>> from bloomberg world headquarters in new york. is is bottom line, today comcast agrees to buy time warner cable for $45 billion. then how an extreme drought is affecting california's economy. and with spring training under way, we'll preview the upcoming baseball season. >> to our viewers here in the united states and those of you yoining us from around the world, welcome. we have full coverage of the stocks and headlines. we have a round table discussion

on retail sales. janet yellen and more more. peter cook looks at regulatory issues behind the comcast time warner deal. we look at the stock moves in the $45 billion acquisition. good afternoon. >> one thing that's important to note about this acquisition is it's a stock transaction. shareholders will get stock of comcast in return for this deal. they are going to get 2.875 for every time warner share they old. that values the company at about 17% higher than yesterday's close. if you look at the time warner cable shares today, you'll notice theorizing which is what you might expect but they are trading below that offer price. there could be a couple of reasons behind that. first of all, comcast shares are

declining so the value of the bid is declining to some extent. second of all, it's going to take a long time for this deal to close. it could be the end of 2014. and third of all, and of course peter is going to get more into this is the regulatory risk associated with this deal. that's why the time warner cable shares are rising but not as much as you might anticipate. as for comcast, not usual for an acquiring company to be declining. most analysts are bullish on this deal and the fact it will add 11 million subscribesers to comcast and access to the new york city market and more bargaining power with content providers. that's what these combinations are all about. who is being left out in the cold? that's charter communications. it offered to buy time warner cable. it's bid was much lower. time warner cable holding out

for a higher bid has worked out. but now investors and annual lis are asking where does charter go from here? who else can it team up with? that's why we're seeing a decline in shares today. >> if that deal is going to move forward, government regulators are going to have to give this the green light. what else do we know about this? >> that is one of the risks associated with this situation. that's one of the risks to the deal. we might see comcast divest some of its properties and charter, which i just mentioned, that company might be able to pick up some of those assets. >> thank you so much. let's go to our chief washington correspondent peter cook. he has more on this story. is this going to be an up hil fight on the regulatory front? >> anytime you have the number one cable company and number two cable cun company joining together, you get some red flags

and we'rey views in washington. at the end of the day analyst players think this deal will likely get it. comcast will have to make serious concessions to the government. could they make this deal less attract toif comcast in the process. the reason this deal will get cleared is because these companies do not compete in any of the same markets. there is no overlap here. they are competing against more than the rest of the cable industry, they are taking on satellite providers and internet providers as well. the regulators are going to have to acknowledge that. they are going to have to make concessions to focus on regional sports networks, sports channels. that is where a lot of the tension will be here in washington. but comcast making an aggressive

case this is not an anti-competitive deal and it is in the public interest. >> speaking of public interest, what is on the federal government's wish list then? >> a number of things and comcast moving on its own pitching to the government some ideas voluntarily. they are willing to divest 3 million customers. that will keep them at the 30 million subscriber mark or the less than 1/3 met trick. they are offering as well to abide by a range of competitive commitments they made when they ok over nbc, most notably to not discriminate against certain content running on their network. the question is will the government ask for more and could those demands make this deal less attractive in the long run. that could be the deal killer. tom wheeler is the one to watch.

it's the a test for him. he's talked a lot about competition and warned about consolidation in the wireless business. this is a different industry, could be a different set of questions for them. but he's a key player to watch. >> these companies, do they have a lot of friends in washington on the hill many >> they do and comcast in particular. it's a big player here no question about it. we had a top comcast executive attend the state dinner. 's spent time with the president. and made friends on both sides of the aisle. you look at their top five law makers who have received contributions from comcast and you get a who is who of republican and democratic leaders as well key players with regard to telecommunication issues. comcast is a powerful player here and as nalls washington, good to have friends in high places when there is a big issue

like this on the table. >> peter, thank you. >>'1" cars of a freight train carrying crude oil and propane deflailed pennsylvania today 30 miles outside of pittsburgh. one struck a nearby steel plant which was forced to evacuate. no injuries have been reported. investigators will determine if the weather cribted to the derailment. propane supply levels are at their lowest since 2001. >> we go international in scope as john kerry aflives seoul ahead of president obama's trip there to asia in april. we'll get analysis from our foreign policy correspondent when we continue in just a moment. ♪

>> italian prime minister will resign after his party withdrew support for his ten-month old

government. he intoned resign from office officially tomorrow. democratic party leader says italy needs to start a new season with an executive that lasts for the entire mandate. he would need to win a vote of confidence in both houses of parliament. >> secretary of state kerr ray fliveedstule try and reign in nuclear ambitions. president obama promised in his first term to foift asia and to devote more u.s. attention and resources to that strategyically vital region. how is that pivot going? >> well the importance of that asia pivot depends on which awsyens you are talking to. the ivet didn't even come up when president obama gave his state of the union address to

the american public and there is no tchute distrabs in the middle east have taken attention away from the region. kerri has spent so much time there working on middle east peace and has been absorbed by the problems in syria. this is his fifth trip and he insisted the rebalance to asia is still president's top priority. john kerry has to be there to reassure critical u.s. allies and he's bringing news of president obama's plan to visit in april. there is an intense effort to finalize the trance pacific partnership and this is about laying the ground work for the president's trip. >> china may be a tense visit. how much influence does china have over north korea and how much leverage do we have over the merry time dissputes that are going?

>> not much especially given the u.s. is at odds with china over key issues. ow the u.s. says china, you're north korea's closest allies, you supply their fuel and banking system and you can do more to urge them to stop their nuclear weapons program torks release the u.s. missionary kenneth bea who is in a labor camp there. china demothers on this and say we don't have as much influence as you say. as for the merry time dissputes, these are some of the busiest shipping lanes in all of the world. they have dissputes not only with japan and south korea but with many of its neighbors and the u.s. being a major pacific power wants to keep freedom of navigation open, the east china sea has so much oil and gas and

the u.s. is trying to tamp down these high tensions between china and japan which could set off an accidental confully relation which is what the u.s. is worried about. >> thank you the. u.s. economy is off to a slow start this year. most americans face colder than normal temperatures and slow growth in jobs and wages. joining us now with a closer look chief economist and our economic senator joining me in studio. the u.s. saw decline in retail sales last month. the drop was.4. it was the most since june of 2012. what do does it say about the health of the american consumer? >> most of us which are experiencing the hibernation in the polar vortex, that has really disrupted, deferred and

delayed a lot of economic activity. ifed the only been a few days, we would think about it being transitory. what i'm worried about are some of the losses that are very heavily in foot traffic like vehicle sales and department stores, restaurants got hit too. on the other side of it things like grocery stores did better, building materials, repairs, they are associated with the disruptions and the damages caused by storms. there was a real imprint of the weather but i worry about those who have lost wages due to the weather and it becoming repeated events. this week now cumulating. now i'm concerned this is less transitory than what we once thought and now beginning to be burden some. >> you have to look at the numbers as possible sign of some sort of pause. it's difficult to separate them from the weather. until we get a better read on

how much damage the weather has done to not only sales themselves but the confidence people not wanting to go out and spend at the moment, it's hard to say whether it means a lot. yesterday we talked with the st. louis president who is going to look past this. he thinks after the weather improves, the economy will too. >> what do these numbers tell us about first quarter growth forecast? velocity?eded to gain >> this is going to be difficult. we are exass baiting weakness with the weather. some will be recouped and it won't be recouped where it's lost. i think there will be vacations to sunny places. that means tips in areas of the country where there is more temperate weather. you'll see 1.5% in the first quarter looking at the weakness

and retail sales that is carried into february as well and disruptions to travel and things like that. the question is not only do we see it recouped in the aggregate and not where we lost it but i worry about how so many schools closed, that represents day carry for some people. that is hitting hours and earnings. much harder to recoupe with this. >> one of the interesting points in retail sales numbers was the online sales. they were down as well. you can shopity home when it's cold and snowy. >> yes, you can. and that is something i worried more about because many people were home with their children. they were stuck home with their children and anyone home with young kids, you don't have a lot of time to shop online for sales. but they weren't working and people on hourly pay lost pay. plus we have higher heating bills in december and january. and looks like february as well

now. that's a real blow to disposable income. not much aptitude to go out and spend even online. that was different than what we saw before christmas. >> we're going to ask you to stay with us. we're going to continue our discussion later for california and other places around the country, three words that could be a game changer, brout proof farm. that story is next -- drought proof farm. that story is next. ♪

.> we're back fed has a new fed president. >> she is the research director. she's been there for 28 years.

it's an interesting move for the leveland fed center. loe retta comes from a bank with very hawkish tradition. the senator has been one of the people who makes very few waves. she hasn't done a lot of monetary policy speeches. it will be interesting to see if the cleveland fed takes a more prominent role in talking about what the economy should do. >> what are we thinking of this? >> it's critical. it's interesting because she oversaw some soft research that was used by the house on tuesday to attack janet yellen from the philadelphia fed arguing that 80% of the reduction in participation in the labor force is structural related to retirees which is in contrast to

other estimates out there. she walks into the equation with view. more hawkish it sets up the stage for more decents in terms of monetary policy. that's going to be more confusion than clarity where we have noise from the weather. and the fed crossing 6.5% thresholds and things like that. >> you put out a note saying the hallenges facing the yellen is weak jobs. >> might they change based on qualitative views? >> that is certainly the onsensus now not to go forward lowering the threshold but to stay with the current threshold

but say it's more knew answer than that. the problem is financial markets like numbers and not nuances. the fed is dealing with a collision course it set up in terms of thresholds which were not triggers and how to deal with it in this world where we're crossing them. >> he wants to go to a qualitative base system. what are the indicators you would look to to tell you it's time to change policy? >> it's a great interview you had. he noted things like labor force participation is still low. even though it's trended down, it's not all retirees. the other important number is long term unemployed is still high. the number not taking part is still high. the able bodied people who want to work or underemployed working under 35 hours or less is

extreamly high, 13% versus 6.6%. so you can look at other measures within the employment survey that i think are more to the meat of the matter of how weak the labor market still is. >> how does janet yellen distinguish herself from ben bernanke? how does she make it her fed? >> i think she already has. it's all about communication. she's going to be the queen of communication but it's going to be a rough ride. >> i think it's going to take time. it's about communications but it's going to take time for people to look at her and see the decisions she makes. she's got to make decisions and lead and then it will become her fed. it won't take that long. .> thank you for joining me >> bloomberg is on the markets. our markets senior correspondent

joins me from the newsroom with the details. >> good afternoon. if you take a look at stocks, they were rising to the highs of the session right now. retails sales worse than estimated. counter balanced by some better individual corporate news. let's talk about a couple of individual stocks. one of them is applied materials. they are forecasting fiscal sect quarter sales up 10%. applied materials seeing higher mand fromers of cell phone chips. and general motors recalling over 750,000 cars. that recall linked to the ignition system which is hit by a heavy key ring could cause the engine to shut off and deactivate the air bags. we are seeing g.m. down a little more than 1% today. you'll get more bottom line

after the break. ♪

>> welcome back to this second half hour. thanks for staying with us. let's check some of the top stories we're following for you at this hour. after pummeling wide areas of the south, a winter storm dumped more than a foot of snow on arts of the mid-atlantic region. government officeses were closed and hearings were cancelled on capitol hill. a state of emergency was called in parts of the country. many of the commuter towns west

of london have been hit by the worst floods in 250 years and the establish environment agency says the risk of flooding is likely to increase in the next ew days as the rivera proaches peak levels. >> for the state of california 2013 it was driest year in history and there is no end to the drought. 80% of the water supply in the state is used for farming and that has some looking at new ways to grow food. >> we have broccoli, some tomato plants, a variety of different lettuces. >> two years ago ken armstrong started a different kind of vegetable patch in california. >> people ask me if i was doing farming before this and i told

them no. everything i tried to grow i killed because i forgot to water it. >> that is clean roots an one beautiful head of lettuce. >> this is an alkqua upon i can farm where fish and produce grow together. >> all the nutrients are available to the plants at all time. they expend more energy into growth. >> in this pond there are 800 catfish being raised on organic fish feed. they are carried to troughs here plants grow on floating pots. >> the clean water is returned to the fish tank where it's renewt fide and begins the whole process again. >> it's a combination of plant farm and fish farm. combining the two cancelles out

the negative of both. >> fish are cold blood so in an alk upon i can system it is not possible to have e collie or sam nell louisiana the fish can be harvested out and used as a protein source. >> alk upon i can farms are expenive to construct but are less expensive to run. they eliminate the need tr fertilizers or pesticides or farm equipment. it may seem count intuitive to grow in ponds of water in one of the worst drouts. alk uponics use 80%less water because it's recycled and it's not lost to the soil or evap relation. >> they could restrict our water by 80% and it wouldn't restrict us at all. >> this ancient farming method

may prove to be the modern solution to drought. >> i believe this is the evolution of farming. because of it's ability to grow faster more densely with fewer resources it will be the method doling of growing in the future. >> for more on california's drought, i'm joined from san francisco by make wade, depecktive director of the farm coalition. thanks for your time today. >> good morning. >> how bad is this drought? >> the drought today we're experiencing is one of the worst we've ever experienced in california. it isn't just something that impacts farmers. it hurts people across the country. california provides almost half of the nation's fresh fruits and vegetables and when farmers can't grow them here in california, they don't show up in market as cross the country. >> do we have any historical

perspective as far as weather patterns are concerned? why is this happening now? >> california historically has had wet periods and dry periods. we often see flooding and homes sliding down mountain snidse california. we see fires and drouts. we are used to dry conditions but this seems to be the worst we've experienced in the last 100 years or so. >> you gave us a hint of what is going on. exactly how is it impacting agriculture? >> we're estimating there is 500,000 acres of farm land that is not being planted or growing crops. that covers about 780 square miles or equal to the size of los angeles and san diego combined. >> you mentioned crops. which ones are being hit the hard snest >> right now we should see harvest going on with broccoli and iceberg lettuce, bell

peppers and in the coming months cantaloupes, corn, other mellons and processing tomatos. all of those are at risk because of the severe water supply shortage. >> all of these crops are being planted by farmers. how are they being affected? >> we're seeing a lot of farmers that have laid off workers. it impacts from the farm to the fork. we see truck drivers and farm workers and port workers out of work because we don't have water to grow food in california right now. >> the consumer is eventually going to feel the effects of this, when and by how much? >> we're thinking in the next two to four weeks. if we see an impact on pricing that's when it will show up in the market. we know crops of broccoli and iceberg lettuce aren't coming from parts of the central valley that would have been growing them and we'll see that in other crops that will never get

planted this year. if there going to be a hit on price and availability they will see it in the next two to four weeks. >> exactly what is the coalition's role in all of this? >> the farm water coalition is an education organization. we were set up to provide fact based information on farm water issues to the public. i'm here today and out every day talking about how agriculture is impacted and how it plays a role with every consume they're eats california farm product. >> i imagen the education isn't just for the general public. you are trying to educate the elected officials as well. what is being done on a legislative level to help? >> california senator fine sign the and boxer introduced legislation on tuesday that can help with some of the flexibility we need in moving water from parts of the state that still have some to areas that are in dire need. we appreciate that. we hope democrats and

republicans will work together in the coming years to solve some of the water problems california has, from storage to moving water to being able to capture it in wet years. we need to capture that water when it's here and use it when we need it. >> we see politics getting in the way of a lot of things in washington, d.c. is that also the case in california or are your elected officials heeding your call? >> we're seeing elected officials work together and we're happy about that. we're used to conflict. we're used to issues that affect water supply and water reliability and we're hopeful that we can come together and help meet some of the future needs, not yust for agriculture but for urban users and people that buy california farm products at the grocery store. >> mike wade is the director of

he california water coalition. thank you for your time. >> it's been my pleasure. >> two words baseball fans love to hear. pitchers and catchers. i thought it was mets win. but we'll talk baseball in a moment. ♪

>> under the circumstances time for spring training. major league baseball is back. opening someday march 31. michael mckey pinch-hit for me this morning, thank you three-hour commute. ron darling now an analyst with major league spoke to michael. he asked about the legacy of derek jeter who said that 2014 will be his final year. >> i think you're right. there is not many players that

people want to go see and especially this being his last year, i'm sure the ticket prices will go crazy for the last game at yankee stadium. he is everything that parents want their kids to be. he's everything that kids want to grow up to be. you almost wax nostalgic when you think about him. he's seemingly beyond reproach when it came to p.e.d. he's the clean face of the game. he did it the right way and he's a winner. that's the american way right there. >> what is it like for a former athlete when you know your body wants to stop playing and your mind wants to keep playing? >> your mind does want to play but the bad part of it is everybody gets betrayed by the calendar at some point. for derek is injuries last season i'm sure played a big part in it. rehabbing an injury at 39 to 40 years old is not a lot of fun.

everything he's ever done has always been special. >> the yankees pass t it this year. why have a flesh hold if wealthy teams can play through it and sign whom ever they want? >> what is interesting about it is the luxury tax and the teams that blow through it doesn't guarantee success. the yankees have had one of the highest pay rolls. we've seen a lot of teams not only have a substantial payroll but also have been able through their farm some have half of their players making close to the minimum or not a lot of money. i think it's the real judicious organizations doing a little bit of both, spending on free agents and making sure they get the best player available. but the young players coming out

of college and high school, developing them which makes it a cheaper product for them. >> there isn't the sam parody we see in football with so many teams involved to the end. greenbay, tiny little market can stay competitive. >> the great thing about football is if you have one of the half dozen great quarterbacks in the game can decide your future as an organization. it's a quarterback's game, it's a point game and passing game. they've made it so difficult on the defenses. that's why a team like seattle could win this year because they had such a spoir defense, such a spoir team that could bat it will passing game. it's great quarterbacks are the teams that move on. >> the mets, big market team. every decade or so have a couple of good years.

the cardinals are not competitive year after year. when is a big market team like the mets going to put together a successful run like the others? what does it take to be a team like the cardinals? >> i was thinking the last time the mets had a team that had a substantial run of years in succession where they won were the years when i played in the 190eu's. they do that with smart trades, a few free agent signings and two-pointing young players. the mets organization as a whole now is developing great young pitching and young players. that is a better avenue for them to go down sprinkling in a couple of free agents here and there like they did this year. but their pitching is young. their everyday players are good. i don't know if they are great. so it's still a couple of years away. but the cardinals are just an amazing organization. and i think part of it also, got to be a little lucky. you draft some people you know

are good players but they end up being great players. and i think that has happened. michael wock cawith st. louis came out of nowhere. >> we're both stuck in the snow up here in the new york region but i know you'll be heading off to florida soon. who do you like this year? what are you going to be watching in major league baseball in 014? >> can the red sox repeat? that is going to be an interesting story. >> the loss of a-rod, how is that going to affect that ball club. derek jeter watching him play his last 162 games during the regular season is going to be something to watch. the dodgers with their payroll and great young talent in puig and i think with jeter retiger it's like mike trout, the great young players for the los angeles angels, maybe he's the

next face of baseball. it's going to be interesting to see his development. >> that was new york met broadcaster and major league analyst ron darryling with my cleek michael mckey. would you join a race of dehydration and electric shock and dislocation? some would. hot shots is next. ♪

>> this would restore your faith in humanity. a security camera caught this scene outside a bank in china. after a couple we drew $20,000 from the a.t.m. a gust of wind blew it ouf of their hands.

passers by picked them up and returned them to the bank. e couple was able to recover $19,700. >> a baghdad valentine, the iraqi capital streets are draped .n red ready for valentines day locals are hoping for a quiet valentine day celebration. >> and speaking of hearts, here is a competition not for the faint hearted. in england thousands of men and women braved an 8,000 mile course for the winter tough guy race. it consists of running through fire. it followed by the killing fields and an escape where participants crawl under bashed wire. why? they pay at least $65,000 to join. >> that's disturbing. >> stay with us.

another check of the market movers is on the other side of the break. bottom line returns in a moment. ♪

stpwhri am told in the name of journalist i can integrity i have to say participants of that race wru get shocked and dehydrated paid $65, not $65,000. i'll see you tomorrow. time for a market update. bloomberg is on the markets now. >> that did seem like an

wfulfully high number. it's time to check in on where stocks are trading. we are seeing a gain in today's session december spilet some worse than estimated retail data being counter balanced by some corporate stories on the flip side. let's take a look at individual movers. sketchers is surging to a 52-week high. the company's c.e.o. said he's comfortable with current quarter and full year forecast. angie's list reported earnings that missed it's first quarter forecast also falling short. he company was downgraded to hold. we're also watching the homebuilders. they've been leading other cyclical stocks since last year.

they have rebounded more than any other discretionary category in 2014. jack is the home builder analyst joining me on the phone from his office in new york today. jack, we're looking at the homebuilders and are we seeing sort of a second wave recovery here because people piled in post financial crisis and we started to see a recovery. then we saw a pullback. is this the next move up pardon ward? >> i i do think it is. you had a lot of enthusiastic about a year ago and there was concerns about the rise of rates to the taper. mortgage rates have come back down and seem to be absorbing the taper fairly well. we've had builder reports in the last several weeks showing the demand trends seem to be ok, seem to be holding in through the course of the fourth quarter. if the third quarter it was low

point and they are still getting pricing power. it looks like the trends are are starting to rebound. and then remember this is also a seasonally strong time of year for building stocks. the builder stocks seem to move into the spring selling season which kicks off about mid february. >> yields have remained reasonably constrained and mortgage rates have remained reasonably constrained to now. janet yellen seems to be indcailting that is what is going to happen. do you think we won't see a sharp upward move in yields and won't be enough to spook home buyers? >> i think that's right. from mid october to the year end in december 31, we saw a move of about 50 basis points. that's come in 30 basis points. we've given up a lot of the spike we saw in the third quarter. the other thing that is

important is i don't think pricing in absolute terms has been the issue. i think it's been as musm credit availability and in addition to the builders, we also cover the regional banks and some of the housing and mortgage names, and one of the things we're definitely seeing continuing to be a loosening of credit standards. not saying we're going back to 2005 levels but we are that youing some and that's going to be a help and an off set in case rates move higher, you are broadening the buyer pool through looser credit. >> that is what the fed had been pushing for all along. >> thank you very much. we'll be on the markets again in 30 minutes. street smart is next. . .

♪ >> what a day it is outside -- looks like some of that snow will turn to rain. ,tocks all in the green today $800 billion of u.s. shares traded just this week. welcome to the most important hour of the session. i'm trish regan and this is "street