>> welcome to "lunch money." i'm adam johnson. in company, target. the retail giant had one of the largest data breaches in history. this a bloomberg businessweek investigation. wall street and washington. a lovely relationship. plowing through retail sales. is the white house strategy working echo time to get your last run in for the ski season. one mountain for experts only. we're kicking it off with what

everybody's talking about. the malaysian airlines flight. disappeared on saturday and no one has a clue as to where the plane actually is. there are a lot of conflicting reports. according to people familiar with data gathered in the and or read, the plane continued to fly for hours after losing contact. the communication minister says otherwise. the chinese government released the satellite image which showed a suspected crash area at sea. >> the surveillance released this morning show nine chinese satellites -- we deployed our efforts but found nothing. the images were released by mistake. it did not show any debris. >> amazing. we still don't know. one thing that might actually help locate the missing plane --

crowd sourcing satellite images. >> digitalglobe operates via commercial satellites. there are constantly orbiting the globe capturing images. they can capture imagery over the source area. they release it to the public. we have millions of people on our website right now looking pixel by pixel trying to identify things that look out of place. >> keep looking. the incident has yet to be linked to terrorism. meanwhile, washington concerned with the another potential criminal incident. russia's planned referendum to annex crimea from ukraine. president obama yesterday with

ukrainian prime minister at the white house. the president warned that it would lead to economic retribution. >> we will continue to say to the russian government that if this continues on the path that it is on, not only us but the international community and the european union and others will be forced to apply a cost to russia's violations of international law. >> he spoke to reporters after his meeting at the white house. >> we understand that they will not have any real talks. it's unacceptable to have russian boots on the ukrainian grounds in the 21st century. violating all international deals and treaties. >> john kerry will

meet his russian counterpart tomorrow in london. >> gm shifts to damage control. target survives one of the biggest hacks in history. pope francis marking his one-year anniversary with a tweet. he will spend the day outside the vatican walls. he is the first pope to do so in decades. ♪

>> this is lunch money on bloomberg television. i'm adam johnson. if only we knew. that's what companies and organizations often say when something is horribly wrong. in hindsight, it's 2020.

general motors and target, yeah, they wish it were that easy. jim's discovery of an ignition of law that left 12 dead. target also knew about problems you're going to the biggest data breaches of all time. it even could have done something to prevent the salting. it's the finding of a new bloomberg businessweek investigation detailed in our addition out today. the target timeline. >> the first time the public heard was on december 18, 20 13 when a blogger revealed that the company was investigating a massive reach. the breach itself actually began some time before that. what did morgan know? hackers began capturing data on november 27. target paid $1.6 million for fire eye because of its ability

to detect hacking in real-time. soon, the security worker saw the alarm and sent it on to the minneapolis operation center. it's overlooked. on december 2, they detect another alert. this red flag also goes undetected. had target acted on the alerts, they would have been able to prevent one of the biggest data that's in history. instead, for more than two weeks, the hacker software collected credit card information and bounced it around the globe. federal law enforcement notifies target that they have seen suspicious activity. the retail hires an independent team to run a forensic investigation and on december 15 they confirm they are hacked. the issue the first statement on december 19, revealing cards may have been compromised. 22 days later, target notifies customers that in addition to

the credit card theft, personal information for up to 70 million customers has also been stolen. affecting as many as one third of american consumers. >> one third. that's a lot of consumers. target had at least two opportunities to stop the flow of consumer data. let's start with fire i. >> fire eye is a system and the company created by the cia. it's used by intelligence agencies around the road. it targeted the right thing at first by setting up the system. >> they had this in place a year ago. >> it's been sitting there. they also employed a group of people who monitor the system and they tell minneapolis anytime they see something suspicious. the system work.

it detects the malware the moment the hackers went in. they send the alert to minneapolis and we asked target to respond specifically to the question, what happened? what we got back was a statement from the ceo -- they do not respond directly. >> while we are still in the midst of an ongoing investigation, we have taken significant steps, including be getting the overhaul of our information security structure and acceleration of our transition to chip enabled cards. however, as the investigation is not complete, we don't believe it is constructed to engage in speculation about the benefit of final analysis. >> when we came to them with everything we were reporting, they had nearly 100 lawsuits to protect themselves from. there is a limit to what they can respond to. we did ask them to participate in the story. they politely declined. it's hard to have any insight into what they have learned and how

far they will go. >> for a hack to be this big and affect tens of millions of americans, you would think this would be very sophisticated. >> they made a ton of mistakes. leaving clues to identity behind. the identity of that person has been difficult for our reporters to pin down. there are clues to his identity and the hack itself. a lot of the people that we spoke to said, look, this is not a high-level hack. it's most likely carried out by a group. it's very unusual for a sophisticated hacker to leave behind clues to their identity. particularly when you're talking about the biggest retail hacking history. >> this is a relatively unsophisticated hack that target could've stopped. >> profits were down 46%. customers are quite highly

attuned to the companies that will take care of their data. 46% during the holiday shopping time is a huge deal. at the same time, the arc of history is pretty long. people have been exchanging cash for goods for years. somewhere in the first 20 years, it was a bit of a mess. we need to recall that we are still quite new to all of the ways in which we can obtain goods through electronic data. you expect to learn from these things. it target was prepared. they were prepared. >> lesson learned. you can learn about the target hack in the new issue of bloomberg businessweek. it's on newsstands tomorrow. it's online right now. businessweek.com. make sure you download the bloomberg businessweek app on your iphone, ipad and android phone. case study number two.

a company that money been able to stop a problem. were talking about general motors dealing with the fallout from a massive recall. 1.6 million vehicles with a faulty ignition switch. the problem linked to 12 deaths and a letter to regulators, they admit they knew the problem as early as 2001. jeff green explain how they handled this. >> she has been keeping a low profile. she said in the most recent statement that she is leading the effort behind the scenes. she's not up front. this does not come back to her all that much. it's for ceos ago when this all happened. it is a rough start. she started out at the state of the union being praised by hillary clinton and now she is embroiled in this messy recall. >> she says, i did not know this until a few weeks ago. how is it that something that

involves multiple debts does not make its way up the ranks to higher management? >> if you were to look at everything that involves death in the auto industry, think about 30,000 people dying on the highway every year. there is always hundreds and sometimes thousands of lawsuits floating around. which ones come to the ceo? they don't rise up until there is some action being taken. in this case, they had known about this for a long time and did not consider the car turning off on its own to be a safety issue. they have known this was an issue and they dismissed it 10 years ago. >> i want to bring in the politics. is there any sense that gm is being picked on because they did receive a government bailout? >> no. the idea with toyota having the hearings -- it seems to be inevitable. as the issue got more complicated, more publicity and

more discussion about the debts -- the one thing gm had going in their favor as they said, we were wrong and we are sorry and we are trying to figure out what went wrong. now they're waiting for the beating. >> people waiting in line in washington for the beating. gm is under investigation by the justice department, the national highway traffic safety administration and both houses of congress. there are lots of lawyers on this one. president obama is going viral. we'll look at how the first family is taking the lead in spreading the message through unconventional methods. which bankers have their eyes on which candidate? that is coming up in nation. a new wave of violence in turkey. clashes coming after thousands honored a 15-year-old boy who died after being injured during a police crackdown a year ago. the demonstration started peacefully. by evening, police and protesters were battling it again. ♪

>> we have some breaking news on it's all about the symbiotic

relationship between wall street and washington. >> if the government wants to help the economy, it helps the banks. wall street is eager to get to know the potential -- these politicians not only enjoyed meeting these guys but they need them. >> whenever we have a crisis or some sort of economic problem, the banks get the help. the rest of us can fend for ourselves. >> the numbers of how much money wall street gets his astounding. >> we will start with bloomberg markets reporters. his book looks into the ineptitude of banks. he has an >> the banks were trying to draw the curtain during that time. how much were they borrowing? we never really knew. what the federal reserve loaned the banks during the crisis was to astronomically bigger than tarp. in march of 2009, $7.7 trillion is what the fed had leant to the banks. that's not the same. what came afterwards as the sin.

the bailouts never ended. we still have qe. we have interest rates at close to zero. this is a bank bailout that never really ended. >> who committed the biggest sin? >> i'd like to become the federal reserve because the federal reserve has a lot of power, mostly unaccountable. >> is this the same federal reserve as 2006? >> certainly the federal reserve now is the world economy. it has become the world central bank. it was not the world central bank. >> k street and wall street may be in bed with each other. >> what they would say is they are immensely annoyed and frustrated by the landscape right now.

they feel the american government does not appreciate finances. >> what's the solution? wall street plays the 2016 dating game. wall street republicans have been courting potential white house candidates. meeting with rand paul and paul ryan. how about somebody who will be kinder to the lobbies on k street? >> the money they give to republicans astounding. it's almost a cliché. it wasn't until i reported the story and look back to see how much money wall street gave candidates -- only 10-15 years ago. >> the president was doing a fundraiser. which republican is least in love with wall street? >> right now, marco rubio is in first place. he is affiliated with the tea party that has very mixed

feelings about wall street. one good surprise -- you never want to report a story where everything is what you learn is what you thought already. i was really shocked to hear how much willingness there is to listen to the tea party. you had people like rand paul with goldman sachs bankers. we had rob meeting with ted cruz. he is a big california investor. >> can the finance industry make or break a candidate? >> i have to be careful to not refer to wall street as some sort of monolith. it's the equivalent of bankers talking to me about the media as if it's this one thing. >> isn't it? >> that's the fun thing about the story.

i hope people will see that there are people on wall street were still excited about chris christie. >> you can read his story on bloomberg.com. and on our award-winning tablet app. we are off to the shopping mall. if we can make it through all the snow and ice. speaking of snow, we willtake you to one of the most extreme mountains in the country. you have to be insane. ♪

>> this is lunch money on bloomberg television. also streaming live on bloomberg.com. the video is the story. the death toll now at seven in the fire that destroyed two buildings in east harlem. more than 16 were injured. police believe that was triggered by a ghastly -- a suspended drunk driver plowed into a crowd outside of the

night club in austin, texas. police had attempted to stop him before he sped off. more than 20 people were injured. a nobel prize up for sale. it was awarded in 1936. it is expected to go to auction where it could fetch as much as $100,000. we will talk about the weather. economists lost a lot asleep over the mix of snow and wind. it could have cost the economy a lot of jobs. it could have, but it didn't. people just stayed home and didn't work. as for spending money -- >> retail sales up zero point three percent. slightly better than expected. -- 0.3%. >> so retail spending did alright last month. not because people made it to the malls. it workers stayed home, spending time buying stuff online.

mike mckee broke down the other categories. >> electronics comes down by .2%. you think maybe people would've stocked up during the stars. sporting goods -- i don't know what people were doing. they weren't out playing basketball. 2.5% gain there. they had fallen quite a bit the prior month. eating and drinking establishments -- there is a .3% gain. it maybe tells you people are a little more resilient and economy weathered the weather better than we thought. retail up .3%. it wiped everything out over the

two-month period. in the interest of gdp, about flat. >> a lot of data there. the boosts to e-commerce is the big standout. >> what you have is what i would call omni-channel shopping. people are shopping anywhere they wanted. they will go to the mall and shop in the stores but will also shop online. the traffic in the malls is down. down in the single-digit levels. it will continue. maybe it will stabilize a bit but it will continue to have a shift towards the digital. people are shopping at both. in the winter, it's not just internet-based. the macy's of the world doing well because they have a vibrant internet business as well as brick-and-mortar.

>> how do you know when you get it right? >> when you invest in the technology and offer a seamless experience between the store and the web. if you look at the data over the fourth quarter, the winners versus the losers, in almost every category whether it was sporting goods or home improvement or department stores, it was the company's that had invested in technology and were doing digital and stores that were winning. >> is it a different kind of store that can win on the internet? if you have to buy clothing or shoes, something you have to try on, a lot of people send stuff back -- aren't you better off if you are in electronics retail? >> you do want to have the experience. what you are finding now is -- you are finding a huge growth in

the apparel business on the online piece of it as well. the digital for electronics, you are looking at the issue of show remain. whether or not it's a commodity item. the real issue is differentiating product. something you cannot commoditize and come out and say i will just go for the lowest common denominator. it could be exclusive brands or exclusive items within a brand. if you look at macy's or jcpenney or sax, exclusive merchandise is an important part of the mix. if you look at the electronic side, that is part of what they have to think about. how are they going to provide more in the way of differentiated products? >> from e-commerce to see commerce, the app that is saving skiers a bundle. the president hobnobbing with celebrities. ♪

>> this is lunch money on bloomberg television. also string live on bloomberg.com and your tablet and smart phone. i'm adam johnson. the white house is arguably the hippest it has ever been from late-night to dry sarcasm between two ferns. >> it must stink that you can run three times. >> i think it's a good idea. if i ran a third time, it would be like doing a third hangover movie. it didn't really work out very well. >> zinger. president obama showing he is willing to try all sorts of platforms. >> when it comes to approval rating, no. it we took a look at the president's appearances on late

night talk shows and overall the approval rating never moved. why do them? white house officials point to several items. they're not looking to boost the approval rating. they're looking to target. that video is a prime example of one of these things. they need young people to sign up. this was a way to reach them directly. the numbers -- healthcare.gov received thousands of referrals. this may have worked. >> it doesn't ultimately move approval ratings. >> the president won't sit down with a show if there is not a target audience that he and the white house are trying to hit. those shows are prime examples. president obama's core supporters are women. the view entertainment tonight

give him a direct line. the same thing with reddit. just like the funny or die video, the white house uses those to target a specific audience. in this case, young people. maintaining that support and the of that group is a key for all these appearances. >> a presidential appearance may boost talk show ratings. what about the bigger picture? >> taking a broader and longer point of view, i'm not sure this is all that great for democracy. when political leaders become friends with comedians, doesn't that turn democracy into a joke? ronald reagan was the big seachange that led to an escalation of politicians acting as celebrities.

>> if there is anyone who is upping the game on the video front, it's michelle obama. the first first lady of viral video. she has enlisted the help of will ferrell, beyoncé and the miami heat. from miami heat to colorado cold, the mountain extreme skiers are flocking to. the former executive. you will meet him, next. ♪

>> the trend is hitting the slopes. see commerce helps people save up to 85% on lift tickets. why this business has taken off. >> is a $4 billion industry in america alone. what we tend to see is that folks were using our platform and booking 65% of their business at an individual resort through the platform -- we are trying to influence resorts to continue to grow the industry as a whole. >> what i see is a different mountain with different technology when it comes to the tickets. >> absolutely. what we have seen is this industry operates tremendously in sophisticated physical infrastructure.

they have not had the same sophistication with software. with sophisticated software, they can price their products and sell their products in the same way that are so common with airlines and hotels. >> they have adapted to changes in a real-time basis. can you do that in skiing? >> as we have grown, we have proven to individual resorts that working with us has meant incremental business for their organization which ultimately means incremental skiing for the customer base. >> he is headed to be the ceo of sugarbush resorts. >> last year, for us was an all-time record year. trolling -- trailing behind, nine percent year-to-year. i think we are going to have a good year and we will last well into april.

>> what about a lift ticket prices? for an adult, $168 per person? >> you can shop and get a very good price. kids under six ski for free. you can buy ahead of time and get an average ticket price of about $50. there are many ways of skiing and not paying that rate at aspen. >> the guest on our show last week from liftopia, using the airline price model for lift tickets. >> you look at supply and demand when you've had a slow period of time, you want to go out with an

aggressive price. what we do is let you buy early and take the risk and we can give you a better price. the best deal is the season pass. those people who ski 20 days a year. >> beginners, not recommended. >> a 7 hour drive from the denver airport. the most unique and extreme skiing area in the country. >> it is not safe. there's nothing safe about what we are doing today. >> this is silverton mountain. in 2002, they got $100,000 in state loans and sunk their savings into a dream to build a ski resort like no other in america.

>> at the time, i was a sponsored snowboarder. i was sponsored by cliff bar. we ate a lot of cliff bars at the time. >> they signed a four-year lease and bought a used chairlift from the 1970's. it was colorado's first new ski area in 20 years. it is one-of-a-kind. a ski area with expert only terrain. >> there was a void in the ski market. everybody is focusing on trying to be mini disneyland. we were thinking about the hard-core skiers. we were being left out. >> most ski areas in colorado are massive playgrounds. one of the biggest ski resorts in the country has 20 mountains and lots of outdoor ski activities. you won't find swanky lounges at

silverton. there's an outhouse, an old broken down trailer as a ski rental shop. >> one of the risks is that it is totally reliant on the quality of skiing resorts. luckily, we are in one of the snowiest places in the united states. >> you start the day out by getting your avalanche gear and they teach you how it works. i'm wearing a beacon right now. i have a shovel and a probe. you have to sign your life away. the waiver is very clearly. you could die here today. you take this one chairlift up and you either hike or you can purchase a helicopter drop. >> silverton is only open four days a week and only 80 skiers are allowed on the mountain every day. how many skiers do you guys

have? >> thousands. what we see in a year is what vale sees on a busy holiday. >> they make just a fraction of what the big resorts do. it took them six years to earn a profit. but there are no plans to supersize silverton. at their growing the business by offering their mountain for a thousand dollar private parties. how many skiers are good enough for your mountain? >> most people that ski probably aren't good enough to ski at silverton. however, a lot of people can do things that they had no idea they could never do. they just need somebody to show them how can be done. >> that looks absolutely awesome. i'm headed to aspen next week. you are with me for a few days. that just gets me so fired up. ♪

>> it is 56 past the hour, which means bloomberg television is on the markets. i'm julie hyman.

let's get you caught up on where stocks are treading about halfway through the session. we are seeing a pull back after the s&p 500 earlier approached its record high. that was within about four points of that level. there still tension in ukraine between it and russia. and a lot of concern about what could happen there. that seems to be contributing to the decline today. in terms of individual stocks, dollar general saying fourth-quarter profits rose. the results were still weaker than estimated. the discount chain issued fourth-quarter results that trailed estimates. amazon is raising the price of its prime number should. prime provides two day shipping and streaming online movies and tv shows. it won't cost $99 a year. this is the first time that they

have increased the cost for prime since it was introduced in nine years ago. they're hoping it will add to the bottom line. for more on the retailers, adam johnson is here. >> retail sales come out this morning better than expected. we know exactly why. time for a little insight and action. the commerce department tracks 13 different sectors within the retail sector. there is the data. you see what's number one? strongest sales growth in the month of february, e-commerce. everybody stayed at home during the snowstorm. they were shopping online at home. e-commerce up about .1%. this whole thing was only up 13%. you look at some of the others like clothes, restaurants, buildings. people were actually at home.

if you just consider e-commerce as a percentage of the total, this is a very big deal. e-commerce accounted for 41% of the total gain during which leads us as investors to e-commerce retailers. here's what we did. we found in the s&p 1500, we sorted the retailers by sales growth. here are your top five. retail me not, 35%. trip advisor, home away, priceline and netflix. i listed a couple of others and post them on twitter. these top five are up well more than the market. you follow the retail spending and that creates the sales growth which creates earnings growth which creates more in the

stock market. >> thank you so much. let's take a look at some of the other markets that are moving today. bonds among them. we are seeing that money actually flow into bonds today. it we are seeing those yields go down as people by bonds. the 10 year is that 2.66%. we are seeing buying in this bonds. in terms of the individual stocks that we are watching today, we are taking a look at pfizer. the shares are trading down in today's session. pfizer yesterday said it would be trying to dispute a lawsuit against it having to do with the celebrex drug. shares are falling today. we will be on the markets again