Kremlin has been amassing military along parts of ukraines eastern border. Ahead of the meeting, john kerry stopped to speak with reporters. About. Ave a lot to talk i look forward to an opportunity issues and the possibilities that we may be able to find about how to move Forward Together to resolve some of the differences between us. We look forward, i know, to a good conversation. We will take you live to the Russian Embassy later in the hour for an update. The public face of russias seizure of the peninsula is holding a News Conference ahead of the vote. You can watch it at bloomberg. Com tv. We want to focus on the oil ties between the countries. The u. S. Is selling 5 billion barrels of oil today. It is the first time the u. S. Will be testing its release system. Barrelsel, 5 million sounds like a lot, but put it into context. It is kind of like a drop in the bucket. It is basically less than 1 of all of the oil we stockpiled. The whole enchilada is 690 Million Barrels. Huge, and there is a lot left over. In terms of demand, it is relatively small. We use 19 Million Barrels every single day. 26 llion barrels is about of that daily demand. Cause a lot of the defense. If it does not cause big effects, what is it meant to do . Two things. The direct purpose is to test infrastructure, a teacher pipelines are working up to snuff. It will also test the appetite for this oil. It is sour oil, so, in theory, oil thate blended with the u. S. Produces. It is being called a warning shot. It is not a coincidence the test comes days before the referendum on crimea. The u. S. Is releasing this hour crude. The sour crude. The release might displace other imports and those imports have to find their way to market, most likely diverted back to europe, and that could compete with russian crude. Russia exports 7 Million Barrels 2012. In the entire u. S. Stockpile could replace russia for 100 days. That is the muscle that they are boxing. Flexing. Overall effect on the oil supply . Industry experts a pretty small. Of release might have more an impact on the heavy crude, the sour crude that is still being imported. If the u. S. Diverse the oil to europe, it could impact prices. Keep in mind, russia needs 110 per barrel to balance. Russia needs High Oil Prices to sustain itself. However, experts tell me if you want to saber rattle it will be the u. S. Exporting oil, which we are not legally allowed to do because then they could really eat into demand and provide another option for european buyers. Thank you, alix steel, our bloomberg reporter. Shaking this hour, facebook ceo Mark Zuckerberg. Americans, he is unhappy about the nsa and spying. Nt unlike a lot of americans, Mark Zuckerberg was able to get president obama on the phone wednesday night to complain. There are reports the nsa describe disguised itself as facebook. Nsa calls the reports inaccurate. Mark zuckerberg has not revealed what he said to the president but in a Facebook Post he wrote the u. S. Government should be a champion of the internet, and not a threat. Speaking of movers and shakers, i want to bring in our mover and shaker, jim reynolds. Why do you blush . Thank you for the kind description. He is the ceo of loop capital. You are a friend of the president. You have talked about his policy and his relationship with business. There is no secret that the frustrations are there, but they are also continuing to rise, are they not . They are continuing to rise, but the good news is as you look through the continuum, when this first started the economy was sluggish, we were not growing, jobs were not being created and the like. There is less of a discussion of the impact on the economy. We seem to be on an upward trajectory. We are creating jobs. We want to create them faster. We have a solid business climate. We are seeing a lot of deals get done that one again done not getting done last year. Dealmakers might say that is regardless of washington. Not happeningere last year because of the indecisiveness. If you recall discussions, it was confusion around washington, d. C. Every other conversation was what is going on in washington, d. C. . Now, and most of the business conversations i have, washington, d. C. Does not come up. What has been decided . Economy continues to grow through it. We are on a positive trajectory. The fed policy has become clear. When you look at what is happening in productivity, jobs, corporate activity in terms of mna, spending, and the like, it is really a seachange. There are a couple of issues that have come out of the white house that have rankled some people in Corporate America. One of them is the minimum wage hike. The white house pushed for that. Also, the push for reclassifying certain kinds of workers in the u. S. So that they get overtime pay. Republicans argue that is another job killer. I wanted to listen to what House Speaker john boehner said about this. If you do not have a job, you do not qualify for overtime, so what do you get out of it . Nothing. The president policies are making it difficult for employers to expand employment and until the policies get out of the way, employers will continue to sit on their hands. There are a couple of responses that i have. First and foremost, there might be a bit of fact in there somewhere, but i do not know if you expect john boehner to come out, of all people, strongly in favor of any of the policies the president has. He is the opposing party. We have midterm elections. A lot is at stake. The president , in his state of the union address, stated several things, and we talked about them afterwards. I said it sounds more like a governor talking because they were smaller goals. They were goals that have more to do with the domestic economy. They were less ambitious. Much less ambitious. Income inequality was an issue he wanted to deal with. It has become a big thing for him. This is one way he begins to deal with it. The one thing that is not talked weekend,e lower end but the top end, the lower end, we get, but the top end, the gap is wider than ever. For yourself if we want to talk about income inequality, we have had several ceos on the program that have talked about it and defend it very they say defend it. They say i work hard, and i see myself as an example to the american people. You work hardif enough in this country you can get to where i am. Is there anything wrong with that . Absolutely not. Every young person should have those ambitions, but the reality is we still have workers, low skill workers and marginally skilled workers that have to get up every day, go to work and try to pay their bills, so how do we make sure they are adequately compensated . Do you believe raising the minimum wage, any other policy about overtime pay, do you agree it could be a job killer or that it could cost jobs in the u. S. . Doubt some no businesses will have to lay off workers to maintain margins and do this. There is also the flipside of this that many businesses cannot absorb the costs and continue to function and have inadequate margin. They be the ceos take home a little maybe the ceos take home a little less, which is something we do not talk about, and they do not take it out of offhide of workers and lay workers and you are able to accomplish that. It is difficult where you work for a living and you still do not make it out. You continue to struggle. We will talk more about this in a moment. I want to focus on what is going on in new york city with jim reynolds, the ceo of loop Capital Market and we will talk banks and pension funds. Well be back with new York City Comptroller scott stringer. Also, bankuniteds john kanas will weigh in. Hitsthe magazine that government. It is called garden and gun garden and gun. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Back with my guest post, jim reynolds, ceo of loop capital, a significant acrossiter of muni debt the u. S. We are also joined by scott stringer, the new York City Comptroller, who is also pushing for a higher minimum wage for workers in a city that is one of the most expensive to live in and the world. We have documented the rise in rent and the rising cost of living here in the city. Wage debate on the and how much that will close the income gap. We have to recognize new york city is the Financial Capital of the world. Citywe do well in new york it has a Multiplier Effect for our state and our dark you for our state and i would argue beyond. We want permission to raise new. Ork citys minimum wage we have an 80 higher cost of living than the city of buffalo, the city of rochester. It makes sense that the minimum wage, one size does not fit all. Doif albany allows you to this, they would have to allow all cities to do this, right . They should be explored. Just for numbers say, if we could raise the minimum wage to 11 in new york city, that would be an additional 2 billion that would be sent in neighborhoods where we need to create more economic activity. Heardo not know if you the discussion at the top of the show where she a costed us where she a costed me on the minimum wage issue. I am a fan of it, but the downside that betty referred to is are you concerned about the job losses that might result . Sure. There are National Numbers that have come out that shows that is a concern. So many studies there are numbers to back that up. There are so many other studies that suggest we will not lose jobs, that we will actually create jobs. In new york city, were actually adding jobs, 95 thousand jobs, but what we find in the trends is that these are lowwage jobs. The challenge is yes, job creation is good, but we need jobs that will pay the rent, put food on the table, and give people an entree into the middle class. That has been the american tradition. Withott, we were speaking john kessler tedious, who cites as aising cost of living reason why people are fleeing the city. The Florida Real Estate people were celebrating them more and more new yorkers are moving down. I think it is 400 families or people a day. Really . Because of taxes . Because of the fear of taxes. They have not gone up yet, but they fear it is going to rise, so they figure lets get out of town faster. What do you think of that . People,ing for working being progressive, and fiscally responsible is not mutually exclusive. I, believe it or not, in a rare moment would agree that we have to be careful that people do not flee, but here is why people stay. People stay because they love our culture, our arts. City. S an interactive we have diversity like nobody else. We have the tools to keep people here, but you do have to balance with delivering service. One way is to give people that are struggling an opportunity to do more so we do not have to spend more on social service and the like. You cannot have it all ways. Jim, in chicago, you are dealing with the same issues, maybe to a bigger scale with pension obligations. We are, and that is something i wanted to chat with you about, scott. It is interesting, in this National Debate about unfunded ever l liabilities, i rarely hear new york city in the conversation. Can you give me dialogue as to why that is . I would like to be able to tell you since i have been comptroller, we are all set and everything is fixed. And the future is bright. Ofi wish i could claim all the credit. Just do not mess it up. Do no harm. To your point, the pension actuarial targets have to be met, and that is about allocation, and bringing in the professional team that understands we are longterm investors and we recognize volatility in the market. I want a Risk Assessment of pension funds. I want to make sure we are edging in the appropriate ways so that when the economy moves in a certain direction we can continue to grow. Are those returns, those goals too high, unrealistic . I will not know the specific data, and we will have to come back after june 30, we are doing well. I do not want to overpromise, we still have another quarter, but i am confident in new York City Pension Fund will reach the seven percent target and perhaps beyond and that is because of hard work and strategic thinking. In this economy, nobody is an expert. Maybe you are. Let me ask you another 1 the toughest thing for democrats has been the relationship with unions and negotiating points. You seem to enjoy a good relationship. What is your secret . The Labor Movement represents working people around this country. They are very important to the life of families around the country. There is a rich history. We should not demonize labor unions. Just like it is a mistake to demonize this offense. It is time for the country to come together. Us,hank you for joining scott stringer. Also, jim reynolds will be staying. We will be back in two minutes. First. Bloomberg. [laughter] you are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. It is 26 minutes past the hour. Bloomberg is on the markets. We have erased all of our games for the year on the s p after hitting records. The s p is now down. 2 . We are waiting for Producer Price numbers. We are on the markets again in 30 minutes. The mystery over what happened to the missing malaysian deepens. Flight malaysia is looking at the possibility of pilot or crew involvement in the disappearance. There is also evidence that the claimed flu the airplane flew four hours after losing contact. Four years after the explosion, the right for exploration contracts in the gulf of mexico. They were banned after the epa determined they had not fully corrected problems that led to the spill into the gulf. Theen buffett is once again worlds second richest person. According to the bloomberg billionaires index, he has a net worth that is about 5 million more than carlos men carlos slim. He has been helped by a rise in berkshire hathaway. He is right behind his friend bill gates aaron bill gates. Bankunited has reached a milestone. Includingity holders equity holders including wilbur ross and carlyle have made shares available to mutual funds. It is that a 52week high and it has expanded operations into new york city. Joining me is the bank and ceo of bankunited, john kanas. Jim reynolds of loop capital is also with us. The did you think about endorsement for florida from John Catsimatidis . We are sending john a check. I was trying to do the math, how many people can be absorbed . Do not worry. They keep building. Both of you have been in the Banking Industry for years. Tell me how you think banking will turn out in the first. Uarter i think it will be tough in second, androbably maybe all of 20. A lot of banks have been anticipating a rise in Interest Rates, and prognostications are based on levels of rates where we are not there yet. With janet yellen in the thrown, promising more of the same kind of monetary policy, i think it will be a while. Rates are languishing at this low level for longer than people think and that continues to squeeze bank margins. Would you agree that mergers and the positions activity is acquisitions activity is rising . Tothere is a great argument be made that consolidation of Smaller Banks over time is that what you did . 18 or 19 times, yes. The consolidation at the midcap level and large level continues to be thwarted by a number of things, not the least of which egulatory policy, and valuation . Valuation for sure, and uncertainty. One of the things that we chatted about was what is happening in your sweet spot, the middle market, mergers and acquisitions activity, and it feels like we have ourselves set up to do better last year and the year before, but this year it looks like things are falling into place. We are starting to see higher valuations, money is virtually free, baby boomers want to get out and things are happening. How are you playing the a sector . M we are continuing dialogue. The key to success in the anmarket space is to grow institution and look for opportunities to buddy the institution up with a complementary company that could improve value on both sides. We are also in contact with s and boards of Company Companies that we think could be a good partner in the future. Ofre has been no more talk consolidation than this year. We keep the channels open. People know well what makes sense for us. That he said, valuations are making those conversations difficult. Very difficult, and candidates smaller and smaller. Scarlet fu has breaking news on the Producer Price numbers. We are talking about wholesale inflation and we had an unexpected decline in Producer Prices for the month of. 10 . Ry, a drop of if you back out energy and food prices, alsol down. Im a yearoveryear basis, Producer Prices rose less than anticipated. 9 is the headline number. Producer prices were actually overhauled in january to include more prices for more services. This is a more comprehensive pricing businesses power and one reason he remains muted is because of a lack of topline pressure and these numbers bear that out with lower than expected readings in wholesale inflation. Thank you. We were listening in, and it is interesting, jim, because those kinds of numbers, while just one month, add a little bit of uncertainty to fed policy, but it is also not terribly good news for corporations that have less and less Pricing Power of a given what they see with inflation. We have seen the difficulty that is the story with business growing Topline Revenue and the Pricing Power that has not been there every it is probably there. It is probably good news for the fed that has been watching the job rate and inflation. It shows we do not have to be as concerned about the inflationary impact we see with the numbers, but it is worrisome for businesses. They have to recapture that. When you look at how they make money, they have squeezed so much out of productivity gains, reduce labor costs. You want to push that. John, earlier jim and i were talking about policy in washington, and you have expressed your frustration in washington about regulation and this environment, and how it is difficult to do business. Do you agree that things seem to be a little bit better in d. C. . I think everybody is getting used to each other. Bankers are understanding what the new rules are. Regulators are getting more accustomed to enforcing these new regulations in an evenhanded way. Yeah, i think things are improving. There is still a lot that we do not know about with the execution of more of dodd frank, which is not been completely rolled out yet. Most of what is happening is banks finally get it. They understand what the new roads of rick nash rules of the road are they understand what the new rules of the road are. What is interesting about your bank. My favorite. And citibank. When i moved to florida i will bank there. I will hold you to that. Your bank, citibank, jpmorgan, they have a regulatory bullseye on them. They are under the microscope. You are not as much. Does that give you an advantage as you go about doing your day an business theyto advantage as you go about your daytoday business . Of course. We have a simpler Business Plan for sure, though with regard to regulatory compliance, to be frank, midcap banks, while we do not have to comply with 100 of what the big banks do, we have to comply with 99 . In terms of regulation, not a great advantage, but in terms of size and the ability to be more nimble in the way we operate and how we can react to trends, certainly we have more of an advantage. Are you looking to expand . Florida and new york, or what . We have 100 branches throughout florida, and we are probably mostly done in expanding in florida. In new york, we have four operating locations. We will probably throw up one or two more, but to be frank, as we talked about before, customers do not need the services of a bank through branches anymore. Stroll down the streets of new york, look at most of the bank branches, there is nobody in line. I have not gone into a bank in a long time. Most people have not. We were all predicting the 25 yearss environment ago, then 10 years ago, and then it did not happen until two years ago. It happened all at once. People got accustomed to the technology. It started with consumers and handheld devices. People are banking with Remote Deposit Capture and mobile devices. That, of course, raises security concerns. Tremendous. A problem that has yet to be solved. John, thank you. John kanas, the ceo of bankunited. Reynolds,k you, jim ceo of loop capital. Coming up, backlash how government spying might have an impact on the elections. We will hear from the cofounder of wikipedia. Garden and gun is a booming business they have seen their circulation rise while the rest of the industry is flat. The editorinchief joins me in the loop. Well, at a time when yahoo , aol, and other sites are launching topicspecific sites, one magazine sees ad revenue the oldfashioned way, with a hardened hollywood issue. Hit withnd gun is a southerners and americans around the country. Davidne industry veteran dibenedetto is editorinchief of the publication and has written the companion, the southerners handbook, a New York Times bestseller. People want to learn how to be a southern. There are a lot of skills people are interested in, making julep, a pecan pie, even grits. Hungry. E making me i lived in atlanta, and their was always the idea that people do not understand the region. With the magazine that you launched, 62 issues a year. The hollywood issue, why was it so popular . You think about hollywood, and hollywood is into good storytelling. The south is about good stories. There is a southern mafia. So many sufferers. Our cover model, john goodman, who lives in new orleans, very much a southerner. Have the upcoming james brown movie that was filmed in mississippi. Hollywood is not filming the south in hollywood, they are actually coming to the south and they want to get it right with the accents. You mentioned it is your revenuegenerating issue, so advertisers have really glommed onto this culture where this region. Absolutely. His region, the magazine they are realizing the passion readers have for garden and gun , and its continued growth. However there are still stereotypes that persist in media. Do they help or hurt . I do not know how much they hurt. Think about duck dynasty for instance. Not it is a great moneymaker. It is a great moneymaker, but it is not in garden and guns wheelhouse. Great photography, we have readers who read. A lot of magazines are quick hits. We are a throwback. We took a gamble that people wanted to dive into a magazine and be taken away. To you have a Digital Strategy . Is that important . Is allow ustal does to tell stories deeper. Also . Story about john goodman in the magazine, and you on andthe digital editi you see a video clip. You write about a band, and in the digital clip, you watch their video. Aere are so many ways to take story even additional photos or audio clips, you can go you can goter layer. To could you do what you do in print and online . You could do it, but you would not be as successful. Why . Is anden and gun experience. To sit down with it is an experience. Our readers are passionate. They are proud to put it on the coffee table. It is almost a badge of honor. That is why you have Luxury Companies that are keen to advertise. Sure. In the last couple of years, great luxury advertisers land coming,hey kind of keep and certainly, liquor ads jack daniels, they are realizing the power. Before i let you go, garden and gun is not what we think, the origins, right . Gardens and about it is not about guns. Club innspired by a charleston. When the bars shut down at midnight, everybody went to the garden and gun club. It was the studio 54 of the south. It is not named by the club, but it is inspired. 50 50 readership, and it is a fun name. That caught our attention. Much, david dibenedetto, editorinchief of garden and gun. It is time for the bloomberg big number. 1 billion, that is how much frozen has brought in. It has beaten toy story 3. It has helped pixar regain dominance in the genre. Coming up, the founder of onipedia weighs in government spying and tells us what he is doing to keep your information private. First. Bloomberg. President obama has been under pressure to provide clarity on the nsas tracking of Internet Users and many silicon titans have called for more transparency. Guy johnson and Francine Lacqua asked jimmy wales how serious it is. I think it is serious and it will be a big political issue in the upcoming elections. Itll are fed up with the lack of transparency and lying to congress and i think it will make a difference. Jimmy, who has to take the forefront . We heard from Mark Zuckerberg that he called president obama. If the authorities are not backing this, what could companies do to fight this . If you look at both sides, who is going to have to do the heavy lifting . Well, i think that ultimately the public is going to have to step up and demand changes. They already are from internet providers. We see facebook and google turning increasingly to yeah encryption. As well as yahoo . We have encrypted connections to wikipedia. There is a demand from consumers to increase the level of security on the internet. As Mark Zuckerberg said when we work on these issues we think we are combating criminals, but we are combating spying by our own government. In terms of the resources it will take any sense of the scale of the problem and how difficult it will be to find a solution that matches Consumer Expectations . I think it is straightforward. The technology is in place. Awareness among companies they need to move to better technologies. That is also in place. It is just a matter of time. I do not think ultimately the fight. L win in this when you talk about technology, is it just inscription technology, stuff that is widely available, or stuff that very few people know about . Widely available. People have concerns that it is not as strong as it should be, but experts say you can trust the math. Strong encryption actually works here it is a technology that is actually with us and we need to start using it more and more. That is wikipedia founder jimmy wales. Diddy backlo and together again. They have not reignited their love. They are bidding against each other. Two entertainers that once dated each other are now rivals trying to buy the same television channel. This is hiphop mogul sean combs, who has gone by puff and now justddy diddy. He wants to buy fuse tv. That is singer jennifer lopez. She is one of the backers of nuvotv, and englishlanguage channel for latinos. Nuvotv is offering more than 200 million for fuse tv. They want the eyeballs. Madison square garden is set to select the winning bid by the end of this month. Wendy six 56 minutes past the are equity futures lower. We erased the gains that we saw this year. Month,r prices fell last and there was an expectation for a gain in inflation. We are on the market again in 30 minutes. Coming up in the next hour, secretary of state john kerry is meeting with russian leadership in london. We will have the details next. Also, the details in a different rivalry, Warren Buffett edging out carlos slim in the billionaires ranking. You are watching in the loop, live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. We are about 30 minutes away from the opening bell. U are in the loop i am betty liu. Equity futures are showing little change. A new twist in the search for the missing of Asian Airlines plane. Investigators looking into if the crew was involved in the disappearance. In china it has to do with graphite lines. Graphite is used in batteries for tesla, the electric car. John malone is changing course Liberty Media is dropping its bid for sirius satellite radio. Statedon, secretary of john kerry is meeting with his forian counterpart to press an end to the crimean conflict in the biggest dispute between the country since the iron curtain fell. Ryan chilcote is inside of the russian ambassadors residence in london. Crimea is holding the referendum sunday. What are the two sides looking to accomplish in this meeting before then . To break the impasse right now and try to find some kind of solution to the conflict in ukraine that is mutually acceptable. Discussions. Hhour it is difficult to figure out how they could actually come to agreement, but the Russian Foreign minister is said to speak here in the ambassadors residence in london in about a halfhour. He is meeting with the u. S. Secretary of state right now. I spoke with the secretary of state earlier in the day and he told me he is looking for a way to defuse the crisis and get this back on the diplomatic track. The United States and the European Union have threatened sanctions if russia and Vladimir Putin do not step down with this referendum in crimea, now scheduled for sunday. It is interesting they are meeting in london, not exactly neutral ground, but not washington or moscow. John kerry was supposed to go to moscow on monday. He had been invited by the russian president , but refused because the United States say they do not believe russia is taking the diplomatic solution seriously and we have these lastditch talks and the United States might be happy with just giving assurances that russia will not accept crimea. Annex crimea. When they go to the polls on sunday, they will decide whether they join russia or remain in the ukraine, and then minnesotas it is up to russia on whether they accept crimea. Ist is where john kerry hoping to make some ground. Thank you, ryan chilcote. Has reclaimed his spot as the worlds second richest man. According to the bloomberg billionaires index, he has a net worth of 63. 4 billion, 5 million more than mexicos Telecom Mogul carlos slim. This is a shift. Now on the go, carlos slim was the richest. Tom metcalfe did some digging. He joins us. Warren buffett, you could figure out. The rise in berkshire. Carlos going on with slim . His Biggest Holding has been hit. One year ago, he was comfortably the richest man in Warren Buffett was fourth. Since then, Warren Buffett has been on a tagger. On a tear. Has concernsle about new regulations. That has been an overhang for carlos slim for many months, and in fact, several years we have been hearing about this. Do you see the divide or the gap between the top three . How does it look . Gates is number one. He is 78 million. , andthe low60 billion then you have in fourth place, europes richest man who is at about 60 million. The gap is closing between it is indeedim. And i wonder how much these guys look at the rankings themselves. What are you hearing about what is going on with how bill gates is using his money and how Warren Buffett is, and how ortega is as well . At this level of wealth, what is interesting is they live relatively modestly. Worn buffet is known for drinking cherry coke Warren Buffett is known for drinking cherry coke and playing poker. Ortega is he a modest guy . They live relatively simply. Warren buffett has given away 30 billion worth of berkshire hathaway. Fromank you, tom metcalf, the merck billionaires from bloomberg billionaires. One million air moving and shaking, Bob Benmosche a. Total compensation for the year, 14 point 8 million, 40 higher than one year ago. Been on a roll, posting a 9 million profit in shares rose 45 in 2013, all of this one year after repaying the government for the biggest bailout in u. S. History. Bob i bob and sheri took over aig in 2009. Well have more on in the loop. You are watching in the loop. Statementitted in a that it failed to act on early warnings of a cyber reach. That breach. That is a story we brought you yesterday. Target had the right safeguards in place but missed their own warning signs. James foster,by ox. Nder and ceo of zero f great to have you on the program. You read through the article. Being that you work with Many Companies such as target, are you surprised that they were, essentially, as we described in this article, asleep at the wheel for almost two weeks . They are in a tough spot. I am not surprised. They put a lot of the pieces of the puzzle into place. Circumstances, they would have had a worldclass Security Defense posture as an organization. They had disruptive new technologies, they had teams around the world are looking at this stuff 24 7. There are things that all organizations could do better, but they were doing a good job. The challenge that target and everybody else has is the organizations attacking them are persistent and they will not give up. It is a tough spot for Corporate America to be in. But why . Explain that to me. We know they are consistent persistent. . Hy is that a vulnerability because the adversary the size and the complexity of the emissary. If the hacker was coming after you, if it was a Single Person on the other side of the world, that is one thing, but when you have Foreign Government actors with huge resources going after u. S. Companies and corporations it is a much different battle. I call cyber warfare the new economic warfare. It is a big challenge. Target had the lowest earnings in six years. Security should be done at the board level not a department within i. T. What i thought was muchesting, foster, is how targetkers have seen to target were not that sophisticated. Sloppy and was very he basically identified himself to authorities. ,hat is going on on that end and why is there not better surveillance or intelligence on the other side with Foreign Governments and how they are monitoring hackers . I heard a couple of things. You are right. Some of the attacks, at the end of the day, it is common, it should have been easy to catch. Systems were identifying it. One of the challenges not just for target, but every organization is sheer volume. Can one or two things slip through the crack . Absolutely. Theou are starting 90 of attacks, it is really difficult to say you have done everything zero. N and risk is now it is part of a Risk Management plan. At the end of the day, you talk about Risk Management and you do not get it to zero. If youre getting hit hundreds of thousands of times, something will come through every day. You are right. It is a tough place. Foster, before i let you go, what came out in the article is retailers are not that good compared to other companies in detecting cyber attacks. Is it just retailers, or who else is not as prepared . It is a great point. I think financial services, in general, has done a good job in terms of industry sector to coalesce together to fight this battle. You will see and need more industry partnerships. Youll need more people fighting the same battle. Retailers sticking together, Technology Companies sticking together, and figuring out how to Work Together as a collective group to fight the challenge instead of individually. Retailers are going through a transition as an industry, and youll will see that organizations that have particularly tough road ahead in dollars resources and to have a tougher road staying ahead of the Cyber Security challenge. Jaymes foster, founder and ceo of zerofox. Thank you for joining us. Thank you, that he. Thank you, have a great day. You, too. The tesla model s, the toyota being both cars hailed as ecofriendly, but they might not be as clean as you believe. Hydroelectric vehicles burn less fossil fuels but there is an Environmental Impact from battery production. Right, they burn less fossil fuels when you drive them, but the question is, when you make them, what does that do to the environment . I remember talking to investors when we were visiting solar panel manufacturers, and we cannot believe the pollution. It is really a drag when you want to believe in the efficacy of trying to help the environment by helping these it buying these vehicles, but it also raises questions about the longterm Business Model of these companies. Could you not say that about a lot of companies that are trying to create and produce environmentally friendly products that the manufacturing of them, take solar panels or whatnot, it will have an environmental cost . You could take that about a lot of companies. Absolutely. There are three ways to impact this story. It is a fantastic story that just comes out this morning. It really gets at this issue. There are three issues. One is the mining of materials and the unsaved, heavily polluting mines that are being shut down. That might get better, right . You could imagine Higher Standards to mining or first world standards, and maybe someday i could happen, but in the meantime, china is shutting , which leads to the second issue, the rapid predicted increase in the price of graphite. If the price of graphite goes up so much that it makes the batteries more expensive over time, in the next 10 or 20 years without a serious mine in the graphite world since the 1980s, you can imagine they would onlymine dirty when it is effective to do so. Dirty when it is effective to do so. The plans to build a factory to build these things, relying on the raw material where the raw cost will go up 30 , part of the believe in tesla and its current share price is that cost will go down over time, not that they will stay flat, or go up by 30 . That is the concern. Cory johnson, thank you so much. Turning to Hedge Fund Manager and billionaire steve , he has been feeling the heat. This comes after eight of his beenr employees have convicted of profiting from information that was not publicly disclosed. Fromjoined by Sheila Bloomberg businessweek. Take it information tell us what this is about. A lot of people thought the en and sac look at coh capital was whiling down, and if you remember, they were charged as a company for being a criminal enterprise, but they did not charge cohen himself. People were starting to think the government moved on. Suddenly, the new case brings them back in. Filed yesterday against a former sac capital analyst is suggesting that cohen was involved in a trade. What happens next for cohen . He is trying to resolve these legal threats. He has a civil case that accused him of failing to supervise employees. He has to resolve that. It could result in a bar from the industry. He has to face managing his company in a different way. It used to be one of the most powerful hedge funds in the world and now he will run a family office. Thank you for bringing us more on cohen. Frome a few minutes away the opening bell. We have the top 10 trades you do not want to miss. Keep it here on in the loop. First. Bloomberg. Welcome back. You are in the loop. I am that a little. It is 26 minutes past the hour on this friday and Bloomberg Television is on the markets. Scarlet fu. We saw futures gyrate after the Producer Price numbers. Wholesale inflation fell unexpectedly in february from january because of service providers. Overseas, the direction is more clear with european stocks down more than 1 , at a fiveweek low, and there is a rush to save ravens as we get closer to the referendum in crimea. A 10year yield is coming down to a 10day low, but lower prices for u. S. Treasuries. The yen is also stronger against all major currencies. We are on the markets again in three minutes. 30 minutes. Thank you. Lets count down the top 10. Scarlet stays with me and Olivia Sterns joins as well. Which has pepsico, been criticized again by nelson peltz who has been pushing the company to split its food and saying they do, not understand how frustrated shareholders are. Rubberer nine, cooper and tire, reporting a drop in corporate earnings driven by a drop in sales. Number eight, herbalife, Nutritional Product maker postponed its Shareholder Meeting as discussions continue with activist investor carl icahn about adding new board will dashboard nominees. New board nominees. They are being investigated for deceptive practices. Number seven, target. They admitted they were alerted of hacker activity but decided the warning did not warrant a followup. An investigation found the company have the safeguards in place but failed to act on them. Six, reporting a loss of six cents a share, fuel systems solutions, who says they continue to focus on new opportunities and are in discussions for a possible renewal of credit facilities. Number five, bp, when in right to compete for u. S. Contract winning the right to compete for u. S. Contracts in the gulf of mexico. They are still recovering from the massive 20 time oil spill 2010 oil spill. Number four, Liberty Media, the Company Controlled by john malone, abandoning the bid for sirius xm holdings. They had offered to buy the satellite radio carriers remaining shares. Number three, altra salon. Fourth quarter earnings rose 9. 5 , topping estimates, but they gave a forecast that came in below contestants contestants. Number two, general mills, posting profits that trailed estimates. Sales volume fell about 1 in the quarter. Reportan to import for this all to march 19. Number one, aeropostale, reporting a 15 drop in samestore sales. The private equity firm, sycamore partners, has taken a 5 stake in the company. As a way for the opening bell, i want to bring in chris harvey, the director of discipline portfolio strategy at wells fargo securities. His call is the bad Winter Weather was actually a positive. Yes. It has been a bad thing, but because it has been bad he will be a good thing. A fair amount of pentup demand. People will have cabin fever. Once we get to spring, some of the trends will change. A few retailers has said the first couple of weeks are starting to improve and think that will continue. You will see a bounce back. Exactly. When you say positive, just for retailers, or acrosstheboard . Acrosstheboard, it will be positive for homebuilders, retailers, the economy in general. It has been a cold winter, as you might have noticed. Yes, as we all notice. Youre looking at various areas including emerging markets and scarlet fu has been looking at different ways to approach emerging markets. It lacks the consensus view the consensus view is to stay cautious, but Goldman Sachs says it is harder than ever to take a single view. Analysts say differentiate, focus on shift and trade that combined with concerns over chinese growth, mean that chile and brazil are most vulnerable. It is an area to take constructive on, but it is difficult. One thought is people want exposure to em. It is risky. One way to play that is through minimum variance, low volatility funds, where you get exposure but you do not take on the risk profile of an active manager. Area. Ebuilders is another there is a lot going on in this actually,olivia, before you speak, is looking at the barricades for homebuilders. I would point to the numbers that say wholesale numbers are falling. Inflation is falling. Ppi numbers show inflation unexpectedly dropped, another sign the economy is not really growing and this might not be the time to buy a home builders. Look at the s p 500 homebuilders index. Halfway through march, the index is already down 8 , 9 . Perhaps now is not the time to buy up names like pulte homes and toll brothers. We look at it as an opportunity. The 10year good Interest Rates, mortgage rates, again, they have been been down recently. In the economy, underlying growth seems to be appropriate, moving along at a good clip. We will have fits and starts in housing, no pun intended, but the continuation of an upper trend. Will you see more differentiation and growth among the homebuilders . I mean, they have all gone out for a long period of time. We are seeing better growth in southern markets, but i do not think there will be too much differentiation want to see the balance. When you have a balance, things are correlated tightly, but over time regional markets will play out differently. You say play in the reits. Yes. Thatwere another sector was being down badly, but if you look at the relative relation, where Interest Rates are, relative valuation, Interest Rates, it is an interesting way to play the market. Up in theot beat middle of last year and we were speaking about that with our guest john kanas, where they mentioned that the expectation of rate increases got ahead of reality. Do you expect that scenario has worn down, that that is not the case anymore . That is right. As Interest Rates went higher, reits went lower. We see a little bit of a decoupling. The fed has finally said we are going to taper, but in a methodical fashion. One would not expect rates to get out of hand, and with a lot of turmoil overseas, that is causing german bonds to rally, which is putting gravity under u. S. 10year, so we think rates will be ok for the reits at this point. Chris harvey, wells fargo securities, thank you. Videogame wars are heating up here in we will tell you who up. Theill tell you who won latest battle, microsoft or sony. A few minutes into the session, stay here stay in the loop. His a look at the top tech stories. Plans to offer Virtual Credit cards have been halted. They tighten restrictions on online financial product. Another electronic battle is heating up between microsoft and sony gaming consoles. Or playstation four consoles ones were sold. Liberty media is dropping its bid to gain full control of sirius, opting to sell stock for Liberty Broadband instead. The unit will include a 25 stake in charter. Catch all of the latest in tech and media at 1 00 p. M. And 6 00 p. M. Eastern time only on bloomberg west. President obamas latest publicity stunt has turned into an infinite viral sensation, and it also talks to his will and is to younger people. Join us more on the white push, the founder and ceo of cheeseburger network memes. I have been following your work for quite some time. What you think about the white houses use of viral videos . House isk the white realizing they have a problem with Health Care Insurance for younger people, and a need to figure out a surprising network surprising method. We are very familiar with the demographic that funny or die reaches. We understand the desire to reach those people, like a lot of brands. What is this millennial generation want . Click entertain me, maybe inform me, but primarily make me laugh. Do you give thumbs up to the this . Ent for doing he will take flak. It is nothing president ial, but he does not have to be reelected. [laughter] what about the other side. The republicans have been trying to reach the younger generation. How do they do it . They have a problem because they do not have a figure to point to and say that represents us. Ceo of facebook saying the Obama Administration has been too much spying and needs to stop. For rep isk republicans to step in and the potential for republicans to step in. What do you expect will be use of younger viewers changing the way elections are run . Will everybody be doing this . The problem is they are mostly a novelty to capture attention because it is a surprising element, but i do not think he will see it in the midterm. You will start to see it in 4016. If Hillary Clinton runs, and she has shown a knack for andicipating in memes letting that happen. She has already been in a very famous one. I think she could leverage the power. I do not know who from the republican side could do that. I want to talk about your own business. You founded the cheeseburger network and you are involved in rca. R Companies Including ci tell me about it. It is a news app geared for the mobile platform. Allows you to follow specific news but the Malaysian Air that have get updates been vetted and are reliable. Customization. Article not in long format, but in smaller chunks. In this have add country. We do, but it might not be a bad thing. If youre walking on the street reading a long article, you might get hit by a bus. With that, you might not. Allen has invested, is that right . It is a long list of people. I believe he has. It would be a wellknown name. On the flipside of what has been going on with this viral video and everyone going digital, you are saying that editorial content is at a premium. That is good news for us. It is good news for everyone in journalism. The discourse 18 months ago was how we have newspapers left to be funded, and now you have Glenn Greenwald getting funded, getting funding, and a handful of startups trying to integrate for different innovate for different meech nietzsches. Will all of that get consolidated . Butt will get consolidated, you will see continued expansion months. Next 20to24 it is one of the cases where once the first consolidation begins, it will be a domino effect. How about for advertisers . How do they sort through all of the content which platform is the best for me to advertise in . You look at scale and uniqueness. Experiences matter to millennials. I do not want to pick up a newspaper. It is just a bunch of words. They are looking for how does it make me feel, how does it entertain me, how does it in for me. How does the advertising make me feel . That is right. Everything needs to be integrated. Great to see you. Thank you for joining us. Ben huh, the founder and ceo of cheeseburger network. We are waiting to hear from secretary of state john kerry in london. He will be speaking at the Russian Embassy. He has been meeting with his russian counterpart. We know the referendum in crimea will be on sunday. You can watch it live on bloomberg. Com tv. We will be back. Time for our global outlook. We are waiting for u. S. Secretary of state john kerry. He will be speaking soon at the Russian Embassy in london ahead of the meeting with his counterpart. We will monitor the press conference for headlines. Sixalaysia, it has been days since the boeing 777 disappeared with 239 people on board. Police are investigating the possibility the pilot and crew might have been involved. Authorities are saying this. We are learning the plane fle four hours after losing contact. I am joined by richard falkenrath. It seems like more foul play is . T work it is starting to look like foul play. It is hard to see how so many things could go wrong. If it is true the navigational transponders were turned off, that would require a deliberate act by somebody who knew what they were doing. All signs point to follow play. Ist is important to say there are still a lot of contradictions in the publicly available information and fragmentary information. We have not seen the last twist and turn in the story. No, we have not, and i want to talk about the coordination. There are several countries involved in this. The United States is not leading the investigation. It is the malaysian authority, the malaysian government that is. Is that somewhat hampering things . Malaysia is not known to be an extremely competent government, and this is a very complex investigation with several different tracks. One looks at the aviation technology, and a second looks element, the manifest, the history, if any of them had a motive, if they were connected to terrorist indicates. Nonetheless, the governments are protective of their prerogatives and do not want other countries, including the United States, stomping around in their investigations. You mentioned that on the airplane it looks like the systems were deliberately turned off. Who has the right to do that . It is a good question. The pilot, or the ground crew acting in conjunction, or somebody who has a deep knowledge. Plane, it is just the pilot . Presumably, just the pilot and copilot. Those are the focal points. Who are these guys, what were they up to, did they have motives to do this, any history terroristion with organizations, a psychological history of problems . Suicide is a possibility. There have been other cases where pilots have committed suicide by crashing the plane, but this is almost too complicated for that. That would have been a sudden action where people could not have reacted, but if the airplane was flying for several hours, what was going on . Exactly. It points to possibly a hijacking, maybe a kidnapping of one of the passengers, theft, extortion, or terrorist attack, and it is conceivable the plane would be used in the style of a 9 11 attack, flown into a skyscraper or something, but we have no evidence of these scenarios. If it was a terrorist attack, something along the lines of a 9 11, would we not have heard chatter . What do not have been other types of correspondence . Would there not have been other types of correspondence . Not exactly. If it is a terrorist plot, it is unusual to be done in isolation by a single individual. Usually there is a network of orchestration behind them, and that would be 18 interest of the government to find out who is behind it in the event they might do it again. And you believe we will find it . Eventually we get to the bottom of these things. For faralready gone on longer than anybody anticipated. I am confident we will get to the bottom at some point. Thank you, richard falkenrath, or bloomberg contributed editor. Kimay, i will be joined by kardashian and Kourtney Kardashian as we talk about the business of being a celebrity. Former new york giants running back tiki barber will also be in the loop. That is all starting at 8 00 a. M. Eastern time. It is 56 minutes past the hour. Bloomberg television is on the markets. Fu. Scarlet we are about a halfhour into the u. S. Trading day. What we have right now in u. S. Stocks is a mixed picture. We have the university of Michigan Consumer confidence coming in slightly weaker, a read of 79. 9, when the consensus was for an increase to 82. This is an unexpected drop in confidence. More direction overseas in europe where stocks have fallen to a fiveyear low. The 10year yield, little changed. There was some buying over all. Is stronger. The dollar is weaker versus the yen. It is strengthening versus all of the major currencies right now. It is something we will continue to monitor into the weekend. World, arabicay coffee prices are getting a buzz. Thing set the scene for us. Why are prices taken off . There was an unexpected drop in brazil, the worlds top producer. It is the worst drought since the 1970s. On top of that, you have a fungus called leaf rust. It really looks like that, and that is cutting production. Does that mean there is a shortage of coffee beans . Into not have to panic. We not there yet, but it might be the first time demand exceeds supply. There are a lot of inventories and stockpiles. There is plenty of coffee in the world. Christ there are a lot of caffeine junkies around here. Will we have to pay more at starbucks . You and i do not have to worry because we have free ,offee upstairs, but starbucks dunkin donuts, Green Mountain coffee, they have locked in their prices and they have stockpiles of cheaper beans from before the rally. They have breathing room. Eventually, the costs will start to deed into margins. It depends. It depends where prices go from here. After a while of higher prices, they do not have a choice, but coffee demand nick about your behavior. It is pricesensitive. It would have to go up a lot for us to change habits. How does demand in the United States compared to overseas for these coffee beans . One of four drink cups of coffee all over the world. We are hooked. Overseas, are they catching up . Coffee is popular worldwide. Brazil is the second biggest drinker. Demand has been strong and able continue to be. That goes along with supporting the price. Sure. Sure. What does that mean for investors in commodities . There is a bull market in coffee. A lot of investors gave up on commodities in 2013 when there was a decline. A lot of people called it the end of the supercycle, the idea that china and the developing world would you consuming more Raw Materials and that would drive up prices. Now, all of a sudden, commodities made a huge jump. We have this issue with coffee, and the really cold winter in the northeast and across the u. S. Has led to Higher Energy prices. Also, the weather has affected agriculture and all sorts of things. We will continue to monitor all of these things. Thank you. We are on the markets once again in 30 minutes. Live from bloomberg equities in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. With thee an exclusive president of the world bank. Were talking ukraine, common change Climate Change and much more. Fannie and freddie couldnt , showing more clear that all profits will go to the government