inflation, tepid economic growth. everything at cosco is on sale. good morning. this is "bloomberg surveillance." it is thursday, march 6. i am tom keene. running me is scarlet fu and adam johnson. did you go someplace warm? lex.e corner of 81st and >> very good. good morning. >> morning brief, indeed. overnight, here's what happened. estimates.d we have seen this over and over in a number of retailers. lekom says a sales of t-mobile is less likely.

prices are accelerating in february. another line you want to watch capital, canceling their investor forum next month. >> that is the first note of tension. >> we're sorter figuring it out. you see this percolating out. >> orders rising as well. there is another positive number. >> that is a positive number. as far as you go news, the bank of england -- that is coming out at 7:00 rid then we get ecb. you want to watch the 8:30 press conference. kicking off jobs, we have the initial jobless claims that 8:30 today. we have the jobs number tomorrow. also, the bloomberg comfort index. i told you the morning brief not so brief. >> breaking news that scarlet

will have in a moment. let's look at the data check. stocks, bonds, currencies, commodities. uphill markets not moving because of the news in crimea at the moment. hydrocarbons come down off of three days ago high-price s. risk.n shows let ruble shows the story -- me get to that. here is the weaker ruble. pressure intervening to sustain the ruble, but nonetheless, weaker. we scour the paper for breaking. here is scarlet fu. top front page. russian news agencies reporting that crimea has voted to join a russia. this though needs to be confirmed by referendum, that will be held on march 16.

that is according to a russian nude agency -- news agency. a lot to come up in terms of the counter -- calendar. eu leaders are meeting. >> secretary of state kerry is in rome? >> he is meeting with the russian foreign minister for talks on libya. he is trying to get the russians to meet with him. >> the markets are doing better. >> think about all the activity around the world. we have been talking about ukraine. libya is still unresolved. they just had a new prime minister in rome. syria --those negotiations, on and on. of electionsseries coming up, there is a backdrop to the crisis. >> there are elections all the --all over the world.

>> and midterm elections here in the u.s. some people say changes to the affordable care act do not get in the way of elections. you can keep her policy for another two years even if it does not meet the standards. insurance company say 2.5 million people would have their policies canceled. >> republicans voted for the 50th time to strike it down. >> is a 50 are ready? -- al ready? >> what is not changing? >> the democrats would say it is happening on a different timetable. staggered and delayed a bit, but it is happening. >> ok. >> how're last story, big changes for the college admissions test known as the sat. will be optional and

2016. they are also illuminating vocabulary words. the maximum will be 1600 points. they will not the duct a quarter of a point for a guess? >> they will not do that for guesses. parents were concerned that these did not reflect achievement and your prediction for success in college. the test prep industry is massive. >> i have been through this. you will go through this. there is an equal uproar on both sides. people were in an uproar. >> i took the prep course from kaplan. they said where do you want to go? i wrote princeton. they said that is not how you spell it, you better study the test. >> i think it is a huge deal. we're trying to sort out.

>> this does feed into the twitter question. do these changes make the test more fair? does the level the playing field? we will speak with the founder and director of a test prep company in the next half-hour. tweet us. we also have breaking news out of staples. they will close up to 225 stores to cut costs. this is after its fourth-quarter adjusted earnings came in at --missinge -- 33 estimates by six cents. >> we're going to go to london. a busy morning. we will get to david strasser and a moment. it was supposed to be an active day for economics in europe. front and center in brussels, we go to london -- some color on us

the challenges prime minister cameron has. he is a bit removed from the debate. how does he go to brussels? >> i think the challenge he has is the challenge we have here. whatever happened to the international coordination? he has a clear split here. one half is led by the eastern side. they face severe sanctions. the bottom line here -- it is a meeting of european leaders. some say it should be a meeting of finance ministers. >> what about the debate in the last 24 hours? and cameron capitulating? >> he sounded more hawkish this morning. he was talking about consequences. they are all saying them. if we haveline is, consequences, then walked the walk. deliver sanctions. from the moment we hear them talk, we know they are thinking about asset freezing.

they know the trade sanctions. any sanctions on russia could hurt them selves. remember, one third of their imports come from russia. they are likely to feel it here as well. >> what would you hope to see out of these meetings? where will they be tomorrow or monday? >> i think you want to see coordination. you want dialogue between eu and russia. it is all well and good to get the likes of john kerry talking about action. remember, russia is not iran. you can put big sanctions on iran. you can put sanctions on russia and you are going to feel it. that is the primary reason why they are coordinating now. tomorrow is another day. i'm interested to see what draghi has to say. >> thank you so much.

we will go to brussels in the next half-hour. david strasser, two stories printed center. changedis the meeting by these geopolitical indents -- events? >> not yet. the fallout has been very limited. i do not think there is any reason to be overly concerned about consequences yet. >> you are not looking for a rate adjustment are you? >> why not? 08%? inflation running . >> pmi was very strong this week. inflation has not been going lower. findingnot want to be residual cuts. >> let's go to staple news. this is breaking news.

something people have been looking for for 5 years. staples is shutting down -- >> up to 225 stores and cutting costs. >> is this doing a radioshack? >> it is not that bad. radioshack -- the issues there are more substantial. this was probably long overdue. wall street has been pushing for this. the office products category had a merger. that is about taking capacity out of the industry. they are seeing declines. now they are starting to get the message. >> are we over stored? >> we are over stored. we do not know how much. we're trying to understand the impact that online selling will have. the retailers themselves are seeing massive shifts. best buy, 12% of their sales were online.

it is going to happen of the next decade. >> we have two right people and two very different issues. u on geopolitics of europe and to david strasser on american retailing. let's get to company news. >> let's begin with the fact that you should not expect a sale at t-mobile. here are highlights. that is according to deutsche telekom. that a sale isrs unlikely due to regulatory hurdles. this is according to people truck knowledge. japan has been interested in buying t-mobile. workers in ibm china. more than 1000 employees walked off the job. they objected to their transfer to lenovo. times reports that

production has been suspended during the strike. and sbarro moving closer to bankruptcy. they have been hit by slowdowns in mall traffic. a filing could come as early as this weekend. that would be the second trip in the past three years. that is today's company news. we are not done either. costco reported earnings a few hours ago. they missed analyst estimates. wey are trading lower and will discuss what is going wrong and what they can do to change things around. this is "bloomberg surveillance." ♪

>> good morning everyone. ceoalked to the adidas

yesterday. trevor edwards, president of nike, will be on "market makers." very cool basketball shoes. i was in their store this weekend. scarlet fu, i could see you in them -- >> can you? i could see you in air jordan's. >> these are beyond air jordan's. i want sparkly ones. >> i think we should get "surveillance" ones. i am tom keene. i am here with scarlet fu and adam johnson. >> another big-box retailer reports profits missing estimates after discounts to attract holiday shoppers. this theme is familiar. we have heard this before. the name is not. it is costco.

david strasser covers costco. i know that you have been bullish. you are not too worried about this trip up in the latest numbers. the management is playing to the long game. >> that is what they do. back in november, walmart said they would do a one hour guarantee. that was a change for the promotional season. this was a very tough season. we had the weather in january. they said november was their worst month and it got better. that was where most of the prophet miss came from. that was when most of that promotional data hit. --linking walmart and costco walmart has not done a whole lot to build up their website. that is a missed opportunity, especially with whether keeping people from going to costco. >> i have had that conversation. they probably have the greatest

asset that anyone could want. 55 million or 60 million members -- they are so protective of their members. you get e-mails every day from every retailer you have ever looked at. they are trying to balance this a little. >> one of the underappreciated ceos --tell us about this executive dynamo. is a long-term thinker. they look out 10 years or 15 years and protect customers. they will always give up a short term profit. >> why do we talk about bentonville, arkansas, but not about washington? >> just size. walmart is a bigger company. they just are so much bigger than everybody else out there,

it is just enormous. costco, they can miss numbers like they did -- you try to get a parking spot. it is still not easy. >> you will have to fight for that shopping cart, i know it. >> what are you reading, hearing about walmart? why is costco able to get it right and walmart is not? >> different customer. costo average customers $85,000. walmart is a $30,000 customer. different spending patters. -- patterns. costco is -- their operations are on. they think in the longer term. walmart has gotten distracted by pr issues regarding their labor and so on. keeping shelves stocked and bribery issues in mexico. big that they

have that many more issues to deal of. -- with. you have a lot of people after walmart and they do not go after costco. >> all retailers have to deal with the infringement on online sales. which company in your universe is managing that in a way that complements the brick-and-mortar presence? >> one of the most interesting was best buy. 18 months ago, they were going out of his miss. in the last 18 months, they have gone from the poster child of going out of business to being a brick and click model. >> what is there strategy? >> they will grow five percent. probably more abroad than u.s. one of the interesting things about costco, they are one of the few games where returns are at or higher outside of the u.s. >> why is that? >> they have higher gross

margins. it is competitively -- much less competitive outside. >> can you extrapolate 14% per year performance? >> people get worried that valuation is high. thereuth is, it has been a long time and it will continue to be there. there may be ups and downs, but they will get their. >> you are all thinking about going to cash in your 401(k). david will also with us from bank of america. we better be in cash. you cannot make money in stocks. >> tensions in the ukraine at other places around the world. creating some dislocations. are they opportunities? how should you play the emerging markets? we will be back with the two davids. david strasser. you are watching bloomberg tv.

we are streaming live on your phone, tablet, and bloomberg.com. ♪

>> good morning everyone. 102.66, shows that weaker yen. some of the calm as leaders meet in brussels and rome. here is adam johnson. >> i should point out that our sayt host has a lot to about retail and the state of the consumer. house prices in u.k. are accelerating at the fastest rate in five years. 2.4% to an average of

$301,000. this is according to lloyds bank. the rise is the largest monthly gain since 2009. in emerging markets, let me point out what is being said in the financial times. important elections in columbia, turkey, india, south africa -- political crises make momentum and possible --momentum investing impossible. >> how important is this in the calculus of europe? >> for europe? the elections? i think very important. for emerging markets, i think it will be everything for the second half of the year. especially places like result, indonesia, where investors are looking for in impetus for reform. >> could there be elections that

skew right? >> in india, for example. and are more right wing muslim. at the same time, more pro-business. let's get your take on europe as well. you focus on inflation or do you focus on deflation? we will discuss the effect on the global market. this is "bloomberg surveillance." you are watching bloomberg tv. we are streaming live on your phone, tablet, and bloomberg.com. ♪

>> good morning everyone. busy morning. whether in brussels or new york city, i am tom keene. to me, scarlet fu and adam johnson.

this is a message dated check. calm given all of the diplomacy going on. oil actually quite yes and here. quiexcenscent here. john kerry is meeting with leaders in rome. >> facebook is up. raising the price saying that they are gaining shares. then mobil is down, company held its analyst meeting yesterday and there is concern that the international opportunities could be in trouble with talk of russian sanctions. they have plans to drill in the arctic later this year. exxon is the largest non-russian company operating a in russia. >> i would never have guessed

that. 2.7% dividend growth five years now. out. on europe, david woo, they are sending out an sos. mayo draghi and the ecb have their hand forced. we will have the announcement at 7:45 grid what will we hear from mario draghi? >> i think he will sound concerned. he will be urgent that they have to do something right away. i do not see a lot of new things to come out. >> how is inflation different in europe versus disinflation and the united states? >> to put a positive spin, many european policy issues see that it is driven by the peripheral. spain and italy see lower

inflation. this is helping them to regain competitiveness. >> the currency meeting the other day -- i was thunderstruck at how the president talked about the dollar. is the euro overvalued and the dollar undervalued? >> i think it is. forave forecasted $1.25 some time now. this is a disappointment in my career that the euro is hanging around. currently is going to be where inflation is going. we need higher inflation in the u.s. and lower in europe. >> help us understand what is behind the strength of your the euro.-the strength of the what is it that has been keeping it so strong? >> one of the big concerns us trade. everyone and their grandmother is now over equities.

>> they got so cheap. >> they see it as a catch-up play and a high beta play. at this point, it is expensive. worldyou think, the thinks that european equities are cheap --americans have to buy euros. that is the connection. >> most of the equity transactions are not currency hedged. >> i want to get your take on china. they have been guiding their currency weaker. they came out with a 7.5% growth target. a lot of people say that is too ambitious. signal is a very strong that they are not prepared to accept anything lower. loanmphasis away from policy to balanced monetary policy says that they will start

to relax their tighter policy. >> let's rip up the script -- this dramatic photo of a political conference in china and the idea of a discussion of a first corporate bond default in china. that is pretty up your. why is that on the front page? >> it is the first. this is a solar company. >> it is small. >> i do not know if this will have a big effect. point,ack to the earlier the chinese will make a mistake. the statement from yesterday is a very clear indication. they are not prepared to -- >> this is not a maturation of china. it is to improve capital flows were the chinese can invest in the united states? we're not there yet? >> i do not think we're there

yet. outflowsg to cap the and exacerbate the problem. >> david strasser, let's bring you in. you look at the global consumer. china is making moves on its currency. what effect is this have on companies that are trying to rid use their costs? >> a lot of them have retreated because it does not work. costco, part of their miss was currency related. >> absolutely. >> a lot of companies do have these fairly substantial international operations and are seeing that hit. canada dropped substantially. cost go have a big operation there. best buy -- they have all been hit by that. china has been interesting. tesco has pulled out, walmart has struggled. they are trying to make a go.

i was in mexico with walmart last week. that is another struggling market. if you are a shareholder, they are cutting back on cap ex. >> the idea of a struggling market -- would you know that gdp is up? one of the struggling markets is russia. the geopolitical mix right now -- can they be pushed into recession and see their economy slowdown? is theink the week ruble best thing that can happen. >> explain that. know, 70% of russian export is oil and gas. the ruble has been the domestic manufacturing sector. a bit of currency weakness is not about thing. >> they're getting all these dollars because they are selling so much oil and gas. to spend more rubles

internally? >> the strong ruble has been killing domestic injure straight --industries. this is a boost. the main story here is the market only cares about ukraine and russia. thatthey have realized is nobody has an incentive. >> they are voting on march 13 for a referendum. >> i agree. there is tension among leadership. there is an idea that we're doing diplomacy. >> until now, the threat of sanctions or military anything lacks credibility. they need to look more credible. >> david strasser is with us and david woo. futures up 2.

dow futures up. >> we want them to weigh in on our single best chart next. it is "let the good times roll." this is "bloomberg surveillance." bloomberg.coyou are watching bl. we are streaming live on your phone, tablet, and bloomberg.com. ♪

>> good morning. i am tom keene. a busy morning. we will go to brussels in the next hour. but get the top headlines. ordersermany, factory rose 1.2% in january. that happened after a drop in december. the gain also tops estimates. 09%nomists had looked for . increase. and in the u.k., housing prices increased to an average of $301,000 in february. this is according to lloyds bank. this is the largest increase since may 2009. a 10% jump over one year ago as well. here in the u.s., we are going to have fun. that is a jim harbaugh, san francisco 49ers football coach, training the half court shot with ease. pep talkpre-game

to the kansas jayhawks basketball team. they trounced texas tech in the game. that is the exact outfit he wears --look at him. >> does he sleep in that outfit? >> he got it at walmart. it is part of the pregame tradition. >> an athlete is an aptly. that is awesome. >> we did khaki pants. i do not like that. a lot going on, let's get the single best chart. >> slow recovery from the financial crisis. one big one is the rise of income inequality. this is a chart from the chief economist at columbia management. the u.s. starting to rise in the 1980's as a percentage of national income. they grow four percent annually from 1960 to 1980.

that was 20% of national income. you can start to see it take off in the last couple of years after 1980. by 2012, it's got to 35%. thet of people say that economy cannot gain traction because the upper five percent -- the upper one percent are doing so well. do you believe in trickle-down economics? >> not in a world where skills are so highly valued. the problem is the widening income gap --people who are educated are well-paid. education has become so expensive. people cannot go to school. it is a vicious circle. >> is reinforced over and over. david strasser, when you look at that and how companies have responded and how they are pricing, have we reached a

tipping point where they price too high? >> the wall street journal talked about that. they are starting to face some resistance to the outrageous price increases. my wife has not figure that out yet, but i think it is a broader topic. >> wait until the chinese figure that out. i went to bring david woo back to something. you said that bitcoin it generated a lot of reaction from customers and clients. was a good or bad? >> good reaction because it understood that there was a socioeconomical dimension. >> you put a terminal value on bitcoin. you said that terminal value is $1200. >> did you mention "street smart" on air? >> we got it all covered. morning and afternoon. >> keep it up, johnson.

>> you said that there are three ways to look at that point. let's remind people-two $1200. >> that was maximum. you need bitcoin to account for 10% of all e-commerce. you needed to be a major player. you need to also acquire silver status. anddd up those aspects abide by the number of bitcoins to get to the $1200. that was the exact day of the high. >> since then, it has come down. they have filed for bankruptcy protection. there is an exchange in singapore --someone committed suicide. this dampened the enthusiasm. >> let's clarify this, a report of a suicide -- >> fair.

28 years old, though, and she ran a bitcoin exchange. this does dampened the enthusiasm. >> i think that is true. we have to see whether it can take root in this country. the biggest battle is new york and california. >> let's go to david strasser. do you see a retail future for something oscillating around like a coin? >> if it is going to work, the retailers -- officemax tried to take it. the retailers are going to wait and see no one wants to be the first. . we just had an intelligent conversation on bitcoin. >> we did. >> it is an exclusive. >> let's talk about copper. alix steel will help us get a rare glimpse into the confiscated his best -- complicated business. that is coming up.

♪

>> this is "bloomberg surveillance." i am scarlet fu. adam? >> you want to buy some metal,

copper, tin, aluminum? you have to go to the warehouse. >> deep in the arizona desert, behind this chain-link fence, half of those guard dogs, tv oferas, lies a mother load one of the hottest commodities. how much is this worth? >> about $100,000. >> $100,000 worth of copper? that's right, copper. operativeformer cia in charge of protecting the copper in this massive warehouse. >> copper metal is used in almost everything that we use in modern society today. telephone, computer, car, pots and pans. it is literally the most useful metal that man has ever discovered. >> why is it so hot? >> it gets recycled regularly. copper that is stolen can be resold anywhere.

>> copper theft is a big business. 2012, $15006 and million was stolen from an arizona mind. warehouse is almost never let cameras inside. doug smith agreed to let us have a look around. the metal arrives directly from nearby mines. it is held until someone wants it. forkliftsa 6000 pound to move the copper. we can load it into vehicles. charges eight dollars per ton per month to hold product. the recession was very good for him. copper sales slowed to a trickle, leaving him with a full warehouse and a fatwallet. times are changing. >> production and manufacturing are ramping up. that is good for the economy. it is tough on us. we have seen the copper go from

30,000 tons to about 5000 tons now. we are watching money walk out the door. >> alix steel is back from arizona. here she is. impressive, right? >> it was fascinating. this was very rare that i got in. i worked for months. fascinating. there has been a lot of controversy related to the london metal exchange. a lot of warehouses are skittish about letting people in to see it. >> what is the difference between lme and cme? >> lme is based in monday. they also take a cut of storage fees. one percent of the fees go right to the lme. cme does not. they operate like a franchise, on their own. >> they do not wear tuxedos. >> i have never been there. >> there is a controversy at the

lme. high premiums, what does that mean? >> doug says that he can get the metal out and days. in some warehouses, associated with the lme, lines are as long as 410 days. >> how can that be? >> that is one of the questions. there is one in detroit that is owned by goldman sachs. the longer you wait for your metal, the higher your premiums are. you have to pay more to get your metal because you're waiting so long. like of users anheuser-busch, they got squeezed. they were not hedging that risk. they got hurt and now they are making a lot of noise. >> we sell forklifts and big hunks of copper. why 410 days? >> if you could answer that

question, someone would pay you a lot of money. some of the issue is banks. they wind up opening -- owning these warehouses. are they creating long lines to trade off of those long lines? that is unanswered and still being questioned. --so to challenge this idea alix, how is the rule of , howegy, buy, hold, sell is that linked to the real world? you ran a forklift in the summer in college, right? >> i worked for a moving company at $15 per hour. . >> it is quite separate. the premiums have been rising while the aluminum prices have been dropping. there is a big disconnect. producers like that. they making money off of the premium. >> is there a situation where

, thepurposely -- they warehouses, keep the copper inventory longer so they can charge for storage? >> that is part of the concern. i have spoken to some insider analyst to say that there is a line at the warehouse. inventory on one side and private on the other. aluminum goes from one side to the other and creates bottlenecks. the forklifts cannot be used. >> let's go from london to chicago. david woo, do you know how much copper is in china? >> i do not. for me, the most important thing the concernsite about slowing chinese growth and u.s. growth, commodity prices are holding up well. china, by the way, accounts for 40%. will they keep buying copper? >> i think what it is telling you is that we generally associate with copper --it has

gone away. strasser, should i buy copper pipe this weekend at home depot? >> i will be there. >> everyone is. >> we do not think about it, the copper is important. >> a lot of it is in financing. there and finance. you cannot get it out if you need it. >> barlett against it like gold. way to go, alex steele. woo and david strasser, thank you so much. let's look at the four x report right now. quiescent. weaker yen shows the calm. the ruble will not become stronger. it is being managed out of moscow. aussie dollar a little different. dataset. more brussels next hour.

>> we will also be joined by the talk about vladimir putin's reputation. much more coming ahead. ♪

>> good morning everyone.

we say good morning to you from new york city. scarlet fu and adam johnson, we are looking at ukraine. european union leaders are meeting at this moment. we will go to brussels in a moment. futures up three. dow futures up 25. we are looking at european growth. the bank of england out with their news. we will have that at: 45 this morning. very important. also, big news for everyone listening in america. capitulate and go back to 1600. let's go to the morning brief. >> 1600 is what you got. >> yeah. i took it six times. >> i like it. all right. morning brief. second quarterts

profits and missed estimates. counts overe to dis the holidays. deutsche telekom says a sale of t-mobile is less likely. atthe u k, home prices grew an accelerated rate in february. it was the highest in almost five years. tb capital is canceling its forum next month. >> i think it is a big deal. of beginning of a tea leaf business tensions. abouty are all headlines what is happening with secretary kerry. >> back stories. >> unintended consequences. things being canceled. economic news, the bank of england will announce its policy any moment. ecb will follow

suit. >> i think the press conference is a big deal. >> no change. they will keep their asset purchase. keep their benchmark interest as well. >> way to go. we should point out that the initial jobless claims are coming out at 8:30. and the bloomberg comfort index at 9:30. >> i could barely sleep last night. >> you are worried about the jobs report coming up on friday. >> a few more earnings are still trickling in before the bell. we have joy global. this is a mining construction company. also kroger and staples. and h&r block, have you done your taxes yet? >> let's get to company news. staples closing as many as 225

stores in north america and cutting costs. the office supply chain is facing competition from amazon and costco. they say the moves are necessary. is moving closer to bankruptcy filing. they have been hit by a slowdown in multiethnic. a filing could come as early as this weekend. it would be the second trip to bankruptcy court in the last three years. do not expect any sale of t-mobile anytime soon. that is according to the ceo of deutsche telekom come out which owns 67% of the wireless carrier. it is a sale is unlikely due to regulatory hurdles. this is according to people with a direct knowledge. a japanese company has been interested in buying it. >> very good. markets are calm our. the 10 year u.s. yield suggests

calm. it was supposed to be an active day. bank of england to out here in the hour. we need to go to brussels, where things are not calm. has been there 47 times. this time, it is not born. what is the difference versus the other 18 times you have been there? times, i was18 covering the debt crisis. the sovereign debt crisis seems to have calmed down. looks like the biggest geopolitical crisis to face the european union. it, coloru look at for us the tone of miss merkel or david cameron? are they in charge of this debate or are they peripheral? >> i do not think they are in

charge of the debate, but they are not peripheral to it either. they are talking about what they need to do in terms of diplomacy. they both want diplomacy to rule here. today,er they do decide whatever statement they come out with, it will send a very strong and whethert putin he can continue doing what he is doing. is not inmerkel charge, who is? there are so many factors at play. think you have to look at the hand of mr. putin as well. even though he is not here, he is in russia looking at what is going on. the question is, what is he prepared to give up? he might already think he has moving into eastern ukraine.

the question is, how far is the rest of the european union willing to go to push them back? >> you are in brussels. how important are the meanings in rome -- meetings in rome? is that just a sideshow? >> i think it is a sideshow. they have looked at what mr. kerry is talking about, but there has been negotiations with the foreign ministers. nothing much has come out. the real shadow is in brussels. will they go as far as putting sanctions in place or will they say we will put sanctions in place only if you do something worse? russels. tweed in b we will have news from brussels and thrown throughout the morning. now is a perfect time to speak with michael fertag -- conversations on the internet and moving things around, we

will look at that in a minute. i am looking at the image of vladimir putin. has he can't do? -- has he called you? overm says he is turning in his grave that he is not alive to see this. any goodwill that he has had is gone. is this good or bad for the jews? there is about crimea, no one to root for. the russians are gangsters. the crimeans are anti-semitic and negative. i do not think the people really mean it. they will not take material action. there may be a late sanction. putin has shown that he has a reputation for not caring what people think. >> i wonder if he cares what people think.

he himself poses with jaguars. hirtless.shor >> you mean like the animals? >> don't global leaders look at these and does this affect their perception of him? >> global leaders think he is tone deaf or impervious to feedback. russia has such a significant gas supply leverage. he feels he has all the cards. are senior vice president -- we had a shock last night in russia. >> there was an american television news anchor who protested in ukraine. she went on air and quit her job on the russian government's english channel. listen.

>> i cannot be part of a network funded by the russian government that whitewashes the actions of putin. i am proud to be an american and believe in disseminating the truth. >> the russian network called her resignation a self-promotional stunt. will she get a job after this? >> she is probably rolling in ouffers. i tweet regularly about how much bunk they offer. they have marginal experts that represent the american point of view. it is laughable. one of them is a 9/11 truther. she is a regular anchor. >> what about what is happening internally? other sideshows the of putin. >> can we say that on air?

>> is the band's name. the audience that putin has is internal to russia. all of the propaganda, the strong stuff, is for the internal audience. >> are they buying it? what is your evidence. >> his reputation has never been higher. >> spontaneous protests in moscow? >> it is quiet riot. >> no, wrong one. all right, who is working from home? it is not always who. we will be back. ♪

>> good morning everyone. i am tom keene. k, he is here to give me some counsel this morning. this is your digital privacy. it is a big deal. --y you at a p&l bar in piano bar in davos. >> davos is a good place to invade privacy. there are a lot of data guys

there. i'm calling this a michelangelo moment. it was discovered that a pernicious virus was on commuters -- computers. it activated on march 8, michelangelo's birthday. it was not all that different from other viruses. it hit all around the world. the media took notice for the first time. this gave rise to a huge industry that we can define as antivirus. also, the deep infrastructure business. >> where are we now? >> we're at the moment where privacy is getting the attention of the world. the public is aware that they have something to lose and the demand for products and technologies that could protect their privacy are skyrocketing. chat,r my company or snap which gives you the ability to communicate. or this new phone that was

announced recently at the mobile world conference, or the boeing technology -- this is a very powerful moment. i am hoping there's an edge industry born -- being born. >> no one is looking for margin compression across social media. all of this ferment and business about income statements. the margins will not be there. the profits will go down. >> very powerful question. we now know that in digital gaming, there is low friction and low friction off. there is a passing parade audience. it is tricky to invest in the digital gaming business because of the hit turbine business. the audience might move on. the same is true in social media. you see the $19 billion acquisition process.

they keep and capture the audience. everyone knows it is a passing parade. kids go from facebook to instagram. you will see compression over time. the audience is very ephemeral. fertik, let's go the other way. how about warren buffett's letter? betty liu was out in the freezing cold of manhattan and found hard assets in new york city. ♪

>> good morning everyone. adam johnson is killing me this morning. with me isene and scarlet fu and adam johnson. my guest host is a michael fertik, ceo of reputation.com. >> we have a lot of news. factory orders and germany are bouncing back. that is after a drop back in december. the gain also tops estimates.

economists had been looking for .09% gain. in u.k., gold prices are accelerating. they jumped to an average of $301,000. this is according to lloyds bank. the rise is the largest monthly gain since may 2009. it is also a 10% jump over one year ago. and the israeli prime minister says that he can help california with the drought. they signed a deal to ease the state water shortage. desert and has used irrigation techniques to provide water to its population. that is coming together. fascinating. >> new research out. about who stereotypes

telework and works from home. or from a local starbucks. according to a new study, three out of four are men. they are not working mothers or millenials. kelly is the ceo of a flex strategy group. she joins us. why are these remote workers so overwhelmingly men? >> the most important point that we found is that one third of the full-time u.s. employee population is doing most of their work from home. that is a huge percentage. it is no longer a perk or benefit or policy. it is a core way of how businesses are operating. we shatter the stereotypes. it is not moms and women. the majority of women working from home are meant. by a significant amount. hr groups extent are

aware of this? >> considering the fact that most of the people who work from home are men, they are not parents. there is no age group difference. we have topening is stop making it a benefit or a perk to an isolated group. you have to make it part of the way the organization operates. i do not think hr departments know that. it was so interesting -- it was a nationally representative data sample. no one size of company was represented. that there are, two partitions. economists look at this in a grim way. people work at a starbucks because they cannot get a full-time job. but then the other side is this is a touchy-feely, good they. which is it? >> these are full-time employees.

we did not include self-employed or contractors. these are full-time employees. this is the way we are operating say. i do not think we have grasped that. >> are they just not going to the office? or do they work for companies that do not have offices? >> it could be both. there is no one type of industry that is represented. there has been a rapid change and industry has not caught up. as individuals, we could not -- we have not caught up. we have also, most people do not get training or guidance. weighing in,rtik here is my question -- marissa mayer at yahoo! said no more telecommuting. you have to come into the office and put in face time. what is your take? >> i think they thought it was a benefit. i think they thought they could take it away.

but we did find out is that mostly men were teleworking. often times, they do not live close to the office. you could lose talent. they were not doing it well. that is what happens. >> not executed well. >> absolutely. michael, is the west coast ahead of everybody else? >> i feel like i am an old cooperstown this topic. i love the fact that we can have a population that works at home. at my company, people are strongly encouraged to come to work. people can work at home have to day or one day a week. i see huge benefits. people sitting next to each other -- the interstitial conversations -- 108th mayor of new york, could he have invented this? >> bloomberg transparency, no

borders, no walls. >> we live this every day. >> thank you so much, cali. very interesting study. >> we want to point out that tomorrow morning, we will celebrate international women's day. we have a special edition of "market makers." they will interview marianne lake and tina brown. tune in tomorrow at 10:00. >> coming up on "surveillance," the sats getting a much-needed overhaul. 1600 is back, the essay is optional. you cannot use a calculator and there is an online test prep as well. >> we did not have that. test prep was go to bed at 8:00. >> this is the twitter question

of the day. do the changes make the test more fair? tweet us. this is "bloomberg surveillance." ♪

>> this is "bloomberg surveillance." i am scarlet fu with tom keene and adam johnson. let's get company news, starting with mcdonald's. generous a pretty 401(k) plan. they match 300% of the first one

percent of employees say. all this is according to an analysis by the this week -- bus iness week. and the justice department is joining an investigation into corruption at rolls-royce. they are the largest maker of commercial jet engines. and a story that broke earlier this morning. staples is closing up to 220 five stores in north america and cutting costs. increasedacing competition from amazon and costco. they say the moves are necessary since they get half of their sales from online. that is today's company news. it is 14 degrees below zero here in manhattan. that did not stop betty liu from exploring manhattan and looking for the non-depreciable assets of a war in a fit of omaha -- wa rren buffet iof omaha.

>> he disclosed this in his letter. it is a prime example of buying cold. why that works. in fact, let's roll the video on the exact property that he owns. it is in lower manhattan near nyu, on 8th street. there is a cozy sandwich shop, a bank, you get the picture. how it all came about is fascinating. during the990's solomon treasury -- >> let's rephrase that. i remember this, you do not. >> warren buffett went in to save the solomon brothers. they were at seven world trade center. solomon was the largest tenant.

that was how they met. buffett said do you have any good investments? silverstein came up with some properties. he said i would invest in it, you should to. o. >> this shows the granularity, doesn't it? this is the real operational buffett. >> i met him for the first time last night. i admired him from afar. >> hang out with betty liu. she has bonded with him. was very struck. i got to watch him for one hour and speak with him for 20 minutes. he is exactly the guy on camera. he also has one joke. it is " i made so much money on the deal." he does that over and over again.

he is a next or ordinary salesman. he made a lot of money investing. he has put $1 million in two properties. that is a drop in the bucket. that property is now worth $60 million. it is a great retail property. i want to give you a sense of what he said to me. he says i have given him larry silverstein all of my numbers and told him to call me day or night. ha ha - i get to make more money. also cash flow -- those are his two metrics. there is a granularity. >> what does he do with his properties? do the kids get it? >> it is his own personal money. >> this betty liu get the block?

i could own a sandwich from the shop. a very smallusly investment compared to everything else that he is buying. >> the main point is a couple of things. i do not have to be an expert to invest. >> if he thinks it is a good location -- at 21 page letter, betty liu spent all day sunday going over it. that.oze doing >> i think we all did that. we are waiting for the european central bank to come out with it position in 15 minutes. the bank of england said no change to anything. futures are higher by three

points. the 10 year yield is moving up a little bit. 2.71%. the euro is stronger against the dollar. nymex crude falling. mario draghi will speak to the press that 8:30. >> good morning. i am tom keene. with me, scarlet fu and adam johnson. michael fertik is with us today. he is an author at reputation.com. what we do not talk about this test scores. what do we have? >> the sats are back to a perfect 1600. they are making the essay optional and not penalizing

guesses. founder of advantage testing joins us to discuss what this means for students and the test prep industry. to the changes better for fill the purpose of the exam to test achievement and predict college performance? or is this an attempt to catch up with the act? >> thank you for having me. the changes have basically moved in the direction of greater rigor. what we have is evidence-based radical reading and writing. that is new. it used to be that the essay was one where you could essentially make up facts. that move is a good one. another change is moving towards fewer mathematical topics. more rigorous once. a little deeper dip into material. >> i love this. >> this is tom's dreams.

standardized tests feed the coachingutoring and and give an advantage to wealthier kids. is the u.s. becoming like other countries? >> long-term rigorous preparation, we ought to ask everyone in society to engage in that. not only for credentials, but also for preparedness. whether one is wealthy or not, the expenditure of resources -- the time and money would be better deployed in the service of education. the am going to rip up harvard outstanding teaching fellow, harvard college , princeton. this is an elite group. i did not go to school.

deal.this is a huge >> i am glad you said that. i'm glad it is getting more rigorous, but i am troubled that the essay has dropped. wethis 140 character world, do not have to express ourselves in complete sentences. why are they dropping the ability to judge whether our young students can express themselves clearly? be clear. they are not dropping the essay. it is now optional. it is a 50 minute essay instead of 25. it is also based on text that they are giving you on the exam. you have no ability to prepare and a dance, other than to assess and analyze arguments. >> i went through this with three kids. it is all hot air. all the schools. about his test scores.

--all the schools care about is test scores. the reality is, do these matter? >> the tests matter. to put this into perspective, the test ought to be regarded in conjunction with your academic record. there are too many a's being given out. you do need some standardizing metrics. >> what i love about this is that this is a response -- the very serious guy, a yale guy -- this is a response to market. sat losing to act. i love this change. it is market-based. >> should we rip up all of bloomberg television? >> i'm looking at this too. thank you very much.

our twitter question of the day, adam. --rigotr, rigor do the changes make the test more fair? tweet us. ♪

>> good morning everyone in i am

tom keene scarlet fu and adam johnson. let's get right to adam johnson. bubble alive and well. tesla trading at high valuations. leslie's article appears today on bloomberg.com. what did bankers tell you about justifying cuts in prices? >> they talk about the way they come to valuations. they compared to the 1990's. they were more abstract. they went off of eyeballing and things we did not know about yet. today, these companies are older and bigger. they have longer track records. they're creating discounts in cash flow. they have a track record of valuations. >> there is cash flow this time as opposed to impossible metrics. >> there is more revenue. median revenue with over $100

million as opposed to $17 million during the .com bubble. they have more established business models and they're bringing in cash. that is making it easier to value. >> the ceos are urging caution. musk and netflix have talked about how valuations have gotten ahead of themselves. >> that as mother thing that people have said is different from the bubble. people were expecting things to keep going up. now they know the risk involved. >> this is front and center. the profits in 1999 and 2000 were fiction. we learned that in 2002. do you have the same fear that we will have a phantom profit or revenue? >> i'm extremely excited about these valuations. i think your question is the right one.

every conversation i have involves the question of whether this is 1996 or 1998. we have better companies and they are more mature. people believe that the entire economy is moving to the internet. you can see that the broad back -- that can stand up for valuations. >> what did you learn about the twitter debacle? me, with facebook? >> people felt that twitter was a successful ipo. >> what about facebook? they learned a lot. >> they learned about how to be long-term and greedy and make sure the pricing is that a sizable discount and not feed into the hype. >> what are bankers tell you about the pipeline? >> i am told it is very strong. we will see a lot of pe wax

companies. -- backed companies. they will capitalize on rising equity prices. tech is making another comeback. more fun. >> way to go. read her story on bloomberg.com. has decided not to do anything. the ecb is seconds away. ♪

is "bloomberg surveillance. i am scarlet fu with tom keene and adam johnson. we have some breaking news out of the european central bank. they have decided not to do anything with interest rates and have cap that on hold. newse waiting the conference with mario draghi at 8:30. news too. company >> we start with ibm. workers in china are striking. more than 1000 employees walked off the job in southern china. they objected to terms of their transportation will lenovo.

the financial times reports that production has been suspended during the strike. walmart is slashing prices on smartphones. --italaxy s4 was dropped is now $119. the new prices are fueling talks of another iphone release in the spring. something to look ahead to. eric schmidt says that robots will become present in our lives. he says that they will eventually replace a lot of repetitive behavior for humans. he was speaking at a conference in california where he was asked about staying competitive. >> apple is a well-rounded company. i'm sure what ever issues they are facing they will solve. google, it is at a founder run company.

brilliant founders. there is a commitment to excellence and you do not accept products that are me too. >> that his company news. >> we have european central bank news. the euro is a bit stronger. we're thrilled to bring the michael mckee. we staggered to 8:30. that is important. >> nobody expected any kind of rate cut. there was an outside chance, but they did not. they stated zero. what does mario draghi dale? -- do? >>they might introduce extraordinary policy. >> away from the announcement we just had? but something that would boost the economy a little bit. the most talked about is ending the sterilization of the securities market program. that sounds very concentrated. in 2010, your member, the

interest rates on bonds or skyrocketing. the bank spot those bonds. the bonds earned interest themselves. that increased the money supply. they take that money out. >> sterilize it. >> there's a feeling that they might end that sterilization and increase the money supply to put pressure. >> after the success that mario draghi has had, will there be a more conservative voice? >> it is still a dominated institution. the interesting thing is that the bank has signed on. they think that would be ok. colors the geopolitics anything that we'll hear from mario draghi coming out at 8:40 this morning? >> he will be asked about. what happens to the cost of energy in the european union? that has been very low and contributed to the decline that we have seen.

is there a feeling that that will push things up when they do not have to worry about? the idea of job state -- what are you focused on at 8:30 tomorrow? >> everyone is focused on the weather. are there signs that people are not able to work because of the weather affect. do we see it in things like construction and recreational hiring? beyond that, people want to look at hours worked and whether or not companies are cutting back. >> michael mckee, our chief economic correspondent. pretty much on book. markets are not reacting. is with us from reputation.com. you have been a piñata. there has been some controversy about what you do on google. this affects all of our viewers and all of our listeners as well. you can go in and dr. tom keene's image on google. is that right? >> that is exactly what we do.

we do that for fancy pants ceos. >> why is this a controversy? >> it is not much of a controversy, but it is a fair question. if you believe that google is god, the new have to believe that everything was put there by a divine way. i do not believe that. it is a machine. i believe that you as a person get a chance to have your voice on the search engine. we figure out how to give that to you. >> what is your guiding principle? the best practices that say this is a fair doctrine of the fact that mrs. a manipulation? >> that is a fair question. we represent a vanilla picture, something that would look like your reputation --resume. we solve the controversy question by not serving controversial people. >> when you go to jamie dimon, i just picked a small -- if you go to jamie dimon and he says i hate what they have done to me, changed my image on

google. he wants to dictate what you say about jamie dimon or google. what do you say? >> if there is an article from 10 years ago about jamie dimon or warren buffett -- >> he picked a poor paint job. >> that is something that people need to know about. he did a lot of philanthropy. freshest, most relevant stuff. the other stuff does not go away, it just does not dominate what people find about you. >> are you googles frenemy? >> google makes us possible. i am proud of that. >> and the controversy of reputation.com and the services they provide -- >> maybe you should be more like wikipedia, where it is crowd sourced. >> there's a picture of me that i am trying to get rid of. >> it is out there. it is time to get to our agenda. adam, let's start with you. >> jobs is the whole story.

we will get the jobless claims as we do every thursday at 8:30. the real story tomorrow is 6.6%. that would hold steady. the real question is how the weather affected the numbers. the word weather was mentioned 119 times. that is eight times more than the average and more than we have ever seen before. since 1990 -- do we read jobs numbers as an honest number or is it skewed? and aprilnto march and on to november, how about the affordable care act? that is my agenda today. delays, delays, a set of delays. --this is his the patient with colon

cancer was able to get a second opinion. her that she did not need chemotherapy. she paid nothing out of pocket. this is an important op ed in the new york times today. he will join us tomorrow. i want dr. choice, he says, don. >> people do get to hold on to their plans. my agenda item is costco. shares are falling. lot every time i go there. buying meat for boys -- third straight quarter of profit missed. like all other retailers, they had to discount to attract holiday shoppers. >> you by 20 pounds of buffalo there, right? >> and pulls purchases. everything is six dollars or nine dollars. it adds up quickly.

let's get to the twitter question. everyone everything -- about the changes to the sats. do the changes make the exam more fair? answer, all answers to 1+1 =? will get credit. tired ofick and everyone getting a ribbon for competing. second place is for losers. i have not gotten fourth place. >> johnson had the day of the day for yesterday. theechnology will research archaic system. matter?swer, does it industry still comes out on top. >> it is a big business. thank you so much.

come back again. iano barp&l bar -- pai cocktail. loop" is up next. jobless claims in 30 minutes. ♪ . .

>> good morning. it is thursday, march 6. we are live from bloomberg world headquarters. you are "in the loop." i am betty liu. the european central bank

keeping rates on hold. they decided against taking action after data showed inflation had gotten stronger. the threat had many speculating rates could be cut today. a great example of warren and holdinging strategy. he had been holding onto a real estate investment right here in new york. u.k. prime minister david moves inaid russia's the ukraine are unacceptable and must have consequences. he spoke in brussels after an emergency meeting. theashington, administration is moving forward to impose new punishment on russia for its actions in the ukraine. president barack obama issued an executive order that includes additional sanctions. peter cook has