Rose to a record high in january. Shifting over to japan, Industrial Production grew the most since 2011 indicating the economy is strengthening. Jumble. Of data but a all thisrning we got data. Starting at 8 30 a. M. , gdp. At gdp so look we get in theory they refined any little bit. Also, personal consumption consumption. 9 45 a. M. , chicago or kissing managers index. Michiganversity of converts number and pending home sales at 10 00. And we may be getting the letter from mr. Buffett as well. Last years letter was strong and smart from the buffet we wew years ago buffett knew years ago. Check. Ave a warning data stocks, bonds, currencies, commodities. I am going to call it off but i am going to say the markets are calm her given what we saw in the ukraine yesterday. 2. 6710year and the euro. S stronger, up near 1. 38 you can really see the geopolitics coming in. A stronger102 yen. The ruble is stable. That speaks volumes. The backstory away from the ukraine is the managed weakness of the chinese yuan. 615 six. 15. Scarlet fu has the front page. The crisis in ukraine keeps expanding. Overnight him of the latest elopments are russias black navy fleet locked another airport. Crimea the flashpoint. Ethnic russians make up about 60 of the regions population. At the same time, but new ukraine government has put in a to kievto the imf to go and Start Talking about a possible bailout. 35 billionne needs to balance the books. Part of the problem is with the crisis, tax revenues are not being collected. Out,m keene has pointed ultimately they will be able to get through with that they will have a shortterm capital studies years ago in economics, the basic idea, adam, of the real economy. Plunges. No other way around it. Viktor yanukovych, the former president who says, by the way, he is still ukraines leader, is holding a press conference in russia later today. What i would say is things are moving quickly in the ukraine. The newspapers can barely keep up with the headlines. In about 10 minutes we will go to the ukraine with our own reporter on the ground. What what x . Activist investing, who led by both billion or agitators like carl icahn. , foundattacked ebay major conflict of interest because he invests in companies that compete with ebays paypal unit. He accusesonse himself from discussions involving companies he backs. Dan loeb is now willing to work with the current management at 70s, one of the companies he is focusing on. Which is a bit bit of a switch because he has been trying to replace the ceo. He says he will work with the current emmitt smith if they put three with current management if they put three of his nominees out there. By his own rule. Sothebys is basically a bunch of rich guy in the hamptonse th. Guys like dan loeb, how curious a Hedge Fund Guy on wednesday i would like to. [laughter] very tane looking today. We will explain why later on. We have the spray pan person spray tan person. And janet yellen moving the market. Remember it was delayed by two weeks because washington had a snow day. What she that is listen said is central bank may change the strategy of the taper if the economy gets weaker. Market reaction, the s p 500 ended up setting the record. The great headline in usa today said the s p parties like it is 2013. She hit the ball out of the absolutely, walked the fine line that is so difficult to do. We have a special guest. There is a frontpage story for the morning. We have a very special guest for you. We are east coast. If they live three zip code from manhattan we think it is distant. Keating,out it, frank resident and chief executive of the American Bankers Association. Of thehe 25th governor state of oklahoma and we are honored to have him with us today. You look at the mood. Floyd norris writing up the cbo, the budget getting better, jamie dimon talking about what to do with the cash. Why are we so miserable in oklahoma and other parts of the nation if we seem to be doing so well . Thank goodness for federalism because at the state level, bad governance will result in bad results and Good Governance will result in good results. We moveds governor from 45th per capita income to 38th over my eight years. I was only the third republican governor to the state, the only one really did but we passed right to work and constitution through a democrat house and taxes, government of welfare and all those things but at the national level, as all of you know, the big crisis is demographics. Medicare, medicaid, social security, interest of the debt. By 2025 every cent of tax revenue will go to that and that alone. That is why the gloom exists. I going to rip up the script. Minimum wage. In zurich, switzerland, the numbers work up to 12 and here in new york, seven dollars . I am going to guess in tulsa, oklahoma, and mcdonnell mcdonalds the mid to value meal is a little cheaper. How do you do a minimum wage of the federal pages when you have bases we have that disparity . As republican is probably high treason but i have never been concerned about minimum wage at a certain level. Obviously if you set 50 that will not be good because then you will starve job creators. 7. 25 dollars to 10, that is a big jump and from the analyses of last week, a major number of number of people who will not be able to work, that is not good. It is a liberal more democrat agenda. These are the things they believe very strongly in. Here is what is curious. You are a week were a republican governor and the only republican governor from oklahoma who is ever been elected. You raised the pay for teachers by 3000 annually and figured out how to get state troopers more money and you did it while lowering taxes. How did you bring it all together . Forgain, think of this federalism. Except for one state, the other 49 states have balanced budget requirements. You have to balance budgets and you have to make decisions, some good and some bad. Everyone has to sit around the table, democrat and republican alike, if you have a balanced budget the requirement. In washington you can postpone the debates and discussions because there is no requirement for a balanced budget. Ui now head of the American Bakers association but if you want to the Community Bankers covered. What is your take away . The average Community Bank has 35 and please, and they have 11,000 pages of proposed and final roles from doddfrank, very difficult, to say the least, for a 35 Employee Bank to digest. Now the operating income of a lot of those Community Banks rising with the complainants part. Imagine you have a restaurant and you were spending five percent to 10 of operating income responding to the city or county health department. That is a great point. We forget that most of the banks of this country not by assets but by number are small business. 90 of the American Bankers Association have a billion or less in assets. Frank keating we will talk about to be to fail banks. Right now, company news. Speaking of too big to fail, mount gox, a quaint exchange, filed for bankruptcy in japan. Three quarters of a million bitcoins belonging to users and 100,000 of his own. The worldsonce in Largest Exchange for the digital currency. As began dismissing workers part of its restructuring plan. It started firing employees in new york, North Carolina and five other states yesterday. They could ripple in the elimination of as many as 13,000 jobs this year. Cis is according to a Sanford Bernstein analyst. The winter storms of forcing united to cut revenue projections. The airline says revenue will drop after it canceled 22,000 flights due to the weather. No overall figure on how much lower the revenue will be but it prompted one analyst to forecast a much deeper loss this quarter at united. Adam . We are going to take a very quick rate. When we come back, cut the ukraine be on the verge of tearing itself apart . We will be on the ground in kiev. Right here. Bloomberg surveillance on Bloomberg Television, streaming live on your tablet, phone, and bloomberg. Com, and we will be back with frank keating, former governor of oklahoma and current president of the American Bankers Association. Where did the month of february go . Eventful in washington, Foreign Policy in geopolitics playing a debate inn a february washington. Of course, a terrific budget report yesterday showing less of , giving pause as they awaken washington. Coming up in the next hour, we are honored to bring you Charles Plosser, a controversial and very smart head of the philadelphia fed. Guess, on hisr, i inflation worries but much more. Charles plosser on the American Labor economy. Look for that in our 7 00 a. M. Hour. This is bloomberg surveillance. We welcome all of you worldwide and particularly on the continent of europe. Scarlet fu and adam johnson with us this morning. Morning mustread right now. This is kind and lost in the shuffle of what is happening in ukraine. The New York Times the editor of the literary magazine talking about young people risking their lives to demonstrate against the government. Are not especially interested in geopolitics. What they know is the democratic progress needs more than just the legend to move it forward, it requires full freedom of speech and the media. He says the government cannot go by its old playbook of suppressing information. It does not work in this era. This is an era of twitter. 140 characters. I have to read up on this, but the distinction to me in people is a lot of we dont say the venezuela. Theas not a member of soviet union. Venezuela is incredible, more oil than any country in the world. More than we have, more than saudi arabia or more than anywhere else in the world but think about the poverty. Oflets go to the governor oklahoma, former governor, frank keating. We see where we are in the independent oilproducing Central States versus south and venezuela. How is the perception of venezuela in texas and oklahoma . It foren venezuela. We had an Exchange Student from venezuela years ago and he became an m. D. And lives in miami. His parents are both. Theres in venezuela, povertystricken. The experience of a wonderful country like that the Security Services of cuba basically run the Police System of venezuela. It is a thugocracy. It is incredible, in one of the National News media papers, a huge line of people lining up for bread. They cant even get toilet paper. Adams point, a very rich country because of the oil revenue they have. It has just been miserably governed. That is why it is poor. Detrolstay to the and agree. Frank keating our guest host for the hour petrolstate to a degree. We will look at the big business and big scandal around college athletics. The failures at unc. Also coming up, we will head to ukraine next. Good morning. Im tom keene. A frigid morning across much of the northeast. Bretton woods, new hampshire, 20 below zero as we speak. Weve got to warm it up. Heres top headlines. Adam johnson hasnt. Car seatsan to make mandatory in china. Working on a proposal requiring the use of safety seats. China has half the number of vehicles in the u. S. But three times as many children are killed in auto accidents every year. Rebounds, the major brewers again are focusing the cheap bill. Miller, coors, anheuser in benefit will increase marketing for economy brands like keystone light and busch light. Persistent unemployment left luke allah workers with left less money. Could be another blockbuster. Warner bros. Is filming a movie based on the popular videogame on and on caps the success of the game. And you have the lego movie. Lego has taken an almost 190 million in the box office animals three weeks. I am not sure i am going to see the movie but i respect what they do. Everything is awesome. Remember that. The news flow out of the ukraine, on the verge of tearing apart, ethnic tensions in crimea. Two airports taken by armed gunmen dared this morning, very difficult relations between ukraine, europe, and russia. We need to go to kiev. I were reporters there is iev,rting on the calm of k the tension of from you. I assume all of kiev is focused on crimea. Is a major concern. I had a chance late last night. Is a down with a man who security chief his official title i think is secretary of National Security defense counsel in ukraine. I asked if he is worried about the Russian Military conducting exercises nearby. Yes, i am. I am worried about it for sure. Also the capture of the government in crimea by units in my opinion that were sent from russia, from moscow. From russia, we see a very aggressive method of tearing out policy toward ukraine and we attempts to the five divide ukraine or take the historical crimea. Em, on the among will focus of crimea but the former president is in moscow. A press conference at 8 00 a. M. New york time. What will key have a for from their former president . The big concern here today seems to be about missing money. The new Prime Minister here says the regime of yanukovych, the man who found safe haven in as much as have put 70 billion offshore and that is morethey want to know about. Especially given the fact the ukraine need to 35 billion in the u. S. Has pledged a mere billion dollars. As i look behind you and kiev seems to be returning to calm, what is your expectation regarding the imf who will be in kiev next week . New Prime Minister this morning saying to a crowded press conference saying they are convinced they will be able to pay back all their creditors. Theyve got no restrictions on what they are willing to do. On thealking to People Ground and looking at how people are going about their lives, what have you observed. The city center, it is very difficult to get cash out and rumors flying about the restrictions on how much money you can take out. There are a lot of arm demand. They are not carrying weapons that can fire bullets but they are carrying clubs and you see them everywhere. Kind of a carnival atmosphere meets mad max out on the square. Marx in kiev, appreciate that. Dowe see it on and on and i not see any compromises as we go into the weekend. Arrivalonder what the of the imf officials in kiev next we will do. The u. S. Has pledged money but a symbolic amount. 1 billion out of 35 billion. I want to make a point. We spoke to hans of graylock on the debt Restructuring Panel for grayson also restructured ivory coast and argentina as well. He made a point it is an income statement issue and not balance seat. The level of debt in the ukraine is significantly lower than a lot of European Countries but the problem is there are no tax receipts right now because of the crisis and it is not able to make some of the payments. The government is busted, no question. But the real focus is should the imf go win. That is a going debate. I dont know who goes in . The reason the imf was created, postworld war ii, to go in and help broken economies. We are not saying ukraine is broken but aspects of the government is broken. The little deterioration of tape. Dow futures, 20. The rest of the markets, unlike yesterday, much calm her off of the headlines. But you can say for certain that most investors are not too focused on what is going on in ukraine but looking at what janet yellen said for instance. In the meantime, new alltime highs in the u. S. Maybe the u. S. Is just the best place to go. We will talk about the u. S. When we come back, specifically about the bank tax. Failthe fix for too big to banks make the problem worse . I guess is frank keating, president of the American Bankers Association our guest is a frank keating. Good morning, everyone. Im tom keene. Lets get a data check. A lot going on this friday morning. Record high,er the s p gives it up a little bit. Not confident it will continue. 10year all over the place. Geithner yield today. A little bit of risk on. One. 38 euro begins to get your attention. You wonder when it starts to hurt germany. Warner to losers. Turns out jcpenneys and struggling, they managed to put in a good day in the market yesterday. 25 iny up by the most, the still trading below 7. 50 a its a gross margin will significantly improve. As for sears, the fourthquarter loss narrowed. Eddie lampert, the ceo over there. Chicos down 8. 5 . Im winded. You know what, president obama is running again and so is Vice President joe biden but it has nothing to do with the election. They appear in the video to promote the first ladys lets move campaign aimed at childhood obesity. Jogging around the white house. Doing laps around the rose garden. The president s job dog. I love the music. Joe. Theres the dog. Hillary would never do this. Joe. Kind of leisurely. Not going for record time. Wouldhink the president rip him apart if it came to basketball. You are the hockey guy. He is going joe speed. After a good workout with campaign. Ove joe, a vodka gimlet. Not sure it was water. The houseirman of ways and Means Committee wants to cut the top rate down to 25 , increase at the banks. Frank keating is head of the American Bankers Association and former governor of oklahoma and he is with us all our. How do we bring back borrowers and things together so they are partners and not adversaries . Ad that you showed, but imagine if it was republicans and white shirts jogging . When republicans the fact that banks are bad and weft attacks the banks, and as you point out 90 of banks in america are fewer than 35 people. When do we see banks and borrowers as partners . I really think banks today, as a result of what has happened in 2008 a strong liquidity, strong capital, wanting to lend. Obviously to borrow you have to have a job, assets, and income. We dont do not we the banks but it is not the behavior patterns that occurred prior to 2008 and i think it is a good thing. The problem is with the bank tax, over a 10year period, 86 billion to 89 billion a year, it is really a trillion dollars of less lending that will be done. In other words, the tax will go not to reduce the deficit or debt and it will be less lending. Why would we be doing that . It makes no sense. Spoke with a hunt representative and i want to get your take. To 25, and you are right, 99 of taxpayers will be at 25 or less. 99 and a when i was in school. What we do that is have tradeoffs. Back to the one percent argument. Does this thing stand a snowballs chance in hell passing . For the bank tax, i hope not, cost because you will have less lending. The panel that i was on, and simpson bowles, better known to the general public, we all recommended dramatic reduction rates and elimination of most exemptions, deductions, and credits. That is the only way you solve the problem. If you go at it piecemeal, whether a bank tax on mortgage interest eduction, you never get it resolved. The reality is you want to balance the budget and get the debt in line with where it ought to be. You are going to have to do very dramatic things. I am glad that conversation is starting. You are known as one of the most courageous talkers in the midwest. You went to battle with catholic priests over different topics that you represent the fatcats, no question. You represent the fatcats. How do you get big banking back in sync with mainstream, told the, oklahoma . I am one who i am kind of unamerican first. I am kind of an american first person. We have a balance of payments surplus so we all can cover to that. To the american average person is a small bank. If you have a caterpillar headquarters, big banks will help them internationally. And the smaller and regional banks, their employees it all holds together. Big banksr, arent too big . One group says they have to be big internationally and the other group says they are to back. Are they to dig . Of the top 10 banks in the world there are two in the United States. They are not big enough . What i am saying to compete internationally yesterday Strong Enough and muscular enough. But obviously we have to have better underwriting and regulation, which i think has come since 2008. I am not a great fan of doddfrank. It was the regulators, in my judgment, at the time that did not do the underwriting sufficiently to satisfy the needs of safety and soundness. But they are hard on it now. I think they are very professional in their approach. That obviously access and expense chills. I suggest you still have a huge sales job. No question. You talk about competing overseas and a lot of u. S. Companies compete overseas and they get most of their revenue, its not a big chunk, from overseas. The revenue u. S. Government gets from corporate taxes have been falling. We have a great chart that illustrates that. Back in the 1950s, u. S. Revenue from Corporate Income tax was about five percent of gdp in it has come down to about 2. 5 today. What part of the tax code is most expendable in your view . What you want to do at the state level or federal level is have a tax code that encourages productive activity. If you have a tax code that does not, it is not good. Inmy judgment, the tax work enterprise in savings does not do the tax consumption. Basically where a lot of states are going. That is basically where we and the rivlin panel suggested to get the debt out of way i should dramatic i should say dramatically reduce the deficit, to get to a sales tax like to have in the state of washington or even to a vat tax and focus on consumption but then get rid of corporate and individual income tax. Ofyou representing the haves society. Not like Andrew Mellon but a huge how do you bring the trust back in the relationship between the major banks and the people watching the Television Program . How do you bring the trust back . The important thing is have the leadership of those institutions and i believe they are people of integrity, and vision and let them talk about ordinary people about saving and investment and retirement. Think about this the problem we are facing in the United States is a good problem and a bad problem. The good problem is we live far longer than our parents and the bad thing is we live far longer than apparent. Being able to live through the retirement years, that is where banks can play a very significant role. Guidance and advice for ordinary people from sea to shining sea. But you are right. The issue in 2000 and focused on the banks the popular press focused on the banks. And that is going to take a while to get out of the ditch. Frank keating representing the American Bankers Association. Earnings and a little bit another month to go. Go big and go home or go home. With geometry friday, we will do a little bit of math to find out what is the best way to pay for your pizza. Pi r squared would be the formula. Are single best chart is next. It is 11 degrees in new york city this morning. It is a gorgeous morning with longer days. Do you like that, late at night walking home . Friday, from new york city, it is bloomberg surveillance with tom keene, scarlet fu, and adam johnson is with us as well peru zynga headlines. In venezuela, National Guard troops used tear gas to break up an antigovernment demonstration. Protesters tried to block a highway in caracas when the troops moved in. Earlier, thousands of protesters took to the streets in the city, as president Nicolas Maduro sought to defuse tensions by declaring a Long National file holiday. A spokesman for germanys foreign minister said the country of ukraine cannot be stabilized without russia. Saying it is naive to think ukraine can be stabilized economically or politically without russia. Again, that is coming from germany. Rain is falling in the drought stricken southern california. The storm is forecast to dump up to one inch per hour of rain this morning. But mud and rock slides are feared after wildfires left the mountainside to virtually bear. It is predicted to move across the country and eventually dump snow and sleet over here in the east coast in time for the monday morning commute. That should be fun. Those are your headlines. You show up with your hunter boots sunday night. And put the boot warmers in their sunday night because youre going to need them. Best chart. Single she will be eating pizza and watching the oscars. A bigger is better when it comes to value. The mass of why bigger petri bigger peaches in such a good deal is pretty straightforward. The area of the circle increases with the square of the radius. An eight inch pizza pie will cost you somewhere between lets say . 17 or . 18 per square inch and used trichet out to an 18 square inch i and the price drops and it really comes down. This was published by npr, using data given to them. You like roasted garlic . Roasted garlic and pepperoni. I like the analytical pizza. The tangent now you are talking to me. I like a crispy tangent on my pizza. We all like eating pizza but overall everyday 13 of the population in the u. S. Will eat pizza, about a 10 billion increase. Bloombergs Olivia Sterns is here with what some people call the pizza cartel. Theyre calling it the pizza cartel, the dominoes him a pizza hut, papa johns, they are growing their market share and they now have the majority of the market share in the pizza industry and they are growing it at the expense of their smaller rivals. The big trend you are seeing in the Food Industry is the big push into local and natural agreements. The phrase farm to table. People went independent coffee shop and grocers but they dont t independent independent stores here in new york when it comes to pizza. Manhattan, 60 bucks, its got to be 80 in tribeca. Look of the marketshare numbers. A few years ago, the big guys did not have the majority of the marketshare but today they have 52 in 2013. What they are doing is capitalizing on their scale at the expense of their smaller rivals and in particular they are doing it by spending heavily on technology. The smaller guys cannot afford afford to. Dominos d dominoes, 40 of total sales for mobile and apps. Has been downloaded more than 7 million times and dominos at the commercial where they make fun of it. Scarlet, you said you like pepperoni, but when you call somebody to order pizza on the front half of the time you say pepperoni and they hear peppers and there is a mixup. It is faster, more efficient, the margins are better because you dont have to pick up the phone and more accurate. Dominos is saying they are wasting a lot less food. Tulsa, oklahoma, the best pizza in told for, andelinis pizza. I like the diameter piece. I want mine to be now on this with a lot of green things, healthy, but theres got to be sausage. Pepperoni is ok but i just loaded up. Inis the peak of choice . I grew up in tulsa and go back all the time but when i am at home i am with my motherinlaw who doesnt eat you to. In the world headquarters, we should get all them together to argue about the best pizza. Pepes. The overnight team good to see you. Russia yet . M lets see traded in her red russian doug for her new york and stress. But still in the same family. Olivia sterns, thank you so much with the latest on pizza. Coming up, the business behind the oscars. One that brings color to the stars. That brings us to our twitter question how will you be tuning into the oscars . Will you follow a live twitter feed . I like the twitter feeds. I know adam will just watch the celebrity red carpet. I want to see the ladies in their dresses. And the botox, they need to fill in a little bit. Tweet us. This is bloomberg surveillance. Im scarlet fu here with tom keene and adam johnson. Lets get you company news from the files of bloomberg west. Adobe signing onto president obamas broadband initiative, pledging 300 million in software and training to the program to increase Broadband Access and text to schools. The company has donated 1 billion to the initiative. A legal win for apple in germany. A 2 billion lawsuit accusing apple of Patent Infringement was dismissed. The Company Brought the suit saying apple infringed on tech. To let go workers as part of its restructuring thing. It started firing employees in new york, North Carolina and five other states. It could result in the elimination of as many as 13,000 jobs this year. That is according to a Sanford C Bernstein analyst did that is todays company news from the files of bloomberg west good it will backstory for the quarter, the cost reductions and fire rings going on. It is not letting up. Remember, it was on monday we were talking about oil bank of scotland. And an additional jpmorgan last week, 8000 people and now ibm. Not good. You want to get americans back to work. The tally has kept climbing. A consistent theme. We need a little diversion. Lets talk about the academy awards. This sunday, and with 203 nominees a lot of work behind the scenes. Not just a stylist and makeup artists but also sprayed tanners benefiting. A growing business ahead of award shows. Of we have the owner and ceo glow. Kimberly we got you in here because you must be really bitter cant believe weve got you in here because you must be really busy. Them are ready tanned because you want to do it a few days before hand. A staff of technicians working every 15 minutes. Their house or apartment and wherever they request. We also have an office but we do most celebrities at their homes. Where is the craziest place you spray tans someone . Restaurant bathrooms in the stall . Yes. Thats crazy. Got to do what you got to do. What happens when they come in and hear the spray gun . I am six minutes in and out. How long does the torture take . Six minutes. And you can make me beautiful and six minutes . In six minutes . Demanded a lot of spray tans . It has gone a lot. Ceos who dont have time to go on vacation, they have to look good on camera or whatever, they just come. Why is it the tan is somehow healthy as opposed to fair skinned and well preserved . Im serious. A lot of fair skinned people cannot tan, and they turn bright red. Our solution looks good on all skin tones. , you did not spray tan Matthew Mcconaughey became out of the Golden Globe Awards looking orange and john boehner is known to look orange on camera. Christine lagarde has gotten more and more tan. She is seriously orange. Looks like a tangerine. What happened . Show up a lot more on camera so in real life they might look natural but then on the camera complete orange. Is it way too much . They definitely got a little too much spray tan. You have to go light, and the solution, too. What does it feel like . Getting it done . What is it sticky . Mist, a like a fine little bit cold. But it is very easy. Six minutes of your life. Boehner, we speaker go to the important question, we ask frank keating, do republicans tan . Not well. [laughter] we are inside working on the time. Can get mitt romney to a spray tan. The fact we are talking about republicans and spray tanning is amazing. There has been a cultural shift. 10 or 20 years ago no one would admit to a fake tan but now it is out in the open. You are saying wall street, politicians get spray tanned along with the celebrities. What accounts for this . Like getting your nails done or your hair, it is part of the whole beauty process especially for the oscars and the whole awards season. I just dont think it is taboo anymore. Who doesnt best . Who do you look to . As far as celebrity celebrity all together. Lets the, oscar nominees, i would say Julia Roberts looks great. It takes a village. It really does. Scarlett johansson looks really great. Tan, shet see her in a will be ever lost in translation. Do you think Charles Plosser spray tans . The owner and founder of gotham glow. We have a forex report. A tanned forex report. Dollaryen right now. The ruble is stable today, seriously. Scarlet . We will be back with Charles Plosser from the philly fed. It is called a well orchestrated power grab. Armed men are in control of two places in the ukraine. They agreed to disagree at the fed. The philadelphia said president , Charles Prosser plosser joins us. Good morning, everyone. This is bloomberg surveillance. Is friday, february 28. Where did the month go . I am tom keene. Here. Johnson is ou our guest host, Charles Plosser. A lot over night. Here is adam johnson. Ecb, mario with the draghi said policymakers are committed to defending the area against inflation. House pricesces rose. Looking at italy, unemployment rose to a record high. In japan, Industrial Production grew the most since 2011. At least there is some strength in the japanese economy. Acta the u. S. , a lot of data today. We have gdp. This will be the second time we see gdp and see if they refine it. Chicago purchasing managers index. The university of Michigan Confidence index. A ton of data. Keep it here. Earnings go, Berkshire Hathaway is expected tomorrow. Scarlet, you have some company news. Filing forx bankruptcy. It lost three coin Three Corners of a million bill coins bitcoins of users. Dan loeb says he is willing to work with the ceo of sothebys. Their trying to replace ceo. He will work with their management if they put three of his nominees on the board. Loeb is the largest shareholder of sothebys. Storms is forcing united to cut its revenue projections. Revenue for each seat flown will drop after a canceled 22,000 flights due to the weather. No figure on how much lower revenue will be. The change prompted one analyst to project a much steeper loss at the airline. , ukraine. O to kiev what are you seeing on the ground this morning . It has been more than a week since the worst of the violence. The themes in the main square leslightly reminiscent of miserables. There is a Shopping Mall directly underneath the main square. You are surrounded by garbage, barb wire, and you walk downstairs and you can buy jewelry. When you look at the Financial System of ukraine, the imf being asked to come in, it comes down to currency. We have seen the ukraine currency weakened dramatically. Kw is the flow of money in iev . The main square, a lot of the banks are closed or operating under unusual conditions. You will see people try to get cash out of atms and not always come away with what theyre looking for. The difference is staggering between what were seeing in kiev versus what were hearing about crummy a. What are people in crimea. What are people saying about crimea. One of the most important things is keeping ukraine united. Russia has been known to harbor intentions about crimea for a long time. Theyre hoping nato will stand up and make sure nothing happens to crimea. Thank you. V thising from kie morning. Difference inte a opinion on inflation. We will get to that. We have to give an a plus two chairman yellen for a terrific two days of testimony. I thought she had the ball out of the park. Unlike the Philadelphia Phillies. A bright lady. I think people like to pull a loss or. Polarize yellen have a lot in common. We are all economists. We share a lot of common ground. Inflation is where the battle seems to be fought. Isor force participation low. Where is inflation going in this country . I think it has been pretty tame. It is below our target. That is not a good thing. It does not seem to be drifting down any further. The fomc says it believes at inflation will rise. Deflation is not a worry that is removed. This is an italy deflation. You are notord, worried about disinflation . No, i am not. I think the inflation rate has our target. Below i do not think we are heading for a bout of deflation. There is far too much angst about the possibility of deflation. se vast majority of the u. S. Recent disinflation has resulted from Technological Innovations that raise Economic Performance and potential. There are a lot of oneoff changes in the inflation numbers. We had a massive cut in medical payments last year. That will roll out of the data in a few months. There are factors going into the low inflation numbers. I am confident they will drift back up. Not dramatically, but back towards our target. How do you interpret this advance we have seen . A long time ago not to try to predict the stock market. Is that expectations of an improved economics momentum or something artificial . I think it is fundamentals. The economy is on firmer footing than it has been in a number of years. I think most of the fundamentals are there. I am confused. We have great Corporate Cash earnings. They are using assumptions of the crisis as part of the core assumptions. You as an optimist on better economic growth, what do you say worried aboutrew a permanent, subdued economy . There are a lot of questions there, tom. The economy has been devastated during the great recession. It has been a very long slog. I am optimistic about the longerterm growth of the economy. It is beginning to wane and i am optimistic that we are on a better track. We hear that bloomberg wrote titled i am worried the fed may be too late in raising rates. What do we do about it now . Going to raise rates while we are buying assets. Are trying to lower provide more commendation by buying assets. Ourselves in a situation where we are ready to do that. There is a lot of excess reserve in the banking system. Its a start to flee the banking system, where the excess funds go to . Loans. It might help, but it creates a lot of inflation. Charles plosser with us. A little bit of a nudge down. 18. 50. As a terrific number. The euro dow a stronger. We are covering everything. We want to hear from you. Our twitter question of the day how will you be tuning into the officers . I am going to watch the philadelphia story. Good morning. Charles plosser is president of the philadelphia fed. Philadelphia is Forward Guidance the look out into the future . Is it a joke . Forward guidance that is not in any paper you wrote. I dont member of from the textbooks. It is when you want to signal about how Monetary Policy is likely to be conducted in the future. What are we going to do in the future . Were going to guess the future with a crystal ball. It about trying to describe how Monetary Policy makers will react to the data that comes in. We do not know what data will come in. Is there too much information now . There is never too much information. The problem is the interpretation of the information. There is a lot of information out there. U. N. Academics from the Freshwater School have a belief in the market clearing system versus skeptics that feel the government has to come in and police. Wheres the battle right now . I dont like the freshwater, saltwater monikers. Markets tell us a lot. They do wonderful things for us. Many times, they are not perfect. As a result, there is opportunity for government to take action and lease markets and control them. You can overdo that. We can put the economy under great stress. We overtax the markets you have delicate policies about predicting the target Interest Rate, but i will say what will be the ramification of a more rapid move to neutrality zero bound . Forever there are two risks at being at the zero brown and zero bound. We could be facing a lot of inflation later. Facing asee ourselves japan world. If we keep the Interest Rate at zero for a long time, the only way the economy can function is to have deflation. That would not be a good place for us to be. Charles plosser with us. We continue our discussion. We need to talk about carl icahn. It is bloomberg surveillance. Good morning. Good morning. I am tom keene. Arelet fu and adam johnson with me today. Might Michael Mckee with us as well. Charles loss or is president of the philadelphia fed. Useational guard troops tear gas to break up a demonstration. Thousands of protesters took to the streets of the city. The march came despite the president s attempts to defuse tension. Major brewers are again focusing on cheap beer. It miller, coors will increase their marketing for connie brands such as keystone light and bush light later this year. Rain is finally falling and south in southern california. Mudslides, rockslides feared after wildfires left the mountainsides bear. Economic data. As winter falls wait a minute, it has not followed. Thawed. Plosser, he is of the philadelphia fed. As the economy progresses, we expect to continue to reduce the pace of purchase. What do you anticipate in what is telling you the economy is still progressing at that rate, given the data we have seen . The data is noisy. With the weather and other things. We have to be patient. The economy left the end of the year on a good knowing it is in a position that is firm. It will continue to bring down the Unemployment Rate and continue to allow the economy to progress. Anticipate no change at the next meeting . You can expect that we will evaluate the data that we have at our disposal. I think we should be patient and not read too much into this sort of data that is noisy. All of the data gets revised. We have to be patient. We may not get a very good handle on the underlying economy for a couple of months. Even then, we will be uncertain. We always are. The taper remains on track, why . Does bond buying work much anymore . Are you worried about the size of your Balance Sheet . Maam i was never a fan of the bond buying. Concerned we are about our Balance Sheet. He gets bigger and bigger and at some point we will have to unwind this thing so that there are so and there are some concerns about that. We have to be patient. We have to assess the economy and that the data command and not be in the position where we are whipsawed by every number that comes in. That is not a good way to conduct policy. Forwardalk about guidance with tom. The 6. 5 unemployment threshold is essentially obsolete. How do you signal to the markets which are intentions are . It is on the table. Is obsolete. Shold it is almost irrelevant. With want to replace it something, we have to figure out what to replace it with. One of the concerns i had when we had the 6. 5 was that i was sayinged we were not what happens after we get to 6. 5 . Now we have to figure that out. This is a terrific conversation. Are you more concerned about the inflation mandate or the jobs mandate . Now we are concerned about both the mandates. Memo that was a safe answer. They teach me that in school. You are also saying a 6. 5 number doesnt mean as much. We are not counting people. You cannot key off unemployment, can you . Them in the Unemployment Rate is still sick and meaningful. It is not as low as we thought it was. A lot of the people that are dropping out of the labor force are not coming back. They are retiring. They are on disability. Getting aer better understanding of why the labor force has shrunk the way it has is important in understanding the degree to which the Participation Rate is something more fundamental in the demographics since the baby boomers retire. Theson is innovation Participation Rate has fallen. Comes, how do you signal that to the markets . Can you avoid the kind of big market disruption that we saw. We have to be more explicit and more articulate about what kind of data we are going to be reacting to. Point. Ot just about one we are going to behave in a more systematic fashion. We have to figure out how to do that if we are going to be successful in getting Forward Guidance of any kind and be committed to doing it. If we change our mind every time, it is not meaningful. Are you concerned about this . It is part of our communication challenge. Is from thelosser Federal Reserve bank of philadelphia. He is with us for the whole hour. We are happy to have them here. The latest company to devalue your miles. Which airline get you the best deal now . We will find out after the break. Lets get you some company News Headlines now. Fortis picking a market share among Retail Market buyers. This is according to data from ihs automotive. Unitedstorm is forcing to cut its revenue projections. Revenue for each seat flown will drop after a canceled 22,000 flights due to the weather. No figure on how much lower revenue will be. One analyst forecast a deeper loss at the airline this quarter. That is the company news. Activist investors make a lot of noise this week. They are not getting a lot done. Letterahn sending out a to ebay in his push to split up ebay and paypal. To Board Members have conflicts of interest. Dan loeb is the one making noise. An annualrt to read report from the back. You look at the board of directors. You analyze a given board. The board holds the ceo accountable. He speaks to separate roles for the chief executive officer. The board sets its own and keeps the executive accountable. That is why you look at that. Been pushing to split to unlock value. Cap sicko rejected that. Pepsico rejected that. Theres a theme here. That is where the money is. It is not really unlocking shareholder value. Mr. Icon is taking heat over apple. What carl icahn is doing is what a lot of people are saying silently away from the media. What theyre doing is a result of what people say is a zero Interest Rate environment. The idea zero return goes to Charles Plosser. Do we have challenges in investment . Do low Interest Rates distort American Finance . I think there are a lot of people that complain. Is worried that we distort various price signals. You worry about chronic low Interest Rates. How long will it take before the pressures of that begin to show up and Financial Stability and capital going where does not need to go. The more Central Banks around the world and the fed try to distort the signals, the distortions build up over time. Capital going places, being turned around quickly. Not much sign of the traditional money velocity. There is a ratio of how much money is in the system. That has more to do with other things. I do not think that is driving the search for yield that we see. Bank loans have fallen. They are up a little bit. Are there optimistic signs that things have turned or are starting to turn . Economy is in better shape than it has been in a couple of years. Man i have never been one to protect that were going to see four percent or five percent growth out of this economy. I dont think that will happen in the near term. Well have a steady pace of growth going forward. Get wrong . They a lot of people criticize Charles Plosser what do they get wrong . Models ofve different the economy than i do. They have more faith in the ability of Central Banks to make effective decisions. Charles plosser with us. Bloomberg surveillance on Bloomberg Television and bloomberg radio. I am tom keene. With me, scarlet fu and adam johnson. Futures at negative two. It is getting harder to fly on the cheap united. Delta is switching rewards for miles flown to dollars spent. Is that fair . Lets ask the point guide. Why are airlines doing this . On theirake billions frequent flyer programs. When they increase the amount of miles that you need to book an award, they are increasing their bottom line. They presell these miles to the credit card companies. 50 more miles needed for the exact same reward. It is a revenue play. Delta made a bold move by changing how you earn those miles. Is this a real impact for the airlines for their earnings . It could be. There are a lot of different types of travelers out there. When you are on the road, it can be grueling. When they keep slicing, if they go too far, i could see a mass exodus of flyers going to other programs. United they are watching closely. This could be an opportunity to coach those flyers from delta. United has operational issues. Their Customer Service is not as great. American is in the middle of margin, so nothing will happen there. What did you pay for the airline fare to sydney, australia . It was very expensive. It was 100 for an 18,000 ticket. You are changing people possible lives. What is the number one thing we do wrongly five. We fly . When the biggest thing is credit cards. The bonuses, american has 100,000 mile offer. There is a 450 annual fee, but it can get you into Business Class for a 5,000 ticket. Even with u. S. Airways, the australian trip i took, you can buy miles from u. S. Airways at a cents apiece. Even buying a miles, you can buy enough miles to fly first class. Charles plosser, when was the last time you flew on miles . Not recently. I think my wife has. She flies on my miles. If i go to your website, there are howtos to figure out how to do this. I have a beginners guide. I have the top credit cards. I have written posts on using American Express points to go to africa and australia. Why do men like to hoard their points and women like to use them . It is a national issue. Tom, when was the last time you used miles . I have never used my miles. I lose them. I read this religiously because i lost miles. Have a single Points Program at an airline, but i do use the chase sapphire card. I bought a ticket with my points. Is that a better way to do it than going airline by airline . You want to diversify your miles and points. As a general tip, getting a card wood that, the star preferred guest. Pointsguy. Com. Im going to your website. We want to bring your attention to the new business week. That is out today. Good morning. Bloomberg surveillance. Neilch kari kashkari. 1 00 p. M. This afternoon on bloomberg west. Looking forward to that. This is bloomberg surveillance. Charles plosser is with us. Adam, you get our photo session going. Were going to jump in with a bunch of photos. Celebrations underway around the world. Number three, kicking them off in venice. Three jesters gathering at the square. They celebrate around the world. There are people around the cathedral. What do you think . Maam it looks like a fed board of directors meeting. Sambadreds of people are dancing in the streets of rio. The final touches are being put on the massive floats for the parades. Ck out the detailing of all kinds of detail. Detail. No shortage of nice job, adam. Also preparing for con abou carnivale. The floats on motto is the spy who came in from the phone. Maybe humor gave it away. Those are your top photos. Speaking of humor, the movie, maybe the rerelease should be called anchorman 2. 5. It goes back into theaters with one for one week today with a couple of changes. 753 new jokes. Film shot thatch they could replace almost every joke with new ones. Content is king. This is fascinating. Will this be a new trend . It is a new strategy. You remember the movie they said a plane tweet us the line that you want to hear Samuel Jackson say and they changed the script. I feel so old talking to these guys about the movies. How will you be tuning into the oscars . We will be finding out. Charles plosser will be watching ellen. Live tweet us. Good morning. We need to get your week off to a good start. Allrey rosen sums it together. Looking forward to Jeffrey Rosenberg of blackrock. Begin march. 6 00 a. M. Hour on bloomberg surveillance. For the hourhost is Charles Plosser. We want to get you some company news from the files of bloomberg west. Adobe is signing on to president obamas broadband initiative. All totals, companies have donated 1 billion to this initiative. A legal win for apple in germany. Eight 2 billion lawsuit is dismissed. They say apple infringed on technology to decide priority for calls on mobile networks. Ibm has begun dismissing workers its 1 billion restructuring plan. The cuts could result in the as many as in 13,000 jobs this year. That is todays company news. This idea that Tech Companies are cutting jobs as well as big banks, gets swept under the rug. Tech companies as well. Were seeing a lot of efficiencies as we going to 2014. They continue from last year. It is a debate among economists. The job economy, how manys are not working. Could they come back to work and should they come back to work . It is a raging debate. Charles plosser is with us from the philadelphia fed. That. E looking at should more americans me in the labor force . Should is a hard question to answer. They are not in the labor force. Participation rates have been declining for more than a decade. It has been declining since 2000. A lot of that has to do with baby boomers. Those people are retiring and they lead the labor force. Chairman yellen has had a lot of this in her speeches. Help the American Labor economy directly . It is hard for us to do. Labornot find to the including economy. So many things affect it. We cannot control all of those things. If you cannot control them, who do you want to control them . Which institutions do you have to throw responsibility back to . The marketplace and fiscal policy issues and regulatory policy issues. All of those things matter. The challenge is never just one thing. Bullet. Ook for a silver the world does not work that way. A baseballdescribed strategy of the Philadelphia Phillies. Chairman yellen talking about the need for other measures besides raising rates. What you think she is talking about . What is she getting at . The fed has a large Balance Sheet. As we unwind and try to move to more normal policy, we have to manage the exit. What are the tools . We look at term deposits where we freeze reserves so they cannot pull out of the banking system. There is a facility we look at, there are a whole bunch of technical tools we are using to control the flow of reserves as we exit this. I had economists right in with suggestive questions. What would you consider the neutral fed stance . That depends on what they mean. In terms of the funds raised in its Balance Sheet. They usually refer to the neutral rate as the long run average of the. If you are targeting a two percent inflation, get you to Something Like a four percent funds rate over the longer term. Like you to expand on it, and you made earlier of a concern about being like japan. We are slipping into a japanese disinflation. We are not near that. What would be the telltale sign that would cause a greater concern . The tell tale sign for me is if i saw a rapidly dropping inflation expectation. Asked, es up which indicator is your favorite for that . There are so many. There are so many different measures. Very good be not a sign. We talked about demographics. Do you have kids ranging from 27 to 34, what have you learned from them and how they approach and employment. They are all employed and all working. That is a good start. Fortunate. Very it is a different market out there than it was i was coming up. John taylor at stanford i spoke to. He says the rulesbased regime has to be revisited. When do we revisit role versus discretionary theory . I try to get us to revisit it every day. Charles plosser. About re you looking at for the agenda . How about warren buffett. His letter along with earnings was superb. Forget about the ukulele and the annual meeting in omaha. Focus on the real buffet. Word of his letter. It is a jewel. Theithout question must read. His holdings, at they span the entire spectrum of american industry and services. It is a glimpse into what is happening. I have lots to read. Routing a lot of rooting to do because the Philadelphia Phillies begin spring training. That is my agenda. Friday, march 13. That is when the pictures show up. That is a little scary. A going to march in the games. It is a sign of spring. It is that optimism in the economy. It istraining always great to have baseball starting again. Roster this year, about a year and a half younger than the yankees. My agenda item is the oscars. Dicaprio finally win or will the academy snubbed him . They say all of his career choices are not typically ones where he would be rewarded. I just assumed he had one. Never. How will you tune into the oscars . Ellen degeneres will be live tweeting throughout the broadcast. No surprise the first dancer through twitter. The show before the show. Forait until monday morning tom and the Surveillance Team to provide their views. That is brown nosing. We appreciate that. The closest i get is trying to to now the background noise while my wife is watching. Charles plosser, thank you for a generous hour. Charles loss or with the philadelphia fed. Over the weekend, i have to read about venezuela. To the back slipped because of what has been happening in ukraine. That is not fair. That is the country with the most amount of oil in the world. We will focus on both in the week ahead. Is up next. Have a great weekend. Morning, its friday, february 28. You are in the loop. The crisis is widening in ukraine. Troops ared arms occupying an airport in the crimea region. That has led the ukraine acting president aziz duwaik that Russian Troops are directly involved in the conflict the ukraine acting president is saying that Russian Troops are directly involved in the conflict. Mountox says it has 64,000 dollars 640 thousand dollars in debt. Liberty media announced estimates that are encouraging. It is the bidding battle that just wont go away. Joseph a bank has refused the latest offer but it keeps the door open on making a deal with mens wearhouse. Bank ready toa