coco cola shifts from sugar to h2o. and you are really -- if you are really unhappy with your stockbroker, what to do? this is "bloomberg surveillance ." we are live from world headquarters in new york. tuesday, april 15. tax day. joining me are alex beale and adam johnson. -- joining me are alix steel and adam johnson. orderwill start with your overnight you take inflation fell to the lowest level in years. well below the bank of england two percent target. -- 8:30 a.m., empire manufacturing and we will also get cpi so we will see how our inflation is doing or not doing in the u.s. janet yellen will then deliver marks to the atlanta fed and b housing market index. and earnings before the bell,

coca-cola and johnson & johnson. >> interesting to see what they do. >> coke earnings expected down four percent this year. >> the last time you drink? >> i generally don't drink soda. >> that's the problem. >> no sugar. whistle pig or ginger rail. >> or his espresso in the morning. espresso hour, a double. after your the bell we have yahoo! and intel. and we will be joined by peter or zach, former budget director, --king about all things tech tax. andniversary of the boston bombings. we will go inside a new technology that aims to prevent future bombings. using artificial intelligence.

>> stocks, bonds, currencies, commodities. futures are flat, to say the least. not much going on. the second screen, if you would. vix does better yesterday. .6.11 currencies turn and oil, brent crude is elevated, 108.73 the last two or three days. i will call the one big churn to the data check. at 8:30 a.m., we get the cpi. here is a quick snapshot of the bloomberg terminal. the fed is concerned about -- below two percent -- 2%, this inflation, way off the mark there it there we go again, rolling over. not like italy or spain. nevertheless, there is our this inflation as well. yellen with her speeches today and tomorrow. we scoured the paper and the

websites of this morning and let's look at our front page with alix steel. >> the first story is the traces in ukraine. president obama and russian president vladimir putin talking on the phone. obama telling putin to get the russian militants to leave the ukrainian buildings that they occupy. putin says obama should use u.s. power to prevent bloodshed. both putting the onus on each other. ukraine they are not protecting russian speaking citizens. dovetail is the idea of politics folded into the financial markets. you mentioned earlier they raised rates in ukraine. >> for the first time in about eight months. 9.5% from 6 point five percent. trying to keep it from trickling down to the financial markets. the don't understand how

imf can provide significant funding when nine cities have in some form been taken over by pro-russian -- >> and how sustainable without any kind of structural change inside the ukrainian government. there has been so much corruption they have not been able to filter down. -- the onlyst note american on the debt restructuring committee, this is his wheelhouse. he had been long ukrainian bonds but he got out. >> really? because he called a really aggressive that. >> he made a lot of money buying them about a month ago and he got out. >> why we have adam johnson on the show. not just as good looks. >> i thought his hair. our second front-page story is the fallout from heartbleed internet bug. canada saying cyber criminals have exploited the security flaw

to steal social insurance numbers of about 900 taxpayers. websiteopular british for parents saying user data had been accessed for a good fix the whole system. heartbleed was revealed last week. until this report we kind of felt -- we heard no data had been sold in the hacker community. now we heard some hackers are taking advantage of the floor before it is fixed. i guess the lesson is, we do have to change our password. i was hoping it will go away and it would be fine. story isrd front-page more talk of a slowdown in china. or casts say china gdp in the fourth order will be much lighter than previously estimated. looking at 1.5% growth, and annual rate of six percent. and commodities, they say anything over 70% is fine. six percent is pretty deep, compared to 1.8% in the fourth quarter.

7 imf meeting, their call was point five percent for china. >> i thought that was pretty aggressive. the money supply grew at the slowest rate on record. those are our front-page stories. >> it is tax day. peter ortzag will join us. -- we have the author of "capital gains and games" blog. working with various communities on capitol hill. also, david williams, chairman and chief executive officer of delia marketing. stan, what is different from this tax that -- tax day than 10 or 20 years ago? what's the first let's talk about a year ago. a year ago we had massive budget

gyrations. there is nothing happening this year. i think,iggest change, is taxes have become a much bigger issue. a weight issue in the united states when it wasn't 20 years ago. nobody likes paying taxes but the anger about it has become much, much greater. >> this thing -- the single thing for me is not the one tax but the aggregation of many taxes. who advised our highest politicians look at it orone tax, like the fed tax the state tax, or do you look at them all together? what do you typically look at one at a time. but at some point, you put it all together. you have to. but until we get to a comprehensive reform plan, which i don't think we'll happen until not look atyou will the comprehensive or the total burden. >> why looking out to 2019? just pulling it

out. no hair jokes best compared to you, i am in bad shape. the last effort in the 1980's took three years. going back to your original question, it was a much different situation. it was not as big a political issue. you did not have a tea party. you did not have social media. you didn't have bloomberg television talking about it all the time. in the 1980's it was revenue neutral. now it will be revenue policy -- positive. >> i wonder if it takes the sales out of the republicans when you have the budget deficit the lowest level in three years, looking at three percent of gdp. as a trying -- change the conversation question mark >> it should, but it's not. an interesting question. i am about to have a column about it. 2.8% gdp down substantially from 10 point something from years

ago, but to some people, and the deficit is too big. the biggest for your drop of the deficit since world war ii but no one is talking about it. >> why is any deficit at all considered acceptable? >> adam, you listen to -- under fiscal circumstances, policy requires deficit spending, especially when the private sector is not filling in the void. the question is not whether any deficit is acceptable but when should it be pulled back, and do we have the ability to do that. by the way, i do need to correct you. it is not qorvis anymore but we were purchased by msl group, so we are qorvis msl. >> this tax they i will be tweeting my angst. this -- you do this

great work on marketing and advertising. when you talk about the marketing and corporations, what is their biggest headache and what is the biggest demand from you? >> i think understanding the information they now have about their customers and consumers. >> too much data. i totally agree. do you believe in the id of big data? what i do. >> a valid idea. what do you do with the big eta? >> the more you can understand about the ones, needs, desires of consumers for large marketers is of incredible value. and not treating a market as a group of individuals but as actual individual consumers is very powerful. >> i want to come back and talk about facebook. i'm fascinated to see the tooorations -- there is much stuff. >> i tell you what is scary, my parents are on it. [laughter] >> amazing. >> the honest answer.

let's go to company news on this tax day. here's alix steel. >> that's me. google adding drones to its stable of wireless robots. the search giant is buying titan aerospace that makes high-altitude solar powered drones. pair it with a project that is building high-altitude balloons to send internet signals to remote parts of the globe. no financial terms were disclosed. for the largest whiskey market, to control india united spirits. it would take it they and the company to about 55%. largests the world's distiller. nestlé reporting its worst fourth -- first quarter sales growth in five years. the world's largest food company blaming pricing pressure in europe and a slowdown in emerging markets. sales in europe fell 0.8% in the period. >> you wonder if that is a

precursor. i really wonder if that is a precursor for what we are going to see out of consumer discretionary. >> consumer staples, definitely, especially in emerging markets where the growth has been. >> what time is coke today? >> 7:30 a.m. >> u.s. soda sales fizzle. we will tell you how coca-cola is positioning for the slowdown. this is "bloomberg surveillance" on bloomberg television and streaming live on your tablet, your phone, and bloomberg.com.

>> good morning, everyone. from our world headquarters in new york city. coming up on bloomberg television, stacy smith, intel. chief financial officer. this will be "bloomberg west"

and after earnings are out, of course, after the bell. this is "bloomberg surveillance ." i'm tom keene. with me, adam johnson alix steel. grow the food is off this week. forget about bank earnings but let's talk about a real company that makes something tangible and valuable. >> i have not drank a coke since college. what about you guys? what r -- >> rarely. >> basically americans are drinking less soda. concerns about obesity and also sugar intake and calories. u.s. consumption for soft drinks is down 5% since 2000 and eight and diet soda consumption has fallen nearly 12%. this is a major headwind when coke report earnings today. it gets about 70% of the global sales volume from carbonated drinks and cocoa really targets 12 to 17-year-olds, pretty sad and brutal, and that is where we

see the fallout. >> what does the sell side say? talk and not enough action. >> interesting you say that because coke has almost 50% of market share and carbonated drinks and analysts are actually pretty positive on the stock. wells fargo in particular saying investors are just a little bit too negative right now and cost cutting at an pricing could help cope in the short-term offset some of the weaker volumes. the company is not backing away from the soda pledge. the ceo coming out and saying it will spend a billion dollars in advertising over the next three years. in other words, we will spend a billion dollars -- think about the amount of code you have to sell. >> they do sell other stuff. minute maid, dasani. but they are still sticking with the soda. >> is a revenue or earnings story? to me, it is a revenue story. >> earnings fell -- >> black it is volume growth. they are looking at three

percent to four percent longer term. >> david, what is your prescription for coke and dr pepper and the undo? nasty, back in high school. >> it is a tough thing. i think whenever you are in the market were consumer behavior is changing, like it is in soft drinks, from a marketing perspective i know they are saying -- i think they have a media spend of about 4 billion today -- it might make a difference in the short term. >> do the ads on football games and still work versus the more creative stuff of social media? >> absolutely. i think certainly the digital media world is the fastest-growing media world out there today and will likely surpass network television. >> what is interesting is we are

focusing very much on north america and this is also very much in emerging markets story. it only gets about one percent of its volume from north america -- 21% of its volume from north america. mexico in particular, a soda tax, which would implement a sugar cap, which could hurt. the broader picture, not just fighting obesity in the u.s.. >> here is my thing, david. how are you in an age where we all have access to information everywhere, how do you help a company sell a product that just fundamentally is not good for us? >> i think the reality of it is, the consumers who are very focused on what is good for them and other consumers who are not so focused. i think making sure your product is appropriately positioned to the consumers it is attracted to is the name of the game. for coke in emerging markets, it might be more brand awareness. sounds like this is a

demographic story as much as anything else. you were saying they are targeting young drinkers. but as the population is getting older in the united states, how do you communicate with them? biggest concern -- >> to me, it is fragmented. for me as a kid, it was coke, pepsi, and the strange thing from the south, dr pepper. >> now you have energy drinks. was aell-rounded meal coke, cheeseburger, and fries. >> coming up in the next hour, sag will join us as a guest host. you do not want to miss it. this is "bloomberg surveillance" on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.

>> we welcome all of you on tax day. our twitter question. mean and ornery responses. what is the biggest flaw in the u.s. tax system? what is the biggest flaw in your federal tax system? out onbsurveillance twitter. i'm tom keene. with me, adam johnson alix steel. scarlet fu is off this week. adam has our top headlines this morning. >> let's start with what today is really representing. churchl in boston's old will ring this afternoon to remember the victims of the boston marathon bombing. the attack took place one year ago today, killing three people .nd injuring 264 vice president biden will be in the city to attend an event with the families of the victims in the first responders.

the boston marathon will be run next monday, the 21st, with an expanded field of 36,000 runners. the chinese economy may have slowed -- slowed even slower than forecast. down 1.8% in the fourth quarter. official data on china's gdp will be released overnight. this time tomorrow we will all be talking about. out of retirement and into the pool for that man. michael phelps will swim competitively next week for the first time since retiring after 2012 london olympics. he will hit the water at a meet in arizona. some believe it may be the first step in competing in the 2016 olympics in rio. olympian inorated history. >> is this a big hurdle for him? >> is in it -- don't go back when he went all the medals? >> michael jordan came back. >> aren't you ancient when you

olympics20 in the swimming? >> but he is exceptional. >> remember the woman she was in her 40's competing. not unprecedented. >> all right. >> your morning must-read. >> very interesting. path.s off the beaten no pun intended. about to understand what i said this. son writing in "the new york times" -- in other words, he says, it is not inhumane. i just wanted to bring that to attention because of this is one of those things that sort of defined new york. >> i have to say, for me, it

breaks my heart when i walk by. i know tom disagrees with me. but i do. >> i am not going to give my opinion on this beautiful disclosure, i live right over -- amongst the horses. but there is too much going on in central park. london has the same problem. >> buses, taxis. >> more worried about the safety of a crash. >> there have only been four horse deaths over the past many decades as a result of this. >> we are talking about how social media helps the company. we will talk about that next. ♪

>> the morning, everyone. "bloomberg surveillance." it will be a really interesting segment. i'm tom keene. with me, adam johnson alix steel.

let me do a quick data check. flat, flat, flat. we did a data check. [laughter] gainers and losers. >> my favorite data check ever. i want to talk about citigroup, saw the biggest game since december 2012. this was a killer report. i was talking to chris whalen. he said out of all the reports he has seen so far from banks, this was actually the best. talking on twitter, about sanford bernstein. comparing it to jpmorgan, down 21%. it will really be about what kind of company they will be going forward and the capital plans as well. >> the key is valuation. trading close to tangible book. >> radioshack, still alive. gasping for air the closing below two dollars for the first time since 2012. moody cut its full-year retail

forecast from three percent -- 23% from four percent. radioshack cannot seem to get a break. track record is -22% per year. >> pretty dismal. and they just can't compete, that is the problem. when you have stores like apple where you can play with the products and touch them. what does radioshack do? batteries.l i was walking by the radioshack yesterday and there was a big sign out front that said, if your iphone screen is broken, we can fix it. i guess that is why i go to .adioshack and >> and batteries >> we know the brands, heinz, p&g but today know as? the next guest runs the largest private crm business.

how do you built west -- trust? being build trust by relevant and being respectful of the relationship you have with consumers. i think you need to be open about that relationship, how do you use information and how does it ultimately value that individual. >> the customer comes to you -- whether it is coke, heinz, tgi friday saying, help us build that relationship and create honesty? >> you have to have some kind of historical perspective on the consumer. you need to be able to identify and know it consumer to have a trusting relationship with the consumer. i want to understand how somebody perceives my brando feels about the brand. >> are we being over marketed? guys like you are showing -- throwing so much stuff at us? the little red sign, driving down the road and there were the red signs, and it was cool.

>> right, right. >> do we need to go back to that? >> i don't think so. i don't think it is going to happen. would you look at the evolution especially of the social world -- talking about facebook and twitter, these are really marketing platforms. that is what they are. the idea that i can understand an individual versus the classic mechanisms with whack what works best? image -- >> what works best? an image like instagram? a tweet? >> it depends on the business model on the brand. talking about coca-cola, it might be hard to have a really should ship with coke but there are a lot of people who are adjusted with having a relationship with a brand like under armour or disney. i think it is very brand specific in how people emotionally feel about the brand and what value we are getting with the exchange.

>> what is the return on capital for something like that? >> the idea that digital media -- this is the fastest-growing segment of the marketplace and our sophisticated customers are using econometric models to understand advertising spend. >> what are they learning from it? i am fascinating -- fascinated. it is all blather to me. be whetherd to consumers are. those consumers are spending more and more time on facebook and twitter. >> are they spending more and more time on facebook? what i observe on facebook as people are spending less time. >> it may be true in a sense people might be spending less time on facebook, but i can tell facebook isustomers the most productive they have, period. >> today feel like that is where the intimacy is? >> a certain sense of intimacy. a certain appropriateness to being on facebook with the relationship with the consumer. that consumer is choosing to

have a relationship with the brand, and it is low-cost. >> can you give an example of a company that was lacking in some sales and used your strategy and thought profitability increase? -- espresso, a coffee, social thing. they have done a wonderful job. in thelook to engage espresso brand, war than half of the loyalty companies come from referrals. >> what have they done? them wellely i know -- i make my monthly deposit. they are owned by nestlé. what have they learned? >> i think the best practices be whether consumers are and in that particular case they are trying to replicate some degree of retail experience of the intimacy of drinking coffee and trying to facilitate that relationship online. so how they get their brand loyalist to engage other people that are not brand loyal is a consumer to consumer engagement

process. --it tastes so damn good has nothing to do with marketing. >> and you don't need facebook, you just need these guys. >> is there a danger when you start to over communicate that you start to generate some the satisfaction and anger? >> i think it is a danger of walking into a retail store and having the sales person unknowingly. of course, that is a danger -- >> that it daily. >> can i help you? no. i'm browsing. thank you. david williams, i am glad you are with us for the hour. >> coming up, one year after the boston marathon bombings. the police department is now turning to artificial intelligence to prevent another tragedy. we will discuss this coming up on "bloomberg surveillance" on bloomberg television, streaming on your tablet, your phone, and bloomberg.com.

>> good morning, everyone. "bloomberg surveillance." johnson and alix steel. >> president obama and vladimir putin discussed ukraine to fail to make progress. they spoke by phone yesterday. both sides up to their positions on who was to blame for the recent violence in the country.

the u.s. blames russia for instigating the u.s. and russia blames officials in kiev for not protecting russians between citizens. china's broadest measure -- the money supply grew up the slowest pace on record. it highlights the risk of a deeper slowdown as chinese policymakers try to rein in a credit binge and try to prevent default. auctioning off its vacant houses with opening bids starting at just a thousand dollars. the city launched a website listing for closed homes. one to be auctioned every day beginning may 5. they are required to fix up the house and have someone living in their in six months or else they will lose the house and the money. the website, in case you're interested, is buildingdetroit.org. >> they can sell the houses but not the art. >> on this tax day, april 15, we

can enjoy right now a single best chart. alln actuality we are paying less. courtesy ofo us "washington post" and the cbo. you look at the projections into 2013, only the top one percent is actually paying more money. the rest of us are paying less. the average filer effective tax rate dropped 182% back in 1979 to 18% in 2010 and even the top 20% of earnings -- >> sorry, that is just the federal rate. >> of the effective federal tax rate when you take into account the mortgage interest adoption credits. >> one of the things i learned over the years -- and i have been working on budgets for 40 years -- as people do not distinguish -- distinguish. all they know is the total burden -- state, local, and city. >> we do, the politicians don't. >> you're saying they don't distinguish. the federal guys are only

looking of federal taxes and they typically look at one at a time. we talked about this early. comprehensive tax reform will come years from now. they will get a look at total packets but they will not look at state and local burden. >> what those numbers be shooting straight up if you take the state and local together? >> for the average person, if they are living in a high-tech state they are probably paying more. >> but the marginal tax rate -- and we are not back to the like rate of the marginal rate getting way over 50%. when you put in federal, state, city -- >> if you live in new york city or california. >> medicare. tax as well. >> which is the worst one? which is the worst offender? ,> if you look at sales taxes they are so regressive in nature. the average person who spends a lot of money has to -- >> you are getting taxed twice, your income --

anytime you buy something. >> our twitter question of the day, what is the biggest flaw in the u.s. tax system. .o that @bsurveillance >> i am not sure those answers can fit in 100 40 characters. one year ago today, explosions marked -- rocked the boston marathon. this year there will be a new kind of surveillance, artificial intelligence. >> april 15, 2013 boston is hit two bombs during the marathon. within weeks of the attack, called behavioral recognition systems asking about a new kind of crime-fighting technology. >> we invented and developed an advanced artificial intelligence. video surveillance software platform. ?

servicemer secret president -- agent is a resident. it can analyze camera feeds in real-time, learn what is typical behavior and then send an alert when it spots something out of the ordinary. >> eyewear system will figure out things you never thought to look for. you never thought looking for someone driving their car backward out of the parking garage entryway. it is different from what it usually sees. it taught itself what to look for. >> we went to see how isight works at the company's headquarters in houston. let's put it to the test. >> a camera set up in a hallway behind you. you can walk out like a normal guy out of the office. >> i look at the camera. i hang out. nothing abnormal going on. now the question is, how do i set this off? >> why don't you steal the computer. >> i am stealing the computer. cities asing with well as the organizers of the world cup and amtrak trying to

anticipate attacks before they happen. >> in a lot of cases, you can see someone doing something that is the precursor of a crime. joint, poking around, going around and looking at the back and chances. >> pre-crime like minority report >> no, minority report is science fiction. we have a recognized precursor pattern. >> with more intelligent technology comes privacy concerns. the company has been criticized as being more a brother than crime preventer. >> it is not our technology approach to collect any personally identifiable information. that is not the information our customers are using when they deploy our software. >> the video surveillance industry has expanded tremendously since 9/11. half $1 trillion spent on camera security systems to seek out dangers. it is clear cameras are here to stay and it is hoped artificial intelligence could help prevent another boston bombing. >david williams, you help

companies that build report with people. when you see something like that do you feel better or worse? >> it actually makes me feel better. the information is available, the technology is available. using it in an appropriate form. london was way out in front -- cameras, cameras everywhere. and he wins for the company? have they shown the technology can do something? --t there have been numerous >> there have been numerous wins for the company. you walk in the conference room and there are surveillance shot of all sorts of people apprehended and caught. they listed a number of examples when i was up there. 221 buses are equipped with three cameras each, all linked back to the software. >> the skeptical would say it is a lot of technology and obviously a lot of money. it is all for a good reason, but what are we accomplishing with it? how do they respond to that? >> what they are trying to do is

observe changes with behavior. a thousand people during the same thing and now in the airport you see one out of the thousand doing something different and you say, wait, heads-up. >> a direct relationship with the local police force? >> correct. >> you are asking them to catch people if they prevent things from happening. >> it is crime prevention. >> when i hear artificial intelligence -- >> it is scary. >> and it is scary. it does raise privacy concerns. coming back, we talk about what steps investors can take to make sure they are not being ripped off by a rigged market. this is "bloomberg surveillance" on bloomberg television, streaming on your tablet, your phone, and bloomberg.com. ♪

>> good morning, everyone. "bloomberg surveillance." i'm tom keene. with me, adam johnson and alix steel. >> new outsourcing contracts and cost cutting boost the indian software company that is forecasting sales growth of 7.9% . it had been forecasting 8.3%. recent orders from volvo and

pharmacy manager help boost the forecast. ran --'s heavyweight plan on holding on to their shares. they will hold through the may 5 expiration of the stock lockup according to regulatory filings. twitter is working to temper concerns that share of its stock will soon flood the market. apple and its court appointed e-book monitor are getting along better. the monitor filed a report saying the once contentious relationship has improved significantly and monitors overseeing apple's antitrust compliance related to the e-book settlement. the two sides had been at odds over how much access they should have over apple's executives. from the file of "bloomberg west." story. lost in the who is the villain? >> that is the question. is suing each other all the time. what is the next step? >> you wait long enough they will not -- that there will not

be a single bookstore on the island of manhattan. this is important. clients are miserable. managers of family money are dealing with clients who want -- don't want to take risk but what return. our next guest advises people with pots of money on how to select the right advisor and importantly, how to avoid the advisor from hell. i should point out mr. black is a relationship with stan lender who is our guest host. how visible our people after a four-year bull market? >> first of all, we are very busy. probably less busy than in a bear market but we always have client interest. to take the clients. clients come with us because they have the liquidity transaction and they are looking for a place to invest the money, or they have a concern about the current advisor and they are trying to get behind the curtain

a little bit. >> they walk in with a letter saying the s&p was up 29% last year and we were up 11%. there wasly disappointment last year because so many people were focused on the s&p 500. i actually talked to clients a little bit about being diversified. if you got 30% returns, or less than 30% return, you actually have to look and see how diversified were you. wellu did it 15% and were diversified and did well against your benchmarks, you did fine. >> what is the biggest mistake he will make when they are miserable and trying to find a new advisor? what is the biggest mistake they make is lack of process. the financial service industry is an opaque sales center industry. most people don't know what question to ask. an absence of knowing what questions to ask they either talk to a friend or a trusted advisor and they end up with somebody who they think is ok, but for the size of our clients, probably 5 million two 200 and

$50 million -- $250 million. for our clients will look at for things. we look at their background, their history and their experience. then we look at their investment process and their capabilities. we look at performance versus benchmarks and we look at their fees. really dealing with is handholding. the idea that they come in and to grandma told us we needed be 80% in bonds all the time. that is the constraint you are dealing with. emotions, and constraints. >> sometimes it is families and sometimes it is entrepreneurs. >> we get a lot of clients coming in from liquidity -- >> i think it is a jargon alert. like whistle pig. they build a great company, sells the company and takes $50 million out of the company. smart guy, knows his business

inside and out but doesn't know financial year to >> but this is the problem, doug. true, that guy does not know financial services and he will spend a lot of money on fees to you, hedge fund manager and a fund of funds guy. at what point do you say the fees are too much? look at feesll, we relative to level of assets, complexity, and value of the solution. we know exactly where the fees should be. unfortunately, due to lack of transparency in the industry, the fees are all over the place. it is our job as an investor advocate and client advocate to know exactly what they are paying for and what they are getting. >> david williams as well. up with theo set best practices of messaging is for the greater global wall street and money managers. to me they've got to be reaffirming and selling trust. >> i would agree with that. that is the opportunity of today and the changing market. i think it becomes very important. the question is, how do you sort of put the position there and

live to the expectations. >> and performance gets in the way, doesn't it? >> first of all, let me preface -- getting the brand out is easy. it is living to the expectations is the hard part. it is really expectations about execution about what you promise and being straightforward and transparent. transparencylacks around fees, performance, and proprietary products. that hurdleet over before you can get into exactly how you are doing and performing. >> thank you so much. greatly appreciate it. they did williams as well, as well, and, stan, lower my taxes. let me do a foreign exchange report. fairly quiet. i look at the ruble, a huge deal psychologically. for baby george, the

george andwi, baby his parents are down in new zealand. there is the conversion rate. >> he is pretty cute. peter orszag coming up in the next hour. former obama budget director. stay tuned. ♪

kiev asks for you and

peacekeepers. pro-russian militants in nine cities. biggest job inhe american government. salvaging the affordable care act. good morning, everyone. this is bloomberg survey on spirit airlines our world headquarters in your. it is tuesday, tax day. i'm tom keene. joining me, adam johnson and alix steel. scarlet fu was off this week. our guest host for this hour, we are honored to bring you peter orszag. he is the vice chairman at a bloombergd view columnist. >> i will start us off. u.k., inflation saw the lowest level in four years. well below the bank of england's

two percent target. economic data here in the u.s., 8:30, we will get the empire manufacturing. consumer price index -- our rate of inflation. belowexpected to be well 2%. housing market index. we have coca-cola coming out and about 30 minutes. also, johnson & johnson before the bell. after the bell, intel, ya who and csx.sx -- yahoo! >> google adding drones. the search giant is buying titan aerospace to start up a solar powered drone. the project of building high altitude balloons to send signals through most parts of the globe. no financial terms were disclosed.

the ithe company offering $2 million for control of united spirits. the bid would bring the stake to 55%. th to stillere largest with brands including johnnie walker and smirnov. rose 4.2%, excluding acquisitions. the world's largest food company blames pricing pressure in europe and a slowdown in emerging markets. that is today's company news. >> it is tax day. the goals have been humbled by the spending cuts and tax increases. the nation's budget irresponsibility has significantly diminished. at the vanguard is peter orszag, the vice chairman citigroup. responsiblehed a bypass to a better budget future. we are thrilled to have you here today. nobody clicks taxes like you do.

you have the most efficient tax system. >> i would not say the most. we have a very efficient system. >> it works. why aren't you guys taking a victory lap? we baffled by the migration have seen in the budget deficit and people are saying, here is what we did. let's keep doing these best practices. >> we should be. the fiscal situation is improving rapidly. not only because the economy is recovering, but because of costses -- health care has slowed down so much that the medicare numbers are just dramatically better than what had been anticipated 3-4 years ago. allo you share the worry of hell breaking loose 3-4 years out? >> a lot will depend on what we

do. a have been experiencing remarkable deceleration. the first six months of this fiscal year, medicare costs were only up .6%. i think it's because providers are anticipating a shift away from service payments. you have to fill that expectation or this won't continue. if it were to continue, our fiscal future is a lot better than most editorial boards picketing. >> we learned yesterday the health law will now cost $1 billion less over the next -- $100 billion. do expect that to last? >> that is reflecting several forces. -- we're going through a potential revolution in the health sector. we have to reinforce it rather than just hope and prayed that it will continue. our specific things we can be

doing to make it more likely. actually --are what we need to do is, the new secretary, after she is confirmed, needs to lay down a glidepath for the shift away from paper service payment. here is the goal. 75% of medicare revenue will not the intermediate steps. paper service means you get paid for each thing you do. if you pay people based on how much they do rather than how well they do it, you get a lot of -- >> the top 50 ophthalmologists in the country count for some crazy number of percentage of medicare payments. me is plug-in for economic growth. would you wait for us how important it is to have good economic growth? deutsche bank is a hugely

constructive you. are more cautious. how important is that plug-in of gdp? >> massively important. people take potential the deficit as gospel. the numbers move around a massive amount. based on how rapidly the economy grows because that drives the revenue side and more economic growth depresses spending as a share of gdp because let's benefit programs are reduced. a huge effect. it we are in the midst of this big debate because, for the past four years now, there was a lot of optimism early in the year and then it fades. the question is, are we about to do that again or will this year be different because now we have done all the deleveraging on the housing balance sheets and the sectors are worked off?

fiscal consolidation is over at the federal and local levels. this should be our year. have ahappen, we have to pickup in consumption. there was a good retail sales number. then we need a pickup in investment. the imf meetings was a deutsche bank call of 18 months out. six percent nominal. >huge. >> i'm an optimist. coulde's the thing -- you drive a truck through the estimates, they are so wide. with all of these variables, what do forecasters -- what is the biggest mistake forecasters make? >> the hardest thing to pin down is what is going to happen to productivity growth. that number moves around significantly. it's almost impossible to

forecast. it drives medium 10 year economic growth to a massive degree. people are very bad at predicting technology changes and other things that drive it. >> what is the key distinction between economic growth in the u.s. and elsewhere? >> it depends on what you mean by elsewhere. >> europe and emerging markets. >> there's a big difference. , like ins., we have europe, older population -- our labor force growth rates will be slow over the next decade. that is different from most credit markets, with the exception of china where the populations are not aging is rapidly. they get a big kick from two things. population growth and being able to catch up. being able to catch up is a significant driver of economic growth could we'll will have that advantage because we are already there. work at the brookings institution. what did you find? >> you need some tweaks.

it does face a -- >> why are we still retiring -- >> most of us should work longer. there is one exception. people talk about life expectancy going up. it's going up much more rapidly for people who are better educated and higher income. there is a significant share of the population, 25%, where it might be flat or declining. at the bottom of income distributional, the gap in life expectancy is exploding. >> let me do a data check for you right now. a quiet data check today. cpi data at a: 30. at 8:30.ta there is your flat data check. our put a question of the day --

a tax question. twitter question of the day. what is the biggest flaw in the u.s. tax system? >> i will surprise you and say a lack of a carbon tax. >> a lack of carbon tax? using a market solution to fix the problem. i like that. make sure you tweet us. peter orszag, the former director of the omb. on and on and an advisor to obama, etc. coming up, high frequency trading. we will talk about it right here. ♪

>> good morning, everyone. i'm tom keene. .o our guest host, peter orszag one of the nation's most accomplished economists. is the former director of omb. what matters for the nation? to rein in effort the affordable care act. sylvia burwell is the new name for you. she will replace kathleen sibelius. cheered when sylvia burwell became the new head.

why? >> she's a very competent person who makes trains run and does her work. and executed. >> is this needed? >> i think she's a great choice because she will make sure we continue to focus on execution, which is very important. do will see sylvia not only that, but also push along an continue tope, of reinforce low-cost growth. >> what about critics who say we will have it go away? of nurturing lot government and business. and lots of other places. think itally, i don't should go away. i start from a different place from people who -- >> i'm not saying it should not go away. the idea of, when you look at the affordable care act, we got it underway and it was ugly. everybody agrees it's getting

better. what is the next stage to prove to a nation it's working? >> you have people signed up, but now you need the actual operation of those who are covered to be working well, two. a love people who are covered under the exchanges, a lot of them are going to be shifting back and forth between exchange-based coverage and medicated throughout the year. how well does that work? >> we don't know. >> we don't know yet. that is one example. the backup is part of how the payments to the insurance companies working? how soon do you see a doctor? that's only one part of the agenda. this is a large agency that has a lot of pieces >>. >>who represents the doctors in all of this debate? there is the medicine of it. who represents the doctors? of the mosts one

effective lobbyist forces in washington. you don't need to worry about the doctors being represented. the bigger problem is, not a lot is happening to help doctors do what they need to do better e-reader because we are so polarized. >> peter orszag on our health care. hhs.ew director at janet yellen's biggest challenge. this is bloomberg surveillance. stay with us. ♪

>> good morning, everyone. it is a twitter question of the day. what is the biggest flaw in the u.s. tax system? tweet us. we already got some blistering tweets on that. this is bloomberg surveillance. we welcome all of you worldwide. i'm tom keene. johnson andm alix steel. -- the viceszag

chairman of citigroup and a bloomberg view columnist. >> a summary looking for the --sing malaysia airlines jet the summary looking for the missing malaysia airline jet was in the ocean for six hours and did not spot any objects of interest. italy, he will serve one year of community service for his tax evasion. the former prime minister was assigned community service. a will be required to visit facility for the elderly at least once a week. back into the pool for michael phelps. he will swim competitively next week for the first time since retiring after the london olympics back in 2012. it may be the first app towards

competing once again in the olympics. 30. washed up? forget about it. is guy?tall as th that.m span -- look at >> emily once got a big hug from michael phelps. >> you are with guys who are training harder and faster. >> my money stolen michael phelps. is still on michael phelps. >> we will continue the discussion on high-frequency trading. james was thinking very hard about the benefits and detriments of high-frequency trading. he is qualified -- he has a

degree in mathematics from cambridge. you and i have talked about this before. way before the upper, you wrote a long paper. what did you learn? >> at that time, we did not know as many of the details that have come out recently. even then, it was pretty clear that the lack of catch-up in regulation to the changes in the market that came in 2005-2007, structuredbled frontrunning schemes, which were costing the investors quite a lot. at that cost, it is highly undesirable in terms of efficiency of the market and perceptions of the equity market. >> do we need regulation now? have the markets arbitrage away the advantage? >> we need regulation because we bringing

confidence into the markets. probes have been launched, highlighting the fact that theye don't really trust will be dealt with fairly. fundamentally, confidence in markets is really important. >> you have a list of things to do. on the top of that list is, prohibiting exchanges from paying for order flows. you eliminate the incentive. but don't we do that? >> i don't know. if you are a broker who gets in rom a customer, the assumption is that the broker is looking after their interest. that should be a fair assumption. if the broker is getting paid by someone else, they are conflicted. you have a question for him?

you think about everything, peter. you have a stance on high-frequency trading? >> the question i would have is, how do you avoid unintended consequences in anything you do in this area? these are complex markets. how confident are you that any would not havels unintended consequences for some of the people you care about? >> there are always unintended consequences. one of the features of a trading system it is that any small change makes quite a big difference to how securities get traded. that is why it is appropriate that this should be dealt with in a very careful way. -- it's not fcc beyond their way to have consultations and a process here. and that is necessary. i have put in my suggestions, but i think it needs discussion. thischael spence wrote of

3.5 years ago. talkng exactly what you about, which is, be careful what you wish for. what should b we be careful about? reduce thedon't efficiency and transparency of markets when we are trying to increase it. the new market system -- it was regulated, published in 2005 and enacted in 2007. ed to the proliferation in trading venues. it used to be, you went to the nyc or nasdaq. you can now go to lots of different places to trader stock. >> we are single men sachs rotate out of its dark pool business. -- goldman sachs. >> it is hard to attribute my guess is, it's a combination. it's not as profitable, but it

with theiraligned clients. >> printable global investors on high-frequency trading. >> we're talking about u.s. oil sales. ar♪

come everyone. bloomberg surveillance. i'm tom keene good with me, adam johnson and alix steel. scarlet fu is off this week. >> buying the enterprise business at motorola solutions for $3.5 billion. the deal gives them computing

technology to add to its line of barcode printers. motorola solutions decided to sell its enterprise unit after a review found it was better off focusing on its other businesses. hooters heavyweights planned to hold onto their shares. hold theirers will stakes through the may 5 expiration of the lockup according to regulatory filings. put her heavyweights. -- twitter heavyweights. nestlé blames pricing pressure in europe for the slowdown in emerging markets. slowing 2.8% in the period. >> a huge deal. the nestlé -- you have to watch what j and j does with coca-cola. >> that was how they were going to make up for their lack of

bowling. -- lack of growing. >> an interesting backdrop to say will be --e will say wha they serve five years. if are your federal reserve governors. peter cook is our chief washington correspondent. maybe it's a scandal or not. brief us on the spirit of empty seats at the fed, isn't there? >> we could have the possibility of this three sitting fed governors for the first time since the 1930's. this is a big heal because janet yellen is now the chair, dealing with some big issues. is counseled them to carry some of this administrator load. she counsels them for their input around the table.

unless you have the full confidence of fed governors there, the regional bank presidents i'm a she's not getting the full set of opinions and thoughts on what to do with that policy at a typical moment as they execute their exit strategy. did we get here? what is the why? >> these jobs, each individual who takes these jobs has their own reason for leaving. jeremy is leaving after two years. he has his job at harvard. if he does not go back by may, he is not a professor at harvard. nobody serves 14 years. fed 2000, every single governors serving less than five years. their term right now is about three years. this job did not have the same institutional memory that it did have. that is something that poses a

potential problem for the fed going forward. , i would suggest you are more than qualified. >> this is a huge problem. it's not just the federal reserve. tofident people don't want play the russian roulette of the confirmation process. look at what happened with peter diamond. he put himself and his family through that and was not treated well. we have a big problem in terms of recruiting high-quality people into government today. it is partly because of the polarization and nastiness of the nomination process. >> full disclosure, you published a book with peter diamond. both people really love it. washington for over a decade. you stuck it out. why did you stay? >> the jobs that i was in were still something i felt like i

was doing things that actually -- >> unlike a fed governor. >> as the system polarizes, it is not worth being of those jobs for the red lights. you have to feel like you're doing something. it's not worth it for a lot of people. >> we have to run to coca-cola earnings with peter cook. you will see mr. cook through the morning. on the vacancies of the fed governors. coca-cola's earnings. at $10.58es coming in billion. higher than estimates. still down about four percent year on year. net revenue also was down about four percent. making more money, but they have to shell out a lot of cash to make their money. $.44.ations coming in and

all about the global volume. how much sales do they have? dow 2% in north america. it was international that helped drive coke sales up two percent. >> good morning, everyone. all of our interviews on our digital media. look for us on bloomberg radio and bloomberg television plus. our guest host, providing tax was among tax day, is the former omb director. a bloomberg view: this. -- a bloomberg view columnist. is that enough intro? >> a good intro. he likes his coke. coming in with

expectations. sales were better than estimates coming in at $10.58 billion. about four percent lower year on year. the company also saying that a full on your purchase program at $3 billion. we will go to cannes, who works for bloomberg industries. a team of 100 analyst to provide research data 120 five industries in that sector. when you look at coke, the numbers came in and the revenue was not deep. the real issue is, we are drinking a soda. what is do about that? >> you hit the nail on the head there. the key to the conference call will be, just how do you improve growth and returns in the u.s. industry? this is the market that is the set by consumers moving away from sugary soft drinks and moving away from diets. coke is going to be facing heavy headwinds this year to meet its 2020 vision. >> how are they doing this year?

was this all pricing power to offset weaker volume? >> i do not get a chance to see the release yet. coke is maintaining positive on an improved mix. .hey changed packaging the smaller sizes, multipacks, etc. coke is managing the top line well considering the headwinds. plenty ofre headwinds. it's real question for me is, why would i pay 18 times earnings for a company whose earnings are falling four percent as volume growth only grows two percent? >> if you're bullish on the stock, it's because you really appreciate the business. only about one third of the sales now it. . coke is going to address that today.

they will resell those low marketassets into the that are weighing down their returns. the core of coca-cola is an attractive business. the selling of syrup concentrates for others to make and distribute, that is a great business. peter orszag had a love affair with coca-cola. >> diet coke. it all the time. have you wean yourself off of it? >> close to it. >> that's why it's only two percent. >> explained that process. i've never been addicted to a coca-cola product. just less? >> i go cold turkey. i glide past. those 2-3 days, you don't want to be around me.

>> you had an interesting article on bloomberg view. after beating the decline in soda sales to another reason. demographic. tell us about that. >> they're different parts of the population. caucasians drink diet soda a lot more than hispanics do. as the population shifts toward hispanics, per capita, diet soda declines. that is one of multiple forces. >> who has the high ground in the sugar wars? which companies doing best? >> it seems coca-cola is doing best based on our data we put out every month. they continue to inch up market share in a competitive battle. pepsi is doing better, but coke is winning the cola wars right now in the u.s. >> we appreciate your take on

coke. consumer prices running well below the fed's target for more than one year. will we see an increase in the latest reading due out next hour? we will discuss this with peter orszag. ♪

>> good morning, everyone. bloomberg surveillance this

morning. timothy draper on in the loop with betty liu. interesting -- this is bloomberg surveillance. i'm tom keene. we await the 8:30 data. adam johnson with me. alix steel as well. adam has our top headlines this morning. >> i want to start with the bell -- boston's old south church, which will be ringing this afternoon to honor the victims of the boston bombing. place one took year ago today. joe biden will be on hand to attend the event. the marathon will be run next monday with an expanded field of 36,000 runners. china's broadest measure of new

credit fell 13% from last year. growing at the slowest pace on record. chinese policymakers try to rein in a credit binge and prevent defaults. auctioning off the vacant houses with opening bids starting as low as just $1000. the city has launched a website listing of foreclosed homes. one will be auctioned off every day. is building detroit.org here did those are your top headlines. .> time for our morning movers you have zebra? >> zebra technologies. business andrise motorola solutions. the price tag for that is $345 billion. mobileves a zebra a computing captured technology. it helps motorola stay with

their core business. it will focus on their core government and public safety business instead. he credit to zebras earnings. --y will be buying a mixture >> my radar goes up. $3.45 billion. earnings to watch for after the bell. yahoo!, csx and charles schwab. for tomorrow, google, all about ibm my bank of america and capital one.

citigroup and capital one could be easily compared to each other. interesting to see how capital one ends up bearing. very busy day on earnings. we will be talking about csx, which is due to report earnings later today. did the harsh winter throw the operator off the track echo a beautiful shot at a beautiful train. this is bloomberg' surveillance. ♪

>> breaking news for you. johnson & johnson it is the first u.s. health company to report earnings coming in at $1.54 a share. a beat even on the high end of estimates. take a look at revenue, up over 3.5% coming in at $18.1 billion. net income beating estimates coming in at $4.7 billion. increasing 21% year-over-year. the new driver was new medicine sales. optimistic for the full year. raising its earnings guidance to about $5.90 on the high-end.

an increase of five cents. it let's get you some other company news that we are following. new outsourcing contracts and cost cutting -- boosting sales growth seven percent-nine percent for the next few months. new growth of 8.3% was forecasted. apple and its e-book monitor are getting a long. recently filing reports saying there was contentious relationships that have improved significantly. they are overseeing apples and 's -- google ads drones to its wireless cars and robots. the search giant is buying titan aerospace. oogle will serve titan with

its project to send balloons to most parts of the globe. that is today's company news. >> taken back by johnson & johnson. extremely constructive earnings report. >> very much so. they're making better profit. >> you look at the range of $60 a share. like a moon shot over the last two years. an interesting earning seasons. earningseresting season. it is tax day. there'll be copious tears around the nation to the shock and awe of our many taxes we begged and pleaded with peter orszag. or one bigtax redistribution of income? that will be the debate. it there are two sides to this

debate. taxes are a and a lot of people in america can generally say the tax system is messed up. if it's messed up, where's the most messed up? >> i think most people have two things. complexityion of with the income tax. most american households pay more in payroll tax than an income tax. the income tax is more unpopular because the payroll tax is seen as simple. it comes out and you don't see. it's automatic. the income tax is this complicated mess and that makes problematic in the eyes of many people. talk about ayou evaluated tax. it has gone nowhere in the u.s. >> other nations have it. --s is th difficult

they are held up as the best example of in an efficient tax an in. -- of nefficient tax system. >> what is the difference? >> there are a lot of loopholes that you can take advantage of. the mortgage interest tax deductions. >> that won't get my rate to 12%. >> the only way to have that is have most of your income and capital gains than ordinary income. this is why warren buffett's tax rate is so low. the vast majority of his income is in tax preferred capital income rather than ordinary. that is the big loophole. >> where's the debate right now on raising the dividend tax or

the capital gains tax? >> it has been settled. there were changes that were made. revisitnlikely to reason that question for the foreseeable future. >> what you think of negative income tax? taxes, youay get a subsidy from the government. >> we have that in the form of income tax credit. there are proposals to expand the earned income tax credit. to expand world childless adults. moderate income households, as things phaseout come a righty of benefits and tax credits phaseout, they say at high marginal tax rates. >> if you want to get smarter on this, it is all there for you. it is called the congressional budget office. they do reports in english. a 40 page report and an

executive summary report of six pages. don't whine about ignorance. the pains of the middle class of america. how egregious are middle-class right now? >> middle income americans have been struggling for the past three decades because income growth has been -- >> not because of taxes. >> not mostly because of taxes. if your income is stagnant, even if your tax rate has not gone up, it has seemed like a burden. the prospects have not improved for middle america. >> it's the top line. that's always the issue. peter, the former director of the congressional budget office. i think it's a national treasure. everybody that tells me they are in or out, i say, read it. >> time now for the agenda,

where we look at the stories shaping the day. tom, you're looking at tax day. thingi have learned one here at bloomberg, traveling, there is a difference in our system. i'm sorry, it is unique to america. you can't have a sound fiscal system unless you collect the taxes. and we do it better. year were that that. i'm not on speaking terms of my accountant. pays and it gets thicker every year. it is still the best system out there. >> everyone should pay something for living in the country. you have to pay to play. bloomberg surveillance will continue on radio. we are up to the radio studio. my agenda is consumer price

index. we'll get that read out today. measuring inflation. a prettyto me to be non-mover. not much inflation coming from the u.s. euro near. you back out food and energy, about 1.6%.u be and not the issue we have been talking about in the u.k. >> is there enough growth in the country echo here's what's on my agenda. csx -- i'm a railroad guy. earnings will be coming out after the bell. here's what i'm focused on. forestimate is or a a decrease of 16%. re: consuming less coal -- are we consuming less coal? union pacific has those oil trains that go up. , what's on your agenda today? >> getting back to work. >> i have to go.

i have to get my diet coke. biggest flaw with the u.s. tax system? first answer -- complexity. the second answer, more money, more loopholes. final answer -- hundreds, lobbyists, lack of financial es wearing bowties. you are talking that a carbon tax. what were you thinking about that? >> we face a massive problem. e with thes accumulation o f greenhouse gases. >> create a market response. >> thank you so much.

we really appreciate you joining us today. citiurrent vice-chairman. in the loop is up next. s&p futures are up almost four points. ♪

>> good morning, everyone. it's tuesday, april 15. you are "in the loop> ." i am trish regan and for betty

liu. and histalk investments ideas for california's economy. environmentalist carl koepp is also with us to talk about investing in clean energy and what he sees in the market right now. we will hear from arianna huffington as well as jerry brock him or --bruckeheimer. futures indicate stocks will open higher today. it is tax day. you have until midnight tonight to file your income tax form. the irs says the average refund so far is about $2800. the world's largest average, and he -- beverage company out with estimates. for more, going to julie hyman. >> if you look