Transcripts For BLOOMBERG Bloomberg Surveillance 20150209

Is no division, there is no stent. I keep hearing people trying to create one. We are united and are working closely together and we all agree that this challenge will not end through military force. He made the comments at a security conference on sunday in munich. The Russian Central Bank is not likely to reverse januarys surprise Interest Rate cut. In an exclusive interview with ryan chilcote, the Russian Central Bank president said the bank will stick to its pledge unless the ruble swing threatens financial stability. She said Economic Policy will only go so far. We need structural reform because neither monetary nor budgetary policy can create stable Economic Growth. She also revealed that she checks oil prices several times per day. Greece is not blinking. The Prime Minister said he will not back off. He rejects the Bailout Program and went so far as to say that germany still owes money to greece from the second world war. He called the negotiations. On wednesday, finance ministers will discuss greeces financing. Hsbc made big money handling secret accounts of criminals according to a report. Hsbcs Private Banking unit held drug dealers and fugitive diamond merchants among its clients. The grammys. The buzz on twitter. A big night for sam smith. The 22yearold british singer collected for awards four awards. His ballad stay with me won record and song of the year. He was denied in the album of the year category. That autumn went to bec award went to becks morning phase. I have been listening to fall out boy. Let me make this clear, it is copyright theft. Follow boy directly steals from suzanne vega. How hard is it to write a song that doesnt sound like anything anyone has ever written . It is extremely hard to do. Every moment it is there. I still have not gotten over George Harrison being sued. This is a few years ago, olivia. The answer is that sam smith at least will cut a check to tom petty. A lot of people are making a big deal about the fact that people are getting their heart the fact that grammy winners are british singers who have gotten their heartbroken. It is about a one night stand. [laughter] i did not see a guitar all night. Ac dc. [laughter] 60 . Are you kidding me . I would move it further up. We will come back to the grammys in a bit. The tone of the market. David woo is joining us later. There is a real interesting correlation in this market this morning. On to the next screen. It gets ugly. The german twoyear bond. That is an incorrect quote. It is a negative right now. Record weakness. It is an ugly morning. Lets go to the bloomberg terminal. Lets do this quick. This is the german yield minus the u. S. Yield which falls right into International Monetary policy, german unification, crash of 1997, down we go. This is a weekend low german yield. You are focused year here. Why . Germany is deeply embarrassed that in 2002 they were considered the deep sick man of europe. Things have looked better ever since. One of the things they did was keep wages low. One of the things they are lloyd of annoyed about in the periphery of europe. It was a weekend of crushed expectations, at least for european leaders who had expectations. Both putin and the great Prime Minister dug in their heels. There will be an expectation recess this morning. Chancellor merkel travels to washington. Peter cook is our chief expectations correspondent. He joins us from washington. I know that history is being made. What is the history that is being made . This is a big moment for Angela Merkel and president obama. This was a previously scheduled visit for the chancellor that comes at this critical juncture in the crisis in ukraine. There is a division between the United States and germany right now and other european nations over exactly how to handle Vladimir Putin going forward. There is a push within the u. S. Government particularly members of congress, to arm the ukrainians. The decision is to be made by the president after this meeting and the conversation in minsk as to whether or not the United States will take that step, the president may be more reluctant than members of his administration. Define armed the ukrainians . What does that phrase mean . It can mean a whole host of things, tom. That is why the president has a little bit of flexibility here. A lot of people are talking about antitank weapons. Lethal defensive assistance. The kind of stuff that can kill ukrainian separatists and russians, as well. It would be a major escalation on the part of the United States. The reality is that the president could decide to give more modest arms at this point and maybe go let out over time escalated just as if the crisis were to escalate further as well. He has options. It is not all about one simple decision. The pageantry of a summit can say a lot about the nature of the relationship between the two countries. Is there a state dinner or not . Is the run at dressed to congress . What about the schedule . What does it say about the relationship right now . It says that this was a business meeting from the start and it is still a business meeting only the business has been escalated substantially. They will have a press conference. It will air whatever differences they will likely smooth over the differences and suggest there is still unity. This is a president who has Great Respect for Angela Merkel. She is running of the top of the list in terms of someone that the president looks to for advice and counsel on things happening in europe and around the world. This relationship will be put to the test today. We will see it play out on camera. We cannot forget this whole scandal over u. S. Intelligence officers tapping her phone. Are we likely to see the president make a decision today or will he made wait for the minsk conference . I cant imagine he would make a decision today. That is the information im getting from u. S. Officials. The president wants to hear what Angela Merkel has to say. He wants information before he makes his decision. You have the possibility of sanctions out there as well. It seems clear to me that the president will at least give Angela Merkel through the minsk meeting before making a decision on further arming the ukrainians. Stay tuned to Bloomberg Television and radio through the day as Angela Merkel meets with obama. Markets deteriorate. The turkish real the the turkish lira. Cash is being placed under various mattresses. David woos from bank of America Merrill lynch and he knows correlated events when he sees them. How correlated are we . How linked are things on these two european fronts . I think extremely. What is happening has become very clear. The euro and s p has taken on a negative correlation. It is becoming reasonably clear that investors are starting to realize that the u. S. Will not be able to decouple from the turmoil in europe. This is something a little lips gear. It is an on financial system. This is something a little obscure. It is and ought an odd financial system. How do you link the turkish lira back to greece and Angela Merkel . Currency wars lead to high fx volatility. Highyielding currencies are under forming because of the increase in fx volatility. It certainly does look a lot like currency wars. At what point does the u. S. Get sick of becoming the casualty . Unfortunately, the fed cannot be talking about hiking rates at the same time as engaging in currency wars. I think it is going to be a while yet area yet. They need to see that a strong dollar is having a negative effect on the economy. I think that is starting. Procter gamble thinks it is starting. I cannot wait for euro parity. It is going to be amazing euro vacations. Something really interesting was set over the weekend. Russias inflation is not the same as american inflation in the late 1970s. She is going to say whatever putin is going to ask her to say. Inflation is a 15 . It is probably going to go about 20 given the collapse of the ruble. The question is whether putin can sustain the high popularity. What is happening in ukraine is possibly putins attempt to elevate the situation before the economy gets any worse. I think he realizes that time is not on his side and he has to force a settlement over the ukrainian issue. Word is the ruble go . Does your shop have a dollar ruble mark . This market barely exists right now. Honestly it is difficult to make a reliable forecast right now. I think it is important that the market does not exist. David wu says Vladimir Putin has a shot clock on the ruble. A plan to save greece. Will it work . We will discuss that. Good morning, everyone. Bloomberg surveillance. Im tom keene. Lets get to our top headlines. We begin in australia. Tony abbott is holding 20 onto his job. His popularity is waning amidst unpopular spending cuts. Japan is looking to channel aid to foreign militaries. A new charter could be approved by tuesday that would allow the japanese government to spend on overseas developments. The Prime Ministers trying to bolster regional ties. Amidst a dispute with china. At least 30 people died in a stampede at a cairo soccer stadium. Police fired tear gas at fans. The interior Ministry Said officers were trying to contain 10,000 fans are tried to enter the game without tickets. Egypt is there. The two reporters jailed will still go to trial and that was buried in the headlines this weekend. This is percolating. As how i would put it. We are going to move north to greece. The Prime Minister has returned to athens. Yesterday, he gave his first major speech since becoming Prime Minister. He reaffirmed his governments rejection of the international Bailout Program. After five years of bailout barbarity, he said, our people cannot take anymore. He is back in athens. Hans nichols joins us from berlin. He says that this was a european problem, not a greek problem and then he hinted at a 70yearold debt that germany still owes greece. Was that for a domestic audience or his see prepping for the summit . There is a little bit of domestic politics. It was his first to dress address to the greek parliament. It is a nonstarter in germany. All it really does is rhetorically raise the temperature little bit and make any sort of workable, rational compromise more difficult. He is also backing off of the berlin mandated austerity. He is talking about raising minimum wages. Raising the income tax threshold. These are just as injurious, right . Again, they are nonstarters. That is why this meeting is so crucial on wednesday. We are going to see who blinks first. Greece has said that they are going to leave the veil program. They said that through the campaign, after the campaign and they are saying it this week. They are leaving the support package that will put them at the mercy of the markets. We will see whether or not there is any sort of effort to have any sort of bridge financing, which is what greece wants. It is not just the german view, it is the belgian view there seems to be consensus that they should not leave the Bailout Program. It looks like a game of who is going to blink first. You mentioned that there were headlines about how much it would cost germany if greece leaves. Who has more to lose from a socalled grexit . Greece. The view in germany has changed the past three or four years. There was a spiegel report that Angela Merkel could live with a greek exit. There are unemployment figures out. It is still a 5. 5 Unemployment Rate for germany. Greece is dealing with a quarter unemployment and if they leave the eurozone, who is telling how much more depression and pain and hardship they will have. Give me some reason for hope. Has any minister around europe said anything that might look like a compromise since the Prime Minister came to power . The hope is really on Angela Merkels longterm posture that there is no alternative. You need to keep greece in because there is not an alternative. The alternative, the argument to be optimistic is that the alternative is too pessimistic, it is too difficult to fathom what would happen. Somehow, they will find a way. It might be ugly, it might not be concise, it might not be elegant, but they will find a way to paper over differences. The danger is that there is an accidental exit, a crisis in the Banking System and that in that case they cannot do anything politically to solve those problems. Cons nichols, thank you so much. Merkel in washington this morning. We look at a great jobs report and a Great American economy. We look at the pulse of mergers and acquisitions. Our twitter question of the day. What should companies be doing with all that cash . Stay with us on this monday. It is bloomberg surveillance. Good morning. Good morning, everyone. Bloomberg surveillance. We need a morning mustread. We had 42 of them. Olivia sterns picked the short straw. My morning mustread comes from Larry Summers. He writes about the risk of raising rates too soon. He starts the article by saying, i cannot recall a moment when the gap between what the fed was going to do and what the markets expect the fed to do the f averaging about 3. 5 . The divergence is enormous. What is the consequences of the divergence . Presumably, the fed is going to have to wake up to the reality that the dollar cannot be ignored indefinitely. The market is very worried that the strong dollar is ultimately going to slow down the u. S. Growth rate, force the u. S. To become bullish and that is not surprising. Exports are only 13 of gdp. The fact that the corporate earnings come from outside the u. S. We got a wakeup call from the equity market last week about how companies are being brought down. David woo you are staying with us. We are going to be talking about hiphop and the grammys. Why jayz is a better businessman than bono. Some areas could see one to two feet of snow today. The National Weather service has issued winter storm warnings throughout tuesday. Boston was expected to receive two feet of snow and wind chills could move through massachusetts later this week. Hackers to go over chipotles twitter account and served up unsavory tweets. The offensive mesh and messages begin sunday. The Mexican Restaurant chain has apologized. The twitter account has about 630,000 followers. An icon of College Basketball has died or you need smith led the university of california carolina to two National Titles and he was the winningest coach in history when he retired in 1997. He guided Michael Jordan among other big names. Michael jordan, eloquent about dean smith meant to him. The u. S. May counsel strategic for the vigilantes of the market that does not work. David woo does global rates and currencies at bank of america. He considers the impatience of the markets this morning in what is a lose lose game. Why do you describe a currency war as a lose lose event . The reality we have to recognize is that with Interest Rates at zero and with many countries facing fiscal constraints the only tool left is weaker currency. A weaker currency is a zerosum game because one country wins because someone else loses. In october, your again was at 120. After the ecb, and when all the to 130. It did a roundtrip. He saw a lot of volatility. If everybody is doing the same thing, all you will end up with is higher volatility which will be bad news for businesses without achieving game or anyone is concerned. s lose lose if you assume that they are doing is about stimulate exports. It is possible that inflation is good for an economy. A lot of economies have no economy have no information whatsoever. Exporting deflation. If you look in the case of japan, to me there is does kill years there is two years driving down the yen so x port export margins expand. It is a currency skirmish in japan. It is competitive dwa. I would argue that a weaker yen did not say japan competitive devaluation. I would argue that a weaker yen did not save japan. The point here is that the only reason we are doing qe is because is what help is dragged on the euro finally. In your world, what this means is volatility. Exactly. When i showed in my latest report is that if you measure using a range base of volatility measures, fs volatility is at the highest in 20 years. One of the signals . What are the signals . Theyre not reading david wills a cfo told me he is spending 90 of his time managing exposure. They are in the foxholes. How are you going to make money with all this volatility . I love the chart that brendan showed earlier. That is 150 basis points alltime high. David is wound up. Lets look at a chart printed made up. This is the strength brendan made up. David woo insists on printing colored lines on monday. You want weakness and this is your tail risk. No one is paying attention to how china will act if we get a set of outcomes. This currency war has taken toll on the u. S. And china. Both have seen an appreciation of their currencies, especially china. We know chinese exporters operate on razor thin margins. This is not doing china any good. What if china seven ouch 10 s p 500 cfos tell me that their Worst Nightmare is to wake up can we do two charts in one show . This is yen, you on. This is strong chinese currency against tokyo. Is this the reason we saw week export numbers out of china . It is a reflection of it. Import is down, exports are down. China is also increasing running out of bloomberg to stimulate lumbered stability growth. Lets leave germany off the table. With china longterm if this risk does not happen appreciation is good for china . It is and isnt. What is happening is there is no sign export is being replaced as a prime driver for growth. That is the problem. I look at this and i look at the upset in bring it back to the geopolitics of the moment where the markets end up telling the politicians what to do. Theres a lot of history with that, isnt there . Market is right in thinking that things are at a critical juncture. If the market is concerned, risk premium is going to be high. It is going to be bad for global economy. Does this trigger another emerging markets crisis . In 1997, during in the middle of the agent currents asian currency crisis Larry Summers played with the chinese. Pled with the chinese. China should not be value. Will china listen to washington this time . You describe this as an unwinnable game theory problem. There is no reason for any of us to cooperate with anyone else. What is the solution . I suspect things have to get worse before you get to a point china is going is really the axis of this business. I think china is worried about the housing bubble so they do not want to cut Interest Rates too much. They have seen an appreciation against the euro. The heart of this is, we are not at war. The u. S. And china are removed from the currency war that we see in the turkish lira. So far. Why should americans Pay Attention to these wars if we are removed from it . Ultimately, if currency war leads to a stronger dollar, i think this will be a problem for the u. S. Right now, we are bullish about the u. S. Economy. The dollar has been going down for 10 years. And because of jobs. Europe is back on its feet because the strong dollar has given an adrenaline shot to u. S. Manufacturing which is become more competitive. I think we will have bloomberg surveillance in st. Tropez the summer. Lets have a hat trick of charts with david woo. David woo has never looked at this chart. The polish zloty against the hungarian forint. This is the boot up our budapest warsaw axis. Countries that had their currency denominated in swiss francs. It shows the tensions and the volatility that is out there bank. That is out there. Tom keene just broke two of his cardinal rules. A chart that is too complex. Im going to haul your cookies out of the fire. Heres what is going on. What we are is not this global devaluation but one that is going on specific axis from warsaw all the way down to cougar risk. Yet the Eastern European economies fighting with each other. With the whole russia situation, most of these countries for most of these countries, the biggest trading partners russia. The market is for a hedge. Is it going to be pulling, hungry poland, hungary . The polish zloty chart and david woo does not miss a beat. Absolutely fabulous. I prefer the us trillion strategy in risk. You wait the australia strategy and risk. You wait and make a surge. We will take a look at key numbers in todays single best chart. Good morning. Futures deteriorate. Dow futures, 103. What should companies be doing with their cash . Right now, the single best chart. Greeces troika. They asked the country to pay off its debt load. Thrift, Economic Growth. The single best chart shows what would have to be true to make that happen. It is very unlikely. These are some numbers that were run by the kiel institute. They are looking at the surplus as a percent of gdp that each of these countries would have to run given 2 Economic Growth and forth to in 4 Economic Growth. Theres 2 growth greece has to run a surplus of 8 of gdp. Nobody ever does that. That does not happen. Its make the assumption, 4 growth. We are not anywhere near that. Their primary surplus has to be down around 4 . Something similar to what norway used to do. Greece is insolvent. The distinction is the search set is ireland. Greece is not ireland or portugal. Ireland and spain and portugal had credit crisis because they had a housing boom. Greece has a greece problem. There are spending too much money before the crash. The finance minister has been saying greece does not have a liquidity problem. As that make sense to you . I do not think they will be up to pay back their debt anyway. Greece and russia have one thing in common. They are playing this game of chicken with germany. They are both thinking europeans are week. Theyre trying to force the germans to get in. Theyre both plain crazies. They think by playing crazy, it is the other way they will force merkel to say, if germany does not give in and the situation blows up, it will undo a lot of the positive germany has time on their side. Did you see the greenspan interview this weekend . Alan greenspan predicted that greece will lead the euro. I do not see how it helps them to be in the euro and i do not see that it helps the rest of the eurozone. It is a matter of time before everybody recognizes that parting is the best strategy. We all know mr. Greenspan has been a doubter of the eu but that is shocking to see the former u. S. Fed chair predict that greece is going to leave. Lets go to david woo. I want you to jump in. Oil. Opec says there will be less of it. Opec cuts. They reduce the u. S. Oil supply growth rate for this year. This goes to the microeconomics that the markets are buffeting up against. There is no evidence that u. S. Production is going down. If anything, oil and shale producers. They need to produce they need to pump even more to make their debt servicing. U. S. Inventories goes to the roof even. Opecs reducing the growth forecast of not opec supplies. They are saying is this is the way we see the world but they are not at their own numbers. This is why the market is obsessed with recount numbers. Those numbers have come down. It takes about six months before the declining counts to lead to a decline in production. Wheres ethan harris on u. S. Growth . We need a shortterm. 25 s p 500 spending is energyrelated. 1. 6 trillion junkbond market, 16 is energyrelated. Oil prices stable of 50, that stock is trading . 70 on the dollar. It will go to . 30 on the dollar. We think there is not question the drop in Oil Prices Europe is bullish in the u. S. The jury is still out. We are going to be talking about the grammys. Brendan likes sir mix a lot. Good news the man who will oversee the production of that track is coming up next to talk about why dr. Dre is a better businessman and mick jagger. Better businessman than mick jagger. Good morning. In our next hour what should companies be doing with their cash . Brendan grilli has our top headlines. China had a record trade surplus. Analysts surveyed expected a drop of 3. 2 . The government may step up dashers to stimulant the economy. Step up measures to stimulant the economy. The at Nigerias National security advisor wants to buy the military some time to be back boko harrumph boko haram. The president of brazil is facing low approval ratings. Voters hold her accountable for escalating corruption investigations at petrobras. She was rated good or very good by just 23 . The lowest level so she took office in 2011. Those of the worst marks for any brazilian leader since 1999. Olivia, i screwed up earlier. They used suzanne vega and. They have a great relationship, ms. Vega appearing on stage with fallen boy. Fall out boy. Could you sing something from fall out boy . Im immortal. Immortal were still talking music. One of the highlights from the Grammy Awards was the performance of john legend and common. The duo performed glory from the movie selma. Back in 1992 he helped make baby got back. Before we get do you feel it easily was robbed e. G. As ilya was robbed . Beyonce was robbed. Did you consider joining jumping up on stage . That was great. The kanye fake out. He has a kid now. Why is jayz a better businessman that bono . Jayz comes from a long line of entrepreneurs. When hiphop first started in the early 19 early 1980s, it were shut out of music business. People had to create their own institutions. Record companies did not want to sign. Then used in a multiple cap pop. Not want to book hiphop. What is the dna of hiphop . It is creating something out of nothing. That is what happened, not only with the culture isnt there a hypocrisy with what is happened . There are a lot of people that know dr. Dre as tim cooks is this partner. There never heard of nothing but a g thing. This is what hiphop has always done. It is always been this paradoxical thing. Hyper capitalist and also the voice of the underclass. A lot of the names we are talking about are from the early 1990s. Does that change as rep comes more accepted . You no longer have to hustle to get a deal. The real entrepreneurs, dr. Dre 50 cent jayz. The new generation has access did not have. Drake does not have to form his own record company. We are showing a couple of big hiphop moguls. These were their last hits. 2005, 2011, 2013. The last thing we heard about jayz was that he bought a streaming Music Service in sweden. Are these guys as competitive in business as they are on stage . Yes. Theres this great story when jayz sold rock aware for north of 2 million, diddy was in the back of the limo and said, i need a billion for mine. Are you most are you more east coast and west coast . I do not know. [laughter] i like southern hiphop. Dan, a pleasure to have you on. Turkish lira is on the move. A lot more going on. The ukrainian currency is all you need to know. Stay with us. Should the west arm ukraine . Today, there are nine dead, 26 wounded in eastern kiev. Greece wants world war ii war represent reparations to germany. Elan and merkel are speechless. It is at a time of money for nothing. Good morning everyone. This is bloomberg surveillance. It is monday, february 9. I am tom keene. Lets get to our top headlines. Angela merkel is meeting with president obama at the white house later this morning. Merkel is fresh off her trip to moscow where she met with Vladimir Putin to try to find a diplomatic solution to the crisis in ukraine. She and president obama will discuss whether to provide weapons to ukraines military. John kerry insists there is no rift. There is no division. I keep hearing people trying to create one. We are united and working closely together. We all agree that this challenge will not end through military force. Kerry made his co comments at a conference in munich. Governor l virus says l elvira. She says the bank will stick to its pledge to avoid currency intervention unless the ruble swing frightens financial threatens financial stability. We need reforms because neither monetary nor budget policy can create stable Economic Growth. She also revealed that she checks oil prices several times a day. Greece is not blinking. Alexis separates says he will not back off. Alexis sip russ says he will not back off. He made his remarks at an address to parliament on sunday. He called for negotiations that will not condemn greeces economy to an unending recession. Finance ministers get an emergency meeting on wednesday. It will discuss greeces financing needs. Report by the International Consortium of investigators are less. Hsbcs private bank unit counted drug cartels and fugitive diamond merchants among its clients. The report contains a snapshot of the unit as of 2007 when the controlled 100 billion in assets. A soiree occurred. Samuel smith did well. The singer collected four awards. His valid stay with me one record of the year. Those are your top headlines this morning. Let me do a data check. Futures deteriorate in the euro. Weaker as there is a lot of gyration of russia and greece. A weekend of crushed expectations for european leaders. They are gathering frequentflier miles on two fronts, russia and greece. There will be an expectation reset this morning in washington as merkel travels to see obama. Peter cooks chief citations corresponded. My head is spinning. This was a regularly scheduled meeting. I would guess the script has been ripped up. The big focus will be on the ukraine crisis. It were hoping to talk about the g7 meeting coming up later this year. That is put to the back burner as they talk about trying to get some sort of ceasefire in place in ukraine. She is going to update the president on her conversations with Vladimir Putin and the president is going to talk to her about the pressure he is under for members of congress to get more weapons to ukraine. That is the split between the u. S. And germany. We will see how it plays out. This is going to be a pivotal week for ukraine and the relationship between germany and the u. S. What does the pentagon want . Have we done ukrainian war exercises . They have mapped out a host of things. It is clear that they are there are people with a National Security structure who would like to see the United States take the next step and give weapons to the ukrainians. The ukrainians are asking for them and they respect that. They think it might make a difference. You do not think it will necessarily win the battle against Vladimir Putin and the separatists but it will increase the cost on. Putin. I were struck by that interview in the wall street journal with general hodges saying he believed that russia is preparing for war in five to six years. What is the pressure the president is getting now from the Republicanled Congress . It is not just the congress. It is democrats as well. An interesting scene in munich over the weekend with the Vice President. Members of the ministry should john kerry, talking with european counterparts and members of the Armed Services in formulation committees, all talking about the need to provide more arms to the ukrainians. John mccain telling uncle a merkel that she is wrong on ukraine and that the United States telling uncle of merkel Angela Merkel that she is wrong on ukraine and that the United States should take action. There was plenty of fallout between germany and the u. S. This summer when it was revealed that u. S. Intelligence agents were tapping the chancellor phone. Has that been resolved . It has not been resolved. It has also moved to the back burner, in part because of what is happening in ukraine and also because of what happened in paris. The breakdown in terms of intelligence. A lot of European Countries realize the importance of american intelligence capability. It is still an issue in it needs to be resolved, but it is not on the front burner the way it was. Set up our calendar for this morning. What should we be looking for from the president and the chancellor . They are going to meet together. There will be you see the president and chancellor in a room together. You may see the Vice President , secretary of state in the room as well. The meeting is going to be let on and they will get down to business. You will see whether or not there is a rift between this president the chancellor or whether or not they are able to paper that over and they are on the same page. Thank you so much peter. We would hear from mr. Cook later this morning. Our attention on ukraine and greece. A terrific job report on friday. America seems well to does to diverge from the challenges of the rest of the world. Mergers and acquisitions activity may be robust. Robert profusek. How has the year started . How is the tone . The tone is positive. There were not announcements this morning. I was surprised. You failed. Maybe. It is only 7 08. I measure it by how many board calls i have over the weekend. Theres not been a weekend in over two months where we have not had to have a meeting over the weekend. Use of cash and what people should do. How is your world affected by the pressure to raise dividends to buy back shares . How does that fold in . It is part of the equation. Companies have be leveraged, sitting on tons of cash. If they need to borrow it the headline is that it is not just apple and the four names we talked about. If you need to borrow what is blue mercury . It is a fabulous independent cosmetic store. For those of you on radio, there is only one person at the desk who knows that. Does it feel like 2007 again . 2007 was about financial reengineering. That is cheaper than equity. Debt is cheaper than equity. Companies are so deep leveraged. So deep leveraged. The premiums are still very handsome. They come down with equity prices go up. The allocation of capital is the fundamental issue. Translate that for . By vector stock, pushup dividends. If all you can do is buy back your stock, what does that say about your underlying business . There is a lot of that and a lot of redeployment. Do you look for record corporate debt issuance this year . Im not sure it will beat last year. That will depend on what happens with the rate structure. Will talk the talk about the process of and and and. M a. Kathy engelbert will join us shortly. This is bloomberg surveillance go. Futures, 12. The screen looks pretty stable. It is the obscure stuff like the ukrainian currency the greek spread to germany that is challenged this morning. My morning mustread is joseph and i joseph nine this is a smart essay from professor nye of harvard. Not all firepower. Cameras in every phone and phone Editing Software on every computer, the information contest has become a critical aspect of modern warfare. We see this more so with the caliphate than anywhere else. We see this in russia as well. Uggla merkels speech over the weekend she spent a lot of time talking about how you fight hybrid warfare. It is not really a war but it is not really not a war. She talked about all these Rapid Reaction force is there putting in the east. I was surprised more people were spending time trying to decide if the u. S. Should send lethal weapons of the ukraine. I know you like to talk about textbooks. I spoke to him in davos. He has a new book. I look at the redefinitions wraparound just this weekend. That one photo of mr. Putin, mr. Aland and ms. Merkel. Even see the silence. There was no conversation. The problem is you have this old power three heads of state meeting. What you have going on in the Eastern Ukraine is not the west failing id of the world. Who knows this is the kind of aggression it is difficult to counter because he can still maintain plausible deniability. Why should he stop his method . The peace plan that chancellor merkel is going to president obama with looks like exactly what there are sanctioned meetings today. We keep going back to the munich security conference. Poroshenko held up russian passports taken up what he says were russian soldiers operating in ukraine. This is russia against ukraine. We will have much more through the morning. He bomb host president obama hosts chancellor merkel. Stay with us. Our question of the day, what should companies be doing with their cash . It is snarky answers morning. Our audience. We say good morning. A Olivia Sterns and Brendan Greeley with us this morning. Top headlines from around the world. We started in australia. Tony abbott is holding onto his job for now. You 40 of his colleagues voted in favor of a measure that would have yanked him from office. Avids popularity is waiting thanks to unpopular spending cuts. Japan is looking to chanter channel aid to foreign militaries. It would allow the government to spend money on overseas development. The move comes as shinzo abe trust to bolster regional ties. The new charter will replace a 2003 document that says military aid should be avoided. In egypt, at least 30 people are dead after a stampede at eight soccer stadium. At a soccer stadium. Officers were trying to contain the violence. About 10,000 people who tried to enter the stadium without tickets. It was the worst egyptian soccer violence since riot at a game two years ago that killed almost 70 people. Brendan, we have an announcement. Kathy engelbert just took a whack at the Glass Ceiling and splintered it. Beloit has named her as their new ceo. She begins her new role next month. She is the only female ceo of a u. S. A major u. S. Audit and consulting firm. Congratulations. So excited to be here. Happy to be stepping into the role at this time. Famously, smart young people take a role at one of the big four, stick around and get burnt out and leave. What do need to change to keep them around . With and working hard to retain our best and price it and brightest. We are experiencing hiring a lot of experience tires. Would you hire tom keene . We would have to take a look at his resume and a compliments. I could see you back and Lehigh University going debit. I would be your worst employee. There are a lot of kids who are bored with your world. What are you doing to stimulate people to learn the grind of audit and take it from there . One of the things were doing is innovating were using artificial intelligent. Our young people are excited about using technology in this they still have to fill out the amt form. They are doing their forms. The whole grind of accounting how do you stimulate if the kids do not want to do the grind like you did . It is all about the value that our clients see and the trust they place in us. Helping them access the capital markets. When young people see that value , they actually get more passionate. A lot of the grind has been eliminated by technology. I can remember having to underline documents myself. Now, computers do everything. Now all of your computer all of your employees have smart and you expect to reach them at 3 00 in the morning. I think that is important. The grind never leaves you. Technology has never gotten rid of the grind, it is just given us more to deal with. Were looking around the the predictability. What does that mean . Can they have a weekend off . Do they have to be at the store checking their phone . It is important how do you do that . You take a friday off once in a while to read. Google does this as well. Do you give your professionals a day off to think . Not during this time of year. [laughter] we are looking to give more predictability so they know when they are going to leave instead of not knowing. You should try free sushi and a nap room. How will the Lloyd Deloitte look different under your rule . Were growing. The Digital Economy has impacted us in a big way. Were going to look different and get into more products in services that are driving the Digital Economy. Hallelujah to predict ability. You also talk about moving younger workers around the world as you try to take care of different companies. What are you doing for married couples to make sure that that works out for both of them . Everybody at a different point in your career is looking for a different level of flux ability. Flux ability. Make sure if they are married that we are offering them the right worklife fit. What have you learned from h r block . When you see h r block and they have a different clientele what are the best practices you can take away . It is driving the capabilities in all of our businesses. Making sure our people are growing. Leadership development. That they really see a future and passion for what they are doing. Thank you so much. Still to come, Angela Merkel will meet with president obama later on this morning at the white house. The two will be talking about the violence in the ukraine. The big question, should the u. S. Provide military aid to ukraine . Yields lower in germany this morning. We will be back. Olivia we are awaiting word from the greek Prime Minister who will be speaking with the austrian chancellor. Lets get you to our top headlines. More snow. In its falling on parts of new york. Some areas could see one to two feet of snow. Boston was expected to receive up to two feet. Potentially record cold temperatures and wind chill could move through massachusetts later. Hackers took over chipotles twitter account. They also replaced the profile picture of a pepper with a swastika. The chain has apologized. The account has about 630,000 users. Dean smith led the university of North Carolina to 11 final fours and two National Titles. He guided some of the games biggest names including Michael Jordan. He was 83 years old. Tom robert profuse sack robrtert, it is different. Deals will be done over apple pay, i pursue i presume. Lets talk about the process of what you do. How is it different from 10 years ago . There is a new reality Risk Management always part of the equation. Technology has made the document a commodity. We do not have arguments about the document. The legal, regulatory, you name it risk that is involved, that is what directors want to hear about. They do not want to know what the indemnity clause says. Tom what is the difference in talking to the directors . Robert they are definitely two different worlds but there is a confluence. One thing that can blow up a ceo or head of Business Development is doing what looks good on paper and does not work out. 10 or 15 years ago, it was about empire building, synergies. Now, it is about, does this make sense . Our shareholders are talking to us about more than earnings growth. They want to know about what you are doing with their money. Tom money is dirt cheap right now. Why arent we seeing leveraged buyouts . We are not seeing as many of those as i would expect. Robert companies do have so much leverage. The overall leverage in the s p 500 is back to where it was in the 1950s. Some deals use at any, which is a little inconsistent. Sometimes, it is because the seller says i need some of it in equity for tax reasons. It is a complex equation. The lawyers job are about making an informed decision about the risk in terms of the strategy the legal risk, the Regulatory Risk including all of the deals being global today. Tom you go to Warren Buffett do you predict more of those transactions . Robert hardly any of them have a multijurisdictional direction anymore. Business is a globalizing. It is part of the overall equation. It is different. We were talking about the drudgery of some of this stuff. That drudgery is taken care of. It is a global perspective. Tom robert profusek. Olivia u. S. Futures pointing to a lower open. Greece reiterates its ejection of the current terms of its bailout. The 10 year yield is down. The euro is slightly weaker against the u. S. Dollar. The dollar looks like the only game in town. Nymex crude up. Trading at 42 a barrel. Tom good morning, everyone. Olivia sterns decided to show up. Brendan greeley with us as well. Olivia greece is calling debts due from world war two. The country has a moral obligation to claim repatriations from germany for damages wrought by nazis during the war. Lets get out to hans nichols. Over the weekend both sides digging in their heels. Hans in general, talking about the tone from the greek government. This is the junior coalition. We do not know what he is saying. There are some things he could say. This will come down to wednesday night. They need to debate the broader question of whether or not greece will stay in the eurozone. They want to leave the Bailout Program, get the loan and they said no and they said no. Is there any daylight between the European Countries and their negotiations . Italians are telling him that they are with him, but we cannot see it publicly. There needs to be more spending. There may be some longterm daylight between the german belgian, and dutch position. Is greece going to stay out in the imf . Is there a realization that they will lose more money is greece leaves the euro than if they bailout again . That has always been a driving factor. You only have to dither about the price. Angela merkel trying to convince the president not to arm ukraine. Is it enforceable and is it going to work . It does not look like we are there. That may set a pretext for additional sanctions. Thank you. Hans nichols, our international correspondent. Still a come january kicked off with a bank. With a rally continue through 2015. We will continue with our guest host of the hour, robert profusek. We want to hear your thoughts. What should companies be doing with their cash . Pay your taxes was a popular one. With rates this low, tweet us. We will be right back. Olivia good morning. This is bloomberg surveillance. Snow is coming up north. In new york, particularly in boston. The latest political pull out of New Hampshire shows that what we all will know. Henry Rodham Clinton leads the race for the president ial nominee. 58 of voters say she is the strongest leader for the vote cast for the job. Betty, why is he fed up with the party . Betty he says he is barely a democrat. This is the Real Estate Developer who has developed the hotels you may know. What he says is on a daily basis, he is inundated with team with emails from the Democratic Party lambasting big business. He is sick and tired of it. He is a strong supporter of Hillary Clinton and he believes Hillary Clinton will be able to rise up 12 be able to rise above the rhetoric. The gallup poll put out the results of what i thought was 67 of americans are dissatisfied. Brendan that is what they have right now. That is the back tone of what the Democratic Party is about. If they rise up drove it if they rise above it, what is the Democratic Party . Betty i am not sure if americans hate the wealthy just to hate the wealthy. What americans may feel as they are ok with wealthy people. They want a piece of the pipe. They want to feel like they get the chance to move higher. Brendon two politics matter in your world . Robert sure. They have to do with regulatory enforcement. Things that are supposed to be legal are decided on political grounds. I am not sure people regard Hillary Clinton in the same fashion as some of the inequality broadcasters. Olivia be sure to watch betty liu. Dan knight it will be joining betty liu up. This is bloomberg surveillance. When we come back, we want to answer the twitter question of the day. What should Twitter Companies do with their cash . Please tweet us. We will be back in a moment. Tom good morning. Terrific news flow out of europe. Let us get to our top headlines from around the world. Here is Olivia Sterns. Olivia imports plunged on falling Commodity Prices declining nearly 20 from a year ago. They are expecting a drop of 3. 2 . There are signs the government may step up measures to stimulate the economy. Nigeria is postponing elections. They were scheduled to take place later this month. The security adviser wants to buy time to beat back a boko haram. Elections are slated for march 28. The president of roseville of brazil facing record approval rates. She was rated good or very good by 23 of respondents, the lowest since she took office. Those are some of your latest headlines from around the world. Brendon the corruption headline the Corruption Scandal was just starting to make headlines. It is consuming them. This is not an ordinary corruption case. Olivia people have been banging pots and drums,. Tom that is well said. Olivia mn day on fire. 2014 the biggest for deals. 217 billion dollars in mergers and acquisitions. It is the test start to the year. Robert profusek is the man making it rain. This is your wheelhouse. What is fueling m a right now . Robert we understated the impact of the financial crisis. Now, poodles of cash on balance sheets. If you need some, it is available. Olivia it is capital, not construction. Robert it is not empire building anymore. It is strategic deployment. Olivia office depot and staples are not trying to build an empire . Brendon that is a synergy story. Dont think people wont come back into the space. It always happens. Olivia i like toms phrase, mating dinosaurs. Brendon why not take this money and invest it in research and development . Robert it is a balance. When you have activists, plenty of people say give it to me, especially in a low yield environment. The question is, what to do with it . Research and development is there is always an alternative. Olivia is the reason record low rates, is this a danger for keeping rates low this long . Robert it may be. I do not think longterm rates are going up quickly. Tom u. N. I have seen the dinosaurs dying and then there is a radioshack. Were you involved in that transaction . Robert yes, i was. Tom why did it take so long . All of us have known it is problematic. Was it a hindrance to all involved that it took forever to unwind radioshack . Robert they tried to make the greatest value they can for their constituents which at some point, included the creditors. It is a difficult process. Tom what is the quickest you have ever done a merger . Two phone calls . Robert it depends. Brendon you did not have a lot of cash on hand. Robert no cash on hand. It was all of our capital. It depends on the price. If someone says here is a preemptive price, they come barely over what is ok, it can take a long time. Brendon should they just get out of it . Robert that is a huge part of the story. You see companies saying getting rid of things the same day they buy things. I am going to give a good return on the capital, i am going to give it to someone who can. Four deals meaningful deals. Two things that fit better. Two things that fit better for someone else. That is a huge you typically below the first headline stories because they are smaller. Olivia miss goes to our twitter question of the day. What should companies do with the cash . Our first answer is it is the year of spacex. Investment, optimism. Tom that is the most optimistic tweet we have gotten. Olivia the next answer, give it to the shareholders, duh. The third answer, they should pay their taxes. Tom they need to change the law, which is bipartisan right now. Brendon that money goes to democrats and republicans. The obligation is to minimize what it pays in taxes. At some point, this becomes a moral issue. You cannot change legislation until you change behavior. Tom do you have optimism that the adults will change the laws . Robert the repatriation is a nobrainer. It works against capital efficiency and everything. It was put in place in a different world. Put a 10 meter on it. People would do it. Olivia why should the u. S. Be the only company that taxes global revenue . Robert we have to face up to the fact that it is to me, ridiculous that apple borrows money to pay their dividends. Given what tom just said, you cannot blame them for it. Olivia the pressure they are seeing from activists. This brings us to the agenda. Tom i know brendan is going to pick this up. It came up overnight. There were three individuals jailed in egypt. This, as putin goes to egypt. One is a canadian egyptian and another is an egyptian. Brendan i am looking at on july i am looking at Angela Merkel and president Obama Meeting in the white house. They are negotiating from two different positions. Olivia i am looking at the same thing. We can expect a press conference. Merkel is trying to convince obama not to send weapons to ukraine. Tom stay with us. Good morning. It is monday, february 9. We are alive from bloomberg headquarters there it i am betty liu. We are 90 minutes away from the opening bell in the first trading day of the week. U. S. Futures are reacting negatively to the news out of race. Adam parker will be weighing in on that and says investors asked quotations no matter what for 2015 are too low. Adam will help baucas or the start of trade and did you watch the grammys last night and stay up late enough . We will see what a grammy is worth two singers these days. With us will be the former ceo of additional music store to talk about the grammys. First, heres a look at the top story this morning. The crisis of the ukraine entering a crucial week. Leaders meet wednesday to stop the fighting. Angela merkel is in washington to meet with the president today. More on that in a moment. Greece is at a collision course with reaffirmed