took pictures of it. the u.s. is not commenting. it is the latest close encounter between iran and the u.s. in the gulf. earlierlors were held this month after iran said their boat drifted into its waters. -- thema administration white house will ask private companies to submit salary data to the federal government. the plan being proposed would affect all companies with 100 workers or more. for every dollar men earn in the u.s., women earn $.79. that has risen to sense since president obama signed the fair pay act. and the show must go on, even without donald trump. leading candidates squared off last night in the seventh debate. trump sat out because of a spat with fox. marco rubio: it is not about donald trump. this campaign is about the greatest country in the world and a president who has systematically destroyed many of the things that made america special. trump attended a fundraiser for veterans elsewhere in des moines during the debate. monday signals the start of presidential voting. i am vonnie quinn. markets now with julie hyman. story has toggest be what happened to japan overnight. we are looking at honeywell because the stock -- i thought it was going to be higher premarket after the company came out with earnings that matched pre-estimates. aerospace sales rose. we are waiting for sales in american airlines in a few minutes. the big story of the morning is the bank of japan unexpectedly coming out with a negative interest rate, unprecedented in japan, perhaps taking a cue from what has happened in europe. we are seeing the dollar rise against the yen. that is the chart we are looking at. in the japanese market, you have to pay attention to what is going on with government bonds. the 10-year yield falling to the lowest ever, getting as low as 0.09% at one point during the session during the wake of this policy decision. if you look at the ripple effect to the equity markets around the globe, let's start with asia -- you see the nikkei up 3%, with quite a volatile session, climbing then plunging then climbing once again in the wake of that policy decision. alsoopics -- the top picks rising. we saw gains as well. it looks like this ripple effect. for european stocks, are we seeing a ripple effect there? it is more muted, to be sure. you can see the other european averages trading higher, certainly not getting the same magnitude as we saw in asia. as for u.s. futures, we are seeing something of a lift here in the united states. the magnitude not quite the same as it was in asia, but we also have earnings to cue off of. amazon disappointing yesterday, microsoft up, so a mixed picture on the earnings front and we will get more numbers this morning. we are waiting for american airlines, which is still not out. finally, a quick mention for oil. oil has had a volatile session. yesterday we saw oil rally for the third straight day on the hope that russia and opec producers would be meeting next month to hammer out some sort of production cut plan. however, russian energy ministers sort of walked back on commentary yesterday, that a meeting was in the works, saying there is no meeting in the works yet. we want all ministers to agree on a couple for something happen s. david: let's turn back to the policy changes coming out of japan. joining us is bloomberg's francine lacqua, who just spoke with japan's central-bank governor kuroda. you set down for an extensive interview with him a week ago. did you see this coming back of the rest of the world did not. julie: i did not -- no, i did not i spent the day kicking myself that i did not. thursday morning, governor kuroda goes in front of his parliament and says they are not debating relative rates. he has just said to the parliament that they are not looking at negative rates. unlikely, almost impossible that they will go around to that. -- whatyle zimmer's economists and investors are saying now is that when he spoke to parliament, it was before mario draghi spoke about more qe. given the signals over the last couple of days, possibly coming from political pressure, he decides with his board -- although it is a close vote -- that negative rates are the right way to go. he would doid whatever it takes, but we were talking about qe, not negative rates. : on the kuroda necessary,rend, if we can expand or further strengthen qe in many ways. there are many ways to further strengthen, expand qe. francine: it was very clear from the interview last friday that he was ready to do what ever it was necessary to reach the target of inflation. we did not know at the time it was negative rates, but at that time he thought it was the best option. i guess they are experimenting. stephanie: does that mean we will see more aggressive action? francine: that is exactly what he implied. governor kuroda saying he will possibly cut rates further into negative territory if he judges that necessary. it is important also to look at because it is close. when you look at what we heard from the people who were against this, some members saying it may imply that the boj, but cutting rates into negative territory may imply that the boj has a limit on asset purchases, which would be negative for the market. it was balanced, but the fact that it is such a small cut and that the system is quite complicated would suggest that they are just experimenting, testing the market at this point. francine points to the ecb and mario draghi as a participating -- as a precipitating factor. there was negative information coming out of the poor economy in japan in december. is that a fact here? >> is certainly is a fact. there are some signs of slowing sentiment in japan, and they are worried about putting a floor under expectations. i want to add to what we have just heard. i think this thing is mostly theater in terms of direct effect on the economy. negative byve gone the merest sliver, but it is very effective fear in the sense that people did not see it coming. becomingkuroda is adept at giving the market a jolt in the right direction in terms of inflation expectations, whenever he can. the problem is that the actual instruments directly operating on the economy are spent, and i am not sure i agree with what he said when he said there are many other places for qe to go. it is hard to see that there are many other places for qe to go. that is mario draghi's problem in europe, too. stephanie: you were in japan a long time ago -- you were in japan it while ago. what do you think? >> when you think about japan, yenta, car sales, a lower is as good a stimulus as any for the japanese industry selling more stuff, and what led the industry parade, if you like, in 2015, consumer discretionary goods. this is a stimulus. it is working, and it is understandable why the stock market is enjoying, for the moment at least, this policy shift. david: we have seen reaction in as clivets, but pointed out, if you look at the practical effects, first of all it is only .1 of 1% down. and it was only for new reserves. it seems like more of a symbol than anything else. is it really going to affect the economy? francine: you are exactly right. in europe are saying it is a symbol but it is an important signal. is really nowa looking at all possibilities. we will have to wait to see whether this has some real impact on the real economy, but it is a psychology. as matt was saying, this is about yen strength. they need to get yen lower, and one of the most important plays that we saw affects what strategists are doing. if you look at central banks around the world, we know where the fed is headed. the real the virgins may be but -- the real divergence may be between the central bank and -- maybe it is just governor kuroda trying to send a message out to fx strategists. i wanted to put a fine point on the idea that this was unexpected by market disciplines. -- the redistoric line is the function and the green line is the current implied probability. this is the zero line between negative and positive rates. so obviously interest rates swaps and japan, we are pricing in a slightly positive interest rate, but a positive interest rate nonetheless, so now it has had to adjust your medically given this movement by the bank of japan. stephanie: we are talking about the psychology of it all. you talk about the theater. why was it so close? clive: paradoxically, the fact that the vote was close strengthens that it was theater. suspects almost that it was deliberate, but i do not believe that. but the fact that it was so close and unexpected increases the psychological power of the move. good for corona -- good for kuroda. theater manipulation, the market psychology, is about all the central banks -- certainly the boj and the ecb -- it is really all they had left. it will be interesting to see how quickly diminishing returns said in on this strategy. what mario draghi said last time let the markets to expect action from him next time, but what has he got? what can he do? mere words, mere symbols are not what will be effective next time. he has to produce something and it is hard to see what that can be. stephanie: clive, thank you. our own clive crook, joining us from d.c. --ncine lacqua in washington washington, d.c.? in london. it is hard. it is friday. remains.ler we had big earnings this week. amazon down big. 10% premarket. i do not even call it an online retailer. it is just so much bigger than that. they missed big on earnings. we will dive into the numbers and asked the question, is this a moment where investors are going to suddenly say, jeff bezos, show me the money? we will be back with more. i cannot speak today. you are watching "bloomberg ." ♪ vonnie: welcome back to "bloomberg ." this morning the russian central bank may tighten policy if inflation risks intensify. the current rate will stay at 11%. slumpedays oil has below it slows year ago. toyota is buying out it's , making a key unit for small cars sold in southeast asia and japan a fully owned subsidy rate. automakers say it is driving costs from tougher environmental standards, and the challenge of slower global sales growth. that is the latest "bloomberg business flash." bighanie: amazon is down after missed expectations for the holiday quarter. paul sweeney is in the house, and shelly banjo joins us. of course, gadfly, our new fast commentary section. paul, when we look at retailers and the poor numbers they had -- first of all, are those new glasses? paul: they are. stephanie: they look great. they blame it on amazon. they say we would have done better but amazon is killing us. if amazon is hurting, what does this mean for everybody else? top line was good for amazon, so they are killing it on the top line and they continue to take share. we saw that on ebay. story remainsline very strong. but what we have again is a little more of jeff bezos and is basis, spent now, pay later. we had some good profit growth coming out of amazon. investors said this is a profitable business. stock traded up. investors extrapolated that lower level of spending out to future periods, and jeff bezos said, no, we are dialing back up the spending. this: shelley, how much of is increased costs? how much of it was the increased cost at the end of december, making all of those same-day deliveries and overnight deliveries. lly: they said we are spending more money to get things to people faster. they moved prime into 25 different markets, so they are focused on that. but to paul's point, they are doing well. it is just misunderstood by the street because amazon is -- days, back in the olden how many topline dollars flow to the bottom line? shelly: they do not care about the rules. they can make profit if they want, and they did show a couple of quarters of profit, but they are saying we do not really want to and we will use it for other things. stephanie: why is that misunderstood? if i was terry lundgren, running macy's or bloomingdale's, i would say, are you kidding me? i have activists knocking on my doors, where are your margins? but jeff bezos says the investors do not understand. i spoke to jeff bezos yesterday and he said there could have been more comfort on earnings calls. that is not what investors are there four. david: barry diller said this would be the most successful company in history and jeff bezos would go to number one as far as the richest man in the world. what do you think? matt: i do not think that is that far off the mark because his company is disrupting. it is creating this endless i'll of limitless choices, and that is such a powerful commercial strategy, which is what you are talking about right here. he is not letting up. he is pursuing this. stephanie: when you describe it that way, if i close my eyes, that is what walmart was it walmart first came onto the scene, it was, we have never seen this before and it is incredible. if you invested in walmart from the beginning, happy days. you are shopping at neiman marcus. matt: i baked to differ. in that comparison -- i beg to differ. in a comparison, walmart is bricks and mortar at amazon's e-commerce. there is a huge difference. stephanie: when walmart began, your only choice was bricks and mortar, but it was an option that no one had before. what neither have are those big, fat, juicy margins. walmart, amazon keeps expanding into everything you can imagine and beyond. walmart has constantly bumped up against its own limitations. david: what does bloomberg tell us? shelly: i do not know what juicy is, but they have some juice in here. we are looking around 32%. macy's, i picked another bloomberg -- another retailer. around theargins are same. is it apples to apples? probably not, but amazon's margins are still higher because it does not have the real estate, in part, that some of the bricks and mortar retailers do. david: there you have it. matt, you are staying with us. paul sweeney and shelly banjo, thank you for being here. next we look at the top trending bloomberg news stories this morning. ♪ david: welcome back to "bloomberg ." now it is time for bloomberg trends, where we look at the most-red bloomberg stories. i checked and three of them were japan. stephanie: i am not going to say number three because i am giving them know more media attention. trump. david: matt winkler? matt: i could not resist the japan story. historically, the bank of japan and the government have not always been in sync with each other. what you are seeing right now is actually the bank of japan and abenomics literally coming together. i think that is what the market is most interested in, because markets do not like uncertainty. they like certainty. what you are getting is something more certain about fiscal monetary policy. stephanie: shouldn't that be a positive? matt: yes, i think it is. the stock market rallied, the end is lower. that is what the fiscal policy is trying to do. so is the monetary policy. david: i want to take us back to oil. glencore has four supertankers part in malaysia. 8 million barrels of oil. to ownp to seven dollars a barrel of oil tomorrow as opposed to today. so there are 8 million barrels parked on the ocean. stephanie: this is when glencore is asking themselves, why didn't we just trade? now we are storing oil off singapore. david: if you look this morning, the value has gone up. stephanie: there you go. you know who is asking them selves, why am i doing this for a living? it is bankers. busy of a year this was for banking, for m&a? we are talking about the men and women, 43 weeks per year. this is a new normal. davide serra said, "the goose is cooked." matt mccoy, do not go anywhere. we have got a lot more to cover. when we come back, we are talking gold. the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. stephanie: that is a big screen of green. you are watching bloomberg "." s&p futures down in the green. oil all over the place. earnings finally getting back to fundamentals. news out of japan, europe is creeping along, the fed is giving us not much information. it is nice to end on the green if you are long. winklerg editor matt will be here at 8:00 a.m. we will speak with the xerox ceo. xerox announcing their split into two public companies. carl icahn is getting board seats. we will find out about these deals. the interactions with carl at 8:00 a.m. first work news with vonnie quinn. peace talkssyrian will resume in geneva switzerland. the syrian president just arrived. some fear the meetings will go nowhere, because the main opposition groups will not attend. olympics fear the could spread the zika virus worldwide. the games and august are expected to attract half a million people. the world health organization is holding the murder -- is holding an emergency meeting. one of iraq's most influential groups, -- one of rock's most influential group's members is dead. he was a member of jefferson airplane. he was 74 years old. bloomberg news 24 hours a day. i am vonnie quinn. markets now. >> i will bring you the earnings from american airlines. the revenue overall, $19.6 billion. earnings per-share coming in ,head of analyst' estimates three cents ahead of what anticipated. revenue more in line with estimates on an operating basis, it is comparable to estimates. billion is what analysts had been looking for. taking the liberty of mainline aircraft in calendar 2016. i will keep going through the report. what will be interesting on a conference call, will it talk about travel worries linked to the zika virus in south america? they may get questions from analysts on that front. that has been a concern of some airline investors. stephanie: talking about expedia and that they have seen less travelers going to paris following the terrorist events. we'll see how it affects travel. today's morning must-read. it is not tom keene, but matt. is a bow tie. he has been looking at pure gold . isa casual inspection it easy to conclude the price of gold has nowhere to go but up after four-year slide. gold has fallen faster and further before. i already introduced you as the company optimist. you are saying the four-year slide could go further? matt: there are two reasons why. sign ofhat there is no resurgence inflation. that was originally one of the catalysts of gold's rise going back to the 1980's. the second thing is there is a resurgence of financial assets. i natural assets are as -- financialoday assets are significant today as they have ever been. they have a third catalyst helping, the strength of the u.s. economy, which is stronger and more robust than it has been since the financial crisis here those three things are what is underpinning what will probably be a long-term slide. stephanie: i know you like to talk about how strong the u.s. economy is. are those feelings not tempered since you have seen janet yellen pullback? good reason to still talk about gradual tightening. the housing market is back to where it was before the financial crisis. that is saying a lot. when houses have appreciated to the extent that they have, you are seeing homeowners more confident. that is why the fed, on the verge of full employment in the united states, has to think about gradual tightening. this is one of the charts. speaking of fed ishares, the average volatility under the past several. greenspan, 100 two. bernanke, 95. , 71.n if you want gold to hedge again, as measured by something like volatility, matt's point is that there is less need to do so because volatility is at such a low level. in talking to options traders, it has been notable that the volatility has remained subdued given the fact that there has been so much concerned about global growth. it has been unusual. david: one phenomenon has been china buying gold. china has been a big old buyer. matt: the gold buyers will not go away. if you want the market to get excited, the gold market to get excited, in need something more than the traditional gold buyers to be there. that is not happening. david: this may be over explicit, but is it inflation or geopolitical risk? matt: here is one very powerful deterrent for gold strength. you have coordinated monetary authorities that you have never seen before. we have been talking this morning. if you go back a week or six months ago, that was also true. it will be true six months from now. the central banks are so much stronger and more visible than they were in 1980 when gold made its spectacular run to the top. stephanie: in terms of those who invest in gold, when you look at things now, it seems we are seeing more outflows. it is not a place where investors want to be. matt: last year they made a hell of a lot more in amazon stock van in gold. stephanie: it is a lost but compelling argument to be in a place where one wants to invest. it isrs or 15-years ago, used on most of the sophisticated investors. of stocks andrns bonds for gold. the returns of stocks and bonds dwarfed anything you got in gold. david: one big geopolitical event could change it quickly. stephanie: this is one of the charts from matt's comments. it shows the u.s. inflation rate versus the gold price. it does not make a lot of sense if you have inflation rates so extraordinarily low that to use old as an inflation hedge becomes less necessary. i feel like we need a goldbug. there are no defenders in the room. hasd: somewhere else there been beating up is a loyal. brent crude has been up, it is going a little down, after mr. alexander novak said a cut in oil production is possible if all exporting nations are in consensus. he spoke with ryan chilcote earlier today. iraqi oil minister said iraq is more flexible on producing output. what is mr. novak trying to tell us? ryan: the russian energy minister would agree that over the past year russia and other countries have become more prepared to engage with the idea of a coordinated supply cut. when i spoke to the energy minister, he wanted to dial back expectations that some have or had in the market that we might to get one of the coordinated supply cuts soon, or even a meeting to discuss those supply cuts. he commented that he thinks we are misinterpreted. he said we have agreed to attend a meeting if there is a meeting. meeting. is seeking a there is no agenda, venue, or date. in the past, venezuela said it would be good in february. he feels the market got ahead of itself. he was not saying that there will be a meeting in february. we heard the february meeting -- what are you talking about? after the comments from yesterday. there is a readiness. the impossible condition that everyone would agree to participate. david: what are the mechanics for any supply cut? how does that work? ryan: that is one of the tricky parts. russia and opec, the other non-opec producers, do not trust one another. they are engaged in the battle for market share. in some cases they are on the opposite side of geopolitical conflict. the energy ministers said there has to be some guarantee, some trust check system. he was not clear what it could be. he said he would not have to be legally binding, but a very sound agreement. stephanie: hold on. walk me through this. the participants. are we talking about blood brother pinkie swear? they're never going to trust each other. ryan: there are a lot of reasons why it is fanciful to think there would be a deal. for one, the first and foremost, you would have to have the russians and saudis as a part of it. they don't trust each other. the russians think the saudis have it in for them. when talking about cooperating with countries outside of opec, they do not think that is a sincere comment. the russians think the saudis want to destroy the russian economy. david: global conspiracy is harder than it looks. an opechis is production by nation. saudi arabia is the largest, 30 1%. that is why it is so important that if there is an agreement on a production cut, saudi arabia would have to be on board. orion's point, saudi arabia has kepttargets before and not to them. this gives you a map and opec who the biggest producers are. when you look at the other big producers, you have a rock, the uae, and kuwait. unofficial partnership, friend, trust circle? are you kidding me? ryan chilcote, thank you. when we come back, we have to talk about the massive earnings week. the biggest movers when we return. , underk, a candor book armour, massive moves. we will talk about amazon again. equities finally getting back to fundamentals. stay with us. ♪ vonnie: welcome back to bloomberg "." xerox is splitting into two publicly trading companies. unit will handle hardware operations. the other will house business services. carl icahn will get 3 seats on the service company's board. at the top ofns the hour. saidwell international deliveries rose and overall margins expanded. $1.58 a increased share. shares fell 3% to $10 billion, hurt by lower demand for gas and services. developing new wireless charging tech knowledge he that could be deployed on apple mobile devices next year, according to someone familiar with the plans. one quarter of the revenue is generated by iphones and ipads. david: we are in the middle of earnings season. we will look at three of the week's biggest movers. under armour rose the most in two years after footwear sales bolster the fourth quarter earnings. reduced itsn capital budget by $900 million. facebook, their shares rose 15.5% when the social media giant delivered another quarter of record revenue. let's bring in julie hyman. take us through the big movers. julie: you gave the bullet points for each. it has been impressive how the stocks have done. facebook, i found interesting the nasdaq is the underperformer and other big tech has done poorly. itsbook is down after earnings report. facebook was the standout that helped spur other big cap tech gains. you can call it a rebound. away, looking at the big earnings reports and earnings standouts is that the s&p is down seven cents on the week. not muchthere was optimism going into this earnings season, where earnings going to help stocks overall? the answer is no. stephanie: i argue that that is a positive. we are out of the momentum trade and back to fundamentals. if you look at companies with swings to the positive, we didn't see momentum sure that affected the overall s&p. maybe this is a healthier market. thee: you're getting out of momentum trade for individual stocks, not the overall market. if the s&p rises on the week it won't be because of earnings, it will be because of the doj. macro effect. because of global sentiment. it will not be as much because of the earnings movement. david: matt, i'm curious for your thoughts on this. it feels like we are moving into our phone rather than beta. the whole market isn't going up. some winners are going up, and others are going down. stephanie: i like that. matt: it is a stock pickers market. last year, the winners were people that picked the right stocks. that will probably not change in 2016. the u.s. economy is chugging along, slow and steady. it will not weaken into a recession as some have suggested with the january route in the stock market. the bigger story is the economy is healthy. if you look at the stuff, imports, coming into the u.s. -- stuff that amazon buys, facebook recordnd so on -- traffic with imports in 2015. january were probably be another good month. then, you have individual companies continuing to excel. stephanie: maybe the next-door he would be what is jeff gogol's take. this is the year when you could potentially pay for professional investing because it is a stock pickers market. david: if you have the right stock picker. stephanie: thank you. stay with us. willwe come back we talk donald trump. did he still the show missing last night's debate? ♪ ♪ stephanie: welcome back. you are watching bloomberg "." cover.s plenty to last night's debate, what was .aid, who wasn't there donald trump held a fundraiser for veterans office it the gop debate. setting it off was his claims of his claims of poor treatment by fox news. mr. trump: i wanted to be about four minutes away. i didn't want to be here. i've had a kick with it. you have to stick up for your rights. when you are treated badly, you have to stick up your your rights. in des moines at the debate, not spending the night with mr. trump. was his stunt a success? >> we won't know until monday night. i think that if you look at the measures by which trump engaged was as gambit, it success. the debate will have a half-life that will dissipate by the middle of this morning. there were no critical moments. trump showed his supporters and maybe undecided voters that he is willing to do what he thinks strongly,nd act decisively, and he controls in a situation he is in. and in the case of the debate, situations he is not in. david: here's not hurt his status as frontrunner from your point of view? mark: i do not detect that. as we get this close to an election, i like to let the voters decide. i have not heard from the last 48-hours anyone say they will not vote for donald trump because he skipped the debate. last night's debate was not a dominant event. .avid: tell me about mr. cruz some think he might be fading. did last night hurt or help him? mark: i did not help him. in part because our polling notion that hehe had a bad night their front page. he had his worst debate, but i don't know if anyone else had a good debate. ted cruz and marco rubio did not take the absence of donald trump and assert themselves as dominant figures. they were the center of attention and got the most attacks and hardest questions, but i don't think ted cruz helped himself. if he is in a slide, if he is behind trump, which the polling suggests that he is, nothing that he did last night will reverse that. marconie: ted cruz and didn't spar on immigration. jobs andut so many punches trump-style, there was less noise. he is the most conservative guy. everyone else is a rino. throughout this campaign, you have been willing to do or say anything to get debates. ted cruz: he is very smooth. when he ran for election in florida, he told the people in i will, if you elect me leave the fight against amnesty. in texas, i said i will lead the fight against amnesty. we made identical promises. in washington, marco made the choice to go in the direction of the major donors to support amnesty because he thought it was politically advantageous. i honored my commitment. as president, i will honor every commitment i make. stephanie: it is personal. versus rubio. they do not like each other. bush did well, but this will lose steam by mid morning because it is about box and donald trump. shouldn't it be about the content and the election? mark: some call this an extremely substantive debate. i don't think it was. i think they were cherry picking statements about past statements. i don't think the candidates stepped up in terms of moments or describing a vision for the country. it has been the biggest thing lacking for the republican contest. no one took advantage of the absence of donald trump to lay out clear visions. stephanie: it is substantive but not fun, because that's what debates should be. you can catch mark and john weeknights at five :00 p.m. on "all due respect." matt winkler, thank you for joining us. ♪ the only way to get better is to challenge yourself, and that's what we're doing at xfinity. we are challenging ourselves to improve every aspect of your experience. and this includes our commitment to being on time. every time. that's why if we're ever late for an appointment, we'll credit your account $20. it's our promise to you. we're doing everything we can to give you the best experience possible. because we should fit into your life. not the other way around. intoanie: xerox splitting two companies, giving carl icahn three board sheets. we speak with the ceo and chairman, ursula burns. what will the gdp say about the strength of the u.s. economy. amazon coming up short on earnings expectations. we are taking a deep dive. ♪ stephanie: welcome to the second hour of "." i am stephanie ruhle. david: i am david westin. we will talk to ursula burns about her plans for xerox. stephanie: a lot to cover. let's check in with julie hyman. oute: we just have earnings from microsoft. earnings coming out ahead of estimates, $.79 versus $.70 which was estimated. just shy of what analysts anticipated. mastercard up 12% in local currency. i have dropped my piece of paper that has everything on it, but it looks like the shares are getting a leg up. we are seeing a list, negative on the week going into today's session. the movement i the bank of japan to take interest rates negative have given a lift to stocks and other asset passes around the world. we are seeing futures in the united states get a boost. it could change at eight: 30 when we get gdp. that is the readings for the fourth quarter. europe, the read through with what happened in japan, we are seeing a rally across the board. not as large as in asia or indicated by the u.s. futures. we're watching oil, because be aa -- will there meeting with opec producers on a production cut? russia is walking back on its talk saying that all producers need to be committed. oil is coming off of its lows of 1%. 1%.t's lows, up on the list along with the japanese government bonds. the dollar rising versus the yen up 2%. he'll on japanese government 10 years falling to record lows. other watching buying of global bonds around the world, not just in japan. the 10-year yield is the lowest since last april. it was falling yesterday in the wake of the durable goods report, and falls today. that will likely move when we gdp number. mastercard, we just talked about. amazon is ramping up spending. investors don't like that. microsoft, ramping up cloud business. that seems to be, for now, a successful move as shares rise 4.5%. david: a big day for xerox. they beat fourth-quarter profit forecasts and is splitting into two different countries. one will manage hardware business, the other will manage service business. thank you for joining us on this big day for you. thank you for having me. this: what brought you to stage, that this is the best thing for your company? outsideextent was it factors, and what extent did mr. carl icahn play in it? a decision driven from analysis of what is happening in the market and around the world. what customers, investors, and our employees are driven by. our board injured with -- our board in turn into a net -- earlyd into analysis in october. we looked at capital allocation models for the business. we had great advisors helping us. we came to the conclusion that given the strength that both of these businesses have -- combined with changes in the marketplace, changes in the the competitor set, that it is best for us to be separate companies not together. we have 2 great fortune 500 size companies after we separate. interestingly, we came to that conclusion. reported is that this was driven by mr. carl icahn. interestingly, it was not. the board did its analysis and came to a conclusion without speaking to mr. carl icahn. fortunately, you know that he is a large holder of our shares, he agreed with the outcome. on a go forth basis he will be involved when the company splits into two. he will have some governance input into the services business . he will not be engaged with current xerox business or the technology business at all. i'm pleased with the fact that we came out in a place that is strong for the business, and it happened to align with what mr. carl icahn wanted to do. david: to what extent did you chan into your strategic review? we never brought him into the strategic review. we came up with an answer and spoke to him at his request. that was the way the process was operated. stephanie: can you walk us through, with the split, services was your big push. help us understand why the split makes sense, if services is your growth area? ursula: services is a topline growth area. before i get into the details on services, i want to spend 30 seconds on our document technology business. we are the number one provider around the world with number one market shares from an equipment perspective. we have leadership solutions. it is a high profit margin business for us. a large amount of cash. it has segments that we invest in intensely to represent pockets of growth. that business is a growing that much from the top line. we are unbelievably strong and global. that requires some investment on haveide of the business to a different operating model then our services business. is growing business topline with transitions happening quickly. software, cloud computing, mobility. the idea that the world is getting significantly smaller. health care has changed. we provide solutions to these markets. the topline is growing and investments will be higher to drive that topline growth. a return to shareholders will be a different model. the technology as this will be a high cash return to shareholders business. our tech business will probably continue that way. services will be about investing for growth and globalizing that this mess. we started that path seven years ago. can you break that down in terms of innovation? even if you are in the number one position, if you are in the low growth or diminishing industry, where do you innovate? i look at ibm and hp looking for ofir next level innovation. where do you find it? are pockets of growth in printing, especially high-end color printing. we are investing there to transform that market. and document outsourcing or workflow automation. those are two segments on the technology side that require innovation and investments to differentiate. they are growing. there are segments that are declining. the declining segments will get small enough, the growing sections will get large enough, and we will grow over time. you cannot take your eye off the fact this is a high profit business. it is a very shareholder friendly return model on investment. thed: looking forward to two separate businesses, part of what each week or will look at is their capital structure. xerox has a fair amount of data. 7.6 billion according to bloomberg. how do you assign that debt to the two different entities? ursula: most of the debt on our balance sheet is associated with xerox having a financing business. the financing business finances equipment in the document technology end. most of the debt will go over to the document technology business. the debt is securitized with equipment at customer sites. we expect the document technology business to be investing. we are managing the balance sheet in the separation so that we can continue to support this investment-grade rating and business we have. stephanie: have you get out of the hardware-technology business and into the cloud? the workflowof solutions and workflow automation processes we offer in the document tech knowledge he business is about moving. it is about enabling mobilization and mobility of workers. how do you take the information you carry with you on a digital format and render it into a printed format? how do you do that in a secure way, point of need way, personalized way, etc.? setould serve a solution that we provide to customers. the service side is very different. stephanie: how? we actuallythat provide some cloud solutions, but more importantly, we render solutions in the communications infrastructure. the intelligence behind our customer care infrastructure, our transactions, sits in the cloud. we sold it to an information technology outsourcing business, and now we are a customer of cloud solutions to render our solutions to customers. david: in 2010 you made a large acquisition. from your point of view that was sensible. you could put these two things together are the sum would be greater than the parts. in your first answer you said there were changes in the marketplace. explain those changes that make that not such a good idea today. said thisrst a law, i somewhere else. seven-years in business is like seven-years in a dog's life. a lot has changed. one is health care. we started with the affordable care. removed from the affordable care to outcome based medicine. many are shifting to medicaid as a foundation medical structure for their needs. providers -- they are consolidating. we provide consumer and government health care. those changes in a short amount of time of who our customers are, how big they are, how consolidated, the regulations around how they operate their business -- we have had to made significant changes to provide to them. another one is in customer care. where we answer phones for people. it has now moved from simply answering phones to providing them with analytics and information about how they can take their customers -- their businesses better. they're smart processing. service as a service to our clients. those investments and that move nonexistent seven years ago. the dollar has strengthened significantly and change competitive landscapes for our technology business. all lots has happened. one of the best things we have done in a strategical and structural review is to pause and say, what does the world look like today? back, let's look forward, to see if we can align our company better to provide better solutions to our customers, a better place for and aployees to work, better investment vehicle for investors and shareholders. ised on where the world today, having us in 2 businesses that are focused on their marketplaces is appropriate. world'se: where the today, and over the next 12-months, could change exponentially. you mentioned the strong dollar. a growth area is emerging-market companies. emerging markets are getting hit drastically. what happens to your businesses there if that continues? ursula: our services business benefits of a little. our document technology business is pressured. what i love about both businesses is that they have this this models that are flexible. this is one thing we are driving in the separation, to make sure we heightened intensity around flexibility. having business models that can respond to the macro economic environments. our tech and business continuing to drive automation and solutions around service mobility, hownd we develop a product and infrastructure that supports it. , weur services business source work from around the world. the strengthening of the dollar will be of benefit -- will be of benefit for us. the way the macro economy is changing, having these two businesses that are focused, can move relatively quickly around these changes. what you just said, 12-months. 12 months does not seem that far away. we have to make sure that we -- continue tod refine the business models. our intense about moving quickly and having our ear to the ground for both clients, investors, and employees. david: let's talk about execution. what happens. what is the time horizon? what happens to your workforce and you and the new world? -- we havee horizon done a lot of work before we announced this. we are confident we can get the deal completed, the separation completed, by the end of the year. program management office with the correct level of support and expertise to make sure this complicated separation happens in a way that does not ' delivery ands service, and not the vast majority of our employee base. it will not. as far as my role, i purposefully took this discussion off the table. when you are going through something as dramatic as this, when you have to do a fundamental analysis of your business and position, one thing i did not want as a discussion point was, what is going to happen to ursula? that was off the table. stephanie: how have you removed that from the table? ursula: by saying, i'm not going to think about it. it isn't part of the decision-making process. the decision-making process has to be about the business. now, i will come forward with recommendations about leadership, and we will have that discussion. stephanie: you have been leading and transforming this company for over a decade. how do you feel about the fact that carl icahn is dominating headlines and many say he is making the changes, when we look at all you have done to transform this organization? ursula: my first reaction would be frustration, but it really isn't. at the end of the day, we have done the right thing for the go forward for this company, for sure. initial reports, which were inaccurate about how we got to this decision, is masking the fact that decision is the right decision. that will come out over time. this discussion help us. how we got there is less important than what we've got. we are going forward with two fortune 500 strong, fit, focused companies in 2017. we are laying a foundation in 2016 so that happens. not everything is as it appears in the headlines. that is not the way the work happened. stephanie: your workforce, if you are not leaving, consolidation, changes, splitting, what happens to workforce? job cuts? ursula: every year, xerox has to drive automation, innovation, and productivity. this year will be no different. 2016 will be no different. the technology business will have to continue to automate. the services business will have to automate. our workforce will likely shrink , but it does every year as it becomes possible to do more with less. we do manage those transitions fairly well, i'm proud to say. they will, for sure, happen. less than 1% or 2% of our employee base will be impacted. willing to getre the credit, you can get almost anything done. ursula burns, it was great to have you on. next, the bank of japan surprises investors. more on that and global central-bank policy is next. ♪ julie: the bank of japan, unexpectedly adopted a negative interest rate strategy overnight, a lightning it central-bank policy to one the adopted.lready we spoke with david allen. thank you for joining us. first, i know the you focused on europe. when you heard about this new policy by the bank of japan, what is your reaction in terms japan?effectiveness for a mission that is already tried different policy tools to spur its economy? >> i'm no expert on japan, but having gone through the negative interest rates, it opens the door for further moves into other territory. it is no surprise they ruled it out until recently. it is very much a surprise. are otherow there implications for central banks globally, particularly the ecb, who is meeting on march 10. the increase is that they do more in terms of the negative rates in europe. we're looking for that to come down tomorrow. puts more pressure on central banks to do more. it obviously highlights the world cast, a colleague in hong kong has been calling for a devaluation. timing of the the chinese new year. and what japan did overnight, that probably increases the option of that happening. that puts more pressure, globally, on central banks to do more. more of a devaluation for the ecb, negative interest rates for the ecb. something you have written about is a wildcard for the eurozone and the ecb. the potential for britain to leave the eurozone. how much pressure -- what is the likelihood of that actually happening? probably 55% or 45% in favor of britain staying in the eu. change between now and the referendum, which most think will be on the 23rd of june. this would not only have major implications for the u.k., but could have another fallout. looking at the european projects, the u.k. has left the eu. it will also put more pressure on central banks within the eurozone itself. situation is precarious. you have a potential chain reaction. germany ask all the time about finland. there is a concern that they would try to leave the eurozone. derail thewould it efforts of the ecb in terms of using in stimulus? david: the ecb would keep the system in play. the ecb with step out. it is over one trillion euros in size and would expand further. we have no doubt that the eurozone would stay in tact. the ecb would be causing that. at the end of the day, there will be a price to pay. the yield spreads would be high. germany's major trading partner is the u.k. outside of the eurozone. a weaker sterling, which seems inevitable if the u.k. leaves, with slow growth in germany. julie: thank you. brexit caution for the ecb. futures in the green. gdp, coming up. ♪ david: welcome back to "bloomberg ." futures up a little bit. s&p, dow and nasdaq as well. tom giles can always good to have you. we also joined by brendan greeley. steve will be talking about gdp numbers. we are waiting to find out how we are doing. how the u.s. economy is doing. do we have them? julie: growth a little bit slower than estimated. 0.7%. 0.8% was the estimate. estimates have been coming down gradually. 0.7% was the growth in the fourth quarter. the gdp price index or core pce, the measure of inflation the fed watches, 1.2%, in line with what analysts had estimated. the employment cost index, one measure of labor costs, also closely watched, 0.6%. the headline number here come the 0.7%, what investors were looking for. with this opera any validation -- it doesn't seem to have. growth is slightly slower than estimated, but not seeing anything dire. stephanie: but still in the right direction and the markets like it. david: you just learn to those numbers as we did. welcome to live television. what is your initial reaction? some are worried it was going to be much worse than this. steve: many were cut to putting this would have a negative handle to it. if it had been inventory, you may have seen that snapped back. knowing where8% the consumption numbers are leaves us with the idea that the fourth quarter will be disappointing as well -- david: on the heels of the durable goods numbers. brennan: not a huge surprise. the fed was looking at these -- they were not expected to be good numbers. they were so nonplussed about what they already expected to happen that they declined to tell us what the risks were. what stuck out to me with this core pce number. that is the inflation number the fed looks at. -- it was at 1.3, now at 1.2. they were looking for some jump in that. the inflation dynamic has not changed. david: in their statement earlier this week, they did not talk about this. they talked about employment. brendan: they lead with an employment. could downside surprise have changed the dynamic. reserve has gone down this path of zynga have to normalize interest rates and they feel they have a labor market environment that set the that will lead to higher inflation and wages down the pipeline. they are not getting the inflation pressures. the academic path as to why they have to keep on going -- at the payroll numbers come out on friday and are on the high side, that will put them in a difficult position heading towards march. you hate to be a federal reserve whose pop yourself in. the question will be whether they are forced to make -- i'm concerned they will wind up having to do that because of the academic structure they've put around their first rate hike. >> the real surprise this week was yesterday's manufacturing number. we were hoping we would be able to push our way through the strong dollar. we are at the level of what tom keene calls the rubin dollar. the beige book, this is what we saw in nine of 12 district activity. this number confirms what we already suspected to be true. a mistake being made over and over again in this economy. is only 10-20%g of the economy. -- manufacturing. a lot of the activities are now in services. those are ancillary institution that feed into the manufacturing process. the services are suffering dramatically. you are zynga is also in the energy with the energy servicing companies. manufacturing is a much broader reach than anyone thinks. for peopleig problem and that is why the economy is a disappointing. stephanie: is that a new suit and tie? what do you make of all this? >> you talk about the strong dollar and that is coming home to roost for a lot of the big companies. this is how much our sales would have been had it not been for strengthen the u.s. dollar you see this weakness overseas really coming home to roost for u.s. companies. ndan: the apple numbers. thank you, brendan greeley. steve, think you so much. let's get a quick look at chevron earnings. julie: more evidence of the plight of the oil companies. $.27, $.20 below analyst estimates. sales plunge -- i want to talk about the other things in the statement here. the company talking about its reduction in operating expenses and capital spending in 2015. a reduction of $9 billion. largeo expects similarly reductions in 2016. chevron is going to continue to have to cut expenses. we have no release on the oil price front insight. asset sale proceeds were $6 billion in 2015. there are additional sales plan the company's bottom line is shrinking worse than estimated and it will have to cut in order to continue to prop up these numbers. chevron shares declining. stephanie: chevron is one of a big number of companies that reported earnings this week. minds is the biggest come amazon, shares down in the premarket after the online retailer reported a miss in profits. gene munster joins us via skype. the investorsg don't understand jeff bezos. is that the right answer? or are investors finally saying show me the dough? >> what investors want is to have some sort of predict ability of how they will grow there margins. on investorsount minds. margins are improving year-over-year but investors are trying to cope with this risk that amazon goes back into spending mode. what they are spending on is producing faster unit growth. yes, amazon spent a bit more, but they are getting a return to how very quickly david: much of this is because they had so many shipments they had to do overnight at the end of last year? >> that is exactly what happened. the reason they missed their operating margin by 20 basis points was they had a spike in the number of prime users in the quarter. about 15 million prime users. most were expecting 10 million. all those people rushed at the end of the quarter to get holidays -- with a rush at the end that has a higher rate to fill those orders. user,ou become a prime you spend three to four times more than a non-prime user. you see this membership mentality is growing at amazon. tom: what do you make of this push into logistics? what do you think of this idea of them leasing planes, trucks, getting out there and doing it themselves and taking that responsibility away from ups? is that a good idea for them? gene: for a company that doesn't say much of anything on their earnings call -- they did talk about the logistics scheme. -- they areentially acknowledging they are doing it. when they have these surge in aders, they have to have backup when ups and fedex are not there for them. that is what they are saying today. it is important that they -- my bet isthese they continue to grow this the just defeat at a small rate and use that as a surgeon orders. david: talk about their services business of it. it is growing very fast, six to 9%. -- 69%. gene: cloud computing. businesses today are not spending money on hardware. they put everything in the cloud. 70% in the december quarter. 75% in the september quarter. continued to have great growth rates, 10% of their overall revenue. something investors believe could be part of the growth story for the next decade. i'm coming back to a discussion we had about amazon earlier, it's gross margins. we compared it to the other retailers. margins now at around 32%. walmart is around 25.5%. bases around 40%. over the longer term come amazon is trending up. is -- ifuld ask you you are looking at margins, who do you compare them to? it is not apples to apples with walmart. for you, what would be a good gross margin figure from an amazon? >> they don't fit into any category. ebay is a whole different business. amazon is a retailer. not a traditional retailer. we compare amazon to itself. we want to see progressively higher margins. they will never get to where .acy's is they can continue from the low to mid 30's. it is a separate animal. this animal will totally up and retail as we know it over the next decade. they are getting more and more into instant gratification, which will staying your traditional retailer. stephanie: you have to answer some questions. what do you think? tom: something we have not talked about, how they are getting people to get those prime memberships. it is not just about the free shipping anymore. their jam packing those packages with all kinds of entertainment. them doingideo and their own original programming. that is another way they are locking yuan to the amazon story. -- you into the amazon store. watch other people -- stephanie: that is insane. david: you hear of a lot of the programs they are putting out. they have some really popular programs out there now. thank you to gene munster. up next, we will dive into chevron's earnings. shares falling as the company loses money for the first time since 2002. ♪ vonnie: welcome back to "bloomberg ." american airlines reporting fourth order profits that exceeded analyst expectations. the result boosted by falling jet fuel prices and domestic travel. will --s it says it this after u.s. regulators found severe deficiencies at the lab. the company is providing testing to consumers -- -- the son of rupert murdoch replacing the quiz ferguson. .- nicholas ferguson last year, he replaced rupert as ceo of 21st century fox. we will take a deeper dive on chevron. they reported their earnings earlier, disappointing, but this $588 million for the first time since 2002. forcing chevron to write down the value of its assets. vincent joins us now. tom giles is still with us. is this about chevron as a company? because of oil prices? argument thathe this is a time to buy? >> when we think about chevron, you think about the upstream , productionoutput is a little bit better. the negative impact as price realization. somewhere around $35 for the quarter if you take a look at last year, that is almost half. pricegative impact realization definitely did have an overall negative impact on the earnings for the quarter. downstream business could not sustain the negative impact from the upstream. 2016you take a look at and 2017, challenges are ahead for chevron. they did revise their production bit.nce, tightened it up a the challenges there -- lng coming online. offshore coming online. lng will be the biggest driver of volume growth through 2017. commissioning here in early 2016. there's still some challenges specific to chevron. the coming down significantly for 2016. some asset to be printing to close that funding gap between five and 10 billion through 2017. julie: one thing alix steel chevron's high dividend yield is the reason some investors hold the stock. the dividend yield in yellow, still at around 5%. should that provide a floor for the stock? in theinvestors integrated space committee dividends are a prime contributor to the reason why you invest in integrated names. also because of the integrated platform where the downstream business tends to smooth the earnings volatility. during price declines. the dividend stream is somewhat sacrosanct to the integrated players. that dividend growth may be somewhat muted, but chevron did suggest they believe they can cover the a cash flow that dividend in the 2017 -- cost: take us into the reductions a bit. i heard a number of $9 billion they are looking at. break that down. what specific changes are they making to realize those substantial savings? >> we are still running through the report. when you think about chevron and exxon, they are past their peak cycle. 26 billioney will be x -- they are still line.g the op x that will be significant in terms of job reductions and in cost efficiencies, well efficiencies, drilling efficiencies to come in 2016 as well. cap x in 2017 should also go down relative to 2016. great to have you with us, vincent. the world's favorite tax haven is now the united states. we will look at how places like reno have become the hottest markets to stash foreign wealth. ♪ david: welcome back to "bloomberg ." the united states is becoming the new switzerland. this week's edition of business week looks into how the world's wealthy elite are moving their money out of the usual tax havens and the united states. you've covered this was tax havens over the years. i think of switzerland as the place to go to stash your money. there were all these criminal proceedings. now, it turns out we are the ones? the u.s. has been prosecuting swiss bankers and entering into mostly non- prosecutions with swiss banks -- that is making switzerland and other places like bermuda more difficult places to hide your money. dozens of places around the world are signing on to bankments to share information and the one country that will not sign on to those agreements at the u.s. high -- probably a very low likelihood of getting legislation like that through the republic in congress right now. there's been lobbying over the versions oft mini requirements like this. david: we always thought this was government was in cahoots with the swiss banks -- stephanie: i never thought that. david: there's a general understanding. i banks are doing the same thing with our government. >> there's merit to that. one thing we should not overstate -- i don't think anyone expects swiss banking secrecy to end tomorrow. the same thing can be said for the banks and the bahamas and cayman islands. the u.s. is the one country that has a stated policy of providing confidentiality for these tom: you talknts about how reno is such a throwback. why reno? >> it is more sort of why nevada. statese of a number of that have been aggressive about passing laws to promote their trust and to have trusts to help people avoid taxes and provide layers of confidentiality and protect assets from creditors. it is a race to the bottom. what is happening on the state level in the u.s. is similar to what is happening in the offshore world. mini offshore industry here on shore on the state level. stephanie: we have to leave it there. thank you. catches piece in business week on news stands now. ♪ david: we are just 29 minutes and 25 seconds from the opening bell in new york city. welcome to "bloomberg ." stephanie: third hour, let's fill it with power. we have lisa abramowicz here with us and the ceo of bankunited. hopefully in the month of january, you are in florida more than you are new york. welcome. that's to be some first word news. -- let's give you some first word is. vonnie: the syrian civil war resuming -- pentagon officials reportedly don't earn airstrikes -- they don't think airstrikes alone can wipe out islamic state. they're asking the white house to send more advisors and trainers and the fight. employees at the california jail where three prisoners escaped arrested. police say the woman gave the prisoners mavs. -- maps. a new bernie sanders tv ad criticizes goldman sachs for its role in the financial meltdown. it does not mention hillary clinton or the speaking fees the bank paid her. it starts airing today and i what. -- in iowa. with all due respect is live from des moines right here on bloomberg tv. i'm vonnie quinn. julie: let's take a look at what's going on with u.s. futures this morning. we could end the week on a high note. we got fourth quarter gdp just a half hour ago. because it came in largely as expected, we did not see much of a deviation for futures in the wake of that number. the more pertinent market story this morning has been the bank of japan taking interest rates negative in that nation. the dollar continues to strengthen first bn -- versus the yen. that, weese government are seeing it fall to a record low. 0.1% in japan. here in the u.s. as well, we've been seeing some buying of u.s. debt. last, the lowest since april. interesting, the ripple effect from the japanese action around the globe. we've been seeing a lot of volatility come a drop in oil after russia gave a more nuanced answer to the question of whether opec nations and russia would be meeting next month to come up with a production cut plan. russia says there is not a meeting on the calendar per se and we would like all oil-producing nations to agree on a production cut. we will be talking more about that a little later. stephanie: we will dig in a lot more ahead of the market. we had to give you the three stories that matter most right now. number one, bank of japan surprised investors last night by adopting a negative interest rate strategy to spur banks to a weakeningface of economy. the central bank of russia left its benchmark interest rate unchanged. it may tighten monetary policy of inflationary risks intensify in the future. with central banks intervening in all sorts of different ways at this point, we don't have global coordination. does that not leave you and so many others in scratching our heads? >> when you see japan make a -- bank stocks were lasting a big lift in the six months because everyone thought rates were going up in the unite states. now, that has come into question. the fed talking back their position on that. we are paying close attention. will it have a massive impact on other economies? >> over time, yes. it gets everyone scratching their head as the world economy is more correlated. -- coordinated. --in the united states lisa: isn't this just a currency war? camping up the global concerns? where does this end? >> i don't know. we are dropping rates in japan to spur more lending. you have to have far worse and and credit -- borrowers good credit and creditworthy borrowers. unfortunately, i'm not so sure that japan will get the desired effect. i think it is more a currency war. staying in russia, oil pared gains after the energy minister told bloomberg tv "we are ready to discuss the issue of cutting oil, ready to consider the possibility. there should be a consensus." oil moved on his comments. let's get to ryan chilcote in london. what will it take for an oil producer to actually make a move and start cutting? stephanie: a best friend pinky swear. >> good luck. what the russian energy minister has said was there would have to be unanimous agreement by all the oil producers that they want to meet and want to discuss cuts. they would have to agree on the level of cuts and there would have to be some kind of mechanism by which they could trust but check one another's cuts. there are a lot of obstacles in the way. do you think there has been any progress towards this or the bounce in oil was absolute pure speculation yesterday? reallyery difficult to know because a lot of people when they talk about oil, the big producers can bluff. they're not telling you what is going on. what he said yesterday was, yes, we would like to beat them of the venezuelans are trying to arrange a meeting, but we don't know when it would be, where would be, what would be on the agenda. early days for a meeting, let alone for a cut at this point. david: there is a 900 pound gorilla in this called saudi arabia. trying to seesia how the saudi's will react? >> there has been no direct reaction from saudi arabia. we've spoken with a few members of opec. act asmbers of opec proxies for saudi arabia in terms of communications. saudi arabia has its own camp within opec. we have not heard anything that would suggest the saudi's are supporting a cut right now or would join in a cut. that is pretty telling. i did ask the russian energy minister when w he last spoke with saudi arabia. the last time they spoke was in december. lisa: i have a chart that shows one of the reasons why this is such an important issue for russia. looking at the ruble versus oil just to show how reliant the country's economy is on oil prices. looking at the correlation between dollar ruble and oil prices. a negative correlation. as the dollar rises versus the ruble, the ruble falls. the correlation has been going more and more negative. the ruble has been going more and more in lockstep with oil prices. oilasizing the idea that stumble has been terrible news for russia. that is ryan chilcote in london. thank you for joining us today. story number three, after estimates,ning xerox announced it is splitting into two publicly traded companies. what has been reported is that this was driven by mr. ic ahn. it was not. the board came to the conclusion without speaking to mr. icon and all. -- mr. icahn at all. john: clearly come all ceos or indirectly feeling the breadth of activist investors. -- the hot breath of activist investors. of the pressure we are all under during these difficult economic times two build a shareholder value. aephanie: xerox is somewhat different situation. is the company being mismanaged or is it in an industry that is simply on the decline? many see a big-name activist investor step in, the shares may move up because of that threat. what can carl icahn really do longer-term to turned that business around or is it simply becoming antiquated? david: is part of the business immature business and part of it as a potential to grow? upmay be by splitting them this way, the pieces are worth more than the whole. stephanie: maybe this is something she wanted to do for quite some time. i'm looking at the segment breakdown of revenue at xerox. andices in the gold color revenue from technology, hardware in the pink number. the pink bars are going down and the services is a bigger share of revenue at this point. ,his seems to be secular change the maturing change or the secular change the market right now. hardware is less important. david: that is a great chart. that does illustrate it. lisa: with someone like carl icahn -- people in the industry who see these numbers themselves , why does he get three seats on the board of directors? why does he get such control? he owns 80% of the company. >> he has a big seat at the table already. lock him: this does up for a lot longer. by the timer is a meyer was in the seat, carl is making a different movie or. mayer wastime marissa in the sea, carl is making a different move here. he never seems to be bound. the three stories that matter to markets right now. next, we take a look at what is moving up and down in the premarket. ♪ vonnie: welcome back to "bloomberg ." japan's central bank trying an unprecedented strategy to jumpstart the nation's economy. negative interest rate policy. the hope it will push banks to lend. investors and deutsche bank having a bumpy ride as there pushed force her to triggers -- bank has $5 billion in outstanding bonds. may buy back some diesel cars in the u.s. if they cannot make them compliant with air-quality rules fast enough. the clearest indication yet the german automaker may not have the technology to bring in missions into line with regulations without hurting performance and fuel economy. emissions into line julie:. let's get to american airlines. earnings per share beat estimates. american airlines has hedged against fuel less than its competitors come as of the drop in fuel prices has been a boom for it. 5.2%.falling by american does not have the pricing power to raise fares. the company's president says when oil prices rise, shares will rise. a double sword and the shares are down. electronic arts is another mover we are watching. the fourth quarter forecasts coming in short of analyst estimates. it's talking about the effect of a stronger dollar. and the last quarter, live services revenue from its live games of 22%. -- thosefor currency that shares are down in the premarket. we heard from the big credit card company's come a mastercard and bvisa benefiting from spending. visa is rising, mastercard is declining. these companies also citing the stronger dollar. coming up next, we will take a closer look at the bank of japan's decision and what it means for global markets. ♪ david: welcome back to "bloomberg ." surpriseof japan global investors and adopted a negative interest strategy. for more on this move, let's bring in john, who's been covering asian equities for more than two decades. the chief global strategist at nikko asset management -- why did they decided to do it this way? there are different ways they could stimulate their economy. john: they realized they ran out of stimulus from buying bonds. the qe had run its course. reaction, youet look at banks in japan, shares are tanking. was this a fail? john: it is a pretty bold move. he is succeeding in getting negative interest rates and getting the yen weaker. look at the details of the agreement, they're still getting 0.1% on the largest amount of reserves. incrementaln building of reserves will they be charged and negative rate. his note impact -- there is no impact on bank profits right away. lisa: you have investors in japan looking to other places in the world to park their money. how much of this money will come to the u.s.? john: very good question. hopefully it is not a flood. you would not want the exchange rate to get to week in japan. -- weaker in japan. you will see congress get quite upset. lisa: where is this money going? >> japanese companies have been very aggressive in buying companies overseas. they been moving some of their rescue assets abroad -- risk assets abroad. you know banking backwards and forward. take us through the second and third level effects of this. >> john brings up a good point. we will see some direct investment in the united states. the issue for us, we think janet surprised. how does it she feel this morning? lisa: tired. stephanie: never. >> he loves to surprise the markets. he was the head of foreign-exchange intervention. he felt the only way to get the effect he wants is to surprise the market. dark,t everybody in the except for his death. -- his staff. it is amazing they can keep it secret like that in japan where people talk and have consensus views. it is quite a shock as to how that came about. david: is that a matter of personality? mario draghi in janet yellen don't want to surprise. they want to telegraph a lot. here's japan going a different direction. >> he is a very unusual person. he is a true believer in inflation targeting when no one else in japan believed it for a decade. he is quite a unique person in japan. as for janet yellen come i don't know whether she was told or not. there was a challenge here on the currency front. i'm sure they will be talking a great deal about it. julie: we've got a chart here come another way to look at what is going on in japan. this white line, japan's bond holdings as a percentage of total issuance. this is other types of financial companies, holdings of that issuance. the japanese government is -- the blue line is the dollar rising against the yen. another way of mapping what has been going on over there in japan. he is is there any chance thinking they have too much of their balance sheet? they've taken on so much of the balance sheet -- stephanie: you think this guy has any idea what he has going on in his mind? >> especially true with him. has reached gigantic proportions in japan. have a huge balance sheet. something europe has done extensively, switzerland, sweden, ecb -- it is not radical, but pretty bold. lisa: fed officials have raised questions about how effective some of these policies have been in igniting inflation. europe has had the negative fielding policy for quite a while. we are not seeing real gung ho inflation there. do you think this is going to work? >> what would it have been without qe? nobody knows that for sure. we'll negative rates help? it was a tremendously risky move. the insurance industry is against it. for the overall economy, this will be better than it would be without negative rates. we have a piece on how this affects japanese companies. seen a change yet of japanese corporate behavior. it sustained growth and uncertainty in financial turmoil affect thehat could behavior of japanese corporate's. he has been trying this whole time to encourage japanese companies to expand cap x, expand their wages they pay their workers. he's been trying very hard. this is all about trying to encourage the japanese companies to do more. it has worked a little bit. he is disappointed at how much this has worked. he wants to do more. stephanie: it was great to have you on. john, you are not done. he is sticking around. it has been a busy week for earnings, especially tech. we will break down the winners and losers. ♪ stephanie: we are just moments away from the bell. i like how this bell is going to ring because the dow is up 116, green across the board. david: you are always biased long. stephanie: i am. green is my favorite color. , we willat bell ring see where those movers go in the next few. we are also looking at the bottom line for the world biggest tech companies this week. there areo doubt huge, highly profitable companies. it is how long they can deliver to shareholders who have very high expectations. let's bring in a man who has a lot of doubt on a lot of subjects. cory johnson. be that he is pessimistic. when he is with us, it is so early there. welcome. paul sweeney back with us. cory, let's start with you. from a tech perspective, what is standing out the most this week? cory: it has been quite a week. one is facebook's fantastic growth. not talking about the stock. their ability to grow and change the company -- they have gone from the desktop company to a mobile company. , every numberth looks better from this company every quarter. the other thing that stands out is this focus on the cloud and the changing environment for all of technology. the web services results for amazon a bit slower. we saw that with amazon and microsoft last night. inir web services business the those businesses reporting a fantastic base. internetanging the way technology works for every company in the world. david: one thing that strikes me is the separation of these company's. you have facebook at the very top. then, you get a twitter or yahoo! and we forgot about apple. apple put up good numbers, but not quite good enough. the concern is it is a phone company. where will i get the next leg of growth? is it still a growth story or what analysts are calling a recurring revenue story? that is not what apple investors signed up for. when you look for topline growth , you look at google and facebook and amazon. they continue to deliver extraordinary topline growth. of intensed a lot comments out of apple talking about the global economic situation. we saw the strong dollar into earnings at apple and amazon and many others. the earnings told you about the state of the consumer right now? the consumer has a lot on their shoulders. manufacturing has been weakening for some time. the consumer continues to carry the burden of growth in this country. the latest gdp numbers may give one pause. i think it bears watching. we are jealous of the tech stocks. amazon was a more interesting company before it started making money. us a pausey gives with regard to the american consumer. time will tell. does theng forward, result of facebook that were so much better than people were expecting, does that cast a shadow over the discussions of a potential tech bubble? >> you are starting to see a bit of a separation here. look on the social media site, facebook versus twitter. put up theyou can topline growth, investors will continue to be attracted to these things. twitter has been stalled. which is a huge audience. for investors, that is not the story. the story has to be driven by topline growth and investors are looking for pricing increases and volume gauges. google,e a facebook or you have a bigger audience, you andinue to grow your users you continue to monetize them at higher and higher rates, that is a high quality topline growth story. david: we had barry diller on a couple days ago. he thinks amazon is the biggest company in the world. the thing that struck me, the list of new ideas and ventures goes on forever. do i get worried that they keep chasing after the next shiny object? : the press release was peculiar because it's this laundry list of new initiatives, most of which are never heard from again. they throw stuff against the wall and see if it sticks. they are a very experiment of company. as far as today's selloff goes, the stock is back to where it was last wednesday. profitability, it was a lot better this quarter. i don't know what wall street is freaking out about today. amazon has never said we will be a great net income company. they've always said we will grow topline, we will show the smallest profit we can possibly, reinvest every dollar from a as little taxes as possible. -- pay as little taxes as possible. i don't know why they were surprised by the claims of profitability last quarter. david: it is pretty simple. they had amazing topline growth. record topline growth. much of investors said how dropped to your bottom line and it was disappointing in terms of efficiency. stephanie: can you expose your risk when you give an answer? >> no. tech has always been confusing to me. a lot of it lies and who is the investors. investorofile of the and amazon changing as the company starts to develop profitability and slow down on the growth side? time will tell with that as well. certainly hats off and the point is well taken. this company is roaring strong. it is an overreaction. david: thank you for getting up so early in the morning. john and paul, please stay with us. we will turn to american airlines and oil talk. american airlines fourth quarter profit exceeded analyst expectations on plummeting jet fuel prices and stronger domestic travel. george ferguson is with us. american has decided to take the hedges off. they get the benefit of this downturn in oil prices. american has not hedged for quite some time. that is their strategy. the more interesting story underneath americans earnings today, slowly but surely, consumers and labor starting to chip away on those gains. basis pointsup 300 but fuel prices gave them 1000 basis points and labor took back 500 basis points. lines,all the revenue they're giving back to consumers. david: are these union contracts? wage --there >> they are union contracts. smart, they get those flights to talk about their strategy. profitable ine the airline industry, the pilots gave back during the downturn and now want something in the upturn. this is happening throughout the industry. stephanie: let's talk about zika virus. did they give any guidance or concern that it could hold off travel? >> they're saying it is too early to tell. latin america is extremely important to american airlines. they are the largest carrier to latin america in the u.s. nursing it is too early to tell. it is not an airborne virus. you have to have a mosquito carry it between people. not sure they will ever be able to look inside the data and tell what the effect is. stephanie: thank you for joining us, george ferguson, joining us . paul sweeney, thank you for coming back. let's have a look at where stocks have opened. julie: we are seeing the rally we indicated by futures, something to do with the bank of japan, of course. adding additional stimulus there. we are seeing stocks and bonds go up in tandem. stocks and sovereign debt in the united states and japan and europe. gdp, the other element to consider, coming out earlier, 0.7%, slightly worse than estimates. not as terrible as some investors had fear. we have these earnings reports to considered amazon and microsoft. shares down 8% at amazon. microsoft doing quite well with the cloud business. thathave been beefing up side of things and microsoft has been raining and it -- reigning it in. chevron the other big earnings report we watched that came out this morning. earnings that missed analyst estimates. lower oil prices have taken a toll on the company. chevron says a lot of the did in 2015 will continue into 2016 as it copes with those lower oil prices. on that front, let's get a check on oil. this morning, oil prices are higher and the fourth straight day in a row. we see oil take a leg up. will there be some sort of plan to cut production between russia and other oil producing nations around the world despite the skepticism being expressed on that front this morning? a four-day rally for oil. lets see what's going on at the nasdaq. abigail: gilead sciences, the stock is down today on big news. a management shakeup your to the current ceo is stepping down effect of march 10 john milligan will be replacing martin. is a real character, he has been a public face for the company for a long time and investors really like him. driving the stock down is the news that merck's drug was recently approved. some competition. gilead is the 800 pound gorilla -c to -- hep-c space. ♪ vonnie: welcome back to "bloomberg ." nissan recalling thousands of bits midsized ultima's for a third time. 846,000 cars made between 2013 and 2015. no crashes or injuries have been reported. one of rupert murdoch's sons bounces back, becoming the chairman of sky tv. he was caught accessing the phones of people the newspaper was covering. apple is working with partners in the u.s. and asia to develop wireless charging technology. it could be launched on its mobile devices as soon as next year. iphones and ipads generate two quarters of apple's revenue. stephanie: the beginning of 2016 brought with it a market monsoon and heightened warnings of the u.s. recession. big banks might be able to with stand the challenge. what about community banks like think united? -- bankunited? you are only down 8% this year and up 22% over the last 52 weeks. we have to know what is in your special sauce. you just announced you are exiting the retail and residential mortgage business. what do you know about mom-and-pop? >> what we exit was the -- we are still very committed to residential mortgage and that whole asset class but we provide for both volume in a much bigger vali -- it did not have any impact on the company. david: is it inefficient because it is so labor-intensive? >> exactly right. not profitable unless you can do that business on a grand scale. if it cannot be profitable unless you are on a grand scale, are you handing more and more business over to these big banks to continue to get bigger and bigger? >> a lot of that business is moving outside the banking industry completely. we met with some folks the other day from bank of america. , it islook at volumes $50 billion come almost nothing for a bank that size. is not a very attractive asset class or channel for anyone in the banking sector. lisa: the one-two are getting -- how this business much of a threat to these companies post your business model? >> almost none because we are focused on what is exclusively on the commercial side of the business. while retail origination of residential mortgage was a business we did as a convenience to our customers come in with nonessential to us and to most banks. what is interesting to watch are who were-banks advertising they will approve a mortgage and 30 seconds -- in 30 seconds. let's see what happens. this,nie: the you think being able to approve mortgages and loans and 30 seconds, some people say this is a sign this bubble is going to burst. these businesses have gotten too big too quickly. is not just residential mortgage. it is a small business lending. they drove a lot of this risk off the balance sheets. it makes banks earnings more protectable and less risky over a long time. that business has gone somewhere else. -banks.gone to non david: are you looking at acquisitions? what is attractive to you? >> we are always looking at acquisitions. we've been blessed with the two greatest markets on the east coast. miami and manhattan. 100 branches in florida and 800 and new york. bank ine fastest midcap america because those two markets are holding up very well. we grow about $5 billion a year. it doesn't make sense for us to go out and make an position. -- an acquisition. what we look for in terms of an m&a opportunity is something we cannot build ourselves. something upsizing size and a business that takes time to ramp up. usething that would offer an opportunity to get cheaper funding. both of our markets are so healthy and growing. we are always thinking about the funding side of the business and opportunities to reduce our costs and funding either through deposit generation or borrowing opportunity. david: you are really in commercial. small and medium-sized commercial. what does that tell us about the economy? you have a particular vantage point. john: in the markets bankunited operates in -- all the bank ceos are very nervous. then of us are quite sure what we are nervous about. when we look at our balance sheets come everything seems to be fine. nothing is it showing up. in these markets that are still robust and growing. listen to your show and we read the newspapers and we see andtalk of recession worldwide economic depression. it spooks the people who run the banks and regulars who clampdown on the industry. whatever experiences telling us is that our markets are healthy and continuing to go. stephanie: just keep watching the show. is thing with us. next, the highlights from a big, big week. ♪ stephanie: now for a look at this week's conversations. >> people have reassessed the andrtance of fracking realizing the u.s. is a domestic producer and this oil prices hurting us. outright hurting our gdp. , small, medium and large were forced in the last couple of months to prepay 100% of their corporate tax. this is what you do to a company if you want to crash it. s on thef us are serf land of google. that is the reality. it is ok, sensible to treat your serfs welcome a because if you don't come history has said they rise up and get on horses and kill you. >> i will tell you on them vigorously higher. this unambiguously higher. in 24-36 months, oil prices will be higher. by mr.icahndriven -- it was not. the board came to its conclusion without speaking to mr.icahn at all. david: we end today with post it. i like mohamed el-erian's point. oil prices going higher. means a stock prices are going higher, i like to hear him saying that. rfs in the land of google from barry diller. you better be nice or they will get on their horses and kill you. stephanie: my just came from julie hyman. r pricing going down 15%. that is a big surprise. on monday, we will have more surprises. john, thank you for joining us. monday will be pretty special. tech related this miami dolphins owner -- he knows real estate and fitness. analysts.banking and michael foreman. and we have a very special new experience here on "bloomberg ." our new green room. you will get behind the scenes footage. david is out on monday. i will be back. see you then. ♪ betty: it is 10:00 a.m. new york, 3:00 p.m. in london, and 11 p.m. in long congress. welcome to bloomberg market. betty: from bloomberg world headquarters in new york, i'm betty liu. bank of japan stunning investors moving to negative interest rates to juice up their flagging economy, while the u.s. barely eked out growth in the fourth quarter. in the meantime, that move propelling a rally in asia and european shares, and one here in the u.s. oil is also climbing, but still no word that opec will meet to discuss any type of production cuts. zero splitting in two after pressure from after the investor paul icon who gets three board seats. we hear from the chairman and c.e.o. head straight to the markets. that's where bloomberg's julie hyman has the latest "on the markets" and other triple digit move for the dow. julie: bank the japan going

Related Keywords

Nevada , United States , China , California , Syria , Russia , Washington , District Of Columbia , Bahamas , The , Paul Point , Northumberland , United Kingdom , Iowa , Finland , Switzerland , Singapore , Miami , Florida , New York , Malaysia , Japan , Germany , Iran , Texas , Reno , London , City Of , Cayman Islands , Iraq , Saudi Arabia , Hong Kong , Sweden , Paris , Rhôalpes , France , Venezuela , Kuwait , Bermuda , Americans , America , Saudi , Chinese , Russian , Venezuelans , Saudis , Britain , Iraqi , German , Swiss , Syrian , Russians , Japanese , American , Bloomberg Julie Hyman , Marco Rubio , Bloomberg Francine , John Milligan , John Kanas , Mario Draghi , Kendra Morgan , Marissa Mayer , Jeff Bezos , Cory Johnson , Jeb Bush , Matt Mccoy , Kyle Zimmer , Nicholas Ferguson , Janet Yellen , Alexander Novak , Matt Winkler , Brendan Greeley , Paul Sweeney , Tom Keene , Davide Serra , Tom Giles , Julie Hyman , Terry Lundgren , Betty Liu , Barry Diller , George Ferguson , David Allen , Rupert Murdoch , Ted Cruz , James Murdoch , States Lisa , David Westin ,