asks where is confidence in athens. chris christie maintains solid. president underwood and the first lady "house of cards" season three is upon us. live from new york. friday, february 27, i'm tom keene. joining me, i think the color of her dress is pink. olivia sterns. the dress uproar in a bit. olivia: congress may kick the can on it comes to homeland security. house republicans plan to vote on a bill that would fund homeland security for three weeks. that would avert a shutdown fidgeted lace tonight when the spending -- whatever a shutdown said to take place tonight. republicans say any spending should block obama's immigration

order. the homeland security secretary urged congress not to play politics. jeh johnson: this is not political jousting. a failure to fund the department of public scared he has impacts on public safety. olivia: democrats say they will not negotiate on immigration until homeland security is funded through september. the fight of traffic on the internet shifts to congress. republican lawmakers are vowing to overturn net neutrality rules. the regulations bar providers to provide faster service in return for payment. republicans say regulators went too far. >> the authority the fcc is claiming, they are claiming authority over every aspect of internet operation. they have said we are not going

to enforce some of that. they have claimed unprecedented authority. olivia: comcast predicts the matter will end up in court and says the best way to avoid this is for congress to act. the cease-fire appears to be holding in eastern ukraine. the situation in the combat zone with rebels was relatively calm. truths and heavy weapons are being withdrawn from the frontlines for a second day. hethe u.s. director of intelligence says he is in favor of supplying weapons. james clapper says the move could backfire. brendan: the largest mortgage lender in the u.k. has reported its first annual profit. lloyd's will resume dividend payments for the first time since the bailout. taxpayers still own almost one effect percent of lloyd's. the bank has cut thousands of jobs.

ibm has figured out where the growth will be. it will shift $4 billion in spending to what it calls strategic imperatives cloud computing, data analytics and mobile offering. the css sheet wants sales -- the ceo hsays she wants sales to hit -- llamas on the lam! yesterday, a farmer brought llamas to visit people at an assisted living facility. the chase lasted an hour before the llamas were lassoed. tom: what happened? brendan: llamas escaped. tom: are they in captivity? olivia: they are going to be

therapy llamas. tom: to our good friends at cnn this was a developing story. brendan: let us not condescend. this is why i got into the news business, to watch llamas. tom: there is your longer report. not "yama." brendan: is there anything funnier than a running llama? olivia: what would you do if you were in a car and a llama approached you? tom: let me do a data check. futures -3. yesterday the euro was 1.13. it regroups, oil under 15. vix, 13.91.

euro-yen, take the dollar out. thisit regroups, oil under 15. vix, is stronger yen versus the weaker euro. renminbi weaker, gold above 1200. to the bloomberg terminal fixed frenminbi, they unpeg stronger yuan down we go. this is a wildarc isldcard. brendan: the communist party doing what it can do for the kind of economy they want.they know they have to change their economy . they are doing what they need to do to shift the economy from exports to domestic consumption. tom: i don't know what the vector is. is this managed right now? or is this at the whim of the market? olivia: the currency does not

look like it is pegged to the u.s. dollar. the renminbi has gained 7% in 2014. tom: stephen will be with me on bloomberg radio with michael mckee. looking forward to that conversation. look to washington. here are the options. delay until march 19. have mitch mcconnell cram legislation down the house's throat. house republicans fight the president. they may fight their constituents, who want a secure america. a shutdown at the department of homeland security. peter cook in washington. what are you focused on in this madness? peter: i'm watching the llamas on capitol hill. it is an unusual situation.

the tension is between republicans on capitol hill -- republicans in the house and in the senate. we've seen it play out in public. john boehner saying over the last two weeks he has not spoken to mitch mcconnell. you will see republicans in the senate passed a clean funding bill. throw in the towel over the fight of immigration. you will see the house do something very different. pass a three-week extension and come back to fight. john boehner is not willing to capitulate. his conservative conference are applauding him. they want him to continue to fight. tom: what is the distance to march 19? what is the import? peter: the three-week time period is important. a couple other fights. the debt ceiling situation.

we are not going to hit the debt ceiling deadline there will be in extraordinary measure that continues things. three weeks buys them time to have conferences and try to deal with the immigration issue. democrats are not going to allow that to happen. there are a couple other deadlines at the end of march that tie this together. it will only add to the drama and the showdown mentality. brendan: somebody is sitting in john boehner's office with a list of names and starting some calls. do we have any sense of what the whip counts are? peter: the whip count for republicans, particular for the three-week extension. it's hard to imagine republicans are going to pass a clean bill. the three-week extension, he's got to have republicans on board. there are some conservatives who say they will not do it. some moderate republicans say it

is a waste of time. they know the negative news and they want to find the department of homeland security fully. he's probably going to have the 218 votes he needs on the republican side. democrats would rather have a three-week extension that no funding for the department of homeland security. tom: yesterday afternoon, the fx market unraveled as the u.s. dollar found strength. the renminbi found multiyear weakness. alessio with oppenheimer funds. james's chief executive officer of principle global advisors. the linkages between foreign exchange. what does it signaled that we see weaker euro. even france seems to be doing better. what is the signal we are seeing from the foreign exchange market

given the madness in the bond market? >> in the foreign exchange market we are seeing that the dollar and euro have stabilized over the course of the last month. in the prior six months the euro had a historic fall in terms of the rapid miss of the roof. almost unmatched compared to what we have seen in the last 40 years. there are incredible forces -- tom: 1.40 to 1.12 is a range trading environment? >> we went down to 1.12 but over the last month we have been between 1.11 and 1.15/ why that pause? tom: you let that in europe? olivia: jim, you think a grexit

is likely. >> is about 50-50. the fundamental imbalances between the greek who do not want to pay the debt and the core foof the euro zone led by the germans who are determined that commitments will be honored. that is the fun and a political problem. neither side -- that is the fundamental political problem. neither side can sell compromise. olivia: the bundestag voted in favor. brendan: of what they were told to vote for by wolfgang schaeuble, a temporary extension pending negotiation. a redline for the germans. they will not renegotiate the existing debt. varoufakis in athens saying we want to talk about the amo unt of total debt. >> if you ask the germans should

the era stay together, yes should we write greece a check no. tom: goldman sachs said yesterday what jim said greece is not a back burner issue. front and center. brendan: to add to the pain, you have countries like portugal and spain. they did the right thing. alessio you collect old currencies. did you hang onto your drachmas? >> they would be worthless anyway. greece is front and center but from a game theory point of view. greece is trying to win to keep faith with the domestic electorate. within europe, greece has less leverage than4 years ago.

you can say i want to renegotiate but i want to stay in the euro. you're showing your hand already. brendan: a great piece this morning talking about despite what they've had to give up, the greek leadership has a lot of support from the domestic -- olivia: alessio and jim staying with us. coming up, retail. tom keene is going to bonobos. nobody wants to go to the mall. the retail winners and losers. this is bloomberg "surveillance," good morning. ♪

tom: good morning. oil below $50. our top headlines. brendan: congress looking to buy time in the fight of her funding of the department of homeland security. house republicans plan to vote on a bill that would fund the department of homeland security for three weeks, staving off shutdown set to begin tonight. republicans insist on tying to a reversal of immigration orders. new rules by the fcc bar companies like at&t from selling faster services to content providers. israel's prime minister will meet next week with the u.s. senate' is top republicans and democrats. benjamin netanyahu rejected a meeting request from key democrats but he will sit down with mitch mcconnell and harry reid after addressing a joint session of congress tuesday. netanyahu wants to stop the u.s.

from making a deal with iran. a candidate for governor in missouri is dead in what police believe was a suicide. state auditor shot himself. just minutes after he invited reporters to his st. louis home for an interview. he plan to go public with allegations that a state official made anti-somatic comments about him. nba stars remembering earl lloyd . he became the first black nba player in 1950. he died yesterday. lloyd was named in the basketball hall of fame. as a our top headlines. olivia: good news from retailers. walmart, target, home depot, macy's and kohl's beat estimates for the fourth quarter results. department stores seem to be davited. in 1992 a third of merchandise

was bought in department stores. now it is just 12%. our department stores dying? >> they are not doing well. it goes back to the struggle of malts. spartan stores -- department stores anchor malls. usually nordstrom, they barely show growth nordstrom rack did well. olivia: you look at macy's and it is going gang busters. >> macy's is the top performer. even macy's is showing weakness. their outlook for this year is only 1-2% growth. they are profitable but growth

is something they are struggling with. brendan: one of the things we have been seeing is they are trying to figure out how to put smaller stores and higher traffic areas. do we have a sense of what the ideal footprint as for a store that sells general merchandise? >> basically if you look at target they are struggling for growth. they have stopped building big stores in the u.s. that looks like the future. an urban setting store that can go after purchases on a regular basis. >> the upside surprise from many retailers seems to be in the type of stores for people who show up, they spent less on gasoline and spend more in the stores. do you think that is a rational way to look at it? >> waited a story a couple weeks ago that retailers are expecting

a boom from gas prices but they have not seen it yet. right now people are spending their gas savings on more gas, they are driving more. that is something we expect in the second half of the year. >> that could be what gets the economy going a bit more. >> home depot and lowe's had gang buster quarters. a good sign for the housing market. the values of homes are going up. olivia: and a boost to the dividend at home depot. thank you matt covers retail at bloomberg news. in the next hour of surveillance talking about the housing market. this is bloomberg "surveillance," streaming on your tablet, your phone and bloomberg.com. ♪

tom: it was the tallest building in the world for almost 40 years . the empire state building is spectacular. lights on the top, if the knicks win they are orange and blue. they do the color thing. olivia: i can see the empire state light from my bedroom. i wonder if this is competition with the hong kong light show. brendan: it is an honor of the llama that was on the loose for the longest. tom: we welcome you to new york city. a morning must-read. brendan greeley, i love the "ft"

today. an fcc commissioner who tilts republican. it is all anecdote. this is net neutrality. a great article. what did you learn yesterday about the coming debate. brendan: it doesn't look like there's going to be movement and congress. there will be a lawsuit. the carriers -- the reason they took this regulatory scheme it is actually much more lawsuit proof than the legal path in the past. there will be a lawsuit. i predict the fcc will win because they will have legal standing. i agree with what ajit pai says we need a new telecoms law.

tom: the head of the commerce committee in the house has made it clear he's going to take a middle ground away from the staunch republicans. what is the middle ground? brendan: there's a way you can say you can call them a common carrier. you cannot use it for anything else. tom: net neutrality 101. coming up, we look at bonds. "surveillance," stay with us on friday. ♪

tom: good morning everyone. let's get right to our top headlines. olivia: republicans on capitol hill are looking for way to avoid a partial's -- shutdown for the department of homeland security. as john boehner explains, the problem is priorities. >> we want to fund the department of homeland security and we want to stop the president's executive actions. brendan: house republicans have agreed to separate the two issues.

they will vote today on a three-week spending bill for homeland security but they are insisting on a long-term plan to block president obama's orders on immigration. democrats say they will not negotiate on immigration until homeland security is funded through september. for the first time, regulars have classified internet providers as common carriers. the rules will prevent companies such as at&t from blocking websites that they do not like or allowing content providers to pay or faster delivery. the fcc chairman says that some regulation is necessary. >> it is simply too important to be left without rules and without a referee on the field. olivia: republicans are pledging to fight the rules and john boehner calls net neutrality a misguided scheme. comcast critics the matter will end up in court and says the best thing to do is let congress decide. given its ok to a four-month extension of a bailout.

lawmakers in germany overwhelmingly approved the plan still angela merkel has to stand up members of her own coalition. it wasn't a matter of giving millions more to greece it was a matter of allowing the current program to be completed. brendan: the three cofounders of the carlyle group, according to a filing, day were paid a combined total of more than $800 million in 2014, more than 50 million they got the year before. remember the online tv service that lose -- used tiny entity -- antennas to subscribe them. they went out of business after losing a supreme court decision now it's assets have been sold at a bankruptcy auction for less than $2 billion. tivo was the winning bidder.

on capitol hill, senator jim in awe's latest effort to debunk climate change. watch. >> national attention in case we have forgotten, because we keep hearing that 2014 has been the warmest year on record. i asked the chair, and you know what this is -- this is a snowball. that is from outside here. it is very cold out. very unseasonal. here, mr. president, catch this. brendan: it is not the first time he has used snow to make a point about climate change. those are your top headlines. tom: you are serious? back to fixed income. do the math, all of europe is in deflation. with help from the ecb, bonds with yields stunningly low, none of this is the math in economic

textbooks that jim o'connor used. the grinding negative yields, the signal something is a mess. alessio de longis with us from oppenheimer funds. i have never seen a bloomberg terminal screen like i have seen today. what the ramifications for the european banks? >> there are two reasons why rates are going solo. european sovereign debt is on a negative interest rate. that is a lot. that is unprecedented. there are two reasons why this is the case, one, the prospect of quantitive easing, the short area action by central banks. the other is that the world has a deflation -- deflationary tendency something baby boomers that grew up with inflation line very hard to adjust to. tom: i want to know the

ramifications of this new rate regime, not only for the big banks, the lloyds dividend deutsche bank but the smaller banks of europe, how do they do business in this environment? >> it is difficult for profitability. they like to see yield curves and european yield curve is flattened to close to zero. brendan: there was a meeting yesterday in denmark among bankers. to figure out what to do with the negative rate -- does that trickle down to consumers, they do not have any experience, can denmark hold on to its peg? >> they can. they're committed to doing so. from a banking standpoint, what you're seeing is that in europe lending standards are getting looser. what is been remarkable is that credit conditions in europe are finally moving unit growth is

starting to pick up. all of this delayed easing from regulatory, as well as quantitative easing is starting to pay off. if the credit channels begin to work again that is the single biggest missing link for european growth to begin. olivia: mario draghi is trying to give lending away from smaller economies. what does this achieve? >> europe is in a recession. the only thing you can do is to guarantee that there is like a full supply of funds. the demand for funds has to come from corporate and consumers. >> don't you have to have banks capable of lending and isn't the problem with european banks that they never really wrote off the problems of 2008 -- 2010.

they never recapitalized. the u.s. banks wrote off the bad debt, recapitalize, so they are in a position to and, the europeans are not. is that not a problem? >> the situation is much better than it was for our five years ago. under these conditions, european banks can lend. i don't think the credit channel is as broken as it used to be. you are seeing italian and spanish borrowing rates are coming down. we had a 7% gap. olivia: one of the consequences is that you're seeing the credit yield move from the sovereign into the corporate market. we talked about nestlé's negative corporate yield. coca-cola is selling debt in europe. markets are very different. they get a lot more of those debt from the banks. here we have a more liquid -- tom: the german here.

the german two-year yield. what a stunning is the difference, two years ago, the persistency -- i have never seen this. what is the why? >> it is deflation. the oversupply in the world economy of commodities, all commodities, and manufactured goods. tom: what is the distinction we should fear from that dreaded deflation? >> it is not necessarily that everyone should fear it. it is good news for consumers who get things cheaper, who get commodities cheaper. bad news if you're looking at economic growth in aggregate. because lower prices will lead to people postponing spending. it is good news and bad news. even in the 1930's, there were people that did well.

>> and corporations, they cannot plan ahead as they were used to. when you budget for the years ahead for capital investment, for revenue growth, you are used to extrapolating. the problem in equity prices is that equities are driven by nominal earnings growth. the real earnings growth are already challenging. if you can get support from the nominal side, that is where the problem is. brendan: you have been taken this historical look -- maybe we need to get used to deflation, are we looking at a larger problem, is it too much savings in the world? >> there is an imbalance, but that will clear. it will clear at some point with all those savings, all those baby boomers trying to turn it

into income for their golden years, they will have to readjust to do it in a 1%, 2% world, rather than a 5%, 6% world. that will lead to a change of patterns, but it does not mean the increase in savings you can project forever. brendan: any the long run, we are all dead. if you're a "house of cards" fan, we know what you're doing this we can. we are taking a look at streaming trends all over the world. that is today single best chart. this is bloomberg "surveillance. " to a negative rate germany on bloomberg.com. ♪

tom: good morning, everyone appeared good friday morning. on the precipice of march. single best, the last february chart. brendan: white that tear away while i speak. during prime time internet traffic comes from netflix -- most traffic. we were curious, we took a look since "house of cards" -- the third season is going on today. olivia: i have been waiting months and months.

brendan: olivia will think about "house of cards" and we will look at who is getting the streaming traffic. 67% of traffic goes to video in north america. when you look at africa and asia roughly similar percentages of internet traffic are going to streaming, but the single biggest source is not netflix or any legal source, it is bit torrent. people taking content for free. >> like the software market in china, where it is pirated. this is a big question as to what weight will be world go. will content be pirated, will it be free everywhere or will it be paid for? my guess is you get a two-tiered service. if you pay for them, you get the flexibility and you get what you want. brendan: so it is not an

accident that spotify started in sweden? they tried to claw back some of that by making it where it is legal and you pay a little bit. >> a netflix would be trying to expand globally with a premium service that was good enough to get people to pay a few dollars a month. olivia: that is certainly the intention. brendan: when we look at the data, what we saw that netflix their percentage in europe is in the low single-digits. olivia: it is much smaller. tom, do you know what bit torrent is? that is how the entire planet watches content without having to pay for it. brendan: it is an efficient way to share videos with each other out of private citizens hard drives. tom: how do we keep the sanctity

of copyright in the united states in this new world with net neutrality? brendan: we don't. historically, copyright is in flux. there was a fight with europe over copyright in the early days of the american republic. what always happens, we see evidence of it in china and india, it the developing economies want no copyrights until they have their own intellectual property, and then they want to uphold it. tom: you are the english guy. what do we do differently in america? when you look at cable, content, how to you, as a british guy look at that? >> the problem is that in an un-american way, your monopoly cable providers, and they are not reactive to customers. in europe, you generally have regulation which keeps that in order. tom: do you agree?

>> absolutely. >> the american way is to be light regulation, but competition, and they haven't managed to do that in table. -- in cable. free content, what you will get is a skate alum is -- escaped llamas and cute kittens. olivia: everybody wants to see the llamsas that escaped. tom: save us olivia with our photos which are deadly serious. olivia: number three come in south america, the national guard come a members confronting students with tear gas during anti-government protests. tickets escalated after police killed a 14-year-old boy during a rally. the officer responsible for the

killing was charged with intentional homicide. thousands protested in the country's capital, in its way luck, facing increasing pressure from falling oil prices. -- in venezuela. our number two photo of the day, in sweden, taylor fletcher of the usa competes during a nordic world ski championships. the camp -- combining a ski jump and a six mile race. more than 700 athletes are completing -- competing. i'm number one photo the thing that everybody is talking about on the internet, worldwide, what color is this dress? the original photo in the middle, i see a blue and black dress. the question everybody is asking, is a gold and white, or is it blue and black here to 75% of those see white and gold. brendan: 75% of people who are wrong. olivia: taylor swift says the

dresses blue and black. kim kardashian says it is white and gold, as tom keene does. the real answer is that the dress is blue and black. what you make of this? tom: kaitlyn mcneil, off the coast of scotland, started this. this speaks volumes of the new world we are in. this is a whole new world. imagine if this was about something serious in washington or london? it is amazing, this new world. brendan: what tom is talking about, is how this news spreads. a teenager off the coast of scotland making this happen. qe relations. -- we will discuss next, this is bloomberg "surveillance." available to paris hilton on bloomberg.com. ♪

tom: oil back below $49 a barrel. right now, we pay attention to top headlines. olivia: congress is looking to

buy its uptime in the fight over funding the department of homeland security. house republicans stand to vote today for a bill that will fund the dhs for three weeks. it would stave off a partial shutdown. that is set for tonight if nothing happens. the fight over net neutrality --

those are your top headlines. brendan: did a promise it will host the second round of talks today. when you think of trade with cuba these are the things you want to buy. let us pause for a second and think of all the very serious reporting you do for us. let us speak of roman cigars. we will open up trade with cuba. are these two items on the list?

>> how you live disagree reopen and this is. there are a lot of companies around the world, i looked at mccarty, watching very close -- bacardi. there will be a dispute over rum. they cannot be sold by the rights holder in the u.s.. these big firms have a lot to gain, a lot to lose, and there watching this closely. brendan: what is the state of the rum production right now? a large volume, a large friday in cuba? >> it is state-controlled. the have been a club is the leading brand by a wide margin. -- the havana club. we have spiced runs here

flavored rum, hundreds of brand, you walk into a communist style supermarket, and there is limited options. olivia: people are confusing the fact with the fact that the -- >> with cigars, with rum, it is not like the government will release its grip on production. brendan: there is nobody in the u.s. considering investing in old distilleries? >> that movement we are seeing here where you have these microbrews that will not happen there anytime soon. this is something the government wants to control production of. they want to bring in the foreign currency to their economy. olivia: i saw conan o'brien go to havana. i'm disappointed we did not see you. >> i like the dexterity. olivia: will he be a will to buy cuban cigars in new york?

>> i don't know. olivia: not a priority. you could bring them back. tom: thank you. how about a forex report. the renminbi weaker this morning. ♪

tom: greece enters the weekend

uncertain. where is international confidence in athens? conservatives meet to create -- olivia: set to take place tonight when the agency's spending authority runs out. republicans insist that any long-term spending plan should

blot president obama's immigration orders. homeland security secretary urged car is not to play politics. >> this is not just an inside the beltway political jousting. a failure to fund the department of homeland security only has real impacts on public safety. olivia: democrats are balking at zero public and plan they say they will not negotiate on immigration until homeland security is funded all the way through september. that battle over net neutrality has just begun, republican lawmakers valley to overturn the rules approved by the fcc yesterday. they bar companies from at&t offering faster service and turn for cash. johnson is says regulators went too far. -- johnson new new. >> they are claiming authority of over every aspect of internet operations, pricing, investment am a content. we are not going to enforce some

of this, they said. they have claimed unprecedented authority. olivia: comcast critics the matter will end up in court and says the best way to avoid this is for congress to act. in ukraine, the latest attempt at peace at the to be working. they said the situation, a zone with the russian rebels is relatively calm overnight. troops and heavy weapons are being withdrawn from the frontlines for a second day in a row. the u.s. director of national intelligence says he is in favor of supplying weapons to ukrainian troops, but james clapper admits the move could backfire. brendan: after it first profit in five years, boyd has not paid dividends says the government bailout during the financial christ. it is taxpayers almost own .5% of lloyds. -- 25%. ibm will put its money where it

thinks its features. they will ship $4 billion in spending to strategic imperatives. cloud computing, mobile offerings. they want sales from new business to hit $40 billion over four years. their stock has fallen 11% since they scrap earnings-per-share target in october. america has finally found something that it finds so fascinating. a televised llama chase. they were on the lamb. to escape as gate on the loose. the sheriffs call their deputy's, local news crew scrambled the choppers. we did not miss a thing. it was -- olivia: the most highly watched chase. a mother and a baby llama that escape.

what a thrill to watch them run down a highway in phoenix, arizona. tom: phoenix talk radio was out on the street. that's how long they were there. brendan: how much time do you have to spend calling play-by-play in baseball to do llama play-by-play over the radio? brendan:olivia: only in arizona what people know how to lasso. tom: let me do a television radio data check. europe gets my attention. oil was a 48 print moments ago. $49. here are the options. philip mattingly is south of

washington, somewhere in the vicinity of the flight path into reagan airport. at national harbor, maryland, for the seatac conservative -- cpac. what ronald reagan know this meeting? what he even recognize this c-pac meeting? >> he is still the hero and the god. if you are a politician and you want to give a speech, if you leave ronald reagan out, you immediately it points it acted. -- get points the docket -- deducted. you mention the homeland security funding fight, what's going on this weekend, it is terribly time for mitch mcconnell and john boehner. all they are doing is attacking republicans considering any compromise. tom: what is the back story on why chris christie and jeb bush

are afraid to speak to these core conservatives? >> this is not their crowd. it's not there not conservative or do not have conservative records, but when you step up there, you have a crown that will react, they will be you if they do not like you. that is bad from an optics perspective. both chris christie and jeb bush have try to figure out a way to around -- around this. they are doing q&a's that worked very well for chris christie. the reviews were across the board good. jeb bush goes today. brendan: let's talk about who's crowd this is. yesterday it was scott walker's ball -- how did he do? quick if you asked the crowd, they would say he did good. he talked about his record in

wisconsin, winning three elections in four years. in a purple state. he had one -- slip up. he inadvertently compared wisconsin union workers to isis. accidentally. he came on bloomberg politics afterwards to walk that back. he said what he was trying to say is that he faced the type of intensity that would be equivalent to what is going on internationally. democrats having a field day with this. he had a great day in terms of how the conference took him. tom: thank you so much. i was flabbergasted and how the bloomberg politics video -- what is her name -- it is all about that bass -- that went viral within conservative politics. olivia: all eyes on jeb bush

today. he does not pull very well with the base. tom: we will try to turn to what they actually do in washington having to do with bond market signals and what it means for the american banking system. i look at the interest rate environment. i can say that i have never seen this before. what does it mean for treasury -- what is it mean for the housing institutions in washington and for american banking? >> the bond market is waiting for the fed to stabilize rates. it has helped strengthen the banking industry. we do not have a stiffer yield curve. the intent was to get a steeper yield curve. tom: you are willing to state that american banking is free

and clear? >> there is a lot more regulation, compliance volatility, it is tougher to make money. on the capital market side. it is a clear improvement. olivia: i want to go back to something we heard yesterday. carly pure enough -- talking about crony capitalism -- do you agree that it is a good economy run by crony capitalism? >> no. i think capital still flows freely. i do not agree. brendan: you did time in the treasury department under paul o'neill. one of his priorities was fundamental tax reform. any reason we will get there now? >> no. when was the last time the president and republican leadership agreed on anything. ? anything meaningful, i do not see that happening. tom: are we free and clear -- i

am like everybody else, fannie mae and freddie mac is a jumble -- are we free and clear on housing? >> i would say that the mortgage applications, the type of buyers in the marketplace, have improved dramatically. ltds are better. the quality of buyer have improved. that is due to dodd-frank higher underwriting -- tom:olivia: coming up, the president vetoes the keystone type line. we will discuss the republican response. ♪

tom: i am time -- i am tom keene. an interesting morning must-read. olivia: a topic we talk a lot about, the financial times, it takes more than $10 an hour to make a good employer feared this comes in response to the fact that we have seen protests from the past couple of months across the country demanding a higher minimum wage. she writes that software does not take into account the shifty nature of human life nor can it

deal with unexpected events such as a sick child. this is a huge issue. because of advances of technology, workers are often sent packing midship. it is terrible for peoples individual lives. tom: this article is devastating in its data detail. olivia: walmart is getting good press for raising their pay to nine dollars an hour. will be $10 an hour i-20 16. -- by 2016. the policy shifts will have a bigger impact on quality of life. brendan: when we talk about the negotiating -- capital and labor negotiation, usually we talk about wages. with this research, we are learning, you negotiate, not just over wages, but over

conditions. tom: buried in this article is the $6 billion subsidy from federal programs to low-wage employees. they are at a -- they are a low-wage employee, because they can get a government check. olivia: one of the benefits that workers are demanding is to know when they are expected to be at work. brendan: it is very hard, even when you have a full-time job very hard to string 40 hours together. people who are out looking for work -- tom: can we just get our staff to work a 35 hour workweek. ? brendan: can i work a 35 hour week? i'm pretty sure the control room is listening, and they are saying it is between 70 and 90. olivia: i encourage everybody to check it out, in the "financial

times>' ." still to come, we will be speaking with the chairman and ceo of ethan out and, he will be enjoying betty liu at 9 a.m. eastern time. we will take a quick check on where futures are trading. open futures flat. this is "bloomberg surveillance." streaming on your tablet and your phone. good friday morning. ♪

tom: brendan greeley gets us started with top headlines. brendan: congress is hoping to buy time on funding the department of homeland security. house republicans plan to vote on a bill that would fund the dhs for three weeks. it was they've off a partial shutdown. -- it would stay off a partial shutdown. the net neutrality fight

continues. republicans say they will try to overturn rules from the fcc. on the bloomberg terminal israel's prime minister will meet next week with u.s. senate top republican and democrats. given that yahoo! had originally projected a meeting request for two ever got but he will sit down with mitch mcconnell and harry reid after addressing a joint session of congress on tuesday. he wants to stop u.s. from making eight nuclear deal with iran. jcpenney shares are down 11% in the premarket struggling department store posted a loss in the quarter that cover the holidays. it delivered an annual forecast below expectations. their ceo is trying to revive sales to revamping marketing and expanding merchandise. if you think you send bulk will win another gold you are free to wager on it. the nevada gaming commission approved a lithic betting. -- olympic betting.

nevada's largest sports book operation says bolt is favored to win it again. olivia: president obama vetoed the keystone pipeline this week. he is waiting for the final impact before he decides whether or not to green light the 1200 mile project. he is down playing the benefits. >> it bypasses the united states, is estimated to create a little over 250, 300 permanent jobs. we should be focusing on american infrastructure or american jobs and american producers. that is something we support. olivia: that was president obama speaking on a local station in fargo, north dakota. oil production is booming in north dakota. the unemployment rate is 2.8%.

why does north dakota need keystone? >> it is a great question. the main reason is because there is at least 100,000 barrels of capacity or more, as guaranteed by transcanada, for crude. one of the big challenges we have in north dakota is that we have constrain transportation out of north dakota for oil. you are seeing over 70% of north dakota's crude shipped by rail. we are grateful for real, we need all of the above, that it is not as safe. it is double of the greenhouse gas emissions moving it by rail. it is not as efficient, and in a market where there is $10 or less margin on a barrel of oil, type lines -- pipelines are important. we especially need that pi

peline. we are americans and taking oil from venezuela to the gulf coast for their processing in the gulf coast, is one thing, canadian oil is another. i would much rather trade with our biggest trading partner, our friendliest neighbor, $2 billion worth of trade. wide-out we displace venezuelan oil with canadian oil? olivia: do agree that this will do much more for the canadian economy? >> i figure will be better for the canadian and comic, but that will do well regardless of where they process the oil. whether it is to the gulf coast, china, all of these are options. this oil will be process. let's also benefit the american worker and the american economy. he is wrong on so many points.

these are full-time american jobs. it is not 250, 300. i cited the original keystone pipeline through north dakota. these truck drivers have -- heavy equipment operators, the restaurants, and hotels, and hardware stores 88% of the steel for the pipeline is north american steel. by the way, not a penny of taxpayer dollars goes into the construction. brendan: the reports we are seeing for the -- oil fields say there is a pullback for investment for the future and production in the present. what is the state of the economy? >> as i told some of our producers who let us know what their pullbacks are -- they are anywhere from 45%, 50%.

it is still an incredible boom. in the context of laughter coming it is a decline. people are optimistic, they know it is a resource plate that oil will always be there. we expect the price will come up . maybe not next week or next month, but hopefully with in the next six -- 12 months. we are positioned well in north dakota. we already have a minimum wage that is over $10 an hour. we have more jobs than people. the pause will be fine. we will see enough pumping to get us through. i think we will be fine in the long run. olivia: we had larry fink, the head of blackrock, he says the pipeline has made the u.s. more energy independent. >> i don't use the term energy independence, i like energy

security. i think the pipeline is a wonderful way to bring domestic crude. we need to leave -- left the import ban. olivia: we have to cut you off but we appreciate your time. we will be back. ♪

tom: good morning. yesterday, oil $47.80. let's go to the bloomberg terminal. i've got the plague. oil, $100. down at $20 a barrel. it is a churn. we're at $50, we are not at 50. going into the weekend it is fragile. brendan: we talk about the plunge and how it affected things all over the world.

we talked to the congressman from north dakota. he said it is still a resource we did not have 20 years ago. it is always going to be there. tom: we will keep drilling and keep producing at the margin. some of the dynamics for saudi arabia to consider. top headlines. olivia: republicans on capitol hill looking for a way to avoid a partial shutdown in the department of homeland security tonight. john boehner explains the problem's priorities. to avoid a partial shutdown in the department of homeland security tonight. john boehner: republicans agree that we want to find the department of homeland security and we want to stop the executive action and immigration. olivia: technical difficulties. republicans have agreed to separate the issues. they will vote today on a three-week spending bill for homeland security. insisting on a plan to bl

ock immigration. democrats will not negotiate on immigration until home insecurity is funding until september. the fcc voting in favor on rules. one not allow content providers to pay for faster delivery. chairman tom wheeler says some regulation is necessary. republicans are pledging to fight the rules. john boehner caused net neutrality a misguided scheme. comcast predicts the matter will end up in court and says the best thing is to let congress decide. germany will not stand in the way of greece getting a bailout extension. lawmakers approved the plan. angela merkel had to stave off members of her own coalition. the german finance minister told the bundestag it was not a matter of giving more to greece

it was about allowing the current program to be completed. brendan: a good year for the cofounders of carlyle group. david, william, and daniel were paid a combined total of more than $800 million in 2014. $50 million more than the year before. the bull market allowed private equity firms to profit by selling stakes in companies they own. you missed a chance to buy a pie ce of aereo. it went out of business after losing a supreme court case. senator jim andinhofe is a skeptic when it comes to climate change.

yesterday on capitol hill he had a new way to underscore that. senator inhofe: we keep hearing 2014 has been the warmest year on record. it's a snowball from outside. it's cold out. very unseasonable. catch this. brendan: not the first time he has used snow to make a point about climate change. inhofe and his family built an igloo and labeled it "al gore's new home.:" tom: the "surveillance" photographer saw a staff member out by the washington monument. she brought the snowball back to capitol hill. olivia: those in boston would think that they might be having

questions about it the cover of "the new york times." this might be new york's coldest february since 1934. tom: a later -- 80 and check.-- a data check. this is bloomberg "surveillance." i'm tom keene. we look at the housing market. brendan: he has some experience. mortgages down from a peak in 2005. applications have fallen 60%. tim is with us from bnp paribas. he spent two years at freddie mac. tim, are we looking at a long-term change that will never recover? is this a cycle that is going to return to her it was? >> the summer of 2008 was a pretty eventful time. it was one i will never forget.

in the mid-2000;'s the people owning homes should have been renting. fannie, freddie originated 98% to 99% of all mortgages. up from 44% in 2006. we've seen the banks leaving that market. tom: are we the only clowns doing this? >> the u.s. markets are based on capital markets. tom: run by the u.s. government, that is not capital markets. >> it is based on securitization models. home ownership is a social good in the u.s. if you look at the history of banking -- brendan: are we back to where we

were in the 1940's and 1950's, we need a greater government intervention? >> right now, yes. the u.s. market market is so used to having the government backstop. tom: olivia is going to be at the -- olivia: i'm going to florida. tom: she's always going someplace. life with olivia -- me, brendan and mike have no life. brendan: you were talking about netflix on the weekend. olivia: "house of cards.; tom: nobody can get a mortgage. >> underwriting standards have gone up. in light of that is dodd-frank compliance. if you are a bank and you get sued, your level of risk aversion has gone up. the pendulum has swung too far

in terms of difficulty to get a mortgage. olivia: if ben bernanke cannot get a mortgage. brendan: this is day that you flag. fica scores -- fico scores, five years ago they were in the 710's. we are used to seeing homeownership as a public good. it increases property value. do we need to re-examine the obsession with homeownership? >> that's a loaded question. >> it is the only kind we do on friday. >> the pullback would be dramatic. talking about changing the tax code so mortgage interest is not deductible. the market where fannie and freddie make deliveries has a government backstop. there is huge foreign ownership

--. to make that change, we are kind of in bed with this. brendan: that is kind of a conservative answer. real-world frictions are huge. olivia: life, liberty, and the pursuit of happiness and a mortgage. >> house prices improved. some level of bounceback was going to happen. you seen opportunistic buyers. from 2009 to 2012 there was a tremendous and out of cash buyers. you sell buyers coming in and then renting out homes. tom: >> can we get you back in the next couple weeks to spend a whole hour on american housing. >> i would love to. tom: this is a huge deal. olivia: not millenials, still

not buying homes. tom: that is stunning. i am putting that on twitter. olivia: coming up we go to munich. we will be joined by the ceo of airbus, tom enders when we come back. ♪

brendan: this is bloomberg "surveillance." ♪ everything is awesome ♪ betty: we are so out of tune. brendan: there are dark clouds gathering over venezuela. betty: we do feel pretty good about stocks. back near record highs. how did we get here after the terrible january. a couple warning signs -- oil is one. oil is decimating the economy in venezuela and russia. the dollar is rising. that is hurting profits. two big things we are going to focus on. investors may not be paying as much attention to. number one is bond markets. they have been swinging wildly. volatility has gone up.

the makeup of who is owning bonds is changing. that may have consequences if we run into a speed bump. the second thing we are looking at his profit. stock markets are going up. earnings are coming down. expected to be off by 5% and the first quarter and 3% in the second quarter. it begs the question why are investors buying stocks when profits are going down? brendan: betty and i are reading the same report from ubs. there is unprecedented institutional investor ownership of sovereign debt that might be distressed in the future -- venezuela and nigeria. are we looking at the same kind of summer as 2008? tim: i don't think so. they're so much quantitative easing going on. the u.s. is slowing it down a little. the risk would be that the emerging market world, through

commodity exports are other means. maybe on some of the em countries there might be risk. broadly speaking i do not think so. olivia: it is really interesting. why are people pouring money into equities even if they do not believe in the fundamental strength of the economy. it has to do with central bank intervention. you mentioned demand for treasuries. we started looking at the strength of the renminbi. i wonder what the change in the u.s. dollar-renminbi rate in real terms means for chinese and u.s. treasuries. tom: they all dovetail in together. the idea of a discrete analysis -- tim: pretty much all emerging market debt sold off at once in the testaper interim.

mexico was considered a better investment, brazil not as much. tom: let's go to the money question. is janet yellen going to enjoy another taper tangent? tim: no. i think the fed is going to be slow and patient. tom: they learned something the last time. olivia: they did not enjoy the taper tantrum. that it will be joined by even alan's ceo. we will be back. ♪

tom: good morning. bloomberg "surveillance." i am tom keene with olivia and brendan. top headlines. olivia: congress lines up to punt in the fight over funding the department of homeland security. republicans planning to vote on a bill that would fund dhs for three weeks. passage would stave off a partial shutdown set to begin tonight if nothing happens. the net neutrality fight shifts to congress. republicans will try to overturn rules that bar companies like at&t from selling faster service to content providers. u.s. jets attack islamic state

positions in syria. targeted an area where militants are thought to be holding 250 christian hostages. local groups have appealed for help. the u.s. says it forces have launched 33 airstrikes in the area in the last five days. assailants have killed a u.s. blocker in bangladesh. he was attacked. assailants critically injured his wife. roy is the second blogger murdered in bangladesh and less than two years. he was a secularist accused of publicly defaming islam. national basketball association stars remember the man who broke the league's color barrier. earl lloyd joined to the capitals in 1950. he died yesterday at 86. he was named to the basketball hall of fame. those are your top headlines.

it is a beat for airbus. reporting a 15% gain in annual profit. airbus announcing its plans to boost production of its a320 aircraft to 50 a month to meet demand. investors seemed pleased, the stock is up almost 7 percent. guy johnson is standing by with the ceo of airbus, cpac tom enders. guy: the share price popping after airbus delivered its results. i am with tom enders, the ceo of airbus. a lot of people stateside will be wondering whether or not you are starting to see an impact from the stronger dollar and weaker euro. is it having a impact? tom enders: it has no meaningful impact. it will start to have an impact in 2017 onwards. we are fully hedged in 2015 and

largely hedged in 2016. if the dollar stays that strong 2017 is when we should have tailwinds. guy: let's talk about fuel prices. the price of oil has come down. does that mean you think airlines will start thinking about different orders? they want the most fuel-efficient aircraft of they can get. if they can eatget a little bit more, will that? tom enders: i would rather deal with financially healthy airlines then week airlines. hardly any airline wants to speculate about what the oil price will be in two, three or four years. this is when most deliveries are coming. we do not see anything that will affect our order books so far. guy: you are renting of the number of a320s you're going to

be making. that is the single aisle. boeing is talking about 52 by 2018. how big a risk with that be on your supply chain? tom enders: we would not talk about that. if there was a strong demand -- we're not talking about speculation. we have more than 5000 single aisle aircraft in our backlog right now. we can ramp up production. before any ramp-up decision, we always make sure our supply chain can follow. airbus has a pretty conservative ranking. we do not go for momentary spikes come up and downs. we tried to keep it steady. guy: decent you will match boweing at 52 in 2018? tom enders: we have a different

business model. we are the leader in single aisle aircraft. we have a 60% market share. we feel good about the demand going for. guy: to the big ones a380. speculation about putting new engines on the aircraft. i was talking a little while ago to tim clark in davos. he said if they make that decision, airbus will give them an order straight away. can you make that decision straightaway. do you need other airlines to come as well? tom enders: 2015 is a decisive year for the 380. after 15 years of heavy investment, we are breaking

even. the team has done a great job doing that. a production level of 30 years. we've introduced improvements over the last seven years. we introduced the aircraft into service and are looking for improvements in the future. reengineering, if it makes business sense, why does not. we will continue with improvements that payoff for customers in the future. guy: how long the think you can leave that decision? tom enders: we take decisions when we need to take them. . after careful preparation, it is no different on this. i do not want to speculate. the team has worked hard to get additional orders. guy: talking of gulf carriers, there's a dispute between the american carriers and the gulf carriers. we saw comments from the delta ceo anti-net up -- amping that up a little. you send a lot of planes to the

gulf, do you worry about getting dragged in? tom enders: customers of ours are emirates, lufthansa, all of them. the question is not that easy to sort. people say that when they start discussing what is subsidy, what isn't a subsidy. i would very much hope that we do not get into a situation between airlines from the gulf and the u.s. or western europe. we certainly as an aircraft manufacturer are not taking sides with anybody. guy: the defense side of the business. marwan, your head of strategy was talking about this. an acceleration of divestment in 2015. at what point the you not have critical mass in the defense sector? tom enders: we still have a huge critical mass. many people do not see --

olivia: we are going to leave it there. guy johnson speaking with tom enders, the ceo of airbus. airbus boosts production of the a320 single aisle plane. tom: he dodged the carrier war with the gulf states airlines. tim of bnp paribas, you live on airplanes. can you tell a difference between an airbus and a boeing. >> i was on a 787, it is nicer. more moisture in the air. olivia: lighter material so you feel more refreshed. there a bathroom window in the new boeing dreamliner's. we look at the stories shaping the day. tom, you got to go to radio. tom: south of washington cpac. a lot of people make fun of it,

even conservatives. it's a big deal. an important part of america. brendan: look past the silly costumes and see a dress rehearsal for the election. olivia: we are going to say goodbye to you. "surveillance" with tom keene and mike mckee will continue on radio. brandon? brendan: looking at a spring meeting of the u.k. independence party. london is where you spend some of your formative years. a beautiful piece by stephanie out on bloomberg.com that describes farage a former commodities trader changing the face of u.k. politics. it is going to be a big election. olivia: nigel farage running for parliament. "ohouse of cards" season three is out. i will be binge-watching all weekend. i can't wait.

tim, thank you so much for joining us. managing director of bnp paribas. that does it for bloomberg "surveillance." "surveillance" continues on the radio. on tv, "in the loop." have a great weekend. ♪

betty: good morning. friday, february 27. live from bloomberg world headquarters. 90 minutes from the opening

bell. the clock is ticking for d .c. less than 24 hours to come together on a deal to avoid a security shutdown. republican congressman will hurd, a former cia officer, he rips into this debate. a white house that frank underwood built. third season of "house of cards" tonight. hollywood producer is going to weigh in. a look at our top stories. a 4-month extension of the greek bailout gets the ok. parliament approved the plan despite dissent from members of chancellor angela merkel's coalition. in ukraine, journalists spotted rebels pulling heavy weapons off the front lines. the first confirmation that they