>> welcome to "lunch money," where we tie together the best interviews and business news. looking at the menu, what we've got -- the search for malaysian flight 370. the big part of it happens inside a london satellite company. we will take you there. mobile worries 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 pawn 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. >> citigroup ask the fed to 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. >> so there is 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. when you look at the exit out of asset management, the holdings of non-core assets are things that 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" earlier. >> i have always said these banks are too big for anyone to manage. for them to getciti to take 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. citi 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. remember ken 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. here is what he wrote in the "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-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 what happened to mh 370 required radical thinking, week of hard work, and lots of pizza. >> the way they did that was

with this. not the racing car, but the doppler effect, which describes how signal frequency changes over distance. in the race cars case, that 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. >> the hope now is tangible evidence will be found that will actually explain what really happened. whatever that is, narrowing the search area will have proved 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. the problems do start before 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. we know the 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.

>> 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. 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. 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 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. could this be other courts situation? many say probably not. next we will stay tuned. grass is making its first 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. >> we wanted to create something extraordinary. we have been collecting colored diamonds that are extremely rare for about two years. there's about 110 carats of colored diamonds in the piece. over 50% of that weight is 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. it is very, very possible it 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. diamonds are a great tangible 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. mcdonald's is launching a new upscale menu line up there featuring a $12 burger. they call it the prime. it better be. taco bell is serving breakfast and we are not talking about

huevos 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 requests the search giant has received for user information in criminal investigations. google published this video that explains in plain language how we respond to u.s. search warrant'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. if it is an urgent matter like 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. they fix 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.

>> this is "lunch money" on bloomberg television. we are also streaming live on your tablet and smartphone. today's moving pictures now -- this is new video of the chicago 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 francis today. income inequality was on the agenda. the president presented the pope with a chest full of fruit seeds from the white house garden. pope francis gave the president a medallion symbolizing peace. today in all it takes, call it "american idol" -- 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 jeb bush. so there are golf outings and in 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. >> that's where you want to go -- spend $93 million and the governor did not take the trophy. what is he doing different this time? >> 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 devastating attacks on romney as a vulture capitalist that obama picked up and used to win. after the primary, adelson shifted to romney but the damage was done and it was too late. this time around, adelson's aides say he's motivated by winning. he's looking to find the most electable, mainstream republican candidate he can find. >> he is 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 sheldon adelson going to give his money to? >> $716 million is how much president obama raised in 2012, and that set a new record. raising money -- learn how to haggle like a pawn star. that is coming up next. and if you can't beat them, join them. taco 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. when i write 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 like i'm feeling what then meant. 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, then 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 lines when he said you are a -- >> word up. wall street is not necessarily synonymous with teamwork and helping out the little guy. but adam grant says it is you to 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. >> how 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? >> how do you avoid doing that? >> 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. the evidence suggests that the amount of time and energy you devote to helping others contribute as much to your salary as your actual performance. caring for others is an equally important part. >> is there a distinction when dealing with white collar jobs? >> i have not seen any major differences will stop the way people help is different. it is often the case that sharing knowledge and promoting creativity is critical.

>> 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.

to show you how much people are loving taco bell's new breakfast, we asked the special people. >> my name is ronald mcdonald. this is ronald mcdonald the third. >> 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. -- ronald mcdonald. >> 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 fastest-growing parts and quick 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 99 -- $1.99. the crunch wrap is $2.49. we've got great food like sausage, grilled tacos -- 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 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 been the doritos logo tocco, which is as outlandish as you can think of. putting a taco in a supersized doritos chip. this is the right strategy. when you think about what they it's allcco -- taco, the core pieces of your breakfast. sausage, eggs and a waffle and it's not even that novel to combine sweet and savory. the waffle carrier is new and it speaks to taco bell and what they do. >> today's mystery meat courtesy of norway -- this is mickey d's receipt after what must have been a very satisfying meal.

this teenager tattooed his mcdonald's receipt on his arm [speaking foreign language] ♪

>> it is 56 past the hour, which means bloomberg television is on the markets. i'm cristina alesci. let's get you caught up on the markets. stocks finished down for the fourth time in five days. the s&p fell in the down had little change -- the dow had

little change. the nasdaq was hit pretty hard. it was the lowest since february 10. technology stocks that went public in the last few years, facebook, yelp, twitter. vixtocks are falling, the was rising. what had investors rattled? joining me now is the chief global strategist with a company. you are printing more volatility. geopolitics, what is going to propel us into more volatility? >> there's a massive increase in bad news oh stop it will drive volatility. we will continue. a lot of that is very isolated. exporter to russia.

i am not sure that will really move it. the more obvious catalyst is higher volatility and interest rates going higher. we are coming off of a strong bond rally. there is strong bond volatility. i would expect higher fixed levels. >> the question is when. investors have been parsing through some confusing economic data. we had a gdp that missed expectations. jobless claims and unemployment benefits to client. how are investors reconciling these signals? >> i think there is a snow or weather cloud hanging over all of this data. all of this economic data, no one knows what it really means. if you go back six months, you can look at the broader picture

of what is the probable path of the economy. it is on a slow bed with probable inflation. there is no acceleration to velocity. if that reemerges from that data, which i think is probably going to happen, that could in turn get some of that bond anxiety dynamics acting play. >> we have seen today an idea that has been emerging this year. stocks that led the five-year rally had actually been it was that were hit. is this an indication that we will see a same losses this year? >> it is specific. last year's winners are these years losers. >> they will continue to be losers. that i think so. the market is rich right now.

you cannot make a solid case. people are coming into equity. they need to find a home. i think people are going to continue to rotate out. biotech is an example. that money comes out. they are buying stocks at sensible prices. >> how do you had to get that rotation? >> options is a good way to do it. you have to be clever. .