another immigration plan -- the first tuesday in november. content is king. just us facebook and yahoo!. >> we are alive from our world headquarters in new york. it is monday, january 27. where did the month go? me, scarlet fu. we welcome olivia sterns. she has never been up this early in her life. that is not true. we used to have a 5:00 a.m. london show that we did. >> do you like new york better than london? >> hard to say. very happy to be home. some news overnight coming out of japan. reporting a record deficit in 2013 things to a surging energy bill. this comes after three decades of surpluses that can to a halt in 2011.

the halt -- turning point seems to be fukushima. cs was supposed to be helping. >> we get some economic data today as well. >> we will get new home sales figures. it'll probably show home sales slowing for the second month. cest year for home sales sin 2008. dallas fed manufacturing ofivity -- a key measure state manufacturing activity. scarlet will be breaking down the caterpillar earnings, always a bellwether for global manufacturing. will this big investment be petering out? the new construction in u.s. homes, will that help? we cannot help but talk about apple. >> cory johnson will join us

later. check.o a data i want to get through this in quick speed. markets on the move, particularly in turkey. 4.40.es back up onto the second screen where we get into what is going on and the emerging markets. 12 to 18 while i was away. there is the quote on the argentinian peso. the turkish lira all over the place. a.m. and of the central bank sets an emergency meeting for tomorrow. we have a stronger lira and the past 30 minutes. -- in the past 30 minutes. we pulled an all miter to come up with this chart. ter to come up with

this chart. >> not your typical pair. >> we blowout six standard deviations. there it is. the out. ch,. brazilian rio versus argentinian peso. let's get started with the front page. >> the market meltdown. it started in emerging markets. it spread around the globe. we start the week with the dow trying to recover from its worst week in a year and a half. futures are bucking the slide we have seen in emerging markets and european stocks. is this a short-term pickup? hiccup?p -- >> i would point to what we heard out of the president of goldman sachs speaking to bloomberg market makers. we have to get used to more moves like this. >> you see that in the vix.

average on the vix is about a 20 , going back two decades. we are getting back to average from the huge complacency. >> the decision comes out on wednesday. it doesn't affect what the fed does -- does it effect what the fed does? my favorite quote out of the weekend came from "the wall street journal." until the tide goes out that we see who has been swimming naked. that is what we're seeing in the emerging markets. we are seeing that economies like turkey. pages, in the front looking ahead to president obama's state of the union address. will emphasize that he is willing to use unilateral presidential authority to get things done and bypassing

congress. is the kickoff to the 2014 election campaign. other papers say he is taking a non-ambitious agenda. he is looking to add incremental progress rather than bold legislative action. why shouldn't he? >> he couldn't get them onboard with gun checks, raising the minimum wage. maybe he will have to do an executive order. >> this is the tilt as we head into the state of the union address tomorrow. as we prepare for the super bowl , we have a sports business story. we are focusing on espn because it is aggressively pushing into online services. the network wants to profit from demand for online video. it does not want to push away its pay-tv customers. tvrategy is to allow pay- subscribers to stream games that aaron its various channels. espn is the big moneymaker. >> i love what they do right now. their usage of video -- i go back and look at the anaheim ducks highlights -- nobody

doesn't like them. >> what is amazing is how much emphasis they put on football. even the days they are not broadcasting nfl games. >> did you go to rangers-devils? >> i watched it from the comfort of my own home. i cannot handle that. too hard-core. .> joining us this hour i will get it out. >> it is monday. >> help me here. we will talk about a busy week of internet earnings. we will talk to jason t rennert. how concerned are my about turkey and argentina? can you link them? >> i don't think so, for very long. this does not look like 1997 to me. a 1997, you had extraordinarily

thin markets. all of the countries that had received international dollars. now the situation is much more diverse. you have certain countries, like argentina or venezuela, who really have made their own bed and now they are sleeping in it. other countries, like the brits, are in far better shape. >> did you change your investment strategy in the last three or four days? should our viewers? >> no. we have been underway developing markets for quite some time. we think the dollar is going to be quite a bit stronger. that has generally not been a good development for emerging markets. also, the taper, part of the same story. things conspire against emerging markets. we have not changed a thing. if anything, we think this could be the pause that refreshes. , hate to say that we are due

but we are due for some sort of correction, consolidation in the u.s. equity markets. this could be the opportunity. what is interesting is what did not happen. we saw the violence selloff in emerging markets, yet people do not flood into the u.s. >> i think there is still a big love affair with the growth in the emerging markets. we looked at the relationship between the growth in the emerging markets and the return on equity of the equity markets themselves. tuple are paying way too much for the equity markets. they're getting too enamored by the underlying economic growth, not focusing enough on the companies themselves. >> olivia sterns is having a back and forth on e-mail. corporate profits are at an

all-time high. gdp is at an all-time high. stock markets are at an all-time high. yes, we have fallen 3% from their, but people think that with a break they are hearing the crack of doom. >> i saw that at the yahoo! party in davos. the internet world going to survive the turmoil that appears distant from the world of facebook, yahoo!, and google? is your world really care about a global turmoil? to those stocks just keep chugging along? >> i think it cares a lot. the thing that we see now in the internet world is that we are based on earnings. we are based on real performance of the stocks. even the underlying private companies. i think it matters a lot. >> you look at bo's world is grossly undervalued. >> not necessarily.

we just talked about bill miller. one of the guys that would tell you that it really depends on how you define value. value depends on what you take the future expectations. just because a company does not have earnings today does not mean it is overvalued. i don't have religious fervor on this. i think if you're going to value something, you do need capital and all the rest of it. >> no quote on the argentine peso. we will look at that through the morning. it lets get to company news. busy monday morning. >> we start with at&t. it has ruled out a bid for vodafone. it will not make an offer for vodafone in the next six months. the speculation of an at&t buyout had driven shares higher in recent weeks. in stock was down about 4% trading on this news. sam sun and google are teaming

up. are agreeing to a long-term patent licensing deal. the deal strengthens ties between the two companies. they are the main supporters of the android mobile operating system. a deal in the netherlands. liberty global is buying ziggo . liberty already owns a 28% stake. the deal will let liberty reach 90% of dutch households. it is not the deal that everyone has been waiting for. that is the one that is front and center. immigration is front and center for us this morning. president with a historic speech in front of the brandenburg gate a bit ago. he will need the energy for the state of the union this week.

it is bloomberg surveillance. good morning. ♪

>> good morning. dozing tomorrow night. a challenging state of the union for the president. it troubled 2013, the president looking for new momentum. the president of the united states works on the state of the union address, house republicans will be unveiling their principles were immigration reform. what they are willing to do in 2014. peter cook joins us now to discuss. are the going to look ahead what is beyond? their usual talking points

will be the big issues on the table. republicans get set to showcase movement on the immigration front. this is the best opportunity for a big come a bipartisan deal in 2014. probably happen after the state of the union. most likely on wednesday as they head to the retreat on the eastern shore of maryland. the big sticking point has been all those folks undocumented in the country already. they will suggest legal static -- status for a lot of those people. >> who is driving -- was more influential in the republican party? the moderate republicans or the conservatives? >> you can be sure that the folks who up and pushing for an immigration deal have been a little quiet over the last year or so -- they are starting to feel a little more traction, in part because the tea party set

got a bit of a setback over the last few months. john boehner criticized them. john boehner is driving this train and he is asking for these principles, given it his blessing. a couple of people to keep an eye on -- paul ryan can provide political cover for others, if they can move forward with these principles and get enough buy-in from a majority of the house republican conference this week. >> you say that boehner is driving the show. the government shutdown, it did not look like he had control. will he be able to get the ducks in a row? >> i think there is a 50-50 chance. one of the reasons here is the timing. april is important. april is the deadline when republicans cannot face a new challenger. if there was someone out there who shot -- saw this immigration

, april is the filing deadline for a primary challenger. you move it past the deadline and then people might be a little bit more comfortable about testing this vote. -- casting this vote. >> thank you very much. rennert with us. a major u.s. executive said to asteriska ceo with an next to me. these are tender box issues. immigration. you, with your heritage. it is something we lived day-to- day, isn't it? >> unfortunately. i am not defeatist about it. i do think the u.s. is one of the greatest places on earth in terms of the equality of opportunity. >> particularly when the customs lines at jfk are short.

>> i try not to buy into that too much. that there is an enormous opportunity here for everyone who is willing to work hard. it is harder for some groups than others. if you're looking at it globally, the u.s. is still one of the better places to be. about yahoo!lk and facebook. smart stuff on the news feed i hate so much. >> did you stay up late to watch the grammys? >> i did not watch beyoncé. >> it is our twitter question of the day. what would see her favorite grammys moment? >> vampire weekend. yes! >> that was a few years ago. ♪

>> good morning. "bloomberg surveillance" from new york city. liu.he loop" with betty 9:00 a.m. suisan lyne on the state of internet. i am tom keene. scarlet fu gracing us with her presence this morning. olivia sterns has top headlines. >> antigovernment protesters in kiev have seized the building housing the justice ministry. they set up barricades around the building. activists have now taken over nina spoke buildings in 10 cities. buildings in 10

cities. edward snowden accuses the u.s. of industrial espionage. he made the accusations in an interview with a german tv station. he also dismissed accusations he was a spy, saying he acted alone. office, "ride along" took the top spot for the second straight weekend. it collected $21 million. "lone survivor" took the second spot. those are the top headlines. buzz beganal sphere on a controversial moment for twitter and for silicon valley, as well. here is olivia sterns. basically, an op-ed in response to the wall street journal about the demonization of the rich. progressive

kristallnacht coming. any of you watch "fawlty towers." the number one rule is to not mention the war. ure that thes never go well. i am not sure why he says this. we were shocked by his views expressed. how shocked a silicon valley? >> i didn't even know there was a perkins. the guy is not involved. not involved. >> does he speak for silicon valley? in any way? >> in no way. in no way. i have no idea who he even is.

>> it is very strange. his outrage comes from the fact that he thinks there is a perceived rising tide of hatred of the successful "one percent. -- 1%. >> i cannot get to the tragedy of con number europe in the 1930's. >> it is a stretch and it is not going to go over well. >> do you see signs of social unrest in the bay area? >> no. not at all. feeling this is an older gentleman. >> tom, inequality was the watchword at davos. the 1-99 where is split? >> i think it is almost more

social, frankly. in the developed world, it has a lot to do with education. a lot to do with the fact that you do not have -- you have service oriented economies that are not providing manufacturing jobs for people that are not going to have college educations. that is a bigger story. i think you need more profits. rather than more laws. personally. up, emerging-market currencies. ♪

this is "bloomberg surveillance." i am scarlet fade away anytime keene and olivia sterns. we need a data check, futures are resisting the selloff in the

emerging markets. >> futures up 1, up 5. here is the second part of our data check, the fix of 5 big points. quote onet to see a the actual argentine peso market. certainly not on the black market number, much higher than that. i have seen it at 13 pesos to 1. turkish lira all over, that is the litmus paper. belowos watch euro/yen, euro,trong yen weak emerging market data check. >> was that selloff a hangover from 2013 or has that there -- bear sunk its claws into the equity market? trennert, oneason

thing larry fink said at davos, the turmoil is going to be indicative of the year and there is too much optimism and financial markets. he said we are going to be in a world of volatility. >> it makes sense, last year more than 80% of the move in stocks was due to multiple expansion rather than profits. you are focused on profits this year. i do not think -- the u.s. economy is improving. there is a pent-up demand for capex. the dollar and u.s. equities tend to be the default asset class in the world in which you are not sure what the risk-free asset is. i am not that worried, but i think it will be more volatile. >> does a great more opportunities for investors? >> for our clients, institutional investors, they want volatility, they want correlations to come down and dispersions to go up. they can strut their stuff and

show they are confident money managers, it is hard when everything is moving in the same direction to add value. >> i feel like we start every year off with money managers who say this is going to be a stockpicking year. like an 2013,ls the fed did the heavy lifting, multiple expansion. do you think the focus is now going back to earnings? mainly because the fed is withdrawn liquidity. little by little, tapering is not quite tightening. by the same token, at the margin, things are changing a little bit on that score. it is already having an impact. last year, as soon as they started talking about tapering, emerging markets got run over. this is more indicative -- >> this is the key question, can you blink? what we see in imagining -- can you link what we see in emerging markets to chairman yellen? itnot yet, but you can link

-- >> why won't we see the same turmoil we saw in august? why should i be so confident i will not see bonds lower, yield higher? >> inflation still in the developed world is very low. the back up in interest rates and the u.s. has been almost entirely in real terms, it is probably suggesting you will have higher real gdp growth in the u.s. this year. >> it seems like the u.s. treasury market did get the message from ben bernanke that tapering does not mean tightening. it does not seem like the emerging markets got the same message. >> these are two different types of assets. one is very risk on, the other is not so much that. 1.5, it is more concern about deflation in a lot of parts of the world. >> back to profits. the profit growth we have seen

has come from cost cuts, will investors start to make the distinction between profit growth from cost cuts versus topline growth? >> i think so. and i think m&a will be a big part of earnings growth strategies. as his cliché but you are not left with other auctions. you have guys like carl icahn, who is he picking on? ebay -- >> blue chips. >> $500 billion market cap companies. if you are not safe as apple, no one is safe. synthesize for institutions a confidence or a belief in the market. if i am not institution and just someone out there, i have never seen this. >> look at the dow industrial. >> a correction free dow industrial, 10% down is in this society, 13 900. >> if you look at mutual fund

inflows last year, only 24 billion dollars of equity market domestic inflows last year. million.onal was $145 there was more of a confidence and putting more money to work. >> how is that going to change? >> i think it might come back to the u.s., they will say it is more risky than i thought out there. >> you mentioned m&a, bo peabody from greycroft, talking about private equity and m&a. >> very good news. i just saw that google bought deepmind technologies, $400 million purchase of an artificial intelligence company. this is what makes google unbelievable. a little company called semantic technology that became the profit driver of google. android, nobody knew anything about when google bought it, now it is the biggest --

>> small and incremental acquisitions, not high-profile. >> google is good at buying these delicate companies and blossoming them. it is amazing. >> it looks like a much more proactive google, this follows the acquisition of nest, the push into hardware. i tweeted this, their biggest purchase to date in europe. >> is them looking way forward. >> is the day of the big merger over? bull?4 the year of the shows that the big megamergers generally do more to hurt shareholder value than to help. m is the more strategic ergers. charter-timeue for warner cable? >> most of the time it has more

to do with ego. should actmpanies like venture capitalists, do 10 $200 million acquisitions rather than one $2 billion acquisition, see which one works and use it to bolster earnings. the long-term impact of the technology. >> in 10 minutes, is mainstream media dead? >> apparently not. >> exactly. [laughter] >> i have never seen so many newspapers. >> within the framework of your world, mainstream media and content are aligned. >> very much so, not in this form, content -- the whole story about facebook and google in 2014 will be content marketing. this is what all the commerce companies are using to get people to buy things. rather than sending you an ad,

they send you a piece of content that acts like an ad. >> bo peabody and jason trennert. argentine peso, still have a quote. -- don't have a quote. >> tom was at the airports all week long, if you do not like airports, looking at the most luxurious airports in our single best chart, next on "bloomberg surveillance." ♪

>> good morning. a volatile market morning, futures up 6, pushing at emerging-market gloom. surveillance," i am tom keene with garlic feel and olivia sterns. top headlines. >> the head of a motor company bangkok, he was managing director of the indian automaker and had been leading efforts to turn the company around, shares of tata last 5% on the news. americans relying on

food stamps. in the past, it was the elderly and children who were the main recipients. but high unemployment and assignment wages have led to working households seeking food stamps. graduates from the top mba programs have seen pay soar. salaries have already doubled for the class of 2010, alumni from stanford and harvard drew the highest salaries. those are your top headlines. >> single best chart, we could have a single best charts. >> you just came back from europe, olivia is headed to russia. of travel.honor new york city airports are like third world bus depots. when you compare them to their peers, this is from global gateway alliance. it shows where the new york city airports rank. the highest rated airports are tokyo,, like haneda in

zurich.in seoul, lowest capital was the rated asian airport. laguardia, no free wi-fi. now go to jason, continuing, any other wisdom? >> you should go to hong kong's airport, you could play golf. 18-hole golf course. >> your colleague dan clifton, i asked ken rogoff in davos. in switzerland, everything is perfect. >> a lot of our infrastructure, especially in new york, it is older and it has been here. there is not a lot of space to put new stuff. >> this is why everyone is revolting against the 1%, we

complain we cannot play golf at the airport. [laughter] the food at the san francisco airport is outrageous. likely gordie used to be. -- it is like laguardia use od to be. --laguardia is incredible jfk is incredible. is alwaysedman writing about how the drive into manhattan shows the descriptive -- shows the decrepit state of infrastructure. supportould get more for infrastructure than transportation, at least you get something for it. in terms of extending unemployment insurance over a the period or food stamps, multiplier is different. >> can you imagine bipartisan

support for a skating rank? there is one in south korea. >> in defense of laguardia and jfk, they are getting better, it is taking -- >> each time you go, a terminal has gotten better. 2 still cannot deal with inches of snow. mental criminal -- incre progress. coming up, why yahoo! has to be a content company and not a tech company. this is "bloomberg surveillance ," streaming on your tablet, your smart, and bloomberg.com. ♪

>> good morning, futures improved, ugly opening in asia, doing better in the u.s. even the japanese yen pulls back a little. it is "bloomberg surveillance." scarlet fu and olivia sterns. >> let's have some fun, pope released two white dove into st. peter's where and a prayer for ukraine. symbols of peace

were attacked by a single and a and peckedabbed them at them repeatedly, that seems like a bad omen. the doves you naturally got away. >> now we go to expert on the vatican, jason. this is a scandal, what does it signify? weeks ago i wrote a piece on the holy see as a new economic power. he is god's central banker, he is talked about that she has talked about income inequality. there is an economic angle. >> we need this for jason's children. seriously,al banker, in davos there was a huge respect for the pope's path. cardinal isne new

from the southern philippines. this is a pope taking a different path. >> he got rid of, largely, the moniker of monsignor. he is wearing a very simple cassock. , as a jesuit,me unusual to take the name princess. -- take the name francis. >> st. francis of assisi, saint of the poor. >> it is telling you something about the economic -- >> did you watch the grammys? >> no, beyoncé -- >> no. >> beyoncé and jay-z perform their new song "drunken love." love the hair.

daftpunk won album of the year. some of my favorites, macklemore took home 4 awards. do not like the hari. -- the hair. mccartney show up? >> yes, he did. they won awards. a 17-year-old also won a best song. >> i remember sitting in david's basement staring at the first led zeppelin album. >> enough nostalgia, tom. >> vampire weekend! >> you are dating yourself. >> what was your favorite grammy moment, tweet us @bsurveillance .

back to hard news. >> 2006, content is king. >> vampire weekend was king. tobo peabody from greycroft talk about this. facebook, i do not like the newsfeed. >> so you are not clicking on anything? >> it is useless, what do they need to do to make these feeds work? the people inside of facebook are deciding what is going on on the feed. you are seeing social, sometimes it can work for you, sometimes it doesn't. >> content, in your world, what do you mean? >> the stories we are talking about, they are either showing up or not. depending on how many people like them and what the facebook algorithm is doing. >> if companies like facebook and yahoo! art owing to become

content companies, are they going to do away with their obsession with hardware? >> facebook needs to become a content distributor, the place where you find content. yahoo! needs to be a content creator. the big mistake ever yahoo! ceo makes, they try to make a technology company what it is a -- when it is a media company. >> they get a higher premium. >> right now, it is all based on china-japan asset. >> burress am i just brought in katie couric -- marissa mayer just brought in katie couric, a big hire. aol, aol went with content. >> there is a lot of things going on aol. be a! -- if they want to technology company, it has to focus on search. hard battle against

google. they have more traffic than anybody, more traffic than google, the largest amount of traffic in the world. why don't they focus on producing content, hiring katie couric is not the way. acquisitions for newer content companies like buzzfeed. >> they have great quizzes. >> on buzzfeed? >> yeah. that is the stuff they get people engaged, bite sized content everybody wants to see in their newsfeed except tom. that is what gets the kids clicking. essay over thert weekend, i cannot remember where, maybe "the guardian." there are different twitters, there is not one twitter or one facebook, we craft our own twitter. time you spend on facebook, the better your

newsfeed would be. it takes time and it takes an investment to get these social platforms to behave the way you want them to. >> can you buy twitter jason trennert? na world that is largely bereft of earnings growth, anything that is going to give you the possibility for earnings growth in the future. i know you do not have it now, it is attractive. that is 1 -- if there has been a little bit of, a tale of two cities in the stock market. anything that has any sort of a ofn of growth -- patina growth attract high multiples is not infinite multiples. everything else is on the side. >> forward, growth trumps -- >> i think so, i feel pretty strongly about that at this stage of the game. i think rove has to come through. i would be overrate growth overvalue. >> -- i would be overweight growth over value. >> a study from princeton set up

to 80% of facebook users could be gone in 2017? turn overlatforms very fast, there was a study of the age of the average user, 75% of people under 25 years old had abandoned facebook. i guarantee facebook was celebrating. they want older people, older people have money. driven by advertising. advertisers want to advertise to people with money. >> bo peabody, jason trennert, thank you for starting us on this important week. , very important within the kirchner government speaking on the limitations of dollar ownership in argentina, there is the forex report. monday quote on dollar-argentine peso. there is not adjacent brazilian real,. argentine

turkish lira doing better after their central-bank step in 20 minutes ago. >> coming up, former ceo of paypal, bill harris on whether even they should spend off paypal. ♪

>> this is "bloomberg surveillance." >> the emerging market run

continues, u.s. futures do better. we consider the many canaries in the global coal mine. republicans will announce principles, another immigration plan. the state of the union tomorrow night. apple reports after the bell, china sales are tim cook's mystery. good morning, this is "bloomberg surveillance." live from new york. monday, january 27. i am tom keene. scarlet fu and olivia sterns join us. our morning brief. a recordreported deficit and 2013 thanks to a surging energy bill out of this comes after three decades of surpluses. they came to a halt and 111 after fukushima. waiting for some eco data. home sales expected to show a

slowdown but still looking to be best year since 2008. at 10: 30, dallas fed manufacturing activity. earnings we are waiting for, 7:30, caterpillar. a global bellwether. after the bell, apple. how well are iphone selling in china? we will get numbers from u.s. steel. >> some company news, here is scarlet. >> google buys another startup, technology, artificial intelligence. $400 million, making it google's largest european acquisition. at&t has rolled out a vodafone bid for now. it will not make an offer for vodafone in the next six months. speculation has driven shares of the u.k. mobilephone company higher in recent weeks. vodafone stock was down about 4% in trading on business. in thelone does a deal

netherlands, his liberty global for 13 $.7iggo billion, liberty owns a 20% stake in ziggo, reaching 90% of dutch households. talking about how europe is the next target area for m&a. >> different opinions on that in davos. equities, bonds, currencies, commodities. futures do better, i see them up 8. last threeent in the hours, a constructive response. euro does not move, talking about turkey in a moment. nymex crude not part of the discussion. currencies. turkish lira in the soup, 2.31 is a stronger lire in the past 2 hours. alan ruskin from deutsche bank, we are thrilled.

all of a sudden, it begins. central-bankthen steps and. the turkish central bank stepped in 90 minutes ago. >> now the market is looking for . interest rate hike the central bank have to be serious and signal to the marketplace they're willing to take some pain if necessary in terms of stopping the right we have got in some currency like turkey. >> within the weekend, all your strategists discussing this, is there a compare and contrast with other emerging market asckdowns -- meltdowns such 1997? >> comparisons between what was pretty much an em related crisis in 1997. the u.s. did very well, u.s. growth maintained about 4% to 5%.

the u.s. is probably the place to be once again at this moment. if the em is going to continue, i would not say full crisis mode, but in this fashion, the u.s. is the place to be. >> what is the catalyst for all this? people talk about tapering and china to economic weakness. >> we have to go back to the middle of last year in terms of what was going on. there was weakness that was permeating through all the current account deficit countries. people felt these countries had grown too fast. the key source of this, people mistake this. this is a credit problem for most of these countries, excess credit manifesting itself in the current account and external deficits. people are focusing on the symptom and not the cause. i am glad you bring it back to fundamentals. turkey has a credit problem, they have a real estate boom,

they are spending too much. they built a new bridge from europe to asia. this selloff and emerging-market currencies is very broad-based. you are seeing currencies spell off -- selloff in countries that are stronger like mexico and south korea. >> the good are being swept along with the bat. this is not unusual, in most crises this is what you see. there will be differentiation over time, people will try to step in front of what looks like a freight train at the moment in terms of countries like mexico. be cautious. you can step in front of the train and be more bullish on the u.s. equity market then you can with mexico and credit. >> for the confidence of our viewers, we saw this in august and it was not pretty. how much of this is linked to an unwinding of six years of distortion? what does that teach you about what we will see the next time chairman yellen has to act? >> the truck -- the track record -- iran >> --

is importing overly easy fed money and the rest of the world. now we have the potential unwind. -- are theyes are going to be a catalyst that triggers the credit unwind? if they do, we have problems. if the scores china as if this goes towards china, china is holding this altogether. >> what will you be watching for next week? >> see how the central banks respond. africa's next, brazil can probably get away with intervention. indonesia, same story. the key is, watch how some of the southeast asians do. is this moving up towards malaysia, thailand and onwards to china? a.my morning must read, from ruskin. byresearch note, read

those worried about peso, lira. he is a poet. so far, their passing the test. >> i don't know whether they are passing the test. >> the central bank is acting. >> you get into a cycle where you have to hike interest rates so much you enter your asset cycle. the risk is that that is what happens. script,ng up the blackine peso is 8, market is 13. which do i follow? >> depends if you go to argentina. >> how does a pro look at the disparity? how much theion of market is not functioning in argentina.

effectively, what the fair value is. the black-market rate is usually a better demarcate or wife -- demarcator of fair value. "ft," argentina should not be in such dire straits. there was never a them, fiscal and current account values are sound. that peoplessue is do not know what the inflation rate was. the inflation rate was even voting competitiveness -- the inflation rate was eroding competitiveness, now we have to unwind. >> real movement and stocks, bonds, currencies, commodities. someone with a little bit of experience. our guest host is former ceo of bill harris.

we talk about market turmoil, there is turmoil in m&a. are you surprised at carl icahn? >> not at all. this is what he does. taking target after target, now it is -- >> are you personally offended? all weekend with dr. phil. >> not personally at all. if i was still running paypal, i would be fighting him. it is part of the game. >> interesting, we will talk to bill harris. saidck to alan ruskin, you look to china. if china's data continues to show weakness, the next manufacturing number shows a contraction, what does that mean for emerging markets? >> it is a counterbalance to the strength we have seen from the u.s. are at the way the markets responding to small downside deviations in china, people do not believe good data and china.

i do not think that is going to change anytime soon. >> bill harris, through the hour. pushing against turmoil. ugly early morning in australia and across the pacific rim. we do better in this new york opening. >> turkey's central bank will hold a meeting tomorrow, the movie needs to make -- the move they need to make is to raise interest rates to stop the bleeding and currencies. coming up on "surveillance ." will apple's china deal mean record-breaking earnings? this is "surveillance." ♪

, everyone.ning market to better this morning of a very follow on monday in australia and japan. futures up 29.ow nobody in washington cares, they are focused on the state of the union tomorrow night. our chief is washington correspondent. to be responsible, -- >> state of the onion? >> that is what my father used

to call it. the onion will have a spoof. tell me about immigration, is this debate for real or are we moving deck chairs around? >> it feels like it is for real, you are hearing from supporters and folks on capitol hill who have been hesitant to go there at all. they now see an opportunity for some sort of compromise on immigration by the end of this year. one, because democrats believe it is important for the economy. as something they promised they would do in power. republicans see this as necessary for their political future. also, the business community has weighed in, they see this as an opportunity for the economy. what happens to all those people here undocumented already? there are some signs of compromise, getting more this week with the house republican retreat after the state of the union. >> who will the president speak to tomorrow night, what is his goal? >> his goal is to not only reassert the executive branch

and sort of reassert his own agenda going forward. there is a notion that the president has spent too much time differing to congress and trying to work deals with congress. most of them did not end up anywhere, the effort to reassert the white house, his role in his sixth year in office. this is a final opportunity to get something done. can you imagine what it is going -- what itthe union is going to be like the next two states of the union? a balancing act on issues where he can find common ground. how can he reassert the office without taking off republicans? >> who is the president going to bring as a special guest? got a list this morning, some of the first names to be released. they include two survivors of the boston marathon bombing, they will be with the first lady.

we have the fire chief from moore, oklahoma. >> a-rod? >> you have also got the nba star who became the first major sports team player -- >> no a-rod. >> to come out as an openly gay athlete. many people. >> peter cook, joining us from washington. more coming up. ♪

>> good morning. "bloomberg surveillance," a peso,on the argentine 8.60 on s&p. our guest host is still harris, former ceo of paypal. a lot to talk about. monday morning, top headlines. still no peso quote. in the ukraine, antigovernment protesters in kiev have seized

the building housing the justice ministry. they set up barricades around the ministry. they have taken over municipal buildings in 10 cities as unrest spreads across ukraine, even into areas with closer ties to russia. the head of tata motors died over the weekend, karl slym fell from a hotel in bangkok, he was the managing director of the indian automaker and had been leading company -- leading efforts to turn the company around. shares fell 5% on the news. 5at punk -- daft punk won grammy awards, including record of the year. and ryanmacklemore lewis took him the award for best new artist. beyoncé and jay-z performed. those are the top headlines. i wonder if they practice in the shower. >> really?

>> they are husband and wife. >> i watched the grammys on bloomberg radio. good morning. >> that is why you did not see - betweenthe difference record of the year and album of the year? >> i think it is a single. us.ory johnson, joining he called the deal a watershed moment. we get to see whether that worked, apple and turning mobile, units and profit. giving us some perspective. i totally agree, this is a huge mystery. >> looking at the full quarter of sales, china mobile is the largest cell phone carrier in the world. 750 million customers is the opportunity for apple they have

had for the 13 weeks of the quarter, that is the x factor going in. >> is there going to be a surprise this afternoon? >> i don't think anyone knows what the number is going to be like. one of the reasons -- adding in the door was such a big deal. it is going to take so long to roll out, people in china have plants, it will take many years. one of the many peculiar areas the 750 mobile, of million subscribers, 600 million are prepaid. they are unlikely to adopt iphones at the same rate as the postpaid. just of the postpaid customers is a big opportunity for apple. >> apple and china already has partnerships with the number two and number three players, china telecom and china unicom. china mobile is different. what have we learned from other players that we can apply to the partnership with china mobile? >> the model might be what happened in the u.s. with at&t,

they had an exclusive on the iphone. time, thenlong verizon got a different iphone. verizon's iphone, in the first year, iphone penetration was 13%. if we want to imagine the iphone postpaid -- in the customers will get about 15%, that is a big deal. >> bill harris with us. apps, a huge deal now. they are germane to earnings. >> absolutely. mobile apps have taken over from websites. at my own company, we are getting already 80% of usage on mobile as opposed to web. are puttingyou bloomberg west together, do you ever mention app revenue? >> they do not give a specific number for apps, they fold it into another unit.

apple does not tell us a whole lot. they give us information about units sold and revenues for all the different groups of products. they do not give us profitability for all those products. we are kind of left to guess the gross margin number, somewhat of a mystery. had the biggest inventory of a iphones ever going into this quarter. i expect that is because they were preparing for the china mobile launch. >> china mobile, iphones, is 5c, not the not the lower-cost phone. phoneo not have the cheap but that was the whole reasoning behind the cheap phone, it would sell emerging markets. >> they have the opportunity to sell the high end phone and establish their brand in a certain way. in the first year, this will be $4.5 billion in gross profit for this company. >> isn't that a drop in the

bucket for apple? >> that is a huge deal, why not go high-end. >> i just bought the iphone 5s in pink. for real.s the 6 >> sure, why not? >> have you seen it? >> it will be a well, they are basically two years apart with every major release. the 5s was not a big change. >> do computers matter anymore to apple? the imac? of theintroduction tablet has really changed the entire pc business, whether the mac or other pcs. the pc is deadys wrote that headline on a pc. the cycle seems to be really stretched out, we have gone from two or three updates to six.

>> he is with "bloomberg west." saysming up, karl icon spill off paypal. ebay ceo says otherwise. we will have more on "surveillance." ♪

it is washington on a monday. focus on tomorrow night, state of the union. look for that on bloomberg television, coverage before the state of the union, 9:00 p.m., the president will speak. >> some company news.

jamie dimon may be in line for a $34 million in options, the board will rule on whether the ceo can collect a $2 million option granted in 2008. they deferred this last year in the wake of the london whale scandal. samsung and google teaming up, they have agreed to a long-term patent licensing deal that covers existing patents and is filed during the next 10 years. strengthening ties between the two companies, they already support the andrade system. system.ndroid tesla expanding its network of chargers, letting owners of the model s drive coast to coast. 80% of the u.s. population is covered with more than 70 charging stations in north america. >> bill harris with us this morning. of paypal and into it -- paypal and intuit.

mr. musk, what is his approach? >> he is brilliant, he breaks a lot of eggs. the organizations are usually in a little bit of turmoil. the ideas are a little bit of turmoil. the one thing he does, he creates results. >> interesting. breaking of eggs. >> from breaking eggs to rules, chipotle mexican grill, known for breaking the rules, it has an atypical approach to marketing. carol massar joins us. beyond a quirky super bowl ad. video series, each segment is about 30 minutes long. when tom is done watching "downton abbey," he can watch something from chipotle.

it is going after industrial agriculture. we got a sneak peek, i spent time with the chief operating officer. it was a hollywood production. they will roll out on hulu. it is about getting the message of food with integrity. check this out, it is not a typical tv ad. there is no explicit chipotle branding, check it out. >> why am i here? this is the biggest improvement in agriculture since synthetic growth hormones. >> what is it? >you are feeding cattle petroleum? >> peanut oil, olive oil. >> side effects? >> you have got to love chipotle . >> who is the target market? >> mcdonald's has been out of

the picture, there is one it has to chipotle, do with mcdonald's owning the company. mcdonald's has not own the company since chipotle went public. >> you are as jaded as anybody i know on this. >> that is awful. >> what surprised you? >> i love their approach. they are spending a small percentage of their revenue on marketing. so different from mcdonald's or burger king. they are known for animated shorts. over 20 million hits on youtube for one half. >> thank you so much. caterpillar out, the theme is pretty good. use to cash helping us. an important blue chip. >> plans for a $10 billion stock buyback. quarter, aiming to

repurchase 1.7 billion dollars in shares. in terms of the actual numbers for the quarter that just ended, $1.54, analysts were looking for one dollar $.27. revenue coming in higher than expected, $14.4 billion for since a consensus of $13.7 billion. caterpillar gives a forecast for economic growth. looking at 2014 developed country grows up 2%. >> the interesting thing is the futures, a pretty good view for for caterpillar. immediate pop and stocks. back to what jason said earlier, use of cash will save the day. by n.l. 5% ins up premarket trading to $90.40 in -- a share.

europe, this is interesting that the u.s. continues to resist weakness overseas. caterpillar shares rising on a better-than-expected fourth-quarter and a decent outlook. morning, "bloomberg surveillance." on bloomberg television and bloomberg radio. all our interviews, including on bloomberg radio plus on itunes and android. and boomer tv plus on your ipod -- and bloombergtv + your ipad. our guest host, william harris, former ceo of paypal and intuit. >> some headlines on cala keller -- some headlines on caterpillar, stock higher by almost 5%. giving a forecast for the full year that beats estimates on the revenue line and earnings. it has announced a $10 billion stock buyback program. check idea, it data

improving. up 4, up 1. up 4 on turkish central bank, on a tear. dow futures up 67, higher yields, lower gold prices. weaker yen. good news after concerns on emerging markets. >> let's talk about ebay and paypal. carl icahn getting ready for his next proxy war. here's what he said on bloomberg television about why shareholders should have more of a say. >> this whole business of the divorce between ownership and management, i really think it is hurting our economy greatly. it is time that shareholders should have more to say. in the big picture, not micromanaging. we have done work on ebay and we believe without question it is a no-brainer, paypal should be spun off. >> carl icahn saying his plan to

spin off paypal is a note trainer. -- a no-brainer, ebay executives are betting long on paypal. bill harris, you have a different take from carl icahn. what is the case to keep paypal? >> is incredibly integrated. when you buy something on ebay, you pay for it with paypal. the paypal heart of service. obviously, paypal is moving outside of ebay. both online and off-line. this integration of the two is terrific. >> is paypal innovating enough? how has it evolved since he founded it? >> it is a larger organization, the more difficult it is to innovate the larger you get. they are not innovating at the pace they were early on -- >> where they should -- or they should. >> the guys who founded ebay

tweeted out that they want ebay to stay with paypal. left from the original board is with the company, what does that say about paypal? the original group that started paypal, this was probably 12 years ago now. the original group, most of them were gone within the year after the acquisition. >> mobile payments. so many people getting into this space, talking about apple pushing mobile payments. why will paypal maintain the edge? >> they already have the customers. they have got hundreds of millions of customers already ks tod and having the lin their bank accounts set up. >> what is the relationship with the juggernaut of the holiday season, amazon? are they on speaking terms? >> not really. amazon, bezos loves payments.

he lovesfor filmic, cloud-based services, he loves payments -- he left for filmic, lment, heves fulfil loves cloud-based services, he loves payments. >> why doesn't he buy paypal? >> i don't think ebay wants to sell it and i don't think ebay should. a third ofet about revenue and half of its profit from ebay, where should it be? theirm not privy to internal economics. paypaln the idea that needs to go beyond ebay and is being held back? >> i don't think they are being held back. first, this is their base. this is what has created the opportunity for them to go beyond. they are starting to get into off-ebay payments and particular

even off-line payments. >> bill harris, former ceo of paypal. our twitter question of the day, your favorite grammys moment. was it beyoncé and jay-z get between us at @bsurveillance. ♪

>> good morning.

"bloomberg surveillance." the news of this morning, recovery in developed markets off of a very difficult asia morning. dow futures up 60. betty liu is joining us. >> welcome back from davos. >> nice glasses. got lazy thisi morning. susan lyne from aol will be joining us. a great conversation on everything from digital, mobile advertising, all the way to -- >> e-commerce. channelsg about cable and how they will keep subscribers and cord cutting, a lot of conversation. she will be joined by steve schwartz of hearst, you think of hearst as the publisher of magazines like "cosmo," "seventeen." they get most of their revenue of theirances -- most

revenue from businesses like health care and cable channels, no longer magazines. willank you so much, we look forward to that. now it is time for an earnings calendar, get out the bulldozer. >> looking at caterpillar, shares are steamrolling, up 5.9% to $91 26 cents in the premarket. ourth a more than decent f quarter, $1.54 earnings for share beating $1.77. revenue also higher than anticipated. you have been talking about use of cash, setting a $10 billion stock buyback. in the first quarter, it plans to purchase $1.7 billion. is all harris with us, it blunt instrument.

use of cash can save the day. do you have a feeling that that ends? does it go on forever? using buyback and dividend growth? >> i think it goes on. articulate for tech companies. techrticularly for companies, tech companies generate cash and have huge cash balances. >> is apple a blue-chip stock? >> sure. >> is a mature company. >> if they split the shares 10 dotcom?would it be >> i think so. >> when are we going to see companies paying dividends? >> companies that have these huge, multibillion dollar bounce sheets are putting it to work. --y can and their businesses they are using cash and their businesses. >> there is more that can be

done if you listen to carl icahn. >> money on the sidelines, something we monitor. other earnings coming out in the days ahead. a big week. tomorrow, pfizer, at&t, american airlines. facebook. boeing, on thursday, google, visa, exxon mobil. this is "bloomberg surveillance." streaming on your smartphone, tablet, and.com. ♪

>> this is "bloomberg surveillance." i am scarlet fu. our guest host, bill harris, former ceo of paypal. some company news. google has bought another startup, it is a deal for deepmind technologies, a u.k. based artificial intelligence firm. the price tag somewhere in the neighborhood of 400 million dollars, google's largest european acquisition. another junk rating for sony, movies cutting its rating to one level below junk. sony's profitability likely to remain weak and volatile. fit has a junk rating at

ch. agreed to a samsung deal that ends competing on realty payments. they will cover standards for networks and handsets. samsung agrees to keep paying ericsson really is. that is today's company news. at 9:00 p.m.ight on bloomberg television, state of the union. >> oh, that. after his rocky 2013, one of the themes to be covered -- immigration. the linkage is -- the linkage two different policies and geographies of the u.s. silicon valley, smart people cannot work in america, a never-ending debate. bill harris joins us right now. this will not go away from silicon valley. >> what makes silicon valley tech? we had the best of the best,

people from chicago, from new from and we get people china, from israel, from india, from mexico. we need that. the debate changed with many silicon valley's across the american landscape? >> new york is silicon alley, austin is silicon prairie. silicon beach. >> bloomberg has done a great job in new york city. >> fabulous. >> does that change the immigration debate? >> it broadens it out. it is broader than tech. need to country, attract the best from around the world. if we do not, we are crazy, we bring people and, given college educations and graduate school educations and then send them back. ,> there was a theme at davos

when you see not only the u.s. minority representation there, so many people abroad looking to the u.s. for technological leadership. is silicon valley still the dominant technological leader? >> absolutely. >> what is a close second? >> as the -- actually, tel aviv. there is a tremendously vital software, hardware and probably software activity in tel aviv. >> the president will pay lip service to this, i wonder what he will do with the politics of it after state of the union. >> doesn't silicon valley see washington and the president as a lever they can pull to do something? of us in silicon valley are working very hard on politics of this. >> mark zuckerberg went down to visas to getore

engineers to run facebook. >> did it work? >> yes, we have had an increase in h1b visas, it continues. >> just hard to get through jfk. >> to all of you listening, i was dazzled over the reception at jfk. like, 12 minutes. >> i don't think i have done it in less than two hours. let's get to our agenda, the stories shaping the day. >> for me, two ideas -- emerging markets doing better. moments ago, publishing for potomac research group, his college is the former vice chairman of the fed. he is adamant there will not be an effect on emerging-market turmoil on the federal open market committee as they move forward, a strong note from somebody people listen to. you see that in the markets, it

is certainly better than the gloom of 7:00 last night. incentral bank meeting turkey tomorrow, the fed begins meeting as well. >> anticipation of what the argentinian government will do. president kirchner is besieged. headlines from some of her leadership beginning to amend a little bit. i have got to be honest, i saw very little optimism in the reading over the weekend that the kirchner government will be able to adjust. the betting is a new coalition government -- >> all the buzz at davos. weit was a seismic shift, want from the google and yahoo! party and debates over, el-erian retiring, everybody was glued to their smartphones about argentina. i do not believe i have seen as abrupt a shift as we saw late at davos. >> emerging markets and

argentina. my agenda is apple, reporting earnings after the close. it will -- it is set to record its first profit gain in a year. a 2% profit increase for the fiscal first corner, this encompasses the holiday season, when apple it generates its biggest chunk of revenue. the three things we want to know, how well our iphones selling in china now that they have a contract with china mobile. how well the 5c is doing, rumors that they could stop selling the low-end phones. i want to hear if tim cook will respond to what carl icahn has been :00 i went to see -0- -- use of cash.ar, what would be wrong with seeing drama out of apple with a share buyback? >> you asked earlier, what else could they do with their money?

what they could do is advance into a new realm. think about this, we talked about apple doing global payments. -- doing global payments -- doing mobile payments. what about apple as a bank? >> itunes has the credit information for millions of people. they havehemselves, got the audience, the money, and the ability to run. >> i have heard a lot of interesting things. a member a grocery store trying to be a bank. >> walmart has done it in a backdoor way. >> the other item we have -- >> music themed. >> it is all about over 50 and still rocking. piano man, billy joel.

he kicks off his residency at madison square garden tonight. he is the third best-selling solo artist of all time. 64 years old, one year away from qualifying for social security. everything,we rank 12 out of the top 25 grossing concerts from 2013 had at least one member who was over 50 years old. >> this is very good. about this, i can't report that christie brinkley is still 32 years old. >> everyone has to name their favorite really jewel song. -- billy joel song. one of the members of our staff is in the music video for "lullaby." >> "new york state of mind." girl," i grew up in

soho. >> our twitter question of the day, what was your favorite grammys moment? punk," they showed up with. "the evening i spent not watching it." reed, by tribute to lou seeing ringo and paul." >> as a fossil, the privilege of living in that moment, that explosion of 1963, 1964. >> you are not a fossil. >> as a fellow fossil, remember what george bernard shaw said, young."s wasted on the >> much more on emerging markets, apple earnings out this

afternoon. "bloomberg west" at 1:00 p.m. this afternoon. "in the loop." with betty liu. ♪

bloomberg world headquarters, this is "in the loop." i am carol massar. we have the first ceo off their

first interview. >> the target class of emerging markets continues to roll out at home with north pacific at home dropping. >> plus chipotle is not only known for its loyalty to locally grown and organic nudes, but also its style of marketing. the fast casual burrito giant is out with its latest comedy series advertisement tactics about exploited cows. the chief operating officer >> thanktheir tactics. you, cristina. i am joined by trish reagan, who brings us a first on bloomberg interview. >> capital earnings crossed just moments ago. fourth quarter earnings being who estimates this morning, authorizing a new $10 billion buyback. we have the chairman and ceo, doug from p aurea, illinois. always good to see you. good news on the buyback, on the