids are playing on the smartphone. Who is they . Talk about capital and going up and down in the elevators at the end of the day, who is the they . Some genius in the corner. Notaking games today is about an individual coder. These are individuals or games costing 10 million. These are real. Creating blockbuster movies in many cases. This Company Generated 1. 8 billion and revenue. Get by mr. Ould not coffee. You can download can be crushed because it is free to download. You have to reload. You can only get three free. It is what is called the Premium Model. What we have discovered is the Premium Model with games really pays huge dividends. Free to download and play him a but as you get addicted, you pay one dollar here or one dollar there. There are cases of people paying thousands of dollars to continue actively playing it. You see that across all the premium games. Where is the leading edge, asia, u. S. , europe . Was a lot ofere early adoption throughout asia. Now the majority of the games are being used in the u. S. Market. It is really where the focus is. People are willing to spend that money. Talking about crosspollination. One game to play the other. You have to make the turn. Not just about games. How do they do that . What is great about the iphone is it already has your credit card information. There. R here or dollar getting more lives and upgrading place. Upgrading plans. Is this a restricted ipo . Financial transaction. True initial Public Offering . Or is this just guys cashing out quickly . I think the company is accessing the Public Market because they see a big global opportunity and want to raise additional cap bital. Candy creche . I banned it. They have to Read Old School books. Get home i am in a bad mood from being here all day. Waste my time playing candy creche on the way home. That brings us to the twitter question of the day, what cap eu waste the most time on . What app do you waste the most time on . Playing solitaire with four decks simultaneously. bsurveillance. Nerd alert. See how you can do you can learn how to do the slide where you do the math and here is the forex report. Japanese yen. Rubel huge story. Hans nichols at the hague today. Markets like what they see. Stronger russian ruble. 36 level and Australian Dollar get the business warning on commodity news. We want to thank our guest host for the hour, michael chase and. Coming up in the next hour, we will speak with ian bremmer on russia and ukraine on the eurasia group. This is bloomberg surveillance. Russia is tossed out of the g8. The ruble strengthens. Those the g7 agree to disagree on sanctions . The nsa will stop widespread collection of phone data. If they will continue to search for terrorist. Mainstream tv, a very big deal. This is bloomberg surveillance. We are live from World Headquarters in new york. It is tuesday, march 25. Im tom keene. Joining me, scarlet fu. Adam johnson decided to return from aspen. My guest host, gary shapiro, president and ceo of the Consumer Electronics Association Associated with the most i enormous Las Vegas Convention ever. Have you been to what . Lets know, but i think we should lobby to do the show from their next year. Is what wehis learned. The pace of migration of rural chinese to the cities set to slow in the coming years. Deepening economic concerns. Economic data here in the u. S. , 9 00, the case schiller home price index. Of items. Umber Consumer Confidence, Richmond Fed Manufacturing survey and new home sales. Bell,gs before the walgreen and carnival. Came digital, the maker of candy crush, will price its ipo after the close today king digital. Re is one company of note what do you have for company news . Google. Google glass set to go mainstream. It is teaming up to develop and distribute frames for the internet connected eyewear. The largest Eyewear Company that owns both both rayban and oakley. What does beefing up its web video business. The company is buying maker studios for 500 million. It is the supplier of online videos to youtube. Another 500 million if certain targets are hit. Five former aides to bernie made off found guilty of helping him run the biggest ponzi scheme in history. They were hired with little or no financial experience. They fail to convince the jury they were ignorant of the fraud. They face as many as 20 years of prison each when they are sentenced in late july. Is stillrse, ukraine front and center. The group of eight is now the group of seven. It is a symbolic wrist slap is meters leaders meet day two in the hague. Ian bremmer has seen this all before. He is the author of managing strategic surprise. Wonderful to have you on. That is a book from an older younger, rather, ian bremmer. What is the next surprise to come . It is hard to imagine that been pushed into this corner by the United States and europeans on ukraine, will suddenly back down and say, ok, guys, i give up. You can have crimea back. Have a United States and obama, after having backed down on this red line in theory yet, feels very strongly he needs to actually follow through this time around. But he is coming up against a then who feels this is single most important interest he has. We are set for more escalation here, and it is starting to hit the mark. Is russia still part of the g20 . Sure. Why . If it is out of the g8 and the g7 . The g7 countries up]aking did not share the same principles. No countries share values and principles in the g20 ok, we are going to jump in and reconnect with ian bremmer. Some phone difficulties. Nichols and hans what we saw earlier in the day, this is still a continuing story. It is a little bit off the front page but still very much front and center. The president and g7 leaders our discussion on how they will ratchet up the sanctions. He wonder what they will accomplish at this point given putin has dug in his he completely on crimea. This comes from the wall street journal yeah, it is that big. Ft has it on the cover, pressure braces for 70 billion dollars in outflows. It all goes back to cash flows and how western companies will react. We have been reporting for days that the sanctions could tip russia in recession, yet putin is standing firm. We continue with dr. Ian bremmer would continue with dr. Ian bremmer. The second day of the meetings, what should the president tried to accomplish . Whats the United States is trying as hard as possible to work with allies to show a united front. The declaration signed by the g7 states yesterday was pretty powerful in terms of rhetoric. Statese all the g7 condemning the russians in very, very certain terms. Is not acceptable. The undermining of ukrainian sovereignty. And they will have a summit to work on colette dave Energy Security collective Energy Security as fast as possible to diversify away. What obama is trying to deliver as he is meeting with the europeans this week. Where is the next time you . Moldova got some play over the weekend. You are the expert on the political map. Is there a next crimea . Next crimeanot a but ukraine is incredibly unstable. The ukrainian people are caught in the middle just as the Syrian People have been for the last threeplus years. The question will be how would the russians decide to undermine this Ukrainian Government . Do they do it through traditional economic and political means . They decide to directly intervene in east ukraine themselves. Military forces have massed on their border and clearly not just for purposes of exercises. That is what we have to be focused on here. We know president obama is not the only world leader with a difficult relationship with Vladimir Putin. His predecessor as well. Is there any world leader that Vladimir Putin shares a decent relationship with that might influence them . Whats a lot he has a good relationships but they are tiny maduro in venezuela. Consistently if you behave this way you isolate we isolate you. That is the way we talked about north korea. You dont get to isolate russia. Xi jinping and china do not accept any of that. Is going there in may. They will sign a big energy deal. Putin is going there and may. None of the brics are supporting any of the g7 countries on russia. I have half a mind they should set their own g5. It is a very big divide between the advanced industrial democracies and everyone else on this issue. The eu accounts for 70 of the Foreign Direct Investment into russia. Are you effectively saying that itshe eu strengthens position against russia that india and china will step in where they used to be . I am saying the americans have very little exposure to russia, so as we push so far as the indians and chinese set come lately on the sidelines and they may tilt toward russia Going Forward with that level of exposure they europeans can talk as good a sanctioned game as they want but if we move toward actual sanctions on major russian sectors we will find large parts of the europeans not with us. Ian bremmer, a required read come a when it came out and even more so now, out on amazon. Are guest host of gary schapiro, president and ceo of the Consumer Electronics association which produces the largest innovation show. It is massive. Gary, i wanted to get your thoughts on the big news of this week which is apple and comcast in discussion to perhaps together do a streaming television service. Is this a deal about licensing rights or about hardware . I do not know if there is really a deal, first of all. To a is reportedly talking lot of cable companies. What it shows is apple wants a direct pipeline to its customers. That is what everyone wants. What i think we should want, though, is Competition Among pipelines. It also points out the need for additional spectrum because a lot of it is talk about should consumers be charged, should apple be charged. It also goes to comcasts brilliance. Brian roberts has done an amazing job of building the company. He is going after the fact that it is less about cable and the content comcast of delivering and more in the future if they own the pipelines around the country. The question is how big they will get, what they control and who will pay for it. Iro with a letter to talk about, your television and the rest of the poison the house but our twitter question of the day what app do you waste the most amount of time on . Tweet us bsurveillance. I am spider solitaire. Fruit ninja. Good morning, everyone. Bloomberg surveillance. Im tom keene. This matters now to our guest post gary shpiro, chief executive officer of the Consumer Electronics association. He has represented people who make records. A record as a black disk that goes around and around and you turn it over. A little bit of technology from a few years ago. It very shapiro on copyright. Copyright. Iro on international property, patent, Great American ask for. Our brand is known around the world and our creativity as a country that is what innovation is about. Are we making headway in getting back to copyright in particular the Recording Industry . Made a career sometimes battling with the content world. We believe innovation comes in many forms. And consumers have to have the right to take what they bought and move it around so they can enjoy it in other places. Why cant i do that . It drives me insane. You can do it a lot more now than 30 years ago. We went all the way to the Supreme Court saying the vcr is legal and from that position would establish pretty clearly you can do a lot. If you bought something, you can move around for private use. If you are sharing with others and charging for it, it is a problem. We are going to talk about next hour. E porter bit and others saying it is a huge deal. In april the Supreme Court decision, we will hear it. Broadcasters have less than 10 free over the air. Less than 10 of American Homes are relying on broadcasting but yet they are holding spectrum and they have free spectrum because they are supposed to provide a community. Look, if you are in an Apartment Building and cannot use an antenna, we have the solution. Broadcasters, in spite of getting a free licenses from the federal government for valuable spectrum saying, no, you cant get it even if you cant get the signal. Ibo like to be about on the soiree in las vegas, the ces convention in las vegas too big. Tell me why i need to go to ces in 2015. Where everyone in the world gathers who is focused on innovation. Um pinnies showing their most Innovative Products to the world. The ceos eight of the world gathered there because they are focused on what is next. 150,000 people, 5000 journalists. People from a raw. Where innovation comes to the marketplace. For startups and big companies. We will come back and talk we will talknd about the news from washington, serious plans to chains the National Security administration. Good morning, everyone. Bloomberg surveillance. Data throughing the morning. We will have it on Bloomberg Television and radio worldwide. Stay with us for important housing data this morning. Im tom keene. With me, scarlet fu and adam johnson and our guest host, gary shapiro, president , chief executive officer of the Consumer Electronics association with us today. Adam, you have the top headlines. Family members of passengers on the missing malaysian jet marched on the countrys embassy in beijing. The group accused the airline and malaysias leaders in a coverup of the handling of the search plane. The search was suspended this morning due to the weather. Gale force winds and heavy rains are in the forecast and they hope to resume tomorrow. Tolation in the u. K. Drops the lowest rate in more than four years. Consumer prices rose as an as at an annual pace it gives room to keep Interest Rates at a record low. The search for victims in the mud slide out and Washington State goes on. The slide was triggered when a large chunk of rainsoaked mountain pulled away, creating a wave of mud. 4 people dead more than 100 missing. At least three houses were destroyed and the mudslide. It is hard to imagine, 100 people missing. Seen thisorts i have morning are pulling it down from that. But still, it is horrific. It gives you a sense of how wide this was. 1500 foot wide slide. Like five football fields. It is just hard to imagine. Speaking of the weather, spring is officially done. Coast getting more snow at least that is in the forecast for today. Meteorologist Bonnie Schneider joins us with all the good news. Why are we still getting snow in the springtime . Gete unfortunately we do snow even in the springtime. It will be a powerful storm that will hammer new england. Possible up to a foot of snow in cape cod from this one. Has something changed in this year making so much more snow man we have seen in the past and making it last longer . It has definitely been one of the snow wheezed winters we have seen. Some people actually say the cold is but it actually was not the coldest winter when you start to rank it. We have seen temperatures, when you look at the average, to about the 34th coldest on record. In terms of the snowiest winters, the big question i have been getting because it has been nonstop there are a couple of cities that have seen the snowiest winter ever. Detroit be one of them, 78 inches. Indianapolis the coldest, snowiest. In new york, even though we saw the share of storms it was not the snowiest come in number three and the ranking. It has definitely been a terrible winter in terms of a lot of snow and a lot of cold. As you can see with the storm leading new england today we are not out of the words because we are supposed to get el nino as well so we are looking at more disruption as well across the globe for this summer. Thats right. One of the things we are floodng is the spring forecast. Unfortunately for many places of the country this is going to be a problem because of all the cold and snow we have had this winter. What i mean is, if you look at the great lakes region, for example, record cold and record snow we winter. All the snow has to melt and when we are looking ahead for the flood outlook for spring snow melt, we could possibly see flooding with some of the rivers , ice dams. In the Northern Tier of the country and the southeast as well. It is incredible, mike mckee. This thing get keeps going. Put some dollars and cents into these things because a lot of companies are blaming bad weather. About 85 more blaming weather for the poor results versus a year ago. A lot of people have been impacted by the weather. What you really have is a change in the mix of spending. It looks like people are still spending but we are spending more on services, which includes utilities because the gas prices have gone way up and Heating Oil Prices in new england you dont want to know about. That is where the money is going at the moment and we are spending on durable goods and things like cars. But if we get a warm summer, it should switch around in the hope is you we capture a lot of the spending lost on the bigticket items. Chief economic a respondent, weve got a lot of Economic Data. You put an asterix because of the weather . Housing numbers, if they, poorly everyone will say you could not go out and shop for a house. You look past that and what we will want to see is later on in the quarter, when you start to see a rebound. I want to go back to the flood. I was surprised how rare the floods are in the greater mississippi rally. 1951, 1927. 1993, i you suggesting it could be a big year like that . It is possible, tom. It depends on where the isa jims take place. It was not that long ago we talked about serious flooding in the mississippi river. Flooding, believe it or not, is one of the biggest threat in terms of natural disasters. Like a silent killer. It is very problematic and it is economicd cause huge loss. How far down does the ice go . I dont mean to pin it on you. In a year like this, new orleans does not get ice jams. Does st. Louis get ice . We could definitely see ice but what happens with the spring thaw, it is considered a rapid snow melt. When the ice melts it melt quickly and then soon as it does we see a rush of water flowing in some of the really large rivers. Even as far north as minnesota, once we start getting the warmer temperatures, the snow will melt, and that is when we have concern about letting. You saw earlier, the flood concerns from minor to moderate is in the Northern Tier of the country. I hope he does not turn into the situation as in previous years but the risk is there. Certainly is risk and we appreciate you coming on and helping us quantify the thing. Schneider, bloombergs on meteorologist and mike mckee putting numbers on it. It sounds like farmland could be an issue. Coming up, reading the tea leaves on the upcoming Supreme Court battle between Television Broadcasters like abc and cbs and upstart aereo. David anka joins us next. Good morning, everyone. Bloomberg surveillance. Regales in manhattan. Looking toward new jersey, statue of liberty statue of liberty in the distance. Snow later today. One to two inches. A march dusting. It is a joke actually that we think it is such a big deal. It is spring and we are tired. That is the big deal. This is bloomberg surveillance. Im scarlet fu, here with tom keene and adam johnson. Look for a late summer or early fall rollout of the next iphone. An analyst at the civic rest said component orders are forecast to increase in july. Insistent with a late september october introduction for the iphone 6. Standard poors cutting brazils debt rating to one level above junk bond. The Rating Company cited concerns about the economic credibility, fiscal management and week growth or cast. Sheryl sandberg said she did not avoid hiring google will use when she joined facebook. Her comments were disclosed in a court document. A number of Tech Companies are in an antitrust suit that alleges they have an agreement not to higher each others workers. Neither sandberg or facebook are defendants. For some gut wrenching video. These are pictures taken by one of the men who went skydiving from one World Trade Center here in new york. They are known as base jumpers. They were arrested later on. They were. If they were jumping off buildings, bridges, cliffs. Taking video. Ins took place back september. Yesterday, the four men involved were arrested and charged with burglary, Reckless Endangerment and jumping from a structure. Is that out of control . Not a spider man trailer. And that is what they were thinking, well worth getting arrested for the views. Like the other Youtube Video about the guy speeding around manhattan in less than 20 minutes in a bmw z three. Remember that . To hear from our audience is listening and washington. As i get older, i get more afraid of heights. Are you kidding . I would not do this. This is from on top with from on top of this i never jumped out of an airplane but hiking this weekend, they took me of the aston bowl and basically you have to hike 40 minutes past the highest lift. Au are going along, you have three foot wide thing and you have the skis on your shoulders and you go down one way or the other it kind of freaked me out. I was going to jump out of helicopterllance once because they did not have olives. [laughter] the top story we have been following, the nsa book collection of americans phone records and data would end by a bill introduced by the Top Republican and democrat in the House Intelligence Committee and the white house is expected to push its ideas. Phil mattingly has more on what this means. Who is taking the lead . Is it congress or the president . A little bit of both. What you are going to see are the top two intelligence lawmakers in the house are releasing their own proposal. What they are trying to do is walk the line. Continue to give the nsa the ability to grab the information out of telecom and phone carriers. At the same time the Administration Working on their own bill to do something very similar. They are trying to get out in front of this issue. Who is the most out front right now . Is it the nsa, the president , congress . Who is leading on this debate . What do you make a great point. You are trying to get out front because there is a sector of congress that wants to but down the nsas ability even more than what the administration is proposing. What you are seeing with these two top intel lawmakers, mike rogers, Dutch Ruppersberger in the house, trying to set out a the administration is very much in line with the house intelligence lawmakers. Their goal here is to maintain the capabilities that they have while putting in enough restrictions to make people comfortable but not go too far. How big is the lobby for people that say i dont care if they look at my phone messages, just as long as they get the marginal terrorist . I think it is certainly smaller than it was 10 months ago. Officials ion talked to really struggle with the ability to explain what these capabilities do. After the Edward Snowden league there were not a lot of people in the country he feel super comfortable with what the nsa is doing. It is a messaging issue as well as a policy issue. The administration has been fighting and will continue as this moves hardcore into congress legislatively. Phil mattingly, thank you so much. Our white house correspondent. We did get breaking news just in the last few minutes. Walgreen reporting secondquarter adjusted earnings per share of . 91, two cents shy of what analyst looking for and the Company Plans to close 76 drugstores as well. Morning, everyone. We are on Bloomberg Television and Bloomberg Radio and look or our Digital Media out on Bloomberg Radioplus and tvplus. Im tom keene. With me, scarlet fu and adam johnson. Shapiro,terri president and chief executive officer at the consumer ctronics administration gary shapiro, president and chief executive officer of the Consumer Electronics association. Upstart streaming service that uses tiny antennas to Stream Television programs is taking on top broadcasters. Aereo is expected to submit a brief to the Supreme Court tomorrow. Ahead of that, we asked david bank to join us to the best. Thanks for coming back. Thank you for having me. Is the white house siding with the network mean aereo is losing momentum heading into the case . Is there such a thing of legal momentum in a Supreme Court case . I dont think there is. But i do think the amicus brief filed on behalf of the department of justice for the broadcasters was a very thatcut powerful argument the Aereo Technology was essentially a was violation of the spirit of the law. Meaningful. S if you are trying to read the tea leaves, sure, you would argue that maybe some of the momentum is going the broadcasters way. I will be a little bit of a contrarian. What do investors who are watching today really care about . Certainly we care about the outcome of the case. You know what is going to happen at the end of the day . Whether or not aereo is legal, aereo itself is a footnote in history if it doesnt find a distribution partner. It just doesnt have the scale to make a difference. So what investors want to know is, are the direct tvs and ss, will theyio adopt this technology to avoid the fees . I dont think they are. We go interview after interview with his new Disruptive Technology and distribution. At the end of the day, everybody wants just one cable bill to pay. Are we going to change in two years or five years or 10 years . What that is an interesting question that is an interesting question. When i speak to the industry guys as two to generally i think seen beyond the three years is very tough. Does the ecosystem keep together for three to five . I would think so. 15 of the households in the country receive broadcasts. 85 get some sort of cable and directv. Is this really relevant, david . First of all, they could all turn into cable channels. Relevant in the broader sense of the ecosystem. Of revenue innt this ecosystem now being given by subscription fees. For broadcasters which used to be a free service. Youou disrupt that and somehow change the broadcaster from the evolving subscription all they have to do is stop broadcasting and although the sudden vote. If you look at the stocks of the conglomerates i think investors are seven to realize it is an Interesting Technology that perhaps a disrupter would use and gary would probably know more of that. But the incumbents, i dont think so. Gary shapiro, our guest host, with the have to say . David is absolutely right. This is a Disruptive Technology and the broadcast dont like it and it may violate the spirit of the law and it does not violate the law. At is what all of those broadcasters are struggling this. They have the spectrum, eight year licenses. At the risk. Ery few people relying what everyone does want is to get that service as quickly as possible. They dont want a lot of complication. There is apple, facebook. Is aereo your friend . We go after the disruptors aereos, those who come out with something new and challenge the status quote. It accompanies my not like it but that is what americas is about, disruptive. Disruption. David bank and gary shapiro. Of this conversation does not go away. The Supreme Court will get this briefing from aereo starting tomorrow. Coming up, the maker of the popular smartphone game can be crushed, Adam Johnsons favored, expected to price its ipo after todays close. Will all the candy question at its lead to a big buyin on wall street . That is the twitter question of the day. Which app do you waste the most time on . Tweet us bsurveillance. Good morning, everyone. Bloomberg surveillance. Im tom keene. With me, scarlet fu and adam johnson. Top headlines, adam has them for you. Emily members of passengers on the missing malaysian jet marked on the country by the embassy in beijing, including the airline and malaysia leaders of a coverup. As for the search, it was suspended this morning due to weather in the indian ocean. Australian Authorities Say Gale Force Winds and heavy rain was forecast. They hope to resume tomorrow. A booming business of exporting natural gas liquids has been idle due to a weekend crash in the houston ship channel. Accident between a barge and another vessel close the channel. Crews are trying to clean up the 4000 barrels of oil that has been spilled so far. The ship channel enos 80 vessels today, many carrying gas exports. Every eight deaths worldwide can be traced to air pollution. The group said pollution killed 7 Million People in 2012, more than diabetes, aids, and wrote injuries combined. Beyond repertory problems to heart attack, strokes, and cancer. Those are your top headlines. Futures up six. Seven. Ures up lets get to the morning movers. Ebay is moving higher in the premarket. Headlines out from the company on a regulatory filing where ebay commented on carl icahns proposal to nominate his guys on the board. Ebay would recommend their slate of nominees. This is heating up. Anything carl icahn is not going after . Apple, check, ebay, check, herbalife, check it he has been generally on the right side of most of them. The guy with the largest mouth. Weve got disney naming abc news president dan sherwood as the new disney abc Group President replacing and sweeney who announced her resignation. The stock is up on this news. It is news. We live in a twitter world. It is all about twitter, in the moment, the extra screen. This guy gets remote up. Gary shapiro, you are the hardware guy but there is a content move. Content is so critical. How do you see content from the land of different things, toys and stuff . Content and hardware and services all need each other and they all need tight lines. Our goal is to get as many pipelines out there as possible. And choice of broadband, that is a good thing. David bank from rbc capital rockets. Up,ey stock just goes up, up. Talking about one of the greatest brands in the history of brands. I think two things happened. Not only did we get a new president of the Entertainment Networks but last night they announced they are buying maker studios, a very large player on the youtube side. Original youtube programming. I think by putting a toehold into a brandnew space, i think people are receiving that ms. Pretty well. We will come back. David bank with us and gary shapiro this morning. Coming up am a president obama expected to host a News Conference from the hague later this morning. Will he comment on the latest move on the g7 . Mrs. Bloomberg surveillance. This is bloomberg surveillance. Our guest host for the hour, gary shapiro, president and ceo of the Consumer Electronics association and we have david banks from Rbc Capital Markets is who focuses on Media Companies. Company news from the files of bloomberg west. Kim. Com not letting his legal issues love them down. He he wants to list his online Storage Company on the new zealand stock its genes. He is resisting extradition to the u. S. Due to a site that has been called the biggest copyright Copyright Infringement case. Ipos failed to raise the 250 million in the offering. Doubled through january. Google glasses set to go mainstream. Google is teaming up with a company to develop frames. Owns both rayban and oakleys in the company will develop google glass frames for both of the brands as well as design original ones as well. Great picturet a of yourself earlier. I was wearing google glass. I totally dont get it. But there it is. Optimism is it will get better. You can get lost walking from the office to the carlyle. I dont see a lot of people using it. Lets look at software. A big banks is with us from Rbc Capital Markets. Gary shapiro with us, chief executive officer at the Consumer Electronics association, two very different prisms on media, innovation, and making money. David, let me start with you simply on the hardware and software. Do you presume in your each and every day that content will still be the thing that drives all of the toys that garys world has . I do. I think the hardware is sort of useless without the content. What will ultimately change the ecosystem from the way it exists today, which is a fabulous ecosystem for the content companies and the media conglomerates in particular is when the hardware allows a seamless transition, i think, from do you know you are watching the internet, do you know you are watching a traditional tv channel . When you have that in every room of your house and it is seamless this . Far are we from las vegas 2015 or las vegas 2020 . I think companies are providing solutions and new things but this is not linear. It is more logarithmic there it we are at a time of fundamental quick change in technology. In video, it is ultra hd 4k which is rapidly taking over. We have devices that is thousands of different things. It is software. It is applications. Which Media Company is doing its best . I think of comcast being part of distribution hard of nbc. Is there is a company you think is ahead of the debate . Apple and samsung doing great things in many different areas that you have google, comcast, his knee, so many different Great American companies that are thinking strategically. Within that, david bank, used a Mainstream Media, that is derogatory. They are not Mainstream Media anymore. They are scrambling like everybody else to keep up with this, arent they . Think they have to be strategically smart about what they have to do but what do they sell . They sell the bullets. What does everybody want . They want the whole its an the big cap Media Companies with the big studios and big networks have the most valuable things consumers want. They have content. I think they are trying to figure out what their longterm plans are. I would ask the question of gary, if you look at the replacement cycle of televisions over the next i dont know how many years at what point how long would it take before everyone has a smart tv or an advanced tv or a 4k tv . How many years in the future isnt before we sort of evolved is it before we sort of the ball to the new platform, and that will drive much of it. We sold about 30 million tv sets a year and about every 11 years everyone turns it over. You dont get rid of it and you move it to a different room. Now you can get a phenomenally thin, viewed a full curved tv that is an immersive experience with the sound as well as the picture and the internet in activity as well. With rabbit ears they stopped working in 2008. Adam, jumped in. Davids point about a look is becoming simple where i dont care if i am watching hbo, showtime i just want it really simple. What is the catalyst that enables all of these great new tvs to then get all of the stuff behind the screen right . We are getting there. Apple as a company was successful because they did that with audio. The question is, will they do it with video as well . Lots of companies are trying and they are going to get there. Who is the competitor to apple tv . Samsung is out there, lg is there. Not hardware but the bundle altogether as david is talking about where it is seamless . Whats sony certainly did with video games. No question. Sony certainly did it with video games. No question. What is great about the system . Competition. If you want pay television, you can get it from, coast comcast, directv, fire hose. If you have a closed system with one dominant player, it gets very dangerous for the content owners. What i would say is that as part of their difficulty what is your single best idea right now . A run on media stocks when they look on hockey like hockey sticks. Say is you want to be generally in the content side of the business with a large cap media conglomerates. Can you come back . I would love to come back with you two. Absolutely fascinating. And david bank. I have to figure out how to operate my smart tv properly. Way too many buttons. I can see the hudson river so if i turn the antenna there you go. Aereo is available for you, too. Lets take a look at the stories kick for the day. President obama will speak at 11 00 talking about the nsa. He is speaking obviously from the hague, dave two of the Nuclear Security summit. There are so many issues. Almost secondary. Isnt it amazing . How they are dealing with russia. The g8 becomes the g7. Any number of things he could say. It is delicate, to say the least. He will be he can later on this morning. Of any action from Vladimir Putin will be fascinating. Mine is more up heat. The restorative nature of spring and what it means for housing. We get housing data out today. Went to housing data. Woomer has a, snow goes away, things get better and america has it, snow rumor goes away, things get better. It alwaysll do what does. Scarlet, a thousand square feet, seven bathrooms. I have to make room for the Big Christmas tree i have. We tweet it every year. People ask is that really hurts three . Will the boys get a new hockey ring in the backyard . Sure, why not . On my agenda, the maker of the insanely popular mobile game can sh. Crushed candy cru it is priced tonight. Selling shares between 21 and one a four dollars. It works out to about 100 times earnings. They do have earnings. One hundred times earnings. I did not get past mr. Toffee. Twitter question what apps do you waste the most time on . There you go. Candy crush. It sucks me in and i cant stop. None of you guys have mentioned them but i am always running them on three smartphones whatsapp, linkedin, and the economist. And sorry, tom keene, you have been nonstop on twitter and linkedin. Linked in less so. Because of the news flow keeps you going. It depends. You are an active tweeter. There are others who just observe. From rbc. Ank with us where do you spend the most time . Dots. My daughter has gotten me addicted to dots. Im always on bloomberg personally. What is your waste of time app . Friends. With gary shapiro, thank you so much and david bank from rbc capital moments. Bloomberg surveillance continues. A lot of Economic Data this morning. Housing big caseshiller coming up. Numeral sale at 10 00 a. M. Along with Consumer Confidence as well. Loop on Bloomberg Television is next. In the bloomberg World Headquarters, im alix steel come in for betty liu. President obama wants to end the systematic collection of phone data. If approved, the and is a would get specificred to records from the phone company. Additional currency like bitcoin, hackers can sell the toegal software for up 300,000. Chain,largest drugstore walgreens, it missed estimates and also says it will close 76 of its stores. Is onornings top story president obama. Rug,up has told the protesting by refusing to allow the country to promote the g8. For more on the p