j.p. morgan they had a tin ear. and the kingdom of isolation has been in, disney missed billions as you can't let go of "frozen." good morning, everybody. this is bloomberg "surveillance." we're live in washington, d.c. this is thursday, april 10. i'm tom keene. joining me from our world headquarters. scarlet fu and adam johnson, let's get right to the morning brief in new york city. here's adam johnson. adam? >> tom, overnight, here's what happened. china trade falls unexpectedly. imports were down 11.3%. the government says it will initiate more growth policies. meanwhile, in europe, the bank of england expected to keep rates at a record low, half a percent. we're going to get the official announcement in about an hour, 7:00 this morning. and here in the u.s., we're going to get weekly jobless claims, as well as import prices, both at 8:30. we've got earnings before the bell. family dollar and rite aid, allied financial, the former gmac, begins trading today. this was the former arm of

general motors acceptance corp. finally, a judge is accepted to rule on the we terrible settlement plea, also we should point out the masters tournament begins today in augusta, scarlet fu. >> let's get straight to the front page. we've looked through all the web sites and the front pages of newspapers, and tom, this is one that i know you'll speak to really well because of where you are right now with the i.m.f. meetings. greece returning to the international bond market. after four years, the government will sell $4.2 billion of debt, more than estimated. this is a five-year bond issue, and it marks quite a turnaround after greece was bailed out not once, but twice, and had the biggest sovereign debt restructuring. tom, this is going to be a point of discussion there, huh? >> well, a huge point of conversation. our conversation this morning with madam lagarde and jim yong kim of the world bank, and what i would suggest, scarlet, is this is a spring meeting, a victory lap for the i.m.f. and for world leaders as they look at a peripheral europe through

a much better, not only greece, but spain and italy doing much better as well. >> absolutely. well, it's something that we'll continue to monitor, too, once the sale does take place and the results come out. let's move on to our second front page story. this is a good one. j.p. morgan c.e.o. jamie dimon questions to a challenging 013 in his annual letter to shareholders. he admits the bank had a tin ear when it came about dealing with trading losses and all those mortgage problems, all the settlements they had to pay up. >> what he's rfering to is the fact he called this a tempest in a tea pot, and we found out -- >> bloomberg wrote the story. >> bloomberg wrote the story, and then we found out the losses were $6.6 billion. you add up the fines that have been paid, and i think it's double that number. >> $20 billion. >> you look at all of the fines and fees, but if i recall, $12 million just in lone done. >> there's a lot of "should have" in that note.

they should have done more self-examination, need to be better listeners. i know we'll addressing this later on. but i want to move into the last front page story. this is a heart bleed bug. it's the latest security flaw on the internet that some sen. ts say is the worst ever this has reportedly been around that keep your email, your pass words, banking, all that stuff private. have you changed your password yet? >> no, i haven't, but i was hacked on twitter a few months ago, and i got some very interesting feedback based upon some stuff i did not send out, thankfully. >> apparently the fix is web sites need to update with a new version of the software, so change your password once, and then after the web sites come out, do it again. we're all going to remember 20 passwords. >> this is getting way too complicated. >> tom, how many pass words do you use? >> seven, and they all say

scarletscarlet fu, i love you. >> that's creepy. >> it is. it's too much information. this hour of the day. let me do a data check. we look for commodities, and there's exactly -- well, i got . come on, peter cook, get my bow tie right. futures negative. euro-dollar, 1.3873, stronger. and what a smart interview yesterday with barclays capital. let's move on to v.i.x. we saw that after the minutes yesterday, 13.82, a better stock market yesterday. there's a one single number you need to know, .36 on the two-year yield. that's a big, big deal, lower yields in the last 10 takes, we have simply gone roundtrip with the fed t. has certainly been a roundtrip for janet yellen. we saw higher yield, now lower yield. the fed maybe has found a

different path. all that's been reversed in 10 days. the bunch bowl, it has continued. meanwhile, lots of others in washington, peter cook joined us, our chief washington correspondent. >> welcome to the nation's capital, first of all. >> great to be here, with washington nationals 6-2. we like t. >> we love t. >> spring, magnolias out. >> the wizards won yesterday in overtime yesterday. >> there's a revitalization at the i.m.f. meetings, world bank meetings. is there any kind of revitalization to the political dialogue between democrats and republicans? >> absolutely not. it's an election year, tom, and they are talking past each other. you see the ryan budget on the floor in the house of representatives going absolutely no where in the democrat-controlled congress. in the senate, you've got them talking about equal pay, unemployment benefits, a whole range of issues that republicans leaders say,

listen, this isn't going anywhere in our chamber, so they're talking past each other in this midterm election year, but the reality is there's a budget deal in place and everything is sort of on auto pilot. >> to me, i feel it, folks, when i came down here to washington, you just feel the auto pilot sense of it, whether it's political, "the washington post," our great bloomberg news coverage as well, everybody is like struggling to make news. does this go to november? >> well, it does. it all goes to whether or not democrats can hold on to the u.s. senate or whether republicans, as they feel their chances improving, perhaps get control of -- get control of the senate. it all points to the midterm election, the fact there aren't a lot of things for washington to be doing right now. we're going to have a lot of side shows. we're going to have the lowest learner held in today. the irers official blamed for all the 504-c4 investigations, that kind of thing. the reality is the budget deal is in place. >> you look tan and had rested after your trip to honolulu. did you get six or seven

minutes in the sun? >> i had a 42-second -- 4 seconds in the ocean. i had to tell my boys i went there. but we had a good trip with secretary hagel over to hawaii. >> peter cook back from an important interview with secretary hague nell honolulu, and i believe the secretary continued his trip. >> yeah, speaking of the secretary, maybe there's a solution for him to get around all those infamous traffic jams in washington. as we mentioned, he was in asia. he is now on his visit to mongolia. his host gave him a 9-year-old horse. chuck hagel gave a local herder a commemorative pentagon coin. he will not be taking that horseback to d.c. it will stay in mongolia. the defense secretary did give away or did take a painting of the animal, so he has something to remember it by. peter, our chief washington correspondent, what did you -- did chuck hagel say anything about his upcoming visit to mongolia and what he expects? >> we did, and i did such an

investigative work on this interview going in. i knew he was going get a horse, and i asked him about it at the end of our interview whether or not there would be room on the plane for a horse. he said there was no room for livestock. it's not the first defense secretary to get a horse from the mongolians. nine years ago, the same gift, it's a traditional gift, was given to donald rumsfeld, and he handed it off to a nomadic herder to keep track for him. we'll see if chuck hagel does the same. but yes, a lot of horsepower in the defense department, at least as measured by our trips to mongolia. >> wait, are you saying that this is a regifted horse? >> i believe it's a separate horse. it's a new horse. but it's happened before. he's not the first. donald realize feled got the first horse. >> peter cook, i've fwon inner mongolia, a province of china, and it's known -- >> did you get a horse, adam? >> i did not get a horse, but that's the difference between just being and he being the defense secretary. moan feel i can't, separate

country -- mongolia, a separate country, what's the purpose of the visit? >> well, because it's a thank you, and it's the same thing that donald rumsfeld did nine years ago. this is a small country, small as it may be, has had troops go to afghanistan and iraq. for the u.s. military, that's a big deal. and any country that has contributed to those efforts gets a thank you from the defense secretary, and that's one reason they went out of their way to go to mongolia. if i'm not mistaken, fastest growing economy in the world right now in mongolia as well. one reason, two good reasons to make the visit, but mainly a thank you for their contributions in afghanistan. >> bloomberg's "surveillance" from washington. later this morning, a conversation with christine lagarde of the international monetary fund, and then i'm really looking forward to speaking with jim yong kim, former president of dartmouth college, he is the president of the world bank. really looking fwoord that as

well. scarlet? >> we will speak with you in a little bit, tom. meantime, we want to introduce our guest host for the hour. nomi prins from gold gold. she also worked at bear stearns before that. she turned into an author of the new book "all the president's bankers." this is a wonderful chronolgy of the alliances between wall street and the executive branch of our government. nomi, we'll get to the book shortly, but i want to get your take on jamie dimon's letter to shareholders where he admits the bank had a tin ear to all the challenges it faced. now that the troubles are behind the bank, never actually lost money during the period, do you think the complacency has returned as well? >> well, certainly has a sense of settlement and contrition after the fact, after the settlement, after the negotiations, after the subsidies that j.p. morgan has received in various types of manners through the federal reserve and other types of programs. so it's very easy now to come and say, ok, we're sorry we

made all these mistakes, but we put a little bit of money on the table, a little bit less of their as societies table to do some settlements. it's nice that he is feeling this is a good moment to be gracious about everything that happened in the past and sort of, you know, but it doesn't necessarily mean anything about the risk structure of the bank. >> has anything, therefore, really changed? >> well, no, not really. as long as the structure of the bank, as long as j.p. morgan chase is the largest bank with fdic insurance, has the largest derivative portfolio of all the other banks that has a large asset base, largest deposit base that is also insured by the fdic, it still has the ability to risk individual money, the bank's money, and there's really no division besides on paper as to what it can do. there's a lot of ways to move money around the bank and behind trading and different things. >> isn't it amazing how

relatively little we've actually progressed? smaup people argue too much money, but we'll get into this a little bit later on with nomi prs. but coming up on "surveillance," let it go? no way. disney is holding on for dear life. it is milking the success its latest movie, "frozen." the blue dress that princess elsa wears impossible to get. this is bloomberg " surveillance." ♪

>> good morning. this is a live shot from disneyland at anaheim. adam johnson, do you know this ride? >> of course i do. i used to go on that with my

grandfather when i was a kid. the thing was to put my hand outside the boat in the water. >> and touch the water. >> yeah, of course. >> this is it's a small world, the ride, celebrating its 50th anniversary today. it's in disneyland in anaheim. we're talking about disney, because everyone who has a 5-year-old to 8-year-old daughter or niece or neighbor knows what's going on. we're talking about "frozen." the movie is hotter than hot t. went on to become the top-grossing animated film of all time with worldwide theater receipts of almost $1.1 billion. when you include merchandise, the number will go beyond that. the blue dress that princess elsa wears, and i might be confusing my facts here because i didn't actually see the movie, but that thing is going for $1,600 on ebay. it's totally sold out at all the regular retailers. $1,600 for -- >> a polyester dress with sequins. nomi prins. you have a 5-year-old niece. >> my niece literally will not

stop singing that song. she sings it in her house, on the street, in stores, in restaurants. i was listening to that during the break, and i came in with the coffee, but yeah, my 2-year-old nephew is following her and singing it. so this is -- this is going down in age. this is not even 4, 5, 6-year-olds, this is hitting 2-year-old boys. this is everywhere. >> and here's why it's so significant. you look at traditionally the studio entertainment business for disney is only about 15% of revenues. you get this kind of bump, and all the sudden it just catapults earnings for not just the current quarter, but the coming quarters. >> oh, absolutely, because this coming quarter we'll include the box office receipts from asia, from china and south korea. it's going to be a blockbuster hate in asia too. i saw some number that said disney will make a billion dollars in operating profit from "frozen" movie receipts and tv and d.v.d. receipts before merchandise sales.

>> and then you got "frozen 2," which may be coming out. >> the franchise, absolutely. the other thing that people tend to forget is that even though disney is the world's biggest entertainment company, it's actually the world's largest licensing company as well. i mean, whether it's officially distributed "frozen" dresses, or the ones that people make on etsy and sell themselves, yeah, it's booming t. is definitely a big part of that. and rapunzel, those people are out. >> you're quite well spoken on this. >> well, i live in hollywood, you know, so this is kind of what we actually talk about. we don't talk about banks in hollywood. we really do talk about "frozen." this is what we do in real life. >> you actually have a life in hollywood. >> yeah, die. >> and every studio is looking for their own version of "frozen." >> absolutely. lots of screen writers trying to figure it out in between coffee breaks at starbucks in west hollywood. >> well, this being new york, we are talking jamie dimon. when we come back, we're going

to look at this letter he wrote, the annual shareholder -- shed say, the annual letter to shareholders. it was a mea culpa with a tin ear, says mr. dimon of j.p. morgan. "bloomberg surveillance" streaming on your tablet and bloomberg.com. ♪

>> good morning, everyone. i'm tom keene in washington. scarlet fu and adam johnson in new york. out of cheer washington correspondent, peter cook, is with us this morning as well. at 10:00 a.m. this morning, my conversation with christine lagarde, look for that. it's an important conversation on america's relationship with the i.m.f., this on the 70th

anniversary of the international monetary fund. what a pleasure to be here in a georgeous washington this spring april morning. peter cook with us, and he has a morning must read. >> it is from jamie dimon. we're going to new york to get our morning must read this morning. i was intrigued by hi letter to shareholders. a more humble jamie dimon, he writes the most painful experience that i have ever dealt with policy professionally was trying to resolve the legal issues we had this past year to try to get many large and risky legal issues behind us. he goes on to basically admit that they had a tin ear when dealing with regulators. we thought we knew what we were doing, and we should have been listening better, the message from jamie dimon. >> he does a radically different conference call, and i like the idea of an officer of a company being moroccan died in what is usually a formulaic moment. he's taken a page from warren

buffett. >> and he's shown, again, a dose of humility here after dishing out $20 million to settle all these various issues here in washington. remember the more aggressive tone we got from jamie dimon whenever he came to washington and testified, remember when he challenged ben bernanke publicly a couple of years back on regulatory issues, not the same jamie dimon we see in this letter. >> does he have the respect of washington? >> he absolutely does. now, has he come down a few pegs since he was lord dimon and the next treasury secretary of the united states? absolutely. he does not have the same cloud he used to have because of the problems at j.p. morgan. but he still runs a huge bank that has operations across the country, and every senator and member of congress -- >> we spoke to senator grassley yesterday of iowa, 80 years old, started in republican politics in 1959. there's a lot of old people in washington. will the new guard of washington have a different relationship with too big to

fail banks? >> i think they'll have a different relationship. it's not the same relationship that it once was. there is now a real opportunity to run against wall street and be successful. and that is one of the real things you sense right now in the relationship with the financial sector. but i also think you got a different releaseship with business overall. there is an opportunity for both democrats and republicans to take on large business politically and be successful while they still try and bring the businesses to their home state. so there's a strange dynamic working here, but wall street in particular still feeling the pain from the financial crisis. >> let's talk about another elder statesmen of washington, d.c., alan greenspan, he wrote an exceptional smart note this morning for societe generale, and he fwalked the ghost of alan greenspan clinging to easy policy for too long a decade ago, provided the fuel for a credit bubble. that's al's legacy. real fed funds have been negative. the s&p has risen despite the

biggest financial crisis in our lifetime. i thought it was a real note. what is the aura of alan greenspan after bernanke and now in the yellen years? >> well, you know, it feels like a long time ago, to be honest, here in washington. everything that's happened here in washington, all the movements of ben bernanke, alan greenspan is not being called to testify up on the hill these days, still respected, still an admired guy, but questions about, question, the performance of the fed under his watch, some of those decisions, whether it did fuel a credit bubble. the debate continues. >> i want to put out spot. what is a question you would have ask christine lagarde as a washington insider? folks, you can't believe how the i am and i am world bank headquarters are on a moat, a word from jamie dimon, a moat around political washington. what would you ask madam lagarde? >> the question right now is really not that she can take a victory lap, but the i.m.f., everything going on, we see -- i look at greece today, and the bond -- it is amazing, a unique

turn of events. what is the fear of complacency right now given everything that's happened and where we are today, the fact that greece is successful? what's the risk of complacency here in the united states and across the world? >> peter cook with us, our chief washington correspondent. it is our twitter question of the day. it's an international question of the day. should america support the i.m.f.? here at the spring meeting, that's the back story issue. should america support the i am am? much more from washington and new york. it's "bloomberg surveillance." ♪ .

walking by yesterday, all the kids in town, the students are in in droves. the magnolias across lafayette

park looking over to the white house, it must be april in washington. here for the spring imf meetings, i am tom keene with peter cook. scarlet fu and adam johnson hold down the fort in new york. let me give you quit -- quick data check. futures are negative. this is a big story today, the euro higher. we have really reversed 10 days of higher interest rates. i think will make for a most interesting day of trading all in all. let's look at some dinner and losers. >> i have one winner and one loser. we will start with alcoa, which reported two days ago after the bell. there have been some comments out of alcoa effectively saying the long dry spell for metals is over. it is for kay's sting the demand will exceed -- forecasting the demand will exceed supply.

that is in part because they cut back on production. if you cut up production, of course -- >> there is a little payback. >> toyota really struggling along with several motors, recalling about 6 million vehicles. practically one-for-one with gm. the stock is down. >> the american depository receipts. >> the ordinary straight in tokyo. all whole range of defects from to break -- airbags lamps. it is all safety related. >> the distinction with gm, there are no deaths or injury tied to the recall. >> at least that has been reported. >> toyota dealing with that. speaking of dealing with a lot of issues, regulators won't let wall street forget its role in toppling the financial system with risky lending practices. the three banking regulators on

a lesser proposal to have the too big to fail banks that aside 5% of their assets. nomi prins is our guest host from a banker turned author. she joins us now. nomi, is the tension new? in your book, you talk about the alliance between washington and wall street that goes back to the early 1900s, leads to the great depression. is the relationship between wall street and the presidents office more pernicious now? >> it is different. the relationship is different. when you go back to the panic of 1907 which had so many parallels to what happened in 2008 from a bunch of bankers getting together to decide how they would save the markets, putting in money, saving the markets, and not changing anything structurally in terms of their power and then having it crash in 1929. we have recently seen in 2008, you give bear to jpmorgan chase,

but nothing is really structurally changed. the reason for that are the relationships that were cemented back in that period of time. >> you talk about -- you paid a very incestuous relationship between presidents and the leading bankers. everyone went to harvard or yell. they neared each other. they mentor each other. they're also all white. times have changed. we're barack obama as president, a female fed chair. the white majority will be gone in 30 years in this country. will the passage of time to change things? because of the manner in which politics and finances so money is politics. politics is money. it is so interlock that it almost doesn't matter anymore who is in the white house or who is running the fed because the policies that subsidize the

financial industry in cases of extreme crises or that press washington to make certain decisions with respect to the imf or world bank or participation all relate to things that have been put in place and families and these relationships have put in place throughout the decades. >> you are making the case for getting rid of all lobbyist who lobby on behalf of banks, right? you're really saying the system is effectively bankrupt morally. >> and also hazardous. it is risky to the rest of the population, as we have seen recently. going back to your question earlier about the character versus how now we have so many lobbyists and lawyers in between going through papers and trying to make reforms, not reforms, that are weak to begin with and will do anything anyway, is you actually get less done. then there was the personal connections or you could pick up the phone, do something. it was more direct. >> peter cook, jump in here. >> i think their relationship is

complicated, to be sure. there is the sense in washington these rules are still coming and are not going to end anytime soon. it is taking way too long. but the reality is, and jamie dimon says in his letter, he thinks ultimately the rules of may the system safer. at is the justification democrats in particular pushed out. the sense there are still rules too, i think is something the banking system, wall street, needs to be prepared for. ,> one of the things here, nomi it is also making doing business expensive. it will increase our wing costs says jamie dimon -- borrowing costs says jamie dimon. to say they're going to be things coming in that will make your business operating expenses go higher. the bottom line, as peter was saying, there are more rules. there's plenty of time to continue the debate about what

actually going to be agreed upon. -frank did not separate depositors and taxpayers from the risks being taken. --the way glass-steagall >> exactly. all of this voice from the banks singer too many relations and democrats and we have done all this great stuff, it is wonderful and republicans and we should not have any, it doesn't really matter. positionally, we're a of a bigger crisis. we're still in a position where banks are doing too many things that put too much risk on the overall economy. >> i want to go to the heart of your book. congratulations on the book and the way you methodically go through each decade of the american finance and banking. three simple, why will the concentration of deposits in the concentration of size, the growth of size, rather, why will that end?

all most like canada. why won't we be like canada? >> we do have sixpence controlling much of what goes on. we're going in that direction. 85% of the insured deposits are with the top six things. derivatives concentrated within the big six banks. what is happiness course trading -- what has happened is course trading and concentration of power within a few institutions has come to a point where the other ones don't really have a position. >> what is it going to take to change that? a it is going to take either tremendously bigger crisis and the one we had before, which i believe will happen. i said it in 2004. a market, the risk, we did not do glass-steagall and had a crisis in 2008. i believe it will happen again. maybe this time, and unfortunately it would be a bad event for everyone else, maybe this time we will do something about not having another one. has become a cottage

industry recounting the problems. books,e is writing producing movies, producing political careers. you have been doing this for a lot longer because you started to write about this in 2002 after you left their stars and goldman sachs. tell us what you saw in your banking career that led you to turn on it. >> one of the things i saw was this evolution of the credit derivatives market that also had a big role in the implosion of enron and the telecom companies and the things going on in the time right before left the industry. i also had personal reasons i came in to play, which was 9/11 and rethinking life and everything in general. there are was a lot of messiness accumulating that was going to get bad. one of the things i did when i left was right about what was going on on the inside. we did not know these terms. cottagea bit of a industry, but a profitable one.

i thought it was important to inform people and a look at the structures of these banks, now goldman sachs is a bank holding company and then it wasn't. but how these banks operate within the national and international economy. >> you certainly nailed it in your book. >> nomi prins, our guest host for the hour. tom, i want to send it back to you in washington because you have news on twitter. >> news off the bloomberg terminal over at cantor fitzgerald, makes a big move on twitter. he has been very negative, correctly negative, on twitter. he goes from cell to hold on twitter, but makes there he is a great preference over facebook. this is one of the backdrops here at the imf meetings is the real carnage in emerging markets and the carnage in bio techs and those highflying stocks. scarlet? >> it looks like twitter shares are trading higher.

thanks, tom. we will be checking in with you shortly. coming up, we will take the gender pay gap debate to the white house. we will discuss how female employees fare against their male counterparts when it comes to their paychecks. we will be right back. ♪

good morning from new york city. it is a beautiful spring morning. this is a shot from our rooftop camera. the temperature is a bus to get to almost 70 today. >> 70 in new york city? we are going for a run in central park, scarlet. >> springtime is here. tom keene is attending the spring meetings at the imf and washington, d.c. we will be joining him shortly. surprise drop in china's exports as well as the imports in march. exports had been expected to rise will stop imports slid 11.3%. they had been expected to rise 4%. the mythic and disappointments. -- significant disappointments. stimulus measures to support the economy a boost growth. it will be a bit of a lag there. greece is returning to the bond

market today, the first debt sale by the country since its international bailout began four years ago. the country selling at least bonds.llion of it's return of capital markets is a sign of its recovery from the financial crisis. record 24 rookies will be among those teen off the masters tournament gets underway in augusta, georgia. the field will not include the number one rank tiger woods who is not playing following surgery for a pinched nerve. the first time in 20 years he has missed the masters. those are the top headlines. >> whenever he is not there, there is no buzz on the masters. >> and no premiums per ticket prices. at least last week, were down over 20%. we will see what happens. >> no tiger woods, no high-profile girlfriend, either. the single best chart over the

washington post, it looks at the gender pay gap between male and female wages. level. on the national the white line. it remained constant since 2000 three. overall, making proximally $.24 less than male counterparts. the yellow line shows the white house. in fitslosed the gap and starts. it was in line with the national gap in 2003, but now says that roughly $.12. this is a 10-year chart. peter cook in d.c., didn't the president has an order forcing government contractors to post breakdowns? did that do anything to move the numbers? >> those are contractors opposed to white house employees like those hired within the government itself. it doesn't do too much there, but it is part of the larger effort to highlight his equal pay issue. democrats think it is a winner

for them. they had every female member of the u.s. senate on the floor yesterday talking about this equal pay issue. they have had to play little defense this week. jay carney has been charged -- challenged over the question of whether or not these numbers truly capture what is happening in terms of the picture. specifically, if the white house pay is reflective of the nation as a whole or of the white house has a problem on this front. it has been interesting. republicans have tried to push back. >> the american enterprise institute has questioned those numbers and did its own resurgence as if you compare apples to apples, women have stayed in the workforce not left or had children, but stayed in the workforce the whole time are much closer in their pay to men. the pay gap is only 3% or 4%. has that gotten any traction? >> it has with republicans, to be sure, and one reason jay carney has been facing questions. at the end of the day, this is still a lot of politics.

you have the president highlighting the 77 send cap the white house has pointed to in the past -- $.77 gap to white house has pointed to in the past. the war on women, as it has been referred to, they think they still have an advantage with female voters in this country and their attorneys everything they can, every leverage they can in this election year -- they're trying to use everything they can come every leverage they can in this election year. >> peter, we will check in with you shortly. coming up, the worst internet security bug yet. it has gone undetected for almost two years. it keeps servers secure. we will discuss that coming up. ♪

>> good morning, everyone. "bloomberg surveillance." my conversation with christine lagarde who has been critical of the united states policy. then you'll hear at 2:00 p.m., yongnversation with jim kim.

boy, has he made some changes coming from dartmouth college down to washington. a wonderful day of international bloomberghere on television. our twitter question of the day -- we need your controversial and emotional answers on that issue. let's go to scarlet fu. >> anytime people are asked to pony up money for something like that, there's going to be a lot of controversy. another day, another computer security issue called heartbleed that affects the internet, giving hackers which infiltrate up to two thirds of all active websites. by the way, it went undetected for two years. dr. vincent burke is ceo of flow truck which provides network analysis for security,

inference it's and joins us by skype from new hampshire. dr. burke, welcome to "bloomberg surveillance." the sad thing in all of this, we are so numb to reports of websites or data being infiltrated that people tend to just think, all right, let's get the fix going and move on. i will have to change my password five times. what is different this time? >> this bug is a unique one and it has a tail. the truth is, we really don't know how long people have known how to exploit it and what kind of information they have been able to scrape. the way we have to look at encryption is what makes our internet secured and allows us to do things like banking and log onto our website, now, this bug allows attackers to scrape arbitrary data out of the memory of the server which we really have no way of telling what they might have gathered. it could've been passwords or security certificates, it could've a long story. >> nomi prins, you said your

banking statements were hacked not so long ago, right? >> i think it was at the beginning of heartbleed. i had to go in and change all of my accounts and everything else. i heard from a number people at the time, you know for being hacked into some people could pretend to take their id and get the information out for financial statements. >> does that mean all of the hackings we have endured the last couple of years are linked to heartbleed and whatever happens now will be worse than what we have art experienced? >> most likely not. there are different kinds of attacks out there. impersonation to gain access is common. heartbleed is unique in it goes truly at the heart of the encryption protocol. probably not the last but we will be seeing from that. >> i'm told my iphone is very leaky. it is constantly going up to servers, looking for data, bringing in. how do i secure it? >> you could turn it off. >> aside from turning it off,

which i really don't want to do, does anyone actually produce something that can legitimately secure my iphone or your galaxy s4, etc.? >> it is extremely hard. the galaxy phones, to some degree, have this heartbleed problem. let's be fair. we recently saw the bug in the is a webb browser that browser you run on your iphone. what we have is protocol we must all rely on, but implementation faults are putting it such that it becomes extremely hard to completely trust these technologies. >> thank you so much, vincent berk, the latest on the heartbleed bug. i want to turn to nomi prins. your books paint a dark picture of this rigged political financial system.

what are you hopeful about? >> there is a time in the book lbj andetween fdr and when the glass-steagall act was enacted and a was lot of people don't know because of the relationship of fdr and winter baldrige, the chairman of chase at the time. outrage front ran -- he front fdr's. it is a time when bankers can get together with bankers to reduce the risk that created a nice stable economy and financial system for about 30, 40 years. >> perhaps glass-steagall is the way to go once again. >> intuitively, it makes sense. shareholders who have benefited from it. thank you, nomi prins, our guest host for the hour. >> thanks so much. peter cook with us. "haven't heard the word

boehner" in weeks. low profile for john boehner because there is a lot happening in congress. basically he is on autopilot because he knows they have an advantage. they will hold the house republican thing and a good chance of winning the senate. they will not tackle tough issues like immigration this year because they think they're on the right flap a -- flightpath. lame-duck? >> no, because i think the expectation is john boehner will be back, will be running for reelection, and intends to be speaker of the house. that is the sense right now. if that doesn't happen, there's going -- the knives will come out, just's will come out, and we will have a serious battle. >> i hope we can do this again tomorrow. how about a report? the imf, is a floating, fixed,

the violation, appreciation? how about the dollar-yen and the euro decidedly stronger? stay with us from washington and new york, it is "bloomberg surveillance." ♪

ledcrimonious stalemate has

dashers janet yellen the only adult in the nation's capital? around lornaat and company. dimon more taxes, less spending? was it smoke and mirrors? we are live from washington. i am tom keene. joining me, scarlet fu m adam johnson. overnight, china trade falls unexpectedly. in points are down 11.3%. the government says it will initiate more growth policy. in europe, the bank of england has announced it will hold rates at a record low, 50 basis points. that is out of the bank of england. this is not a surprise. in the u.s., we are going to be

getting earnings. they will be coming out from family dollar and righty. we want to point out that down the road, a: 30 we will get some numbers. will get import prices. finally, we want to point out a judge is expected to rule on the capitall settlement sac advisors paying potentially $900 million to settle its insider trading. the masters beginning in the dust, georgia. a lot to look forward to. tiger woods. he is out with the pinched nerve back surgery. >> two company news. we start with jpmorgan ceo, jamie dimon. a 32 page letter went to the shareholders. he called the legal problems the most painful difficult and nerve-racking experience he had ever dealt with. they had to deal about $20 billion in total settlements last year.

capital's day in court. they will find out if a judge up proved a one point -- a judge approved a $120 billion settlement with the government. walmart wants to make organic food more affordable. they are teaming up with wild oats to sell packaged organic food at prices comparable to conventional food. it will be priced at least 25% less than the organic brands walmart carries. let's go back to tom keene. >> i did have my oats this morning. worldwide,ffices washington has the best food. discussionways one

show we say, uncomfortable, in the 2004 general it is the u.s. congress's reluctance to support the imf, critically, these reforms are widely praised by republican and democrats. would make for an imf with better representation. ourre on that you bring you guest at cornell. we are thrilled to have you here. does ms. lagarde hope to accomplish? memo to try to get the key countries talking to each other and resolve differences in their policies. in risingmany issues

tensions about currency around the world. she is trying to get the country to the right things in terms of their policies. to learn fromying crises past. the feeling is that things are better. what does the imf onto change? when you talk to the pros, what is the number one item to change? >> whether governments will use the breathing room they have to do the right thing in terms of the structural reforms and the deeper reforms that they need. many of these economies seem to have repaired themselves to some extent. they are no longer shrinking. they used the space to get financial markets working better. that is the real challenge. ma'am a in my interview this

supportive are these leaders by their institutions? >> they have a fair amount of support. -- are they going to listen to what these leaders have to say? >> there is this idea of who is running the show. america seems to be upset. would you explain, after the successful g 20 meetings in pittsburgh, the president's delicate negotiations and why they will not pass imf reform. u.s., that in its wisdom, westernized that the -- recognized that the imf needed to be reformed. now, it is the u.s. blocking those reforms. the amounts are very small.

all it takes is political will -- unfortunately the imf political football. it would be good for the imf and the world economy. fascinatedeen reading on this. ted peterson has made a lifework of your g20, trying to explain the complexity of this reform movement. congress will not support. that is our twitter question of the day. we have had a huge response already. the imf?erica support we could have asked that in 1944 or 1970. certainly out of 1998 as well. we will come back. we will speak about the meetings in washington. right now, let's go to a little

more geopolitics. here is scarlet fu. >> we have not talked about russia yet. the game of chess that they seem to be playing with ukraine has reached a stalemate. russian troops are still amassed along the border. the snap presidential election will be held in late may. .ina fordham is our guest she is among the first dedicated political analysts to work on wall street. first seized crimea, there was international uproar. this week, the same thing happened in another -- a number of ukraine cities. it feels like we are assuming russia is going to get its way and do what it wants. is that a fair assessment? >> you mentioned the elections. that is a key sign. one possible explanation, or outcome of the unrest in these three cities that you mentioned

is that they could make it more difficult for elections to take place. if there is chaos on the ground, it is difficult to hold a national poll. government needs his legitimacy of a popular election result. reporting thats in some of these other cities, it was a few hundred people. that we arerisk getting wrong? we think it is worse than it is. is notw hundred people very many. it suggests that there is not that kind of popular support from ethnic russians in eastern ukraine to join in some kind of uprising, which might trigger russian intervention. what might happen as a political response. one of the important developments is a presidential poll in ukraine without crimea is unlikely, mathematically, to

produce another pro-russian government. >> you have lost a million votes. all of those crimean's are now russians. >> crimea is a swing state. without it, there could be more divisions after the result. >> you were a strategic advisor strategic k's -- u.k. movement. u.k. and continental europe -- there is a tighter relationship between russia and europe in terms of the gas relationship. >> russia supplies about one third of russian -- of europe's gas. comic potential for eagle -- economic flow back is much less. we have the high portion of k sians living in the u

a memo that was photographed and circulated that suggested there was reluctance. putin understands there is a mutual interdependence going on. the western is how far the developments test international resolve and instant national -- and international institutions. that thereso concern could be more instability that could hurt the european union. >> lots more to discuss. she is in new york this morning. ukraine reacts to president putin. we will discuss. ♪

>> it is the white house. it is gorgeous. the magnolias are magnificent. all of that history. madison's yellow house. it is gorgeous in washington. it is great to be here. this is "bloomberg surveillance." i am tom keene. look for my conversation with madame lagarde and resident cam later today. kim latersident

today. emerging markets are stockpiling reserves. currency tensions are set to rise. to asia as the cause, perhaps. they are learning from a 2008 financial kate -- crisis. this is the world economic outlook. it is from the imf. not in it is the upset of those reserves in asia. what did he mean? >> it will happen right now. the reality is the head is easing off and money is flowing. is easing off and money is flowing. economies are put under because money is coming in from the american markets, but the bake of japan is likely to open, which will mean more money in asia. the chinese central bank is not

letting the currency appreciate. what are they going to do? accumulateing to reserves. it makes sense in the context. these countries know the capital coming in could fly out. there is nobody to protect them. >> stanleyna -- fischer will become the vice of the fed. potential of 2016 not like 1998? emerging markets are safer by reducing the amount of external debt. they have lots of reserves. the problem is that capital has found much more open and they are much more subjective to volatility. we need to be vigilant for the next crisis. there is going to be a next crisis at some point, right? towe have done enough

protect ourselves and the country. this is the reality of financial markets and capitalism. you have bones in the road. -- bumps in the road. i am not sure financial systems --. >> how about this business week cover? mr. gross talks about pimco. that is a great cover. ♪

>> this is "bloomberg surveillance. " our guest host for the hour, tina fordham. she is based in london. as you have made the rounds and talk to investors, one thing you are constantly surprised by is everyone is about the geopolitical risks.

what is the reason for the disconnect between people's perceptions of how the reality of sex their investments? -- reality affects their investments. >> greece returns to the credit markets. ofkets tend to get ahead socioeconomic and --. months,ast six to nine we have had three really important developments. the context.ered the first one was the failed vote in the u.k. house of commons. the non-vote in the u.s.. the u.s. did not enforce its geopolitical redlines. that was a message that was

clear to everyone in the world. on the plus side, we have a boost for diplomacy. iran after not talking. >> talks are still taking place. >> that has taken off the risk of an attack on iran's nuclear facilities. third, russia, ukraine, they're now in question. india, china looking at the of referendum risks. , syria, crimea, no shots fired, no war. be complacent,ot comfortable, step in and put capital at risk? >> one reason these are taken together and are important, we

have come to a point where it is difficult to use military force to back up our position. in the short term, markets do not like conflict. that is a positive. it brings up route -- about the breakthrough on iran. there is a risk that there is a perceived power vacuum -- >> that the u.s. is weak? >> rogue actors can take u.s.tage of the do not mean to interrupt, but the dithering is a perfect example of why a lot of people are expressing admiration for vladimir putin, even as they condemn his actions. the to notation to admire him for -- the temptation to admire him reflects tension between the democratic limits of

systems and those governments that are no longer answerable to their populations. byhe is not as encumbered legislature that is coming up to midterm elections as here in the u.s. beentions have popular because of the perceived violation of rights of ethnic russians. there is another component -- former nostalgia for the soviet union and a sense of imperial power projection. in the u.s. and elsewhere, the focus has been on economic recovery and putting that first. >> people in the u.s., the leaders think they understand how he thinks and have been shown that -- >> clearly, no. he is a step ahead of president obama. >> chess versus checkers.

>> tom keene, i am going to send it back to you. layingimf is no doubt geopolitics -- playing geopolitics. paper a fewote a years ago. sympathize with those that minimize rather than maximize the economic entanglement among nations." does the u.s. need more expansion into international trade? in this crisis that enough is enough? >> the world is the heavyweight and finance. does affectse u.s. the rest of the world. one thing they are beginning to see is that the desire from emerging markets, but also of countries to pay a little more

attention to the effect of policies worldwide. >> our jobs going to those emerging market nations? >> some producers in china are beginning to move back here. it is arisk because high-cost environment. >> we did and article earlier on "frozen." gets thehe dollar trap same kind of following. coming to youap" on memorial day of 2017. there is a wonderful book, smart, smart, smart. thank you so much for coming by. coming up, we will look at the american budget deficit. mcginnis will explain why you should be happy about your deficit. we are in washington for the imf and world bank spring meeting.

our twitter question is right to the point. should america support the monetary fund? stay with us. it is "bloomberg surveillance." ♪

>> this is "bloomberg surveillance. " let's get you some company news. we start with right eight. -- rite aid.

ready clinicsnd to other markets. no terms of the deal were disclosed. walmart wants to make organic food more affordable. they are teaming up with white wild oats. the items will be at least 25% less than the other organic brands that walmart carries. gucci's owner may look to buy sports and lifestyle brands. it will hinge on whether it can puma brand around. growth ined to have a the brand. we need to make sure the brand impossibility is in line with the new product that we are putting a market. >> he went onto say that he is convinced that they should have a lifestyle brand to reach younger consumers.

his wife, salma hayek. >> i did not know that. >> i only know that as mr. salma hayek. someone else they care a lot about, bill gross. speaks. he is the pimco cofounder. mohamed el-erian after -- after mohamed el-erian announces resignation, it has been rough. everything has gone wrong for him. he has had redemptions, the bond market has turned around.

the rally has ended. he uses -- loses mohamed el-erian. why did he let you come in when his back is against the wall? turmoil has been hard on him and he felt he did not have an opportunity to express what this is unlike for him and say his piece. impressed by how analytical and reflective he is. about distressed to read the negative depictions of himself. >> people are saying he is impossible to work for. hadad to pete -- mohammed to pick up the pieces because he had made such a mess. >> he was a dictator, he did not listen to dissenting opinions smoothamed was there to things over with the staff. he admitted he could be hard to get along with. he is focused on bond trading.

introvert, why do i have to apologize for that. he is one of the greatest bond investors ever. many people are inclined to forgive him for that. he wanted to point out that he is not a bad guy. he is trying to learn from this. he is trying to pull the company together and reorient for the future. improve trying to himself. he sounds like he is in soul-searching mode. he runs deep biggest bond fund and he is ensconced in newport beach, california. does he not pick up on the tensions between what he is doing and how people perceive him because he is in his own world? >> this affects a lot of people in leadership positions. he is great at what he does. he has skills as an investor. intodoes not translate management and managing people and running a company. it has been so good on the investing side, it has grown into a huge organization. suddenly, he needs someone else

to manage it for him so he can focus on the thing that he is great at. that is the role that mohamed el-erian played when he was there. have you had the sense that the sense has been righted -- the ship has been righted in a profitable direction? the rightve taken steps. they have promoted a lot of talented people into positions where they will be able to challenge him and collaborate with him in ways that could be productive. everyone agrees that the structure is still new. it is going to take some time before we know if it will translate into returns. was allss said this fine and dandy, we are happy, we have everything sorted out, but the test is whether the investors are happy. >> a wonderful article in "bloomberg businessweek." that is available on newsstands and on your tablet today.

let's get to a data check. stocks have gained for two days. it looks like teachers are bouncing around. -- futures are bouncing around. jobless claims coming up at a: 30 a.m. we are on bloomberg television and bloomberg radio. i am here for the spring meeting of the international monetary fund. my conversation is with christine lagarde of the imf. at 2:00 p.m., you will hear my conversation with jong young kim, you know him from dartmouth college. the united states is leading the world in economic recovery, at the same time, timeout chair, the school that the imf. the u.s. is an irresponsible lout for spending beyond its means.

are you confused? i am confused. milo mcginnis is not confused. she suggests i should read material and get smarter, as you should. it is a clear and future danger. it is gorgeous in washington. you are a native washingtonian. >> i am. i never expected i would end up back here. i do not like the political scene. the budget deficit has brought me back. it is beautiful now, but it has not been recently. >> it was the fiscal winter of our discontent. we are happy because there are some short-term improvements which are giving politicians that want to run away from this an excuse to say things

have gotten better. emphasized theas deficit has been cut in half over the past four years. grewnored that the deficit to two years prior to that. a going that our debt remains at near record levels. economicith strong growth potential that we have, i agree with the imf. the u.s. can be the lead in engine and growth. it is not structurally sound. we have real problems staring at us. >> your budget has plug-ins. if i get the deutsche bank , if we get some good news, doesn't that help solve the tension? memo that has been exaggerated. let me say, yes, we have to grow the economy.

there are a lot of policies that we have wrong. we need to be investing more on the budget side. the tax code is a disaster. the chairman cannot avail -- cannot put out a start on the tax. long-term problems are based on aging population and our demographic and health care costs. those things tend to go up. the cost of the aging, when the economy grows. they are kind of link. the more we grow, the more we pay out in social security. frame team democrats and team republicans. what would be your number one advice to republicans to jumpstart intelligent policy? >> they have to compromise. they have a view of how they would like to see the world.

it is a legitimate view. that is not going to happen in this environment. entitlements, key to fixing our budget, will never happen with republicans alone. scared forlitically what they stand for when the democrats are not there to give them cover. they need to reach out to make this a part of a budget plan. >> what would be your recommendation to team democrats. >> quit pretending you can fix the problems by taxing millionaires and billionaires alone. democrats are focused on spending tax breaks without paying for them. they want revenue but are not comfortable. they are scared of the policies they want because they are hard. they need to work together. it is about political dysfunction. they will not. >> i have to do a show to talk

about this insanity. we will continue with maya macguineas. our twitter question of the day, madame lagarde's worst nightmare -- should americans support the imf? it is "bloomberg surveillance." ♪

>> this is "bloomberg

surveillance." tom keene is in washington for the imf spring meetings. we have betty liu to tell us what is going to be "in the loop." we have a guest that will be perfect for adam johnson. -- ben l will be erer will be our guest. i know you love cars. he targets this young male audience. he is also trying to completely change the way media companies operate.

>> he is trying to disrupt? >> facebook is trying to do it, twitter, everyone is trying to -- that is like the holy grail. he says, forget the ads, he wants to sell products directly from his content, from what he creates. >> he is an investor in companies like warby parker. >> sounds good, betty. thank you so much. we will make sure that adam checks out thrillist.com . >> the global economy ways emerging-market volatility. you have written extensively on the problems that investors should watch out for. they are having a couple of things that did not come to pass. things that worked out. you called them the dogs that did not bark. what is at the top of the list?

>> the global economy is recovering. it is led mainly by the u.s.. the u.s. did not go over the fiscal cliff. we did not have an attack on iran's nuclear facilities. expected, or the known knowns failed to transpire, that does not mean that any of the risks are completely ameliorated. particularly when it comes to elections. >> we got through 2008. it was ugly, but we got through it. there are buying opportunities when you hit the bottom. one of the things that we

observed is that political developments cause volatility. barke dogs that did not idea, the potential for politically generated systemic risks, like the eurozone breakup, it has declined. country risk is still with us. >> we will discuss that further with tina for them. we want to go back to washington. tom will be checking in with maya macguineas. this is "bloomberg surveillance." ♪

>> good morning. i am tom keene. outhe 10:00 a.m. hour, my -- my conversation with christine lagarde. also, she is on america's place within the imf. kim coming to the world bank. he is trying to reform the aircraft carrier known as the world bank. that is a great challenge. we will get an update. this is "bloomberg surveillance." i am tom keene. and adamrk, scarlet fu johnson. let's go to adam johnson. he has a morning must read to

set up our conversation. >> this comes from richard mcgregor of the financial times. everyone is focused on midterm elections. here is what he has to say. bush's comments on immigration jarred the republican conservative base curriculum as the federal overreach. mrs. clinton is more hawkish than her party. both are centrists figures while their parties of your right and left. how can we have two leading candidates who are in the middle and two parties that are at such polar extremes right now? >> if you look at how the party system works, you have different candidates who come out through the primaries and to the political parties support. those who appeal to the vast

majority of us, who are in the center. thereback a little bit, is such a problem in washington right now about governance, the ability to get anything done and address problems, that there is an appeal, particularly for more moderates who are less on the extreme of who is going to come into office and be able to govern. who will work with the most parties that are relevant and getting anything done? leaders who are not at extremes with their parties, certainly, at least, project or signal the ability to get things done. i look, maya macguineas at the politics. you grew up, your cat was named gridlock. where is the gridlock and his

gridlock a good thing? >> it is a good thing when we're going to complement -- contemplate what we are doing and think through our policies. this is not even following the basic rules of how government is supposed to work. do not do budgets anymore. the largest economy in the world does not have budgets that we pass and put in place. we have a two year deal in a budget, butn of the the senate decided not to do a budget. they have said, we cannot get a law, we cannot agree -- >> i have to ask a be dumb question of the morning. what do politicians do if they are not making budgets? of -- therea lot are a lot of tiny things that nobody would care about. there is very little grappling with the big issues. it can be analyzing what is

working and what is not. it can be working to figure out different topics, whether it is the environment, energy, or immigration. there is a lot of policy that could be getting done. they do not do that. they raise money. our political system consumes a lot of time that is not focused on governing. changes will have to happen. >> i get a lot of mail from that arence watchers very cynical about the process. get out pastpro, 2016 and say things will be better? congress dors of not actually want the system to be this way. when i work with individuals on both sides of the aisle, there are a lot of great men and women that came here to solve problems that want to work on these issues. that is what they would like to be focusing on the most. it is the rules and the systems that are making it harder for them to get things done.

hope the presidential race creates an environment where we can talk through these issues in a major way. this would be the time we can start thinking about how are we going to put in place some things that deal with jobs, competitiveness, economic mobility, in a way that both parties can live with. the race gives an opportunity for a national discussion. --see political races >> you are a native washing tony and. where is the best diner? where is the best request? >> there is one on chevy chase circle, below, on connecticut avenue. you have to go to ben's chili bowl. >> thank you. maya macguineas. ben's chili bowl. scarlet? him, our guest

host. you are a senior political analyst. maya was talking about congress not making budgets anymore. you were nodding your head. we do not think of it as a political risk. our system of government has been enduring. the polarization creates unease. main consequence of polarization is a lack of legislation. we have a short-term deal on the budget, but it is the longest duration that we have had for four years. markets are priced to risk in washington. not react after the shutdown. washington was expecting a reaction. they are not playing the role they might, which is to put pressure on politicians. markets expect short-term, piecemeal policy measures and that is what they are getting. >> what is the impact of a change at midterm elections where republicans take the senate? >> that is within spitting distance for the publicans. we still have divided government

. we have a democrat in the white house and republicans controlling both houses of congress. there is a body in washington that looks at the productivity of congress. the last congress was the least productive since 1947. i think this year is going to be even less productive. change this dynamic? that is the most important question. one party controlling both houses of congress and the presidency. stuff done and maybe the market rallies because you have progress. >> mathematically, it is highly unlikely. is the basernment case scenario. everyone -- should america support the imf? here, if weanswers can bail out aig, goldman sachs,

thewe can surely bailout imf which works to foster global growth and economic stability. for the imf and end the fed as well. do not support imf, we will become head in sand. we will be surrendering to putin , et al.\ >> everyone is in support of washington, america supporting -- imf.area anniversary 70th for this institution that is reinventing itself, 5, 6, 7, 8 times. centerll be front and with my conversation with christine lagarde.

that is the agenda item for the morning. it has to be christine lagarde and my conversation with her. everything said and done, it is about the view forward for her institution. she comes in under a lot of duress and she is by all the claims, done a great job. we will have to see her view forward for the imf and for their support of ukraine. that is the issue of the moment, if you will. >> you will also be speaking with dr. kim, the president of the world bank. front thanch less up what the imf. i want to speak about his reform efforts at this giant bureaucracy known as the world bank. i want to talk about the spirit of the health initiatives that he has front and center. policymaker.aimed there a sense, that given

the fact that the world has gotten through so much over the ,ast year, whether it is syria crimea, there will be progress down there? we will have more. "bloomberg surveillance." ♪

>> good morning. it is thursday, april 10, and we are here at bloomberg world headquarters. and i amin the loop" betty liu.

our cohost for the hour is bill thrillist.com, and he has invested in many companies, buzzfeed and parker, and he will talk about the heartbleed threat that is gaining speed. but first, here is look at the top headlines this morning. dimon sayseo jamie that they had a 10 year and should have listened to warnings, and that regulation could hurt the low income buyers by driving up costs. says they of pimco have not been happy campers, they have been hit hard by investors fleeing the fund and one very big up archer. ann shares