in three years. outlining the boldest of policy proposals in tonight's state of the union address. staying alive. mtv comments entertainment with a deadly serious message. good morning, this is "bloomberg surveillance." tuesday, january 20, i am olivia sterns with brendan greeley and tom keene is in the swiss outs -- alps existing on bread and water, as he cannot afford anything else. >> china recorded this week's economic growth in almost one quarter century but it could have been worse. chinese efforts kicked in late last year. that boost a production and consumer spending and helped spur growth closer to the government target. gdp rose 4.7%. the government is expected to add more stimulus this year. the imf has made its biggest cut in three years. according to the new forecast the world economy will grow 3.5% this year, down from 3.8% in

october. here's the imf chief economist. >> the underlying weakness many economies, many emerging market economies are revising the prospects down. that is decreasing growth today. and we think [indiscernible] >> the one exception in the new forecast for the method is the united states, upgrading its forecast for u.s. growth to 3.6% from 3.1% in october. in ukraine, fighting has picked up between government forces and rebels backed by russia. there's a battle over the control of the airport in donetsk. ukraine is accusing russia of terrorist activity after a bomb blast in the eastern part of the country. 13 people were wounded. >> it appears amazon is really going hollywood. they won its first major

television award last week and now amazon will start making feature-length movies for theaters. four to eight weeks after the theatrical release, they will be shown on amazon prime online streaming service. last week they said they hired woody allen to write and direct a new half-hour tv series. plan on going to the super bowl? it won't be cheap but it may be cheaper than last year. going for about $2900 yesterday, but believe it or not, that is down about 20% from year ago. one reason may be there is just a bit of patriots super bowl fatigue. new england has been six times in last 14 years. fans may decide to watch this one from their living rooms. i know i will be watching. >> the belichick, graduate of my alma mater, mice of these are clear. >> $2900? >> i'm not going to pony up. >> interesting.

the president is taking aim at equality in the state of the unit in dress. you set to announce a host of reforms that attack the wealthy and support the middle class. -- he is set to announce a host of reforms that attack the wealthy and support the middle class. markets are moving after the china gdp number. the scramble for yields continues. the japanese five-year hitting negative territory for the first time ever. anastasia, how do you advise your clients? >> searching for safety can mean several things. i think searching for safety means source for income and you mention the japanese yield and german and u.s. treasuries, but i think the reality is, there are many other areas in the world that offer that yield. emerging market corporate is one of those areas. as well as parts of european

high yields. even though yields collapse across the sovereign yield curve, in europe anticipation of what is to come thursday, the high-yield spreads of not really moved. >> there is life in the yield. raising its head considering raising its torso. >> you have to expand your search. it is not the local bond market, it is the global bond market that is available. >> time, there's a little bit of daylight in these numbers between what china was forecasting and imf was forecasting. which do we trust? >> the reliability of the chinese official data from a few look at some of the less high visibility series like electricity much more pessimistic story about what is going on with china's growth. the headline number is optimistic, 7.3% growth in the fourth quarter for the chinese economy does suggest the worst fears for hard-line and china

appear to be exaggerated. ask the forecast from the imf is for six point 4% growth in china, so 7.4% looks pretty good , even though it is the biggest since 1990. anastasia, what does that due to global demand? >> one interesting thing, of course, we have to talk about oil. the traditional sources of demand for oil might not be they're going forward. china is a prime example. if we are growing at one percentage point less, it does mean we are not going to be assuming as much oil. -- consuming as much oil. whether china or other countries, we have to consider the efficiency of utilization of fuel. it is quite a bit better today. maybe not in china, but it certainly is in china and the united -- in the u.s. and europe as well. >> we're going to talk about china little bit with cleveland miller later on this hour. anastasia i want to look at the

president's tax plans, raising from 23.5% to 28%, which is significant on capital gains. can we smell the sweat of fear from wall street? >> there are two parts to this proposal. there is the tax credit for education, tax credit for the dual income for childcare. some of the has to pay for that and that some of the as the top 1% and it is the 100 largest firms -- financial firms in the united states. that is not one to sit well with either the ultrahigh net worth clients or representatives across the aisle in congress. it is a nice plan, but i'm not sure it can quite translate into the reality. there's something i do want to say about the education tax credit. one of the things we talk about when we talk about inequality is, it is true that the top 5% maybe the top 10% in this

country, will actually experience inflation-adjusted positive wage growth. the rest of the country absolutely has not. it has to do a lot with education. if we look at the unemployment rate for somebody who has a college degree, for example, it is 3.2%. for someone with a high's diploma, it is a .7%. i think that expose a lot of the disparity. >> do these tax policies, can they do anything to prove -- improve inequality? >> i think critics would look at a negative for growth, but you'll have to think about the impact of this market inequality on demand. what is happening in china is as income is skewed toward the very rich, the very rich have a very high savings rate. even if they go out and buy a nice new handbag or luxury sports car on a regular basis is still can't use up their enormous incomes. with that high savings rate, and

means they're consuming less and not interrupting so much to demand. if you take a little away from the rich and contribute or to equality, you can also provide that boost consumption, certainly in china, i suspect something similar in the u.s. as well. >> the income inequality in china, the gap is slowly closing, right? >> that is what the government would like to happen. the reality i think is a little bit less positive. one of the characteristics of china's growth is it is very much driven by the state of people with access to state resources them a cheap bank loans from state owned banks cheap land deals from locals. they can reach enormous wealth. one of the key concerns for china's government is we're seeing developed world levels inequality in a country which is still a developing stage. >> the event we're all been waiting for, thursday, mario draghi, ecb, expecting to see qb. anastasia, what can mario draghi

do? is it going to be enough? >> i think it is going up to be more than whatever it takes. that is the threshold. that is the standard we're grown accustomed to. there are a couple of reasons for why he absolutely has to exceed that threshold. >> can he do it? >> i think he absolutely can. what he has to do is increase it over and above i think 300 billion to 400 billion. we have two different measures that right now are driving the ecb balance sheet. the refinancing operations, the maître -- major boost of liquidity, and the covered bond purchase program. as he said in his last conference, that will be something more than what has been in the past. you have 300 400 billion shy of the one trillion euro threshold. he has to exceed that. i think yes the firepower

because there is punch of sovereign bonds right now not be used as collateral for the european banking system. >> scale is the issue and so a structure. what is he going to do to transfer the risk on to the national government? >> slowly moving toward this date, january 20 second. . talking about what is going to do and what he did. in the meantime, the donetsk airport is ruined after hours of fierce fighting. we will head to moscow. tensions between russia and ukraine. this is "bloomberg surveillance." ♪

>> good morning, this is "bloomberg surveillance." i am olivia sterns with brendan greeley. >> two years ago, donetsk rebuilt its airport.

it is not clear now who is in control of the airport but it is clear that fighting has resumed. eastern ukraine. anastasia amoroso of jpmorgan investment management, we're going to talk to henry meyer in moscow and a second to see what is going on there but, where are we now with the russian economy? we sort of assumed things were headed south but somehow he is to president, isn't he? >> we're not in a good place in the russian economy from the economic perspective. we've seen two downgrades just above junk level. we could see another one perhaps from the s&p below junk level. that is a clear indication we are not in a good place from the economy. it on this, i do not necessarily thing that is saying that russia fundamentally is chunk. i don't think that at all. i think it is the political drugs -- direction that is giving agencies the concern and the issue is the politics of it are not necessarily such that

they rely on economic slide. what i mean, if you think the price of oil was this big squeeze on the budget deficit in russia, but it really doesn't. once you translate the u.s. dollar the the nominated barrel of crude oil to russian rubles, it actually is down maybe 0.9% for the year or for last year not down 50% like in u.s. dollar terms. that is not the trigger change the politics of it at all. >> anastasia amoroso, tom keene as soon as watching us from the world economic forum in davos likes to say the japanese yen is signaling that russia is going to default. you agree? >> with all due respect to tom -- i would not quite agree with that. i think russia is fundamentally sound. >> really. >> of course. it is not to not -- it is not 1997 or 1998. the pair to turkey, for example, a screens better on the same

indicator. turkey has, russia does not have. russia is in a much better more fundamental place. that is why it is not necessarily economically speaking deserve the aa plus reading that turkey has, for example. politically speaking, if economic sanctions continue to weigh on access of to capital of not only public corporation or not only obligated to use but also private entities, you could have a situation where the public sector has to bail out the private sector. that could cause wider budget deficits. >> i was speaking to someone this week and who made the point you cannot treat russia like syria. it is just too big to ignore. it is a major economy. we have henry meyer in moscow right now. henry, what is the latest that we know of who is in control of the donetsk airport? >> there are very conflicting

signals. the ukrainians said they had taken full control of it, but that doesn't appear to be the case. it is very strategic asset because it is taken over by the ukrainians and they rebuilt it. that allowed them to bring in more supplies. the battle lines are shifting constantly. it is actually hard to get any real hard information on that at the moment. >> looking more broadly across eastern ukraine, the ukrainian government has accused russia of sending two battalions, each is more than 1000 people come across the border. can we assume the truth of september 5 from last year is over? -- truce of september 5 from last year is over? >> the peace process is pretty much dead in the water at the moment. whether it can be revived is another question.

fighting had gone down during that cease-fire and had not disappeared entirely, but the level of violence was very much reduced and now has resumed with intensity. yes, i would say we're at a very dangerous moment now. >> henry, this is olivia. our guest host anastasia amoroso says the russian economy is sound but from our perspective, looks like a lot of things are falling apart. the ruble has collapsed, interest rates are 17%. is there a feeling in russia that the president is at all to blame for the deterioration of the economy? >> it has not had an impact so far on his popularity levels. however, there is an expectation that as the months proceed in as the pain starts to be felt more acutely, that his ratings will actually start to fall. at the moment, a lot will depend on how the ukrainian conflict plays out and whether or not

there will be some easing of sanctions. the oil prices is obviously the major factor. it is the sanctions are renewed in the summer, there is very important and p.m. -- european sanctions that come up which targeted the economy. if those are renewed in the summer, then the damage will be even more significant and then i think you'll see a major impact. >> that is the news i've heard coming out of europe, some do very much like there will be no easing on sanctions. henry meyer, thank you. still to come on "surveillance," guest host on television and radio, senior adviser at warburg pincus. this is "bloomberg surveillance." streaming live. good morning. ♪

>> this is "bloomberg surveillance." it is time for this morning's must-read. for that we go to brendan greeley. >> mine is from katzenstein -- casts some steam who writes in bloomberg view -- the gambler's fallacy is basically if you draw two cards and the other cards you want the third card can't possibly the one you want but that is equally probable. one of the things we been noticing, tom orlik governments, particularly the u.k., relying on the cass sun stein's theory.

>> it is an appealing idea in a world where there is a consensus against big government and government intervention. clearly, government was to promote high savings rates, promote high levels of health and education. how do they do that without sticking their finger too far into people's personal lives? behavior economics seems to offer one of the solutions. it is kind of striking that businesses have been ahead of the curve in understanding people's behavioral biases. if you think about lotteries, lotteries are profitable precisely because people aren't good at estimating probabilities . i think this pretty smart for governments to get on that bandwagon and start leveraging some of those benefits of public policy as well. >> i've heard from several economists that as well that the actual partition -- partitions are ahead of the academics and understanding what behavioral biases are. as you sit on wall street

anastasia, is that what you are finding? >> we do have a whole discipline of behavioral finance. there's absolutely true that you can cap license or behavioral biases. for example, individuals not wanting to invest in companies. they should be wanting to invest -- russia would be one example, oil companies would be an example. scary, should avoided by all means. probably the exact entry point you should be looking. >> anastasia amoroso says we have again ever bias against russia. >> that is very true because russia is very much driven by the sentiment from the western investors that i think misunderstands the cultural aspects of it, which is not oscar-nominated film you can go watch. navy that will clarify the mystery. >> this goes to the heart of what warren buffett says, you want to be greedy when others are fearful and fearful when others are greedy. mine comes from "the new york

times" -- that is truly an incredible number. 15% of the adult top elation. essentially, the argument is through the so-called recovery yet barely seen the number of people who qualified for set -- food stamps budge. this is a time for the president to really come out and defend it. tom, i'm curious to euro your thoughts are on bid stamps and the economic impact on what we call entitlement spending. arguing for increasing the minimum wage. from your research does that do anything to be manna people on government subsidies? >> i think these policies, which aim at alleviating some of the

worst consequences of poverty they inevitably get criticized as being costly, is giving handouts, and is creating disincentives to work. i think all of those criticisms of a certain amount of validity but i think the solution for me is not removing the policies which create a flaw under extreme poverty, but really looking at more systemic approaches to giving everyone the opportunities to succeed. that is why i think the president's state of the union thoughts shifting the balance away from -- >> we're going to leave it there. don't go away, we will be back.

>> this is "bloomberg surveillance." time to get our top headlines this morning. big fourth quarter for baker hughes, oilfield services, he soared past estimates adjusted earnings per share of $1.44. analysts surveyed expected one dollar -- $1.07. google is close to investing in space exploration technologies which was to provide internet access via satellite. the investment of roughly $1 billion would value mask's spacex at more than 10 lead dollars. google wants to spread internet access as it tries to boost its user base and sell more digital ads.

huge opening weekend for "american sniper." the top grossing movie in the u.s. and canada over the holiday weekend to a collecting a record-setting $105.3 million per ticket sales. the four-day total was the highest ever for martin luther king junior holiday weekend. the warner bros. film nominated persists -- for six oscars. those are your top headlines. we also heard or overnight we learn china's economy grew 7.3% in 2014, slightly better than forecast but it is the slowest expansion since 1990. leland miller, you're now is with the beige book for 7.3% growth? >> we assume stabilization in the economy since q2 strong job growth, sales, profits. all of these: for stimulus because china was going to be the growth target.

the question is, how is the economy doing? >> the other bit of the equation, the news from the imf revising down next year's growth forecast to 6.5%. >> whenever growth is being checked down a few notches, the imf is the last one to check in on this. i don't think anyone should be changing a personal productions based on what the imac is doing. -- imf is doing. >> does the chinese government have too much writing politically on sustaining growth? >> one of the interesting things for china and the relationship between growth is the relationship between growth and employment has changed. in the past, this idea that china really needed 8% growth. if it did not have it, the rabin as unemployment. if there was mass in employment, that would have huge political instability risks. i think that calculation has

changed. the services sector, which is much more labor-intensive, is putting a bigger part in the economy. that means we can have less growth without having height and implement. -- high and implement. the economy has slowed considerably. there are lots of unemployed workers on the streets? from where i'm sitting in beijing, i did not see that. >> showing the stimulus is working. leland miller do you think we will see another stimulus? >> no. and i don't think the stimulus is working. there talking as if the chinese government is growing up to do some draghi play. despite all the stimulus, the cost for borrowers for capital has risen. stimulus is not working and has not worked for a long time. what is happening right now is the chinese economy is relatively stable as is. the job market is better than people are saying. >> what about the shift we're supposed to watch china go through the next five years from production to consumption? is that happening?

>> we have a very mixed picture on rebalancing. on the core rebalancing everyone talks about investment versus consumption, we're not seeing that. retail is gone down four straight quarters. on the other hand, we're seeing services do quite well. manufacturing stabilizing. it is a mixed picture on rebalancing. there is no one indicator. >> i think there are two big structural questions for china. one is the rebalancing issue the shift from investment and export system is the main driver of growth, to consumption is the main driver of growth. i think we're seeing a little bit of progress on that. the other challenge, which is much more difficult and the last five years we've seen this massive increase in lending in china. outstanding credit is 200% of gdp. the unanswered question, which is still unanswered by the 2014

data we've just seen, is how does china want from that? how do we continue growing? >> another statistic i saw is shadow bank, 34% of borrowers are going to non-bank lenders. just 19% of firms borrowed. that sounds really week. how concerned should we be? >> it is not necessarily a problem. what we've seen in the last several quarters is a major drop in capex. people look at the economy and say, we want to stay on the sidelines while we figure out the economic uncertainty. also a major drop in borrowing. first quarter 2012, share borrowers has dropped in half. people not wanting to borrow not wanting to spend. this is one of the reasons you see a slowdown in the economy. >> anastasia amoroso? >> clearly, china was to regulate where they want the credit risk to go.

what about the property market? it seems like when all is going well and property prices are going through the roof, that is when the chinese government slams on the brakes and the opposite happens. you have copy prices are down, no development activity. that is when stimulus gets set in. what is it they are ultimately trying to accomplish with the property market? >> the key for the property market is really affordability. for years, we have property prices accelerating well ahead of income. that meant for the middle classes, first-time buyers property was getting out of reach. what the government has been trying to do for the last several years is put the brakes on property prices. property prices growing more slowly than income making houses more affordable so we can replace the speculative demand which was the main driver of the sector in the past for something more sustainable which is jen when demand for people who want to buy a house to live in. >> we're hearing so much about the new anticorruption campaign.

finally, going after the state backed companies, not just individuals. is this going to be as game changer for the chinese economy? >> you know, it may or may not slowly happen as one of the reforms. we have seen corruption affect the economy for a long time. it is coursing through our data. will it stop at any time soon? i think the worst is over, but this is a long-term political move that resident xi has to do. >> leland miller thank you so much i'm also tom orlik and anastasia amoroso with us for the hour. >> tonight, president obama holds his annual state of the union. are you watching? you're likely not. our twitter question of the day -- this is "bloomberg surveillance." ♪

>> good morning. it is time for today's single best chart. >> time is a scotch drinker. i'm pretty sure that is what he has. >> correction. >> tonight at 9:00 in eastern, president obama will address the

nation in his annual state of the union speech. but will anyone watch? 33.3 million people tuned in last year. that is 20 million fewer than bill clinton state of the union at the same point in his presidency. when we look at this chart, this is sort of nielsen data showing who watches. one, overall secular decline in who watches. the other trend, the cyclical trend. much more interest at the beginning of a presidency and you have to fight for the end of your presidency, lest something happens like what happened in 1998 to bill clinton. >> that make sense. if you are the new dude on campus, people are curious. at a time you are a lame duck less interest. >> do you read the summaries the next morning or watch? >> it is full of so many anecdotes, so many takeaways. even though this is the six time of doing it i think the topic is when to be quite important. that is the middle class economics.

one of the things that i look to take away from it is this actually is the year of the u.s. consumer. this is the year of the middle income u.s. consumer. unemployment rate is down, stock prices are up, home prices are ok and gasoline prices are declining. it is a good time for the u.s. consumer. >> also a good time to be phil mattingly. he is with us in washington. what is the white house doing differently this year to get people to watch? >> they're keenly aware of the chart you just showed. i think they feel like it is even worse off than that chart looked as you showed it, which really is kind of amazing when you think about it. over the last couple of years, steadily trying to figure out ways to digital and social to try to reach an audience that no longer tunes and :00 p.m. or is watching some type of reality show or brendan greeley, probably on bravo seeing some kind of real housewives show moving through. this year they went all in on it. they've introduced videos on upwardly, done blog posts on

medium. after the state of the union the president is doing a sit down with three youtube creators. these people are really youtube stars, including most famous for doing -- >> i'm definitely a bethany fan. i'm amazed. this is the same strategy that disney is taking to roll out "star wars." >> basically. >> they recognize most people aren't going to watch this, so how do you reach them? instead of holding of all of the secrets of what is going to be in the speech until the day of and the traditional road trip afterwards, they been rolling them out over the last two weeks. they're in the same position the media industry is in, trying to figure out how to reach people digital, how to reach people on tablets, get people to pay attention when they know they're not going to watch through the traditional form of media. >> i hear some of your compatriots in the what has press corps got heated about the fact that bethany mota got to

interview the president instead of them right after. what are you going to be listening for? sounds like the president is going to be targeting inequality, taxing the wealthy to fund the middle class. what are you going to be listening for tonight? >> the president's aides rolled out the core of the state of the union address the last couple of weeks but this week and probably the biggest ticket, his tax proposals. what he is basically going to do is through a series of tax proposals, raise or proposed to raise about $300 billion to really target middle income and lower income tax cuts for american citizens. the proposals to do this increase proposing or propose increasing capital gain rate from 23.8% to 28%, also target asset transfers after debt. basically, inherited money you're going -- a summit he dies and your family and you inherit money, he's going to try to apply the capital gains rate to that. this is a nonstarter for republicans. it is not going anywhere with

republicans controlling the house and senate. what i'm interested in watching the fact this is an opening marker for them. this is what he is going out to try to start the conversation. >> really looking forward to getting your reaction tomorrow morning, phil mattingly what house correspondent. thank you so much. still to come, mike waldman will join us on tonight's state of the union. tune in to bloomberg television tonight at 8:00 p.m. eastern for a special edition followed by a bloomberg politics preview of president obama's address at 9:00 p.m. eastern. that's take a look at some photos making news today. number three, paris. demonstrators holding banners tonight gathering. the protest was against boko haram islamist who attacked baga after nigerian military fled the town. estimated 2000 people were massacred. >> i thought this was a really good pick because it is amazing

to track the difference between -- this is what we're looking at misty international released -- amnesty released photos. read area shows vegetation. the difference between the response of the attacks in paris and the response of this has been deafening. >> number two in china, 12,000 square foot mansion was built using a 3-d printer in an industrial park constructed using a room size printer which measures 105 feet long and 21 feet tall that comes out multiple layers of premixed concrete which stacks to build walls. previous house is pretty by the company were only 650 square feet. i mean, i never could figure out what the utility of 3-d printers were. perhaps you lose a rook and your chess set. but if you can print homes? >> tom orlik thinks this is solving a problem. >> the tragedy of this, it is terribly clever but they printed

a house into massively oversupplied property market. >> would be affordable housing, right? >> perhaps. we don't know how much it costs or how it would do hurricane. tiger woods was spotted missing a tooth on monday. according to his agent, he had it knocked out by a video camera. he was celebrating with his girlfriend lindsey vonn falling her 63rd world cup ski victory. a shoulder mounted camera hit tiger in the mouth. don't you love it? his million dollar grin. >> he is just lindsey vonn's boyfriend. >> and lucky man. >> coming up, how one nigerian soap is using research on economics to teach safer sex. this is "bloomberg surveillance." ♪

>> this is "bloomberg surveillance." let's get to the top headlines this tuesday morning. jcpenney defined the digital age and bringing back its print catalog. the struggling department store chain things many of its online

sales come from customers inspired by what they see in print. the new 120-page book will be sent out in march. it is their first catalog since 2010. samsung electronics says it is not interested in acquiring blackberry but it's co-ceo says it is talking to the smartphone maker about using its technology. last week was reported samsung proposed buying blackberry for smudge a $7.5 billion. both companies and i did. a new study says the gap between the world question yes rich and poor is getting wider. by 2016, the world's richest 1% will control more than 50% of total global wealth. the percentage is up from 48% in 2014 when the world 80 richest people had a collective wealth of $1.9 trillion. we will be speaking to many of them in davos later this week.

a television show gaining popularity the proofs data and entertainment can work together. 18 soap opera once based in kenya featured oscar award-winning actress. the goal of promoting safer sex remains. here's a scene featuring two of the characters learning the results of their hiv tests. >> your negative. >> thank you, jesus. >> you have to do the test again in three months. >> and go through the whole process again? >> it is a necessary precaution. the virus can take three months to appear. it is what we call the window period. i would like for us to discuss ways to avoid it in the future. >> you don't have to tell me twice.

>> the executive director of mtv 's staying alive production and produces that show. georgia is backed by bill and melinda gates. thank you so much for coming in this morning. it is very powerful. . give us examples of how using the so-called tele-novella affect work? >> is important we are putting across same-sex messages. the first things in terms of changing behavior is change attitudes. we can get people to think more positively about living with hiv and get people to call a phone lines. the long-term change we hope to see and working with the world bank's element impact team -- development impacting is that people go get tested, people do actually use condoms. those are the long-term things we want to have people -- >> one of the things and point to the grander at the gates the

nation particular, this affect the rigorously measured. that changes what you do is a production company, right? >> absolutely. anyone who works in behavior change can medications, you can't do anything without evaluation. we are funded by the billable and it gates and nation and -- real and melinda gates foundation and they ensure we have this rigors foundation so we're working with the old bank and they have worked indefinitely to us but also closely with us in terms of making sure they are able to have some transparent and clear results. what is different about what we do compared to other communication programs is we have depth and breadth in the mtv brand. we're not just a tv show, we are a radio show, digital platforms, tour guides. it really is that depth and breadth. >> your broadcasting on commercial stations. i wrote about this and spoke to many economists. it seems like one of the lessons

we are taking from this is that it is not enough just to show it. you have to talk about it afterwards as well. we have some data from an economist studying the focus groups in south africa. he found out the biggest effect was not after watching it but after you talked about it. how do you make sure that happens? >> it is important. what happens when you take sugar off the tv screen, when we see the impact was somewhat to what james has done in south africa. what we're doing at the moment actually working with another foundation on this, we produced a. in tour guide across five states in nigeria we have trained up 120 young people on how to use this properly. they're going into community centers and universities and during group sessions. each of those group sessions they have -- they watch it and have the conversations. i think it is the conversations that really show the impact. >> the whole idea is so interesting. your mother tells you to do

something, you're not gonna do it. if you sit character you like doing something, perhaps it will change your behavior. maybe you'll go get that hiv test. it is not just in africa. we assume this till a novella affect layout -- tele-novella affect across other countries. >> to others i follow interceptions and soul city in south africa. i think those are difference and they have only been tv content. that is the difference with sugar. you go back to what you're saying, one of the things world bank team are evaluating is they're looking at the difference of what -- watching it by yourself and with others. the difference per pressure puts on you when you watch this content. >> it seems like an innovative approach been driven by some private organizations. do you see the public in organizations, the world bank, also moving in this direction? >> i think this is key to what

we're doing now, behavior change is hard to prove. what i hope is with this study it is going -- we will see a lot more content. >> fascinating. read and an strophic story and "business week." . .

>> this is "bloomberg surveillance." >> china moves to jumpstart the economy.

appears to be working. meanwhile, the imf cuts the forecast by the most in three years. the president delivers the state of the union address tonight and prime time. we will speak with one of bill clinton's former speechwriters. did morgan stanley get hammered by a big drop? good morning. this is "bloomberg surveillance." we are live from our world headquarters in new york. this is tuesday, january 20. i am olivia sterns. with brendan greeley. tom keene is on assignment and adults. -- in. close davos. fourth-quarter net revenue coming in, morgan stanley saying they are seeing fourth-quarter well, yeah, it looks a little bit weaker. essentially it appears that the story once again is this week trading revenue. for more, let's bring in allison

williams from bloomberg intelligence. this is not fair to do to you because you do not have the terminal right in front of you but what does that look like to you, $.47 earnings per share? is that the same story for the big banks across the street? >> $.40 is what i am seeing. keep in mind you want to ask out the valuation game, and there is probably a legal charge. we've seen that a several banks this quarter. for most of the banks what we have seen is the fixed income coming in weaker than expected. for morgan stanley, it is a unique commodities business. it seems to be a lot lumpy or in other companies. my guess is that is where i would be looking. >> there was a revision down in december after they said they were going to change compensation, be more in line with other finance companies. >> they came out and said they would be taking an extra caution in the quarter.

we are seeing that i think come across now. the elevated compensation by $1.1 billion. they had said $1.2 billion. what they're doing is moving from i think they had said they were 80% deferred on average for bonuses, and they are going to a 50% ratio. what that really means is as you pay your employees more in cash today your expenses are higher today, but what is helpful about that is it improves your flexibility because you have less cost coming in in future years when you take the cost today and for less. >> where do you think we are in the multibillion-dollar fund? >> i think for the u.s. we are eighth or ninth inning. when you look at what to investment banks are trying to do, it is really to try to accrue as much expense as they can into 2014 to get that behind them and they have, through a few more weeks, we have been

hoping to get some settlements and just to get some closure on some of those. >> for years now the story has on cost cutting and cost cutting, but a lot of people are telling us that all that jamie dimon and james gorman do is cut into bone. is there any more fat to take out or perhaps will we see job losses? >> as long as you see revenue pressure, you will see a focus on cost. it is the way the math is going to work. you cannot look broadly. you have to look at individual businesses and what is happening. in a certain businesses, you may be starting to get close to cutting into bone, but in other businesses where there is still opportunity for technology to improve efficiency, perhaps there is more opportunity to bring the cost down. >> the week trading with seen for the overall trading for the big banks, do you think this is a direct result of dodd-frank regulation? >> there are some things that are a direct result of dodd-frank regulation, right, that we have banks that have to

scale back from certain businesses and the bigger impact has really been on the overall profitability. the return on the capital mathematically is just going to decline. >> we also have this morning halliburton earnings and baker news. they reported together. fourth-quarter eps at $1.10. the range was between $1.04 and $1.22. we have seen revisions down in the last quarter from $1.30 the share prices for halliburton certainsort of winding down. >> i think it is interesting that halliburton, obviously the oilfield services company, has seen fourth-quarter profit rise as the price of crude has been tumbling. it is up from $793 million or $0.93 last year. let's bring in can hoffman --

ken hoffman on this. are you surprised at seeing an oil services company doing better in an environment of $45 oil? >> i am not an energy analyst but i used to play one. no. a lot of these things are delayed. it takes time for things to walk through. on the mining site when you have a severe downturn like this, usually companies take their down between 75% and 95%. that is what you worry about. people will save -- what is the order flow? that is going to be the interesting part going forward for any commodity company. >> bill janeway, you are legendary in the field of tech investing. this is a sector that sort of floats above all of these basic things that we are talking about -- oil, metals in china. >> yes, but it is not one sector. it is a conglomeration of sectors.

right now, there is one domain in tech, which is super hot, so hot that you can be for highly confident that we will have a mean reversion and valuations will come back to reality. >> tell us. >> that is the winner take all opportunity to exploit the friction-free environment between sellers and buyers, creating platforms that have the potential -- and the potential -- to go from here to google facebook, maybe uber, but the g ame is still on. the point here is that the cost of getting one of these things launched is asymmetrically equivalent to zero so that the kids in the dorm rooms do not even either parents' credit cards to get going. the software is free, you get up on your social media, you market through your friends, and if you get some traction, the valuation goes straight up. >> the problem with something like uber is not the platform but the very real-world

frictions. you have got to go through regulatory problems, you have got to roll out the city by city, so for google, google was creating a service that had never existed before. uber airbnb are disrupting services that have existed for generations, that are local, that are subject to the cultural, regulatory, political, and economic ecosystems that have evolved for generations, so you are right, they have to go local and take seriously the history that they are addressing. >> do you see long-term valuations in the tech world becoming more and more pegged to this really real-world of metals that ken looks at? >> that diversion, that distinction will continue. we will not see successful tech companies valued like successful mining companies or even successful oil companies. that is a clear distinction.

what you can expect to see is the super high private market valuations where public market investors like wellington, t rowe are coming in with no liquidity, and eventually there will be a market test. the ipo at 30%, 40% below the last private round, that is reversion to reality. >> ken, overnight the big market moving gdp figures coming out of china growing at 7.4%, the weakest since 1990, but a little bit better than we expected. you and i have been talking about what could have possibly triggered this collapse in the commodities pricing. he pointed to china, this 7.4% growth to you suggests the selloff we have seen? >> if anybody sees 7.4%, bring them in because every number we look at out of china is a disaster, and china is actually getting worse. how can you have an economy that a 70% of gdp china's

construction, and all construction is down double-digit and you grow 7%? how do you do that? >> we are told that the chinese economy is stabilizing. >> no numbers we see show that at all. we want a proprietary china with a steel profitability index, which really tells you how industry in china is doing -- it is down 60% in china this year alone. >> i want to let everyday know there will be a cage match this afternoon between ken hoffman and lee lynn miller. >> -- and leland miller. >> oil collapse is coming out copper is collapsing, they all have the one common denominator of china. now that china has pulled back from that world of commodity, all of the overspending that you have seen over the past decade is coming to bear, and you are seeing up or down 10% this year you are seeing iron ore down 65%, 70% you are seeing oil

down 50% post-up a all have one common denominator and that is china fund up as china pulls away, you have got problems. >> you want to see what china does with the price of $45 oil. in the united states, the price of gas $2. that will factor into the president's take on the economy of the state of the union. thank you so much, alison williams ken hoffman and bill gave janeway, you're sticking with us. meantime, our twitter question of the day, we want to hear your thoughts how are you watching the state of the union tonight? -- please tweet us @bsurveillance. this is "bloomberg surveillance." on bloomberg television, streaming on your tablet, your smartphone, and bloomberg.com. ♪

>> good morning. this is "bloomberg surveillance." i am olivia sterns with brendan greeley. the celtic tiger has come roaring back. imf chief christine lagarde is keeping praise on ireland recovery. she's as "the irish people has made great sacrifices, which have begun to bear fruit. growth has accelerated to be the highest in the euro area, bond yields are at historic lows solid job creation is underway." separately, i too was in dublin this weekend. i visited the guinness factory.

i have to say it does actually taste better and different there. our dublin bureau chief joins us now from dublin. what was the secret to the success here? how did ireland go from having such a severe banking property bus to becoming the fastest-growing country in the eurozone? >> well i definitely urge auction here. sure, the headline numbers look pretty good 5% or so this year over last year as well, a lot of that is down to success, it seems to attract companies like google, facebook, and linkedin. i say concerns because of the 12.5% corporate tax rate. it has cap the numbers decent but i say if you look at the bottom a little bit, there are a lot of problems out there. i would not get carried away with the numbers. i think a lot of people talk

about christine lagarde, certainly we do not feel like heroes all the time. >> right dara this is brandon, these to be recovery board said we should focus on growth while he was in ireland, and there is a hint there. he says is there going to be no renegotiation, just grow the way you are growing and shoulder the debt burden you have? >> yeah i do not think it is a hint, i think it is pretty blunt that there will be no debt and real negotiation -- no debt renegotiation for a country like ireland. that is at the root of a letter from that the irish economy. sovereign debt we are managing ok, the market has got no worries we continue to sell bonds at record low yields, but to keep the economy at his personal best for my lot people took out jumbo mortgages in ireland between 2000 and 2006.

i unfortunately was one of those people. we are still paying those mortgages back, so because of those massive personal debts that people are still showing we are not going to see any big pickup in consumer spending for a couple of years. what we have is kind of a -- >> dara, i have to jump in there, dara doyle of come our dublin bureau chief he knows about ireland. ♪

>> this is "bloomberg surveillance." i am olivia sterns here with brendan greeley. tom keene is on assignment in. world economic forum. china's weakest growth in him was a quarter century, but it could have been worse. chinese efforts to stimulate the economy kicked in late last year listing production and consumer spending. they comes close to the government's target of 7.5%. china's gdp rose 7.4%.

the imf make the biggest cut to its global outlook for growth in three years. the world economy will grow 3.5% this year. that is down from a forecast of 3.8% in october. the one exception in the imf's new forecast is the united states, it is going to upgrade to 3.6% from 3.1% back in october. now amazon is really going hollywood. the e-commerce giant won its first major television award and how it will start making movies. the council be shown after its theatrical release on amazon's prime streaming service. amazon has woody allen to write and direct a new half-hour tv series. those are your top headlines. time to turn to the genetic code us in the commodities market. it is watch out below as commodity prices have collapsed since the start of the year. the bloomberg commodity index down again today as the imf cut outlook for global growth.

near its lowest level in years. ken hoffman is head of metals and mining research for bloomberg intelligence will stop it is not just oil and copper, it of the industrial minerals. it looks like we're throwing the baby out with the bathwater. is this justified by 7.4% growth? you would think that would indicate more demand. >> you would think so. no clients believe that number. a look at the actual demand numbers out of china. china's third planet had about a year ago was to change the whole economy for the next 10 years, and what that is doing is trying to turn them into more of a consumer country. it is trying to consolidate power, and remember, the local governments in china, the way they raise money, they do not have property taxes, they sell property, and the bank finance that. what the central government has done is starved those local banks of capital, which has starved their local government of selling property, because you see construction down therefore

there is no demand for the metals, and that is giving the rest of the world a big hole. >> the question with commodities is whether we believe there is a chinese stimulus happening or going to happen. >> that is right. he federal government is doing a stimulus but the problem is the local governments are falling apart, they are bankrupt, and the debts are high. >> in china, all you have to do is go outside of beijing and shanghai in the first thing you hear is china is a big country, beijing very far away. the dynamic of the local governments driving economic -- heavy, construction led economic development funded through relative property sales ken, you are right. this is true of all commodity markets. supply is very inelastic. it takes big cash flow to build up capacity, but once it is there, even if demand slows down, it does not decline. this overshadow of the excess

supply drives prices down. >> isn't the whole point about the shale revolution now that shale is more elastic because it is less capital-intensive? >> now we are talking about oil and a good friend and a really smart guy, he just published a thought of that $50 is the new ceiling, not the new floor as saudi works hard to shift itself and to allow the frackers in the u.s. to become the swing producers. saudi arabia has costs that are a fraction of anybody in the new energy world. this is a new dynamic, which is different than anything we have seen since the first oil crisis in 1973. >> ken hoffman, i want to review by some that you set a second ago -- china has absolved the commodity world of all sense. we are talking -- of all sins.

what we are talking about is brazil, australia, and i had been thinking about if demand goes down, that is a problem, but it from your analysis, they have at the higher rate iron ore. >> they do, but they produce too much. when you do not need copper production this year, expected to be up 11% the iron or guys are trying to add 800 million metric tons to eight 1.6 million ton market. they added way too much because they thought that china would go on forever. everything you want to know about china and commodities, the last two years, chinese used more cement than the united states has use in the past 100 years combined. can i continue to grow? if you are bullish, you're like no problem, china is unbelievable they will use it forever, and you talk to commodities ceo's, they have been talking about that for a long time. if that is not true, we have a problem. >> it cannot go on something because it cannot go on. >> that is right. if it keeps moving forward until

it doesn't, so you have seen in the iron ore market, it kept moving forward, now it is not. it is happening in oil and copper and it is starting to stretch all metals. those suppliers borrowed a hell of a lot of money to build at new capacity. they have got to keep servicing their debts, their average costs stay up the matter what happens, and they have to keep producing to keep that incremental cash flow. that is the dynamic that is to think about the commodity markets. that is why it is so different from tech. >> that is one of the big questions overhanging the markets, what is going to happen to the high-yield exposure in the oil and gas stocks? will that spread to the broader markets? ken, thank you so much, ken hoffman, our head of metals and mining for bloomberg intelligence will stop bill janeway, you are not going away. still to come on "bloomberg surveillance," the president addressing the nation tonight in his state of the union address. has the speech lost its relevancy? it is our twitter question of the day -- we want to hear what

you think him a how you will be watching the state of the union address? will you be watching it live on prime time or perhaps with bethany mode on youtube? tweet us @bsurveillance. this is "bloomberg surveillance." on bloomberg tv and bloomberg.com. ♪

>> good morning. this is "bloomberg surveillance." i am olivia sterns here with brendan greeley. tom keene is on assignment in the swiss out. let's get you to top headlines. united airlines is reportedly ordering the new 777 er's. the deal have a value of $3.3 billion based on list prices. airliners do get discounts. it could be announced as early as this week. and google is close to investing in space exploration technologies, which wants to provide internet access the a satellite. the "wall street journal" says it would value elon musk's spacex at more than $10 billion. google wants to spread internet access to sell more digital ads

and boost its user base. going to the super bowl will not be cheap this year but may be cheaper than last year. secondary market tickets for the patriots-seahawks game were going for about 2900 dollars yesterday, apparently a bargain, down 20% from a year ago. one reason may be patriots super bowl fatigue. new england has been to the super bowl six times in the last 14 years. those are your top headlines. >> private equity is still slinging cash at private companies. uber $40 billion, the highest valued tech startup ever, but this is america, and entrepreneurs look for exits. shake shack, box, and go daddy have already filed to go public. with us is bill janeway, a legitimate economist. what would minsky say in this cycle? >> where minsky would be looking

is -- are people really getting comfortable that we are into a new era? are we getting relaxed? i do not think that is yet really true. we have this high-tech new service business driven by the fraction-free environment and the low cost, the zero cost of launch for new digital services is a very special part of the world that is, to a very substantial extent, decoupled from what else is going on more broadly. like commodity markets that we were talking about with ken, it is its own unique world. it is going to undoubtedly a bubble. i think you saw that one of the ipo's. box is filed at a price that is substantially below the last private round. the ipo market for new tech companies is very restricted. they have a ton of money invested in these new service businesses, a lot of it has come from unconventional public market investors, not venture capitalists who are looking for

the next winner take all, google facebook. if you wind up with one of those, then you cannot pay too much at any point. but one out of how many? >> and they are scraggly for yield. the japanese five-year in negative territory, equity, bc seems pretty good. >>v vc doing what he knows i to do, but you have companies that never used to do this. do they know what they are doing getting into this risk? >> they for optimal support in word and finance -- "liquidity for a co-if i change my mind what is the price of getting out? if you bought into the last round of uber, the price of getting out is infinite. there is no price, the price of getting out is infinite. so public market investors coming into -- the first time i saw this, by the way was 1983. that was when we had the first ipo hot market after the oil

crisis and the deadly stagnation of the 1970's. >> i have to jump in here bill janeway, a for those of you do not know, invested in a little company called apple. continue. >> if only i had i confess, two of my best friends did, but i was not at apple. i was in the next round of enterprise, the companies that transformed and made possible e-commerce in the 1980's and 19 a90's. >> what do you think of places like atetsy.com? >> they're driving these restoration of commerce in the u.s. and around the world. whether it is etsy or a reborn ebay, or amazon never quitting, pushing it every frontier, we are only in the early days of the transformation of this economy. it took 100 years for the railroads to transform the economic architecture of the u.s. it took 50 years from the first railroads to montgomery ward and sears roebuck.

we're not even halfway through. >> bill, we are going to leave it there, you are staying with us. i want to go to the chinese gdp, 10-year yield moves lower, and the euro is slightly weaker against the dollar. this is "bloomberg surveillance." this is "bloomberg surveillance." i am olivia sterns here with brendan greeley. tom keene is having whiskey at the panel bar in davos, switzerland. he will be live from the world economic forum all week starting tomorrow. >> tonight the president will not be drinking whiskey. he will be delivering his state of the union. for the last two weeks, barack obama has been performing what one former clinton official called a striptease for stuff you heard that right. he has been unveiling bits of policy day by day instead of waiting for his speech. michael waldman wrote for state of the union addresses for president clinton. michael, you have been there in the final years of an administration. what does the president have to say tonight to prevent he is still relevant in this speech matters? >> it is a funny thing, the idea

that the state of the union, oh it is not alive anymore, the viewership is going down, but it is still 30 million people in this day and age. a lot more people are going to be watching president barack obama tonight than president -- >> any more than watch the patriots-seahawks? >> that is a good question. >> it is a lot more than frank underwood get seen by. >> are you sure? netlist is doing better than hbo. >> the president gets to command this big national stage. he does not have control of the congress, of course, but the last time the president gave one of the state of the unions to a congress that was not control by his own party was 1939, so what can president obama do? he can articulate his views, set up a debate, and congress now is going to start passing things and he can sign them or veto them. >> he really took a strong stand on a couple of issues. is this a stake in the eye for

republicans, or what is the issue? >> he will drop a line on effective action really take a stand, and if they scream it politically, that is not so bad for president obama. some issues where there is actual bipartisan agreement -- corporate tax reform i be one of them. criminal justice reform is another. criminal justice reform has left and right coming together. i think he will talk about the fifth anniversary of citizens united, which he talked about five years ago when it had just come down from the supreme court. >> mike, there is a great story from the "new york times" today tony keenan, who spent the last week or ashes a spent a week over the vacation hold up in a hotel room in honolulu working with the president on his speech. what does this team around the president doing, how many have their fingers in the pie? >> let me say for the record unfortunately i never got a week in a hotel in hawaii to work on that speech. >> you got a week in a hotel in

little rock. >> exactly. president bill clinton -- he went through draft after draft, pulled in dozens of people to get their ideas, and every word, every comma matters. i bet president obama works on the text as well, but it is much more of a solitary think him and he is that a next excell speechwriters -- he has got index the linda speechwriter in tony keenan. -- he has got an excellent speechwriter in tony keenan. it is never really done until he gets to fayetteville. >> michael waldman, i want to play back something you wrote more than a decade ago from president clinton's 1996 state of the union that you helped write. >> we know big government does not have all the answers. we know there is not a program for every problem. [applause] we know, and we have worked to give the american people a

smaller, less bureaucratic government in washington, and we have to give the american people one that lives within its means. [cheers and applause] the era of big government is over. [applause] >> michael waldman some things resonate, real quick, when you know you have hit it out of the park with a comment like that? >> something like that is both an articulation of a political philosophy and a political act. he was seizing the center at the moment when he had just been fighting with newt gingrich and the republicans over their attempt to shut the government down and when a fight on the budget. he sees to the center and really want the public debate. he says yes, big government is over, but let's not cut medicare medicaid, social security or the environment and that set the budget politics for the rest of the decade. >> also mass for use of that

power thumb as they call it. tune into that it :00 p.m. eastern for a special edition of "with all due respect" and president obama's address. ♪

>> this is "bloomberg surveillance." i am olivia sterns here with

brendan greeley. tom keene is on assignment at the world economic forum in davos. morgan stanley reported results early this morning and it was a bit of a mess for morgan stanley, missed estimates as fixed income trading revenue failed again. this is the story we have heard from all the big banks, fixed income fell by over 14% post-up net income came in at $.47 per share or $1.4 billion. the reason shares are higher in the premarket appears to be because the investment of banking revenue numbers were not quite as bad as some people thought. morgan stanley shares are up by about .9% in the premarket. two hours before president obama delivers his state of the union address, michigan governor rick snyder will give his state of the state speech, focusing on rebuilding a stronger detroit. "in the loop" anchor betty liu spoke with quicken loans founder

dan gilbert for an exclusive interview, and betty joins us now. >> governors from across the country have made or are going to make their state of the state speech is stop rick snyder, though, as you mentioned, has sort of an extra thing in his back park it, and that is dan gilbert, the billionaire of quicken loans the founder who has himself put in billions of dollars all stock he is on a one-man crusade to save detroit. we were there last week during the auto show. i stopped by. he has got a big model of the building see bought the one point $6 billion of buildings he has bought, and what he plans to do -- i asked him, look, it is great that you are buying these buildings, but the fact of the matter is the real problem for detroit are the 70,000 plus buildings that are abandoned right now. what are you going to do about that? >> it is like a cancer. if you do not remove it all, it grows back and that is what

happens. you go into a neighborhood and there are 100 homes and 50 get removed in a given year, there are still 50 more there and still residents looking at that and seeing that and knowing that affects their property value -- >> and if they leave -- >> yeah, making decisions on whether they stay or leave. you have to get rid of it in the shortest period of time possible. >> now, he is an optimist, as you can tell. he knows that property values that he has but not presently have gone up. his buildings he says are 95% occupied with those office spaces, which is incredible. >> michael walden, this is fascinating because it is a 10-year, 15-year story, goes back to before your days in the white house. how do you talk about the decline? how do talk about cities shrinking? >> that was something that of course unfolded over decades. the plight of traditional manufacturing and the decline of

cities and the return of cities, new york where we are, but so many of them, is one of the great, unarticulated stories for stuff you might hear a little bit from the president for the previous to paint a picture of america's access, and this is actually art of it. prime going down as her medically -- crime going down as dramatically as it has. >> betty,, thank you so much betty liu's interview with dan gilbert coming up on "in the loop." ♪

>> good morning. this is "bloomberg surveillance." i am olivia sterns here with brendan greeley. tom keene is on assignment in davos, switzerland. >>shake shack, the restaurant founded in new york by danny meyer, once to raise $80 billion -- $80 million in an ipo. the company has more than 63 outlets in 30 cities from london to dubai. a new study says the gap between the world for the rich and poor is getting even wider. oxfam says by 2016, the world's richest 1% will control more than 50% of total global wealth-. that percentage is up from 2014,

1 of the world's 80 richest people had a collective wealth of $1.9 trillion. and again, tom keene will be speaking with many of us people at davos. a huge opening weekend for "american sniper." bickley eastwood war drama with the highest grossing in america and canada over the weekend creating -- garnering a record-setting $105 million in ticket sales. the four-day total was the highest ever for a martin luther king jr. holiday weekend. the warner bros. films nominated for six oscars, also said an industry mark for one-day and three-day sales in january, and brandon, those are your top headlines. >> president obama will speak tonight, the state of the union address will stop michael waldman is here with us. michael, you have been there to draft these addresses. i am a little curious -- i was sort of shocked to read the plan when it was released this weekend where, you know, in the past, the president tinkered around in the edges come a little bit about the corporate

jetsdebts. this time he is completely committed to raising the tax. famed investor, explained to bill janeway why it makes sense to raise capital gain rates? >> i realized all my investing with capital gains well over 30%. you can do very well with a 30%, 35% capital gains rate, i promise you. >> i am really fascinated by this because this was the rate under reagan. it is not unprecedented. >> exactly, we got into this nonsense of a spiral to the bottom whether it is the inheritance taxes and the notion that you should have a step up. that's a step up of debts instead of capital gains being on cost if you inherit, if you get the golden spoon when you are born you are born on third base, the cost is stepped up of what you inherit to the value at the time of your parents' death. >> michael, you are the

wordsmith. how does that obama finally language to make an increase in taxes sound palatable? >> it is how the ball because the decrease in taxes for the middle class. >> that is how you do it. >> we are now in the post deficit crash period and he can make the case that growing the economy from the middle out is actually best for growth, best for the economy. the connection is that growing inequality is actually a damper on overall economic growth so it is hard to get it passed, but i would suggest an easy case to make in a lot of ways. >> i was struck reading the president's release, the white house released that it is a lot like what you said president clinton was doing a 1996, trying to grab the center. " so many times just like under reagan, just like what paul ryan wants, that is not an accident right? >> no absolutely not. when the president gives a

speech like this, he has the congress in front of him, he knows paul ryan is sitting in front of him, he knows what the republicans and what the democrats will cheer for. he does not have to worry about whether they will vote for him because he now has an opposition congress. it is a chance to clearly articulate a new economic vision, which he has not always done so much in these speeches so i am looking forward to hearing it. >> how do you shift the rhetoric on this? we have been talking about tax the rich, tax the poor, that has been the basis of debate. it is a slight rhetorical shift to say we are going to do capital gains instead of labor. how do you make that clear? >> again i goes to the core of american values, work responsibly, opportunity, and upward mobility. i think again it is easy to talk about, and it is not a massive tax increase on everyone. it is shining the light on the reality of what is happened to the american economy, he would argue, and of course the republic and will say you are raising taxes, that is what democrats do whenever they have a chance, and it is a

debate the president would probably like to have. >> do you think people still care what the president has to say in the state of the union? yes he is a lame-duck president and he has also done this so-called striptease, went to detroit and roller programs here and there, do people still care? >> one of the few remaining civic rituals, nobody thinks that it's a word comes out of his mouth it will get an into law the next day, but it is still -- considering the cacophony of other things going on in the world, it is still a focusing moment for those who care about what is going to happen in public policy. >> it really helps set the terms of debate for 2016. as you see the supposedly moderate republicans actually starting to talk about inequality -- jeb bush, mitt romney. the terms and debate, where the center of gravity is is beginning to shift, and i think this can advance that shift materially just like the big

report from the center for american progress that larry summers is the co-author of has definitely contributed to finding where the democratic party in 2016 is going to be establishing its central banks, as you did back in 1996. >> bill janeway, just to put a fine point on it real quick, you are an investor, not a stress fighter. >> i am for balanced growth and balance fairness in the economy. >> it is time not to answer our twitter question of the day. we asked you -- how are you watching the state of the union tonight? our first answer, dvr to fast-forward through unnecessary applause. [laughter] our second answer, streaming online in the comfort of my recliner. bethany motor and many other -- bethany mota and many other youtube stars will be covering it. >> exciting. i will be watching bloomberg politics tonight. >> of course because it is two hours past your bedtime. the best answer comes to our fearless leader, tom keene, tweeting us from davos,

he will be watching it at the piano bar, i imagine with a glass of scott. >>how much does that glass of scotch cost? >> that will be 3:00 in the morning davos time. >> what makes you think tom keene will not be there? >> he will, he is a hero. next year, i want to do this interview in davos. >> we might take you up on apple stop it is past her bedtime -- >> to do the show, you have to be in bed at 6:45, and a lot of the world happens after six: 40 5 p.m. -- after 6:45 p.m. >> it is setting the stage, it is setting the stage for the next year or two and 42016 also. in a way, the cupboard is bare for both liberals and conservatives when it comes to policy. this is the beginning of the

post-obama era, and he is giving his own views as to what should be appropriate. >> i do have an e-mail from tom keene, i have to issue a "surveillance" correction -- the man dreams martinis, not scotch and he is deeply jealous of the bowtie on bill janeway. >> i have already given tom one, but tom, i will take this off and give it to you. >> you are turned out today. >> my wife is a stem cell geneticist, and she was practicing needlepoint. >> they say that is too much information. it is time for today's agenda looking at the stories shaping the date was at my agenda is the state of the union address post up i will drink coffee, stay up, and watch it. we will have special covers on bloomberg tsarnaev :00 p.m. with our -- on bloomberg at 8:00 p.m., and we will carry it live on bloomberg tv full stop it looks like the president will be taking aim at inequality, so it will be interesting to hear what he tries to announce tonight to try to redistribute wealth from the wealthy to the middle class.

>> my agenda -- forget the state of the unit, we are looking at the republican race for president. mike huckabee his book landed on my desk this morning, it is called "god, guns, grits and gravy," but you do not need to know that, it is called "i am running for president" by my cut that be -- by mike huckabee. >> do you think he is jealous of the pigs castrating? >> that is his wheelhouse. he took it. >> we know more people are some to netflix than hbo. the president will probably get a bit of a bump in the state of union thanks to the overwhelming interest in "house of cards." we will have to wait and see but netflix, bill janeway, an enormous success story for the tech community. >> netflix is virtually unique because they went from, you

remember what netflix was like 10 years ago? >> no. >> it was storage. you got a videotape and brought it home. it reinvented itself. >> bill janeway, michael waldman, thank you, "bloomberg surveillance" continues on radio, "in the loop" up next. ♪

>> morning, it is tuesday, january 20. we are live from bloomberg world headquarters and you are "in the loop." on the agenda today, he's not

only rebuilding an nba team but rebuilding a whole city -- my exclusive interview with cleveland cavaliers owner dan gilbert and how he is putting billions into restoring to try for it harry wilson is no stranger to motor city. he advised the obama administration on the automobile bailout and he is my guest is this hour. a random walk down wall street, we will be joined by this author. first, here's a look at our top stories -- president obama will call for new taxes on the wealthiest americans in tonight's state of the union address. it calls for raising the top tax rates on capital gains to 28% plus capital gains tax will have to be paid on assets transferred at death. the republican-controlled congress is likely to oppose both of those measures and you can catch all of that right here tonight on bloomberg television