a challenge for retail. good morning, everyone. live from bloomberg world headquarters in new york. i am tom keene. joining me is adam johnson and alix steel. scarlet fu off today. the coin.never had >> i have never had bitcoin, and i never wanted it. >> time for morning briefing. stocks dropping the most in five months. humbling to the lowest level in more than three years. exports rising, the most in three years in the fourth quarter. we have economic data. 9:00 the case shiller home price index. 10:00 consumer confidence index in richmond fed manufacturing

index. the retail earnings day. after the bell, dreamworks and sam adams. beer in retail. >> we will get to that in a bit. commoditiesnd continuing. futures lighter. nymex crude, again, stable. moving onto foreign exchange. we look at the yen at the bottom. a huge deal. that is a weaker yen as the government manipulates the room ramimbi.- the gamimbi euro-yen 140 .78.

this is the dynamics of what revenue is doing. the dynamics are bringing that found the income statement to cap -- profits are doing. >> looks like a disappointing quarter for home depot. missing on earnings and revenue. that means revenue fell about two percent. overall, comparison -- comparable csales. is the full-year sales guidance also lower than estimated coming in at 4.8%. the company was looking for five percent. obviously home depot has been hit with the weather issues. spring very important to see if there is payback. the fourth quarter does not look great coming in at the low end of estimates. >> rbc capital markets saying whether had a huge impact. >> or, foreshadowing something more to come? >> the vast amount that i use

home depot -- you painted. >> i painted instead of psychological therapy. >> i will say there is a home depot in the basement of the building. i love going in there. i know they missed on this particularrter -- quarter that earnings have been growing very consistently. show tough quarterback consistent growth. >> use of cash as a theme. we scour the papers this morning and the web. a busy front page this morning. --i will start with whatever with all over the front pages, the big corn exchange has gone off-line yet again. based in tokyo. the bitcoin falling.

down from $1151 in early december. bring it into look at bitcoin. here is where matt miller bought their. i think you bought twice. matt miller, i have been busting his chops for months. i learned a lot. 500.is the rollover under >> there is a difference between the intellectual knowledge that is a benefit from discussing something like bitcoin and legitimacy. china says you cannot use it, russia says you cannot use it. >> you know this is important

firms,jor wall street john norman and jpmorgan putting out a published research report on the letterhead. .hat gives it a veracity >> we have to point out the financial times saying today that there was a document let -- document circulated that actually lost 744,000 bitcoins. .ix percent >> coming from the financial times. that was the twitter question of the day, are you still a believer? are you a bitcoin believer? >> justin bieber. number two item on the agenda today, j.p. morgan chase preparing to cut 2000 or more jobs according to the financial times. they made the announcements today. they would be in the mortgage business where demand has

plunged. jpmorgan cutting 13000 and 15,000 positions. they agreed to a record $13 billion settlement. regulators to evolve allegation -- resolve allegations. interest rates have gone up. you saw the same story at wells fargo. as rates go up, people are not refinancing. interdependencies of what is going on. i look at rbs with 30,000. really beginning to add up. working all. >> these archives making loans. is thethird item following, samsung unveiling the newest smartphone. s5 has a fingerprint model and a larger screen. attempting to keep high-end users from by hank smartphones.

it is dust and water resistant. >> water reason to -- resistant. droppedlways -- almost my phone into places i do not want to share many times. >> this is critical. quotes in theil shower? >> no, but i can now. look at the commodity quotes from the shower. thatould point out caroline horn -- caroline hyde at of london will speak with the blackberry ceo later. we are going through the release. it does look like sales came in 6.83 billion. in six poin

the real number you need to know is at the end of the fourth quarter, almost 47 million. t-mobile really having the price war. >> it has not been the same since catherine zeta jones left. we wanted to bring you someone smart on the market. strategist.quity he has written a very nuanced note within the enthusiasm of dallas 16,207. ? >> i amtowable stowable, but i think we will struggle through volatility. sentiments become euphoric again. >> i am dazzled by how unloved the market is. inflation-adjusted

dow jones industrial average to show how far we have come, going back 10 and 20 years. do you look at that and say it is a peak, or finally back here ready to rake out to a new high? >> two and a quarter years ago where wea report change the view to more of a trading environment. we still think we have a 3-5 years ahead of that. in 2013. driven by the energy revolution. driven i'm mobility. >> here is my concern. last year most of the strategist did not think we would be up 30%. this year, every single

strategists is above the current market. wonder what happens when everyone is lined up on the same side. as a result, do you worry about that consensus? >> even though people are up, they are not up aggressively. i want to get this and quickly. michael purvis talks about flows of money. nothing like flows of money and that makes stock prices go up. >> not necessarily. we had a market that trip all off the bottom. very little money coming in. coming for mergers and acquisitions. all whole lot of cash. will dive into this in the

hour. >> we certainly will. one of wall street's best secrets has been revealed. talking about the identity of the person behind the twitter account gs elevator. giving comments from the goldman sachs elevator. they are neither from goldman sachs nor from the elevator. do you remember some of these lines? he basically made it up the skype. you ready for this? >> some chick asked me what i would do with ted million dollars. i told her, i wonder where the rest of my money went. honest, there is no way your guess is as good as mine. absolutely crazy.

>> we all thought it was true. i am gullible. twitter.oup elevator twitter.ot on i thought it was some guy from the nsa first and only. >> the new york times determined this gentleman is from texas. anded to work for citi move back down to texas and was his way of having on. and a book contract. follow your passion. sometimes it actually pays. >> home depot just that with earnings. sales forecast. very heavy retail week for earnings. television, streaming on your tablet, phone, and bloomberg.com.

♪

>> good morning, everyone. coming up, this is very cool. victor cruz. i do not follow football, but one of my favorite players. wide receiver, the aircrews. >> the same victor cruz who does the salsa dance every time he scores. i took lessons for years. you learn something every day. >> we are going to go with home depot. earnings as well as revenue

estimates. the real number is net income down one percent. the first time in 15 quarters that there was a decline in net income for home depot. this is the week for retail. we find out just how about the holiday shopping season was. macy's coming up 8:00. a retail consulting firm, we love having you as a voice on retail. what are you expect in gecko >> a very tough season. the consumers in a major slow down. when you see walmart at 11% of u.s. sales, retail is lousy. >> continue. you nailed the season. howard came out and said this is not happening. pre-k's you said discounting would be the theme of the

quarter. you were right. why did you predict it? >> medium family income of 57,000. alfred e one. 77% of new jobs, you do not have to be a rocket scientist to understand that 80% of america is in recession, all you have to do is look at the polls, wrong way or right weight. -- right way. >> coaches going to be lousy also. as far as -- look at the department store business. sears in the. pennies in the. coles in the. need i go further? amazon not?

>> they are sucking up all of the business. here.ave to make news jcpenney rolled over again yesterday under six dollars. can they survive? >> no. from 19th or billion to 30 billion. lex away from your work, looking , looking more at the financial results, what would you advise a sulfide about your world right now? i was on the show. i said do so it's a long time ago. would they have a ceo who went completely nuts and completely destroyed the company.

everything he did was insane. ovitiwitz, thankd you. >> we will be joined on the future retail security. lots to talk about. bloomberg "surveillance." ♪

>> good morning, everyone. with me, adam johnson. a correction of the home depot earnings. >> earnings came in at $.73 per

share, not $.67. in terms of earnings, it was a beat at 73 cents. i should point out that revenue still came in light and income still did fall i one percent. forth, sometimes mistakes happen. but her use of cash and share buyback. getting to the morning must reads. alix steel has that. 40 year track record of investing esalen's -- excellence . what do you have of? i am tired of cleaning up your -- beep. basically a meeting where they went after they -- each other. -- it out into the press. >> you and i have both worked on wall street.

for 40 years there has been a rally in bonds. all of a sudden, the bond rally stops withdrawals. trying to figure out the future. makes people very testy. two different mandates of pimco. desks are right next to each other. they have two very different mandates. the tension in the under performance in the bond market managing money and mohammed managing the company and doing a much larger economic perspective as well. i am not willing to say who is behind doing more in equities , but as adam correctly said, sometimes you get off your game and natural tensions occur. he has never been wrong.

would like to be on whatever drug regimen you are on to believe that. >> called espresso and lots of it. take us inside the city. when markets turn, and you are making a call to the upside, what kind of pressure do you get? >> you get some. we're not trying to trade on a daily basis, which does happen if you are sitting on a trading desk. i am not talking 24 months. but 6-12 month time frames are what portfolio managers care about. they do care about longer-term. >> though gross gave an acclaimed speech. very emotional about underperforming. then you come back.

i just want to point out the big number right here. that is bitcoin. adam johnson trashed it. it is a lot bigger than me. china trashed it. russia trashed it. finland said it is a commodity, not a currency. likes not the u.s. -- >> not the u.s. trim theel looking to military budget. we will talk about that coming up next. ♪

>> good morning, everyone. bloomberg "surveillance." oliviam keene with

sterns and adam johnson. we're watching bitcoin. taking a long after a tough night. we will catch you up on this. and commodities. a little bit of a bitcoin feel to it. euro-dollar 1.3748. thisrveillance data check morning. again her and the loser. rex a record day for the s&p. ebay a winner. of paypal wanting to nominate two boards, to individuals to the board of directors. the losing side, sears and jcpenney. >> it is in the. -- crapper. up five dollars.

when a stock it's below seven dollars, people are forced to make decisions. >> a lot of people are not able to own stocks below five dollars. do we have? >> i will tell you what, announced chuck hagel plans to shrink the army to pre-world war ii levels. the defense budget for fiscal year 2015 just under sixbillion compared with hundred 82 billion for 2014. how will the proposed military cuts affect the u.s. economy? incredible. the senior defense analyst for bloomberg government, which provides stated news, analytics about the business impact of government actions and joins us from washington. on anyou for joining us early tuesday morning. this is earth shattering, the fact that we can have these

cuts. talk us what this means for the defense sector as a whole. is quite asthink it earth shattering as you may make it out. the numbers were agreed to, modified a little bit, so it is not quite as much of a surprise. but if -- defense budget is coming down. the industry is having to adapt to this. so far the big primes, they the revenue. it is an adjustment, but not something people did not see coming. >> if you look at how the cuts percolate through, active-duty military personnel will be traced by 13%. reserve force will decrease by five percent. what is curious is the special forces, the group that captured mr. bin laden up six percent.

this about the u.s. becoming more targeted military? us about bruce for -- proved force? >> i think that is right. back in 2012 they said we will not size the army anymore for the long-term stability operations. we just do not want to do these anymore. the army and marine corps can come down in size, but at the same time i'm a the targeted operations will be increasingly used to deal with the kinds of enemies we think we will have to fight. the large land army is generally going to be a thing of the past. whicvich.lesko i'm in shock for someone like lockheed martin. i do not hear as much about defense contractors or is people that make ensco fast anymore.

>> i saw the note that are area -- aerospace analyst put out last night. he called the cuts more rains, less bronze. they say about the politics? can we get this done? >> this is pretty much agreed upon. do you agree with that? >> yes. i think both sides, at least from 2015, they came to a number and can do it. you used to have, particularly on the republican side, a firewall protecting the pentagon and intelligence community. that has collapsed. the tea party has figured out the pentagon as part of big government that they do not like so much anymore. >> i want to get your take from neil ferguson writing over the weekend. mr. obama supporters like

nothing better than to portray him as the peacemaker to the warmonger. people havemore died violent deaths in the middle east during his presidency. is this the legacy? depends on how you look at it. yes, people are dying of violent deaths in the middle east. the question, are americans involved in all of that? there is turmoil in the region. that is killing people. some of it is because bitcoin has been overthrown. certainly a more volatile region than when the president took office in some respect. less americans getting shot at at the same time. >> when was the last time we saw a defense secretary have to effectively remake and redefine the role of the u.s. military to the extent that the secretary is having to do right now? >> i

think you have to go back to the last drawdown, which started in the late 1980's and through the end of the first bush administration. the cold war ended. away.ent the u.s. military had to figure .ut what it is going to do now >> how did the veterans administration respond to that? many lobbyist group about people. not digital this or that, just manpower, the billion -- divisions. how will they respond to what we have heard in the last 48 hours? >> you are re: hearing about benefits cuts. veterans groups will scream about that. they will fight that and push back. the reality is personnel costs are getting very high. if you are bringing the topline down and do not curb the personnel cost somehow, you start to squeeze out equipment and training.

rex a lot more from this. look for it from bloomberg government. synthesis in washington. i want to get your opinion on bitcoin. here is a tweaked -- tweet out right now. keene, no one cares about bitcoin. michael mckee, no one cares about bitcoin. it is a great lesson for mp all. i am honored to get your opinion. myit is like reality tv and perspective. i do not write about bitcoin, do not have a particular view on it. something that is thoroughly unregulated by any central bank makes me nervous. a slight marks of theory without theoretical foundation. there is no foundation underneath really good ideas. where are you on this?

>> i am not sure what you just said in plain english, but bottom line, i think there is a farce. no central bearing house. we just found out this morning has six percent of this effectively gone missing. that is part of the problem. >> that is the twitter question of the day. are you still a bitcoin believer? you can tweet us @bs urveillance. >> calmed down. take your medicine. >> coming up, we will hear from the google chairman, eric schmidt, on the fight with apple over operating systems next. streaming live on your tablet, phone. we are fired up. in way have another espresso, please? ♪

>> good morning, everyone. i would love to say it is a beautiful spring morning for the to date. the two-day period this weekend. adam johnson with us going

over u.s.-canadian olympic hockey. enjoying a canadian vick to read. delay a vote on a new government until thursday. in an effort by officials to move quickly to fill the government vacuum so they can seek economic aid to hold off default. 35 billion to stabilize the country. audience for the closing ceremony of the olympics. 15 million people tuned in. that is down 29% from the audience of the closing ceremony in vancouver. the nightly audience was down 12% on average. sits down with john boehner for a closed-door meeting at the white house. higher minimum wage and overhaul to immigration are among the have.sions they will those are your top headlines.

>> you wonder if they have a beer? >> they have that photo op beer. >> probably very stage. talking last night discussing an apple and google rivalry. >> the fight between apple and google over operating systems is producing enormous reductions in the price of phones. there, theere not apple phones would be more expensive. consumer value is enhanced. i still think iphones are pretty expensive. the low end at phones. that did not cut it in china. foring god -- thank god the at&t subsidy. it cost me $200.

>> i cannot even afford to get a new ipad because it is too expensive and cannot up read my software because i do not have enough storage. lex i think it is incredible bargain for the amount i used this. >> there is more power on your smart phone then when they went to the moon. that weer soundbite want to play for you. >> the question of valuation, which everyone is obsessed with, is a question of what do they do with its? if i handed you a 400 million unit network on the how much money did you make from it? depending how well they execute it, they could make a lot of money or not. >> you can see the full interview with eric schmidt on charlie rose tonight at 8:00 and 10:00 eastern. i will look over to that. this calls into question the bubble valuation. a bubble valuation?

that is a really great idea here. we are not a bubble now many would say. >> there are people fearful there are bubbles forming in social media, as opposed to the broad market we had back in the late 1990's. there is some of that. there have been different ways to calculate that. it is really tough. do people buy in is the best way to put it. >> almost like a behavioral thing. everyone on one side. we are not seeing that. the discussion is are they valid? keep like they will just going and get bigger and bigger. people are still questioning it. this particular deal, there are a lot of questions. >> we have to take a quick break . when we come back, we will be with the strategist at citigroup

. what drives stocks higher? how sustainable is it? that is the discussion. this is bloomberg "surveillance." we are streaming live at bloomberg.com. we are everywhere you are. we will be right back. ♪

>> good morning, everyone. i am tom keene with adam johnson and olivia sterns -- alix steel. >> these are from the files of bloomberg west. at&t cutting rates. they are introducing cheaper rates for international calls and text messaging. they recently introduced free international text messaging. ohy cut prices in canada come -- canada, mexico, and the caribbean. service messaging controlled by a south korean company according to all familiar with the matter. 300 40 million users and value close to $15 billion. ibm wedge to keep more than 3000 jobs in its home state of new york through the next two years. for theement calls company to restore hundreds of position it cut just last year.

you are in or maybe not in them. once again, record highs. supported by people buy in stocks. jimmy fallon is involved somewhere in the calculus. citigroup. consistently optimistic. he suggests caution. .here is no whom are -- humor looking at weaker retail sales -. >> we think the economy and the consumer economy is relatively ok. well about consumer sentiment dashers. we have seen the consumer come out. what has really been a problem is expect haitians around earnings trends. we started the year at 13%. now about nine percent.

so it is not the consumer is not there, it's just relations are too high and aggressive. underlying it all, more hiring is coming. a lot of good news. >> you have a lot of proprietary indices. out 12 months? >> for the broad market, more firm optimism. media and consumer services, still underperforming. >> are you seeking value were climbing on board growth? >> generally speaking, it has been pretty good. the markets should be fine by year but we are still seeing the volatility. >> if you are seeing this disconnect, and what other sect or do they mac up -- matchup? >> outside of consumers.

hospital services area was spend 10% more on the i.t. sec are based on services -- surveys done of hospitals. we see i.t. as being the strong area. we like reits a fair amount am vucevic a much more interesting. diversified financials are a play on the general market going higher, and utilities have been pretty interesting. >> here is what i am wrestling with. so you see upside for the broad markets at seven percent roughly. the economy is based on consumer spending. withre not comfortable where consumer stocks are positioned and what is happening? if more than half of subject, how can you bullish -- be bullish for the broad market? 56% is not the s&p 500.

there is a difference between the economy -- we are looking at seven percent earnings growth, which would pull up the markets. 500 in other words, the s&p is not as weighted to technology as the broader market? >> that is right. alix steel mentioning home depot with the share buyback. how did you use the cache filter into your broader market optimism? >> people said capital spending has suffered because people are spending on chair buybacks. it is falls. >> so american companies are investing, creating jobs as they dividends and share buyback? >> part of that is they have a lot of cash and the funding costs were really cheap to do it all. as funding costs start to move up, that will shift a little bit.

investors said companies would spend more on and low 20% on buybacks. >> do you filter in janet yellen giving you a low discount rate? is she pushing on the yield, which pushes up the equity world ? >> you think about the 10-year treasury yield but also risk rhenium's. premiums.ree be >> what blows up your thesis? >> lots of things. clearly there is concern about china and the emerging markets generally. europe is still an area i struggle with. seems like has not fixed much in europe. yes, bond yields are lower and will do whatevert takes, but the real fixes are the structure. if europe continues to

struggle along, china down, can the u.s. continue to rise without everyone else? >> 70% of the s&p 500 is north america. -- canadiani am can and hurts me to say it. europe, even though it is 10-12% range, half of it is nondiscretionary things. >> when you look at the view ers, they did get in the equity market. they have participated. how do they maintain confidence out when they presume what is tightening, profit ease off? how do you stay in the game? >> when you look at the consumer finance and they do this every few years. the top 20% of income earners

own 90% of the stock market and they continue to be holders of stock through good times and bad . they have not been shaken out. are committed. >> when you look at the on trawl canadian lineup when they come back from the olympics, can you frame doubt 20,000? >> you played well. >> we do see that in the future. we think the next -- >> you can extrapolate out 20,000? have beeny to future things like smart phones, the energy revolution in the u.s., manufacturing cost. those are not a one-year shot. >> looking at the forex report. rubel a little bit weaker.

renminbi back up. >> coming up, google ideas founder and director jerry: will discuss the future of retail security. ♪

>> markets climb.

testing economic growth. bitcoin -- they have a great fall. andnasdaq shuts down regrouped. for the entire hour, we cover your safety in the digital world. good morning, everyone. it is tuesday, they brewery 25th. i'm tom keene. joining me, adam johnson and alix steel. our guest host for the entire , the author ofen your beach read the summer. in china. action stocks dropping the most in five months. at the same time, tumbling at its lowest level in more than three years. german exports rising the most in three years. that was in the fourth quarter. s&p in the u.s., 9:00 the

index, we are watching that closely for the housing market. , the manufacturing index. the retail bonanza today. it kicks off before the bell. macy's and dreamworks. the bitcoin exchange has gone off-line yet again. earlier this month, they said they had identified a bug that a loss ofe with bitcoins more than once. from 11.51. more job cuts are coming at jpmorgan. the firm plans to cut 2000 jobs. plunged.nd has that's what happens when rates go up. it they already plans to cut as many as 15,000 positions.

samsung unveiling its latest smartphone at the conference in barcelona. it is a fingerprint reader and a larger screen. dust and water resistant. it comes with a heart rate monitor. that is today's company news. chaselooks to be a little for samsung. hoopla we sawlog w with the galaxy for. let's go to our own celebrity. she's in barcelona. she's at the mobile extravaganza in barcelona. how big a splash did samsung make? a bit muted to be honest. it showed that they were not going full guns blazing. they were not madison square garden showing off like they did

for the s-4. .t was quite cool you can get some great technology in terms of saving battery. it looks pretty cool as well. they're playing catch-up with a fingerprint reader. anyoes blackberry have oxygen in barcelona? is there any kind of rec increase? stock pricesen rise since john chen took over. the fact that they're going to be having two new phones coming thefrom blackberry with deal signed in december, look how quickly we are getting these new phones. interestingly, all about emerging markets for john chen. he is saying, we're are going to oll out in indonesia.

restructuring? >> i have my hands full with a number of things to do. i have to get the server business growing again. at figured bbm scaling. is, ithe connected card need to win more designs and put them vertical. they have a bit of wind in their sails at the moment. it just think what that is going to do. you have the messages there. that is showing off some of the processes there. there is a lot to do with privacy at the moment. blackberry has really tended to be the front runner in privacy and security for those that use it. we all have to see the bang for

the buck in terms of products. >> thanks so much. at the mobile extravaganza. we will be that all through the day. our theme here on bloomberg surveillance this morning, securing a digital world. contain acrambles to software glitch while retail is in mortal fear of being next as a target. transparency, unheard of even three years ago. jared cohen is the cofounder of google ideas. in the hour. once again, we see what you think about all day happening. i was thunder struck by the twitter feed. the resilience of the twitter feed out of independence square in kiev. we see the geopolitics changed by digital. >> of course. ukraine offers a compelling

example. we have more insight into the play-by-play in terms of what is happening on the ground. more than any other time in history. there is a challenge that comes as well. we are more engaged and what is happening right now. we can afford to lose sight of .hese historical roots what's interesting about this dynamic is marketing matters. >> digital marketing. how do you define that? >> the ability to shape the public narrative. there is a divide between a society that leans towards the east and a society that leans towards the west. >> deeper divides between democrats and republicans. do you see changed behavior over the digital world? >> they are certainly more transparent. >> republicans are trying to catch up with the democrats. >> i think everybody is trying to catch up with connective constituents. going back to the ukraine

example, part of what is accelerated this revolution in the ukraine, if you compare to the russian intervention in georgia, many more people killed. much less attention. what more connectivity is done as it shows a huge spotlight on top of what is happening. what's also fascinating is the president started to bleed supporters. there is a challenge in the sense that it goes back to the marketing point that he or she who can best capture their cause in 140 characters has a better chance of getting that general public around that. >> the images have been so powerful. almost biggerlly than the words themselves echo >? they are powerful in terms of calling action.

-- calling for action. at the end of the day, technology can create the demand and add transparency. but it still requires the will of governments and requires leaders and in on the ground movement to affect change. >> i remember when google was this nations search engine. point, what people like you are thinking about and doing are the lengths. is the attachment to those different digital moments that provide the dialogue over a weekend or the week. >> it's more than the dialogue. --s more than dialogue with more than dialogue with people on the ground. you can be sitting in san francisco or in new york and you can build cyber security tools for those on the ground. there is a syrian dissident who sought asylum in the united states who remotely from washington built an anti-scud

missile alert system that people in syria were using to get a five minute warning as to when missiles were fired. >> doesn't really create viable revolutionary leaders? you're not building a large revolutionary based like you were 30 years ago. >> it is creating leaders. it i would say, it's the opposite. one of the things we argue is that in the future, revolutions will be easier to start. they will be harder to finish. the accelerated pace of movement making and leadership development. >> the new digital age. out in paperback. the hour.heme for we will particularly address this apple issue, which is directly affecting me as well. we will be securing a digital world through the hour. let's look at stocks, bonds, currencies commodities. of thecall it a churn

market. the ukraine is not front and center. a lot going on. i will point out i'm a the chinese currency is weaker as a tough equity market in china challenges the economy. >> we will stick to our theme this hour of securing a digital world. apple is the latest company to reveal a weak spot in their programming armor. retail companies need to better prepare themselves. that's coming up. are streaming on your tablet come your phone and bloomberg.com. ♪

>> good morning, everyone. , he has writtench the book the new digital age. how to connect 7 billion people. think of the world. often mobile phone into a combined an individual ecosystem is a great challenge. you think about a very poor country that will link up with everybody else if we just get this right. >> you just made the key point.

you think about the 5 billion people that are coming online in the next decade. about the environment where they are connecting. these people are in places where that are impoverished. there are huge challenges with the parts of the world we are trying to connect. these will be the vast majority of people were on the internet. we have to start solving some of these problems today or we will -- >> give me an example. >> repressed censorship. live in environments that are least connected. they go to the entire population being online. what will their access look like? >> we are talking about linkedin in china. your colleague had some real challenges dealing with china. deal with china? >> every company will make their own decision. there's obviously challenges in

doing business in china. there are also challenges with doing business around the world. we are quite aware of intellectual property -- there is no shortage of cyber activity. there is a huge question in terms of who will build the world's technological infrastructure. most of which is still not built. will it lend itself more toward an autocratic or democratic digital model? ?> how is apple doing >> apple is a great company. there is for companies that are driving a lot of this right now. google, facebook, amazon and apple. one of the things you appreciate in the tech sector is you want your competitors to do well. it forces innovation drives prices down. >> when you look very quickly -- let's come back. we have a lot to talk about in the hour. jared cohen with us as we look at securing your digital future.

that is our theme for the hour. we look at bitcoin -- the bubble bursts. prices down. talk about securing your future. that did not happen. it is our twitter question of the day. are you still a bitcoin believer? we are securing your digital future. good morning. ♪

>> good morning, everyone. i'm tom keene. with me, adam johnson and alix steel. just in time for bitcoin collapse. jared cohen is with us. the founder and director of google ideas. >> we will start in ukraine, where lawmakers delayed a vote on a new government until thursday. the boat is an effort by officials to move quickly to fill the government vacuum.

lawmakers say they need 35 billion in financial assistance to stabilize the country. german exports surged the most in three years last quarter. the jump helped the gdp expand 14%. -- expand .4%. turkey, the prime minister is resigning over a wiretapping scandal. the controversy was sparked by recording of what was believed to be the prime minister and his son discussing hidden funds. fake.s the recording was it is the latest episode in a growing corruption scandal that has rocked the country since last year. >> turkey is not there with the other group of thailand and venezuela. all we were talking about a year ago. >> the protests never turned violent. that was the distinction in

turkey. they were able to hold it together. or not, doesu care in the news this morning. bitcoin is dead. off-line.n site went that's digital speak for get out of dodge. they're crashing come under $500 as we speak. we're talking about securing a digital world. this hour, today, in your future. he is the chief executive officer of lama su. the author of the new digital age. retail is warming up to bitcoin even as the currency faces a myriad of challenges. we all have a great respect for the efficiency of bitcoin, but there needs to be a foundation. it has the foundation been shattered with the collapse? >> i don't think so. there was no bitcoin crash to go to because they were overpriced.

you already have a price that may be going down a lot. you do have other exchanges. that is as far as the prices concern. as far as the technology and bitcoin, it is unaffected. the users of bitcoin will see some of their prices going down and will continue going down until everything is cleared up. is not ahat mean it currency equivalent and it will be a struggle for retail to use the currency worldwide? >> the fluctuation is something that retailers are dealing with. you have different systems and services such as bit pay that help retailers deal with that. >> you talk about data permanence. data can be the price of the bitcoin. do you need permanence to make it successful? >> the question i have that i would love to get your take on is, talk to us about the digital wallet. this is the part of bitcoin that people often neglect to talk about.

i remember the canadians tried creating their own currency with the canadian dollar. how serious a problem as the digital wallet? >> it is something that is not simple for bitcoin. people make the mistake of confusing wallets for bank accounts. or people who lost money, they realize it was a mistake. it was not something they should've trusted. what they should do is have paper wallets and off-line wallets. they are super secure and impossible to hack. there are security measures that you can take with bitcoin to make sure they are not hack. it is done credibly easy or intuitive. i believe over the years there will be services and software platforms that will make it easier. from the financial times, jessica einhorn is writing, a currency without a central bank must float in dangerous waters.

eventually, the so-called tokens that pass from buyer to seller will become extinct. business onrun your bitcoin. what happens if they become extinct? in have russia and countries europe and china all saying, no thanks. y aredon't know if ther saying no thanks. >> they are saying it is illegal. in china and russia, is illegal. you can transact in bitcoin. apple has taken it off its iphone. you now have a world that is closing in on bitcoin. how can you possibly continue to put resources into promoting bitcoin when the world is trying desperately to shut it down? >> i don't think it is trying to shut down bitcoin. i don't think apple is closing their bitcoin as the world is closing in. you have simple solutions that

are in the not very far future. as far as russia, taiwan, china, they say certain things at certain points. >> i want to get the optimistic context. what do expect retail to do to respond to what we have seen? >> retail will continue as usual. bitcoin is a solid technology. there are certain services such growth inare seeing a the free market where you can have big business fail and have businesses that people used to think were the cornerstone that were really just another business. people lost a lot of money. there will be replacements. worldwide.to do that the different opinions of any given debate, whether it is my bowtie not lined up or something

controversial intangible. >> our twitter question of the day, are you still a bitcoin believer? please tweet us. we want to hear from you. we will share what you say. ♪

>> good morning. worldwide for you this morning. for all of you in continental europe, independent square, without the smoke, this a different view of a different nation. the currency of the ukraine

actually is a bit weaker this morning as other market indicators for the ukraine do decidedly better. alix steel has our company news this morning. >> we start with home depot. earnings coming out this morning -- the retailer's fourth quarter results topping estimates. revenue did come in a bit light versus estimates. all told, revenue rose more than double its projection over the last quarter net income sales. a report from the subcommittee on investigations as the bank helps clients hide cash transfers and it even offered accounts that were declared to the irs. the ceo is scheduled for tomorrow in washington. are coming from j.p. morgan. the firm plans to cut 2000 jobs according to the financial times.

the positions will be in the mortgage business where demand has plunged. jpmorgan already plans to cut as many as 15,000 divisions in the mortgage unit. that is today's company news. you see that throughout all the banks as acceleration rates continue to rise. >> wells fargo, bank of america all announced layoffs in october. the headline here. i want to take a look at bitcoin as well. it was at $500 when we started. right now, a bit lighter. you are definitely searching for a bid off of the news. raking under $500. zachary is with us. the chief executive officer at lamassu. ukrainiang with currency -- pronunciations are scarce this morning. i want to give you a chance to support bitcoin. there are many doubters out

there. why is this not a ponzi scheme? >> at least one person has to know about it. it is nobody has control over the price, how can it be a ponzi scheme? >> can you develop a business ofnsaction or ecosystem here demand if you don't know where the price discovery is? >> the price is definitely a matter of speculation. nobody knows what it should be. happens and itnt fluctuates. it is relatively a slow market. it is still changing the bitcoin price. from theparate technology itself. there have been no flaws in the bitcoin technology itself. bitcoinsrcent of the -- >> we assume that is a crime. under -- >> jared cohen joining us from

google ideas. how do you think the industry is right now? >> i think it is largely an unknown. when we talk about crypto currency, we tend to associate t isith bitcoin but ii just one of a number out there. >> why do we need a cryptocurrency? >> they want to be in an environment where they can move money that is unregulated. some are just interested because of the technology. >> when you open an app or your wallet, you have to put a social security number with it. haven't we effectively removed one of the main reasons why people found bitcoin attractive in the first place? it was truly anonymous getting in. >> it was never truly anonymous. .t is completely public

what bitcoin does give you a certain thing such as payment methods and moving money from one country to another immediately. there is better technology. two small points of bitcoin are already better technology than credit cards and wire transfers or western union. help people understand why bitcoin is necessarily a better technology or more efficient than a western union or visa or your bank. >> when you deal with a credit card, you are essentially giving everybody your private info. here is access to my money on my credit card account. please only take a certain amount. with bitcoin, you are giving some to cash. you are not giving them the whole bank account. your just giving them a certain amount. >> thank you so much for coming. i have 45 other questions. we have to get you back. thank you so much. the debate over bitcoin. >> a healthy debate indeed.

let's show you where markets are trading right now. i'm calling this a global pause day. s&p futures down .25%. holding at about 273. youthe euro up slightly. >> this is bloomberg surveillance out a bloomberg television and bloomberg radio. adam johnson with me. alix steel with me. jared cohen with us this morning. thoughtful book. really terrific perspective to get the brain going. new digital analytics. >> we have been talking about it for the last hour -- securing a digital world. is my iphone safe? i downloaded the new os onto my iphone but can't on my at pad because there's not enough storage. i am terrified and making any financial transactions. am i right to be the scared?

how bad was the so-called man in the middle attack? robert beauchamp is the ceo of dmc software. he sells what the company uses to run the business data centers. how frightened should i be of this apple breach? >> i don't know that any of us know how it is been used. i trust that apple is a good company and they will be able to close it. what is fascinating about this is you are talking about things in a consumer format that we have been talking about for a long time in data centers. the problems of data centers is making its way to all of us. that is really this interesting convergence of new it back and switch back and they be working on new technology using the software to combine the two? >> i want be careful talking about what they do and do not do. we love apple.

our software is used by the world's largest data centers and the largest providers. earlier --ioned >> we were talking earlier and you mentioned storage management. what we're talking about is entireg an digital infrastructure and delivery system. that is a whole management discussion. it has been boring stuff. now it is coming front and center. this is out of the washington post. this is for all of you using apple products, which is a huge body of the viewers and listeners. this is from haley at the post. the bug affects ios devices and mac computers. apple has yet to release a patch for its laptops and desktops.

this issueware of and already have a software fix that will be released very soon." --jareding for that cohen with us. there is a larger set of security challenges that are industrywide that touch on something alex mentioned, which is the unknown. we are becoming so reliant on these technologies and these devices every single day. security and privacy -- these two things are inherently linked. it is all moving so fast. >> q changer passcodes every hour? >> i use chrome because it is a great browser. bit could switch contexts a , i was just on the syrian border about three weeks ago. i met with a number of friends of mine from the country and i tried to explain to them tape browsers and backdrop

identification -- there is a breakdown that has nothing to do with language but has to do with context. if we can keep people in those environment secure, we have a huge problem. >> we only have about a minute left. the problems at target and apple. problems everywhere. who out there is doing it right? >> i think what we're saying is that the conversation has moved it, geeky these governmentbecoming a conversation. os a few weeks ago and it was a subject that only we talked about. now every industry ceos talking about it. all the government agencies are talking about it. e ofill see in emergenc governmental cooperation and communication. securing hygiene and how we will on that.eople on the wor

be sticking with our theme, securing a digital world. how the robots land but. we will be right back. ♪

>> good morning, everyone.

i'm depressed. george harrison would've been 71 years old today. what is that about? he was fantastic. it is bloomberg surveillance. i'm tom keene. with me, adam johnson and alix steel. betty liu is joining us. he was one of my heroes. >> you need a yellow summary and all -- yellow submarine tall. doll. he will be on to talk about jobs and talking about the budgets that were released. >> and what the defense department debates as well. >> he has this interesting bill with a tea party republican -- bipartisan -- speaking about people who want to move jobs and giving them stipends to allow

them to move jobs to another location to get the jobs they need in order to help long-term. >> coming up later this morning. busy morning. alec still gets us started. -- alix steel gets us started. >> jpmorgan cutting 2000 jobs in its mortgage banking -- leading overall reduction of $2 billion. they're commenting on the trading rules, specifically in the derivatives taking effect. talking but trading revenue, the $1 billion impacted due to these rules. a mystery explained. speaking of banks, one of wall street's best secrets finally revealed thanks to the new york times. get in the of the person behind the twitter account, gs

elevator. it is big news. it is a guy named john in texas. he had worked for citigroup. >> i followed gs elevator. >> i was so gullible. >> i'm with you. , "i neverld resist give money to homeless people." that is stinging and nasty. me what ik asked would do with $10 million. i told her, i would wonder where the rest of my money went." >> a little bit of capitalistic levity. full disclosure, i followed him as well. "let's be honest, there's no way your guess is as good as mine." the humorous part ofmorou

digital. >> securing a digital world. will robots and runs replace human soldiers echo security and conflict coming up next. ♪

>> good morning, everyone. futures at -21. tomorrow on bloomberg surveillance, it is always a good time to talk to richard claret about what is going on in ukraine and russia and europe. with his true expertise on germany and their geopolitics. he is at pimco. i'm tom keene. scarlet fu is off today. our guest host, jared cohen, director of google ideas. the author of the new digital age. out in paperback. your beach read the summer. at&t cutting rates under

pressure from t-mobile. at&t is introducing cheaper rates for national calls and text messaging after t-mobile introduced free international text messaging as well. at&t also cutting the price of calls to mobile phones in mexico, canada and the caribbean's. softbank wants to expand into mobile messaging. a mobile messaging service control by south korean company -- a south korean company. .e have 143 million users ibm has pledged to keep more than 3000 jobs in its home state of new york for the next two years. the agreement with the state calls for the company to restore hundreds of positions they cut just last year. -- that's company news is today's company news. optimistic news. >> you drive up 684 and see those pyramid shapes, the headquarters up there.

were weedsthere growing in the parking lot. though there is some fragility, they're using cash and dividend payouts to share buybacks. grow that topline. >> the team and strategic noted that the cash as a percentage of total assets at 4.8% almost the highest it has ever been, ever. abouthave been talking our theme of the morning, securing a digital world. from retailer and consumer --vacy you banking and curren y >> the style of war is changing. think drones. serious stuff here. military drones. mine detecting. bulletproof robots.

no, stop movies. it's for real. thes becoming automated and battlefield is now virtual. --e are thinking about this the new digital age. i'm waiting for the new transformers movie. you are suggesting that transformers is here right now. >> i think you speak for all of us on this. more ahead of this game than we think they are. >> what was once dreaming and science fiction is getting closer and closer to reality. or at least people believe it's reality. some of the things that are particularly alarming are still at a minimum 20-30 years out on the horizon. drones.ioned uav's and one of the things we need to be ingly concerned about is drones from hezbollah and our tells in mexico.

cartels in mexico. you buy from a toy store and attach it to explosive. >> how do politicians respond? >> everybody is aware of the problem and the challenge. the issue you have in government is, government is working very hard to back sell its political knowledge. this generation will self correct in the future. there's a lot of catching up to do. >> you look at telecom, like the comcast and netflix deal where you are effectively buying assets to bandwidth. the sec does not know how to deal with this. how do you take this to drones, where it is something about human lives? >> there will have to be reactive regulation around some of the nefarious types of -- it

is difficult to implement. the aspiration to control this and the ability to implement it are two very different things. we want to talk about microsoft and did your take on it. >> the problem microsoft has is that there model was organized around the monopoly office position which are broadly used in the platforms that they don't sell. for example, this weekend, mobile world congress, nokia is busy announcing an android-based phone. shocking. >> what's your reaction to that? >> we did that interview last night. i think eric spelled it out, we are very pro-open source. pro-making these products free and available. we have a wonderful collection of products at google called docs that allow for word and powerpoint and so forth.

system, what's the concern of terrorists infiltrating accreting bugs within your system? couldn't they do that? >> historically, you had to be a defense contracting company in order to be concerned with geopolitics as a business. now every single technology company whether it wants to or not is caught right in the crossfire of geopolitics by virtue of state actors like china and others targeting businesses. >> you worked very closely with mr. schmidt. differently from a lot of other executives and technology. what is the eric schmidt best practice you observed? >> we have traveled to more than 40 countries together, including places like north korea and libya. what's interesting about eric is he has an interest in geopolitics and in exposure to geopolitics that very few people in the business community or the technology community half.

he is a serious computer scientist. he talks about terrorism and talks about these big geopolitical challenges but he asks very computer science questions. >> you can see the full interview. i've been watching it. and 10:00 8:00 eastern time on bloomberg television. >> time for the agenda. >> i am looking at housing. s&p home price index looking for e.out a 13.4% rise on you bake of america coming out with a note over the weekend saying that home price gains will continue to slow in 2014 as the housing market actually heads to some kind of normalcy overall. i am watching macy's. you talk about housing and the importance of the consumer. macy's will be coming out with airings at the top of the hour.

what's curious about macy's is we already know that sales were good. salesing is, you look at and macy's in general. ups single digits. the earnings are up low teens. were they able to preserve those margins given the fact there were semi-discounts? bitcoin. numbers -- we discussed this a lot. all you need to know as the prices down. you heard the efficiency debate, which is, it is a better system versus a theoretical foundation of bitcoin. we are glad to have all those different opinions here on bloomberg. is a know that adam skeptic. we ask you all out there if you are still a bitcoin believer. we got some interesting answers. "not one bit." bitcoin fans are the modern

dutch look traders." "still not a believer. no way to back it up and no regulation." the fed there is a place for bitcoin in that it takes away the payment processing fiees that we are used to with credit cards. >> i'm not completely sold. i think big banks are pretty efficient. inevitable?currency is bitcoin the right model? we have to look at it through those two lenses. crypto currency is inevitable. i think unregulated currency percent serious challenges. >> greatly appreciated. the new digital age. down, negative three. busy.y

bloomberg surveillance will continue on radio. in the loop is up next. good morning, everyone. ♪

good morning. it is tuesday, february 26. you are in the loop. i'm betty liu. here's a look at our top headlines this morning.

jpmorgan cutting 2000 jobs. we will hear from the ceo later. the price of bitcoin taking a dive again. rtual currency fell 15% to $475. the exchange said problems made it vulnerable to hacking and it looks like something along the lines has happened. at the mobile world congress in barcelona, samsung has unveiled its new galaxy s five smartphone. the new device has a fingerprint reader and a bigger screen than the current model. samsung is hoping the new galaxy eep customers from buying iphones. macy's earnings are crossing our wires now. julie hyman has the breakdown in our newsroom. >> remember macy's