Buylie ergen failed to sprint. Barclays millions in fees. Shares of tiffanys are falling in the premarket, posting fourthquarter profit that missed estimates and the earnings outlook came up short. Vladimir putin has cleared the russia,crimea to join causing tensions at the highest levels we have seen since the cold war. Ryan chilcote is live in brussels where leaders are meeting. Is this a done deal crimea is part of russia . It is a done deal. Signednt Vladimir Putin la, crimeants and voi is part of russia. This is the first expansion of its territory since the collapse of the soviet union in 1991. It is the First Official or semi official expansion because someone say there have been land grabs. You, and thet ukrainians will not put crimea on their map of russia. It feels like an oldfashioned territory grab, but perhaps there is more than that. There are rational reasons as to why Vladimir Putin wanted crimea. The naval port is one, given porthe has that warm water. Are there other areas that strategically he might want to go after right now . It is an interesting question. I do not want to speculate too much, but russia already has control in a couple of different countries, like the country of multiple. Russianspeaking population. They have asked for the same referendum they had in crimea. It was on the back of that referendum that russia has accepted crimea. There was another one in the former soviet republic of georgia. They, too, could have these referendums and become part of russias territory if chose to have them. Having said that, president putin has not said that he intends to add other territories. What everybody is watching, particularly president obama making clear yesterday, is east of the ukraine. They are concerned about the amassing of troops. This is all coming at a cost. There is a lot of data associated with ukraine, and this is not easy from a monetary economic standpoint for Vladimir Putin. What would this mean for his economy in terms of what he will have to do in ukraine and the sanctions he will have to face . The answer to that is quite clearly president putin did not have the russian economy in mind as his motivating factor for taking crimea. This is what he considered important for the reconstitution of what should be in russia and economic considerations come second. There are talks, kid for cap in terms of sanctions. Members of hised inner circle and a russian bank. Vladimir putin said he sees no need to retaliate despite there are problems i had for the russian economy ahead for the russian economy. As for the russian bank, Vladimir Putin asked the central bank to support it, and he said personally on monday he will go there and open a bank account and have his salary direct deposited, which is a little bit of a joke. The next place to watch is ukraine. President putin got a report from the government that the ukraine owes russia 16 million. Putin did not say anything. Maybe they are about to call that 16 million worth of debt and of course ukraine does not have the money to pay it back. Debt get see russias downgraded. Well put by you, Ryan Chilcote, it is more of a political move. Ryan chilcote in london. You want to tune into his interview, a bloomberg first, with the ukraine opposition leader. We have total integration of the region. It will be complicated and expensive. Scarlet fu checks out russias potential tab. We know it will be at least 16 billion. It will be a big one. The annexation is official, and the bill is building up. There is one russian newspaper that puts the bill at almost what he billion dollars over three years. In terms of the bigticket items, basic infrastructure. Russia and crimea are not connected by land, so you need to build a bridge. One bridge will cost an estimated 1. 4 billion and take several years. Also, utilities. Forea relies on ukraine gas, water, electricity, so the alternative is to build a plant that could cost 1. 7 billion. Lets not forget pensions. Russia has to adopt them into its system. The russian pension is double the amount of crimeas pensions, so the cost there is 1. 9 billion per year. Also receives subsidies. The ukraine budget is subsidies. Russia has to match that amount. Gdp per capita is about 14,000. Crimea, 5000. Pretty big. There are also logistical issues. It could be as easy as people being able to travel and move around. Russian passports are being given to crimeas residents. The russian ruble will also become legal tender in crimea. The cost of integrating the ukraine currency is untold. Russia spent 50 billion on the sochi olympics, so 20 billion over three years might not seem like a lot, but it is something the economy cannot afford. It all adds up. You had better hope the Energy Prices stay high. Scarlet fu, thank you very much. Moving and shaking this hour, facebook ceo Mark Zuckerberg. He will be at the white house today. He will sit down with president barack obama and other tech executives to talk about privacy and spying. You will recall that last week zuckerberg called the president about the nsa to complain and he wrote unfortunately it seems like it will take a long time for true, real, reform in surveillance. Marissa mayer was invited, but could not make the trip. Speaking of zuckerberg, facebook just bought a mobile messaging. Ompany westapp i am in seven cisco where there is a tremendous interest in the San Francisco where there is a tremendous interest in a valuation of companies. I want to bring in the guest host for the hour who knows what it is like to take companies public. Trip hawkins is the founder of Electronic Arts and a new venture that applies Game Technology to education. Eaave an affinity for because i was a sims fan for so long. A lot of women played that game, if i recall. I want to start with a meeting between the president , zuckerberg, and others. There is great tension between Silicon Valley and washington with surveillance. How do we sort this out question mark where is the balance . It does feel like sort this out . It does feel like big brother. It does. , people are technology are trying to figure it out, and with new Technology Comes ways to spy on people. You can see that with a gaming console, spying right into your living room. Balance, or do americans have to face the reality that more of their information is online and will be out there . Therengs tend to stay out may even if you do not want them out there, or even if it is incorrect, which is frustrating at times. Absolutely. Speaking of incorrect, are some of the valuations, especially for the mobile messaging companies, incorrect . It is like a fashion industry. Trendy . Habits are changing quickly. Time about how short of a the iphone or facebook has been around. What people will be doing in 10 years is much more difficult to predict. It is challenging if you are a platform like facebook and you have everybodys attention. Right. How do you make sure you are holding onto that . Do you do that by overpaying app . Est you have over one billion customers, and there are waves of habit changes and fashion changes, and in some ways you feel compelled. You can not choose not to be part of it. Our valuations getting out of hand . They will need to grow into businesses that generate profits over years to grow into those valuations. Hithen does the reality cash value hit question when does the value hit . Everything is about forecasting the future, and sometimes it happens, and sometimes it does not work out that way. We could be talking about a big shakeup. It is not as if everybody is seeing valuations grow bigger and bigger, so when the reality hits, could we see a big washing out . Exit could happen. If you recall, for the last five or six years, technology valuations were suppressed, and multiples went way down. It is not a shock to think that multiples could come back up and stay up for a while. The companies that turn up to be the future, everybody is placing bets and competing. Anytime a company is going public or been acquired, there is a been going on for those shares. Right, and then who is the next one after that, right question at right . So true that smartphones have not been around so long. There are people in the newsroom, 25 years old, they have never used a blackberry. It makes me feel so old. Thank you, trip hawkins. He will be with us for the hour. The art of the deal jeff bezos making it possible for you to buy your neck work you by your next work of art online. Twitterulls the plug on and warns that facebook and youtube could be next. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. I want to bring in my guest host, trip hawkins. Day for youperfect to host. It is always the perfect day, but the candy crush parent pany, came the digital, digitaldigital king is about to go public. Is it a onehit wonder and what do you do after that . Results in the gaming industry are lopsided. Again that gets to the top of store tends to perpetuate that position and consumers seem to only know about the topranked games. It is more of a winner take all n it has ever been good ben. Is that a good or bad thing . It depends if you are at the top of the chart. A generate a huge amount of revenue quickly. Youquestion is how do repeat that, get into a steady rhythm . How do you . You founded Electronic Arts which had several games that are several hits. That . You do what is different now is the Business Model changed. In the old days you could try to in aover more shelf space retail store and maintain a bigger and broader product line. You could become member of the club that has that space. Now you have more than one app storeps in an and a consumer is only likely to look at one screen. They are not looking at thousands of different choices. It tends to funnel down. One of the things what are the things people are talking about, at the top of the list . Is sound like it is almost luck of the draw. There is some serendipity involved. What ends up getting there is a bit of a puzzle. From that, can you build a Sustainable Business . You look at a company like zynga that had a huge hit with farmville and they have not been able to repeat that. Is that a lesson for king digital . If only five games fit on the screen, if you have six, not all of them can fit. That is the problem with the scale. Companies like zynga that have tried to bring too many outings to the market. They find they have a hard time doing that, as they cannot repeat the same success. The way a modern channels of distribution or, they put a bright spotlight work, they put a bright spotlight on a smaller number of products. They do. When youre developing the games, and you develop through Digital Chocolate and on the educational front. How do you cut through the noise . My new company, if you somethingre making that is in a unique space helping children learn social and emotional skills. It is a new area. But gaming is antisocial. It is both ways. It is like real life in that regard. Store we are the only game that teaches childrens social and emotional skills. If word gets around, people will find it. It is a change in the Business Model in the way people are looking for things and being able to try them for free. Trip hawkins, founder of ea the3do, my guest host for hour. Well be back on how much it will cost banks to them, and the volcker rule implement double dribble. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Good morning. I am betty liu. Hour,26 minutes past the which means Bloomberg Television is on the markets. I want to bring in trish regan. Features are a touch higher. We will be watching this carefully. We have a number of tech leaders today meeting with the president to talk about the nsa and cyber security. We will be watching that, and of course continuing concerns about ukraine as well. We have an important interview at 2 00 p. M. With Ryan Chilcote sitting down with ukraines opposition leader. Here is a look at the top headlines. The bond market, which is the subject of a new sec investigation. Regulators are looking into the practice of dealers showing clients different prices for similar products on electric trading. The volcker rule will cost u. S. National banks as much as 4. 3 billion to implement. This is according to a study by the office of the comptroller of the currency. Shing the biggest irs phi scam. People pretending to be irs officials have taken 1 billion from taxpayers. Callers tell people that they ae the agency and must use debit card to make a payment. Be on the lookout for that. Definitely. Thank you, trish regan. I want to bring in electronic ceo tripder and former hawkins, who was an early executive at apple, one of the first employees with steve jobs. It is interesting. There is a whole entire industry out of what has happened to apple since steve jobs passed away, and you worked directly under jobs. There is a new book out that is aaunted empire which is not good look at what has happened to apple. Do you agree with at least one viewpoint that there is a little less shine their . He is impossible to replace. He will be in the history books in 500 years. While he is flourishing in the organization around him will do amazing things, once he is gone, he is not the kind of guy that would have been good at developing a successor. O. T is not really his m. He did the best he could with tim cook . Shadowould cast a large and have a lot of different people working with him that could accommodate and support him. The queen bee disappears, and that is a challenging problem. It would be hard to be in tim cooks shoes. So, how do you think he has done . Again, you have to look at what temp did before. Cook did before. He was the perfect partner if you have steve jobs. There is a yang yang. It is a difficult transformation. Did you find that your own company . Driving inhen i was my thriving in my career, that is one i have had the best experience, with the balance between your skills and those around you. What did you learn from steve jobs . Innovation. You are recognizing here is something that is emerging, and there is a way to create new markets, new products, and served new needs that are not very well understood because you cannot do Market Research and prove it because nobody has heard of the technology at. Gift to recognize the Computer Technology could be made accessible to everyday people, and have it be something that they use every day. What was the nugget from him that you then applied . You left apple and started Electronic Arts. I had always wanted to apply Computer Technology to games, waswhat i got from steve the details of how to be innovative and build an innovative organization. Nowadays, with the generation of new leaders and we were talking about zuckerberg earlier, but you have marissa nadella, michael dell taking the company private. What is your take on the generation . I think our superstars. Thingse next 10 years, will happen that people cannot anticipate. Just like 10 years ago, things we did not see coming that we now take for granted. Technology will not slow down. In terms of people like satya nadella, who are not as well known, taking over a company that has had so many big personalities bill gates, steve ballmer, is it much harder for him to prove his success . When you have an established theyny like microsoft, have so many organizational habits that have been formed over a long time. Are they still innovative . I am sure there are pockets of innovation that still happen, but it is so large that they probably get overshadowed by the mainstream vector the whole mother ship is on. When you have had these really big longterm businesses is very difficult to innovate in a way that can really replace or supplant that. At that point, what should be done . Should the company be broken up . How do you refresh the innovation cycle . 10 years, last fiveto we saw apple do that. They were focused on the pc, then they went into a new market, music, and that was a radical shift to create a new Business Model. Not breaking up, but going into a different model. You have to have the courage to get side outside of the you have been in and recognize thatg that has been will be as big in the next decade that has not been as big. You cemented your legacy pretty well in the gaming industry. Starting a new company, selling their business, to beey all in this race the next steve jobs . I do not think entrepreneurs think about it that way. No . Egos, two,. Come on. Os, too, they are like artists. They read Success Stories and you could get your ego caught up in that, but what really drives them is the desire to have a product that means something. And that everybody is using. Stay with me, trip hawkins. Trish regan, i will turn it back to you for some breaking news. Well, we have some news crossing right now on blackberry , just getting these headlines in. They are selling the majority of their Real Estate Holdings in canada. This is a company that has been incredibly challenged as of late. They have made repeated attempts to make it clear to everyone in the media that it is selling itself. It has hired an investment banker. Now they are selling the majority of Real Estate Holdings in canada. Perhaps it is an opportunity for them to line its pockets with a little bit more cash as it continues to struggle to reinvent in this kind of environment. We want to show you a piece of music history. You will have your chance next week at a very special guitar auction. We have a look at some rare instruments that will be available for purchase. If you are looking to buy some art, you do not need to go to an auction. O to amazon. Com they are bringing you work from some of the finest artists in the world with just a click of the mouse, but will anybody really buy expensive art online . Stay in the loop. We will be back from new york and San Francisco. See you in two. He may be a billionaire, but jeff bezos is bringing fine art to the masses, with a site where customers can find everything from wendy five dollar 40 1 photographs 40,000ographs to works. Trish regan, do you think this is a serious site for art collectors . I do not know if a true art collector will be buying because it makes sense that you want to see something in person. You want to be a will to touch and feel it. Here is the good thing. There is a large percentage of art,opulation that likes is interested in art, and it is an opportunity for them to have something. I joke that i have two ikeas and a target at my house. I have bought some minor. Ebay, you have all sort of Young Artists that have put their work up there and i have found some neat stuff. It must also be that amazon has broken down so many is this is for the average american businesses for the average american to make it less intimidating. Fashion, and now art is the next step. For many people trying to buy fine art at an auction or at an art gallery can be intimidating. Jeff imagine this is what bezos sees, there may be a need that he wants to fill. Bringis an opportunity to more people into the fold and get them interested. We will watch it. I do not know if somebodys sothebys needs to be too worried yet. We will see. Pushan read about amazons into the art world in our newest edition of bloomberg pursuits. If you still have money left over from all of your art shopping, you might want to get your hands on a guitar that was once owned by eric clapton. A collection of more than 260 rare and vintage guitars is going to auction on april 2 here in and new york city here new york city. Of president and cofounder the auction house joins me with more. Arlen, welcome. A spectacular instrument. A guitar made by jon the angelico. Always send a moment ago about an investment that you can feel and touch, if it is not a guitar, i do not know what it is. How many grew up loving instruments and you want the finest. Is this a guitar that can actually be played or is it just a pretty piece of art to look at . It is both. It absolutely can be played. Would you take it everywhere . . Would you take it on tour you could take it on tour. I spoke to an artist, steely dan, and he said what i really play this and i said you have done a lot, go for it, and he would. What makes this so special is not just the workmanship, but the sound, the tenor, the richness of the stringed instrument. Tell me about how these actually sound. When we talk about playing nowadays, do they offer the same experience . If you offer me three bottles of wine, they might taste like to people thatt have a finely tuned the year each has a different sound, some higher, some more miller mellow, and very discernible. What makes an aficionado question archive these people that play them . People that play them, that are passionate. The guitars of jerry garcia for about 1 million apiece for people they grew up with jerry and thought of him as an almost godlike figure and the opportunity to have something that he treasured and played on stage. You mentioned there is a personal collection for people connection for people bidding. What might this collection go for . There is a range from 7,000, to what we could expect would be a sevenfigure amount. Many are in the 300,000 range. This is a rapidly emerging field of collecting. They are manageable, you can handle them and they look beautiful. How do you bid on them . Guernseys, easy, here in new york, or on three different Online Auction platforms. You have the online thing going, too. You bet. We had an option last summer with hundreds in the room, the 10,000 people online. We have it all covered. If there is a will, there is a way. Loebfore i let you go, dan has been making noise in the auction world. What are your thoughts on that . We have been plugging away for 40 years, and done many of the best options ever, and we are here for the long haul at guernseys. And the competitors, and dan loebs complaints . Well. Thank you. Arlan ettinger. We will take a quick break and then happy birthday. Can you believe twitter is turning 8 . We will look at some of the first tweets from betty and from me. Turkey is not celebrating twitters anniversary. The Prime Minister and residents from banned residents from tweeting. Stay in the loop from new york and San Francisco. We are back after this. It is time for him bloomberg it is time for bloombergs big number, 74 million, and one of the turkey residence has been banned from using twitter. Tweets were from anonymous users that make documents and audio files related to an investigation. Twitter reacted to the news by encouraging users in turkey to send tweets through text messaging. Still with me is trip hawkins, Electronic Arts founder and now ceo of if you can. You know what it is like to leave a company, like apple, and make the leap to start your own company, which is Electronic Arts, which became and still is a successful company. Is exactly theh kind of career path i featured in my book, work smart, a compilation of interviews with ceos over the course of a year, and a lot of them, whether they own ceos that started their whether they were ceos that started their own company like martin sorrell, the mindset was important. What is that to you . It starts with a specific idea that the world needs that does not have, and does not understand. If you have the spirit to bring that forward, you are surrounded by aliens. Everyone thinks youre crazy. Right. You can understand what you are talking about and they mostly try to tell you not to do that. Why is that . Everybody says that. Everybody tells people not to do what they did. People told steve jobs, bill gates. What is behind that . There are social roles and cultural norms established and were all going in this direction, and somebody with a different way of thinking is going in a different direction, and they are being told get back in line. You will fail. This is the first test of character, you care about it enough to do it in defiance of the people that are telling you not to. Apple, working for an entrepreneur, what was it for you . I had it before then. I had it when i was a kid. They wereurs realize different. Did you have a Lemonade Stand . Things like that. You have to be willing to believe what is in your own head and trust your instinct that there is something promising about what you want to do and that there is a future for it. That, in the end, separates real entrepreneurs from other people that might be chasing it because they want to be famous or make a lot of money. Or they want to be the next steve jobs. Can getnot think you directly to success unless you have the inner compass that tells you what you are doing is really important. What would you tell the millennials out there . They have bought into this ern oil mindset entrepreneurial mindset, but not everyone one of them will be successful. What i try to help them understand is figure out why they are doing it, what is your identity, and why do you want to do this . What are your motives . If you are really just motivated by power, money, that is not going to float your boat. Trip, great to see you. I pleasure. , founder and ceo of Electronic Arts, still in the game. Still to come, we are showing our favorite tweets. Remember this one not too long ago from Warren Buffett . He was in the house on twitter and he still is. We will be back in a few moments and. Ok, welcome back. I am trish regan in new york. Past the houres and Bloomberg Television is on the market. Futures are rising ahead of the opening bell, indicating the broader markets could rise and close out the week that the biggest weekly gain in a month. Witching friday that happens every quarter. This causes large trades on the options and their underlying stocks. We will be on the markets again in 30 minutes. Coming up next, barclays is not invited to the alibaba ipo party. We will talk about it had anything to do with the missteps of last year. Hoping its new creative director can help things turn around for the retailer. Ou are watching in the loop from San Francisco and new york, live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Betty and i will be right back. Good morning. Inare live from bloomberg San Francisco. You are in the loop. I am betty liu. We had a great interview with trip hawkins on the gaming world, but i want to bring in my atnchor, trish regans bloomberg world headquarters. Tell us what is going on with the other headlines. Are 30 minutes from the opening bell and stocks look like they are headed for the biggest week of the month. Vladimir putin has signed legislation completing the annexation of crimea. Blackberry has agreed to sell most of its Real Estate Holdings in canada. No world on who the buyer is. Blackberry leased back a portion of the space. Facebooks Mark Zuckerberg leads to thee of tech ceos white house talking about nsa spying and technology. Do not forget, he called president obama and had concerns about this. Alibabalk about the ceo. For barclays, one of the past decisions to back charlie ergens efforts to buy sprint could be coming back to haunt the bank. Mccracken hasff more on the story. What happened . They backed the wrong billionaire in a dispute not a dispute, but a contest, if you will, to get sprint. Softbank is one of the largest holders in alibaba and he used his influence to exert pressure and keep barclays away from the ipo. What does it mean in terms of fees they are losing . These. Of millions of this is probably the largest ipo since they spoke and it could be larger. It could be as big as the gl ipo several years gm ipo. It depends on your perspective. Barclays feels they were blacked out completely. View from the moscow some is they found a competitor. Isnt that part of the business you win some, you lose some, you backed the wrong billionaire, and so be it. There is a standard process where you basically select which client you will go with, and it is cut and dry, longterm, who will do more business with us, who we get more money from . This is a stark example, if you will. This is a situation that could linger for years and years. Ali baba will be one of the Largest Companies coming out of china. Who is benefiting . Everybody else. Five bank, sotop folks like credit suisse, jpmorgan, goldman, they will really benefit here. So, does it mean anything for the bottom line overall, or is a division . He m this is not a positive development. I think they are really disappointed in charlie ergen. They thought he was going to push softbank for sprint, and in the end he backed out and went squared. After light xd radically, charlie should be loyal to them. Exactly, but the problem is you have not only alienated softbank, but probably ali baba, and there is a chance they could try to do the deal with tmobile that they have been discussing for so long. Calmly what is going on environment. E m a we seem to hear about deals here and there. What is volume look like . Volume looks strong. We have a couple of weeks in march, and it will probably be the best First Quarter since the crash of lehman brothers. We are looking at big deals. We had the comcast deal, the facebook deal, and now all of these ipos. Good to hear. Jeff mccracken, global head of m a. Thank you. Lets head back out to betty in San Francisco. Coast, movingwest and shaking this hour is netflix ceo reed hastings, who does not internetng to pay providers millions to make sure you can see house of cards and other hits. He is proposing new rules. Month, netflix agreed to pay comcast millions of dollars to improve the speed and live reliability of its video service. Reed hastings warns there is nothing to keep internet providers from jacking up the fees more and making it harder for you to get your fill of house of cards. Coming up, what is old is new again at gap. The nearly 50yearold brand is thinking about going back to its roots. Plus, a behind the scenes look at what some of the Biggest Companies in the business are working on. Stay in the loop. We will be right back here at. First. Bloomberg. You are watching in the loop , live on Bloomberg Television and streaming on your phone, tablet, and on bloomberg. Com. Latesterg businessweek cover story features gaps. Director rebecca they who wants to bring the brand back to simple fashion, tshirts and jeans. Is her strategy working . We are joined by Customer Growth partners president greg johnson and senior markets corresponding julie hyman who has been covering retailers. Craig, lets start with you. How important is it to have y at the helm of style creation at gap . She will make a real difference. Gap was on a strong role for going on two years, but that ebbed late this fall and has had a rough couple of months since that, but the new product is terrific. Old navy and banana is a different story, but the product at gap is different Eric Julie Hyman different. Julie hyman, how did cap lose their way . They had a series of management changes. Bringingmickey drexler in the right mix of merchandise for many years, but when he left in the early2000, the brand lost its way and was focused operationally on cutting costs and has come back under glenn murphy, the current ceo. Really, some of the sales, and especially earnings it has gotten in recent quarters has not and so much from the design or fashion makes. It makes. It has been from the right emotional formula, the sales people want, rather than the fashion. There is some of that, but it is not as strong. Cria craig, gaps zara or h m eating lunch . They are getting share. H m is spot on. The great thing with rebecca ising on board at brand gap she brings a sensibility that is lax ed to address the gap can be brandon g8 bland. Shes bringing excitement back into the product. H m,u have Companies Like unit glow, forever 21, and they inventory quickly because they are trying to capture the trend. You say they are doing the opposite where they are trying to go to muted colors, tshirts and jeans. In part. Gap wants to increase productivity and having faster inventory turnover makes sense, also has the product has been bland and the merchandise that is now just coming on the floor in the last week or two has been a step up, and also, at banana, the smaller of the three brands, that is also picking up, but they had difficult straits for a number of months. If i could jump in, it is a subtle difference. Yes, gap is still looking at the classics and the basics, which is something it has done, but it is tweaking them. They will not be h m, they will not be fast fashion, but you can make the basics more fashionable. One of the ironies is bringing back the iconic american brand, the job has been given to somebody that is danish in the form of rebekka bay, who has watched the brand from a far, and the fact that she has a passion and Design Background makes her unique in terms of the creative directors that you saved. Maybe this industry is struggling in general. No matter who you put into place, whether they are a genius or not, the fact of the matter is there are too many retailers out there, and somebody or some of them have to go. Let me jump in. Right now, retail in general has been quite soft ever since last summer. Is apparel. Part there are too many apparel square feet chasing too few customer feet. I am not saying anything will happen to gap, they are well run but there isurphy, an implant wants in balance of supply versus demand. You see that rationalization teen side with the closure of abercrombies, for example. The question is where will you see it, on the weaker fringes, well it bleed into a corner retailer like core retailer like gap . We are seeing less of that. All i will be told once we get out of the cold while there a lot will be told once we get out of the cold weather. Mall traffic is not what it once was. You have Companies Like sbarro filing for bankruptcy because people are not going to the malls as much. Is onemall traffic issue issue, but it is not like it has fallen in half. It is down. The traffic that is offmall, which accounts for the great majority of retail sales, that is strong, down a point or two, but not dramatically. The issue is that is too much apparel space. Craig johnson, and julie hyman, thank you. We will be back in two minutes on in the loop. Entertainment companies are stepping up their dealmaking, with many looking to get a hold into the online video market. Cristina alesci has more on recent activity and what might be next. Entertainment companies on the hunt what are they after . They are looking for exposure also,ine networks and, the growing international markets, and that is because there core business in the u. S. Is pretty much flat. Content,into original programming, but they have to look elsewhere. Disney, there are reports they are looking at buying a Youtube Content creator, which would be a forwardthinking deal. Dreamworks bought a Youtube Channel last year that really s. Rgets teen it was a 33 million deal, smaller deals, but very sexy and important. Large these Large Companies know how to create content already. Why are they spending 33 million on a youtube station . They know how to create content for traditional television, but there is an emerging audience online that is engaged in creating online video is different. You have potential growth in europe, and if you look at the domesticthat breakout versus International Revenue growth, you will see a stark difference in the growth trajectory of that revenue stream with International Far outpacing domestic growth. That is because more and more people in europe are signing up for television. Buy is why you saw amc Liberty Globals content unit, because it is hoping to transport hits like breaking bad and mad men to the european market. Should we anticipate we will see more of these small mergers in the content space . Small and big. Another part of the industry heating up his local broadcast tv. There was a deal announced between media general and lin media, and all of this has to do with the fact that local broadcasters want more leverage fees, moremission leverage with advertisers you will see more in the space. Sort of the old school media. Exactly. When you talk about the larger entertainment sphere, youre looking at targets like starz, all discussed as potential targets. Fascinating. Cristina alesci, thank you. Were a few minutes away from the opening bell. Were back with a topend trade you do not want to miss and the opening bell after this. First. Bloomberg. Welcome back, everyone. Good morning. You are in the loop. I am trish regan. Betty liu is in San Francisco. 26 minutes past the hour and Olivia Sterns is checking the futures. Futures are rising ahead of the bell. The dow has had a good week and is on track for the biggest weekly gain in a month. Lets show you the currency market. The dollar had a great week after the fed conference. Russian equities are tanking again. Down about 2. 25 . Well be back on the market in 30 minutes. Thank you so much. We want to count down to the open, the top 10 trades you need to know. Olivia sterns, betty liu from San Francisco. We start with number 10, zions k or am i the only lender zions bank or per and thanks corporation, the only lender to fail the risk task tests. Number nine, discover financial. He proposed a 20 dividend boost and a 1. 6 billion stock buyback. They have benefited for more rapid loan growth and an 11 gain in fourthquarter profit. Number eight, wellpoint, the health insurer, with projections still below estimates. They expect to add one million new customers through the exchange is up by the Affordable Care act. Number seven is nike with Third Quarter profits and sales that topped estimates, but signaled momentum may slow. The strong dollar might hamper revenue abroad. Time warner cables ceo is set to receive a severance comcastone when the agreement to buy the company is successfully completed. The other senior managers will get a big payout as well. Rdenumber five, da restaurants. Its red lobster chains continue to struggle. They backed a plan to spin off dreadlocked there. Four, blackberry. They agreed to sell most of their Real Estate Holdings in canada, getting more cash for its turnaround plan. They will sell more than 3 million square feet of space and vacant property by the end of may. Symantec fired, steveitant and ceo bennett after less than two years on the job. Determination comes after several top executives have left the company in recent months area much more to thats that recent months. Much more to that story. Just and the new deal with the Company Formerly known as the yellow pages. Number one, tiffanys. The luxury jewelry retailer posted profits that trailed estimates as expenses rose because of higher store and labor costs. They had earnings for the year that fell short. We will take a closer look at the results in just a bit. Here we are at the open the market is higher. Stocks getting some momentum. We could be looking at the best gain in a month. Stocks start to trade just shy of record territory, i went to bring in a john buckingham, chief Investment Officer at al franken. Value investor who is finding opportunities in this bull market. A lot of people have been fearful that with all of the runup we saw last year, we might see a tiny upside this year. Does that mean you need to be more vigilant about how you approach investing . I absolutely think so. We cannot continue to go up 30 every year. The year before, we went up nicely as well, 17 . You do need to be selective and focus on valuation. I know there are concerns about some of the ipos that have come and the. Coms. Those stocks what valuation . Valuation . s that that is one of the concerns. Easy money has made valuation perhaps too high. Some fear that we could be looking at an asset bubble. Do you worry about that . I do worry about those things. I am focused on individual stocks. So, we do think there are pockets of that ouit there. We are not buying expensive things. Ratio, wek at the pe are in the 1415 range. You do need to be selective. You need to be careful in your shopping. That is why we published the prudent speculator newsletter. These are ways to invest. Give me some picks. You like apple, why . It always comes down to valuation. I would rather buy things today that have not had their day in the sun. Apple has been a laggard over the last 12 months. These days, they are trading at an inexpensive valuation. 13 times the earnings. They used a bunch of cash right after their earnings went down. They bought that 14 billion worth of stock. Here is a company that will earn 40 per share, trading in the 500 range. The fear on apple why it does not trade at a higher multiple, it is so product dependent. That we get that new ipad changes the world, whether a watch or a tv, people are looking at the company and saying ok they spent all this money on r d, where are the results . You have to keep in mind that this is a company that has been innovative. We could have said the same thing after the ipod. What is next . They have a history of extremely innovative products. Lets give them the benefit of the doubt. We have an inexpensive valuation even if earnings do not materialize, this is still a company that is attractive. We will leave it there. Think you very much for joining us from al frank asset management. With tiffanys disappointing results what this tells us about the mood of the worlds wealthiest people. Heres a look at the top tech stories. Antec has fired their ceo after two years on the job. They have struggled as they shift to mobile devices. Director Michael Brown is named interim ceo. The Prime Minister of turkey has blocked twitter saying they have leaked information on his government. The move has been criticized in turkey and overseas. Has found some of the bitcoins that were lost. They were located in old wallets. Theyre still missing 650 thousand bitcoins after it was hacked. Catch all the latest in tech every weekday on a bloomberg west. Lets stay with tech and to twitter. We want to celebrate the birthday of twitter. The microblogging site first launched eight years ago today. They have evolved into something bigger, more important than anybody on that first they could have imagined. A lot of people were not sure what to do with it. Many first tweets were kind of awkward. Trish, i want to bring you in. I know you have a huge following. You are an avid tweeter. My first tweet was very boring i could not catch what it was. There it is. It is an old picture. It says watch in the loop. Yours is more interesting. It is good. Initially, a lot of us did not know what to do with it. The team here went back and found my original tweet. There you go. I resisted this. I really resisted it. I finally succumbed to the twitter craze and thought id give it a shot i really learned to appreciate it. It is a tremendous newsfeed. Unfortunately i get some very unfortunate news in the world. The night that Whitney Houston passed away, i had come home. It was saturday night. I looked at my twitter feed and that news was all over it. You tend to get a lot of information. You do. As i just mentioned in the prior story, turkey were of twitter and help harmful it is to feed that information to the public. I want to mention other first tweets from celebrities that we follow. We mentioned Warren Buffett. He was way later than us. About a year ago. He is a lot older than us too. She wrote just got into berlin. Such a follower she has millions of followers. Justin bieber, also popular. Mohamed elerian just joined twitter last week. He says my first tweet, the patient with me. Please excuse typos, thanks. He has the language down, though. He just popped up this morning. As suggested follows. I just followed him five minutes ago. It is funny that i am not following him, but it is because he just got on their. Everybody is just catching up. Off to asia. Eaded im going to leave in the loop in your hands. Thank you for joining me. Have a wonderful flight and a good week over there. We look forward to seeing your reporting forms singapore. It has been a pleasure this week. Thank you. One stock we are keeping an eye on is tiffany. Fourthquarter profit trailed estimates. Seejewelry designer and did an increase in sales during the Holiday Season. That is something we have not heard from a lot of retailers. Joining me with more is the Vice President and analyst at kelsey advisory, where he covers cosmetics and the luxury goods. Welcome. Is this another example . In terms of the overall results, while it did come in below expectations, the overall business fundamentals are sound at tiffany. Januaryncouraged the did maintain pace from the Holiday Season despite adverse weather conditions. They did see robust gross margin expansion. That was really german by lower commodity costs and price increases implemented earlier. The margins are significant. You are paying for the brand. For the blue box. People are willing to do that. Lets talk about the weaknesses we saw. In terms of the overall asknesses, it will be higher g a. Sg a expenses were up three percent in the quarter. The second mrs. Due to a higher tax rate. That was two cents of the miss. If you think about the fundamentals, we are very sound. Lets look at the stock and see where was trading. It was down in the free market, even though we do have sales climbing and matching estimates. Where does the stock go from here . It has gained about 34 in the past year, can it keep up momentum . Absolutely. Really . 30 . The initial guidance that they provided is actually conservative. Though they are facing higher interest expenses related to higher debt levels taken to pay out the arbitration charge. We could see upside. But with the amount . 472 million. We could see upside to the guidance on better than expected trends. Especially in the back half of the year. Im excited that a the new Product Launch is coming up in september. , whohave a new designer basically produced jewelry for chanel and barneys. She is bringing high design prowess to tiffanys and unveiling a new design in the fall that could drive and elevate the brand. What is the price point . The initial fashion line that their launch in the fall the sweet spot will be 700 and 3000. Why is that a sweet spot . This is the Fashion Jewelry category. It elevates tiffany, but also makes the product more accessible. I said to you in the commercial break, why would anyone buy a diamond to tiffany if you know that the margin that theyre getting is so much more than other diamond dealers . You said it comes down to brand. This is an example of how brands can be powerful. Tiffany is the ultimate american luxury jeweler. Very strong brand cachet globally, especially in asia. When you think about the cut of other tiffany diamond rings, it is very unparalleled in terms of the quality and the exclusivity of the design. All right. David blue at telsey advisory group, thank you. Tensions between the u. S. And russia are running high. We will have more on the showdown. President obama did not see it coming that long ago. Stay in the loop. I am trish regan and it is time for the global outlook. Michelle obama melt with chinas president and his wife. She is on a weeklong visit with her two daughters and mother. They visited high schools and the former imperial palace. Tensions between the u. S. And russia are as collating as the countrys countries trade economic sanctions. President obama did not see it coming during the president ial race. Remember this moment . Im glad that you recognize al qaeda is a threat. A few months ago, when you were asked what is the best threat, you said russia. Not al qaeda. The 1980s are calling to ask for their Foreign Policy back. The cold war has been over for 20 years. Is it . Peter cook joins us now with a closer look at our relationship with russia. I have to say, it feels like were turning back the clock. It does feel that way. Were not going back to the cold war. Things certainly feel chilly. You even have lawmakers in the u. S. Speaking wistfully about the good days. The two powers battled for domination. It was easier to understand everyones motives back then. Things are more confident now. Russia is not the soviet union. Yes, they have a powerful military. They have doubled defense spending. Is still 582 billion that the u. S. Spends on defense alone. Russia is not in the ballpark. They are barely in the top 10, even with 11 billion barrels a day of oil production. The russian economy was slowing before this crisis and the sanction threats. There is a risk of real stagnation for their economy. The political states are also present. He felt threatened. He does not want to dominate the world, he sees nato expansion on his doorstep and a growing european union. Both are threats to him. He is acting out of fear. Rebuilding the old empire is not going to happen. No return to the cold war, but we are looking at a hot economic war for the foreseeable future. Interesting what you said about how some people would like to see a return to that. This is predictable. You knew it was coming. It is a Political School of thought called realism. Everyone thought they were a sane actor. Lets get to the u. S. Now. I would not want to see a return to that, but some do. Lets talk about the economic sanctions. Are they going to matter . There are some signs that they are starting to take a toll. You sell the stock market take a hit, down 13 for the year. S p and fitch cutting their outlooks. They are starting to feel the pinch. Oilentire stake in the industry was given to timchenko s partner. The set mastercard are not serving the customers. The one consolation they see is that president putin will open an account and start sending his paychecks. That is a symbolic move. Thank you very much. Do not miss this afternoon the very first interview with the ukrainian opposition leader. That is happening at 2 00, right here on Bloomberg Television. I will see you back here at 3 00. Have a wonderful weekend and i will see you at 3 00. It is 56 past the hour. We are on the market. And thebout 30 minutes session and stocks are rising on friday. Withs p is rising to optimism about the world strongest economy. No major notes today. The dollar is falling today, but still on track for its biggest gain in two months. The greenback rose following fed chair yellens comments. And outlook on the dollar joe, thank you for joining us. That yellenthink said that spiked the dollar . She provided guidance about the fed funds rate and what when it could be increased. People thought this might be 2015. She said it would be mid2015. What did the economists think . The end of the taper will be october this year. Six months from their puts the first fed rate hike at mid2015. What we heard is that policymakers think rates will rise further, faster. Over the intentions . Yellen is taking a more direct approach than bernanke. Also, Alan Greenspan was more vague in his wording. She is trying to make her own mark and set herself up as someone this is a reflection of people not hearing what they expected. Maybe it is a reflection of people having an idea of what they wanted her to say. She is turning the table and saying this is what were going to look at. She gave the dollar lifeline. It has not been a great year for the greenback. Coming in, it was getting hit in january and february. Based on the weather that we have seen, that has been poor. Also, in emerging markets you speak to analysts all day long. What is the forecast . The forecast for the dollar is going to appreciate. Not on a Straight Line like we saw. The u. S. Economic data will be a big factor in shaping the direction of the dollar. From what we have seen in march, with manufacturing exceeding expectations, payroll is better than estimated. Were on a good track. The only thing to watch is the performance of the euro and the yen. They have been increasing with the geopolitical risk. What is the impact . Sure, what happens is in a situation like that, people want to go into assets. That is the yen. The euro has taken that space to. The dollar used to be a reserve currency. Due to the shrinking of the balance sheet, the slowdown of the expansion, that has been the case. The euro is trading at 1. 38. Looks pretty high. Were looking at a weekly gain. The dollar will be hanging on. Thank you so much for joining us. We will be back in 30 minutes. Market makers is up next. Live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. Putins power play. He signed legislation making crimea part of russia. What will ukraine and the west to do next . The unfriendly skies. There are almost no freebies anymore. Some even charge you to print out a boarding pass. The dividing line between profit and loss. And fit bid for fido. High tech has gone to the dogs. We put it to the test. That is all coming up. I amou would love that matt miller. We are in for erik and st ephanie