aftereffects of the financial rises. end or a a sign of the new beginning for the troubled retailer? fat, and your employer knows who you are. companies demand a cut and chiseled workforce. scarlet fu, why are you looking at me? this is "bloomberg surveillance." this is serious stuff. >> time for crunches. eurozone. they're worried about disinflation. european new car sales, we have some good news in europe. up 13% in december, the biggest monthly gain in almost four years.

they say price cuts helping out. that news down under, australian employers cutting over 22,000 jobs last month. the us trillion dollar goes to a three-year low. people talking about the possibility of rate cuts. eco-data in the united states, we get our own cpi, expected to show little change. >> will it be a big deal? >> everyone wants to know if we will have disinflation continues here. maybe we will get some answers will stop initial jobless claims this morning. betterre we feeling about things? we get another reed at 10:00 from the philadelphia fed is this outlook. how are homebuilders faring these days? the housing market index is out. the big one, ben bernanke, , he speaks at the

brookings institution, probably his last speech before he departs. it is called "lessons for central bankers." earnings, everyone wants to know what goldman sachs did. there are out at 7:30. citigroup at 8:00. >> the world's biggest, blackrock, reported about 30 minutes, and argo. lock buster numbers. 30 --nsensus was $40, $40.33. because their fortunes it boosted assets under management by about 16% and boosted fees. sachs, j.p.dman morgan, citigroup, why do we do blackrock? >> they are the banker to the fed. >> a lot of business from the government. >> 16% per year dividend growth.

likes it went up again. >> you can't make money in stocks -- you can do it if you own blackrock and the last decade. >> after the bell, another financial, amex. intel, we get a technology bellwether. >> finally. >> scarlet fu will take you beneath the headline data here on "bloomberg surveillance." we look at stocks, bonds, currencies, commodities. i don't have a second board today. that is how dead it is. it is news when it is dead. up to 94 point 55. a very quiet market as we begin this earnings season. we have scoured the papers, watched the weapon with a front- page. >> everyone in the market is obsessed with how much their banks are making and how much, therefore, they're going to get paid in bonuses.

how much money the big banks set aside for the biggest expense, which is talent. "wall street journal" has wall singh $600mploys million more in bonus money because of goldman's rising stock price. >> they differed so much into stocks. it felt like you did make as much money in 2009, 2010, but some of those pay packages testing. gains.are sitting on big >> especially because of how much the big bank stocks have risen. there was a lot of resistance, but now everyone is happy. >> is this linked to goldman sachs or every bank? >> it is across the banking industry. >> in europe, they put out a cap on how much bankers can earn, two times their salary. >> so they moved to new york? >> that is the question. even funnier question, royal bank of scotland cannot pay more than two times.

they have to get permission to even do that. if they do that, then the british taxpayer might be outraged. if they don't, then they might lose the bankers, might not make as much -- onthe bank can't get back its feet. >> the backstory, if you are in internet the banks, you're supposed to take off four days a month or so. >> from high-paying wall street jobs to blue-collar jobs, let's take a look at amazon workers in delaware. they have rejected forming the company's first union in the united states. involved at the fulfillment center. the vote was 21 to six against unionizing. >> amazon went back to the workers and managed to avoid a union vote. that would have been a historic for in the door. >> i'm glad were doing this story.

>> a couple of workers try to unionize at walmart and now the labor board is accusing walmart of illegally firing or punishing them. they were protesting on black friday over the last two years. >> it is a fascinating story with the global rise of income inequality. chattanooga, tennessee has a vw played and they want to expand and they don't have a union. vw union in germany says they will not let the company expand in chattanooga unless they have a union. >> and the whole boeing debate. they're threatening to move out of seattle. >> a shocker out of silicon valley, marissa mayer from yahoo! firing her first big higher, her chief operating officer.

she had poached in google about 40 months ago. she wrote a note to employees that she decided castro should leave. a person familiar with the situation said there was for sure between them for the last six months. >> and my surprise that maybe they knew each other before? >> they were both at google. he was brought in to boost advertising. she announced at cs they bought these companies to try to increase advertisers. some many will come in and have some new tools. >> those are our front-page stories. marissa mayer is some and we will continue to watch out for. "bloombergctic rag, businessweek" writes on technology with a real economic view. were you surprised at this? i've heard a lot of constructive criticism about the marissa mayer regime. are we surprised that he castro

is out? >> i'm surprised by him having to leave, but i'm not surprised with are having trouble. everybody likes marissa mayer and says she's doing a good job. she's doing a good job with the company that i'm not completely sure what the company does or what yahoo! is for. it is hard to explain how they're going to make money other than as a media company. she has been hiring a lot of journalists. it looks like one strategy is to attempt to become a real news organization. kind of a mugs game. it is hard to make money off of news. disparatethese properties. it is not clear how they come together. there to -- chasing page views. as rates decline or fail to rise with need, it is not at all clear what the company is going to make money with. >> calls it "global internet needed company." >> that tells me nothing.

>> what is that? >> anything and everything. >> when does the pressure start to ratchet up? these sorts of things can go on forever. when does somebody push her out the door or re-ward her? >> oh, gosh, that i don't know. i think they'll have trouble before any other internet companies do. i think facebook has a wild to go. -- a wild ago. mayerrlet, here is the affect. call that 15 to 40. not bad. >> with all the acquisitions that marissa mayer has been making, whether she will move into hardware like google just did? companiese other acknowledging smart devices is the future.

>> i think that would be a great idea, but i don't see any sort of coherent plan behind them. they have the very popular app. i don't understand how that works in the other stuff. when you look at the address she gave at ces, it did not all come together. >> wasn't any different from two years ago? >> no, it is all a grab bag. >> i have a message from facebook. i may not agree with that, but i have a message. >> we know what google does. they have search. search results. they're making investments to see what might happen, but we don't know the coherent offering is. >> we have a surprise for you on his latest work. we will have that in the hour. your scarlet fu. company news. >> aol is giving up control of patch. he'll global teaming up with aol to cut it in the local news sites around. hail will own a majority stake in patch. chucky cheese gets a new owner.

they're being bought out by private equity firm apollo. orllo is paying $1 billion $.54 a share. that is 11% premium over the last close. hurtingn coal shipments csx. reporting a five and percent decrease in profit last quarter following a finding percent drop in coal shipments. miss fore first profit csx in two years. we will plenty more on csx later on "surveillance" when the ceo michael ward joins us in the next hour. >> i know you have been to chuck e cheese. >> and i had a headache for three days afterwards. >> i've never darken the door of chuck e cheese. tommy what i will see. >> you will see semi-animated big things -- >> noise. >> really bad pizza.

>> is it coated with the gauze of coca-cola or pepsi:? games but they have video , coin operated games, and kids love the place. >> i can't remember what we had when the kids were urchins, but used to pray that were the parties would not be there. >> is back in the day when birthday parties were held in homes. >> pin the tail on the donkey. of something from the past, j.c. penney. remember when these to be profitable question mark the number right now is 9. that is how many quarters they've gone without a profit. will the related strategy to revive private label brands pay off? it is a big question mark for investors. ♪

>> good morning. salliesecurity analyst 9:00heck with betty liu at a.m. always interesting. the state of wall street. this is "bloomberg surveillance." with me, scarlet fu and michael mckee, this final speech day for chairman ben bernanke. mike was in tears earlier this morning. he is composed himself. watching joe dimaggio. amber bernanke, when he started, jcpenney was making money. now closing stores and illuminating jobs. scarlet has the details on the new strategy. >> it is kind of a shift here because it is not a massive restructuring.

a c penney closing 33 stores, cutting about 2000 jobs, about 3% of its stores overall and 2% of its workforce. it doesn't even affect opening a new jcpenney and downtown brooklyn. jcpenney is trying to save about $65 million annually. this will lead to pretax charges for the visible fourth quarter. announced 2500 employees being cut. well. macy's is doing they're cutting jobs and giving a profit forecast higher than initially estimated. they're looking to maximize in- store efficiency and sales within the existing store base. >> the good news is, they're doing something. of 18the train wreck months, they're finally doing something.

classic deadt a cat bounce. they're finally bringing -- >> it is still down since the announcement mike ullman was coming back as ceo. >> but this is classic, we must do something. this is something, so we will do this. i think it is hard to talk about a strategy because it doesn't sound like a strategy at all. it sounds like they're trying to cut the bleeding as best they can. we all reported on what johnson did. >> he had a strategy. >> he did, but maybe that whole story was a red herring. maybe there is the secular decline in lower in department stores and there's nothing you can do about it. is doing fine. but yet the history of the montgomery ward -- >> showing your age. >> maybe can't survive. have questions about sears.

>> buried in all of these announcements is the real world. i think it says volumes about the future of retail. they're taking some of their sales force back to commissions, which is psychologically a huge distinction for retail. >> rollback whatever ron johnson did and take it back to when it worked originally. >> you have to work in a different energy, different focus. >> you walk in for a bowtie, and walk out with extra underwear. >> some of the analysts knows i looked at were so fairly positive on jcpenney, saying liquidity issues are not on the table right now because mike ullman has done a pretty good job of raising cash, almost $4 billion worth. even though jcpenney came out same-store sales update that wasn't exactly full of detail, piper jaffray analyst says the reiteration of guidance followed what has been a fairly disappointing holiday season who canat anyone increase guidance is a winner. >> i'm going to conflate the

holds and the sales. >> ok, we will continue to keep our eye on jcpenney as it undergoes this new shift. we want to tell you about another shift taking place in basketball. on the cover of the new "business week buzz go david stern and the incoming commissioner adams over -- "business week," outgoing david stern and incoming to mr. adams. ♪

>> good morning. our twitter question of the day, should u.s. cap banker bonuses?

it is a big debate right now. >> i'm sure we will get nice responses on that, to say the least. good morning, "bloomberg surveillance." i'm tom keene with michael mckee and scarlet fu. top headlines. ofin egypt, after two days voting, the constitution the fourth by the new government, approved by more than 90% of the voters, a big victory for the military and his plan to restore democracy to the country. part of entry elections will be next. new car sales in europe surging 13% last month, the biggest monthly gain in a must for years. give credit to price cuts to the automakers. here is why it is important.

even with a december game, auto sales in europe fell 1.8% last year. the lowest in 18 years. baseball has its first $200 million pitcher. him toeles dodgers sign a seven-year, $215 million deal. the 25-year-old left-hander has already won two cy young awards. he made his debut with the team at 19. it was the same day willie mays contract150,000 other years ago that people thought was astronomical. kershaw will pay more in taxes than willie mays made. >> it is very cool. he is a fantastic -- it is fantastic to see him. the dodgers have been doing well. the yankees? is a soap opera. our morning must-read. >> we will stay with baseball. lawyer labor implement

in chicago is writing in the "wall street journal" -- >> a lot of high-profile advisers. iesco no warren buffett, goldman sachs anchors. i can imagine he decided to sue mlb without -- >> excuse me, i don't care about the yankees. we go to scarlet fu, the expert. what do you think? >> i apologize. i live online island. it is the mets for me. >> i don't understand how you move on.

i have some small sympathy for him. it is clear he did it. i guess that is libelous. the report is so damming with the specificity of the lozenges he took and the schedule. if you tell him to move on, i don't understand how you move on from the thing you have done your entire adult life. opera willhis soap not go away. futures are -2. calledhelp of a company retrofit, the ceo joins us next.

>> good morning. let's get to a data check. quiet day on the markets. 10 year yield, 2.88%. crude, little bit of a bit

on hydrocarbons. 94.53. losers, which means scarlet fu will save me. >> a big loser called nu skin enterprises. it is a direct marketing -- >> yet, this is like herbal life but a different product? >> yes. skim product. a chinese newspaper called it a suspected illegal chinese game. news can deny that was the case and says it has licenses to operate in china. the government has said it will investigate the operations after the article in the newspaper. have banke will movers with goldman and citigroup coming up. >> let's move on because one of the topics we have been looking into is it is a new year and everyone is trying to get fit, right?

two thirds of all americans, and tom, i'm looking at you, are overweight. >> alamein to out of as 3 -- that would mean to out of us three. >> retrofit reports kobe someplace caused an average of $1500 or more a year in health- care cost. what are you doing? 5? is that an iphone 4 or andeyond subsidizing gyms tom mr. and lives with his iphone, hr departments are hiring companies such as retrofit to promote help -- help ceo ofspeak with the retrofit, jeff hyman. tell me how you operate. hr departments hire you and what do you do? >> it is a weight loss program specifically designed for business professionals. we work with about 100 different employers.

they're trying to cap their health-care cost. we work with the employer to basically build a healthier and more well environment. >> there's a little-known provision of the affordable care incentives for these workplace programs. how has that affected your business? >> employers are legally allowed to differentiate health-care premiums by up to 30%. they're telling their folks, look, if you aren't overweight smoker, you will pay more in terms of premiums. at the same time, they're starting to offer programs like retrofit and others to help their people avoid the penalty. >> we make jokes, but this is deadly serious stuff. percentou incentivize x of the countries given for says, some areh, go away? >> doing it as a carriage, some as a stick. it depends on the culture and their philosophy. as an example, we work with

saleskforce.com. they give every employee in the company $100 a month to spend on anything wellness or weight loss related. what they're hoping his people will take advantage of that, and usually do, to either reduce weightelp, join watchers, read your fit, to avoid the penalty. >> these are incentives to employers to change the behavior, but one of the biggest drivers of obesity is stress and loss of sleep. are there any incentives to the company to get them to change behavior as well question mark the people go home, get eight hours of sleep, have a decent meal? >> i don't think we will see many companies force their people leave at 5:00. withhe good news is, even remote wireless devices like the one i'm wearing which retrofit offers, it tracks your sleep. >> it's not a gimmick question mark >> no.

on ae monitor your data daily basis. >> let's get michael mckee in here. >> to you in dublin the same problem you sort of see going on -- do you end up with the same sort of problem of those ticking advantage of the incentives, being the younger, fitter people who need it less, and the older people who need it more, they don't? basically.selection, it doesn't happen that much, especially in a weight loss program like retrofit. people who join are looking to lose weight. our average client is looking to lose between 20 to 30 pounds. most people which are fit, which is only 1/3 of the population, are not joining a program like that. >> but to take the $100, take that and join a gym or something, it seems like a younger, that person would do that more so than in older person. >> only certain programs are

eligible for that reimbursement. there are some companies that are basically saying, look, we're going to do it by body mass index. if you're overweight or 27 or 30 vmi or higher, you'll get a higher subsidy than someone who is not. >> this program rewards and plays based on effort. the uc -- do you see a point where employees will be rewarded on outcome? >> this is the europe participation. -- this is the year of participation. we give everyone a wireless scale. way cool. >> it is remarkable. our average client ways and four times a week. >> if i put the scale at the redeye bar -- >> that would be ugly. >> it would record how many rings you've got. records that data. >> i want a serious answer.

weights or cardio? >> what we recommend to most of our clients is both. >> oh, stop. >> it really is both. we lose 3% of our muscle every 35. once we get past age you have to do strength training, cardio, and you have to do intervals. search the heart for about three minutes, two minutes on, one minute off, etc. take beforedoes it employees and employers see a change, see a bottom-line result? >> duke university has done the best longitudinal study and found every overweight employee that a company has costs $1500 a year extra per year in health- care cost. you start to see the tipping point after about two years. long- we all worried that term it will be an adverse selection problem in terms of hiring? >> exactly. -- and think you'll see

the discrimination lawsuits that come with that. there are companies that have said, and it's legal, we're not going to hire smokers. that is already happening. it is legal. unfortunately, i think you'll see weight is next. muscle loss, you just told me of lost 120% of my muscle? >> if you do nothing to keep it up. >> pick up the iphone. >> you've got a lot of ground to make up. about the ideal program. it sounds like you're channeling crossett. >> one of the little-known is in weight loss, the smallest bees is exercise. it is like college again and nutrition -- it is a psychology game and nutrition name. you're getting a behavior coach -- >> you have to come back once a week. you're our new coach. >> jeff hyman, retrofit, thank u

so much. coming up, we are going to shift from health and fitness, childhood education. ♪

>> good morning, "bloomberg surveillance." in bernanke speaking washington at the brookings institution, some would say his final speech. michael mckee will touch on that. scarlet fu is here as well. let's get the top headlines. >> the attack on u.s. mission in benghazi 16 months ago was avoidable. that is the finding of a report from the senate intelligence committee. the report criticizes the state department for failing to increase security at the compound following wings of increased violence in the area. the attack killed four americans including ambassador christopher stevens. foreclosures have fallen to the lowest level since before the housing crisis. did you get that? they declined 1% according to realogy track. 26%all of last year, down to 1.3 million properties, the lowest since 2007. tighter housing inventory,

increasing demand, allowing homeowners to sell rather than face foreclosure. he goes by the nickname pony, but now he will be called something else. china's richest man, chairman of 10 holdings, has a net worth of her team billion dollars thanks to a run-up in shares of the internet visiting company. pony ma bumps the top legislator. those are your top headlines. >> pay attention. be play intel. a growing chorus suggests early childhood education, is crucial, and it pays off with huge significant, immediate and down the road dividends. look for this must-read story. it is this weekend "bloomberg businessweek." what did you learn in the story? >> there has been a quiet change

at the state level in the last year. 15 spain -- 15 states spend more on childhood education and eight and were republican or run by the public and governors. >> they don't want to spend money. >> states have trouble knowing how to spend money. spending on money -- spending money on this comes from an idea from the nobel laureate james heckman and he's is been working on this for a while. what we know about early childhood education, it has some effect over the schooling years. at risk kidst educated come in school for age three and four, then they're better off through the 12th grade. what we are also finding out is there is a lifetime of benefits. they're much less likely to go to jail or own a home. they're going to earn a lot more. what he has done is calculated a return on investment to preschool. basically, to 10% -- a lifetime roi of 71.

>> but are they taking away from someone else? are we shortchanging middle school and high school education to pay for this? >> i asked that question to the secretary of education who is a fan of this approach any basically said, i don't like to think about it that way. so, it yeah, maybe. what we do know, if you're going to spend money, if you're trying to figure out in a constrained environment where to focus your resources, you're much better off spending it early. if you feel more confident at age five and having gone to school, you will be able to make -- >> what did you learn about the reporting question mark is this about poor people in urban landscapes? that is not the republican constituency. is it spread out across all three-year-olds? >> the real benefits come from providing school for poor families. we don't really know whether we

get the same benefits by providing school for middle- class families. the problem is, it is very difficult politically to sell a program -- >> unless you do it for all. >> interestingly, about 40% enrollment for poor families. lines for slightly richer families. there is sort of a gap that happens. you don't qualify for head start, but you don't have enough money to pay for pre-k, then arises again with income. you have a middle-class problem there as well. the great roi we have doesn't ring true for middle-class. >> another reason to look at "business week." >> all i on one copy on a sheet dogetes in -- this is a were talking about competing in the agility competition at the westminster kennel club dog show. the competition began yesterday.

>> is this best in show? >> this is the agility part. they will get to that part, i guess. >> jumping over the bar. >> i don't get dog shows. >> i married into a dog family. >> that is the crossett you're talking about? >> the agility training is just as obsessive as the breeding. it is consuming. my in-laws bought houses making sure they had room to train dogs. photo, scotland yesterday, where fishermen do is they line up on the banks of the river. they must wait for the first line to be cast by the first minister. then for traditional blessings, then fishing boats are doused with whiskey. >> okuma ok. >> only then are they allowed to fish. >> but that photo up. that is adam johnson under the

bridge. this is what he would do. he would do this. >> i think there's a facebook photo of him like that. >> dressed up in all the stuff. fishing rod in one hand -- >> whiskey in the other. >> tom keene network in dominoes. -- in davos. that is part of the grand odyssey sledding race, the most challenging race. over 400 sled dogs and their mushers. they will cover over 600 miles. you know this track well. i look at the weather today, 40's. there is a dirth of snow in davos. balmy.s blamy -- back to new york and new jersey, connecticut. the number is 45% from the decrease in atlantic city inland

revenue since 2006. the man who promised to raise it, chris christie, new jersey governor. will this hurt his 2016 chances? ♪

>> "bloomberg surveillance." this is "bloomberg surveillance." >> this is "bloomberg surveillance." apple is paying for unapproved app purchases. they will return money to consumers for apps that were bought by children without parents permission. apple will change practices to make sure purchases are approved in the future. you can add another name to the short list for microsoft ceo, potential successor agreeing to people briefed on the search. as well asting chief a couple of outsiders are on the list. aol is giving up control of patch. aol global teaming up with to try to turn a local news site around. hale will operate its 900 news sites across the u.s. that is today's company news.

when was the last time your kid bought an apple app purchase without your permission? >> they're young enough they cannot figure it out necessarily, fortunately. mostly they come and say, can i buy this? of course, the answer is, no. >> my kids get and had recipes. whiskey recipes. i don't get a check back for that, do i? single best chart is interesting. >> atlantic city. the new motto is, do ac. our chart is called, don't ac. fewer people are gambling. it charts the total casino wins, revenue. at the peak, $5.2 billion in 2006. that is when pennsylvania casinos open. they started taking away market share. it has been a downhill drop ever since. in 2013, year-over-year change in 2012.op

before that, 10% drop. it continues sliding. >> there it is. theas been sports, to say least. this has been something we covered -- tochris christie needs address this. >> he has some other distractions as well. brian miller, gaming and lodging analyst, looking at industries all over the world to the tune of 140 of them. you called this. you were smart on this. how much of is the surprise of the failure of online gambling? for new jersey? not a surprise. but it is still early. we're ending one of what is going to be an entire baseball game. -- we are in the first inning of what is going to be an entire baseball game. land can see knows are doing terribly, so they're moving to online. it is all most like obamacare. people can't sign up. many of credit card companies not funding payments into the system. the deck is essentially stacked. >> why aren't the bankers

dissipating with the casino owners? >> they're not really sure who is gambling. >> fisa doesn't want a 13-year- old playing blackjack. >> visa and mastercard are on one side that are ok with that are ok with it, on the other side are bank of america and others who are against it. >> talk about how this ties up with the new jersey economy. >> this is another lack i-4 chris christie. yet a big five-year plan -- >> yet a great week. >> they're getting into the fourth year. what is happening is they're not seen the land base is enough tax revenue coming out that they expected and now not the online revenue they expected. who knows what happens after next year. >> it is 1/10 of what they expected. >> is this a warning to states that are reforming gamin laws? i just lived through this in maryland. is the money still there? >> it has worked to other states

of images. pennsylvania is a good example. a lot of tax revenue that wasn't there 10 years ago. on the online side, the problem you see, in his gaze back to politics, with the politicians put in the forecast is usually to rosie. >> it is illogical to me the distribution network features of the internet can be constrained by a state geography. when are we going to have federal online gambling? >> i don't know if that will ever happen. harry reid likes to bring up all the time. >> he is in support of it, the senator from las vegas. >> and there's a guy from texas, which is a little surprising, senator from new york or congressman from new york also behind it. there is not that ground swell movement. then you have the native american tribes, and that is a whole -- >> another story. why does online gambling work so well in europe and not new jersey? >> in europe, they have gambling

across different markets. you have people in different countries that can gamble with each other. right now you cannot do that in the u.s. poker is a great one online. the bigger your population size is, really, you get a multiplier effect. you don't have that in the u.s. right now. >> thank you, ryan miller. we also want to thank our guest host for the hour, senior editor of "business week." >> a must-read, the early childhood education story. can't say enough about that. .et's do the report globally, i'm leading with turkey. this is getting interesting. it is starting to run away, some interesting articles out there. turkish lira weaker. unrest in turkey this morning. there are the majors --

next hour, goldman sachs earnings in a conversation with the ceo of csx, michael ward. ♪

we will gosachs,

beneath the headline data. the business of getting from here to there, a boom decade for american railroads. will the next decade be so kind? natural gas. an american job creator. can that help crumble the opec cartel? good morning, it is "bloomberg surveillance." is thursday, january 16, i'm tom keene with scarlet fu, chief economic correspondent michael mckee with us this day. our guest host, chris grisanti. >> you were pointing out christine lagarde warning about deflation. in europe, eurozone december cpi increasing to just .8%. germans during a little bit better, but only 1.4% for the

month of december on a year- over-year basis. the good news is, european new car sales rose 13% in december, the biggest monthly gain in a must for years. the bad news, we're going back and forth, in australia, cutting jobs more than 22,000 last month, sending the austrian down. eco-data in the u.s., our version of cpi, an initial jobless consist morning. claims thisobless morning. homebuilders confidence, housing market index. >> if inflation is front and center, is cpi a big deal or do we look at the core? >> for the markets, probably both to give you an idea of the direction. it is not the absolute magnitude. ben bernanke at the brookings institute today.

that is at 11:00 this morning. earnings before the bell, financials. goldman sachs and citigroup are out, open at 7:30. scarlet fu will be following that. >> we have something from blackrock. it was a good report. the trap -- stock is trading up. soaring equity market helping blackrock boost its assets can also increased fees. fourth-quarter adjusted, $4.92. the consensus was $4.33. blackrock raising its dividend as well. >> you can't make money in stocks, up 22%. american express will report after the bell. we get away from financials for a moment with intel. next week will be tech earnings week. >> let's get to some company news in the meantime. mike ullman. or changes at jcpenney. he is closing 33 stores and cutting 32,000 jobs.

small markets. jcpenney has gone nine straight quarters without posting a profit. analyst forecast to lose $200 million this quarter. silicon valley shocker, marissa mayer firing her first big fire, out just 14astro is months after she hired him away from google. yahoo! chief was disappointed with his efforts at boosting advertising growth at yahoo! one report says he will walk away with $42 million in severance. vote no toers unionizing. a group of employees at a delaware or house rejected a proposal to form a union. the boat was 21 to six. it would've been the first union at amazon in the u.s. will be great emotion today in washington. at thenanke speaking

brookings institute. john williams joining him as well. a celebration. peter cook is our chief washington correspondent. the pageantry at the brookings today, how big of a deal is this? >> it is not supposed to be bernanke celebration today, but you can expect we will get a lot of talk about his legacy. he speaks about 11:00 on the modest topic about the fed today, yesterday, and tomorrow. he will be talking again history and legacy. maybe in the q&a portion, maybe he will talk about current economic policy or monetary policy and what is going on, maybe some explanation of last week's jobs report and how it doesn't fit in with what we're seeing with other numbers on the economy. you can be sure this is the last public appearance, at least, on a schedule before his final

meeting as fed chairman. there will be a lot of talk about his legacy on the federal reserve, on the u.s. economy, the role he played in the controversies around some of his decisions. >> the secretary of treasury is busy today as well. he has been visible -- i guess there is been a lot of speeches. what is the new news about him? appearing at a separate event apart from the fed chairman this morning. you can expect him to talk about a couple of things. he doesn't have a speech, it's q&a. he's building on the economic message heading into the state of the union. the president pretty busy the last few days talking about improvements in the economy, but additional steps the administration was to take. the big focus will be on the debt ceiling. this is the one piece of major unfinished business with regard to the budget and fiscal policy here in washington with this spending bill about to get wrapped up in the senate. the debt ceiling is hanging out there like a real warning sign,

and there's no deal on the table yet to address it. we heard jack lew one about the possibility treasury could hit that limit as soon as the last week in february. i would expect very tough language from him today, urging congress to deal with as well before february 7. >> what are republicans saying about it? a lot of talk about them not wanting to force a confrontation because they want to keep the focus on obamacare. >> that is absolutely right. i have been talking with a lot of rank-and-file republicans who do not want to see a bite on the debt selling, but at the same time, there's no way he can have an increase in the desolate without something to show for it, some prize that they can show to their base and to their constituents back home. right now, no one has or. -- reduce with that prize may be. what the trade-off is. that is what has people nervous. there is less time to deal with it, less extra nearing measures possible because it is tax filing season, but also tax

refund season. much harder for the treasury to string this thing out. >> take some kleenex with you when you go over to brookings institution this morning and you're the chairman's speech. >> our guest host is chris firmnti with an investment that focuses on concentrated portfolios. welcome back to "bloomberg surveillance." we were just talking about blackrock earnings coming out and what a blockbuster report it was. you contrast that with the big banks, bank of america, j.p. morgan, wells fargo struggling. is blackrock's model the way to go forward? >> we are in the anticipation phase for banks. we're waiting for loan growth to kick in, and we think it should with the elevated yield curve. with the asset managers, the grey stock market, that left the

anticipation phase. blackrock did some great things as to j.p. morgan and morgan stanley, making some great acquisitions back in the crisis like the etf and barclays. it is finally coming to fruition. >> what other big banks will be able to replicate the success? ?ill it be morgan stanley looks absolutely. they will come out three years from now being much more asset manager like blackrock. >> at this point, the various things, how do they position themselves for a world in which regulators want them to be utilities? >> they have to accept their punishment and get back to work. s. have remodeled the roe' it is much closer to 10% to 13%. once you factor that in, you get a valuation that is lower. >> you manage money for people. capital at risk. did you take a victory lap for bank of america? >> interestingly, bank of

america was up 2.5%, tippie morgan and morgan stanley were up more. >> why? isbecause the healing affecting all of these guys. i think the ones with the best prospects are the ones either that have transformed themselves into better moneymakers or legal risks behind them. >> what should we look for in goldman sachs in 20 minutes? for for 15oking earnings. >> it is too early for numbers. >> compensation. >> something that says, look at the ro we. are they going to get to 50%, 16%? -- 15%, 16%? 18%, i will give you a kiss, tom. >> thank you to all of our guest for their important wisdom. citigroup at 8:00?

>> yes. goldman sachs at 7:30. >> should the u.s. cap banker bonuses? our twitter question of the day. everyone wants to know when goldman comes up, how much they set aside. >> the consensus is 38% of revenue. we will monitor that. the biggest expense for goldman and any other big bang. coming up, for the first time in two years, csx profit missing analyst estimates and the ceo will be joining us on "bloomberg surveillance." ♪

>> good morning, "bloomberg surveillance." host chris grisanti. airlines, formerly the: of a casino, like a blue chip -- equivalent of a casino, like a blue chip. let's talk airlines as blue-chip investments. you're kidding. >> no, i'm not kidding. you can make the most money in

our business when you can say things are different this time and be right about it. i think that is true for the airlines, for once. >> alaska airlines, moonshot, too late to get on board? >> i don't think you should jump if you get an oil spike or terrorist activity anywhere in the world, these guys could decline 10% to 15% and that might be your opportunity. monopoly industry question mark and you get advantages? >> that is one of the three legs to our stool. clearly, consolidation. we have a secular thesis that the price of oil will be considerably lower than folks think it will with the american oil renaissance. it is coming into promise. >> what is the biggest headache for airlines right now? is a challenge revenue or expenses down the road? take the macro.

economic slowdown will hurt the airlines the most. if you get a quick spike in rates or gdp growth below one percent or zero for that is a problem. specifically, for them it is union issues and being able to consolidate without running into union problems would probably be my single biggest worry. >> you are on the buy side. for you it is single best own. which one do you want to own? >> we really like united. we just added american. united is up 50%. american just came out of bankruptcy last month. we think they're selling at about $26, three years from now, they could be earning eight dollars to $10 a share. that takes a lot of things to fall into place, but they have fallen into place for delta, united, and others, so we think they will for american. >> the airline business all in all come in going back to luggage and regionals and all

that, which is the regional story, the sub story that has most? southwest? >> absolutely. that is the consensus view, but there is a best -- they're the best managed, they operate in such an efficient manner. >> chris grisanti with us. coming up, we will go but need the headline data. worscoming up next. ♪

>> good morning, "bloomberg surveillance." breaking news. >> shares of best buy are plunging. the stock keeps moving to new lows, down 23% right now after disappointing u.s. holiday sales report. comparable sales and he was 8 of 1%.. >> i think the chart we just showed them down 19%, not

accurate, not keeping up with the speed of the move. they did try to cut prices, but it did not lure people in. the strategy of trying to move away from show rooming and have various kiosks -- >> a store within a store -- >> doesn't seem to have worked. >> now we get this shock announcement from best buy. michael mckee says, in a freefall. down, let down. we have not found the bid premarket on best buy. what is your take? look forcontinue to that this morning. the shot at best buy. >> disappointing earnings yesterday, csx after the bell, profit missed for the first time in two years. rail network stretches

across 23 states east of the mississippi. how important is their intermodal network to future -- michaelle ward ward 20 is from there headquarters in jacksonville, florida. is anent wrong? this energy story, to a certain extent, as i understand it. you are on the losing end when we do more fracking. good morning. i guess i would view the quarter a little differently than you just proposed. we did miss by a penny. that was a conscious choice on our part. we resourced up during the quarter as we're seeing very strong buys. pretty early onset of winter. last year we made about $.44 a share in this year we made $.42. blasters quarter, we had about six cents of real estate dana did not repeat this year. by consideration, we grew about shown eps and had very

volume growth. >> but you do have a problem with coal. we're are not using as much. you're heavily into the business of transporting it. >> we definitely do. our coal volumes were down in the quarter about 9%. but i think a good -- there were down five percent, domestic was down 9%. we have strong diverse business base. our intermodal grew about 11% in the quarter. our chemicals business was up 18%. our ag business was up 16%. overall, we were down 300 million for the year in coal revenues, but we were up in total 263, so we are outgrowing the cold challenge. >> that's bring in chris grisanti. >> michael, good morning. you don't ship as much oil is probably some of your competitors. do you have an opinion on what is going to happen?

what do you do if you are a legislature looking at what seems to be dangerous oil moving across these rails? >> we do move that product. we get it in chicago and move it into the philadelphia area by and large. they move about 104 cars a train and we move a little more than one a day now. you're will probably increased to two next year. on the public safety issue, we understand the importance of moving this product safely through the commodities we operate in and our customers. >> are you seeing any pressure from legislation? with are working right now various agencies within the department of transportation on improving what we are ready have is a very safe record. we handle these trains as if they were hazmat trains and exceed all the federal requirements. we are working with federal officials to find ways to move it even more safely. >> michael ward, 2003, what a decade it has been. it has been the perfect moment

for railroads. what is your confidence that will continue? if that is the case, what will the railroads use or have to continue superior shareholder return? -- the nailhit it on the head. we view it as the rail renaissance. highways are more congested all the time. there's a need of environmental fuel efficiency, which we provide. we believe once we get through this coal downturn in the stabilizes, we could produce double-digit growth. >> is geography your friend? are you in warren buffett essentially not a monopoly, but in oligopoly because of the advantages of geography or you're in charge of the southeast of the nation? >> actually, we serve the 23 states east of the mississippi. we are about two thirds of the

population in the u.s. lives grows, wensumption have the opportunity to serve them. there are two big rollers -- rails. we serve them a competitive manner. as the how is become or congested and infrastructure is improved on the highway system, then we will have more and more chance to work with trucking companies to convert business to intermodal. >> what you get out of intermodal in terms of percentage increases? >> we have been growing our intermodal business at about the 7% to 18% pace. most of our strategic capital has been going into business facilities to handle intermodal. long-term, we think we're a great opportunity. if you look at the eastern half of the united states, the relative market is about 550 miles, there's about 9 million loads for us to attack. >> they give very much, michael ward from csx.

>> we are waiting for goldman sachs report in the next five minutes. for banks, a period of healing. ♪

>> this is "bloomberg surveillance." let's get you some company news headlines.

jpmorgan has already replaced 2 billion of its debit cards used at target. chuck e cheese getting a new owner. cec entertainment is being bought out by apollo. they're paying $950 million. as nine current and former employees of standard & poor's will be questioned by the justice department. it is part of the government fraud lawsuit against the company. u.s. accused s&p of lying about its ratings being free of conflict of interest. because he gave $5 billion in civil penalties. taking a look at the premarket trade. lots of movement here. starting with new skin. this is the direct marketing multilevel sales company droping and extending a yesterday because china's government will now investigate its operations. illegalt is a suspected permit scheme. >> the only stock worse

the only stock worse is best buy. they are saying that the same store sales were down 9/10 of one percent. they're cutting their income forecast by two percentage points. it is a rout. withvid will join us later jenny montgomery scott. there is a difference between selling off any crater. this is a crater. >> you have to wonder what their fair value is. i do not know if he has any views on best buy. >> do you own the best buy? >> no. it is so volatile. name of the last electronics retailer that has been a good investment. --t buy with $17 per share

buyer beware. getou roll over and you back to wherever it closed. $26? >> $26.44 per share. >> let's review why. >> they are losing market share to amazon. >> it is about profitability. >> they have given up a lot of margin because of profit. that is how they are trying to get people through the doors. they are trying to bring in samsung. >> a little bit like jcpenney. >> we know how that worked. >> i put this on twitter. it is an exclusive headline. best buy site investment in price competitiveness. >> that existed last year. >> that means they are cutting prices. >> this is important.

let's go through this. the idea is that revenue is price and unit. even if we sell more units, if the price goes down, that is not good. >> under what form would it be a way to make money? they have no brick and mortar. >> we love a bargain. unfortunately, it comes in an expense. >> let's switch gears. is it fortress blank fine? to -- itchanging more is calming down. we are seeing a look towards the five years in the future. goldman will take its place as the preeminent bank. >> we're are waiting for the results in a minute. they have said that the firm does not need a major strategy change. that is a different strategy

than morgan stanley. they have shifted. are they correct? >> it is for goldman sachs. they have the brand worldwide for investment bankers. they can train on that. i think that morgan stanley took advantage of the acquisition to transform themselves. >> what is the distinctive feature? author of many books, including a book on goldman sachs. owning shares in listening to their song and dance, what is the goldman sachs pixie dust? >> we do not own goldman. they're close to full value. the pixie dust is something you cannot replicate. it is their people. they have a reputation. >> may i suggest that it is not only that they hire smart people?

they refuse to hire mediocre people. >> it is their biggest expense. the talent and how much you pay them. that brings us to our morning must-read. it is from the financial times. they talk about how bankers and lawyers are on this unhealthy treadmill. other industries have reduced root krugman. they are relying on subsidies. related professions pay well and train recruits. as much as the firms are trying to change the culture of having people work 24/7, the fact is that this is an industry that pays well. nothing is changing that. >> it is all relative. if we look for a junior analyst, i will spend two years working 24/7. they're well trained and not on our ticket. >> we are awaiting the goldman sachs earnings. >> i can't even keep up with the numbers.

33%. >> this is premarket. moving down. the shock and awe of the holiday season. there was a mix of opinions. we looked back on the wonderful guests with fiery language. >> goldman is out. >> let's take a look. goldman sachs earnings higher than anticipated. 4.60 was $.10 shy of the highest estimate. it is down from last year. >> you wanted a return on equity. this is good, not great? where do they need to be? >> if they can get to the mid to high teens, then there is room to grow. stockt return on a given ?

>> the return on a query is really important. it has to stay large and you cannot do certain activities. you have to keep all of this money sitting there. you earn your profits that you used to earn. it is spread out. >> we go to the headline data. here is your numerator and denominator. the denominator gets bigger and bigger. >> right. you have not tasted the dividends. the government says you have to. >> there is banking 101. what do you have now? >> revenues and trading. this is their big moneymaker. we are looking at better than anticipated numbers. $1.72 billion. 15% lower than a year ago. it is a gain from the third quarter. of equities, trading revenue

$1.68 billion. that was down from a year ago. an increase and improvement. >> one of the dynamics his body count. nine percent down. in 2013.rcent the ratio of compensation and benefits goes down. >> 36? >> versus 37. you will earn last. if you own their shares, -- >> we look at layoffs that here he winston. >> and they get paid in equity. year, buts the first they divest. are theyese banks -- as they were? are they also different?

fortress moynahan is different from others? >> investment banking was not great. that is goldman's bread-and-butter. part andtill a branded. >> what should we look for it citigroup? >> continued healing. you looking at the international business. it is the great international business that they have had. it has been weaker lately. >> a shareholder on the buy side of many of these banks. are you different -- busy over there? >> i am looking to see if they are trading in the premarket. >> up about 7/10 of one percent. >> even with that, goldman sachs is cutting the pay. would not say even, but i

would say it is up because of that. >> that brings us to our twitter question. should the u.s. cap banker bonuses? tweet us. we will also look at best buy shares. ♪

>> good morning.

an incredibly busy morning. goldman sachs just out. citigroup is out at 8:00. that will get us to "in the loop." >> so much news. i am focused on the oscar nominations. in about one hour, we will tell you. that is what i am watching. i am also watching the news you are talking about. the breaking earnings from goldman sachs. we will be all over that. sally will join us with bank earnings and her outlook for wall street. she is the owner of 85 broad. they are a group promoting women in executive suites. we have a lot to talk about with marissa mayer and others. >> look for that. and earnings calendar -- it is a bit cluttered. >> goldman sachs just reported earnings. profit and sales the estimates.

what you bit higher. want to focus on are the trading results. fixed income currencies -- higher than anticipated. equities trading also higher. as part of the prophet, we know that goldman sachs reduced the amount of money set aside for compensation. it is down to 37% from 38%. staff headcount went up. >> it is fascinating. you will make a little bit less. >> they are hiring. >> that is relative. here is another huge story. we know who bought the most expensive work of art ever sold at auction. this is francis bacon's three studies. christie's sold it for 100 $42 million. it went on temporary display at a portland art museum. according to the wall street

journal, a billionaire ex-wife of steve bought the painting with his money. it may be displayed permanently at the los angeles museum of art. she is on the board. >> this is a boom art market. actions, some of the lesser quality stuff struggles to sell. of america.o parts >> it is bonus season. >> what painting will hang above the mckee? >> i have a five-year-old. >> i knew it. >> it is on the refrigerator door. >> i have a velvet elvis. >> that is great. >> the dogs. -- in terms of

the earnings counter, we wanted to highlight the banks earning right. citigroup will announce in the next hour. morgan stanley will report tomorrow in the morning. in the week ahead, we will hear from johnson & johnson, verizon, and delta. southwest, netflix command ebay. a look and natural gas and why america will be on it. ♪

>> good morning. breaking news one hour ago. it best buy co. traders. $36 to $26. david stressed or is here. -- david stasser is here. is this a broken business plan? >> no. it was a very tough holiday. everybody who was in walmart's crosshairs got hit. we lowered numbers recently on walmart. when you look over a few years, you have a weakened sears and toys "r" us. they are heavily indebted. they also have significant --

they have done a lot and electronics. you have a lot of independents who have been hit. this is a lot -- a turnaround. the things are never straightforward. you doing a call at 8:00. they will talk about cost. >> will you ask on that call? >> the first thing i will ask is the entertainment business. despite the video came category being stronger, that was down. it also includes dvds and cds. i want to hear what happened in that category. consumer electronics was down six percent. disappointing relative to what we had. they took a lot of share of appliances. >> i want to ask you some ring about our guest host. is the consumer electronics retailer declining? when was the last successful electronics company? >> i think absolutely.

you can look at what it son is doing. we will see something like that from google. microsoft. there will be consolidation. there will be one player left standing. people demand and need at least one of these places to go and buy. the sales number was down. %, not an unmitigated disaster. there was a lot of promotion. no sales this year. if you look around retail, it was tough. they had a 23.5% increase online. the gains some share. there is no way they were up more than 20% online. there will be consolidation. >> thank you so much.

we look forward to your publication. david stressor. >> we are up by 28%. -- down by 28%. >> let's move on. a busy day. it is the american job creator. oil and natural gas is booming. the flag football contest -- it makes reds gens and cowboys football look like a walk in the park. david mccready is president of the american gas association. he joins us now. wonderful to have you on. you are have experience as a congressman from oklahoma. with your new tenure study, what did you learn? what did you learn in your new tenure study ? >> i am the president of the

american gas association. which a study with ihs, is a developing research firm. we look at the future of natural gas. rather than many of the cities we have seen in the past that focused on the supply picture, this really looks up the demand as well. last five years, there has been an incredible renaissance from shale. it confirms a strong message. it will be her for a long time. provides an incredible incentive and opportunity for consumers because of cost savings. energy security and efficiency, economic development. economic growth. with all of those important factors, most of the policies that have been developed

regarding natural gas at the federal and state level were written before we had this tremendous age of scarcity and fear. >> we have new policies necessary. the focus is on moving the pot a around. what would they like to see on the infrastructure of moving the stuff from point a to point b? you say that all politics is local. energy consumption is local as well. it is that last mile that is getting into consumers. whether an industrial customer or residential customer. we want the policies to stay local. look at how you expand that infrastructure. incentivize the new economic tendencies and acres. -- anchors. >> at what price? what do you need for this

growth? >> we confirm what other studies have protected. between four dollars and six dollars will be there for decades. based on that, compared to other fuels, this is the most efficient way to use thermal energy. whether home heating -- if you have a house that uses natural gas, you will that $5,700 over a 10-15 year period will be fuel. that is a stable price. it enables consumers to use this clean fuel. thank you soy, much. a new major study on the next gate of natural gas. >> it is time now for our agenda. aside from best buy and goldman sachs, i know you're looking at marissa mayer. her firstdy knows

tire is out the door. it is a real show me year. she has to get out and do it. didn't she do a vote? she did a fashion magazine saying it is put up or shut up. that is what she has to do. >> i am looking at ben bernanke. not in vogue but not at the fed. his valedictory speech tonight. we will see what he has to say. to warn about deflation and disinflation? a lot of focus on that. >> we have to move on to the real news. the oscar nominations are due out in one half hour. what is interesting is that usually do golden globes have some kind of clue as to who is going in as the front runner. we had no sense of who would have the lead. it is all over the place. there is no crossover between the voters or the press

association. what we can say is that "12 years a slave" does not have any momentum. drifting a little. who is hosting? ellen degenerate. she will be benign and not offend anyone. they looked fantastic. let's move onto twitter. the question was, should the u.s. cap bonuses? from the answers, yes, they should not be incentivized to take risks. that has been a common theme this year. then you have the alternate take. let the free market decide. that is what we are seeing with goldman sachs. >> that is pink floyd with a beard. >> bigger bonuses should be discussed by shareholders at

meetings. that is interesting. that does not come up that often. is that something you would like to see? >> i think they will discuss it. i do not think it is a viable solution. that that there is a geographic move here? london is tough. france is tough. do the bodies migrate? >> we have the most lax regulation regime. >> would you suggest london? >> i would think that the far east might be the talent. >> hong kong or shanghai> >> both. with the pollution, maybe singapore. >> tokyo also. >> and multimillion dollar bonuses can buy a lot. >> this is been fantastic. thank you for your perspective.

best buy as well -- >> and citigroup will report in just three minutes. "bloomberg surveillance" continues on the radio. ♪

>> welcome. i -- >> on how goldman sachs came to rule the world. earnings about 30 minutes go. right now, we have got to talk about citigroup. charles is following the latest on citigroup. starlet? >> citigroup is reporting adjusted earnings. , bearish, given by analysts. analysts have been downgrading expectations. the consensus was for $.95. $17.8 billion consensus among analysts.