ce files for a bailout extension of the european central bank makes an ecb correction. draghi did not discuss capital controls that everyone else is discussing. and lucky charms have lost their charm. americans are eating less serial. once more, past the cocoa puffs. brendan: as you know, i may lucky charms land. tom: good morning, everyone. this is "bloomberg surveillance." it is thursday come up every 19. i am tom keene. joining me brendan greeley. olivia sterns has the plague. brendan: we begin and ukraine were a military spokesman says more than 90% of horses have retreated -- forces have retreated from depaul death -- debaltseve. it is a strategic rail ray junction. russian president vladimir putin commented on the violence

tuesday. he said it is always hard to lose. "life is life -- it just goes on, no need to dwell on it." the european central bank is offering yet another lifeline to grace. it has reportedly agreed to come up with $3.8 billion in emergency cash for great banks. it has request a six-month loan extension. the eurogroup will meet on friday in brussels to iron out a final agreement. japanese stocks are soaring. the nikkei hit its highest level in nearly 15 years. the rally was fueled by an announcement that japan's trade deficit has plunged nearly 60%. thanks to strong exports in january. tom? tom: very good. president obama said the way to fight islam extremists is for international communities to embrace its muslim immigrants.

the president made the comments in a white house summit on combating terrorism. mr. obama says the u.s. has a long tradition of embracing immigrants suggesting muslims in america are more integrated than those in europe. delegates from 65 countries are attending the three-day summit which wraps up today. finally we continue the saga of boston. boston's mayor is telling people to stop the madness. the city has been slammed with eight feet of snow. that is 90 inches in just 24 days. it is creating massive snowdrifts, which has led some to try their double stunts like jumping off roofs, out of a second story window. mayor marty walsh said "stop the nonsense." that is mayor walsh going in with a dodge. you can kill yourself. oh, come on, mayor, being responsible is never fun!. 3, 2, 1 go. brendan: in slow motion.

i swan dive. i give that a 6.5. a lot of points for style, not for difficulty. here is where walsh has also weighed in. if you have spent a brutal winter in boston with a car, you know you can get into fist fights trying to park a car in someone else's shoveled out space was a marty wants -- out space. marty walsh has said it is true that the grace. -- that the grace period could extend. what the legal rights are of so many questionable out a spot. tom: we have pointed out that this has gone from funny too serious. it is a ton of snow. it is affecting emergency services and such across new england, even eastern long island. there is our weather report this morning, "bloomberg surveillance ," how about a data check? equities, bonds, currencies commodities .

not much has changed. we have 49 this morning. onto the next screen, if you would. the vix showing good gains including in japan as brendan mentioned earlier -- earlier. ukrainian currency is ugly, hryvnia. jeff curry joining us in an next hour with goldman sachs. ed morse at citigroup with a $20 target. here we are at 100. this is the volatility in you can see with the plunge it opens up and i want to know where the bounce is. the midpoint of this volatility is about $63 a barrel. we are miles from that. brendan: i would like to know or the bounce is, too, but i would also like a pulitzer prize. i would like a lot of things tom. this is the old world.

this is the new world. this right here is a fool's g ame. this makes fools of us all. tom: i agree with that statement totally. we are not washed out. this will be tested. just curry with us, really folding into all of our economics and retail consumption in america as well. we need to speak of ukraine. overnight it has become ever apparent that kiev suffered a major defeat in debaltseve. at least 14 dead. ukraine cease-fire is in tatters. hans nichols is in berlin. angela merkel in normandy leaders try to figure out there next step. what is the next step for normandy leaders? hans: well, they spoke on the phone this morning, tom. they want to have the osce go into these this you did zones and monitor them. the readout from the calls that happened between those leaders us morning is generally

positive. it is hard to square that with what is happening on the ground which as mr. poroshenko mentioned earlier this morning was continued violence continued violating the cease-fire. tom: hans, the thrust here is to move 118 miles south to the shores of the see of a thought. that sounds like a major deal. the you in berlin assume that will happen? hans: wow. that is a crucial question and i think you have to get it what mr. putin's real intentions are here. i would not hazard to guess on my. i think we are getting a military strategy now be playing out of my range. brendan: brendan, you have got -- tom: brendan, you have got an opinion. brendan: you and of being on the beat of the vladimir putin watch. what he says seems increasingly disconnected with reality. it is almost less if he is not even pretending like he has

anything to do with us anymore. hans: that is one thing that came out of the last minsk agreement that there was at least a command and control link between mr. putin and the rebels. is that command and control link strong enough for him to influence events on the ground and that is what everyone is waiting to see. brendan: let's turn to brussels. greece delivered a packet of papers today. do we have any idea what is in that envelope? hans: yes. it seems as though greece has out u.s. -- has acquiesced. they use the term "current arrangement," they want to prolong and extend that. that means the whole debate we had yesterday and the day before about whether or not they just wanted a loan extension and wanted to leave the bailouts, it looks like greece has backed down on that and now we can have a formal ratification win eu finance ministers meet in brussels tomorrow. brendan: any word on grace's -- on greece's 4.5%?

hans: that is the number 42015. in some of the documents they came out last night of athens, they said they want to get that down to 1.5%. in a way that is the easiest riddle to solve. the more difficult is pension reform, privatization, and labor reform. tom: on nichols, thank you so much, from berlin. we begin with dr. lee at city research, and away from the hive in the hole of fashion week, there is a retail reality. we speak of consumption and retail in this hour. howard, let me start with you. have you ever been to fashion week ? howard: no. tom: what does fashion week mean to your world?

howard: it is based on what you create. that is the whole business. in other words, that is what creates demand. you see the change people walked by, they love it or they don't love it, they like it or they don't like it, that is the whole apparel business. tom: guys like you keep track of our closets, and there is a point where we buy so much women do not buy any more. where are we in this cycle? howard: women never have enough clothes. tom: another "surveillance" breaksclusive. women never have enough clothes. howard: in the apparel business, the biggest is junior apparel. 11 major bankruptcies, body central, delia's -- it is the weakest part of the retail business. brendan: abercrombie & fitch

succumbed to this as well. there was a "businessweek" story about this as well. is it just a natural distraction -- destruction of old brands? howard: that is a great question. you are 14 years old, the most important thing in your life is your iphone, not your new sweater, and the second most important thing in your life are your sneakers. that is a big change. teens are interested in different things, different priorities. that has changed the business. brendan: you are a creative destruction us. let's turn to bill. changes in the american economy, you read i assume with interest, the fed minutes yesterday. help us out with the psychology of what is going on there. bill: this is part of the problem. the fed is uncertain as the way the economy is. some say we do not have enough growth, we need more stimulus to

get the economy going. tom: howard comes in, he says walmart is in the crapper or whatever he says. do you agree with alan krueger that there is essentially to america -- two americas now one with prosperity and another one that is struggling? bill: when wealth goes up, it seems as if we are not spending as much as we used to because distribution of wealth -- the employment has been skewed. those who have a lot of skills are getting jobs, and those without are not getting jobs. tom: in your world, howard, it is calls. howard: the guys in the middle are getting killed by sears and pennies, liquidating -- tom: penny's is going under? howard: i do not think they will

make it. in six years here is what happened -- we doubled the debt, and doubled the number of people in poverty, so all of these pinhead professors that come out here -- we doubled the debt. [laughter] tom: brendan, will you remove these two? howard: that is a government number. brendan: i will stand here, a human dam between the pinhead and the professor, and i will take us to break because our great question on twitter today is about the real economy. does walmart deserve to be the most hated retailer? tweet us @bsurveillance. i will send these guys to their corners. ♪

tom: let's get to our top

headlines from around the world. so much going on. here is brendan greeley. brendan: libya's for ministers demand a lifting of the arms embargo. over the weekend, isis posted a video of the beheadings of 21 age of 21 egyptian coptic christians in libya. libya officials say this is proof the arms embargo needs to end. thailand's former prime minister is facing charges for her role in a rice subsidy program. she is accused of their relations in overseeing that subsidy program. 20 boxes of evidence to the supreme court, which will now decide to formerly accept the course. and thousands of people march in buenos aires to mark one month since an investigator was found dead. his body was found in his apartment january 18.

it is not clear if he killed himself or was murdered. he had been investigating a 1994 bombing of a jewish center and had publicly accuse argentina's president and foreign minister of covering up iran's role in that attack. tom: i am so glad you put this in top heads. this was sort of their, all of a sudden it has become way more. this thing in argentina is a huge deal. brendan: what has happened is there is general frustration with the president and this is so -- if it is in fact true, deeply inexcusable and shocking, but there is a long tradition of public protest in windows heiress. we have with us howard to that of its -- we have with us howard davidowitz and also bill lee, an understanding of economics

in america. what we were talking but in the break of how we do not really understand anymore how it is that americans feel wealthy. we used to understand the wealth effect, and we do not anymore. bill: people do not consume just because they get angels of income. all this income we get we supposedly save or do something else with, but the key is the long-term study habits are determined by permanent income where permanent income is through wealth. tom: is permanent and comfortable income? bill: it is readable vis-à-vis the person. with more volatility in the stock market, the size of the wealth effect has been miss measured because people are uncertain about where my wealth is. if i am uncertain come i will not spend as much as i used to. brendan: the imf is dealing with this and also the fed, people with different income levels experienced the wealth effect differently. you cannot base the model on one

person. bill: that is the key. there is no such thing as a represented individual or consumer. groups that on equity, groups that have jobs groups that have skills and high-end jobs, they all matter to wealth and income. brendan: if you are watching and do not spend a lot of time with economic models, what he is talking about is a representative agent for longtime economic models basically assuming that the entire economy was one person, a representative agent. tom: that is disappearing. howard davidowitz with us as well. foreign buyers of products in america -- i mean, retail is completely beholden by foreign buyers at the luxury level. people at the wealth effect are being held up your in america by chinese buyers at the margin. howard: i think that is true and for example if you look at the condominium market in new

york, which has been so is close of, a of course is foreign buyers. if you go into bergdahl good morning -- if you go to bergdahl goodman, goldman sachs. tom: all the historical stuff, decades, how has it changed today versus 10 years ago or 30 years ago? howard: the biggest change in luxury is trying to appeal to younger people. it used to be if you go back home 30 years or 20 years, the key to the luxury market was older people. they had the money. now younger people who are wealthy work on wall street, are lawyers, whatever they do, they spend more. tom: do they feel wealthy, dr. lee? bill: actually, we do not feel wealthy because we get our bonuses. one of the things the fed will have to do is put all of this together and say where do we put the market policy setting, where is the economy going? that is why they would rather

wait and meet later rather than earlier. brendan: really you have the economy changing in real-time and our understanding of economics changing and real-time as well. tom: dr. lee and howard davidowitz with us as well. we made a huge/with this, jeff currie on set us. from new york city, "bloomberg surveillance." ♪

tom: good morning, everyone. "bloomberg surveillance. -- "bloomberg surveillance."

i am tom keene. olivia sterns is off. here is brendan greeley. brendan: china banned facebook in 2009, but facebook ceo mark zuckerberg has visited china four times he has met with government officials, even learned to speak mandarin. so with internet.org, a new project facebook has launched, will it help facebook get back into china? mark: zuckerberg: that is not something we focused on right now with internet.org. right now there are countries that reach out to us and say connectivity is a national priority and a lot of people in our country use facebook, and if there is a way to work together to do that -- i mean, for example, in malaysia i was meeting with one of the leaders in the government there. making it so everybody is connected in their countries one of the top national priorities. brendan: tom, that was mark zuckerberg protesting a little too much that he is not fitting in china, but i want to show you

a map we found this morning. this is from internet.org. it is a new initiative by facebook and erickson and samsung and others to create internet access, but what it actually shows is facebook accounts around the world. look at that big dark spot where china should be. there's plenty of internet access -- there is not a lot of facebook. facebook really does have a problem in china, and what mark zuckerberg is deleting and that quote is that china has moved on from facebook. they have a vibrant online social culture and facebook may not have a culture there. tom: you wonder how they get in, and particularly rights issues. you are better at this than i am, but the cyber security as well. brendan: cyber security is an issue, but was zuckerberg is focus on -- can you bring that map up again? he is really focused on how you can get more facebook users around the world.

if you look at africa right there, you have a bright spot in kenya, nigeria, that is where big cables come ashore. if you want more internet access, you have to put up more cables. tom: there it is. futures -3, dow futures -11. don't forget, folks, emily chang's full conversation with mark zuckerberg, that is "studio 1.0." ♪

tom: good morning, everyone. "bloomberg surveillance." oil fighting the good fight. $50.01 per barrel. jeff currie in the neck hour with us. brendan: hundreds of people attended a candle late visual to -- vigil to honor kayla m ueller. the 26 euros from prescott, arizona was captured in syria and 2013 when withheld prisone r for 18 months.

she was killed this month. and lawyers want to move the boston marathon bombing trial out of boston. the attorneys have asked for a change of venue three times three times they have been denied. they are hoping a federal appeals court will take the decision. dzhokhar tsarnaev's attorney says there is no way he can get a fair trial. the fda says that you have peanut allergies, do not eat any cumin. hundreds of dollars of cumin are being pulled. officials say a peanut allergy reaction could be deadly especially in children. they are warning people not to eat any cumin or any product containing cumin. those are your top headlines . yesterday the fed dropped its minutes. at 2:00 p.m., they revealed the increase in the foreign exchange the value of the dollar, was expected to be a persistent source of strength on

u.s. net air force exports. our guest host is bill lee. you did your time at the fed. you say a drop in global demand we're going to look at your model right here. it is not going to have that much of an effect on the u.s. economy. just to show, that is 0% up at the top. it is just a slight drop overall, so from your perspective, a drop in next words is not a big deal. bill: that simulation is because it was concentrated on the goods channel. people talk about experts, -- exports, there's another channel that is more important, which is the asset markets. asset markets are influenced because every once in a while, foreign yen always strengthens and and people start thinking that overshoots. i need to drop my u.s. equity before the dollar starts to come back down again, so that induced volatility causes what we talk about before, the small wealth effect. it causes people to be much more

uncertain about asset valuations, and that is the channel that has also come into dampen the -- to strengthen the u.s. economy. brendan: there are countries that are desperately trying to deal you, -- to devalue and then there are countries like denmark, switzerland, sweden and the u.s., which are worried about too much money coming in. bill: that is right, any trouble with the exchange rate it as it is not a way to go too well. you cannot appreciate your way to -- you cannot depreciate your way to wealth. tom: how close are we to a reuben dollar? howard davidowitz is setting up in the plaza hotel. bill: we are getting a strong dollar because -- everybody is using monetary policy to get out of the doldrums. we are out of the doldrums, and

now we are getting toward cruising speed. what we have to tighten policy earlier or later? tom: if we get a stronger dollar, you are seeing it does not hurt america all that much. bill: the stronger dollar meeting stronger growth means this is a good place for investment but that stronger dollar also induces more asset market volatility. tom: over two howard, does a week euro, supposedly that will stop shopping in new york. there is no evidence in that. howard: none. but americans are going to paris. brendan: let's talk more broadly about high-end shopping not just in new york but all over the country. it makes imports cheaper for retailers everywhere. what does that do to your world? howard: and my world, we are dealing with a consumer who is watching every dollar. 80% of america is watching every dollar and trading down. median family income is down over six years. they are watching every penny, so the stores have to offer

better prices to attract the customers. the great stores in america all offer value. amazon -- all the growth -- where is the growth in retail? 90% of it is a value story. tom: do you link that in, dr. lee, to gdp? bill: absolutely, and people do not have a nominal income to spend as much as they did before. tom: dollar dynamics to play in it but they play in at the margin. bill: dollar dynamics affect core inflation. that is the measure that the fed also uses in the short run to gauge where the inflation pressures are. if that is lunging toward, way below its 2% target, the concern with the fed is -- does this signal transitory or does it tell us something more? tom: that is what this comes down to. they have. brendan: there was a doll

whistle in there for me, which was nominal raising. the thing is important for both you, howard, and bill, if people can get a nominal rates, meaning they feel like they have gotten a raise even if they have not gotten a real one, even if they have not got one, they are likely to spend more money. howard:: i think people will spend more money for two reasons -- one, they have more money, and two, they have confidence. i think confidence is a tremendous part of how the consumer reacts to things and how countries and how investors -- brendan: but howard, or consumers are smart about -- are consumer smart about inflation? howard: they just say they have more money, but the american consumer has less confidence, 80% of them do right now. if you look at the last election, if you look at -- are we in the right direction or the wrong direction?

bill: if we get an extra $10, and we see prices are now cheaper, that is a real interest income. tom: this harkens back to 2005 2006? bill: no. tom: i agree. bill: the shock we had in 2008 was a huge one people have yet to get over, and those headwinds are yet to be gotten rid of. howard: i also think, tom a big factor is the credibility of the lies coming out of washington. in other words, this is huge all of the bs that is going on, all of the jobs are pouring in well, 70% of them are part-time, poverty wage jobs. what the hell? the story that is being told is totally bs, and not believable to the consumer, and if you look at all the polls, the "wall street journal" poll if the people do not believe it, i do not believe it. bill: just look it your payroll

employment. it gives you a poor picture of what is going on. tom: then what do you look at? bill: turnover, job creation, job destruction. before the crisis, we had more than 5 million -- howard: that is the bottom line. bs. brendan: howard, i think we could have you another hour just on the subject of bs coming from washington. but the basis point here is that we are exporting to all over the world. it is nicely hedged. th beautifule parts are basically. what happens if the whole pie shrinks? bill: then the entire world income goes down. in terms of exchange rates and countries with incomes, that is where the exchange rate matters because the exchange rate determines the cut of the pie that you get, so everyone is fighting over the slice of the pie instead of extending the pie. brendan: all right, coming up, talking of pie, well, that is a

terrible transition, we are talking about serial in today's single best chart. this is "bloomberg surveillance." on bloomberg television streaming on your tablet, your phone, and bloomberg.com. ♪

tom: good morning, everyone. "bloomberg surveillance." i am coco a puffs keene, and

with me, lucky charms greeley. long ago and soggy away. brendan: that is right, we wrote that intro, soggy. consumers have evolved and millenials have turned to other options. cereal makers are fighting back. here is a flight from kellogg's presentation yesterday. not that, the other slight come of the chart. he is what we are looking at. there we go. scrambling to save cereal. cereal has a cohort problem which means if you look at 1996, you have got younger kids eating more cereal. those younger kids have grown up. that shows up in the 2014 numbers. 34-year-olds, 65-year-olds are eating more cereal, but six to 12 and 13 to 17 are the growth

cohorts, and they are eating less of it. i went to college and lives on lucky charms, but that is not the story of the future. cereal as a mcdonald's problem, which means they can try to change their products, but the real problem is their product is no longer in think with what american consumers want. tom: mcdonald's with their hamburgers and chipotle -- bill: my kids want their happy meals but they won't eat cereal. they want something healthy, they say. tom: howard davidowitz with us as well. where is the creative destruction along this line? the men want suits, the women one dress up, but where is the thing and you the world where they cannot make it happen like cereal? howard: cereal is always going to happen. the question is -- how much? we are always going to have cereal.

how many brands, what size package, all of that? how much is the demand. we will always have cereal. brendan: the reason cereal is declining as people want to eat less starch. it is been a change in the understanding of what healthy is. healthy has changed -- better eating and more exercise has changed the garments business, hasn't it? howard: first of all, has dramatically changed the food business will stop walmart is moving into organics kroger -- the whole food business is different. that is one of the reasons mcdonald's is in the crapper. you do not have to be a genius to figure this out. health, the consumer is focused on health. trader joe's -- great. whole foods -- great. walmart -- trying to explode organics. no one will ever believe it. 50% of walmart's business is food and consumer -- and consumables.

kroger is beating their brains out because their stores are more convenient. walmart is losing market share to kroger. tom: we are talking about walmart here in a little bit with howard davidowitz. earnings at 7:00 this morning for stop at has moved into the 8:00 hour. i'm not sure why that is, but that is what walmart is doing. let's look at photos. brendan: number three photo in auckland. a woman drove off a rock wall. she was into the harbor. she was rescued. this is that north cook point in auckland. that is paul watson, simon russells, that is a rock in his handfuls up with a minute to spare, they broke through the windshield and rescued her with that rock. tom: wow. shattered to the window. brendan: number two, this is a 12th century monastery. mann free abby was transferred to a state park full survey

three-day event designed by the abbey's reverend. the church of england has had an attrition problem for decades now. i say this as a proud anglican. i do not know this is going to cut it. we certainly did not do this in my it visible church growing up. maybe i would have been more excited about going to church if we had. tom, are you in the background? tom: this is a plantagenet church, this is the 12th century. they are finally at the tipping point where nobody isn't showing up. it is a major issue. brendan: i think nothing there is more reverent than what henry viii did to the abbey. one more photo, look at that car. it looks unextort a merry. it was owned by warren buffett. current bid at -- it looks un extraordinary.

it was owned by warren buffett. current bid -- blue book values the car at only $11,000. our photo editor check that out for us. the buyer could get the keys directly from warren buffett himself go hang out in omaha have some ice cream. that is what he likes. yes. ok. walmart reports results this morning. coming up, we discussed the beleaguered company, and that brings us to our twitter question of the day -- does walmart deserve to be the most hated retailer? tweet us @bsurveillance. this is "bloomberg surveillance." on bloomberg television, streaming on your tablet, your phone, and bloomberg.com. ♪

tom: good morning, everyone. coming up -- a view of new york city. william rudin will join us from rudin management with their many different efforts in commercial and residential real estate here in new york. really looking forward to this. look for that and our next hour, william rudin with jeff currie of goldman sachs as well. it is "bloomberg surveillance." i am tom keene with brendan greeley. olivia sterns is off today. top headlines. brendan: no cease-fire in the

battled syrian city of aleppo. it was rejected by syrian rebels. it called for a six-week cease-fire. the rebels they did not believe assad is acting in good faith and refused to sign off on it. china is building on islands in the disputed south china sea. images from late january show that china is building on a significant amount of land on the spratly islands. several countries have been fighting over rights to the south china sea for centuries with be in on, the philippines and taiwan among those now staking claim. those are your top headlines. tom: headlines out of greece, brendan. this is an example of the craziness of the last couple of days. you cannot make this up, folks. eu's yunker sent letters to athens, received letters from athens. brendan: that is significant,

and i will tell you why. the european union itself, the commission, the apparatus in brussels has turned into a player in a way it was not before. you have the finance minister saying no, you have the commission, and that apparatus saying let's cut a deal. they are being diplomatic. tom: and of course eu says make way for compromise, the latest red sticky coming out of greece. let's turn to one of the great retail challenges -- walmart where you once got a 12-pound jar of vlasic pickles for under three dollars, walmart with all of their challenges facing earnings this morning for stop howard davidowitz is with us this morning. howard, on walmart, you have said it is pitiful. the stock has reacted. the stock has done better. how do you dovetail your view with what we have seen? howard: walmart's return on investment has consistently gone down, and their whole business

is right -- is less relevant to the consumer than it has been. there are a lot of negatives, and people are taking market share from them. tom: what do you do when they have 2.2 million employees, we do not understand -- howard: the largest private-sector employer in the united states. tom: what is the strategic effort for walmart? howard: first of all, if i were walmart, i would start to decentralize the business, restructure the business, and get closer to the consumer, and that is what kroger does. they are centralized. you cannot have a business that big decentralize in my view. tom: what is kroger doing versus walmart? howard: they are doing 4% walmart is doing 0%. brendan:that is a huge, huge difference.

they are eating walmart's lunch. frank:brendan: one of amazon's pushes have been to get nonperishable's into homes. what effect has that had on walmart? howard: walmart is supposed to be in the price business. they have got to consume -- compete with amazon full stop they spent billions acquiring technology companies in silicon valley. they have got a billion labs and all this stuff. can the walmart culture really do with that kind of change?i don't think so . brendan: we have heard about retailers like macy's that they have a huge opportunity because they have physical stores and it requires a shift in culture to take a store and turn it into a distribution warehouse. howard: first of all, the stores are too big. when you have got the real estate, you have got the real estate, so walmart is racing around trying to build smaller stores for stop they are only 15 years too late. brendan: are they doing that?

howard: they are building hundreds in your neighborhood store. but for 15 years, too late. tom: this is an unfair question but i will ask it anyways -- creative destruction is getting out a bulldozer. is that we are talking about that we will essentially have to bulldoze our consumption past? bill: our consumption patterns have clearly changed. our kids do not want sneakers and t-shirts -- they want ipad's with a lot of apps in it. tom: where are the bulldozers howard davidowitz? howard: we are downsizing, closing stores all over the united states, we are closing shopping centers all over the united states will stop the bulldozers are out. kmart, sears, they are all being . bulldozed. brendan: howard davidowitz, if i

ever need my family to tell me a hard truth, i am going to have them call you. howard: perfect i am ready. tom: nordstrom's building a big skyscraper here in manhattan the basic be quality stripmall you are suggesting is done. howard: i am not suggesting the strip mall is done, more businesses doing off the mall because that is where business is done. tom: do they get bulldozed? howard: yeah they get bulldozed because they will have another venue, they will be a hospital, industrial park, a condo, they will be something else of course. the value is in the land. tom: do you to get along? howard: we get along perfectly. tom: very good, dr. lee, you worked that out as a professor. howard, thank you so much, bill see why so much as well. our forex report this one has to center on ukrainian currency we seven dollars.25 -- $27.25

that is a weaker hryvnia. stay tuned for another hour of "bloomberg surveillance" with brendan greeley and tom keene. ♪

>> this is "bloomberg

surveillance." >> rebel forces shift -- one of 17 miles south -- 170 miles south. brees files for a bailout extension. -- greece files for a bailout extension. the ecb says -- things are fluid this morning for greece. $10 a barrel, who knows? jeff currie is with us from goldman sachs. i'm tom keene. joining me, brendan greeley. olivia sterns is off today. >> military spokesman in ukraine's has more than 90% of its forces have now retreated from the embattled town.

they were forced to fight other way out under heavy enemy fire. it's a big win for the russian rebels. let her put and commented on the violence -- vladimir putin commented on the violence saying "it is always hard to lose." the european central bank offering a lifeline to greece green to come up with $3.8 billion in emergency cash for greek banks. requesting a six-month loan extension -- officials will review the proposal today. japanese stocks soaring. the nikkei hit its highest level in nearly 15 years. fueled by a government announcement that japan's trade deficit has plunged 60% things to strong exports -- thanks to strong exports in january.

>> to the white house, president obama says the way to fight islamistc extremists is to embrace islamic immigrants. mr. obama says the united states has a long tradition of embracing immigrants, suggesting muslims in america are more integrated than those in europe. delegates from 65 countries are attending the three-day summit. on to the weather, boston mayor telling people "stop the madness." the city has been slammed with eight feet of snow in 24 days. creating massive snowdrifts leading some to try daredevil stunts. including some of our bloomberg staff in boston, jumping out of windows. this happened on bloomberg radio 1200 today.

>> sometimes good tape makes a news story happen. elegantly executed. low degree of difficulty, but i give it a 9.5. >> they have been phenomenal with non-history about what is very serious. this has gone beyond comedy to an amazing -- five snowstorms? let's do a data check right now. nymex crude at $50 a barrel. oil at that fragile $50 -- jeff currie is with goldman sachs. also joining us benefiting

across the board william rudin. let me start with you. it is all plus plus, isn't it? you have to love cheap oil. >> we need oil to heat our buildings in this cold winter. for consumers, it is a very good thing and good for our operating -- >> and for construction as well. >> it goes right through the food chain of the cost of producing our product. it will definitely be helpful and we have had issues with construction costs over the past several years. >> thank you for being with us. has saudi arabia given you a response? have you spoken to any of the major opec nations? >> quite a few of them. they really do get the point.

market share is the key here. shale has been mentally changed the way oil is produced. -- fundamentally changed the way oil is produced. when you look at the old days, a long time to build between when you commit capital and when you get production. shell has taken that time to build down to 28 days. -- shale. if opec or somebody cuts back production the ability for shale producers to come back in and take market share is incredibly high. >> when we get comments from opec it feels like whistling past the graveyard. is there a difference between what they say publicly about non-opec production and what they tell you privately about the way they see the market? >> their focus is on the potential for demand growth. they do recognize that shale is

now the dominant technology. the real key for them is what is happening to demand. >> i will put this chart on bloomberg radio plus. oil adjusted for price or inflation. also adjusted for rising disposable income. we are richer than we used to be. if we get your colleague's $20 a barrel, what does that do to the global oil order? >> most of those numbers are one touch as opposed to some new longer-term -- the key is where is the longer-term price. we would put it at somewhere around 65. but with a lot of uncertainty. currency and other commodities are moving. >> will that 65 or 54 change production for the major integrators? >> no.

what's going on here is a cost free -- when we think about the cost coming down you have a 15% are a wee business -- roe business. the costs are coming down. >> right before we started bill rudin passed me a wall street journal with one number circle. 33 billion, the amount of capital u.s. venture firms raised last year. the most since 2000. what does that mean for your work? >> it is reflective of our new economy. what is driving in terms of job growth, particularly in new york city. we have increased jobs nearly 100,000 this year over 450,000. largely driven by technology.

it's also about capital appeared there is to mend us capitol out there and people are investing in these companies and they are growing. five of the top 40 on the wall street journal is are based in new york city. these companies are innovators changing the way they do business and our city has to adapt to those types of potential buyers renters and users. >> i see an apple on your lapel. what this number says to me, $33 billion in venture capital you should start building towers in san jose. >> apple means new york city. we are building new york city because demand is here for the type of businesses as we think are growing. the ubers and facebooks. >> within this good feeling about money, i go back to the collapse of oil. this has to be a massive

opportunity for the strong in the oil business. who are those people? >> therein lies the problem with the oil market right now. we see the market trading in the low 40's for quite some time because there is too many -- too much p we came up with a number. $50 billion in sitting on the sidelines. the last 10 days with the rise in prices, we have seen seven equity issuance in one high-yield debt -- too much capital coming in the market. prices have to get low enough long enough to discourage this -- who will be the winners and losers? one thing that is very interesting about this market right now is that when you look at u.s. assets, the high quality assets, they are typically held by the lower balance sheets. what we need to see over the

next 12-24 months is a shifting of the high quality going to the high-quality balance sheets and the low-quality assets disappearing. >> are we going to see other shale regions come online to grab market share? >> the u.k. are not large enough. the key ones are mexico and argentina and possibly russia. >> the spirit of new york city real estate. there are cranes everywhere you look. our twitter question of the day -- does walmart deserve to be the most hated retailer? good morning, everyone. ♪

>> good morning, everyone. "bloomberg surveillance." how about a morning must read? snapchat -- justin makes us smarter. last night, paul speculated that the main force behind snapchat's valuation is professional investors fear of missing out. having snapchat in your

portfolio makes it easier for you to go out and raise more money. it looks good, like a painting or sculpture. a spectacular bloomberg view column on the foolishness of extrapolation. >> they are signaling. the urge to have massive plumage because it prevents them from flying well and thus sends a signal that they are vibrant and healthy. >> we heard from two experts yesterday who made it clear they are not amused by the extrapolation. you are in the oil business. we make this exemption -- assumption of extrapolation out as a new rule in ipo transaction. that is a dangerous exercise. >> without question. as you go to these other markets, they have extremely different punt metals. -- fundamentals.

given the energy sector, too much interest in one sector flows into another. >> those extrapolations in ethanol really worked out. >> from your own portfolio, you said you are bullish on technology in new york city. technology firms have a different footprint. stepchat had three employees at $4 billion last year. that is a different kind of footprint for you. >> they are not worth $19 billion. >> of course. it is worth a lot of money that you come up with that number. i will say fewer than a hundred employees turn to you and say how does that change the footprint of a modern office? >> it is definitely changing. that is why we have partnered with a company called we worked downtown.

it is a hybrid -- small offices shared offices, collaborative offices in the same on the residential side. you are seeing the city adapt in greeting spaces all over new york to fulfill that demand. >> a very cool concept. we have a lot more to talk about with william rudin and jeff currie. good morning, everyone. ♪

>> never a dull moment. breaking news out of greece. germany rejects the greek extension proposal. brendan greeley i will be direct, you saw this coming. why is germany so dead set against the reasonable compromise headlines of an hour ago? >> throughout this whole negotiation, the bad guys have been the german finance minister

-- he has been definite about one point. if there is no negotiation whatsoever over greece's primary surplus. almost nobody does that. greece is expected to do it forever. what greece has offered his they can hold 21.5% of gdp but they cannot get to 4.5% -- to 1.5% of gdp but they cannot get to 4.5%. >> we are ages coming years from the kind of crisis -- >> a restructuring is completely on the table at this point. greece has said we understand there will be no restructuring. they have said we totally agree we need to change our economy and increase our receipts but please do not enforce this austerity 4.5% of gdp in savings. >> we continue to look forward

to the greece story p we need to continue with some world news this morning. >> libya's foreign minister the security council lift its arms embargo. ice is posted a video of the beheadings of 41 egyptian christians libya. libya officials say the arms embargo needs to end. thailand's former prime ministers is facing criminal charges for her role in a rice subsidy program. she's accused -- prosecutors omitted 20 boxes of evidence to the supreme court which will decide whether to formally accept the case. hundreds of thousands of people margin but as iris -- march in whenbuenos aires that she

publicly accused argentina's president and foreign minister of covering up the attack. >> let's go back to new york city. this is a lot of fun. >> we see it every day. look up manhattan. 22,000 square foot townhouse being offered for sale at $150 million. it has eight bedrooms, eight bathrooms and a private elevator. -- 22,000 square foot penthouse. you and i have different standards of what a lot of money is. $150 million is a lot of money. >> no question about it. it is a unique apartment. sony has their corporate offices -- it's an incredible view.

it is reflective of new york city. it is also reflective of what's going on -- last year 42,000 transactions happened in the residential market. $37.5 billion up from $36.5 billion. >> does rudin management have a hand in some of these massive luxury towers in new york? >> we are heading into the home stretch in terms of opening up development at the end of this year. the west village where we have 200 condominiums and five townhouses. we are 75% sold. the difference in terms of our market, these are family apartments. 75% of our buyers are new yorkers. only 10% are foreign buyers. >> $150 million for a bathrooms,

that is nice -- eight bathrooms, that is nice. is that investment or a place to live? >> it depends on who is the buyer. the power of the city is diversely. we have people who need affordable housing and high-end and we do everything in between. there may be a buyer for that price -- >> you guys go back to 1902. a family business. what is your number one heading right now? -- headache right now? >> i am always an optimist. there are always issues. you are working on transactions with people across the world. we signed a lease with a matter -- major advertising agency on the west side.

we are worried about overtaxing ourselves and not being competitive. that's what we work on every day to make the city better. >> how much do global events affect your world? do you worry about an asset bubble? >> we worry about interest rates. those are things i think about. and the economy. what is going on in washington and albany. the political environment and economic environment. there are things we cannot control. we cannot control interest rates. >> when you talk about what's going on in washington, you have the capital and the federal reserve. you are worried about the federal reserve. >> no question about it here we are locked into some pretty attractive long-term loads. >> we have ecb minutes coming

up. these are the minutes, not the announcement or press conference, but the release of the ecb minutes for the january meeting. futures at negative four. ♪

>> this is "bloomberg surveillance." we will get straight to our top headlines this morning. air b&b has paid millions in back taxes to the city of san francisco. it is headquartered in san francisco and officials estimated the oldest the city as much as when he $5 million. -- $25 million. it mandates they pay the city's hotel tax going for. care companies this car companies going to -- the dockworkers of slowdown has stopped billion billions of dollars in international trade.

each year the 29 -- making it possible for the world's watch -- helping develop a television camera tube that could catch the lowlight lunar landing. he was 91 years old. those are your top headlines. >> to our guest host, jeff currie of goldman sachs. he's a just america is amid a new oil order. however blu-ray and production companies will react -- how oil -- >> eog was an announcement example

of that last week. commodities are a different instrument. they are spot assets. they have to clear supply and demand today. not the expectations of supply tomorrow. the equities can look forward. they are anticipatory assets. oil is rallying off this. one high-yield issuance -- this will exacerbate the problem. >> who is big on oil? who is on the bid? >> you look at the retail investors, they have been the primary driver of this recent rally. it has been copper, aluminum, the entire commodity complex. you have a lot of retail investors going for dollar coin, nine dollars oil b soybean -- >> what is your target? >> all the way down to $39 a barrel.

given we are close to the high 50's right now, that is a long ways down. >> helping the president -- puts out a report that says the benefits of your oil world contracts the global slowdown. can that be true? all that could benefit in america is enough to -- >> the question is how large of the magnitud -- people dismiss it because of places like china and indonesia raising taxes. that may not benefit oil demand but will absolutely benefit china indonesia and these other countries because it is a benefit to that country. i believe this is a positive. >> the distinction here is you have a very american research

view where others have a more global view. i know you look globally with steve. what do you see for the future of opec? >> we like to divide them into two groups. there is core opec, the gulf states. strong balance sheet. then you have distressed opec. nigeria and so forth. distressed opec would like to cut production. you look at the stress -- distressed opec and the countries demanding that cut what are they going to do? they have no other option. what will they do, bomb each other? it is unlikely to happen. >> time for a data check. u.s. futures down .2%. not a lot of movement in the tenur tenure.

-- 10 year. germany with an unconditional rejection of greece's offer. nymex crude it down a little bit. >> good morning, everyone. "bloomberg surveillance." olivia sterns is off today. in europe, the soap opera continues for the ecb. >> ecb has decided it too would like to communicate. john farrell joins us from london. you have the first ever minutes of an ecb meeting. is it a good read? >> i have in my hind -- hand -- they with the lid. this is the minutes of the meeting. the consensus on qe, pretty

clear. they say it was the only option. fairly vague. we know there was a 50 billion euro bond buying plan every month on the table. they decided to raise that to 60. beyond that, the news is the discussion on buying corporate bonds. they fall short on the severn -- sovereign debt side of things maybe that is the trigger. they have also pointed out they will terminate this program when the inflation target is hit. that could be a wild. >> i look at these notes -- these are much more emotional and visible headlines. >> they are. there were concerns that releasing the minutes overtime would cause a nationalization of the ecb board. >> i have to give you that one. the fear that this would spread

across europe and have some sign of real nationalization -- a lot of this is discussed publicly anyway. we know what he thinks and we know what most of the national governors think anyway. it is a concern -- when you whisper, people lean in. you have seen the fed get trapped in a corner with their own communication. the ecb is just getting going. >> let's move to berlin. the nationalization that never stopped. a spokesman for the german finance ministry has said we reject the new offer from greece because they do not stick to the terms of the original agreement. is that a sign there is no compromise whatsoever in any way coming from germany? >> a sign that things will be difficult tomorrow when the eurozone finance ministers to meet in brussels. we talked yesterday about greece

potentially blinking. they did make some concessions. germany comes out and outright rejects it. they see this extension program as a bridge to nowhere. i don't know if it's less about a cover my zen more about the fact that they want something definitive not just a stopgap for six months. that is what greece is proposing, a six-month extension. germany does not want that. >> there will be more bad news every day coming out of europe. greece will be on the agenda forever. >> does this change the macro economics? at goldman sachs, are you riveted by greece or is a dish i'da sideshow? >> greece needs the ecb more

than europe needs greece. from that, it becomes much more of an isolated event. when we look at the overall macro drivers out there we look at china and asia, there is some real weakness particularly in the asia pacific basin. oil will help the situation. we think we will see sequential growth in that part of the world. >> i'm still sort of stunned by this news. i am really surprised at the intransigence we are continuing to see. i know you don't follow this on a day-to-day basis. as a broad take, do you have one single prescription there? >> the mutual's asian is one of the key issues. -- mutualization is one of the

key issues. >> jeff currie with us with goldman sachs. and william rudin. stay with us. ♪

>> good morning, everyone.

i have the plague. olivia is smarter than me, staying home. it is a group plague. 20 people this morning fighting our way through it. >> with us, betty liu, who does not have the plague. >> stay away from me. >> she has a certain martin sorrell on her show today to continue our decade-long discussion on how the internet is ruining everybody's lives. >> ruining everyone. we all know digital media is the new frontier. >> i heard something about that >> martin sorrell wants digital media to account for 45% of the revenue in the coming year. he has a big stake -- here is my big question. audience numbers and audience

demographics have always been confusing. we have not always known who exactly is watching a certain program. what they look like. it is great that we have better tools now. the problem advertisers are facing is that there is no big oscars or super bowl of the digital world. who cares who is watching or who is not watching? >> this is the value of life. one thing to be still has going for it. -- tv still has going for it. >> there is no big event that draws and consolidates those viewers. is there going to be something like that in the next five years? >> let's take a hard left turn to buildill rudin.

how the internet has disrupted our history. it is something that has failed to disrupt the real estate industy. >> we have seen tremendous growth in terms of technology companies in new york city, whether it's facebook, amazon snappedchat -- we are causally upgrading our websites using digital -- >> in the commercial region, do people still go through brokers or will the internet replace the broker? >> it's a cop looking at process. the brokers will always be involved. -- a complicated process. >>definitely is changing. >> i drove by their building yesterday -- the whole shared

office space. they were saying we are a tech company, not a real estate company. >> we are also changing our business model to we are creating a technology that runs our buildings could. >> betty liu has martin sorrell on her show today. coming up, we answer up twitter question of the day. does walmart deserve to be the most heated retailer? ♪

>> good morning, everyone. this is "bloomberg surveillance ." we need a top headlines from around the world. >> there will be no cease-fire in the embattled syrian city -- rejected by the syrian rebels. it called for a six-week cease-fire appeared at the rebels say they don't believe i thought is in good faith. -- assad is in good faith. china building on islands in the disputed south china sea. china is building on a significant amount of land -- several countries have been

fighting over rights to the south china sea for centuries. >> a huge deal. >> many players staking a claim. in australia, people are bracing for two cyclones expected to hit the coast on friday. officials warning residents to brace themselves for heavy rain, high winds and high tides. ships have been ordered to deeper waters. >> oil gets the headlines right now, nudging on $50. other commodities collapse in price as well. why corn is challenging the ethanol idea that worked out really well, iowa. jeff currie is head of commodities research at goldman sachs. let's talk about the commodities.

the theory is disrupted. does it come back at some point? >> we use the term super cycle -- every cycle has a phase to it. we just entered a new phase. we were in the investment phase. we have transitioned to the exploitation phase. >> my number one thing is a lack of microeconomics -- i'm shocked. supply just came on. >> it is not a coincidence. we are sitting here at the end of the super cycle, weak dollar era because all the stores are reinforced. as the dollar begins to strengthen the chilean peso weakens, what happens to the cost of producing steel and copper? that boils goes down.

>> it is all in text books, but we are still shocked. >> the price of oil is not in the textbooks. you were great explain to us the 28 days of capital investment in fracking. they are stuck with their investments >>. it is a different story. china is becoming a larger portion of the story there. reducing the demand for investment in cap ask commodities. >> the push and china has had a knock on a luxuries and commodities and real estate. there is less chinese money to be spent on a lot of things right now. >> china's insurance company just bought the waldorf-astoria. we are still sing chinese money come in. >> are using private citizens --

are they discovering manhattan? >> there is a significant amount of chinese buyers in the marketplace. they are also a big user of eb five to get citizenship -- >> a bevisa? >> and visa program where if you invest $5,000 or more -- $500,000 or more -- it brings capital to the united states and in york and helps build infrastructure. >> a lot of people don't understand how you do business. you are a big believer in finding experts. you have a leading architect at cornell. this greenwich place you've got

is a place jeff currie ought to look at. >> you mentioned design. you love design your armie 12 friend, thomas o'brien5 -- you love design. our mutual friend, thomas o'brien -- >> i will send out this image on twitter and facebook. he makes megaprojects for you as well. >> this is a table lamp in bronze and antique brass. >> the great thing about thomas is his attention to detail. the lobby entrance to the kitchens and bathrooms. >> what is the number one thing jeff currie wants? >> a beautifully designed

apartment he can walk into an flip on the lights and move his furniture in and not have to make any changes. >> is this true? >> without question. that is convenience. >> that is what we have created. jeff currie can move down to one of our beautiful apartments and be a very happy man with his family. >> i will have to talk my wife into moving from connecticut. >> a shameless plug. can we start this conversation about moving in and antique brass? >> i promise i will put tom o'brien -- >> tom -- we will take a look at the agenda. >> ukraine, buried in the third paragraph will they move south?

will the rebels move south on the shores to make that land bridge? this is front and center. there is no other topic. >> chilling words from vladimir putin. life is not happening -- nobody is moving on in europe. my agenda is greece. it will be greece for the next six years. no deal was reached. a spokesperson for the german finance minister announced they had unconditionally rejected greece's proposal for a compromise for an extended loan. >> my agenda is not apple. apple is nothing compared to the mass issues at walmart. walmart out with earnings at 8:00. always important as the nominal gdp proxy. how does walmart compete with the large companies nipping at

their ankles? >> we will take a look at our twitter question. we had howard davidowitz on the last hour. does walmart deserve to be the most heated retailer? "stores are filthy and shelves are empty and store managers are incompetent." >> brutal. >> i think that was howard davidowitz. "walmart should be the most admired retailer since they have held inflation low for many years ago >>s." >> this is dead on. >> they changed the way negotiations happen in the wholesale retail -- "long checkout lines, still produce, noisy carts and screaming

parents -- stale produce, noisy carts and screaming parents." you sell things for kids, you will have screaming parents in a store. >> does manhattan need a big-box retailer? >> some of them do work. the whole real tell market -- retail market has changed. you are seeing big-box stores coming in. you see bed bath & beyond -- >> will you build a 90 story monstrosity? >> we are very careful of what we do in terms of design. >> did you see how -- >> we love to build and invest in new york city. we will announce an interesting deal.

we will come back. >> we greatly appreciate your perspective on oil. we have much more this thursday on bloomberg television and radio. stay with us. ♪

>> good morning. it is thursday, february 19 we are 90 minutes away from the opening bell. coming up, one of the legendary

names in advertising, sir martin sorrell. we will talk advertising in social media and get his take on what is happening in greece and the eurozone. germany rejecting the request from greece. what he makes no apologies for being part of the 1%. the eurozone's biggest economy is saying no to greece. germany has rejected the proposal to extend bailout funds for another six months. the greeks wanted to get rid of the belt-tightening proposed by creditors but germany said any loans would come with strings attached. here's angela merkel. >> the euro is more than a currency peg we have always made it clear whether it was greece, ireland, portugal or spain, when countries are in trouble, we show solidarity. we remain firm in that solidarity.