americans work, does that mean fewer full-time jobs? it is a snowy day on the eastern seaboard. there is another snowstorm and bonnie snyder will be along to tell me how miserable february will be. this is what bloomberg surveillance." it is wednesday, february 5. michael mckee and olivia stern are joining me. scarlet fu will appear this afternoon but will return tomorrow. if she can make it through the snow. >> hopefully, the roads will be plowed by then. >i got in ok. let's get over to the economic brief. japanese real wages fell to a global recession low of 2009 and a 16 year low. atalso had economic data 7:00 this morning, mba mortgage applications. adp employment numbers are out today. >> this will move the market.

everyone is watching to see whether we will rebound from last month disappointing jobs report. >> i have not seen and adp report with this much focus in a year. >> we will watch that closely and that 10:00 a.m., we will get numbersnonmanufacturing and the earnings continues. after the bell, disney. first twitter public earnings report will be interesting to see as well. let's do a data check print it's a quiet market as we wait for the adp report. andres are at negative two a 10 year yield was up slightly yesterday. nymex crude is $96.97. vxx is at 21 off the ugliness of friday. the yen is a big story because

of what it has not done. that should be a bigger number. but it's not. we have a continued strong and off economic eta. -- economic data. there is the data check print it is a busy day. we scour the papers. and washington, the congressional budget office is projecting obamacare will cause a drop of about 2 million full- time workers by 2017, maybe 2.5 million by 2024. what they are saying is that people who take a job just to get health insurance will not have to do that so they will choose not to go into the labor force. republicans are already attacking this as a big job killer. meanat does equivalent when they say equivalent full- time jobs? >> it is the number of people

working 40 hours for week under alternative scenarios. >> it is a broad shift in the labor market and harry reid said you should not be locked into your job because of health insurance. these numbers are hard to estimate. inc. --time warner fourth corner earnings-per-share coming in at $17 per share. 15 -- $1.17 per share. they will not put the money to work? >> bit will be fascinating to see what disney does this afternoon. earnings, wef don't have jcpenney earnings yet but we have their sales report. even though it was better than expected, the stock is tanking, falling the most in more than four months, down 11%. it's at its lowest level in about 30 years. thes rose two percent in

fourth quarter, first time that has happened in 2.5 years. mike ullman brought back private label brands and is doing what they used to do and closing stores. they are cutting jobs but there is no love for jcpenney. are they relevant anymore? >> sales is a good idea and the fact that ron did away with discounting was a bad idea. this should be good news. it's against fourth quarter sales that were down 34% overall. is an important line for institutional shareholders and even some hedge funds. >> when was the last time you are in a jcpenney? >> i don't remember. >> i had hair then. >> for anybody in the bond market, puerto rico credit rating for general obligation bonds was cut by s&p to junk.

that's about 70% of the u.s. municipal market funds. they are tax-free nationwide. security --e the i-u can see how many mun market funds hold exposure to puerto rico so this could shake the whole market. the puerto rico economy is struggling. they will try to sell bonds but if they don't get that, they will get downgraded by moody's. >> i did a panel recently on puerto rico. the pros are defensive about the value of puerto rico bonds. they like them a lot. this is the economic backdrop -- this is puerto rico unemployment and this is way up at 15%. here is the u.s. unemployment rate coming in. you can see the stress. >> puerto rico has been in recession since 2000 four,

basically. the economy has not grown so they are having trouble coming up with revenue to pay their bills. deathave just sold more -- more death --debt. have $70 billion in debt which is 70% of gdp and $30 billion in unfunded pension liabilities. they are in a detroit -- like situation. the difference is that greece was a sovereign but puerto rico has many municipal single issue bonds out there. with whom do you negotiate a restructuring? it is going to be a real problem and could affect the muni markets across the board. >> let's get to the weather. it seems like we do it every other day in new york city. it is the third winter storm in one week so let's go to bonnie schneider. what is the newnew as we look at white white?

>> this is a different storm and that today we are looking at ice with freezing rain as well as sleet mixing in with snow. that is a reason why it is dangerous. when you get a slight coating of ice on the roadways, it makes for dangerous conditions. several inches of snow can be expected today in the new york city area and more when you head further north and west and that will accumulate into ice later on, possibly 1/2 inch. >> what do we look forward to this weekend? michael mckee said there would be another storm on sunday? >> yes, we don't know how bad it -- but there is a cumulative effect of all the storms. the airline industry has been impacted. a day after the super bowl, we had thousands of flights canceled due to the weather. luckily, the storm came in after the game. when you look at january as a whole, we saw over 50,000 flights canceled. for has been a big year

winter. it's not over yet. >> we will have bonnie schneider throughout the day. our guest host this hour is richard dodd. michael chase is joining us as well. he has an entrepreneurial spirit on tech. in davos, this is what i read. this is an 80 page essay. is the guy who put these together. we will talk about emerging markets print what can you tell us about the american labor economy? that theod news is talent from around the world wants to come in. unlike other countries where talent does not want to go, america has a source for that. that is very good news because there is a problem with the american labor economy in the

number of people with the relevant degrees for what american employers want, a farm, technology and others is a small per cent. >> we have not flung open the golden door. lady liberty is not welcoming at this point because they cannot get immigration reform through. we will have a rich days a mismatch in skills and jobs. happens, the jobs will move elsewhere. if the companies cannot get the talent here, they can put their engineering facilities in other parts of the world. they just move the jobs elsewhere. i think the big challenge in the u.s. is there are not the skills needed. is thatof the problem the ultra low rates have not translated into companies making investments? a lot of companies have excess capacity.

they're looking at the economic outlook and it is not great around the world. they're wondering why they should add more capacity. with companies piling up cash, they are not doing investments. joins usl chasen today. you are in the trenches on this. is there a shortage of talent out there? challenge trying to get the right type of people that have the technical skills to develop a great product like hardware technology or software technology. the problem is not just in the labor market, it goes back to the education system. the united states has become a little less competitive in recruiting top talent from other countries to stay in our school system. therefore, other countries are invested heavily in drawing that talent. >> we will talk about this more on this busy news day. michael mckee and i are focused on thedadp report in the 8:00 hour. >> microsoft is a company that

may need additional workers from overseas. they have their heads in the cloud over there changes and we will look at those coming up in how the company strategy may change. this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

up, bob eiger, chairman and ceo of disney joining us and earnings are out after the bell. >> this is "bloomberg surveillance." scarlet fu will return tomorrow. >> 8:15 a.m. will be the adp report. >> let's talk microsoft --

they had a search for a new ceo and that's over and satya na and billthe new ceo gates as technical advisor. what does this mean as we enter the new era of microsoft? nadella made in ephesus that microsoft needs to move away from tc and towards mobile and cloud. what do you think his strategy should be? >> certainly, he needs to continue the changes that have been in place. they recognize the difficulties they are facing in the pcs and recognize the importance of mobile. it's interesting that bill gates a sticking around. he is the founder and the one who said it all at much and and under who some of that stuff was not happening. it will be an interesting dynamic to watch these two. de-bal said he will

lmerize microsoft. you need products. you need smart technology and stuff that works and stuff that people believe they need to have them after by. -- and they have to buy. r brought a very sales oriented environment. it is a different feel under nadella and you could see it from the first day. >> is mr. ballmer out? bill gates will stay on the board and still be around. he set in motion a big reorganization. mean, steve ballmer. symbolically, bill gates stepping down as chairman sends a strong signal. he is not the guy who will be setting the tone. >> the most interesting thing on this we found is that pc

nadella'ssaid microsoft will develop into a platform company. they said microsoft was becoming more of an apple and the nadella will become more of a google company. >> you want the platform everyone will use print we talk about the emergence of platforms and amazon and apple and google have one. it's not just an individual product, it's something that ties them together. >> how likely is that with mobile? they have three percent. >> they have a long way to go and many to push the tablets. it's not just about smartphones and people have not wanted to buy the microsoft smartphone. >> let me bring in michael dodds. what would mackenzie advised?

? when you look at the idea of advice to companies in turmoil and transition, what is the first step? >> they have to make a decision around innovation. in innovation there is the early bird gets the worm. and there is another strategy that the koreans have done well which is the second mouse gets the cheese. you can be very successful. if you look at smartphones, it is dominant by an early bird. >> the back story here is that microsoft is still minting money. >> they've got a lot of it and are returning a lot to shareholders. shareholders not just want to but show asit back you will invest in something real and innovative. that people want to buy. >> hardware or software? >> they say they want to be a

hardware maker and provider of a vast range of services. xbox has a lot of potential. don't estimate the ability of xbox to deliver a wide range of services into your living room. >> michael chasen is with us as well. how many employees did you have at the biggest moment? blackboard, we had 3000 employees in the current company only has 20. >> what would be your advice to microsoft? microsoftllenge that has is not just figuring out how to restructure the company at couple of their existing platforms like the operating system and microsoft office are under attack. these are not systems that the kids coming out of college today are utilizing. even if they meant money today, we know these things are slowly transitioning out. kids out of college today are using google docs an

windows is one of the top landforms. it's not even available on the tablets. it will be a big challenge for the new ceo. >> you have to think of in terms of mobile and cloud strategy and the consumer is missing already you are seeing microsoft divide their earnings in terms of business services and consumer services. that's why you see so many fund managers going for a spin off of the consumer business. this is a discussion on microsoft and thank you for coming in. giles is with us on microsoft. >> the big number today is $51 billion which is how much rush is spending on the sochi olympics. that would be the most ever for the winter olympics and what do they get for it? we will look at the staggering cost in a moment here on "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

morning, everyone. it's not new york, it's not boston, it's the windy city, chicago. , and ugly 14ice degrees with four inches of snow in chicago. we say good morning to all of you in the early morning of the midwest of america. this is what bloomberg surveillance." olivia sterns and michael mckee is with me. no snow in puerto rico but no good news is there as the s&p/is the islands debt to junk level. this comes as puerto rico struggles with a long recession and unemployment, over 15%.

this is triggering a big exodus from puerto rico. many people are moving to the mainland. the downgrade has broad implications this matters. the puerto rican debt is held by 70% of u.s. municipal market funds. the pace of economic growth in china is another big concern. ,ne of the biggest questions bill gross called china the mystery meat of emerging markets. >> that went viral. abouthad questions whether the actual chinese growth rate is five percent or seven percent and makes the country a wildcard among emerging markets. the second winter storm in three days is sweeping through the northeast, the midwest and much of the country. it don't have a snow in the chicago and midwest area before getting to us. the new york forecast about six inches of snow today in boston maybe hit harder. they might get as much as one foot of snow. this is having an impact not

only on the economy but a lot of companies saying they are not reaching their customers. happened but what they said the december jobs report was affected by weather and this may be the same story today. >> what is your smart one? >> i found a story in "the financial times." this is about the fed's bad manners. this comes off the heels of the central bank governor of india calling for more policy coordination. the bank governor of south africa also called for more policy coordination. mention of the turmoil in the emerging markets at the last fed meeting. should they pay attention? mr. dobbs is with us from

mckinsey. this is a real battle, should the fed have a more global view but that's not their mandate. >> in the end, the disruptions and emerging markets at some point could cause problems in the u.s. it will not at the moment so there is a risk of that. i think the fed needs to be wary of that. element that an the fed has to be aware of other emerging markets and hold u.s. bonds. >> we will continue this discussion, this is a will bloomberg surveillance." ♪

>> good morning, everyone. i love this book -- it is a snow we day in new york city. this was central park yesterday. it was spectacular.

today it's just miserable. maybe six inches or three inches and maybe we will get more. snow is expected this weekend as well. let's get a data check. adp is coming out at 8:15 a.m. foreign exchange markets are stable and nymex crude is $97.95. >> remember the sony vaio? it is close to selling the japanese pc unit and the buyer is supposed to be a japanese investor group. it is part of a wider restructuring of sony that could be announced as early as tomorrow. radioshack will close as many as 500 stores. you saw the commercial during the super bowl. the closings will take place in the coming months but no details are given on which locations. the struggling electronics retailer has about 4300 stores

overall. the new ceo is scheduled to take over this week. morgan stanley joins the parade of companies settling with regulators over mortgage-backed bonds. it will pay $1.25 billion to settle a lawsuit wrought by the federal housing finance agency alleging he sold bonds to fannie mae and freddie mac without adequately disclosing their risks. the headline we have expected for years is the three year battle of google and the european union. that is settle. >> google will not have to pay a fine, they will broaden their search to allow other rival search engines more easy access and it will probably be good for the stock. >> this is a great statistic -- an emerging swing from five percent-45%, that is the emerging market share of the global fortune 500 companies by the year 2025. is director of the

mckinsey institute. i religiously read their work. it comes out in monographs. this is a good place to start reading this ever to cover, some of the smart stuff from mckinsey. the emerging markets is a stereotype, what do we need to know? the british industrial revolution, the impact that has had on the world economy, we are seeing that going on. we are seeing it go 10 times as fast and 300 times to scale. we are seeing a global force that is happening with emerging markets, it is 3000 times the size. >> let's get to the money question for america. dearth of investment or desire to invest in the united states. we go know it is not the emerging markets but vallone, that money is going abroad.

is that money going abroad creating jobs abroad and not here? >> some of it will be creating jobs abroad. the u.s. needs to in fast and infrastructure. -- invest in infrastructure. that would create jobs at home. the u.s. dealt with the peopleructure backlog -- think of korea as an emerging market and you get there but the emerging market when it comes to infrastructure is the u.s. and the u.k., it is not countries like korea and china. they are investing in infrastructure and that's the key challenge. those of the type of jobs that the u.s. needs to create. lump all theg to emerging markets together but many investors wonder whom can you trust? which emerging markets have the financial underpinnings, the structure, that you know you can get in and get out and make money? >> making money in emerging

markets is tricky. when you look at corporations and emerging markets, most of them are not returning capital. one of the challenges in emerging markets is how you make money from them. often it's by selling to emerging markets rather than by getting in. if you get in, you get in for the long term and you get in about supply chain sprint their companies and emerging markets -- many companies are not returning terribly good returns. the challenge for u.s. and european companies getting in there is the returns are not good. it is difficult with their shareholders for the emerging market coming shareholders prefer to make longer that's. --bets. >> how many of these countries want people to come in? don't they put restrictions on how much investment there is? >> they want to create local champions.

they want to restrict that but they need the international ability to build out investment. many emerging markets -- china does not need investment but they need capability. >> when you talk about the opportunity and emerging markets, you have to look at the technology infrastructure as well. how do you judge when you take a look at where you can place investments how that technology infrastructure will affect the success of companies? >> technology and other infrastructure is important. however, it's not there that some of these emerging markets, the rate at which infrastructure is being put in, they will be ahead very quickly. >> i agree when you think about airports and train lines in asia. they are far superior to the u.s. when you talk about the industrial revolution in britain, the terrible pollution and dirty workhouses and the smog that is covering beijing, we see these terrible pictures

-- will we see more cities full of smog across the world and what are the economic consequences? london,ll see it and in most recently as the 1950s we saw it but it got cleaned up. we did not all stop urbanizing. do you see a tipping point where china will finally take charge of their pollution? we have been waiting. >> i think they are making progress. countries like the u.k. -- it took them many years to address pollution. they addressed it and, in the end, that happened. these conversations are happening in china and they're making progress. >> when you talk about urbanization and you think about the new consumer's cramped in one area, that must be easier for companies to market to a group of people clustered together with access to broadband. how can companies capitalize on that? think about emerging

markets, the challenge is to think about the new business models and how you sell to customers. aba in china now has great penetration or commercial activity in china other than the u.s.. realizethe thing is to that online is where things are going. >> there are many internet companies in china that are now far surpassing the similar companies that are billion dollar opportunities in the united states. we sometimes ignore that part of the world because we think because we invented the internet, we are leading the revolution. many countries have invested so much in infrastructure, they are catching up and doing more online. >> what is going to be the response of coca-cola or ford motor company or a smaller company, how do they project themselves internationally given this new emerging market sophistication?

>> they need to be ready for the emerging market investor. competitorg market -- this is not a new story. think about japan and korea. the companies from japan and korea have successfully come out and challenged the global companies. i think the developed world companies have to be ready for the rise of the emerging market companies and be ready to compete. these guys operate very fast and very lean and they also operate competitively. a study the western competitor and understanding huge detail what the western weakness is and will go off that. we have a complacency in the west. we don't know who our new emerging market competition is. >> i would agree completely. we're looking at emerging markets. up, it is our question of the day -- how should twitter make money?

this is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com. ♪

>> did morning, everyone, "bloomberg surveillance." we are waiting for 8:15 a.m. and the adp report.

in the meantime, we are keeping olivia sterns entertained. you cannot get to work in the u.s. because of the storm or the u.k. the tube is down in the u.k. with a two-day strike. walkout is leaving commuters scrambling to get to work and from work. the unions called the strike after the london mayor announced it plans to close ticket offices , cutting more than 750 jobs. warreng of railroads, buffett is beefing up his investment in his railroad. richard hathaway is planning to sink five the lien dollars in capital investment into the nsf railway. that is a lot of money. heis a 25% hike from what was planning. the investment includes 2.3 ilium dollars for its rail network and $1.6 billion for equipment.

speaking of big numbers, eric million is his payday from google. the chairman is given a compensation package of $100 million in stock and a $6 million cash bonus. price is up 60% over the past year. surely, they are paying him when he takes that trip to north korea. >> that stock has done well. still one of those things that will raise questions about income inequality. >> don't get me going. it's a bad, snowy day and i will get upset. help me with a kind and gentle single to chart. be able to watch the internet in u.s. subways but internet company's are building out their infrastructure. we know netflix uses more bandwidth than anybody.

at on is numbered to but our single best chart, look at who is number three. it is apple. they are building out their capability. this isre wondering if a precursor to some additional services they might offer. maybe television. stuff on ouroring own devices he cut his we are putting it into the clouds of they have to build up their servers and the able to do that. some people are wondering what this means for the future. >> and what it means for net neutrality? what those laws change? that will be a major tax on netflix. thepple recognizes competitors of the future of sites like amazon and netflix of they want to make sure they have the infrastructure in place to deliver content long-term. >> what does it mean to build out your internet infrastructure? what do you have to do? >> it means you make investment

and conductivity and servers. it is large-size content with lots of videos and photos and music. >> i think of you working at american university. you were what everybody talked about. mark zuckerberg it's all the ink in social network what you did essentially the same thing and soldier company for a zillion dollars. -- sold your company for a zillion dollars. the backbone of that is access to all of this stuff. why is our wi-fi system so lousy compared to other cities and other countries? >> other countries are recognizing maybe add of the united states that it is important for the entire country to be covered in high-speed broadband. andunited states was slower recognizing that. you are seeing other countries start to take off in their investments in infrastructure but the companies building on top of that. >> this goes back to the

mckinsey work on urbanization. aren't we behind? >> it's a change of mindset. when the victorians built a sewage system in london, they did not do calculations to see if they could get a payback. they said we need a sewage system. i think that's the same problem here. when you look at things at wi-fi or 4g, if you do a calculation, you get socially the wrong amount. the australians have taken it nationalized. they say it's a social good and we want to have not the level you would provide to mpb calculations. >> there is a wonderful russell short book on new york city were the only reason new york city water is because philadelphia had a better water system and they had to catch up in 1830. >> many people don't realize that the u.s. is way down the list of internet capable countries. >> you do have a lot of the

private sector like apple and amazon really starting to make investments. they are doing it themselves. in the long-term, this should be better. you will have the right infrastructure for companies that know what their future needs will be an long-term, we will surpass others. australia might have taken a step ahead right now. longer term, it will play out that the united states will leapfrog over other countries. >> i love when i am in london. it seems there is life everywhere. >> i got better blackberry service in kabul then i get here. >> what will you do in sochi? >> they better have it. >> we are looking at the technology of the world. 40coming up, the number is thousand, the number of government requests yahoo! complied within six months. as is "bloomberg surveillance," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com.

♪

>> good morning, everyone. breaking news of europe over the settling -- google is

with the european union and it moves the stock. sanford bernstein raise their price target on the google $1500 from your team that -- $1350. apparently that removed risk. west" this"bloomberg afternoon on what it means for google as they have to figure out how to figure out for eric schmidt's payout for it >> apple and google are teaming up to fight patent lawsuits. they are urging the supreme court to collect lawyer fees from patentholders who lose infringement lawsuits brits apple and google have been hit with patent related lawsuits almost 200 times each in the last five years. value is baba average over 150 ilium dollars valuation. 150 billion dollars.

they will go public this year in the biggest ipo since facebook and that will have a big impact on yahoo!. sony is close to selling his japanese pc unit. the jot -- the buyer is said to be in investment group. a widerale as part of restructuring at sony that could be announced as early as tomorrow. let's move to michael jason because there is a lot going on with tech hearings in d.c. havenet companies disclosed company times they had to turn over request to the government. wantingup public is companies to protect their information. the same public forks over his private information daily for the likes of twitter and facebook. >> on that theme, the tech world

celebrates a company that began in the dorm room. you know it as facebook. there is another company that did that, michael chasen's black word began at american university -- blackboard began at american university. understands computer information and he has lived within the security of the nsa and washington. you are the best guy on the planet to talk about this. do you have a confidence that theelites can get their hands around this issue so olivia and i feel safe when we snap chat? >> i never feel safe. >> i don't know what you guys are chatting about. >> will we feel safe? >> the challenge that these sites are having is people don't know whether they can fully trust these online sites to not sell their information or not

move their information to the government. people don't have a problem sharing the information if they know what it will be used for. i have no problem giving facebook my extra information. i think it's a benefit that facebook can provide targeted advertising or show me things i might want to buy. >> this goes into what you are doing with social radar. developedcompany has an application that gives you real-time information about the people around you. people have to trust that we will keep that information and store it in a secure way. we have a high focus on security but one of the top questions people ask-will you hand that people over to the government? they share their versatile information with these websites but the problem they have is they don't want that information handed over without reason to the government. >> but the government is asking for the information. what do you do? >> the general public thinks the government is overstepping their bounds. geolocationapp use software. this newos has

software and we were trying to explain the benefits to it. it's the kind of thing where if he is walking past the carlyle, they might send them a text that would give him half off martinis. >> more importantly, over the next couple of months and years, when we travel with these iphones or other devices, they are literally location beacons in your pocket. it is developing social radar. you can walk into an event or a conference or go to a restaurant and look at your phone and you will know that right there, your friends are nearby or someone is in the restaurant you're connected to. >> this is a generational thing. kids want this? >> i go to meetings all the time. i am visiting new york and i would be great to know if my friends are nearby. >> i am so out of date. >> there have been a couple of

apps that have offered this. they have failed before. >> is not about knowing where your friends are. it's when you are visiting a conference or going to a meeting or a new city and you want to know if you are around that maybe might not be my close friends but maybe i have a connection with. trust -- we don't trust the government but can we trust you? that theyrs have said don't have a problem sharing their personal information or their location information with companies if they are getting a use out of that utility. saidsers of social radar they are fine giving personal information but they also say we don't want you sharing that information outside of the scope of what the application has provided or giving it to the government. >> thank you so much.

here is the forex report for today. i am watching the yen. that is a huge deal, the stronger yen. more ont much "bloomberg surveillance." ♪

calm before three

days of job reports. puerto rico receives a downgrade. the affordable care act will reduce the number of hours americans will work. does that mean fewer full-time jobs? bremmer of ian eurasia group. this is "bloomberg surveillance." it is wednesday, february 5. joining me, michael mckee and olivia sterns. scarlet fu is with us tomorrow. our guest host, the chief executive officer -- terrific work on initial public offering. we need to get to the morning brief. >> japanese real wages falling to a global recession low. also a 16 year low. we will get economic data out this morning. mike on the edge of

their seat for the adp employment numbers. the earnings continue to stream and before the bell. , esteerner, merck lauder. their first public earnings report after the bell today. >> company news on the snowy morning. >> google has settled with the european union. reaching a deal with the eu to end a three-year antitrust investigation. an improved offer to display results from rival search offices. toy rippled a price target $1500 -- raised their price target to $1500. stores -- is closing no details on which locations. they have about 4300 stores. the ceo comes from dollar

general -- he is taking over this week. time warner is announcing a buyback. gains -- revenue jumping 5%. they will buy back $5 billion and stocks. -- in stocks. >> we have some breaking news. cbs -- cvs will stop selling tobacco products. the first national chain to stop selling to back a products. -- tobacco products. about $1.5 billion in revenue. they will stop selling by what -- october 1. >> the white house is playing

defense after the congressional budget office rejected that the affordable care act will lead to the loss of the equivalent of 2.5 million jobs -- billion jobs within 10 years. the political dodgeball -- what an uproar we saw yesterday. is one of those midterm election-year surprises that people did not see coming, certainly the white house did not see it coming. they were playing defense all day yesterday, trying to explain the numbers. it is more complicated than the bumper stickers. it is an advantage to the republicans, no doubt, because this whole situation, these numbers about the number of jobs or equivalent jobs that could be lost within 10 years -- people make the choice not to work a full-time job -- that is going to become an easy campaign at in this midterm election year. much harder for the democrats and white house to explain. >> jason furman is better than

good at this. of the chairman of the president's council of economic advisers, react? >> he spent about 45 minutes at the white house press briefing trying to explain these numbers in very careful terms. he did not disagree directly with the cbo, but he did question some of the assumptions, some of the numbers they came out with and said that the cbo is not 100% certain. take a listen to read -- listen. that if weo doubt got rid of social security and medicare, there are many 95-year-olds who would choose to work more to avoid potentially starving or to give themselves an opportunity for health care. i do not think anyone would say

that is a compelling argument to eliminate social security and medicare. >> you heard him try to equate this to medicare and social security. --ublicans fired right back hard to make the case that the loss of 2.5 million jobs by 2024 would be a net plus for the economy. >he made the case that the affordable care act will be a net plus for the economy, not just this one sliver of the analysis. >> one problem i also have with notedeport is that cbo that the enrollment levels are much lower than anticipated. that is not good news either. >> absolutely. that was the second part of the bad news for the white house yesterday. about 2 million additional people would not be enrolled this year under the cbo's forecast. they projected that there would be 7 million americans enrolled by the end of march, which is the deadline for this year. they have now scaled that back

to 6 million. they also forecast previously that 9 million people would be added to medicaid by the end of march, they have rolled up back i another million. 2 million additional people who will not be in rolled. they say that the numbers will pick up in the following years. the white house and democrats to explain this in this environment. the biggest thing -- hard logic -- one of the casualties is probably immigration reform. this is reminding republicans how cogent an argument this is -- focus on this, better for this and this election-year. >> thank you very much, peter cook. a complicated story. a difficult outline for the administration. >> twitter after the bell -- this will be fascinating to see, their first earnings and revenue report.

a look forward on a stock that has been better than successful. wallace --ay, right brett wallace. you did fabulous work for bloomberg surveillance on the twitter ipo. what have you learned about the company cents? sachs did fabulous work for the company. >> they undersold the story. uppricing at $26, opening $45, and hanging right in their. goldman set the tone for how to do this correctly. airlockgoes out of the from the private market to the public market with the ipo -- which went well. research went right. the stock continued to go up. now we have the first earnings report, along with several

others. in the future, we have the lockups coming off. that will be full process of the company moving from private to public. >> within your experience of the game of bringing a private ,ompany out to a public company how much will the twitter executives be coached a goldman sachs today as they have their first conference call? >> it is like the planetary scientists looking at the stars wobble to know a planet is there. you have to make no mistakes. that cannot be an accident. these guys of them brought along very effectively. >> all they have to do is make money from here on out. it's this not going to be trading at the same level tomorrow morning? >> we will see. no unforced errors. you have to survive the earnings report. we think this company looks a lot like pandora and yelp and other companies like that -- they are all announcing simultaneously tonight. we will get a robust set all at one

time. >> what do you think about some of the ad products from twitter? >> they will have to release and sell a great deal of new products to justify the stock price. >> have any of the changes impressed you? do you think will they will drive monetization? >> we will sue the numbers now. what we would like to see is more penetration into the advertiser base. very good product development. they spend a lot of money on research and development. >> i know you do not like to compare them to facebook, but unlike the others, is this a natural subscriber limit -- is it going to be not cool anymore? >> super interesting question. >> minor only interesting? super interesting? [laughter] i am in trouble now. >> it is still not that big compared to facebook. to reach maturity at a low over level -- it is not a mass-market

product. >> show what you brought. you brought all these ipos. these other ones here. for those of you on radio, rett wallace is the only one who shows up a 300 pages of documentation on ipos. this thing has been a home run, right? >> they killed it. >> you only have 140 characters left. >> yes. i think it is pretty cool. >> this is what good execution is. >> rett wallace with us here. our twitter question of the day -- how should twitter make money? good morning. ♪

>> good morning, everyone. now to rett wallace. he tracks soon to be public companies. how about initial public offerings? we are going to be swimming in them in 2014. why the enthusiasm right now? >> we talked about market conditions. their favorable. >> that is all it comes down to. >> that's right. we have seen energy deals, health care.

>> is the ballet of today, the same as the ballet of 2006 or 1996? >> fewer underwriters and not as many companies that are in the early stages. the companies are much bigger, more mature companies. they are easier to evaluate, but it is a little weird that they are only company -- coming to the market now. >> are they clearer or is clear as they were? >> it is an amazingly resilient template, in the sense that they are filling the numbers. twitter versus facebook -- even the locations of the charts were kind of the same. the language is a legal document designed to protect the issuer as much as inform the buyer. the format has held in since the 1940's and 1950's. >> our viewers -- the one you want you never can get shares of.

it seems like an unfair game. >> a gets more unfair as the number of underwriters are more concentrated. iker soft one public with 116 wentwriters -- microsoft public with 116 underwriters. linkedin went public with five. the number of firms that are controlling these allocations -- ifdman sachs, j.p. morgan -- you want to get the good stuff when it comes, you're still talking to the same person at the underwriting firms when the less good things are coming out. >> it is a fascinating process. should the little guy play this game? >> the little guy has no shot. it is very, very difficult to read the documents are not publicly available until three weeks before the deal. this is all we do, read these things. it is tough for us to get to the

bottom of them and the time elapsed. >> thank you so much. bloomberg television and radio. twitter earnings this afternoon. i will be fascinated. how about snow? how about new york? ty.re is a gorge-eosi it is a winter wonderland. good morning, everyone. ♪

>> good morning, everyone. i am tom keene with michael mckee and olivia sterns. rett wallace, our guest host. we are one hour away from adp. is it exciting. >> we are thrilled. a lot of people may not have gotten to work. >> we are starting with partner rico. the s&p slashes puerto rico.

they struggle with a long recession, high unemployment -- 15%, a weak economy triggering a biggest exodus of people moving to the mainland and a half century. what are the implications of the downgrade? the pace of economic growth in china is another big question. a big question facing the markets according to bill gross. questions about whether china's actual growth rate is 5% or 7% make that country a wildcard among emerging markets. people cannot get to work because workers are at -- staging a strike. workerst by underground leaving commuters scrambling

over plans to make the tube more efficient -- cutting off more than 750 jobs. >> we go to our official london expert, olivia sterns. >> i much prefer the tube. it is so much more civilized. it is more civil, quiet. in the new york city subway, people will take their mobile phone out and they will listen to it without headphones so that everybody else on the subway car can hear the music. in london, you would never have that. even if you're crammed in like sardines, people open up the newspaper and read. >> but it closes so early. >> it does close early. >> the new york subway at least shows up. >> it does show up. the tube it does have gil sans font. >> can microsoft pull off a

turnaround? how does microsoft build a relevant future and what should be the strategy? we keep saying microsoft needs to be turned around, and yet enormous profits under speak all of that. is it more refocusing or setting a future strategy? >> given the cash flow, turnaround is probably the wrong word. the entirety of that cash flow is coming from products whose expectancy is going down by the day to some extent. decay fore a steady the firm. they need something. >> what do they need? they can go mobile, what do they do you do?- they

>> the go mobile. the enterprise space, they have been much more successful. they will need something else on top of that, whether it is finding some way to make sure they can translate the office products into the mobile space or something else entirely. they need something. >> nobody wants to use their products on mobile. >> they have not done a good job with designing them the right way. they have tried to hedge their investment in research and development. it has not worked well. >> within your management and leadership study, is this de- ballmer-izing? or is it a reaffirmation? >> ballmer was definitely in the stay the course can mindset

until things got really bad in the mobile space in the last couple years. the new ceo, who is nowhere near as beholden to windows and the office system as gives thee is, this potential for a real shift in focus. potentially more toward innovation and the next big thing of the future. be -- thatthat will is what our guest was just telling us. i want to talk about mobile. the shift to microsoft has been from what apple has been doing more to google, as a platform focused company. what should they do with the mobile unit? it was interesting to see that gogol's -- google served off motorola mobility. market, unless you are one of the top two producers, it is difficult to make money in the handset space. for the mobile space in general,

there is not really room for a small third layer in the mobile space. be efficientlt to and have the right hand of scale and being able to catch up with the big two players is going to be almost impossible for microsoft. >> do they remain a windows company? or do they go some other direction? enable other things onto it -- can they bolt other things onto it? >> i would rather see them stick office company and not a windows company. the office products are still incredibly important part of business life today -- finding ways to make those truly worked in the tablet the mobile space and whatever comes next, that is a real opportunity. >> j.p. eggers, thank you so much. this microsoft story hum of this transition, is a huge story. when do you leave? >> i leave next friday. i cannot wait.

about up, we are talking the olympics. the sochi olympics start tomorrow. that is when the opening ceremonies are. scrambling to get their house in order. we will be back. ♪

>> it is "bloomberg surveillance." a snowy, winter wonderland. third avenue in midtown manhattan. the key attribute here is snow becoming/. -- slush.

across from our world headquarters -- they do beautiful rugs. let's start with airlines. many are stranded this morning. we start with cvs. they will stop selling cigarettes and tobacco products at its more than 7600 stores startinge u.s., october 1. the first national pharmacy chain to make this news. they have changed their twitter avatar to a no smoking sign. after the airlines. a backlog of orders for 737 jets. the company is banking on the orders to help soften the risk with cancellations tie to currency turmoil in developing nations. morgan stanley settles up. $1.2oint to fill you -- billion in the settlement.

a story we know well. >> you mentioned airlines, we mention bonnie schneider -- she was forced to come on today with the ugly weather. the airlines earlier. this is just the worst winter, isn't it? >> it is. i was checking snowfalls for new work and central park -- e newark and central park. this is already a rough start. three storms in this week alone. the airlines impacted -- over 50,000 flights canceled in january. >> a record winter? can we say that? >> yes. we have already shattered so many records. >> when you go to the snow belt -- are they having a record winter? >> not only are they having a record winter, but remember the polar vortex? >> we call it the polar paid. -- pig.

do like how she says that -- polar vortex? >> it sounds very meteorological. >> we are talking temperatures .0 below zero in the midwest that impacts business in a huge way. >> frankly, it has snowed in cairo this year. so who knows? >> why hasn't snowed in cairo? -- has it snowed in cairo? >> there is always know in strange places. >> let's move to the weekend. us, nationwide, are affected by the travel this weekend. thing aboutesting this weekend is that some of the media releases have shown that we have seen different commuter -- computer models saying we have seen 20 inches of snow or three inches of snow. we really cannot get that accurate several days in advance.

we have to keep watching it and seeing the trends. it is a close call. it depends where the snow develops. we are still in the heart of winter and still way above average for snow. >> one of the problems we have is that the u.s. has not invested as much in its weather computers as other nations. we are trying to catch up now. hurricanes, after sandy, that spurts of medivation, but we are still in catch-up mode. >> also quite a bit of cutbacks in government spending when it comes to weather forecasting. to have investment for that so we can get the latest information, satellite data and radar, and make the best predictions. >> i have a very important question. the danger of this black ice. dangerous for cars and kids and arepeople -- how accurate you in estimating where the black ice is? >> one of the unique features we

to estimate these ice totals is to get reports from real-time people who are on the scene. >> 19th-century? >> it is pretty accurate. a quarter inch of ice to a half-inch of ice. we are likely to see many power outages as the ice cover the trees and we will probably see that going into today and tonight. >> what kind of economic impact? >> we have seen it in the airline industry. on automotive, sales. one of the problems they faced was the cold weather in january. people were not going out to shop for cars is much. february is like january, we could see similar conditions. >> thank you so much. with us all day on bloomberg television and bloomberg radio. the weather just won't go away. it is more than early february. >> markets are not at the moment. u.s. investors are sitting on

the hands, probably rating for that adp report. not much movement in futures or bonds at the moment to read you cannot say there was a lot of movement in currency. we are seeing movement in crude oil. to be that is weather related. -- maybe that is weather related. >> good morning, everyone. "bloomberg surveillance." radio plus on itunes and android plus. bloomberg television on apple tv -- we have gotten some really nice response on that. i can mckee and olivia sterns with me. rett wallace with us on twitter and the ipo market. twitter with earnings this afternoon. billiona has spent $51 on the winter olympics in sochi. that is more than the last five winter olympics combined. hotels and stores are still under construction with just two

days to go before the opening ceremonies. what is this signaling? ian bremmer is the founder and president of eurasia group. sochi calling putin-grad. how much are they for russia? how much of a for the legacy of food and -- putin? >> this is all about him. he just decided to take $15 billion out of russian pension funds to give to ukraine -- something that no one else in the world would have done. something no one else could have done. and you have that much at stake personally, if things go wrong, you are going to be upset. as he getsf pique massive international dissonance, consternation, upset criticism with the way these olympics work on some in a different levels is going to be pretty substantial. that is assuming the security situation goes well, which i

would not assume at this point. >> who is picking up the tab? our oligarchs privately paying? >> the russian economy is not going anywhere. we're talking about lower growth over the next year than the united states. investing in an emerging market like russia when you can get better returns in america? >> with all of this at stake, what are the odds that he has any problem? you can describe the most likely problem is. what are the odds that something goes seriously wrong? >> these olympics are not going to go well. everyone is oriented toward picking at every problem and making a big deal. the media there and every problem with a hotel are big. she --nalists that so sochi are live tweeting their hilarious and gross hotel experiences. with your work worldwide, what

will be the response of russia to some guy at cnn? >> he could probably ignore and dispense with and say they are nobodies. look what their expectations are, these westerners. >> i suppose i better not tweeted out. -- tweak it out. -- tweet it out. >> americans expected terrorist act in sochi. you have american intelligence saying that they're very credible threats right now. you have people in russian secret service who are giving actual photos. >> would you go to sochi? >> no, i would not. i am not someone who scaremonger's about this stuff. we've talked about our clients about having more virtual presences. we talked about limiting

residents -- presence. >> what advice do you have for olivia? -- you do thement best you can. the place is going to be locked down. one of the places i would not go to sochi is because, frankly, the level of security that will be required to make people feel safe is just going to be arduous and make it unpleasant. >> i will wear a helmet and maybe a bullet-proof vest. is there a chance that putin comes out on top? team wins, no security incident, things go well with ukraine. >> the answer is no. i hate to say it. the situation in ukraine is very restive. opposition sees this as an opportunity to get more attention. we have seen security problems where the leaders are not showing up from the u.s. and the rest. the president -- question is how bad? >> a lot more to talk about. microsoft coming up.

what they need to do now if the company is going to get back on track. you are watching "bloomberg surveillance." ♪

>> the morning, everyone.

here.w miller is up at the crack of 6:00 a.m. the entire show will be devoted to bitcoin. >> we will talk to christie hefner. she will cohost the hour with me and stephanie ruhle. she was the ceo of playboy for a long time -- the longest-serving female ceo of nyc listen company -- nyse listed company. she is the executive chairman of canyon ranch -- the high-end luxury spot. >> men go to it as well. >> i am learning a lot more about it. she wants to broaden the brand. get the products out there that you are buying these days on high and. a lot of wealthy people have meals delivered to them.

matt miller, it :00 a.m. this morning -- it :00 a.m. this morning with stephanie ruhle. cvs will stop selling all tobacco products at cvs pharmacy locations this october. it is estimated it will lose $2 billion in revenue for cbs -- cvs. >> here is a twitter site already. they have some pills over here in red which is their logo. >> they have already changed their avatar. i was looking to see the effect on their stock. more than 293 billion cigarettes were purchased in the u.s. in 2011 with nearly three

companies selling 85% of them. i find it annoying. cvs came out and it is a great thing. the ceo says they are doing this because it is not consistent with our brand. well it was for how many years? >> united states does not sell the cigarettes they used to. at the peak of cigarette purchasing -- it was 1964. >> i took a conference call yesterday on my cell phone next to the beer case in a store just like cvs. >> you are taking conference calls and pharmacies by the alcohol? >> that is where i was. by the sixpacks of coors light. will they do beer next? >> no. there was a lot of money and beer. it is the socially conscious thing to do. the feel they will get a big brand benefit from it.

cigarettes are not making the money they used to. it is the folks in the emerging markets were buying cigarettes these days. why can't they be honest with people about it? >> san franciso put a ban on pharmacies selling tobacco products. >> a heated debate. much more on that. ian bremmer with us. wallace. 30 minutes away from the adp report. good morning. ♪

>> good morning, everyone. scarlet fu is with us tomorrow. ian bremmer is with us this morning, as well. founder of the eurasia group. olivia sterns is company news. >> let's start with google. settling with the european union. reaching a deal to end a three-year antitrust investigation. the settlement comes after google made an improved offer to display results from rival search companies. a has soared to more than $150 billion after it reported a surge in sales. that is a jump just after four

months. they will go public this year in the biggest ipo since facebook. radioshack will close as many as 500 stores. the closings will take place over the coming months, but no details were given as to which locations will be closed. the struggling retailer has about 4300 stores. that is a lot of company stores. is closing stores, but i have goodness. we have a big store opening on fifth avenue. top shop is coming. thomas not going to know. a new flagship store in the united states for them. francine lacqua spoke about other expansion in the u.s.. 2014, 2015 -- by the time we get the hand over. san diego, washington, atlanta. >> did you ever think you would be expending so much? 500 stores worldwide. that is impressive.

>> i think it has been a long journey. overall, we have 2000 stores. brand -- we have a lot more to do. >> surveillance correction. it is not just a store for women, it is a store for men as well. it is not one that tom needs to be in. >> where does it fit in and the american landscape? >> kind of like h&m. fast fashion. a dress for $100, $150. a lot of the hipster looking steven alan bowties. >> tom will be there. >> leonard green partners is some of the private equity money behind top shop. >> why has it taken them so long to come here? >> they have taken time. it is a private company. >> is a good to go fast or slow? top shop is going very slow. >> they do have one in vegas

now. [laughter] i have not been to vegas, but it vegas everybody is looking at the cheap close. one of our themes has been economic growth across emerging markets. do the emerging markets need us anymore? >> they certainly need us. they need united states and china. the concerns about qe and tapering are having a very significant impact on investor sentiment. emerging market concerns about chinese reform. china is so large -- what they do has a huge not on -- >> is russia and emerging-market? i cannot get a straight answer. >> they are part of all the indices. it is not developing. it is actually submerging. when you look at the institutions or the investment or the quality of life, you cannot put russia in the same band as other major growth

economies today. it is only going to get worse given the energy revolution in the united states, given they will be under massive price pressure for the one thing they asked for. is gettingico downgraded, facing the possibility of defaulting on its debt. how big of a deal is this? some people say it is the next greece. part of these it is united states. the united states is not going to let it fall. >> are they going to let it fall? what are they going to say to the people in detroit? it is useful to be part of the united states of america. can make more difficult decisions if you have to over a long period. >> people are looking at statehood for puerto rico as a way to get a bailout. does that gain traction? >> sure. the got fairy close on a couple of occasions. there are a lot of puerto ricans living in the united states.

a lot of money that works well there. tourism is great. it would not surprise me. >> with all the problems in washington, with all of the debt going on, there's appetite to take on a 51st state? >> they have the right to statehood if they vote for it. we are not going to change the rules on that. >> it is time for our agenda, where we look at the stories shaping the day. i am looking at morgan stanley. point --ed to pay one $1.25 billion to settle their lawsuit. >the banks are able to write off all of their fines. the tax break for them is easy to agree to. the people who will get the mortgage settlement money from the banks -- the law that made that tax-exempt for them is expired. of thered as part inability of washing to get anything done at the end of last year. they have to pay taxes. you may be out of a house, living in the street, and now you will have a huge tax bill on top of it.

austin to knows it is a problem, but the congressman working on this say it could be a long time, if ever, before the rectify it. mortgage-backed -- it is the elephant in the room that no one is talking about. >> it still has to be addressed by the administration. this is going to be another example -- another reason why people will end up hating the banks. jamie dimon can agree to a fine that he can write off, but you are going to get the money and you will pay big taxes. >> even though he set aside $22 billion in fines, he got a raise this year -- isn't that incredible? >> no. i think was well deserved. [laughter] >> i am watching twitter. earnings are out after the bell. this will be their first set of earnings as a public company. we are dying to see what is in the numbers. what does the user growth? how much money are they making?

ofy have introduced a lot new ad products. we want to see how they are doing. ian, what do you think of the new changes? >> so far, i think they have responded very well. the initial outs, people do not like them, they made them easier to deal with. they seem to be very responsive. that theyteresting is are massively oversubscribed among the talking heads in the media. the people covering them really like them. it tends to be good the way they are presented to the public. i'm sure that is helping the valuation. raise -- wasto raised to $70. sanford bernstein raised on google as well. >> we are all going to die. >> it is getting toward berkshire hathaway. >> there is the surveillance breaking news today. ian bremmer, i will die. [laughter] >> before we answer our question

of the day, tom you have to head over to radio. very quickly, adp report is always important today. a huge deal looking to friday to the important assumed positive revision. i would say, the whisper up on payrolls. >> we better hope there is a positive revision. >> big deal at 8:15. >> how should twitter actually make money? here are some of the responses. another answer. twitcoin. that is an interesting one. >> a lot of people look at atcoin and look at it as payment system. that may be a future there. >> what you think the future is

going to be to monetize? >> it is big data and add revenue. people in the game -- twitter has a lot of users. but not close to facebook. they cannot get china. the chinese have their own. there are two limitations. facebook is bigger and they cannot be global. >> can twitter get to be bigger? >> it is an interesting model. it is much more for useful for people who really want that real-time feed. i know a lot of people who just are not into it and do not feel like they have to have every five seconds refreshing once in a while. >> your feed is fascinating. are in theu, but we communications industry. we are not good people to be talking about whether twitter is going to be a good model. bremmer from the eurasia group, thank you very much. you guys can talk about security in sochi offline. coming up on bloomberg

television, the chairman of disney will be on "bloomberg west." their earnings are out after the bell. stay tuned for "in the loop." ♪

bloomberg world headquarters, this is "in the loop" on the snow we wednesday. i am matt miller. it took me twice as long to get to work today.

i joke very slowly to be safe. >> i am stephanie ruhle. last week, we were talking about the weather and its impact on atlanta. now, potentially only getting worse. i want to send you out to the newsroom where our meteorologist can give us more. what are the economic impacts here? associate the weather will not and and snow clouds will not start in new york. >> hopefully they started because they have seen the snow in the early hours of the morning. and freezing rain. ice accumulations to a quarter and a half inch. a big problem.e the worst of the storm happening this morning. it will start to taper off in the afternoon. there will be plenty of snow, four inches in the city accumulating. it will be the wet and heavy snow