a fed-induced bubble? in moscow, thousands protest the assassination of a former deputy prime minister, is the death of nemtsov a turning point for putin and russia. and nokia failed in iphones, now it's china's turn. there will be bill combrons and billions of cheap smart phones. good morning, everyone, this is "bloomberg surveillance." live from our world headquarters in new york. it is monday, a snowy march 2, i say. i'm tom keen, olivia stearns and brandon greeley are joining us. let's get to the top headlines once my voice wakes up. here's olivia. olivia: thousands marched to protest the activist. he was gunned down friday night and a was a former deputy prime minister who had spoken out against vladimir putin and had been working about a report of his fighting in ukraine. he says he'll personally oversee the investigation into his murder.

north korea underscored the warning of the state of military exercises by south korea and the u.s. this morning kim young un's regime fired two missiles in the sea of japan. they say it's for exercises of a south korean invasion but say they're prurely defensive. on saturday china's central bank fought back against an economic slowdown that cut benchmark interest rates for the second time in three months. and israel's prime minister benjamin netanyahu is in washington in advance of his controversial speech on capitol hill. tomorrow he'll press conference to delay any agreement on nuclear power. netanyahu may argue it will threaten israel's security and is speaking at the invitation of john boehner who did not consult the white house or president. secretary of state john kerry insists there's no problem between the administration and israel. >> i talked to the prime minister regularly including yesterday. we are not -- you know, we

don't want to see this turned into some great political football. obviously, it was odd, if not unique that we learned from the speaker of the house that an administration was not included in this process. olivia: kerry says they agree on the key points that iran should be prevented from building weapons. >> john boehner will begin to get a bill to fund homeland security department through september. boehner's original plan suffered a humiliating defeat friday and could not get enough republicans to agree to a three-week plan and had to settle for a one-week agreement. most house republicans won't vote for a bill unless it blocks president obama's executive actions an immigration. boehner is downplaying the turmoil in his own party. >> we have members that disagree from time to time over the tactics we decide to employ. but remember, republicans are united in this idea that the president has far exceeded his constitutional authority.

and we all want to do things to stop the president from his activity. >> senator republicans abandoned the house approach and approved a spending bill without any reference to immigration. a crucial couple weeks of the city of sit grupe group michael corbath. they'll announce whether to except the capital plan and corbat should be held accountable and analysts say he should lose his job if citi fail as second time. the financial crisis raised doubts about their stability. it's a question that comes up every year in march. who will succeed warren buffett. in his annual letter to investors, he said berkshire hathaway board has the right person for the job. charlie munger added to the speculation and said the two managers g. jane and able are world executives who are in some ways better than buffet. tom: let's get the week started

and blow through it quickly and get to the screen which talks to the economics. the euro is 1.11. hydrocarbons are soggy down to 1%. on to the next screen. bring it on. there it is. the big 13.34. that's fascinating and is a major headline from last week that the volatility finally calmed down. the german two-year, thanks to the negative team, negative 0.23 on the german two-year and on we go. weakness with the rate cut this morning. over to the bloomberg terminal. brenda demanded i do this. this is inflation back to j.f.k. and l.b.j. the breaking of volcker. what people don't know is how much time we've spent under 2%. if 2% -- if a guy like calamiris put pixels in the air and pixey dust and came up with the number that 2% is the important number and we've been

under it a lot as we look at the core p.c. inflator. >> the fed is looking over their shoulder at congress and always better politically or has been until now to undershoot than overshoot but in theory at 2% and we'll blame charles for this. if 2% is the target we should see a nice wavy line above. but that's not what we saw. consistent undershooting. tom: what's great about this is it's march at bloomberg surveillance. we're done with the algebra in january. we need to move seriously on to what occurred in russia and another motion of friday. will there be more violence after boris nemtsov was gunned down in moscow? the singular question will fervent supporters of putinism use violence to crush a small but quiet russian opposition. tony is with bloomberg news in moscow and joins us now. what do you know this morning about who killed mr. mentsov?

's guest: good morning. it's difficult to narrow down the range of theories that are being presented about mr. nemtsov assassination to a single group or cause. there's a great sense of shock among then russians that someone of his stature could be so brazenly gunned down in the shadow of kremlin's walls but no one has narrowed it down and the range extends from a claim he was some sort of sacrificial lamb by the opposition to another claim he somehow was the victim of islamic extremists because of his sympathy for the victims of the charlie hebdo shooting. >> have we learned being famous is no longer a way to protect yourself as a russian dissident? >> i think that's the core of the shock here. i think russia's opposition has operated previously under the assumption that while they risk

imprisonment for standing up to the kremlin, no one was likely to kill them. now it's not clear that's the case at all. while people in the opposition ranks are not able to point the finger at putin and say there was a kremlin hand in this, they are certainly nervous that the kremlin and state media here has created an environment in which opponents of president putin are branded enemies of the state and that may well be provoking extremists to take things into their own hands. >> what does it do to the opposition? does it galvanize the opposition and do you expect to see protesters swell on the streets of the country or are we talking about a climate of fear and you think people will retreat into the shadows because they're so afraid of what could happen? >> well, anywhere between the estimated 20 thousand and 50,000 people turned out yesterday on the streets in a march which went past the kremlin to pay tribute to mr. nem, sov but there was a clear

sense of nervousness and many were holding banners they are not afraid and felt there is a need to state that because there is a sense of fear and people are worried and don't know where the next turn will be and some of the option opposition fear russia is at a crossroads and one road leads to greater violence and instability and they're urging everyone concerned to step back and think of the future of the country. >> thank so you much, from moscow this morning. on to economics, an incredibly busy week for global and economic economics, culminating with a friday jobs report and go beneath the headline data friday. we begin strong in conversation with professor calomirs from columbia university. bob dahl, chief strategist. and let's begin with a collective great extortion. we have an economics guy and investment guy. bob, are we in a bubble? all weekend, everybody, this question, this question.

are we in a bubble? do you feel like the dow, the s&p is bubblelike, whatever that means? >> not at all. to me bubbles have overownership, overvaluation and overleverage. stocks are not overvalued relative to the alternatives. >> michael mckenzie saying this is the most unloved bull market since time began. >> totally agree. the walls of weary are fierce and wonderful. >> so we see this. let's bring it over here. you is euclidian march and within our economics, has janet yellen put us in a bubble? >> you can't say for sure whether you're in a bubble until after -- but i'm sympathetic to what bob is saying. i don't think that for example, rises in interest rates, judging from past experience, are going to cause the stock market to decline. i don't think -- that's sort of a test whether we're in a bubble. on the other hand, you can look at agricultural land prices and say that maybe they're in a

bubble. so i think that that's not obvious that the stock market is the only risky asset that's susceptible to monetary policies distortions. what we've learned, is about 20 serious academic studies the past decade is that monetary policy does produce shrinkage in risk premium and this is a major concern in a lot of markets. >> bob, are you worried when the fed does raise rates and will it suck momentum out of the rally? >> i'm not worried. stocks do well in the first increase and pause and have a little volatility and go up again. the fed raises rates, why? because the economy is doing well and earnings is ok which means stocks probably are, too. >> a big part of warren buffett's annual letter this weekend had to do with whether or not investors are mistaking volatility for risk. >> they are obviously related and overlap. i like to say i love volatility. i've seen far more to the upside than the downside to my

career. when i have volatility i'm able to buy things at a lower price and sell things at a higher price than i thought. volatility is not so bad. >> we talk about the fed's actions and affect on the economy as we see the german currency dip to negative territory and hang out, but it's never been better. >> well, i think part of what you are referring to, though, is the difference between germany and the euro zone. that is the negative interest ratesdz in germany are really a reflection of its relative strength, relative to the rest of europe as a sort of flight to quality play and think that's the same story in the german stock market. >> let's get start on the week here as we get a lot of economic data across all of bloomberg television and radio through the week. >> it's not just the german currency, but the stocks are off to the best start of the year ever. charles calomairis of columbia university and bob dahl, you're staying with us for the hour as we head to break. we want you to answer our

twitter question of the day, has speaker john boehner lost control of the house? tweet us at bloomberg "surveillance."

>> good morning, everyone bloomberg "surveillance." brenden has our top headlines. >> in moscow thousands marched to honor the murdered political activist boris nemtsov, a opponent of russian president vladimir putin. north korea is making noise in the international community and launched a pair of short range missiles towards the sea of japan and kim young union coincides with the start of military exercises by south korea and the u.s.s. also on the bloomberg terminal, the

violence in eastern ukraine claimed more than 6,000 lives, government forces have been fighting a year. the conflict led to a merciless devastation of civilian lives and infrastructure. hillary clinton's long-awaited announcement is reportedly near. "the wall street journal" says she might make her presidential bid official as soon as april and would ease uncertainties within the democratic party and speed up her fundraising. on the republican side, a presidential announcement is also expected soon from the florida center marco rubio. the gasoline honeymoon may be over for u.s. drivers. triple-a says the national average for a gallon of regular is $2.42. it's jumped about 35 cents in the last month. industry experts blame refinery issues, not the cost of crude. those are your top headlines. >> 52 members of the republican party broke ranks over funding for the department of homeland security instead of a three-week stopgap, speaker boehner got only a one-week

extension. nevertheless he insists the party is on the same page. >> we do have members that disagree treatment over the tactics that we decide to employ. but remember, republicans are united in this idea that the president has far exceededed his constitutional authority. we all want to do things to stop the president from his illicit activity. >> our chief washington correspondent peter cook joins us. two weeks might not sound like a big difference but obviously this is politically embarrassing. is speaker boehner's job safe? >> you know, there's got to be real questions now within the peb ranks of john boehner's job. there's no immediate coup attempt and some of the people that might lead that attempt said over the weekend john boehner's job is safe for the moment. this is a big embarrassment. this is a big deal in washington. because it shows how tenuous his hold is over the house republican conference. and there's a really good chance we'll see a replay of it on friday unless john boehner decides to blink and bring to

the floor a bill that funds the agency through the end of september and has nothing to do with the president's immigration executive action and what democrats say he assured them he'd do. if he does, he'll have to pass with democratic support and once again resist the ire of conservative. >> what happens in the next five days? >> tonight you have a vote in the senate to effectively shut down john boehner's plan to try and have this conference committee vote and try and work a deal that way. you're going to see benjamin netanyahu on the floor of the house on tuesday, that in and of itself is already a divisive event here in washington. now you'll see the funding fight play out one more time on friday. this is going to be -- it was a messy day on friday as john boehner said and will be just as messy a week potentially. john boehner has to get his ducks in a row and right now doesn't have them and there's a real split between the few moderates in the house republican conference and conservatives who are plotting the next fight down the road. this tells us a lot what might happen with the debt ceiling

fight and highway funding and could be an ugly, ugly stretch here. >> peter, we watched this dance before and boehner hems and haws and brings a bill to the floor and democrats support it. why would this be different than the other times? >> because the difference is this time he wasn't on the same page with the republican leader in the senate, mitch mcconnell after basically the two said they would avoid these kinds of shutdowns going forward. the fact he didn't have it coordinated with mcconnell tells you that this is john boehner looking out for his right flank without really figuring out how to get things done in the end. and that is the difference here. it really tells us what's going to happen in the future. >> you absolutely nailed that. stan collander was on twitter saturday suggesting what you said that this really was about mitch mcconnell. will you explain to our audience why the senate majority leader controls the future for the speaker of the house? >> well, the senate majority leader can only get so many things done with 54 votes in the senate.

and he took that message to house republicans when they went to their retreat in hershey, pennsylvania, which we attended a few weeks back and explained listen, i can only get so much done. work with me here. this is not what happened with the department of homeland security funding and will be the same sort of thing playing out with the debt ceiling and highway funding and with compare reimbursement. every issue will require senate passage as well and house republicans have to acknowledge that and so far are not and that's the problem. >> you'll have to forgive me and i spent too much time watching "house of cards." but can kevin mccarthy or anyone up high that boehner's john is at all in danger? >> no. they seem pretty united at this point in terms of the leadership. and they rallied around this weekend and were all talking off the same talking points. but there are republicans in the house who clearly are toying with the idea there's a notion of vacating the chair which dates all the way back to thomas jefferson era. there is a way to remove the

speaker of the house. it's complicated and highly unlikely to happen but the fact people are talking about it should give you some sense about john boehner's job security. >> every time peter cook speaks about this stuff, i learn something. it's great. it's fabulous. >> that is the goal. >> he hasn't even brought up the washington nationals yet. >> they're going to be good. they're going to be really good. >> illuminating as always. >> they'll be better than the house of representatives. >> peter, thank you so much. peter cook our chief washington correspondent joining us from d.c. a perfect segue to our twitter question of the day. what do you think, has boehner lost control of the house? tweet us. this is bloomberg "surveillance." we're streaming on your tablet and phone and bloomberg.com. happy monday.

>> bloomberg sur surveillance." oil is down in west texas intermediate and we say goodbye to you monday morning. a busy week of economics. let's get to a must-read on the international relations known as greece. in "the telegraph" it's a brilliant essay from evan pritchard. it's far from clear who really has the upper hand in this game of strategic chicken. both sides can reasonably calculate that the other will blink first at each deadline to come. one of them is wrong. that's a summary. charles is here with our question on america's authority on the greek and where we're going. the thrust of ambrose evans-pritchard's observation is this is a greece that's one out looking north to europe and will begin to reassert a uniquely greek character associated with the romance of

this anti-m and that. is that remotely possible given the bill that's due? >> anything is responsible who a prime minister that named his son after chegavara. this fella can't think straight. greece has an opportunity and elected an outsider and if he sees that opportunity he can work with germany and others to do the deal that's obvious. >> can be no moment of compromise? >> no, there's a win-win. >> what's the deal that's obvious? >> the deal that's obvious is put the horse of reform ahead of the cart of some relief, that is you can imagine europe agreeing to some debt relief and relaxation of some of the fiscal restraints. >> if the reform was there? >> exactly. >> give us an example of a reform required. >> well, labor reforms meaning allowing people to be fired. competition reforms meaning getting rid of all the listens ing barrage in greece. corruption reforms having an european oversight of

anti-corruption commission funded by the e.c. these are things if greece put them out on the table -- >> if they do that and a cup of coffee they g.t.e. on to the issues? >> this guy is saying he wants to mire more workers in the government and he wants to go back to a higher minimum wage when greece has a union labor cost that's 20% too high. >> that sets it up beautifully and we'll set it up for an extended conversation with professor calomiris and bob dahl. olivia? >> hold on to your hat. we'll talk about the ram ifications of deflation. this is bloomberg "surveillance." >> bloomberg "surveillance" brought to you by fidelity investles. tap into the full power of your green line.

tom: good morning. olivia sterns has top headlines. olivia: in russia, a protest march turned into a memorial for a leader. one of vladimir putin's critics was shot and killed new the kremlin. boris nemtsov had been planning an anti-putin rally for yesterday. another protester said nemtsov had also been planning a report on putin's involvement in the fighting in ukraine. a critical week for the future of the affordable care act.

republican senators lamar alexander and orrin hatch argued that subsidies will help the millions who could lose coverage. if the court struck down the provision, there is no word on how much people would get on how to pay -- or how to pay for it. on friday, john boehner suffered a defeat when the conservatives rejected his plan for a three-week funding bill for the department of homeland security. congress averted a partial shutdown by approving a one-week bill. on face the nation, boehner was asked if he could still lead house republicans. >> i think so. remember what is causing this. it is the president overreaching. olivia: boehner will try again to get homeland security funded through the rest of the fiscal year. conservatives are opposed to any spending bill that does not block executive orders on

immigration. brendan: a report that accuses police in ferguson, missouri of racial bias. the new york times says the report criticizes the city for biased traffic stops. according to the times, ferguson will either have to negotiate a settlement or be sued on civil rights charges. the new ceo of mcdonald's will outline his plan for a turnaround this week. steve easterbrook took over the restaurant chain. wall street journal says easterbrook right -- might reveal changes to ingredients. mcdonald's sales fell more than 2% last year. samsung has unveiled its newest challengers to apple's iphone the galaxy s6. the edge model has a screen that extends to the right and left sides of the phone.

samsung is trying to reverse profit declines and market share losses to apple. tom: there is a definition for inflation. there is no true understanding for reflation. it is a policy prescription. charles calaveras and robert -- charles -- bob dahl. japan is relating. charles calaveras is relating his waistline, as am i. >> reflation is an attempt by central banks to inject money into the system to read all kinds of different ways to get the economy going in a nominal sense. we witness the biggest -- the bursting of thech -- that goes

against reflationalre rings in deflationary forcess. tom: we look at 2.2 percent -- >> if you look the trend of nominal gdp in the u.s., it is slowly moving up, slower than the fed would like but it is improving. i think they're having reflation area success. >> this pushes against global this -- global deflation. > nouriel roubini said reflation is the new normal. the negative way to growth outstrips demand into much saving chases -- the equilibriumest

rate is low if not negative. is that what we should expect for the near future? >> this sounds like something norio cooked up at one of his hot tub parties. >> this is the best block yet. >> i do not think so. what we have to look forward to as bob pointed out, nominal gdp growth is solid. great employment reports. consumer confidence and spending are up. it is not that volatile. number gdp growth is looking pretty good and has for a long time. -- nominal gdp growth is looking good and has for a long time. >> take the u.s. out of that -- >> was larry summers in the hot tub? >> i'm not at liberty to say. [laughter] >> when you look around at the rest of the world are we looking at negative interest rates for the time being in

europe? >> the reason i think the negative interest rates used -- you see in europe bank's are facing negative interest rates coming out of the reserves that they have at the ecb. as long as that is occurring and they do not want to lend that money the equilibrium durham by the banks is going to be short-term negative treasury rates in germany. i don't see that as an indication that is relevant for the u.s. in europe, i do not think the near term looks so bad. i am more worried about -- >> within the stock market, how this fullback to the u.s. equity markets. >> it forces you back into more equities if bonds are selling at negative yields. central banks are attempting to get people without the risk

curve. that is part of the reflation objective. when they do, interest rates go down at the short end. that brings longer-term rates along with other factors. >> within this conversation we still have share buybacks dividends. i feel like a broken record from 2013. what has changed? >> i think the world is continuing. add to what your uses of cash, they are hiring new employees cap expenditures are moving up. the system is working. >> moving up or trickling up? they incentivize share buybacks and borrowing to do so but not actually spending into the broader economy. >> if i can get paper at zero or negative interest rates, i will use it for all these purposes. that is why you are seeing corporate america use this cash. i don't understand why more of them are not borrowing money in

the euro market. >> coca-cola did that. >> get us out of the cycle. wiser nothing to lend to in europe? >> growth in europe is very low. it is finally going positive and it looks like it is going to be going positive throughout europe, although very low. the point is, europe is not the whole world. the u.s. is looking solid. i don't think the problem is there is not something to do with the money in the u.s. >> to finish this thought, what is your optimism about american banking? can american finance prosper given these great distortions? >> we have regulatory issues and american banking -- in american banking.

we saw it from j.p. morgan chase, the first time i've ever seen it in the u.s. banking history, turning deposits down. what that is telling you is there is a serious regulatory problem. >> this is a business opportunity for sleepy's the mattress company. >> i have been sitting here thinking, the use of cash has changed. it is like we do the same thing every day. coming up, the global smartphone market is changing. a rise of chinese part -- chinese products. ♪

>> good morning. a correction on the second day of march. i suggested earlier that charles calomiris's waistline is re-fleeting, i've been told it has been recently deflating. that is the toggle switch correction there. let's get to the single best chart with brendan greeley. [laughter] >> growth will not be in my waistline it will be in the developing world. the companies that will win that

market have gathered in barcelona for the mobile world conference. the companies that are winning our chinese and they run android. that yellow line is apple. slow growth, holding onto market share. you can see the peaks every time apple comes out with a new model. white line is samsung. the blue line that we have to be worried about. it is almost meeting air droid -- android. -- almost beating samsung. these are chinese phones all of them together running android. they almost reached the volume of samsung. if you go down market, you're stuck competing downmarket. your favorite apple is doing just fine. >> is a just manufacturing? >> what no po wasn't prepared

for was that they had -- what no kia wasn't prepared for -- they lost that market. what is going on all over the world, the price of the smartphone has dropped 50% in some developing countries. it is the first and sometimes only computer that a family will buy. >> bob dahl's phone costs about $4000. >> otherwise known as an antique. >> what years is from? >> good question. >> that is the year were no kia was still a company that mattered. >> guess what portion of the global population has a smart phone at this point. one third. >> it is scheduled to grow to 65%.

none of that fancy awesome, new matters. what matters is cheap. >> are the chinese at the conference in barcelona? >> of course they are. >> it is interesting that the experiment at the lower end of the market did not work out. >> really good chart. >> coming up tomorrow, we go to the conference in barcelona. brad stone will be talking to john chen of blackberry. >> looking forward to it. let's get to our top photos. number three, notre dame has earned its 10th hockey east wing of the season. notre dame 13-1. why does this matter -- won 3-1.

>> it was stunning to see this kid stop -- >> this was off the chart. >> 55 saves in a game. >> 15 more than normal. young kid playing out of his -- >> 15 more than a normal good game. >> this kid stop 55 shots. he blew me away. >> speaking of new york, the hudson river has frozen over. february ranks as the fourth coldest on record. the average temperature last month was 23.9 degrees fahrenheit the coldest ever february was in 1994 when the temperature.

patches of ice across the whole river from new york to new jersey. >> very cool. >> at the international space station, derry wilmore taking a selfie -- barry wilmore taking a selfie. the international space station is preparing for the arrival of commercial vehicles from space-x. temperatures can plummet to -200 degrees outside the station. did have to take off the gloves? >> do we have the mechanics of how he did that? was it on a selfie stick? was a tethered to the selfie sticks? >> nasa did a great job with the passing of leonard nimoy. they have a very nice fold in of the romance of what hollywood has done with space at the smithsonian. >> the most heartbreaking

tribute was from the international space station. and #giving the live long and prosper sign. the german finance minister softens his tone on greece. this is "bloomberg surveillance." ♪

>> good morning. our twitter question of the day, the festivities in washington. has mr. boehner lost control of the house? this is awful friday night 's failure. it was like "house of cards." with me olivia sterns and brendan greeley. >> in moscow, thousands took to the streets. boris nemtsov was a former deputy prime minister and an opponent of russian president vladimir putin. north korea launched short range missiles toward the sea of japan. military exercises.

iraqi security forces are trying to retake the city of tikrit from islamic state at this hour. the operation includes shiite and sunni fighters. new tracking methods are being tried because of the malaysia airlines mistry. -- mystery. still no trace has been found of the jet or the 239 people aboard. >> 5, 4, 3, 2 1. >> space-x stop and nine rocket blasted off from cape canaveral. boeing built both satellite systems. it was the rocket's 16th launch. auto sales are getting a jump from lenders. car buyers are getting loans which makes -- baseball fans are

pausing to remember many minoso. he was one of baseball's first -- minnie minoso was 89 years old. >> the president's comments on mr. minoso i thought were really heartfelt as a white sox fan. this guy was so much fun to watch. there is a huge debate over whether he should of been in the hall of fame. you can keep conversation on that going for hours. really great coverage. >> we will turn to europe. here is wolfgang shg --

>> i'm skeptical because the greek government has not moved at all. >> the finance minister is quoted in the sunday papers in germany saying "i'm confident greece will place the necessary measures set up a more efficient tax system and honor its commitments." what happened here? let's ask charles calomiris. what is going on? >> i think that it is convenient for him to say that he has confidence, even if he doesn't. what is the point of saying you don't have confidence in another country's finance minister? the title of my next article on this is "germany hands greece a

shovel." for germany, the key thing is not to set a bad precedent for sprain -- for spain or other countries. he is going to have to hold the line to prevent a bad precedent. he cannot turn their thinking around. >> why do you say it is a train wreck? >> he is not saying anything that makes sense. he is a guest privatization. he is in favor of hiring back to workers the government let go. he's in favor of increasing wages when greece has a 20% excessive unit labor cost. greeks are unemployed because greece is not competitive. it is not the government debt that caused the unemployment. >> france has the same problem.

the reason countries do not do these reforms because democracies do not like them. how you solve that problem? >> i said that on this program in 2011. i agree with you. the problem is, what you need is real leadership. leadership understands there is a win-win. to put the reforms on the table and then to get the relief in terms of some relaxation of fiscal constraints. what germany cannot do is give citrus what he wants because that would be a disaster for spain -- cannot give tsipras what he wants because that would be a disaster for spain. >> before exchange markets this morning. the euro was very weak. wrubel, really backs up. all of this over the assassination in moscow.

it is a busy week for economics. our next hour, must watch. thomas purcell he -- tom porcelli. ♪

>> can global deflation derail

and improving american economy? are we within a fed induced asset bubble? thousands protest and assassination of a former deputy prime minister. as the death of them soft but point for prudent and russia? -- the death of nemtsov -- >> tens of thousands march on one of president vladimir putin's -- boris nemtsov was gunned down friday night. he was a former deputy prime minister who had been planning an anti-rally for yesterday. nemtsov was said to be working on a report in's involvement in the ukraine pe.

north korea has underscored its warning about the start of military exercises by south korea and the u.s.. north korea had warned it would not remain passive while the military drills are going on. the exercise is in preparation for a south korean invasion. on saturday -- israel's prime minister is in washington today preparing for that controversial speech on capitol hill. he will address congress to delay any agreement with iran on nuclear power. he is speaking at the invitation of house speaker john boehner who did not consult the president. john kerry insists there is no problem between the administration and israel. >> i talked to the prime minister regularly.

we do not want to see this turned into some political football. it was if not unique that we learned of it -- it was odd if not unique that we learned of it from the speaker of the house. >> kerry says the u.s. and israel agree on the key points that iran should be barred from making nuclear weapons. >> boehner's original funding plan suffered a defeat on friday. he could not get enough republicans to agree to a three-week plan though he had to settle for an agreement that lasted one week. many house republicans will not vote for a spending bill unless it blocks president obama's executive actions on immigration. >> we have some members were disagreed from time to time over the tactics we decide to employ. republicans are united in this idea that the president has

exceeded his constitutional authority. we all want to do things to stop the president from this activity. >> senate republicans have abandoned the house approach. the approved a full year spending bill without any reference to immigration. michael corbat. federal reserve will announce will -- whether it will -- corvette said -- some analysts say he may lose his job if city fails a second time. it is a question that comes up every year, who will succeed warren buffett? buffett said berkshire hathaway's board has the right person for the job but he did not say who that person was. charlie monger added to speculation. he said the two managers are world leading executives who are in some ways better than buffett. >> oil, really sagging this

morning. a little bit of lift. a lot of economic data this week. let's get to russia and the news of friday. will there be more violence as boris nemtsov was gunned down? henry myers with bloomberg news in moscow. what is the mood of the streets this morning? >> the state is shocked. this terrible crime on friday. the opposition -- the leader says they felt this could be a rallying point for them. if you talk to the rank and file activists the people actually

take part in the march, i found them to be pessimistic about the future of their country. >> can you describe what the opposition is in russia? it is not really a party. it is a radio station in a magazine based in moscow? >> there are individuals who have a certain degree of popularity. the most prominent leader is a lexington a volley -- alexa a nevada he. he is currently serving a jail term for distributing pamphlets announcing a march that was due to take place on march 1. the same day that this memorial march took place. other than him, there really is not any leader who has that kind of stature and appeal. boris nemtsov was not popular. he wasn't someone who was very

active but he did not have a real following. -- he was someone who was very active but did not have a real following. >> tell me what the narrative looks like in russian papers. the u.s. papers are making this sound like a murderer out of a cold war spy thriller. what is the russian narrative? >> the theory which is being floated around today is that this was carried out by ultranationalists. the way in which the murder took place suggests there were some people with secret service background. the surveillance camera which was supposed to record the scene of the crime was mysteriously not working. the fact that such an attack took place within a few hundred meters of the kremlin implies that the people who carried out had serious training. >> henry myers, thank you so

much. more on this on bloomberg radio and television. with us this morning, bob dahl. i want to talk about $291 billion. even oakley reporting on that flow of money into bingham garden. why should i be in an active fund when all the money is moving to passive because of low fees? >> the active case is that all the money moving to passive is making markets less efficient. when vanguard gets that flow, you and i both know what they buy the good ones, the bad ones everything. allowing the few of us left in active space to have a better shot of getting a few less good

ones. >> are we going to bring the fees of active closer to what john does at vanguard? >> there have been many articles and less couple of months on this. some of the reasons why actives have underperformed. the monkey is on our back. we have to do better in i think the environment is changing. >> why should i put my 401(k) savings at risk just for the good of an efficient market? >> you shouldn't. i make the argument as an active manager. are you going to find the cheapest lawyer? you want the best lawyer, you are willing to pay. passive has a place. this automatic i have to sell all my active and go to passive -- >> bob shiller and others who invented all this mumbo-jumbo

you and i studied, when you go back to it, is there a place for that delta of active managers? robert kirby said you could make 200 basis points off of active management. he said that 20 years ago. >> the average active manager will not outperform. fees are higher. that does not mean there is not a cream of the crop. you have to work hard to find it. >> how do i pick a sequoia? >> you have to understand what they are up to have some confidence in what they are doing, see a track record and buy in. you will not get them all right and you don't only go to one. >> there is something different this time around. persistent low nominal gdp squeezing everything down toward the wiggle room of excellence is different than it used to be. >> active managers tend to

underperformed when interest rate fall. >> for average investors, the problem is not how you pick a sequoia, it is how you don't pick a ponzi. >> bob dahl just gave the single best defense of active management i've heard in five years. whether anyone agrees or disagrees, that was superb. >> coming up next, toilet paper for oil. it is a trade proposal. we discuss how that things have gotten even worse for the country's economy. we'll be right back. ♪

>> good morning. oil cells -- we will talk about venezuela in a bit. here is olivia sterns. >> warren buffett and his 50th annual letter to berkshire hathaway shareholders. he writes that we will always impressed -- always invest abroad. the treasures that have been uncovered up to now are dwarfed by those that are still untapped. want to introduce tom porcelli.

he is joining us on set. i want to get your reaction to the buffett annual letter. do you agree that the biggest opportunityies are still in america? >> you look at the classic buffett annual report of 20 years back no pictures, no nothing. it had a lot of academics. it was a smart portfolio. now, it is much more nostalgic. i thought the headlines over the weekend here we are, charlie and i. >> he is setting the stage for his president. buffett is a guy who has always been hunting for elephants in the u.s. he says he owns a .5 s&p companies. -- he owns 8.5 s&p companies. >> this confidence he has the

american economy is a confidence in american culture. >> i don't think we are talking to tom porcelli are we? [laughter] >> it is a miserable snow day in new york city. francisco rodriguez is with us on venezuela. we will switch gears. >> raise your hand if you got that one wrong. let's put our hands up. >> it always happens on a snow day. we have ignored venezuela. very quickly, how urgent is venezuela this march 2? >> it is a country that has rampant scarcity of just about every good. it's economy is dysfunctional.

it is going through a political crisis. >> that set. -- that sets us up to talk to francisco rodriguez. we have ignored this. >> i was wondering why you were ignoring tom. >> what we just did is called a brian sullivan. >> has john boehner lost control of the house? we will be back in just a moment. ♪

>> good morning. "bloomberg surveillance." here is olivia sterns. >> thousands marched on four boris nemtsov. nemtsov was a deputy prime minister and an opponent of vladimir putin. north korea is making noise. it launched a pair of short range missiles toward the sea of japan.

the move coincides with the start of military exercises by south korea and the u.s. hillary clinton posco long-awaited announcement -- hillary clinton's long-awaited announcement is reportedly near. that would uncertainties within the democratic party and speed up her fundraising. presidential announcement is expected from marco rubio. nxp semiconductors has agreed to acquire a small arrival. annex b is based in the netherlands. both company's are major suppliers of chips used in cars. plow drivers might be pleased boston is near a record nobody wants. they have already gotten 8.5 feet is winter. six inches more and a

20-year-old wrecker -- record will fall. the center of that phone hacking scandal -- rebekah brooks may end up overseeing digital initiatives at rupert murdoch's company. she quit in 2011. a british court acquitted her of the phone hacking. those are your top headlines. >> venezuela sold its crude at $117 a barrel. last month, that was $49. the country is effectively knocked out of -- lockout of capital markets. the island of trinidad and tobago has offered a swap. venezuela and crude -- francisco rodriguez is with us. he is bank of america merrill lynch is economist.

francisco, that is always a level of democratic unrest in venezuela. should we take it more seriously this year? >> you have to take it more seriously because you have key elections coming up. parliamentary elections which could make the government lose congress for the first time since chavez got into power. the possibility of a recall referendum next year. right now, the president is losing congressional elections by a three to one margin. >> this is not like the russian opposition. this is a real party that could come into power? >> exactly. this is a regime that is been in power since 1999 and it will not be easy for them to give up power. >> we are not looking at an imminent collapse. you think the risk is priced in and reasonable? >> i don't not think we're talking about a default. when you talk about venezuela

deals, that shows you how this economy is. if the government is looking for cash because it has no toilet paper, it should try to be selling its dollar -- it's oil for cash. it is still striking these one-to-one deals with other countries which are part of the economic policies that chavez left. he was giving a lot of foreign aid to countries like trinidad so you could get their votes. what you're still seeing is a country that spend a lot on foreign aid. >> you came out of harvard and the university of maryland. i think of thomas schilling. what are the degrees of freedom this government has? >> i think the government has a degree of freedom because it is unpopular. we are seeing the government take opposition -- actions

against opposition. when you are president and you see you have elections coming up and more than 70% of people want you out of office early -- >> here is a number from francisco's report. per capita gdp in venezuela and -- in u.s. dollar terms. we moved from $13,000 per capita down to $5,459. i've never seen that in a real society. >> will the opposition do any better? >> the opposition could do a lot better. you're talking about a country that is sitting on the world's largest oil reserve. if it is competently run, this country to do well. this is one of the reasons why this is different from a country like greece. the debt is around 30% or 40%. it is much lower than countries that are really broke.

>> one of our producers in venezuela recently says it strikes her as a country that remembers when times were better and still imagines it could be that good again. >> the gdp statistics are distorted. there are four exchange rates right now. another one is 214 boulevards to the dollar. depending on -- you use that number and it is either very low or very high. that explains these fluctuations. it is an economy whose living standards are deteriorating because the government has added in so many controls. >> front -- francisco rodriguez thank you for joining us.

interesting to hear that you do not think venice will you -- think venice well a default. we wants to know, has boehner lost control of the house? ♪

tom: good morning. brendan greeley and olivia sterns with me. let's look at the bloomberg terminal and get to tom. low coming out of the 50's into the 60's. the headline here which you

have written about, this sustained and chronic below 2%. wages will list this up? tom: we are looking at the core --. if you are looking at the core cpi, it is a different animal. mostly because core cpi has a greater weight towards a shelter. that is one reason it is a little bit higher. one of the reasons we feel comfortable that core inflation more main boy and is because of the shelter. tom: is the fed behind? tom: they are. i get it for various reasons. we understand they could not go. at this point it seems reasonable, given the background.

whether it is june or september, it does not make a difference. tom: but it does make a difference to investors. will we get a tantrum if we get the move in june? tom: i think june or september is reasonable. tom: let's come back with tom and wage inflation. here is olivia sterns. olivia: tens of thousands marched in moscow after vladimir putin critic was shot and killed new the border. he had been planning an anti-putin rally. a critical leak for the affordable care act. arguments in a case challenging the subsidies. three senators have a plan to

reduce coverage of the court strikes down the provisions. they have an opinion article in "the washington post." no word on how much they would get or how to pay for it. john boehner says it is not easy leading republicans. he suffered a humiliating defeat when conservatives rejected his plan for a three-week funding bill for the department of security. he approved a one-week bill. boehner was asked if he could leave the house republicans. >> i think so. remember what is causing this. it is the president of the united states overreaching. olivia: he will try again this week to get homeland security funded through the rest of the year. conservatives are opposed to any spending bill that does not block executive orders on immigration. brendan: rachel bias in

ferguson, missouri. officer shot a black teenager. the report criticizes the city for highest in traffic's tops -- in traffic stops. the new ceo of mcdonald's not wasting time when it comes to a turnaround plan. he took over yesterday. he will speak to franchise owners and suppliers. he might announce plans to shift to antibiotic free chicken or beef. samsung unveiling its newest challenger to the iphone. the galaxy s6. the edge model has a screen that extends to the right and left sides of the phone. it includes payment software. samsung is trying to reverse profit decline and market share loss is to apple.

tom: tom is with us from rbc capital markets. phelps spoke about innovation. it is about we need real change in technology to drive growth. is it there? tom: no, it is not. you and i have talked about this many times, the idea that the demographic of the united states is one where they are looking at -- in the immediate term. the great mark twain phrase history doesn't repeat, it rhymes. the rhythms will look similar. i think it is an important idea. if you do not have some sort of slowing in the rate of slowdown

that we are looking at in the demographic profile, the link thing that could change the day is productivity. tom: we will come back. how about a data check? this is "bloomberg surveillance." with me, olivia sterns and brendan greeley. dell futures of 11. the 10 year yield, this is an important essay that we saw on the new york times this weekend. brendan: there were several. olivia: i want to get out to our

colleague, francine lacqua. the man who lifted the lid he alleges management was aware of lax controls. great to see you this morning. set the stage for us. francine: in the u.s. last month, and 2000 seven, he stole data from hsbc. he gave it to authorities in france and that got passed on to the u.s. this sets the scene. it was brought to the forefront a couple of weeks ago when the press poured over this data and not only was it a breach, but the allegations that people were helped to evade taxes came to

light. i spoke to him on friday. we talked about this and he is saying he can prove hsbc management knew about alledge it tax abuses. >> i can prove that the top management is aware and was aware of the program that -- i am really surprised top management is pretending a lot of things, but not try to know what it is about. they do not even try to get inside from their own way to receive information. francine: i tried to get out of him any bank executives.

he declined to describe his evidence. he says he can provide logical proof. it could be something in the way the accounts were set up or some kind of software. brendan: did he tell you why he did this? was this moral on bridge? -- moral umbridge? francine: some people say he did it for money. he said he thought it was wrong. he put his hat on the moral compass that he has. he says there is more information, but he did not want to dwell on it. he says he wants a dialogue between banks and whistleblowers. he is a controversial figure.

olivia: this is a story across the front pages of news papers. what is the bank saying about this? francine: they declined to comment, but they were fond us -- they referred us to the earlier statements. this is a huge topic in the u k because of the election. the hsbc ceo of apologized and wrote that the units had been completely overhauled. olivia: we will leave it there. thank you. as we head into the break, we want to ask you our twitter question of the day.

as john boehner lost control of the house? we only got a one-week stop gap funding bill. we want to hear from you. ♪

tom: futures do not show it but oil gets my attention. olivia: tens of thousands of people marched for the former deputy prime minister of russia. details of his murder are blurry. he was gunned down while walking across a bridge in red square. in spitting distance of the kremlin. a critic left moscow. here is a quote from her op-ed. the message was clear. people will be killed in plane view of the kremlin for daring to oppose the kremlin. what should we know about nemtsov and his role in the opposition? masha: he was part of the

political establishment. he did not seen the kind of maverick who was sticking his head out, but he was. he was consistent. a rare quality for a russian politician. he was talking about the nature of the putin regime. it did not feel like he was a combatant to the extent he should be killed. olivia: americans woke up and they wanted to know to what extent is president clinton responsible. -- president putin was responsible. masha: i was in a group of bicyclists that went under the bridge. 15 presidential guard ran to us to see what the occurrence was. somebody gets killed or shot on

the bridge and the body was on the bridge for 10 minutes before the regular police came. the presidential guard did not walk over from the kremlin to see what happened. i think that tells us everything we need to know. brendan: is boris -- if boris nemtsov wasn't safe, who is? russia's history drenched in blood and tears. is this an apt comparison? is the panic merited? >> i would stay away from that comparison. what is frightening about this is that the kremlin has been

fielding an uncontrollable force, a group of avengers encouraged to go after opposition. what we saw was the first killing in that campaign. this was a frightening. there are lists circulating and many people who are on them. olivia: we will keep talking about this. as we head into break, we will ask you our twitter russian of the day. has john boehner lost control of the house? ♪

tom: good morning. futures flat. top headlines. olivia: thousands took to the streets in honor of boris nemtsov. he was gunned down in sight of the kremlin. the former deputy prime minister and opponent of vladimir putin. short range missiles launched towards the sea of japan. it coincides with military exercises between south korea and the u.s. buzz feed says a military group

because their account is often law. a deal to tell you about this morning. -- prices 1.9 billion dollars. they see the euro closing for the end of this year. new tracking methods being tried because of the malaysian airlines history. australian airlines teaming up to monitor airlines. no trace has been found of the jet or the people on board. a space x rocket blasting off. boeing built those satellite system security was the rocket's

16th launch. baseba many minoso, who died early sunday. he was one of the first latino stars. president obama called him one of the most dominant and dynamic players of the 1950's. he was 89 years old. tom: wages rise. at least the reality that other walmart and retailers are lifting wages. wage growth will come. tom said that. are we finally here? tom: we are getting closer. the rate is up. the percent of small business owners planning on waging raises is up. income expectations are up.

something janet yellen noted. here's a great way of thinking about this. everyone has aggregate wages depending on how you want to measure it. if you look at the wages for job openings now you know over the openings are, you know what the wages are yummy you can combine those ideas. right now, that measure of wages is running north of total aggregate wages. it is not simple enough to say there is wage pressure in the pipeline. tom: the summer of this is outlined crew right. forget about a one america. is it a bimodal analysis?

tom: she has been slow for this reason. there is all this labor market slack. >> the data is compelling. she is not changing her mind. the data has changed. there is a different way of splitting the data. you can tackle data from any perspective. the realities, the percent of small business owners planning on raising worker pay these things have been going on for months. whether it is 12 bucks an hour at target or a person moving up to $140,000 a year.

tom: here is why it is not a simple answer. there are different samples of wages. it is the best way of looking at wages. it has accelerated. most people look at average hourly earnings. this is a woeful way of looking at wage dynamics in the united states. pick your poison. he will remain firm. it will run north of 5%. tom: the gene green increase? tom: it is our call. that got taken down recently.

i want to be clear. i hate to sound like this, because we do stick our next out there whether it is june or september, i do not think it makes a difference in the world. >> 5.6%. olivia: the department of homeland security due to run out of funding. has john boehner lost control of the house after 52 members of his party defected? the first answer, yes. second answer, to lose control implies he had it in the first. the final answer, he has lost control. he is like frank underwood at the start of house of cards season three. tom, do you watch "house of cards." tom: i do not.

olivia: there was going to be a big government spending program and i was going to see if he thought congress would pass it. brendan: that is also my agenda. sam rayburn was speaker of the house for 17 years. john boehner only four years. it feels like it has been 10. he keeps hanging on. i think he is a survivor. tom: mine is greece. ithe article in the telegraph is superb. olivia: the murder of nemtsov. what is next for people in russia? masha: a lot of people are facing hard choices. stay in the country and fight or leave the country.

i think people are going to fight from outside the country. the stakes are too high, the risks are too great. you risk everything when you go into the streets. you get nothing in return. tom: can you frame is this a putin that is soviet like? is it like a 1940's? is it stalinist ic? masha: i think it is to tall a terry and. -- total solitary and -- tota litarian. tom: how does your belief translate over to the rest of the russian people? >> there is almost no independent media left. the biggest opposition

publication is published outside russia. tom: i'm going to cut you off. are you safe on the street of moscow or are you safe on the streets of new york city? masha: you might notice i am in new york city. i am safe here and not there. brendan: is their opposition outside moscow. masha: there is. there are individuals all over the country. they have no leverage to make something happen. olivia: will there be a fair inquiry? masha: no. tom: thank you for coming. thank you for braving the snow. tom with us on a snowy day. we will have continued coverage on the snow. boston has a little bit of note.

olivia: over 100 inches. tom: do not forget the jobs report. stay with us. ♪

>> we are live from bloomberg headquarters. im alex neil. -- i a.m. alix steel.

we will discuss israel's prime minister's trip to the u.s.. we will look at how oil rigs have been idle for 12 weeks it's sending the steepest drop off in drilling. here's a look at the top stories of the morning. john kerry will hold a meeting today with russia's foreign minister. he is expected to discuss ukraine and the murder of a dissident. russia is lying about his role -- its role in ukraine. in geneva, john kerry met with the foreign minister of iran looking for a deal to shut down and ron's nuclear program.