>> welcome to "lunch money." where we tie together the best interviews and business news. looking at the menu dashers what we've got -- the search for malaysian flight read hundred 70. the big part of it happens inside a london satellite company. we will take you there. over the world's biggest watch -- there's a lot at stake to win sheldon adelson's money. it doesn't hurt to know how to haggle like a pond star.

finally, a breakfast taco -- talk about making an offering at the altar of fast food. we are kicking it off with what everyone is talking about today and it is summed up with one word -- >> failed. >> failed. >> failed. >> failing is a part of business and part of life, but when it comes to stress tests at the federal reserve instituted on big banks after the financial crisis, failing this go round is a big deal. tocitigroup ask the fed return capital to shareholders, more capital to shareholders, an increase in its dividend, currently a penny or larger buyback. citigroup was rejected by the fed on a qualitative basis. quantitative, numbers-based analysis of banks finances, and others qualitative , analysis which considers things like internal controls and corporate governance. it was on that basis that citigroup failed and as a

result, it cannot increase it evident nor cannot buyback more stock. >> 29 of the 30 banks did not pass and the one that did was very close. there are these more subjective factors, qualitative factors of how good are the processes? the fed does not want to rely on simple modeling, it wants to rely on what are some scenario analyses and the approaches people are taking that can sometimes make the banks pulled her hair out because it's hard to see how to pass it. >> it would be possible that the ceo has indeed been pulling his hair out over the stress test. he has been trying to rehabilitate the bank by dialing back risks. here he is speaking at the world economic forum back in january. >> we have gone through a pretty significant transformation, really taking our company back to its roots of being a global bank. and the things that go with that

and what we can do on behalf of our customers and clients. exit out ofk at the asset management, the holdings of non-core assets are things that did not feet -- did not fit with who we are and who we want to be. >> now that they have failed the latest stress tests, things could get more challenging. why do we ask a former fed bank examiner and top analyst what he thinks. we're talking about paul miller. he was on "market makers errico he was on "market makers" earlier. >> i have always said these banks are too big for anyone to manage. ti to takeo get ci more than a couple of years. >> bank of america is a broken bank and it passed. brian moynihan got approval to increase his dividend payment.

it's going up to five cents from a penny. if we were to draw a contrast, bank of america is doing something better than citigroup. >> most of their problems are mortgage related. the acquisition of countrywide is really what heard that institution. that is something moynahan inherited and did not do himself. iti was put together over 20 years. >> 100 different companies. >> credit card portfolios and mexico. it's going to take a lot longer to work out all of those problems. they don't really earn their calls for capital yet. jpmorgan and wells fargo earn well above their cost which allows them to earn out of their problems. bank of america is farther down that road but even they got aimed a little bit with capital management. citibank has a way to go. >> about bank of america -- they passed the stress test after

adjusting his capital plan and brian moynihan finally delivered on his promise to raise the bank's dividend. now it's going to be five pennies a share. but they did not walk away from yesterday without a lack i. >> enck of america will be paying $9.5 billion to settle fannie and freddie mortgage claims. lewis? the former ceo agreed to a three-year ban on serving as an officer or director and will pay $10 million because he misled investors about the purchase of merrill lynch. >> bank of america was seen as a savior when it step in and bought merrill lynch in the depths of the crisis. the $10 million ken lewis is supposed to pay? bank of america will pick up the tab as part of his employment agreement according to the "financial times. more recent failures in the headlights? we're talking about gm's massive recall on faulty ignition switches and malaysia airline's

handling of its missing passenger jet. is what he wrote janie "financial times turco -- "financial times." >> we ask the nyu stern management school director for an answer. >> there are a difference between culture and the company. we think about the example you are setting for your own organization about what responsibility means and how you think about how you convey bad news, that sends a signal for how bad news should be conveyed in an organization if you're going to send it out by text message. it's not about taking responsibility for the actions of your organization. you have to be willing to step up and say when it is a problem you've caused that led to this situation, as opposed to hiding

behind technology and hide behind the screen and say we're just going to walk away at this point in time. >> there may be positive developments in the search for the missing malaysia airlines jet and it is in these satellite images. it's another morning commute in china's northern province. check this out. ♪

>> this is "lunch money" on bloomberg television, also streaming live on your tablet and smart phone. i'm adam johnson. new data in the search for the missing malaysia airlines flight 370. satellites from several companies and airbus are fighting hundreds of images of objects in the indian ocean and the tour cruiser focusing their search. it shows more than 300 objects spotted by a high satellite. curiously, one of the satellite putting a central role in this search is a britain -- is a britain-based company. >> they have been in the satellite business since 1979 and went public in 2005. it currently has 10 operational communication satellites used by everything from ships to planes to broadcasters. what they do here really is rocket science, but figuring out requiredened to mh 370

radical thinking, week of hard work, and lots of pizza. >> the way they did that was with this. car, but theg doppler effect, which describes how signal frequency changes over distance. case, that cars sound. in this case, it was a ping from the satellite and aircraft. what that allowed the engineers here to do was not only figure out the court orders in which the aircraft could have been operating, but more critically, the direction of travel down here in the southern indian ocean. tangiblepe now is evidence will be found that will actually explain what really happened. whatever that is, narrowing the have provedwill pivotal. >> malaysia airlines has been criticized for poor

decision-making in the aftermath of the flights disappearance, but the company's bad moves don't start with flight 370. seth kaplan has been crunching the numbers and he joined "street smart" yesterday. >> we are talking about an airline losing more money than almost any other around the world. beforeblems do start 370. this is an airline growing extraordinarily rapidly. so are other airlines in southeast asia. some of the other airlines growing our airlines like air asia, a low-cost carrier from also based in swallow them poor. one that has very low cost at production, so if its fares are low, that is ok. >> what does this crisis due to the company? >> a company that seemed to have liquidity concerns even before this. ironically, part of the reason it is in this situation is that it's a government-owned carrier. there are some government owned airlines around the world like

emirates and those airlines that are perfectly well run, but malaysia airlines for may financial perspective was not one of them. the irony there is perhaps the fact that it is government owned might help it because the government likely providing cash infusions, but they haven't provided any government up eight so far. disaster has cost a lot of money and typically you have some kind of revenue impact as customers do looking away from the airline. >> you can understand it. people would be hesitant to become that airline. but let's look at some other disasters. you think about air france after it situation off the coast of brazil. it survived that. what is different about malaysia airlines versus air france question mark >> grade-point, trish. these kinds of disasters rarely prove the undoing of an otherwise strong airline. you mentioned air france and there are numerous other ones.

but they often prove the undoing of an airline that is teetering. if you think of pan am or swissair, those disasters occurring not too long before those airlines did go out of business. this story will go away. with all those others, as tragic as they were, they were off the front pages within a couple of weeks. that hasn't happened yet. customers are continually reminded that this airline is in this situation and let's face it, if you are doing a flight search right now a have a lot of airlines to choose from, malaysia airlines, but is not going to be their first choice. >> anyone can use lessons of leadership. coming up, the teacher is bed horowitz and the course work is hip-hop. want to buy a watch question mark you'll have to pay $55 million for this one and it's the world's largest. it's next in luxury. ♪

>> this is "lunch money" on bloomberg television and streaming live on bloomberg.com, on your tablet and smart phone. the gulfstream g 650 is at the top of every ceo's wishlist, but don't expect instant gratification. you will have to wait nearly four years for this fast jet which can take you and your guests from new york to beijing nonstop. here's a look at the machine

causing some serious jet envy. ♪ ♪ ♪

>> that works. meanwhile, luxury watch and jewelry makers are gathering in switzerland to showcase their products at what has become the world's biggest industry trade fair. our european business correspondent is there and she's taking the pulse on luxury spending. >> look at the showroom. her this told behind me -- it's fabulous, have chandeliers and there are chefs serving yogurt and granola and will soon be cracking open the champagne. no expense spared, but scratch the need for surface and the leaders here are nervous. they are nervous about china, week this and demand still stagnant there. swiss watch exports to china fell 13% last year and there seems to be no pickup. russia, we've got political

instability. will that hurt sales? sales from russia to the emerging markets where there are sales, foreign currency weakness is dragging down the value of the sales. so two key challenges there. >> so what about the other potential threats question mark we are talking about the high-tech smart watches. >> they seem to be shrugging it off will stop we some -- we spoke to the omega president who said there's room in the market for both. >> i don't think one will replace or threaten the other thing. it is two different things and they are two different watches. to wear a smart watch and then beautiful mechanical watch, i don't think that's the aim. they are two different things. >> he always has two mechanical watches on his wrist. what needs to be aware for the market is that cast your mind back to the 1970's when courts was introduced, battery pad watches -- at that point, the

mechanical watch industry shrugged its soldiers and -- shrugged its shoulders and said it's not going to be a problem. it almost plunge the market into despair and we almost saw it written off. be other courts situation? many say probably not. next we will stay tuned. firstis making its appearance. this is a watch with 110 carats of rare diamonds and cost about $55 million. some call it the most valuable time he's ever made. we got a sneak peak. to create something extraordinary. coloredbeen collecting diamonds that are extremely rare for about two years. there's about 110 carats of colored diamonds in the piece. isr 50% of that weight

stones between two and three caret. there are blues, pinks, greens, orange, every color under the rainbow. that's why we call it the hallucination. it's a collection of diamonds which happened to be put together as a watch. possible itvery will want to be owned by the best of the best. the diamond market is very firm. today more than ever, there is a lack of great places very wealthy people can put their money. tangibleare a great asset you can actually hold their hands. we have seen tremendous appreciation in the value of diamonds and the value of other real assets that are tangible. >> even fast food goes luxury in switzerland. launching a new upscale menu line up there featuring a $12 burger. they call it the prime. it better be.

bell is serving breakfast and we are not talking about wave those rancheros. we're talking about access taco. gop candidates losing with sheldon adelson in vegas. happy marriage of money in politics, coming up next. google says it has updated its transparency report for the nighttime. they detail the number of hasests the search giant received for user information in criminal investigations. google published this video that explains in plain language how we respond to u.s. search .arrant's >> if there's enough evidence to support application for a search warrant, the investigator heads to court and the judge inspects the application and dissatisfied, issues a search warrant. then it is served on google for stop first stop, the screener. matter likeurgent

child safety, it is given high priority. next up, the producer. the reducer examines words at protect users by catching errors and determining what information to provide. glitches soweto access some else's account. sometimes they are illegible or the user name is misspelled or the request is meant for a different company. after the6 minutes hour, which means bloomberg tv is on the markets. let's get you caught up on where the markets are trading. they have been fluctuating all day and they are now in the red. the energy sector is offsetting some of those losses in tact and banks. citigroup stocks dragging down its sector after it failed the fed stress test. you can see the nasdaq is leading the index is lower, extending its declined by about 4%.

, thee watching gamestop videogame retailer will cut the number of stores it operates by 2%. i currently have 6400 stores around the world will stop the scale back comes as gamestop faces increased competition both online and in stores. ♪

alexa this is "lunch money" on bloomberg television. we are also streaming live on your tablet and smartphone. today's moving pictures now -- chicagonew video of the subway train that derailed and wrote up an escalator earlier this week. we are learning the conductor fell asleep before the train entered the station at o'hare airport all stop it happen just before 3:00 on monday and the platform was mostly empty butts till 32 people were hurt. as for the operator, she is on injury leave. nudity of the helicopter rescue of a four-year-old boy trapped in the washington mudslide -- a local helicopter rescue team

plucked the boy from the muck after they slide destroyed his house. he was reunited with his mother who was at work. the boys father and three siblings are still missing. president obama met with pope fan -- pope francis today. in it -- income inequality was on the agenda. the president presented the pope with a chest full of fruit -- will see to the white house arden. hope francis gave the president a medallion symbolizing peace. itay in all it takes, call " -- it is one contest to win the billionaires vote. >> with going on is the sheldon adelson vote. you have a lot of blue-chip contestants getting ready to strut their stuff. >> the top candidates for the gop ticket are hanging out in and airport hangar trying to win

over sheldon adelson because he donated $93 million to super packs leading up to the 2012 election. that is according to the "washington post." that's not giving counting private donations. >> as a whole weekend of events sponsored by the republican jewish committee, but most of these candidates are coming out for a private dinner ales and will be throwing in his private airport hangar to honor jeff bush. outings and inlf between, he will sit down and have a series of one-on-one's, coffees, meetings and listen to these guys in formally make a pitch for why they are the most electable candidate. want to gohere you -- spend $93 million and the governor did not take the trophy. what is he doing different this time? rex in 2012, he was motivated by loyalty. he was a hood friend of newt

gingrich, so they gave gingrich through a super pack about $15 million would probably did more to help president obama than anybody in the republican party. it was newt gingrich who originally launched those romney asg attacks on a vulture capitalist that obama picked up and used to win. after the primary, adelstein shifted to romney but the damage was done and it was too late. this time around, edelson's aides say he's motivated by winning. he's looking to find the most electable, mainstream republican candidate he can find. ghostis the single the giver to republicans -- the single biggest giver to republicans. do democrats have an equal? >> george soros has pumped hundreds of millions of dollars into democratic outtakes. you don't have the same kind of personality. george soros does not have democrats out at a big event and parading them through the media.

that is more of a las vegas thing, but there are billionaires on both sides. right now, the focus is on republicans and who is shelled adelstein going to give his money to? -- sheldon a wilson. 700 $16 million is how much president obama raised in 2012, and that set a new record. tosing money -- learn how haggle like a pond star. that is coming up next. and if you can't beat them, join them. tocco bell jumps on the breakfast bandwagon. ♪

>> this is "lunch money" on bloomberg television, also streaming on your tablet and

smartphone. today, how to be wise in business and smart in the workplace and a shrewd and the negotiating room. first tip as you can find inspiration in unlikely laces like rap lyrics. >> was he saying something, you can't tell me nothing, you can't tell me nothing. hip-hop is the kind of music of entrepreneurship. it is row aspirational, pro-becoming the man as opposed to railing against the man. if you meet anybody in hip-hop, they kind of think of themselves and talk of themselves as an entrepreneur. a blog post, as trying to teach an entrepreneur how to do something. the post can take you through how to do it but can't teach you how to internalize it and feel meant'm feeling what then . the rap lyrics often

complemented in that way. i wrote a post called cash flow and destiny which is about why going cash flow positive is important because you can control your own destiny and not be dependent on outsiders. it's great to explain that, but until i put it in kanye west saying wait till i get my money, .hen you can't tell me nothing it's a little harder to understand. i wrote a post once on why we think founders should run their companies and why they can often performed better than a ceo. but a great artist summarized everything i wanted to say into --es when he said you are a >> word up.

wall street is not necessarily synonymous with teamwork and helping out the little guy. it is you tot says be nice. he argues all truism goes a long way in making you more successful. he breaks it down to evers, takers and matchers. >> the goal is not to be nice to other beagle but look out for others best interests. they shy away from giving feedback and don't play devils advocate often enough and failed to give the kind of constructive criticism everybody needs to hear but nobody wants to hear. has the corporate style changed in the last 10 years question mark is it more giving are more selfish? >> a lot of organizations are not worrying about hiring givers, but if you are extremely selfish, how do we make sure we don't let you into the door? doing that?u avoid >> you avoid the reputation as taking care of others.

those who believe in a quote well step up. if you are a matcher, you believe those people ought to be punished and you will make sure they don't get to exploit givers very often. ricky news from washington -- both the house and senate have passed a ukrainian aid would give the company -- give the country about a billion dollars in loan guarantees. they will impose sanctions on those responsible for human rights violations after ukraine reached a deal with the imf to unlock about $27 billion of international support. we will have more on this situation from the newsroom. ♪

>> this is "lunch money" on bloomberg television. we are also streaming live on

your tablet and your smart phone. i'm adam johnson. again she aiding is a very important skill to have. the star of "pond stars as quote gave bloomberg for tips on how to be the master negotiator. rex i would like to sell you this watch. >> ok. i'm rick harrison from "pond stars." i probably have the busiest pond stop in the united states. my shop buys three or 4000 things a month. i engage in 5, 10, 15 negotiations a day. a nerd, be a a be nerd. read, read, read. there are a million things out there. ocean.right link super why guys buy these things i have no idea. you have a watch that will go down 3000 meters. never give a price because it

might be less than your opening offer. how much are you looking to get out of it? >>, trailing to pay for it. >> at your watch. >> i'd like $3000. >> be willing to walk away. if you are not willing to walk away, you're not negotiating. >> i can do less than $2500. >> not going to happen. i will give you $2000. the day you start taking advantage of people, the next day someone is going to find out about it and they will tell their friends and they will tell their friends and you will not have a successful business. a fair offer for a watch like this would be right around $2000. >> good deal. >> let's go do some paperwork. >> if you like breakfast on the go, and who doesn't, at taco bell has a new morning menu and a new ad campaign to go with it. >> to show you just how much people are loving taco bell's

all the breakfast, we asked some very special people. >> i'm ronald mcdonald. >> i'm ronald mcdonald junior and this is ronald mcdonald to third. >> my name is ronald mcdonald. >> i was surprised how good it is. ronald mcdonald. >> ronald mcdonald. i love taco bell's new breakfast. >> delicious new breakfast everyone can love, even ronald ronald. >> you've got to admit that is pretty clever. taco bell's president joined alix steel this morning talking about strategy. >> breakfast is one of the quickt-growing parts and service restaurants and it's a part taco bell has never had the opportunity to compete and. we have been looking at a category and a lot of our customers already eat request at other quick service restaurants. we realized it was ripe for innovation, really terrific value, and what we have heard from our customers is if we can

give them a better reward for their breakfast routine, they will keep coming to taco bell. >> talk about the pricing here. mcdonald's does a dollar sausage biscuit and that's appealing for the dollar menu lover. how did you do on pricing? >> we've got food from one dollar to two dollars and $.49. the waffle talk to was one dollar nine nine cents will stop the crunch wrap is $2.49. we've got great food like sausage, grilled talk goes -- we have every price point with tremendous value for our customers. >> how long did it take you to come up with these products? >> we have been working on this for a couple of years and we wanted to come up with food that was traditional breakfast island -- request items, but put a twist on it. it's why it's eggs, they get and waffles, but it took a couple of years of working with customers

to get the flavors and experience correct. we want to deliver on speed and convenience and it has to be a terrific value. >> not only do you have to train your staff how to make these, but what other things did you have to do like new equipment and ingredients? >> we had to bring in all new ingredients from bacon and eggs -- but we make coffee in the restaurant which we have not done in the past, so we brought in a new coffee machine. but your point is a good one. we had to have a breakfast program our team members would be excited about executing and be excited about eating themselves. when they are excited about the food and coffee we serve, we know they deliver a terrific experience, and that the type of program we are rolling out right now. >> talk about jumping into the breakfast is challenging moment. coffee, orange juice and pork prices are all on the rise. one analyst offered her perspective this morning. >> for taco bell, this is

exactly what they should be targeting. you look at some of their biggest sales drivers over the past year-and-a-half, it has ,een the doritos logo tocco which is as outlandish as you can think of. putting a tocco in a supersized doritos chip. this is the right strategy. theyyou think about what waffle tocco is, it's all the core pieces of your breakfast. andage, eggs and a waffle it's not even that novel to combine sweet and savory. it waffle carrier is new and speaks to taco bell and what they do. courtesys mystery meat of norway -- this is mickey d's receipt after what must have been a very satisfying meal.

♪ [speaking foreign language] ♪

>> it is 56 past the hour, which means bloomberg television is on the markets. i'm cristina alesci. halfway throughout the trading day, let's get caught up on where stocks are at. all three major indexes are in the red following yesterday's biggest drop in a month. financials are the worst performing sector, led lower by

citigroup, the only one of the nation's five banks to fail the fed's stress test. telecom italia is best-performing sector. spokeorning, alix steel to jim biondo, president and founder of beyond the research he says the wear of the dreaded slowdown. alex asked why he thinks the economy isn't doing as well as everyone else thinks. >> i think we are being faked out by weather. the first quarter was depressed by weather and the second quarter will rebound because it will stop. but when you get past all of that, we've got a slowing in the economy and all of these optimistic earnings expectations everyone is looking for for the s&p 500 are going to have to come down and we are seeing the early signs of that because corporate guidance is about as negative as it has been in any point in the last five years. when the earnings come down, the market will continue to struggle. a a struggling market is stock picker stream. adam johnson joins me today with

his insight in action. rex what's better than dividends? dividends less buybacks. i want to thank the team here at bloomberg for coming up with the chart of the day. you will understand exactly why would we take a look at this. here's the dividend yield of the s&p 500 -- 1.9%. given the fact s&p 500 companies bought back 3% of all the outstanding shares, that tubbs this up to 4.8%. your total cash return to shareholders effectively is a yield of 4.8%. what's better than dividends? dividends plus buybacks. who is leading the way on this front? we searched the s&p 500 starting with 500 stocks and narrowed it down to 190 where the dividend yield is greater than 2%. we further narrowed it down to 77 were dividend growth is at least 10%. so they are paying 2% and growing dividends.

the companies have announced buybacks so far this year and there are only 10 companies that fit that bill. and here they are -- analog devices, fifth word bank, jpmorgan, rubbermaid tub occidental petroleum, usc bancorp and western union. i know i went quickly -- i'm going to post them on twitter as we do every day. here is why you care. dividend less buybacks -- it produces return to the market. this group of 2.9% this year versus the s&p 500 which is down about .2% or flat on the year. cash game returned to shareholders. there is not a lot of companies, only 10 of them. that's what it all boils down to. >> thanks, adam. we want to highlight a couple of stocks for you -- lululemon shares, rising the most since last april. the company posted

fourth-quarter results at a profit outlook below analyst estimates, but the ceo says he is working to speed up global expansion. raised itsre full-year profit forecast but reported lower than estimated second-quarter results do to weak demand in its consulting business. they are the lead contractor to fix the healthcare.gov website. we are on the markets again in 30 minutes. "bloomberg west" is up next. ♪

pier 3 in san francisco, welcome to "bloomberg west." aol ceo tim armstrong joins us to talk about his company's new platform. will it help aol get a bigger piece of the ad market?