>> this is a special edition of "market makers." the special editions keep coming here on "market makers." we are at the world economic forum. big day. >> another big day. it has been a big week. unfortunately, it is about to end, but not before we bring you one of the best shows you have ever seen. one of the biggest stories and tagged, the internet -- in tech, the internet of things. one of the biggest companies in this business is nest. its main product is a smart thermostat. it is also in the smoke to take your business and this month,

google announced its acquisition for more than $3 billion. tony fidel is here with us in switzerland. great to see you. how will being owned by google change things for nest? us, we have been on the market for two years. producing new products, but we wanted to roll them out to multiple countries. we are in 96 countries where we don't even sell today because we can see these items being connected but we can get there fast enough. for us going with google, we could get financing, no problem, but we can get access to resources to allow us to move these products much more quickly around the world. as a small startup, you have to build this. and why was $3 billion the right number? when we see snap chat, i like to say i'm not sure what the ng,pose is besides sexti

why do you want to sell at that price point when they don't? >> this was about a vision that larry and the board understood. they wanted to build this out in a big way. for us, it was about getting out to the world faster. >> $3 billion is a big number. >> we have a revenue-based business. we make money. nice money. we have right customers and a great band and other assets besides our radix, patents, and other things, and our vision for the future. >> i'm fascinated by what you said about who will being the key to expanding geographically. google being key to expanding geographically. >> will they get as much out of nest as you will get out of google? >> they have offices and services around the world.

i think we're both coming together to learn from each other. there's a lot of things that i think i benefit of sides. typical mergers happen when there are two competitors timing together, and they reduce overhead. are two like-minded visions coming together with consummate drew resources and putting those together and then letting those things grow and flourish. >> you offer google data and intel and many people say that is what google is, a big data company. should we have privacy concerns that google will know more information about our habits? >> let's be clear. the nest terms of service, we use it to improve the products and that has not changed and that will not change. if it ever does, we will make sure to let you know. rit now that data is not going into all the other -- google, sorry, you're not going to know how cold i am. >> tony, you revolutionized the thermostat business.

you're in the smoke detector business. product -- i'm going to say it -- what other products -- ripe for disruption? >> there are lots of things. wouldn't have these bits and bytes from cell phones, billions of cell phones and smartphones, all these different ingredient pieces are tangible to put into all of these different products around is that you have never seen. you can see refrigerators. or not talking about refrigerators with basically a tablet on the front, but connecting it so it gives energy signals and also when you're home or not. it can actually turn off and use less energy and help you save more money. it doesn't have to be a screen, but he can have these little bites into a to help you get smarter. >> the internet thing, everyone loves to talk about, you actually believe all of this hype is limitless?

>> i don't know about limitless, but it will gradually over time come into our lives to help bring more convenience to our lives to allow us to do other things we like to do. over the last 30 or 40 years, the only information -- information that is happened was appliances. >> and five years, what is my apartment going to look like? >> what you wanted to look like. >> what could it look like? >> at the end of the day, making sure it is safe, saving energy. much, we are wasting so energy because it is cumbersome. why doesn't he know more about you and just to the right thing for you on your behalf so you don't have to sit there and press all the different buttons? it is not about getting in your face with technology, maybe we think about the smartphone everyone walking around like this, but taking these cumbersome things away from you. ,> is that the best opportunity

energy savings because it is so practical and the money is real? >> energy savings is one aspect, but it is also convenience. >> you can overstate convenience. does everybody need to do everything remotely from a smart phone? a not remotely, but there is piece of mind that comes from having a cell phone and looking at the status of your home when you're not there, like traveling like we are today. it is a piece of mind. we found no one cared about their thermostat two years ago. we have our customers and now they are actually checking their apps all the time to make sure their home was ok. now all of a sudden they care. just like you did not check e-mail before, now you have to check it every five seconds. >> what is in the future for your relationship with apple? >> i have lots of friends, great thank yous and support.

today we are in the apple retail stores. we have ios support and that has not changed. >> but will you still be in the apple stores now that you're the google family? >> that is their decision. >> but will you be? >> you should ask them. they have been a valued partner. we have a lot of ios device owners that use our products, and we want to offer them as products and it is that for apple to decide if they want to continue. >> how might else you change what nest is? might you think of doing something else now that you're inside the google family, you have access to the android platform and a number of other things from inside that would have been much more difficult to do from the outside? >> i think there are a lot of things we can trim about. the transaction is not closed, let's be clear. we cannot jump the gun. right now it is business as

usual. when things close -- it is premature to talk about it. >> who calls who? how did this transaction originates? did you have a relationship with them already? >> google has been an amazing partner. >> they were an investor. >> and through that relationship, and i've known many people at google for years, it is silicon valley. it is personal. >> did you have a bank to mediate the process? oftentimes when we see these things happen in old-school m&a, a bank may be infraction or introduction. in silicon valley, you're in the same pocket. >> most of these things happen at a party. we were not up for sale, so we did not have an auction per se. >> you see a lot. you see a lot that goes on inside silicon valley. eat pizza, going for beers.

what is the most interesting thing you're saying that does not involve google or nest? >> that is an interesting question. some interesting things i seen? say there is a self driving car. i'm seeing the automation of vehicles. computer-assisted driving. i think that is really interesting to us because we are taking all of the sensor technologies and putting them in cars and making people safer. i'm really encouraged by that and seeing where those things are going. much more will happen rapidly than we think. >> how long? >> between three and five years. >> how long is it going to be before you see your self owning a self driven car? >> self driving is very different. assisted driving, we have that today. it is only getting better. it will be assisted parking, all kinds of commerce and things we do in a car today that will be taken away to make it safer. >> i can't take credit for

parking these days, it's the car. the truth is, i don't actually do it. congralations. . ceo and cofounder of nest, tony fadell. >> you need to say, "i'm going to disneyland." let's see how things are going in new york. scarlet fu is going to check today's top headlines. feed.'s get you the news the top business stories from around the world. jpmorgan. a year after the bank splashed jamie dimon conversation by millions, the ceo is getting a raise. his board agreed to a pay increase despite a vocal minority of directors who are opposed. jpmorgan is paid out about $20 billion in legal fines and settlements. no word on how much of an increase he would get. currency plans to ease

controls after letting the peso devalued by the most in 12 years. those controls blamed for creating a black market in speeding up inflation. arginine's will be allowed to buy dollars in proportion to the income and a tax on foreign currency will be reduced. carl icahn making an $800 million profit by selling more than half his stake in netflix back in october. he is losing a bet on the stop with his son brett and his fund comanager, they that that never looks would keep rising. out on a netflix rally that would have made him almost 200 million dollars richer. i want to go back to the argentinian move. the effect it has had on markets around the world is phenomenal. take a look at a chart that gives you an anatomy of a global market selloff.

we have come off our lows, but that is almost a 1% decline in global stocks. emerging-market currencies really leading the way down. the s&p 500, down by two thirds of 1%, pushing yields lower to 2.7%. the dollar is weaker. people are going back to the yen as a safe haven, not helping japanese stocks, either. we will continue to monitor these are good movements. violent selloffs on this friday morning. they're talking about that right here in switzerland. we will bring you more big names as we wind up our week in the swiss alps. and stevechs chairman miller, talking to them about the markets. >> ceo of one of the best performing hedge funds out there , brian taylor. ♪

>> welcome back to "market makers." we are joined by someone who marches to our beat a bit, brian taylor. they have been one of the best-performing fund managers. this is your first trip to davos . you don't have a similar profile to many who are here. what made you decide to make this trip? >> taking a step back, you mentioned it has been a good environment for strategies like ours. the main reason is, the financial crisis kind of changed the landscape of the financial markets, and as a result, a lot of regulation for banks, we assume them pull back from

training activities in a number of businesses. pull back seen them from training activities and a number of businesses. what is happening? what are banks thinking? >> who do you want to meet with this year? do you want to raise money, meet bank ceos? >> i participated in a number of the industry breakout sessions where there are clients and other managers, so lots of big names in industry and it has been fun for me. really, just to understand the thinking, understand the likely direction. davos -- everyone is here. lots of opinion leaders and thought makers. it is interesting to understand the themes of the direction of policy and the impact of our banker counterparties, which we want to partner with to understand what businesses are competitive for them to engage in because of financial market reregulation, because of decreased capital requirements,

and find out if there are opportunities for asset managers like us to step in. >> the discussion that takes place here is at a very macro level often. does that say something about the kind of investing pine river once to do in the future as opposed to what it does now? valueare relative investors. at the core is thinking about investing from a relative fell you perspective. there are lots of businesses and assets that banks hold that can be positioned in a relative value context. >> what is the big take away here? >> what do you have your eyes on? >> a lot of things. it is understanding -- there's a plethora of test banks have to undergo for capital advocacy in the u.s. these have constraints on different types of businesses. >> real estate loans? >> in addition to hedge funds, we manage to harbors, which is a

listed mortgage rate in the u.s. it has been able to take advantage of one of the capital changes which makes it punitive for banks to hold. able -- we had to make a big investment in infrastructure and licensing, but it is able to invest now. argentina is cracking today. how concerned are you? unfortunate.s there have been issues. we do have an emerging market presence. we don't have a lot of exposure. unfortunate as, it may be, creates good investing opportunities. last have witnessed the five years. we are watching closely. we will try to decide --

right, on subprime, the wrong side and the right side. what is your next home run? >> oh, boy, if i knew that. >> everyone here is talking about driverless cars. for you, what is the next big trade? >> it is figuring out what opportunities historically banks are pulling back, where we can step in and take advantage of larger scale opportunities. >> if you were a different kind of investor and you were long emerging markets right now, either long reddit or long equity, seeing what you see in argentina and turkey and russia, would've the time to pull back? -- would it be time to pull back. >> in my 25, 26 year career, it is really hard for me to be long only. >> shouldn't make people feel nervous? >> i think you have to take a

long-term perspective and go for value. sometimes -- >> you have to wait for it. >> if you believe in long-term fundamentals and policymakers can't you just have to stick it out. >> even if you're not heavily invested in emerging markets, are you think your team, take risk off the table and see how things play out? >> no come a replay a lot of attention to portfolios. we don't have a lot of direct exposure to you markets. m markets. we are watching closely and looking for opportunities, but are not going back risk so much. >> brian, thank you for sharing your thoughts. brian taylor, ceo of pine river. >> folks, we are going to take a quick break on "market makers." when we come back from the world economic forum, gary cohn from goldman sachs and with them, steve miller, chairman of aig.

we get them both. >> not space cowboy, sorry. ♪

>> we are putting 26 minutes past the hour. continuing selloff in u.s. stocks. dow jones industrial falling for the fourth straight day. it is off by more than tubing percent this week. -- 2% this week. s&p also losing as is the nasdaq. a couple of individual movers to highlight, if it weren't for microsoft, the dow would be falling even further. it is up by two point three

percent. a reported record revenue last quarter. onle investors are focused steve ballmer successor, he appears to be doing a pretty good job as he gets ready to close out his tenure. juniper networks is another big gainer, up by 9.5%. the networking equipment maker has momentum as it faces off against activist hedge fund elliott which has about a 16% stake -- 6% stake. we want to highlight kansas city southern. it is a regional rail operator earning railroads traveling north to south as opposed east to west. results missed analyst estimates. the big art because of a decline in coal shipments. southern falling by the most since 2000. we will continue to keep an eye on that. in a moment, we had back to davos, switzerland. the president of goldman sachs

gary cohn and the chairman of insurance giant aig next. they are parting with a purpose. how to work the room at davos. this is "market makers." ♪

this is a special edition of "market makers." >> welcome back to "market makers." is the president and chief operating officer at goldman sachs and steve miller is aig's nonexecutive chairman -- not the space cowboy, as i said before. even though everyone here at davos is in breakout rooms, panel discussions talking big ideas, you have got to be getting calls today, at least from new york and london and south america. what is going on in argentina? >> first of all, thank you for having us here today.

we are excited to be here. we are getting calls. throughhave been going some dislocation for the last two or three days. markets going through jitters trying to figure out exactly what is going on. emerging markets, repricing of assets. this is not extraordinary movements in the market. we have seen movements like this before. remember back to when been started on the tapering speech early last were middle of last year, we saw 100 basis point movement in 10-year. 25have seen it move about basis points. we have seen normal reaction to things that go on in growth markets. these are growth arc it's, not developed markets. >> steve, given what we saw play out last year, the taper tension not with standing, conditions were benign. returns and equity markets were very strong. do you feel like maybe we are reaching or getting close to the point where a correction is due? >> i've got to tell you, it is

interesting to come to davos each year. the mood changes, the focus changes. two years ago, everyone was focusing on if europe was going to implode. >> true. >> it is a different attitude each time. this time everyone is saying, happy days -- >> does that make you feel nervous? >> at lunch today, the most terrifying moment i heard, "it feels like 2007 again trico >> here we are surrounded by mountains and people are panicked at home due to overseas. >> my problem is, the current stability of the various developed country markets is against an environment where the physical situation is not sustainable. at some point, the bills are going to come due and the developed entries do not have the wherewithal to meet the obligations that are piling up.

i am an optimist, but long-term, deeply concerned. >> are people too bullish? >> i'm not sure people are too bullish. i had a conversation with you, something i was concerned about, one of my risks is liquidity. i said, one of the things coming out of the market as we continue to regulate market, continue to increase capital charges -- you have seen all of the banks withdraw balance sheets. we need to get used to seeing more and more moves like this. this is just a natural evolution of where markets are headed. >> when lloyd blankfein was here earlier, he told us -- he described this as a consolidation. help us understand the goldman lingo. what does consolidation mean? >> consolidation is a typical charting pattern. when people talk about consolidation, they're talking about charting terms. you have big movements. then you need to get used to

that level of rice. you need price activity around those levels, which is called a consolidation. inhad a 30 plus percent move some of the u.s. indices last or inequities. you need to get used to those 30% higher prices and then decide does the world like those prices? do they establish those are the right prices? are they too high? are they to cheap? adjusts based on that. that is normal. our tenure interest rates are --ll >> they have almost doubled. >> what is your take away going to be? >> i would say the buoyant attitude for the people that is so different from what we saw over the last three or four years. you go back four years ago, you probably would not have been sitting with me. >> why not? >> we were in deep trouble.

we were the most is respected brand name on the planet. now we have come back and fully repaid the us government a year ago. we built a company with tremendous momentum. we are going back on offense. >> what are the action steps? what do you say to aig of what you should be doing? >> i'm going to sit down and write a trip report on the plane on the way back, for sure. i've had some interesting interchanges with individuals. up.ed to add them i still think this is a world of opportunity in front of us. our business is accepting risk and charging for it. that is our business. to the extent people perceive risk and are willing to pay projection from it, it is going to be great for our industry around the world. >> do you feel popular here? you're not in business is that people particularly like.

what is your mojo like? eric schmidt, people want to party with them. what about you? >> i was in that dinner last night with bono. >> what is it like for you today than compared to a few years ago? >> because of what aig has done in the fact i'm chairman, i did a lot of people coming to me for my views, my advice. nobody would have asked that three or four years ago. >> how about you? >> i always seek steve's advice as well. he has worked out some great companies in the united states, so he has great advice. you should seek his advice. we have a huge client base here in davos. when i'm out and around seeing people, i am running into clients all day long whether their central bank clients, ceo clients, asset management clients. they are all here. this is a large gathering of our client base, so i'm always out talking to people and running into people i know. >> but are you frustrated because the theme is innovation

and you're in an industry that doesn't feel like it can innovate. >> we are in industry there to serve our client. we are risk managers. we are here to take on risk, facilitate our client's needs, take the other side of their transaction that allows them to grow their business, that allows them to deploy capital, allows them to hire people. >> hold on. do goldman sachs superstars want to grow up to be risk and expense or risktakers? >> they want to grow up to be both. steve, in theory, the reason to be here is to participate in conversations. now, i don't know if i can speak for you, but gary said they are sit down and spend all day, evening, and night with clients and not sitting in on sessions and listening to things that might allow the amount to lectures about income disparities, that kind of thing.

>> meditation. show, i'mfter the with to a panel discussion pepsi and abn the couple of other companies, talking about road safety. what can we do -- >> road safety? >> road safety. why? china that 40% of the drivers have less than three years experience. there are 20 million new drivers going on the roads in china every year, and haven't quite mastered how to drive safely. >> they should bring over the tech pioneers from the other tent and talk about driverless cars. design of thethe cars, the design of the roads, the training of the drivers and so on. we are going to see what we at the private sector can bring to this process because it is the undergrowth -- underdeveloped countries of the world where

traffic accidents are the number four leading cause of death around the world. for under 30 plus, it is the number one cause of death. we can do something about it. >> do you feel like you're missing out on opportunities here? >> i think it would be fun to come back someday and just be a regular visitor in davos. >> there is no such thing. >> the clients that are here are so important to our franchise and spending time with them and getting to see them is really the best use of my time. >> we will be back with more on this conversation. gary cohn was to come back to regular visitor, but there are no real human seer. we will be talking to him and the miller in two minutes. stay with us. ♪

you are watching "market makers." we are live at the economic forum in davos, switzerland. we're speaking with gary cohn and steve miller. gary, one of the things that struck me as i walked around davos this week is how bullish people remain about japan. is the corona put as solid as the bernanke put? >> the market is interpreting it that way. he was talking about his commitment, his conviction to create an inflationary japan, to stop the decades of deflation, allow japan to keep growing. the market is respectful of the devaluation that has taken place in the yen so far.

the trend has been in place for the better part of a year. if you look at what has happened over the last two quarters, three quarters, the trend is there. somethingmarket sees that is not believable, they will continue to believe it is their. >> do you feel it? do you can fill dusty feel the commitment from abe? >> there is nothing that would lead us it is not there. >> i can understand how the tech ,ompany ceos can be bullish everyone enthused to be disposed misses -- businesses. if you are on the board of blackberry, how do you advise someone like that to have their troops come in every day and want to kick ass, at a company that everyone dogs on day in and day out? >> i don't have an answer for blackberry, but the most important thing a leader can do is to be honest and open with the people of the company about, here's the problem we've got and

here is how we are going to solve it. here is what we're going to do to get to where we've got to get to. you have to be an inspirational speaker, a great communicator to provide that leadership. juste worst of situations, like at aig, you can get the people excited again. i think one of the things you're talking about, japan, one of the things that abe has done, he has the japanese people excited about their future from the first time in two decades. that is in enormous achievement and leadership. >> gary, how do you do it in an industry that has changed? in the early days, people were motivated because they wanted to get the big jobs that paid massive amounts of money. now there is a shift. how do you keep your people so highly motivated? >> our people have to enjoy what they're doing. i have to understand their part of a team, understand the goal. they have to understand the objective. >> the goal is to make a ton of dough. >> the goal is to serve our clients.

if we serve them well, archives will do well and we will be, said it well -- our clients will do well and we will be compensated well. bank of england governor mark carney was talking about it today, the fact that companies are not investing. we have had all of this liquidity injected by the fed, the boe, bank of japan, near zero interest rates in europe. what is it going to take to get ceos and the support of their boards to start making capital investments? >> i think the biggest inhibitor to do investments, particularly in the united states, is that there is uncertainty as to what it is going to cost to hire people. you have people that used to say, i had 40-our workers. those are fine, but any new hires are going to be part-timers so as to avoid the regulatory and financial overload that comes with it. until it is clarified, i don't want dad -- >> i respect that. uncertainty has been, i will

call it the excuse, for so long now, and makes me wonder if we should not just be used to a little uncertainty and get on with business? >> steve has a better view than i do. he would understand what the boardroom dynamic is. he is completely right. this is about confidence. you spend money and you make investments. when you're confident you can get a return to shareholders. ceos and boards don't spend money when they are hoping they spend money when they are sure are highly confident they will get a return. there are too many unknowns in the world right now today to spend a lot of money. you incrementally have to spend money to keep your business going and your opportunities out there, but you're not going to take a risk that you don't understand return. >> to you worry some of these younger companies that everyone must to talk about -- hoover, yelp, twitter -- don't have the senior management, don't have

the white hairs or lack of care guys -- >> hey. >> who have done this for 20 -- >> that was a new low. you are guys who have been through decades of markets. you have run companies. when you look at the young companies, do you think, these guys might have great product, but do they know how to manage? >> they may not know perfectly how to manage them, but innovation and imagination they bring to it is terrific. my own son started up an internet company three years ago and it is going gangbusters. he is quitting his day job and going to spend full time on it. what a wonderful thing. i had every doubt he would never get anywhere with it, but it has been a fabulous success. i love the success stories of the young people in the high tech businesses. >> dairy, do you have reservation gary, do you have reservations? women and jim and have, they're going to make younges, -- what these

women and men have, they are what make mistakes, but they're willing to admit it and move on. these copies have great products. >> you're not feeling an internet bubble is ahead of us? >> it is not driven by lack of management skills in these technology startups. that is not it at all. the ones that are thriving are thriving because they've got great products that you and i need, want, and use every day. >> am prepared to pay for it. >> what a great conversation. >> gary cohn and steve miller. >> when we come back, working the room at davos. we are going to show you how to network like a pro coming up on "market makers." ♪

>> welcome back to "market makers." switzerland,os, one of the biggest business opportunities for many attendees and the real action when the

congress convenes for the day. it happens at night. hans nichols spent cocktail hour with no lead networker -- with an elite networker. i'm david jones. up until two weeks ago, i was the only british ceo of a french company and now the only one with a tech startup. the main reason i come here is you can see in one day more people who you would love to get to see across a year. you make no apologies about the 15 to 20 meeting this minute meeting. in can spend half your life a cube.

other people are much less comfortable with having a high social profile. i think it is about knowing people. if in doubt, don't do it. nonstop events and parties, a lot of work during the day. everyone ends up staying up a bit too late and having too much to drink and having to get up very early the following morning. >> the parties aren't just fine. people talk so much about davos nila. what is it really? >> the part about not checking your coat -- >> you're asking him? >> walking on the streets of davos with stephanie ruhle is an instruction, a tutorial on networking. radar, disability -- >> and this is her first year. >> the important, and not important really fast. >> he is terrible about introducing himself with his name. then you can't find the other person's name.

iswe can talk about this wine and cheese, cocktail hour, but there are a lot of connections made. people find it incredibly efficient. the velocity you can conduct business here is remarkably fast. i caught up with mike froman and today he had 20 meetings. totally doable. he gets a lot done. is going look at what on, yes, there's a concentration of wealth and power, pretty plush environment. there are a lot of fine wines being served, but let's be real about this. these people live and operate like that elsewhere, too. it's not like they come here and every thing is changed, this is how it is. -- they'res walking not walking anywhere, they are driven. >> what he means to say, this is how they roll. to? parties have you been

i was in bed at 8:00 every night. >> we have to think forward. the google party was a big articles top >> ok, thinking forward. >> yahoo!, marissa mayer's big moment, we saw her dancing last night. >> at google. very j blight was performing. blige was performing. >> there is some diplomacy at not being seen as some parties. >> and which party to attend. not-so-subtle cues. >> what he is saying, he has a full dance card. pity the man who has fewer options than air sir. -- erik schatzker. had a fairly long conversation with benjamin at in yahoo!. he talked about what is happening in iran. it would be a good interview.

>> hans nichols will have that for us. stay tuned. ♪ . . .

live from the world economic forum in switzerland, this is a special edition of "market makers" with erik schatzker and stephanie ruhle. >> welcome to "market makers" -- davos style. >> sadly, it is our last day in the mountain paradise where business leaders are gathered. they are not the only people here. politicians have also made the trip. eric cantor is here and the congressman joins us. you and i spoke here last year. i'm curious to know what you learned about the way the europeans and people from other

nations view the u.s. right now. >> you have to say our delegation is here focused on talking with foreign leaders and trying toers who are see the best way for their future. at home, we have serious concerns with the lack of job growth. we are trying to learn from others to see the best way forward with education opportunity and the rest. i will say probably most of our meetings with foreign leaders have reflected a desire to see a strong america, especially those in the middle east. i met with the prime minister of israel and egypt, the tunisians, representatives from the ukraine. americanlearly leadership is so important. ith a strong america, becomes a stronger economy at home.

that is what we all want. . he gave a conciliatory speech trying to win over foreign investors to do business. do you believe it? is it the right time? >> absolutely not. i think there has been a veneer pasted on iran. i think it is absolutely wrong. iran has done nothing for us to trust it. it is a repeated offender of violating international law. we ought to stand firm with our allies in that region that say do not trust these folks. >> did you throw a snowball at them? >> i did not. many from america are very distrustful of what is going on. >> they are distrustful there. how much are they trusting we are not walking into another debt crisis? jack lew said february 7 we're running out of money. >> what we have experienced over

the last year in the house has demonstrated there is not a meeting of the minds in how to properly deal with the deficit. i think the republicans have said you have got to deal with the entitlement situation. not had aely, we have democratic senate or white house willing to go along with us. there is a lot of frustration. if the secretary of the treasury says a date certain by which you go beyond the. where there is no risk, i do not think most would say let's take a risk that is unknown by not making sure we resolve the debt crisis or the debt ceiling. >> let me understand this. people need to know. correctly,tood you you do not believe congress, the house or senate, is going to

test the debt ceiling again. >> there is no testing of anything. >> ok. it has been talked about in principle. >> i disagree. >> i am not interested in an argument. what i want to know is whether it is going to take anything in the way of negotiation to bring both sides together and make sure the debt ceiling is not an issue and does not weaken america in the eyes of foreign leaders. people have talked about keystone, relaxing epa group requirements,a leaving some conditions of obamacare. are those things on the table? what is at the top of the list? >> we ought to have a white house willing to sit down and say we cannot keep incurring this debt without solving the problem. whether america can get its fiscal situation straight.

we know we have to do something about the fiscal situation. the demographic and health care situation is such where you have to change the structure of entitlements. >> is it realistic to do that. >> the administration has demonstrated they do not want to do that. i think all of us want to grow the economy. that means more jobs, upward mobility. there are things we have in common with the president. for instance, skills. he has talked about the need to close the opportunity gap. we passed the skills act. . that is something he should embrace there are things we can work on together. we're asking all for is cost-benefit analysis. >> what would it take? what could they give to make you feel good enough about taking a deal to your membership and saying this is something we need to pass? >> barring some extraordinary would say we they

need to do something about entitlements, let's work to see how we can grow. you mentioned keystone, regulatory reform. anything holding back our would begrowth favorable. >> is there one you would prefer over another? >> i do not want to negotiate any of this. our leadership and the rest of us are interested in working in a positive way to grow our economy. for too long there has been an acceptance of the lackluster growth and the new norm that i do not want to accept the lack of employment growth. >> people are frustrated with washington. i am sure you are as well. you talk a lot about education. after spending a few days in davos, do you think private citizens can be more impactful? if you want to spend more, you have to raise taxes and increase

the amount of money you're spending. you see mark zuckerberg adding hundreds of millions of dollars like others. do you think they can do more? >> almost every month, i'm visiting programs of charter schools, public charter schools, and other school choice programs around the country, including my own district of richmond, virginia. i have seen school choice is the way out of the cycle of poverty for many stuck in failing schools. honestly, you look at some of the systems spending more money than others, and they have some of the worst results. money is not the only answer. we've got to reject the status quo. we have got to raise expectations. we have got to say you cannot keep sustaining schools that do not respond to parents and kids needs when it comes to the quality of education. >> congressman, heavy spoken to anybody here about immigration? if so, what have foreign leaders

told you? >> i do not think foreign leaders have asked us about immigration. >> you talk about a strong america, needs a deal at some point on immigration. you will see we republicans believe in fixing the system. we're going to be taking our retreat in another week or so. we will be discussing principles to see if there is some consensus. any kind ofs said immigration reform has got to be first the limitation of law at the border, the implementation of the laws in the interior. i have been a huge advocate for the kids act which says if you have kids rock to our country by their parents -- brought to our country by their parents, how can you turn your back on them? we ought to be able to start there and build. it has a lot to do with the fact the laws have not been

implemented thus far and so there is a distrust we will try and do something and it will repeat itself. >> do you believe there is room in the republican party, particularly among house republicans, for aipac the citizenship? -- for a path to citizenship? >> i am for a path to citizenship for our kids. >> how about illegal immigrants who have been living in the country for years and can be shown to have made a contribution? >> there has to be a higher bar for citizenship. kidseason why i think the case is so compelling is our country has never said we will hold kids liable for the misdeeds or illegal acts of their parents, and should not. but if you have an instance where there was a violation of the law, i think the standard is higher. >> would you break up our kids from parents? >> you asked for citizenship. we have a lot of work to do.

let's start to see where we can make progress. that is where washington needs to go. we have divided government for a reason. the country and public have seen when you look at obamacare, dodd frank, the regulatory environment -- we hear a lot about that here. we want to attract investment. we are not the friendliest environment. we are trying to make it a better place, trying to see an american it works again. we know it can do it. >> business leaders are interested in talking to you for another reason. john paino told jay leno he does not want to run for president -- john boehner told jay leno he does not want to run for president. do you? >> no, i am focused on the privilege i have got. >> of being on "market makers"? many americansnk are worried about 2016 right now.

i do not think they are worried about november of 2014 or which party is up or down. i think what they are worried about is how they are going to pay their bills at the end of the month. are they going to be a will to save for college/what abou -- are they going to be able to save for college? what about health care? it is going to be deductibles, premiums, access to doctors that will be cut off. these are problems. instead of looking at it in terms of a horserace, let's solve the problems. i think the politics will take care of itself. think n 2014, we will be hearing more about obamacare. thank you. eric cantor with us on the slopes of switzerland. davos, it is the world economic forum. >> we're going to send you back to julie hyman with breaking news. >> we're watching natural gas prices because we are seeing them surge above five

dollars for the first time since 2010. it is all about the cold weather. we are seeing demand for natural gas go higher because it heats nearly half of the homes in the united states. we have had some chili weather -- chilly weather. gas is up 42% since the beginning of the season in november. january is on track to be the coldest month in the 21st century. as a result, we have seen the inventories pulled back. as you might expect, a lot of people using natural gas. "market makers" will be right back. ♪

>> welcome back. this is "market makers." number does live at the world economic forum in switzerland. netflix is gearing up to take the continent by storm. it will have to contend with an industry getting smarter. that is the cable business. with us to talk about cable is

the ceo of the largest international k beale t.v. -- cable-tv company. helicopters overhead. it is hard to hear ourselves think for the time being. are netflix and other services a long-term threat to the cable business? >> they do a lot of things well. they have shown us consumers care about functionality. hey care about ease of use, user interface, being able to move content from one device to another. content is the same as we have on television. >> sometimes less. >> sometimes a lot less. we are learning if woodbridge the functionality gap, which we have done in europe with verizon -- we are learning if we bridge the functionality gap, which we have done in europe with horizon, that you will hang onto them because we provide all the content. that is the lesson we have

learned. netflix will get a customer base. remember, in europe, video is cheap. in the u.s., it is $120. we come from a different history. our programming costs are less. t.v.,you watch european you will realize why it is cheap. >> our broadband speeds are faster. we offer all content available. our bundles look the same but our prices are lower. we do not have espn and he is programming costs driving the video rates up. we are not that expensive. the underbelly is not as soft as in new york. >> what is the challenge in the market? >> we always have regulatory challenges, even though europe is one market and brussels is supportive of our industry. we have national regulators to contend with. they all have their own perspective. sometimes they have ownership in telecom, so regulatory issues

are always front and center for us. company said, a there are talks underway for u2 by the rest of the company is progressing. what does that mean? >> i think discussions are progressing. >> i is it taking so long? >> i cannot say much more. they are a public company. they have their issues to do with. we are a happy shareholder. we are in discussions with them, but these things take time. >> give us a sense of how you feel about the prospects of things coming together. should we assume based on what we know it will wind up in a happy place? >> a good question. i cannot say more. there is industrial logic to put together cable operators in one country. our businesses need to be national. >> consolidation is needed. >> it will happen across europe

in cable, mobile. it is inevitable. >> is consolidation necessary? iggo said higher marketing costs will eat into profitability next year. is that a phenomenon you see? >> not necessarily. consolidation is needed because europe has too many operators. the u.s. has three or four. you have 110 or something in europe. do you need five mobile operators in one country, of a holl size: for example -- land, for example? we want a healthy environment for our ecosystem so. we are supportive of consolidation it is going to happen. >> what do you want to get out of this trip? >> i meet with a lot of regulators and politicians. i have met with the chief regulator or politician in almost every country we do business in. we meet with our peers in the

i.t. and telecom sector. i am one of the governors so we get private sessions where we compare notes. we do our own work. we had a breakfast where we introduced a policy study we're doing trying to demystify the internet. we always worry about the last mile and neutrality, but nobody is worried about the rest of the internet where content is originating. that whole part of the web is going to be the most important topic in the next few years. >> what do you mean? >> we're building broadband networks everywhere. sometimes faster. we cannot control how much content is coming into those networks. contentconnect points, providers are flushing networks with capacity. the manner in which it arrives and the way the data flows around the web before it gets to us is under stress. >> if you could control, by

virtue of pricing, what came in ?o the network and what speed >> we are not trying to control it. we are trying to point out to the way it works today is not necessarily going to guarantee the best experience down the road. >> what is the alternative? >> the alternative is to get closer. netflix and google are moving their content closer to our networks. >> what do you mean? >> less of it has to travel from silicon valley to europe. they are caching content. that is an investment they determine they need to make to improve the expense of their consumers. we are supportive of that. >> you are supportive because they are bearing the cost and not you. >> sure. we invest $3 billion a year in our networks. 20% of our revenue goes back into it. >> is the cloud killing it? >> not really.

not at all. we are all rely on the cloud more broadly. he just -- it just means there needs to be sharing of cost. consumers will win in the end. that is the main point. >> the ceo of liberty global with us in switzerland. it is getting dark and cold. >> we are not done. coming up, we are to hear from world leaders, british prime minister david cameron and israel's prime minister benjamin netanyahu. you're watching "market makers" live from the world economic forum in switzerland. ♪

>> we are approaching 26 pass the hour.

u.s. stocks have hit session lows. the market closing out the week with losses. the s&p losing 26 points. it comes on the heels of weakness in emerging markets. argentina, turkey, south africa, you name it. julie highlighted earlier. natural gas moving above $5. a caps off a big week of gains, the best since december of 2012. freezing temperatures means more demand for natural gas to heat homes. we want to bring your attention to individual companies that reported results. starbucks up by more than 3%. helping profit beat analysts estimates. procter & gamble doing fairly well as well. profitability beat estimates thanks to growth in emerging markets overcoming weakness in developed markets like the u.s. we have more "market makers"

including david cameron. whenlked about the days politicians meddled with interest rates. that is coming up on "market makers" on bloomberg television. ♪

>> i'm erik schatzker live at the world economic forum in switzerland. i sat down with one of the most powerful bankers in latin america. $3.5old his firm to ubs for billion and bought it back for $2 billion. here is our conversation. think it is a measure in the right direction. of course, it comes in a moment of weakness. much more transparency in pricing formation. argentina was in a moment with true exchange rates. society cannot afford this kind of regime for a long time.

what is pushing the devaluation is not the financial markets or speculators. it is the society of argentina. i think it is good. it came in a moment of weakness in the economy. >> is their contingent risk for brazil --is there contagion risk for brazil? >> i do not think so. argentina was so isolated from the international financial community that i think this contagion will be very little. argentina is an important trading partner to brazil. in terms of classic financial markets contagion, i do not see that happening. >> people do have concerns about brazil when it comes to foreign exchange. does it deserve to be called one of the fragile five? >> i think brazil does not deserve. the first is a structural issue. brazil does not offer political risks.

no big sociological issues or religious issues or political issues. it is an easy to understand country. almost $400 billion of international reserves, well above what we have. means brazil is not a fragile country. >> you do not believe brazil will have difficulties as the federal reserve board draws -- withdraws liquidity from financial markets? >> the process started when the fed started the rehearsal tapering. interest rates will be the second stage. the normalization of the u.s.

economy, there will be some rearrangement of international asset prices. of course, brazil will be affected as any other country. from there to extreme volatility, i do not see that. i see a rearrangement of price in some markets. >> what are your ambitions for commodities? >> we have been doing commodity trading for a while. of a verythe center important hub for commodities in latin america. for oil and gas, latin america is an important hub. it is natural for the largest investment bank to focus on this business. that is the roots of our commodity investment. we intensified that in the last 18 months given the international landscape for this asset class is getting favorable for us. >> are you a bidder for the

jpmorgan commodities business? >> we are not. >> how come? >> the bulk of the business is concentrated in the u.s. energy business. that is not our core target for commodities. that is the simple reason. >> did you take a look? >> we know the business from outside, but we did not do that. >> how about morgan stanley's commodity business? >> it has the same characteristics i mentioned so probably we are not a player. >> how much of an opportunity is thee for your bank with withdrawal of u.s. and european banks from certain markets because of the new regulations? opportunity. is an very strong regulated jurisdiction which means we suffer from negative

arbitrary arbitrage. >> the rest of the world has caught up to brazil? >> we are more similar now. relevantes are very sector in our economy. it is natural and investment bank play a role in optimizing the production chain. >> how much bigger do you think your commodities business could be two years from now? >> it could be a big one. we do not have ambition to be the largest in the world, who it can be a relevant business unit for us -- but it can be a relevant business unit for us. >> are their markets where you see opportunity that you want to move into more aggressively? isconsolidate latin america an ambition. >> when you say consolidate, are you talking about acquisitions? >> we already made some relevant

acquisitions in chile and c olombia. they are part of the strategy. they are not the core of the strategy. we have critical mass not to depend on acquisitions. it is growing into having this one firm concept. that is the idea. >> you are still quite a young man. you have become a wealthy young man. have you given thought to what you might do with your wealth over time? btg, we never created a foundation. we always thought we should be respected for how we behave regarding our business ethics instead of helping poor people just because we have money. having said that, we took a lot

of initiatives recently. specifically with education. , you need toerm have an educated population. on a personal and institutional level, we have a lot of initiatives regarding education. >> i have to ask about the world cup. is brazil going to screw it up? >> in terms of the infrastructure? >> that is what i am talking about. >> it will be ok and world- class. i am worried a little bit with transportation, which is a challenge for us. we did some investments. we have a strong pipeline of investments on the. a key challenges around the national team. government have to do more? do you still see a risk it could go off poorly?

>> i think the government needs to do more to incentivize more infrastructure investment. i think we should not use the world cup as a milestone. i think it is just the beginning. i think brazil desperately needs to increase investments and productivity. is 10-year agenda of brazil productivity. a big part of that is education. the economic side is to simplify our tax system. i would like to see infrastructure investments in this context. the world cup is the beginning. we have other important processes ahead of us. >> that was my interview with the chairman and ceo of btg, one of latin america's most powerful bankers. he is not the only heavy hitter in switzerland. we have much heavier hitters.

hans nichols spoke with heavy hitters, two prime ministers. you spoke with benjamin netanyahu and david cameron. you made news with netanyahu. >> two bits of news. he said the central bank is in sintering a currency intervention. currency has been dominating discussions the last 24 hours. he also talked about the role of lifting certain restrictions on cyber technology so israel can export more. listen to his actual verbiage. >> i do not know of any country, certainly not a small country like israel, that can control exchange rates over time. >> there is nothing you can do? >> there are a few things we can do. the central bank director is considering them. in is totally independent terms of what the finance ministry can do.

>> there are few things he can do. what does that mean? the former finance minister certainly knows the limits. he is walking right up to it and saying the central bank is considering doing something. we will see how it shakes out when the comments get played more. on the issue of lifting security concerns, he said this is an issue of israel's long-term economic growth. they have to be a technology- based country. he is willing to live with a certain amount of risk that you have when you share technologies. >> there is tension. i made the decision on taking the gamble to expand our cyber cooperation with countries and companies because we have asked ordinary technology. choice -- we have extraordinary technologies and have no choice but to run to the front of the pack. >> he had availed -- a veiled warning on iran.

he said we will be watching the ceo's to see how cozy they get with the iranian regime. >> you have been cozy with more than a few power players. >> we had david cameron earlier this morning. he has a problem on his hands. unemployment is falling fast. it is a problem if you are a central bank governor. he has a threshold. he said when we hit 7%, they will raise rates. are they going to? the market is playing on this. they need to be careful that the 7% threshold does not automatically mean the rates will be raised. i asked him about it. he said he does not want to get involved with central-bank policy and it is not a trigger. is a threshold. he was very bullish on the u.k. economy. >> they have the same issue we have. that number may not be representative of the real climate. >> that is something a lot of countries have to deal with. it is a better problem than

southern europe with unemployment figures of 60%. i asked the prime minister what he thought about the economy. he said he's confident it will be even better next year. >> what we're seeing in britain is good economic news. we are seeing growth in employment, the fastest growth jobs in one quarter since records began. missing forecasts the raised by independent forecasters -- we are seeing forecasts being raised by independent forecasters. we need to make sure it is recovery for rich and poor. we need to take steps to correct problems we had in the past, fixing banks, making the economy competitive. that is happening. that must be my focus and the government's focus. >> how important is it that you are attracting investment from china? >> hugely important. in the first six months of last year, britain was the most popular destination for investment anywhere in the world. i see it as one of britain's

great advantages. we are not embarrassed we have chinese investment in our nuclear industry. we are pleased. , i have been meeting with business leaders looking at britain and bringing jobs and investment and well to our country. it is in a globalized world where business can go anywhere, having a country say we welcome your investment, that gives britain a great competitive advantage. >> a stark contrast to last year. we were here last year. we had an interview with the prime minister then. this time, he says he wants to talk to business leaders and to attract more investment from china. >> how much did he have to say about the referendum he wants to hold on e.u. membership? >> not much. i tried to ask him about it. the problem with the uk's you have european elections in a couple of months.

the problem is the right wing people are getting a lot of support. i asked if he was concerned about it. he said no, we will renegotiate with europe but we have a firm handle on the situation. >> sit tight. great stuff. we will be right back at the world economic forum in switzerland. ♪

>> what a great week we have had , interviews with giant names from the world of finance, economics, technology. we have an extra ordinary team with us on and off the air. tom keene, francine lacqua, hans nichols. >> the first time we have been together. >> indeed it is.

stephanie ruhle. that is my name. we have to look back at the week we have had. we feel lucky to be here and lucky you have watched. >> let's start off with the founder and executive chairman of the world economic forum. he is the guy who tries to set the tone for the whole week. he has priorities in mind. sometimes it is difficult to bring other people onside. tom, you know this very well. it is kind of like a concept. wall street is a concept. concept. or woman is a there are still more men here than women, unfortunately. here is what he had to say about who davos man is now. >> in the old tradition,

probably some self-doubts. he knows capitalism today, in principle, should be combined responsibilityal with concern for those left out by our capitalist system. >> i am not sure what to say about that. i have not met a lot of people with self-doubt here this week. man has three handlers getting 25 meetings together just to get to thursday night. we have seen corporate davos. this year, davos man is much more corporate. >> struggling against the commercialization of the world economic forum. i think we have seen a lot of commercialization of it. >> they go home and say i need to do something for society, let's give a couple of million dollars here or there.

man is aos corporation, corporations are people. >> you're the only one who did not gain weight. had to go back and forth to the helicopter pad. >> i want to share some of our great interviews. we started off the week with brian moynihan. we wanted to know what he was doing here. >> we come to learn. you think about the range of topics and information from different participants, you come to learn. what iss have to learn going on in a particular country or industry. it is important. >> to you believe ceo's come here to learn? ever, iyear more than had people say i am here for business. acquire, spend money, but also want to have spare time in between parties and deals. many people said it is an

inconvenient location but it is convenient because everyone i need to see throughout the year is here. i believe brian moynihan wants to learn something. thing goodness he does. some show up here overconfident. thing goodness he does. -- thank goodness he does. bankers usually do not get to meet in one place with policymakers and regulators. there is some value in that. hashe casual conversation now turned into the biggest advertising company in the world. >> i would suggest the academics come here for the same reason. they will never admit it. to see their brethren and bounce off other people. they are here for the same thing, to meet people and take names. >> one of the reasons for the merger is to defend themselves from the googles and twitters of the world, from technology

taking over traditional business. you have extraordinary him a forward thinking technology companies. don said technology moves five times faster than management. this place is full of senior management. can you imagine how big my suitcase was this week? >> that is what the helicopters are for. it could not fit on the train. they had to land on the field. flyinglong ago, you were the corridors of power of the white house. covering congress and the treasury department. hans sat down with jack lew, the treasury secretary. >> i think the u.s. economy is doing much better. the year strong and start strong. we had headwinds from fiscal policies. this year, we have tailwinds

with good economic growth in a broad range of areas. >> the tailwinds, the optimism you hear. who is the optimism for? that gets to the debate over inequality which i thought did not ring true. >> it had momentum at the beginning then it fizzled. >> they watched their funds blowup. >> they definitely took a hit. we have been sitting here. i have been watching the data on the monitor. in the last 24 hours, markets are moving. all of a sudden, pompous views and lofty discussions. >> i have to disagree on inequality. you have a lot of european officials. the french and italians have youth unemployment of 60%. this is the inequality they are talking about. the difference between the haves and have-nots. this cap is getting wider. >> larry summers rolled his eyes

talking about income inequality saying davos is not as forward thinking as it should be. in 2012, he wrote it is opportunity inequality. not to say he is not happy people are talking about it, but it is not like we were born yesterday. >> it means different things in north america and europe. in europe, it means social unrest in the southern countries. that is a scary prospect. you talk about youth unemployment and 60%. on the north american continent, we have high unemployment. you do not have wage growth. no one knows the participation rate, but it does not seem to be fraying at these social fabric the way it is in southern europe. europe, we forget a lot of these countries are going through massive reforms. it is painful for the people on

the streets. >> there is a contrast. you are right. it does not appear to be threatening the social fabric in america, but it is fueling populism. perhaps more than we see here. there appears to be the streaming -- strangely abiding faith in government. there is not that in spain or italy. interesting stuff has gone on. >> in the u.s., the number one industry americans do not trust is the government. number two is banking. here's what lloyd banks find -- lloyd blankfein had to say about being a banker. >> there was a big trauma. there were a lot of causes. one had to be poor risk judgments made by certain banks. to the extent that banks were getting a lot of benefits from their good risk management, it turned out to be flawed. it is fair you pay some price and reputation when it did not go well. >> a little lloyd blankfein.

it would not be a world economic forum without him. >> let me see that hat before we go. i love that hat. >> eric remembers what it was like this everyday. i have not one my hat this year, but i did bring it. >> tom keene, francine lacqua, hans nichols. guess what else i brought? thank you so much for this opportunity. i hope you enjoyed it. goodbye from davos. >> their well from the swiss mountains. this is the world economic forum in switzerland. we will see you back in new york city next week. farewell from the swiss mountains. >> it is 56 past the hour. bloomberg television is on the markets. the market continues to deteriorate. the s&p is breaking below the medium-term average.

and nasdaq leading the decline down by 1.5%. it is time to dive into derivatives with today's options insight. onging market volatility the rise causing selloff in the u.s. options traders love volatility. strategist is bringing his emerging-market strategies to the table. how bearish are you on emerging markets? >> i would say cautious, not bearish. the last bout of volatility in emerging markets does have the potential to spill over into developed markets. >> we are seeing the currencies deteriorate, the stocks deteriorate. >> correct. it is caused by the recent renewed tapering concerns as well as soft data out of china causing fear of more capital outflows in emerging markets. it is relegated to currency and commodities

volatility. but the potential for equities volatility is certainly there. >> we're seeing the vix over 16. that is a serious breakout. what is a good options trade? do you look in the u.s.? >> there are several ways to play it. the concern is emerging markets with the attention for contagion and spill over into the u.s. the more liquid vehicles for playing the downside any merging brazil, thevwo, emerging markets etf. right now, we look out to march for two reasons. fmocapture the next two meetings and the next round of chinese manufacturing data. we would look out to march on eem. up fork the spread lines

around $.69. it gives you nice leverage and payoff potential. >> you see the stopping to $33.50? >> if things keep going the way they are. 4.5% in light of the recent decline. >> thanks. we appreciate it. we are on the markets again in 30 minutes. "lunch money" is next. ♪

>> welcome to "lunch money" where we tie together the best stories and news. let's take a look at the menu in davos. what is better than a bunch of suits in the swiss outs? dancing suits in the swiss alps. calls.gest wavke up netflix goes behind the scenes of the romney campaign. how do you sell the best corner in the game after a rant like that? pop staet