the search continues for the airplane. tensions mount as crimea moves toward a referendum. ukraine asks for united nations assistance. general motors tries to recall a failed recall. it may stretch back 13 years. good morning, everyone. this is >> "bloomberg surveillance -- this is "bloomberg surveillance." live from world headquarters in new york. i'm tom keene and with me are scarlet fu and adam johnson. morning brief. >> china's industrial output, investment, and retail group less than estimated in january and february. signaling an economic slowdown. on a better note, australia boosting full-time payrolls in february by the most in 20 two years. also in the region, new zealand raised its key interest rate, the first developed nation to exit record low borrowing costs this year. in the u.k., home prices growing in february but not quite as

much as people had expect it. demand obviously easing. economic data, 8:30 a.m., retail sales, initial jobless claims and import price index. bloomberg consumer comfort index 10:00, business inventories, 2:00, and the budget. earnings before the bell, power weeral -- and at 2:30 p.m. will hear president obama deliver remarks on potentially increasing over time. over tominimum wage overtime pay. >> he certainly has a mission right now. >> and the little bit of electioneering moving to the first tuesday in november of this midterm election you. let me get through the data check here and we look at stocks, bonds, currencies, and commodities. we bounce up today. trade, yield, a risk off particularly wrapped around ukraine and crimea as they go into the weekend. 1.40,ro making a dash to

a huge deal for germany. let's go right to foreign exchange. i am watching the ruble, the 10-year russian peace as well. and the euro-yen close-out, strong euro and weak yen. havene and crimea, you may some fatigue over it. here is a reality for prudent ssia, lowerutin's ru yield and that we go and you see the new spiked up. you do not see the movement in the ruble because the russian government is stepping in everyday and intervening to contain the ruble weakness. >> exactly right. they are effectively defending the currency. an incredible move. that takes us back almost 2007, 2008, will we saw the kind of crisis, that is what 10-year bonds were doing back then and now we are seeing it in russia.

>> as we get to what will be an eventful weekend in ukraine and crimea. we scoured the papers and websites. here is scarlet fu with a front page but >> we need to stay on the malaysia airlines jet. still no trace of it but there is a press conference in quality kumpur.n kuala we have no new information but they said they lost contact with the airplane while transferring to vietnam. remember, they lost contact about an hour after takeoff and there are a lot of questions whether the airplane travel to the west as opposed to the east. -- it is whether strangely the pilots turned off the transponder and it suddenly disappeared. >> we will check in with our reporter on location shortly. we also want to bring you up to date with what is going on in

general motors. it turns out gm knew about the faulty ignition switch is earlier than first reported. it is all a matter of who knew what when. the data we were working with was 2004, but now it goes back to 2001 when gm was developing the saturn ion. >> a distinction -- that i hear you say earlier, 19 deaths? -- did i hear you say earlier 19 deaths? >> with her 12, 19. i don't want to put the wrong number out. but a number of deaths. >> not one where there is 1, 2, maybe three. >> at least a dozen and they recalled at one point 6 million vehicles. americans get worked up about this because we paid a lot of money to bail out gm. >> "the new york times" headline starts out with lawyers. i'm just shocked. >> just to be clear, this was effectively one of the ignition

devices. you had -- it hangs on your key ring and you press the button. >> i did not know that. >> if you bump it with your knee it may turn it off. >> full disclosure, i don't have the do hickey. i thought all along this was in the ignition -- >> the insurrection of the key in the ignition and whether it could be knocked out as you were driving. >> we will check in with jeff green to talk a little bit more about this, because there are a lot of question marks coming up. -- ukrainee parliament calls on the united nations to immediately consider the situation and crimea. the referendum on whether crimea should join russia is set on sunday. there are questions on whether the vote is legitimate or not. the president warned russia that annexing crimea will be expensive. >> ice ukraine fatigue. i look at the newspapers and it

is there but it is not there. a lot of other news, in new york, the explosion we had yesterday. but we go into a huge three or four days here where there is serious military movement, whether in crimea -- concert.about the ukraine fatigue. what is this is just the tip of the iceberg? what if this is a whole new moment in u.s.-russian relations? guest from the eurasia group said this will drag on for years. we are watching every step that there is a bit of a sense it is not in the diplomats' hands. in the 7:00 :00 hour from johns hopkins with a different -- perspective, the muslim population in crimea in ukraine. other top stories. >> eventful day. futures up a little bit. andworld grabs at each

every news item in search of malaysia airlines light 370. for the kingdom of malaysia there has been an intense global scrutiny. officials are learning crisis control and management of the media in real-time. amin spearheads bloomberg's efforts in singapore. i think we know the news flow right now now has been really taken by the people -- how the people of malaysia have adapted. d.l. -- tell us the mood in kuala lumpur. >> the mood is pretty somber. everyone is wondering how can a plane go missing and not leave any trace? six days and no clue. everybody pretty much is confused. there has been pretty much conflicting information. >> we give everyone the

headlines from the press conference but we don't really get to see what the executives look like, how they sound. do you censor there is panic, confusion, despair, futility when they give announcements? pretty calmhas been on their part of the media got agitated yesterday. yesterday for instance it was pretty heated about the accuracy , authorities not being truthful. but all the time the authorities have been pretty calm saying we are doing everything we could. >> the press conference just wrapped up and there are so many more questions than answers. what is next for malaysian officials? and itsearch continues is asking for more help from the world. more countries have offered help. some things have been cleared up. there were reports that the

plane flew for four or five hours after they lost contact that they say it is inaccurate. one of the most important things that came out from this particular press conference. >> thank you so much. in from singapore. we will continue to cover the search for the malaysian airplane throughout the day. we are honored to bring you from cornell university, the former head on the china watch at the international monetary fund and author of the acclaimed "dollar trap." this book is getting rave reviews from leading academics and government officials worldwide. on china, i am confused. we were talking about that earlier. in a summary, are they having good economic growth right now? what's a are having a difficult

spot because many of the factors that were driving growth -- >> they are having a difficult spot because many of the factors driving with a beginning to slow down. fiscal policy to bring growth back if it slows them. they have more than enough space to make it recover. the question is whether in the process of doing that and stimulating growth they create more risks. that is the difficulty they are grasping with. a lotre trying to do it of reforms but if they stumble" it hurts reforms. >> the mother of all juggling acts. we will get into that a little bit further. we do want to tap your brain on what the imf is next when it comes to ukraine. you worked there for years. what is the next step as everyone negotiates how ukraine gets financially? >> there is the politics and economics. ukraine is in a vehicle -- very difficult but economically. but the imf will go in and say they -- is that they need to make certain reforms to get back on track. there is a lot of support from

the u.s. in particular and from the world community at large. quick to does madame lagarde speak to in europe? >> it will be the germans to take the lead. >> bottom line -- >> what merkel says matters, because she does have the ear of putin to some extent. >> she's also got the money. >> and she's got the money. >> the dominant economy as well. let's get to company news right now. here's a scarlet fu. >> citigroup considering clawbacks in the mexico vandal -- scandal. link to the $400 million loan fraud. it outlines the options and predatory filing. herbalife.ms for the magician company says the lead -- opened an investigation into the business practices. a big win for bill ackman who has been trying to convince

regulators to shut the company down. he made a very public that against herbalife. herbalife says it hopes the investigation will clear up misinformation. volkswagen is ahead of schedule. the carmaker may sell more than 10 million vehicles this year, that is four years earlier than planned. it comes as it introduces more than 100 models this year and next. heart of the efforts to overtake toyota and become the world's largest carmaker. >> quickly, that is the first herbalife news that gets my attention. my experience is when somebody mentions the word pyramid, there is always something in the closet. >> it is not clear whether this is a pyramid scheme, they are just looking into the business practices. >> innocent until proven guilty. but with somebody mentions pyramid, the radar goes up. >> here and it is very specific. it means there's more money going out then is coming in -- pyramid is very specific. >> going back to amway and the

rest of it. if someone mentions it, it gets my attention. >> auto recalls are common. criminal investigations into auto recalls, not so much. when gm's delay recalling 1.6 million vehicles and what it means for the new ceo. our twitter question -- is the new gm brand tarnished by an old recall? we want to know what you have to say. this is "bloomberg surveillance ." we are on bloomberg television and streaming live on your tablet, your phone, and bloomberg.com.

♪

>> good morning, everyone. "bloomberg surveillance." up on bloomberg television this morning, tech although women will quake here and bloomberg television. is so coolian, this

for school i can't keep up who this guy is but women quake and he will be with us at 11:00 a.m. this morning. they can hardly contain themselves. >> i hear he wears bow ties on the weekends. >> cool, he is a hipster. >> there is no irony here. >> it is "bloomberg surveillance ." i'm tom keene with the scarlet fu and adam johnson. >> baptism by fire. g.m.'s new ceo mary barra already dealing with a criminal investigation. congress wants to know why the company delayed information on the failed ignition systems going all the way back to 2001. we are joined by detroit bureau chief jeff green. how is she dealing what appeared to be a total fail by her predecessors? >> she has not been in public. she has been keeping a low

profile. she said in the most recent statement that she is leading the effort behind the scenes and that is why she is not out front. definitely it doesn't come back to her all that much. it was four or five ceo asiago when it happened but it is a rough start here she started out at the state of the union being praised by hillary clinton and now being embroiled by this really messy and ever more consultative recall. >> one of the stunning facts of this whole investigation is married by her own admission says she did not even know this until a few weeks ago. how is it that something that involves multiple deaths does not get up to the ranks of higher management? look atu were to everything that involves deaths in the auto industry -- about 30,000 people die on the highway every year and all of them are in a car in some fashion. there are always hundreds and sometimes thousands of lawsuits. it is sort of a system of which was come to the ceo. it does not look -- usually rise up until it looks like some

action is being taken. he knew about this a long time. they did not consider the car turning off on its own to be a safety issue. they have known it was an issue and they dismissed it 10 years ago. >> i want to bring in the politics. any sense gm is being picked on because it received a government bailout? -- thething with toyota idea with toyota having the hearings, it seemed to be sort , as the issue got more more complicated, more publicity and more discussion of the deaths. the one thing gm has in their favor is they basically said, we are wrong, we are sorry, and we are trying to figure out what is wrong. they confessed and now they are waiting for the beating. , trulyr prasad with us the world expert on china. sad when you go to the firstou see g.m., assault of american excellence

in china. do recalls like this damage the american brand abroad, particularly in china? >> it certainly does because this is one of the reasons people come to america is the quality. that their institutions carmaker's will do the right thing and the carmakers themselves -- >> fim in chengdu and i put an audi and agm on the street, which card to the chinese aspire to? >> right now they are doing equally well. audi has a certain image. i think this issue certainly her to the g.m. image. is with us all our and jeff green joining us from detroit. jeff, as always, thank you for your perspective. the twitter question of the day -- is the new gm brand tarnished by an old recall? next hour,p in the we have dean of the johns hopkins school of advanced international studies and he joins us to talk about why russia is not exactly the

partner america expected. this is "bloomberg surveillance" on bloomberg television, streaming on your tablet, smartphone, and bloomberg.com . ♪

>> good morning, everyone. morning.ionally busy futures up five, dow futures up 34. adam gets a started with top headlines. >> at least six people confirmed dead in yesterday's explosion that leveled two buildings in east harlem in new york. nine people are still missing and more than 60 injured in the blast and fire. investigators believe a gas leak was the likely cause. energy company con edison received a call about a possible gas leak about 15 minutes before the blast occurred.

ine signs of a slowdown china. industrial output, investment, and retail sales grew less than forecast in january and february. retail sales rose at the slowest pace in a decade. factory production got off to his weakest start since 2009. two people killed and more than 20 injured when a car driven by a suspected drunk driver crashed into a crowd at the sxsw conference. people say the driver was trying to flee from being arrested when the car crashed through barricades that up at one of the venues down in austin, texas. sorry to say, those are your top headlines. >> it has become such of a bang up effort. i spoke to someone who had just gotten back and she said it was a different festival this year. colder weather earlier. normally it is a warm and springy. >> usually you get a ton of new announcements. we have not had a new iphone in

a long time. >> and tragedy as well. morning must-read, we have three of them up for you. here is adam johnson with the smart morning must-read. >> of this comes from nicholas columnist from "the new york times" writing the following -- antibiotics are routinely fed to animals and birds to help them grow quickly in crowded conditions which could lead to antibiotic resistant infections which strike 2 million americans annually. four fifths of the antibiotics consumed in this country go to farm animals. >> you mentioned earlier the bacterial immunity. taking so many-- of the bacteria out of the system that our bodies can't learn how to deal with them. cornell, dosad from you keep the meat when you go to china? >> i don't eat meat anywhere so i am safe. >> of this is a big issue for the country as it tries to secure the food supply.

>> they are trying their best to --l with the crisis in china us,re they different from where they need antibiotics for the animals? >> the problem, given the amount of demand they want to produce as much as possible. that requires antibiotics. >> are we pushing too far? >> coming up, we are going to discuss the malaysian airline jetliner disappearance and the effect on global tourism. ♪

>> good morning, everyone. "bloomberg surveillance." it is a different new york city for "bloomberg surveillance" here in the 6:00 hour, daylight

saving time, giving us darkness in the morning. >> it is dark out there and cold. >> of course the bright spring evenings. there is the chrysler building off to the left. scarlet fu and adam johnson with me this morning. let me do a quick hit a check. a little bit up. as adam mentioned, a lot of economic data today that may rile the markets. 8:30 p.m. -- beginning at 8:30 p.m. 1.40.ro getting out to really getting into extended strength to the euro. diminishing the china pharma us -- ginormous export economy. actualerms of gainers of individual companies, solar city jumped seven percent yesterday. it will be offering solar power in about 60 best buy stores, and customers will get a gift card if they sign up for solar servers through best buy for a certain time.

herbalife down seven point four percent. the biggest loss since late january. u.s. federal trade commission is doing a probe into its practices. bill ackman thinking finally something is being done. >> finally. yet he has been long fannie and freddie mac which got crushed yesterday. on because we have all been mystified by what happens with the missing malaysian airline jet. >> so bizarre. >> you have to wonder what happens next. industry a report said grew 10% last year. air disasters discourage people from booking their next big trip? does the unrest in places like ukraine discourage travel as well? we are joined by world travel and tourism council president and ceo. david, welcome. >> good morning. >> as an industry insider, you work for budget airline, a

travel company and hotel as well, what is your first thought when you hear about an incident like the malaysian airlines jet? >> our thoughts obviously go to the family and people affected. the debate about why it happened and where it is at the moment continues to rage. i was listening last night to a variety of different theories, whether cockpit error, whether catastrophic failure of electrical systems tom a there are many, many issues being debated at the moment. but it does not impact travel generally speaking. these accidents are very rare and when they happen people continue to travel as normal. >> does it affect leisure leisure travel in the business traveler? is there a distinction to be made? looking for aople deal? certainly a country like malaysia needs to make sure the tourism industry does not fall. areortunately the accidents so rare it does not create a blip on the amount of people traveling. if you look at the growth of travel in the last decade or so,

the amount of people traveling continuing to rise, and effectively the amount of accidents dropped as a percentage. >> who do you represent? >> we represent private industry globally. >> delta airlines -- >> all the big airlines. >> i am absolutely impressed by the effect -- success of the business. who do you fly to china typically? >> at united a lot. y, maybe i prefer catha whatever. the planes are jammed. have you ever seen your industry in such good health as it is right now? what's it is an extraordinarily resilient industry. in the u.s. alone, $1.4 trillion. >> we were talking about earlier, the points guy, and one about frequent flyer miles. we have this horrific accident in malaysia.

forget about that. i have never seen it like this. how did your members get here? here because people are inclined to travel, whether for business or leisure. despite what is going on, whether the economic environment or the leisure industry. as a sector we always grow ahead of the economy. in the u.s., the industry grew by about 2.7% last year and 3.5% forecast this year. he always grow faster than the economy. >> the ceo of united airlines told me for the first time in decades, if not ever, airlines like his are being run like businesses. that in part means fewer airplanes being run, which is why they are crowded. what else are you seeing that airlines are doing differently? >> the balance between capacity and demand is about right looking around the world. management internally is very efficient so they get the right balance in business and leisure

cabins. generally around the world industry is expanding very fast, particularly in asia. >> i want to get back to our guest host for the hour. a question? >> i travel, i have no choice. all of the major airlines around the world have very good safety -- records. even the most efficiently manage companies occasionally have an incident. but china growth is just enormous. another busy building 69 airports to absorb domestic growth. but there have not been incidents in china for at least a decade now. it is a very safe way of traveling, much safer than getting into a car. powerful --s a chinese tourism is a powerful demographic. we saw the dispute between china and japan, he can make or break it. and baby boomers a powerful travel as well, the one to have the time and the means. i was a change in the industry?

>> china has grown from 58 million outbound passengers to 100 million last year and it will be 200 million by 2020. overtake the will u.s. as the biggest travel and tourism economy. it is growing incredibly fast because the government is very focused on the industry as a source of revenue. >> i know you are speaking for the industry and you have the phrases you have to say. i want to ask you a tough question. it is march. every parent out there is booking their offspring to go wherever -- i am sorry, we have a bias toward american and european air carriers. are you suggesting to me that the safety and integrity of various emerging market airlines is the same quality as delta or united or american? >> it is difficult to make those comparisons other by looking at

accidents, incidents, and fatalities. if you look at statistics, flying on asian carriers are equally safe. >> you are willing to make the statement after what we saw in san francisco with a korean airliner? i don't want to disparage any nation but this is a major question for parents. when we were kids at -- it dad, i am going to london, i am going on icelandic airlines and you would here, no. lufthansa actually has its own division that provides maintenance for a lot of other airlines. >> i am just bringing up the emotion. and understand the emotion people make those kinds of decisions. but you just have to look at the statistics. a safe way to travel. >> i hope you can come back. i think it is a huge issue, just because of the tragedy. >> world travel and tourism council president and ceo. >> futures up to five, dow futures up 34 of the 10-year yield 2.73%. atretail sales coming out

8:30 a.m., the data point of the week. speaking of retail sales, $32,000 is the average price of a new car or truck. it turns out that not many families can afford to drop that kind of dough. we will discuss it on "bloomberg surveillance." ♪

>> good morning, everyone. i'm tom keene. with me are scarlet fu and adam johnson. >> today marks the first anniversary of pope francis being named as head of the catholic church and he's breaking with tradition yet again, celebrating the anniversary -- anniversary at a retreat. rents in new york city fell last month, it decreased 2.3% -- mine did not go down. i need to get the average apartment. forgive my apartment. .ccording to a survey it was the sixth straight decline after rents soared 16% in a two-year span. the wall street bonus pool rose 16%, topping -- the average $164,500, the third highest

amount on record. boosted by pay deferred for prior years, according to the new york state comptroller. those are your top headlines. >> it will be interesting to see the dynamic. the last couple of days we have seen challenges in fixed-income trading. >> concern that volumes are down 25%. >> revenues down about 25%. and the european banks are harder hit than u.s. banks. >> single best chart. >> our single best chart has to do with cars. the average price of a new car in this country is $32,000. about $633 monthly payment. the average household cannot afford that. --nterestcom calculated interest.com calculated on with the median household it's been a in car payments, principal and interest, and according to affordability, washington, d.c. leads the list, they can afford

about $32,500 printable and interest. san francisco is second. boston is third. in terms of cities where affordability for cars fell, tampa and miami. if you live in either of those cities, your ability to pay for a car dropped off in the last year. san francisco and atlanta saw increases in affordability. >> this speaks to per capita. eswar prasad with us. truly the china watch at the imf and now cornell university, this speaks to the dreaded word per capita which you can play with, you can manipulate it around. >> it is a very important measure of well-being. you think of china being a very large economy in the notion china could become as large as the u.s. economy, one still has to remember per capita income in china will be about one fourth or 1/5 that of the u.s. the middle class that will

burgeon in china -- they will eat more meat, drive more cars. what is the insight beyond what we talk about everyday? >> in china there is going to be demand, not just for consumer products but things like health care. that will drive a lot of world demand and also drives the way people think about how they spend their consumption baskets, what is the driver for demand. >> how do the average chinese get health care now? >> a lot of it is paid for by themselves because the state provide some health care but a very limited amount and not the high-quality the middle-class chinese one. >> that is why this is a complicate a question that help us understand quickly, why is it china is so far ahead in growth in trying to upgrade the middle-class class and so behind in pollution control? >> this is the part of -- part of the reason why they are growing so fast, they managed to push forward the industrial sector, something every emerging

economy is trying to do. china has done it with spectacular success. it has been financed by banks and there are lots of problems building a. one is pollution and the other is economic. what they decide it is it is the price worth paying in the short run to get the economy going. right now, what a story yesterday in new york city. some real scrambling at our world headquarters as people tried to find where loved ones were on the upper east side. adam, you've got the story with photographs. >> we will go through a series of photos talking about the fire -- the explosion really that was such a disaster. starting with the number three photo, the explosion reported 9:30 a.m. this morning, 15 minutes after a nearby resident reported a pervasive smell of gas. >> right now the train tracks. >> metro-north trains were disrupted for hours because of that. look at those images. >> i couldn't get home yesterday because of the tragedy. >> a spokesman for the new york

city fire department confirmed to six people have died and five morehead state -- has serious injuries and at least 20 others with minor injuries. windows were blown out from as far as 10 blocks away. >> those on the upper west side could smell the fire from where they were. >> test amazing. number two, a close-up up of the building. firefighters listed above blowing smoke to spray water. the fire department sent 39 160 eightquipment and firefighters. unfortunately, no members of the new york city fire department have been injured. it is incredible. 168 firefighters and no injuries? >> work today will be hampered because it is really cold am obviously. that will get in the way of how much they can get done. >> look at the smoke. those guys, they are heroes. they really are. which,onto our last -- it is not really fair to call it number one, but just a shocking image. cars wrecked by the blast.

debris into the adjacent elevated train tracks. for 20 squarewn blocks. mayor bill de blasio saying this is the tragedy -- a tragedy of the worst kind. leadse new york post" with the word gas. we are assuming this is a gas explosion. especially since there was a call put in 15 minutes before. has whatre department is effectively a forensic team of expert to go in and they will find the exact place where the pipe ruptured before they issue the final ruling. >> for those of you globally, a story that transfixed us yesterday in new york city. beyondre going to move new york city because beta came out yesterday showing china's industrial output trailed estimates in january and february. 2014e 7.5% target for

achievable? we will discuss that next on "bloomberg surveillance." ♪

>> good morning, everyone. "bloomberg surveillance." as we go into an important weekend in ukraine and crania,

-- crimea, the diplomacy is front and center. a beautiful sunrise over the capital of the united states of america. >> i'm scarlet fu here with tom keene and adam johnson. let's get you some company news from the files of "bloomberg west." the newclose to picking york ipo. no timetable on whether the company will go public but it is estimated the initial public offering could be more than $15 billion. ebay digs in for its battle with carl icahn. theceo has consulted with apple ceo tim cook and the netflix headed reed hastings, both previous targets of carl icahn. the investor has been calling on ebay to split off paypal but the breakup would rob ebay of its fastest-growing business. google is hunting for a store right here in new york. the firm has been looking on the soho neighborhood for a location

for its first stand-alone retail outlet. the plan comes as google expands into smartphones, eyewear, and laptops. that is company news from the files of "bloomberg west." could you imagine walking into a google store? >> would be like an apple store or microsoft surface store? iphone and iapple got suckered in. i have apple everything. it all works. >> but the apple store is a holy grail. microsoft tried it. the microsoft store i saw six months ago was embarrassing. >> you realize marketing really does matter. there is nothing cool or edgy about microsoft. >> i go back to the ecosystem. apple has an ecosystem. we all agree. does google have an ecosystem? not to the same -- they are working on it. ultimately they might be bigger. ours, watches, eyeglasses. thehey have not reached average person yet. maybe for a couple of the early adopters in silicon valley.

>> kind of weird to say, but beautiful. it looks good. one ofs get started on the books of the winner -- mohamed el-erian, nouriel here is what the pros read. here's what they listen to. you don't know the name eswar prasad. you should. there are too many mysteries of china, and the chinese economy. everything said and done. the communist government, they must react to the immovable force of keeping millions employed good growth is slowing, maybe. old or middle is needed amendment for sure. professor prasad is from cornell university, but it does not describe his impact at the international monetary fund. his new book is "the dollar trap." there are so many myths and misconceptions we hear everyday about china. what is the number one thing that drives you nuts on you hear the bladder about china --

blather about china? eache amount of interest time there is a little uptick or downtick in the data. a littleespecially, move here or there means something for the future, for the next 10 years. it seems to be always overblown. >> how do you measure the economy, the vector of which way they are moving? >> the whole picture, a series of data. get aou work in china you sense of what data means more and mean less. ultimately it comes from experience any feeling for the data. or looking at an indicator even a couple of indicators can see a very partial picture. >> what means the most? debt defaultporate that china allowed to happen or is it the data that seems to come in weaker and weaker? >> the biggest thing right now is china's economic reforms. they are very committed to reforms. the big question is whether they have enough room to push all of

the reforms, and the reforms themselves have a lot of risk. the question is whether they can get through the reforms without stumbling. if they let growth slowdown that could complicate the process. a difficult balancing act. you can't allow the problems to disappear overnight because that could create more tensions in the short run. near astocks in china five-year low. meanwhile, the dated today, factory production up 8.6%, retail sales up 11.8% come in fixed investment up 17.9%, and we are disappointed? >> the financial markets are very much disconnected from the real economy in china because way has gone in a different and sometimes, sometimes go down. china is slowing down but those numbers you mentioned are very impressive by any standard but china is slowing down by its own standard. >> you have been very good at blending economics and finance

into the culture of china. i almost think of you of bringing over the work of jonathan spence and other academic some decades ago. you speak in your book about emerging markets getting religion. what religion are the chinese leaders getting right now? >> they know unless they move to a more market determine system, both in terms of enterprises and the financial market, they are not going to be able to deliver on growth thomas and they need growth for legitimacy. >> tell me about the cultural divide between the manchurian's to the south, one nation or separate nations? >> the notion that everything is run by beijing is are we not true. the provincial governments have enormous authority in terms of how they manage. it beijing sets guidelines but ultimately the provinces rule. >> can you come back -- you can do a whole show just with scarlet.

from oxford onen the military. fabulous. thank you so much. you got to come back. for ex report, it is all about the euro, a strong euro -- forex report. ♪ . . .

investigators turned to boeing for data on the final moments of the flight. the search continues for the airplane. mount as crimea moves towards a referendum. the ukraine asks for united nations assistance. there is only one drexel are. what is retail to do? good morning. this is bloomberg "surveillance." i'm tom keene. joining me is adam johnson. our guest host is mortimer. he is the executive officer. they consult. we see retail sales this morning . it is a busy morning. starting in china, industrial , will coolail sales and signals an economic slowdown in the country.

on a better note, australia boosted payrolls by the most in 22 years. that sent the currency higher. new zealand is raising the key interest rate. shifting gears over to the united kingdom, prices went up at a slower rate than expected. the economic data and the united states, we have retail sales and that is a big number that we are focused on. the initial jobless claims are also at a: 30. we also have the bloomberg index. at 2:00, the monthly budget statement. there is obviously a lot happening today. we have earnings before the bell and after the bell. at 2:20, president obama delivers his remarks and delivering a presidential referendum to raise overtime. we'll bring those remarks on bloomberg television. what you have for company news today? >> let's start with general motors. they were aware of an ignition

switch program in 2001. general motors was saying that they investigate the issue in 2004. the automaker believes that they have fixed the problem. 1.6 million cars were recalled and it is linked to a dozen deaths. the federal trade commission has started a civil investigation into business practices. is as a hedge fund billionaire has been trying to convince regulators to shut down herbalife. they hope that they clear up investigation -- allegations involving their sales practices. the firm may try to get money back that is linked to the loan fraud. ons werehese opti outlined. >> we are going to interrupt and go to an important conversation on malaysia airlines in america.

there are only so many authorities that you can speak to on the integrity of aircrafts and global airlines. we are joined right now. she is a former inspector general at the department of transportation and always one to speak of controversy. it is wonderful to speak to you. what is your perspective? what is your analysis of the events that we have seen? >> i do not think it is a model of an air crash investigation. i do think that the news of the day is, in terms of this conflicting story from the wall street journal about data from the engine. that was expected and is reasonable to expect. the malaysian authorities say they do not have it. ist has to happen on day one , when some thing happens, the team that goes out to the crash and the team you never hear

about that goes to get piloting records. they are unbelievably important. for malaysia to say they did not have the data is shocking. >> how can united states assist malaysia right now as they go to the morning and 8-10 hours. >> the way to help would be assist in the investigation. the military role lays a big role in the civil airline clash -- crash. it is a civil investigation and i think the ntsb could help them by showing the way of doing a moderate investigation. they have had several crashes. united states has more experience than anyone else. it would really help. boeing was a party to the investigation because it was a boeing plane. they are experienced in investigations and they should be coordinating with them. >> there is a lot of

coordination going on between the countries involved here. there is no real hard evidence about what happened. what theory make sense to you watch a mark is there a theory that make sense to you -- what theory make sense to you? is there a theory that makes sense to you? >> i think they are looking in the wrong fights. 777, is an jet, the great plane. you have to track it. the terrorism and hijacking scenario does not make any sense to me. they say that it was heading back into the airspace. terrorism,cked or they would fly. same with vietnam. itwent off of radar and could no longer transmit. that makes the most sense. the question becomes, does the

plane go down? they know it did not go down there because there is nothing to find. the plane went on. the 777 fights to fly. if it is losing systems, it shuts down unnecessary systems. that is what a triple seven does. it had a catastrophic mechanical event and went on. >> you make your name on lousy aircraft parts. official, youblic have to be careful. is there a difference in the mechanical processes and systems in american and developed european economy airlines versus of emerging markets? are they the same? is there a distinction? >> there is a huge distinction in the part supply chain. we were doing an investigation in the mid-to-late 1990's.

a lot of that maintenance was coming out of southeast asia, singapore, malaysia. unless the airlines are careful, they can get that parts. particularly engine blades and anything that is expensive. there is a knock off for it. >> when you fly to singapore, you go on a major carrier or do you have confidence with secondary airline carriers? >> now. -- no. major fly, i look for carriers and i always try to buy tickets in the u.s. and do u.s. throughout. we are not great at everything. we have addressed the part and the maintenance apply. a regime and regulations

that others do not have. >> what regime is in place to make sure that u.s. terrorist do not use the cheaper substitute -- carriers do not use cheaper substitute parts? >> what is most important united states is that if you use bogus part, it is a criminal offense and that is one good set of deterrence. if you do it and you do it knowingly, it could carry a jail term. that is the work that i do. >> based on your experience of dealing with these issues, what type of products going into the engine would lead to catastrophic failure? >> the turbine blade and the spacers. they are the components they keep the combustion contained in the engine. if you have an engine failure, it is turbine blades. >> tell me about the pilots and the difference in trading --

training in the united states versus southeast asian carriers. are they one and the same? >> they can be the same. set basic others parameters for what you have to be trained on. in the united states, we have put in, on the backs of anddents -- they say washington that we legislate by anecdote -- we make changes after something happens. we have more require training and hands-on training for events. we require more crew resource management and pilots have to challenge each other. we do not allow guests in the cockpit desktop that -- t. we do not allow smoking. >> thank you.

mary is the former inspector general of the department of transportation. important breaking news from general electric. >> they are looking to complete an exit from retail finance by 2015. , they ared spinning off an ipo. financial andled they expect to complete the ipo later this year. >> they say they want to reduce the reliance on ge capital. ofwe will give you the pulse retail america. more immersing your will join us. -- mortimer singer would join us.

>> good morning. i am tom keene. this matters now. officer. executive we came out with online success for bricks and mortar retailers. it has been a challenge in many cases and has been less successful. smartphones and technology can save the day. >> what is remarkable today for

mobile and having a phone can catalyze sales. we have a certain amount of lemons and juice coming out of it. we are going to choose the lemons more and we are seeing major things. panict is the level of among retailers right now? there is a stereotype of dynamics. what is happening in retail management? >> the big shift that is happening right now is the fact sayinglot of them are technology companies and they are investing huge amounts of money into technology. there are 700 engineers in separate cisco and they are really investing heavily. and they aresco really investing haveavily. >> what is on the channel --

omnichannel? >> it is one big hype of commerce. 41% ofdo you respond to sales coming from internet sales? >> they end up show wrooming. throughales are done the stores and at home with browsing before they get there. >> is amazing how much. -- it is amazing how much. do you have a company that has best practices in combining? >> i think macy's is fantastic. ralph lauren and burberry are with digitalng initiatives that the customer wants. >> 10 they do the same thing for

apple? >> they are focused on the retail stores and they see themselves as a luxury brand. she is a brilliant executive. >> i cannot wait to come back and talk to you about mergers. buy six, get one free. we will look at the debate over the economy and janet yellen. good morning. it is bloomberg.

>> good morning. bloomberg surveillance. we have a question for you today. is the new general motors brand tarnished by a recall? how does gm handles the handle the-- initiative? this is bloomberg

"surveillance." our guest is mortimer singer. andre looking at retail economic data coming out at a: 30. we have -- 8:30. adam has our top story. >> nine people are still missing and more than 60 were injured in a blast in your city. -- new york city. about a was received gas leak before the blast occurred. anniversary of pope francis being named the head of the catholic church. he is celebrating the anniversary at a retreat in italy. thes the first to mark anniversary outside of the vatican walls. three people were killed when a drunk driver crashed into a crowd at the sxsw festival. the driver was trying to avoid

being arrested. he crashed through a barricade. five of those who were hurt were hurt critically. >> tough news there. it seems like sxsw is a little off this year. >> a little off. less product flow and less news announcements. and then, this happens. >> at bloomberg surveillance, every once in a while, there is a research note that makes a stop. america is stuck in the slow lane. our gdp is now two percent. too many, that is unacceptable. we hope it would be for janet yellen, as well. we are joined by an economist from morgan stanley with a huge research note. they would be surprised if they saw your note on gdp. is it a bad thing to have a two

percent economy? >> growth over time creates wealth. gdp, it is a bad thing. >> is a bad thing. -- it is a bad thing. is there a policy prescription to get back up to 2.5%? >> the first thing you have to ask yourself is how we get to two percent or three percent 10 years ago. we had a severe financial crisis. we had equally performing economy and physical capital stock. we are growing more slowly. some things we can change and some are harder to deal with. our population growth is slowing. we are getting older and demographics suggest that there is a secular downtrend. >> that is why we go to morgan stanley and we are finding out that we are all getting older.

>> we are. i would like you to connect the dots to inflation. the efforts to boost inflation have fallen short and it has not gotten there. part of it is that stabilization. wife that that -- why is that bad? >> the federal fund rate and the nominal policy rate is stuck at zero. if inflation and expectations fall, the real interest rates rise. fed policy is tighter than it was one or two years ago. if you think there is slack and the federal reserve is below the goal on inflation, it is short of both of these goals and the policy is tighter. >> how important was the statement a week ago at the federal reserve when he said that we can already see a change here? are we waiting for more data? >> we are waiting for more data.

we see the weather and we think that the activity will pick up. while we are only going to produce 1.5% growth in the first quarter, it will pick up. >> this important. we are going back to the cbo and we are going to a subdued view by smart people on where the nation is going. >> there are two issues here. which is more concerning to you? participation or productivity growth? >> labor force participation is voluntary. kids, are deciding, young to stay in school longer. they are acquiring skills or enjoying life more. what is more troubling is the cyclical element of it and people getting discouraged because they cannot find a good job. that is bad.

ultimately, productivity drives wage growth and real wages are what can help solve the problem of income inequality, declining labor and income. >> let us focus on what is not happening. five years after the end of the recession, what is the biggest driver going forward? part of thee continent. we are good at extracting an energy that we do not like to ship and that gives a cost advantage to manufacturing. financial institutions lepard eraged andked -- delev derisked. the u.s.ndercount >> thank you very much. we will be joined in a bit on the ukraine and crimea. >> look at what the president

has been doing with minimum wage. he has a new bone to pick with employers. >> overtime and minimum wage. >> it is affecting the retail industry and we will speak with mortimer singer about that. this is bloomberg surveillance. good morning everyone.

>> the sunrise in new york city. very cold in new york city. tower going up to the right side. i got the 90th floor.

it is like the gdp of madagascar are to buy -- >> the view out of central part. got to have it. empire state building. good morning. >> company news. general electric is filing for an ipo of its north american retail finance business. it is the first step towards a planned exit of the retail finance business. volkswagen is ahead of schedule. it may sell more than 10 million vehicles this year. that is four years earlier than planned. its expansion is part of the efforts to overtake toyota become the world possible are just carmaker -- world's largest carmaker. a civil investigation into business practices. this is a win for bill ackerman. he has been trying to convince

regulators to shut down the company. that is today's company news. >> a big announcement from herbalife. >> the president will be making a big announcement at around 2:00 p.m. on the minimum wage and overtime issues he has been pressing so hard on. >> gap said it was going to voluntarily pay its people more. highlight the the need to increase pay for these workers. the chief economist of morgan stanley is here. mortimer singer is here as well. is this what is going to get our wage growth going? >> wages rise with productivity growth. minimum wage, overtime, it is about the distribution and goes into the direction of generating income for lower skilled

workers. in the scheme of things, it is small. affect 5ime rules million workers at most and maybe add 15 basis points to personal income. it is small in the scheme of things. >> this is an important question. do people in the fed talk about the minimum wage? is it an important issue? >> some of the most important research in the mid-1990's came out of the federal research boards. janet yellen is a labor economist. the short answer is it is not a big macro impact. reason the a

president went to the gap specifically. we talk about the politics of lousy retail jobs. employers are using software to schedule workers that maximize their profitability while maximizing inconvenience to employees. they often can't string together two part-time jobs to make a full-time income. >> what is terrible about the situation is that often the turnover in retail jobs is always incredibly high and still is. go on to different things. that is permeated and there needs to be more training for these employees so they stick with their jobs. >> what will a future retail job look like? willery store associate

have a smart phone in their pocket so they can check out their consumer, have client ingling -- clientell relationships. that will start coming down so that employees can engage with customers and feel like they are having a job fulfillment that is interesting. infor every job that is lost a store because companies are doing more sales online, how many are gained any distribution of this elite? distribution facility? the experience that we were speaking about -- it is a rising tide. the more sales happening online -- >> it is a net jobs gain. >> it is growing the in-store retail experience. >> thank you so much. with mortimerue

singer on retail. >> retail sales numbers from the government. the city big data point of the week. and of that, we are looking at futures. somewhat higher. >> "bloomberg surveillance," look for us on all of your digital media. i am tom keene. with me, scarlet fu and adam johnson. our guest host, mortimer singer. a retail consulting firm. america focused on ukraine. nation.is a dispensable foreign policy is in retreat. that is the title of an important book on america's foreign non-policy. we see those this weekend as russia begins to annex crimea.

who and what policy should the united states have? that is front and center. vali, bring us up-to-date on what to expect to see in ukraine and in crimea and how the united states will react. set thatks fairly well may not bein crimea an open vote. there are reports of russians coming from russia across the border to vote. they are likely to vote for annexation. the government is likely to endorse that vote and move in the direction of ink ruling -- including crimea back into russia. willnited states' reaction be limited.

we will support the government in kiev. we will work to put sanctions on russia and try to target putin and his circle. it looks like the russians have factored these reactions and and have decided they could bear that cost and that they have a a lot of room for push against the united states and european union. >> we spoke about your perspective on the arab spring in the muslim world. i am working with the 12% numbers. how will those muslims be treated by russia, by the crimean's and by ukraine? in crimea and ukraine as a whole, they are much happier being in ukraine than in russia. most have not had a good experience with russia. chechnya -- of treatment of chechnya.

in crimea are not happy and likely to have a backlash. they are a small minority. they fear the russians may push them out of crimea into ukraine proper if they object to the annexation process. crimeans voting to leave ukraine this weekend. the scots are potentially voting to leave the u.k. ofthere a certain sense hypocrisy and saying crimea cannot have this vote? >> the vote has to be done in a fair or freeway. a longland, you have process of demand for self-determination for autonomy. it is a grassroots process that is happening through existing

constitutional channels. you cannot have foreign troops and put in aountry referendum that is not endorsed by the government of the country from which this territory is .upposedly going to succeed >> that is a good way of putting it. how does this play out in terms of the u.s. attempts to deal diplomatically with iran and syria? russianse handled the in the way of treating them as a major partner. it is quite possible the russians will become less cooperative. the syrians will begin to drag their feet on fulfilling the

chemical weapons treaty. al-assad will have a vote. >> we are going to have to leave it there. vali nasr from john hopkins. we will be back. ♪

>> good morning. i am tom keene. liu.orld stops for betty what you have for us today? and of the formal had -- former head of ge financial. we brought him onto talk about the media news that has been out. you had added sweeney coming the surprise resignation. also, warren buffett buying into a local television station. does this make sense? newspapers, local tv. is he on an adventure right now? people are wondering what he likes about local media stations. robert wright with betty liu. morning movers.

we have a lot going on. >> herbalife is on the move again. saying the federal trade commission is looking into its business practices. it is a civil probe. they're moving up slightly, rebounding a bit from yesterday's lunch. -- plunge. i have to look up a peer amid scheme. >> more money going out than coming in. >> let's talk about dollar general. they make target look expensive. >> it is just outstanding. >> down about 2.8%. the company came out with earnings -- the earnings were roughly in line. up 3-4%. are

guiding down a little bit. it begs questions. what is happening? value segment of the industry is tough right now. grow -- theyet and grow every year. they are not updating, not investing in technology or their stores. customers are seeing bright and beautiful and the new big boxes and that is eating into the old chains. >> who does low and right? low-end right? >> i still think target. is probably a good thing for the industry. very scary right now, but

ultimately, they are very talented people. >> where is the middle ground. >> pennies feels like they're coming out of the trough. that they are in good shape. they are working at it. >> has the gm recall tarnished mary barra's new regime? ♪

>> tomorrow, the smartest guy on finance. -- calomiris.ras at 6:00 a.m. on bloomberg television. calomiris giving his take on how wall street profits will be down in the first quarter. >> this is "bloomberg surveillance." our guest host, mortimer singer.

some company news from the files of bloomberg west. is no longer discussing a hong kong listing. no timetable for when they will go public. thanpo could be worth more $15 billion. ebay digging in for its battle with carl icahn. they have consulted with tim tim hastings. calling onhas been amazon to split off from paypal. hunting for space for a store in new york. storm, as they expanded their reach into smartphones, eyewear, and laptops. >> mortimer singer, retail giant

consultant. if you were to consult google right now and some executive says, we want to be like apple, how do you respond? >> invest in store design. feeling, the physical space, how you convey your brand through retail. it is the best billboard you could ever have. billboard they are testing and developing. has done them, panasonic. >> have they done it successfully? >> yes. seehat is weird -- you can an apple store is sterile and empty, but the message it convened -- conveys is that it is clean. >> it is the urge to merge. retailers are meeting -- mating.

close -- uniclo acquires j.crew. this is the world of mortimer singer. the talent just walks out the door. it can walk out the door. >> because you need a balance of left and right brain, it is hard to find the right executives. in j.crew, they have one of the brightest of the bunch. hopefully they can keep him if something happens. they have to. in terms of the j.crew tie up, if they were to absorb j.crew, it would be part of the middle brain -- brand of retail. other companies have tried this,

the gap with banana republic, gap, and old navy. is it a successful formula? >> i think it is for this grouping of companies. it could be a retail nirvana. have much of a presence here. j. crew has 450 stores here. niqlo has sourcing expertise. j. crew has a 45% gross margin. they occupy a little bit of a different segment. >> do you keep the brands separate? retail mavens. what is in the dna of j. crew? the shoppingmade experience exciting and fun.

they get what people want to wear. about having the designer work with a merchant and the merchant comes in and says we will sell x amount of these kinds of products and we have to move inventory. coming up on >> they have figured out how to merge hot with girl next-door. >> they took things that were separate. they did it. it has an adage, but it is a wholesome marriage. is they tookdid some elements of the brand and created a lifestyle. they brought the lifestyle into their experience. first.he merchandise

>> the females migrate to the coffee table where there are girl magazines. there is all this change. j. crew merging and maintaining -- mating. they 1985 or 1965, still rocking the house in 2014? magazines like people magazine are moving inventory off the shelves. those magazines are the quick fix impulse magazines that get people going to the stores. >> everyone is wearing track pants and work out clothes as normal clothing. loveemon to get to a new -- a new level. is this a hot trend for now? >> it will continue.

the trend will be about making those products more wearable. you can wear it throughout the day. be yoga to lunch. >> at yoga to lunch. yoga on surveillance. let's get to the agenda. i know you have to leave for the radio soon. >> ukraine, the russian bond exploding out overnight. the ruble does not move. russia.ar peace in it tells me there something going on. i do not know what it is. i would never speculate on that. i think the ukraine, crying at -- crimea, russian mix is important. what we heard about the germans front and center, that gets my intention. -- attention. >> angela merkel has the relationship with russia.

tom, i know you have to take off. speaking of retail, target is on my agenda because it is the cover of "bloomberg businessweek." we will be covering this throughout the day on bloomberg television, including target's response. this is coming up on bloomberg television. just to be clear, retailing you do not think this is a long-term problem for target? >> they have to spend a lot of money, as do many other retailers, to making sure this is something that gets fixed. it is tied into systems of how the payments happen. they are all pointing fingers at each other right now. ultimately, it will get fixed.

>> on my agenda, the auto industry. new technology may power the next generation of cars. fuel cells. plug is the one that everyone is talking about. towent from two dollars up $12. crashed down to about six dollars. people are still talking about this. answer our twitter question of the day. is the new gm brand tarnished by a recall? some of the answers, there is less consumer shock with these offenses. it is a big yawn. no is the second answer. in the u.s..sual push it out until you get sued and then you cry against. i love these raw comment on twitter. thegm brand is tarnished by government bailout. they have arty got my money. how do you resuscitate a gm brand?

>> i think it has to come down to the marketing. look at ford. they went to the whole thing and keeping the brands assist -- consistent. >> "in the loop is next. ♪

>> good morning. we are live from bloomberg world headquarters. top headlines -- what did target

know and when did they know it? ofinvestigate the big theft credit card data from target last year. there were warning signs. the retailer may have ignored them. ukraine's prime minister makes his case today after meeting with president obama. we will talk with scott parry of the house of foreign affairs committee. malaysia says it has nothing to hide. thatre rejecting reports the missing jetliner flew for hours after its last reported contact. that raises further questions about foul play. inomakers sold more cars february. were americans buying anything else? we get the answer when the government reports retail sales numbers. mike mckee says we cannot be sure this time what the numbers will tell us about the economy because of the weather. >> it is not what we are spending, but what we are spending it on. the