One might say that we are little bit tired, but we are not, right . The markets kept us up all weekend. After two days of violent selloffs, emerging markets seem to have found a bottom for now. The u. S. Is showing signs of strength. I want to take you to our chief market correspondent, car scarlet fu. Abroad. Start brazil has recovered from two days of losses and some of that money is coming back to the emerging markets, recovering from a fivemonth low. The safest investment we are seeing in the United States, plenty of damage from overnight, carnage coming from the index in indonesia, losing the most since last august. Looking at the ukraine stock been reallys difficult to pinpoint a single catalyst for the selloff. Broad forces are at work, whether it is concerned tapering to start to pull back on overall equity assets, or if it is the chinese economic weakness, signs of contraction in manufacturing. Then you have country specific issues, whether it is political instability in thailand, or the argentina decision last week to devalue. Morning stopped this after the Turkish Central Bank declared an emergency meeting for tomorrow night. Alan ruskin said that the betting is on the central bank raising interest rates, one dollar versus the lira. Down 1. 2 on the reading for the dollar. The ruble, however, is still weaker. Therefore showing gains in that cross price. Certainly not by as much as they were before. And you look at how much the emerging market index has performed overall, it has been a fairly downward trend since october, the lowest since last august, easy Monetary Policy since the u. S. Seeing a lot of gains in recent years. What is this affect on the u. S. . Investors arenow bleeding, pulling out of emerging markets. What are they doing in the u. S. . It has not flooded into the u. S. As a safe haven either, causing consternation. If you look at how the s p 500 performed last week, it had its biggest loss in the year and a half. Leading it down three percent so far this year after a 30 jump in 2013. The bleeding seems to have stopped for this morning, major indexes higher at the moment. In terms of actual catalysts for the games, a couple of individual companies coming out with a blockbuster Earnings Report for the Fourth Quarter and the year ahead, announcing a 10 million stock buyback program. Merck, getting an upgrade from analysts, one reason that its stock is up to 3. 5 . All right, we are going to check in with you, later, as the market continues. We are only 30 minutes into it, cannot wait to see how it all plays out. As this recent turmoil set the stage for a stormy year . Lack rocks ceo thinks so. He said the experience of the marketplace in the past week is going to be indicative of the entire year. It will mean a world of much greater volatility. We have a perform real manager from Oppenheimer Funds here with us in new york this morning. Is it true . Larry fink is responsible for just a little bit more money than you are, but give me your thoughts. Larry is talking about a world of greater volatility, which does not necessarily mean losses, but it could mean trouble for some. His point is well taken, we have to get used to hire on insurance policies going into 2014. Why . Wasirst of all, 2014 extremely benevolent in terms of asset prices. What we are seeing was very particular to 2013, very high end risky assets like emerging market currencies performing on with veryd basis, but little volatility. Why should we think that there will be more volatility . Central banks made it clear that they are going to do what it takes. Why do we not think that that would be the case in 2014 . We are talking about rising volatility from different levels. That does not mean global risk aversion scenarios. It is not 2008 all over again. And it is not 2011. What we are trading off of our old themes. What is new about what we described today . The chinese weakness, we expected that. Willing to go the other way . We knew that was coming. You will get sustained market reaching consensus for surprises, really. Positioning valuations have to be extreme. They were not there. Quite the opposite, the emergingmarket underperformed, i would argue that that is the consensus trade of 2014. Finally, the cyclical picture is on an upswing. I would say that the biggest risk is not emergingmarket underperformance, but as a surprise it would be a major setback to European Growth and u. S. Growth. Markets have now come to the conclusion and acknowledge the fact that europe can grow again. Even if it is just one percent. That is where i see the real delta, if you like, in Global Growth and surprises. Emerging markets have been discounted, currencies underperforming by 30 in the last three years. The question, then if we knew that china was weak already, and we did, if we knew the Central Banks were drawing stimulus, and we did, what was the catalyst for the moves of the last week . Why now . That is always a good question in terms of understanding the extent of market moves. Pmi and china last week, that is not a headline that you want to see. News about the margin industry heading up problems with loans in the cold and coal Mining Sector on top of it, that is not what you want to see. By and large, these are teams we have discussed already. From a happening is longterm perspective. Like the straw that roque the camels back . The last drop, exactly. The drop that makes the vase spill, so to speak. There are some overweight emergingmarket positions that are still looking to rebound. But on the tactical show tune basis, those are really the last straits. We knew about all of these risks last year. Unless you were long on the market, you look like a chump. A fool. In 2014 those underperforming in the market last year is this the year that we see them perform . An excellent question. Thank you. Grotty. Grazi. [laughter] remember 2010 . We complained about risk on, risk off. In this market, we make no money. 2013 was a great year for differentiation. Was it in 2013 . You just had to be long. But differentiation, that is true for the equity market, for sure, but if you look at other fixeds, like developing emerging income currencies, differentiation really played a role. It was nearly impossible to have emerging currencies, like mexico or korea, decoupling completely. Turkey, south africa, indonesia, they lost doubledigit last year. Other currencies, like poland, they heldrea, reasonably well, given the censorship we had. What does it mean . To stephanies point, is 2014 going to be the year in which, so to speak, the men are separated from the boys . You cannot just short emerging markets and hope for the best . Exactly. It is a year where we need to be careful about historical correlations. We have to think creatively about opportunities. This is a year, just like 2013, where in my opinion valuation of fundamental differentiation plays a role. These environments are very rare. They occur at the turning points of the markets. Do Statistical Analysis we tend to focus on the middle part of the cycle, when the momentum builds in. But at the turning point the momentum goes down. Things just got hard. 2014 is not the year that we enter a major correction or bear market, but that could be on the other side of this . Exactly. Something to be scared about . This is what Everyone Wants to know. Is the. That we are entering something to fear . So. Do not think personally i see the equity market as a careful buying opportunity. Frankly, also, the outlook for most fixed income investments tends to be too bearish. When you start factoring in what is pricing in the fixed income market, you start to factor in how steep the yield curves are. Income will still pay off in some cases, in my opinion, equity like returns. Thank you for joining us. When you need to make sense of Foreign Exchange markets . Ring in an expert. A proposed manager at oppenheimer. Stories now,siness from around the world. A big drop in new home sales occurred last month, falling a whopping seven percent in december, much worse than overall estimates. Bad weather, higher interest rates, rising prices may have old the market down. Home sales were up 16 for the year, the most since 2000 eight. Shares of caterpillar are rising this morning. The worlds biggest maker of construction and Mining Equipment forecast revenue earnings in the u. S. To be the highest in over four and a half years. The Taiwanese Company that assembles iphones is talking to at least six states about possibly building factories. They may expand in the u. S. As clients like apple want more products built in this country. They said they would do more high end work here, not more laborintensive work like assembling smartphones. Want to know what it feels like to get thrown under the bus . In a few minutes we will be talking to the founder of lack water. Will he think twice before working for the federal government again . Thelus we have remarks from cofounder of one of Silicon Valleys most successful Venture Capital firms. This is Market Makers. Streaming on your phone, tablet, and bloomberg. Com. You can have a true apple experience, where all of our interviews are streaming live and ondemand on apple tv. Welcome back to Market Makers. Tom perkins was all over the news this weekend. He helped to create one of the most successful enter market firms ever, but his reputation was shattered thanks to a controversial letter to the editor of the wall street journal. The cofounder of Kleiner Perkins is apparently furious with what he considers class warfare that he says pitts the middle class against billionaires against like himself. Writing from the epicenter of for a progressive thought, i call attention to the parallels of fascist not see germany nazi germany to its war on the one percent, namely its jews, to the progressive war on the american one percent, namely the rich. Was unthinkable in the 1930s and it is defended by progressive radicalism now. Kleiner perkins immediately distanced themselves from his comments, saying that he has nothing to do with the firm anymore. This is clearly something we need to break down and talk about. Fortunately for us, cory johnson, bloomberg west contributor, is here. Through this. As someone just reading this, on the one hand i feel like good for someone speaking their mind. On the other hand, holy crap, this is what is on your mind . Some minds cannot be spoken for. There is no defending it. It is ridiculous. Lets be clear, it is offensive. Clearly. I am not about to defend it. Is anyone . It is interesting that they really jumped out more than once how upsetking about they were and how they distance themselves from this as well. Who is he, though . He is one of the founders of Kleiner Perkins. One of the most successful firms of all time. They put together the original multidecade run of strong returns. They really support Venture Capital on the international level. He is particularly involved with a handful of companies, silicon graphics. Netscape was a big deal. They were very involved in those. A lot of those later stage names. The original guys were part of the original fair fire fairchild semiconductors. They were involved in some of the more modern names. Also wellknown for being the husband of danielle stale Danielle Steel for years. Eric is a huge fan of her writing. I saw the stack on his desk. At this point he is just over it. Very involved in San Francisco society. Which brings me to what i want to know. To what degree does tom perkins channel the thinking in the valley . Maybe not of the young kids . What of some of the older, more established, really wealthy guys . Be far more conservative, radically conservative, than any of us thought. There are a lot of conservative republicans in Northern California, that is true. Do they keep it a secret . I dont think so. There was a huge prolife rally that shocked me this weekend in San Francisco. It stopped traffic. There were four people there . No, it was a huge crowd. But i think that tom perkins is a very unique guy. Surely, he does not speak for Silicon Valley with his ridiculous comparison. But he is not backing down here. I know that when i first read this i thought maybe he was taking it out of context. But he reached out and said yes, this is how i feel. Perkins has always been an outspoken guy tom i even with things like this. He is also a guy who famously spends his money on yacht races. Not to race the ops, but to build the biggest and most expensive yards, that is sort of how he rolls. He is putting his personal wealth out there, which is considerable. Saying Something Like this, radical and ridiculous as it is, does it motivate people to go along for the tom perkins ride . Or does he just become completely outcast in his community . We talked about this, what would i add to this segment. Everyone agrees that it is stupid. Is heis a good point, truly an outlier . Do others feel this way . And would they even come out and say this publicly . The issue of criticizing the rich for being rich is a real one. A lot of wealthy people feel picked on. But the comparison to the holocaust . He said he was writing from the epicenter of progressive thought, San Francisco. Maybe rid large it is, but where is he . Russian hill . He is not at the epicenter of progressive thought. But when people think about Northern California that is part of the problem, he feels like a part of the community. There is some in the Pacific Heights as well, widely expressed, but if i think about how there are a lot of rich people who made money recently, multimillionaires, even billionaires, rocking the streets. He took it too far, but there is an argument to be made that the whole concept of income inequality was the height of hypocrisy. Maybe, but this is the height of absurdity. When we come back, the backwater backlash blackwater backlash. Were they an easy whipping boy for those opposed to the war in iraq . They will be talking to us in just a moment. Welcome back. We are approaching 20 six minutes past the hour. Time for bloomberg to take you on the markets. Clearly this is the right morning to do it, we have Serious Movement in u. S. Markets and u. S. Stocks, fluctuating their worst week since 2012. Moreomes in the u. S. Fell than forecast last month. Here we are with a mixed picture. The market has not moved much. The market is trying to figure out what to do with itself. Caterpillar, a stock that has had whiplash so many times because of receptions that the chinese economy is slowing down erie it they said that 2014 earnings revenue will top analyst estimates. Why . The u. S. Industry is spurring sales of bulldozers and excavation equipment. I am going to talk about my least favorite staycation. Royal caribbean says that they are going to be returning home two days early, gross, because hundreds of passengers have become sick. It is extraordinary. Top reasons for people to stop cruising . Not stop anyone from going on carnival cruises last winter, which is amazing to me. Probably because those ships had to cut their prices. People love good deals, even if they make you barf. In a moment we will talk to the founder of blackwater about his new book. Also, a lot of the real action during the super bowl week is off the field. We will be speaking with former players who are making sure that high rollers have a good time. We are streaming on your smart phone, your tablet, bloomberg. Com, and apple tv. Dont miss it. It is that time of the year to get outraged. Time to talk about the inc. Ceo compensation. Time to get you outraged. Not me. I am on the fence. Canadian, right . Got to be indifferent to everything. Not to be a peacemaker. We are going to talk about jamie dimon at jpmorgan. This week all of the attention is on the 20 million he has to pay, but fews and people realize the jamie dimon and his fellow executives are actually in line for a bigger payday. 34 million in diamonds that have to do with an options spread from january of 2008. That is more or less the outset of the financial crisis, long before Lehman Brothers went bankrupt or bear stearns was bailed out i the fed. To, thewhat it comes justifications the bank boards give for ceo and executive compensation. This 2 Million Dollar option award was given to him to further motivate the executives to focus on the firms longterm success by providing greater Ownership Opportunities and reinforce the partnerships that will help to produce excess. Why do we have such a fundamental problem with that, was annexed are ordinarily difficult year to run a bank. Could they not say that they wanted to pay him that money because that is what it is worth . Media executives, hedge fund makers, they make 10 times that. Why would you not say that he should make more money . My issue has nothing to do with the dollars. That is a separate discussion. People can argue until we are blue in the face about whether they deserve the money or not. It is the deserve art. You do not like other boards justification to further motivate . What further motivation do you need besides the money that you get in your salary and bonus already . The morning toin come and work . To stay in the company. Were decades we have seen ceos doing really well and then they walk out of the firm at a time when the firm needs them most. They time the compensation to say that you have to stay in this company. What would be worse . If jpmorgan paid them five times more than they did in 2008, when . T came to 2009, 2010, or today they would say peace out, we are rolling. Some people would say that they wish that had happened. Are there people who they think could have done a better job . The point is that he was brought in during the merger with bank one. He became the ceo in 2005. He is already running the firm for three years when he gets this work this bonus. And he is already extremely wellpaid because all bank ceos relatively speaking, forgetting about the media guys, in the world of compensation bank ceos do pretty well. Maybe they need to structure compensation away where they get the money in three years. There is nothing wrong with that. The issue is, they can pay him whatever they want, just stop trying to justify it. These ridiculous, laughable, comical justifications. You are saying that they do not need to justify it . If you do not like it, do not buy the shares. Fine. Maybe we will agree. When we come back, we found out if they really know how to party in davos. Wait until you see the bill for one of those blowouts. I promise, we will never have one of those, we are working 24 7. Coming up next on Market Makers. Back to Market Makers. Fresh off of the week and most, eric and i had an interesting time with peter mccoy. Peter, welcome. You are actually the real mccoy, you were on the ground in the conference center, doing real reporting. So were you. Well, we were a little bit disconnected. What was your take away . Is supposed to be about committing yourself to improving the state of the world, but it is supposed to be big term, longterm thinking. Global warming, inequality, so on. They tried. Each year the outside world seems to intrude in one way or another. The past year was all about the financial crisis and the euro. They were thinking ok, finally things have settled down enough that we can talk about the longterm. We can do what. Most do what davos has meant to do. Larry summers rolled his eyes and said that davos was not forwarded not forward thinking, he called them late to the party. It is true that they tend to be a little bit with conventional wisdom in terms of jour. Sue due to her du what happens, always, is that something happens. The arab spring, they were scrambling to find something to say about it. Then the euro crisis. This year, what . Syria . Argentina . The ukraine . To make we say ourselves feel and be relevant to what is going on outside of the swiss alps . Awayis draws the attention from what it is they hope to accomplish . Once again, when you are up to your derriere in alligators, you forget that your objection your objective was to drain the swamp. Not feeling it. Say it again, when you are up to your in alligators . Derriere. When you are up to your derriere in alligators, that is the time to drain the swamp . Ask exactly. Sitting up there with those guys, are they exactly. Sitting up there with those guys, are they feeling this . They became billionaires because they are animals with their finger on the pulse. Billionaire who was there, he was holding a session on the future of philanthropy with bill gates, richard branson. The kind of people you have on tv a lot. He declared a full minute of silence at the beginning of the session for the tragedy. The people that died in the ukraine. I believe that he meant it, you know . But i believe that he feels the pain of his countrymen. Yet, as you say, at the same time he is insulated. Hold on, he feels the pain of his countrymen . How does a ukrainian billionaire become a billionaire . Look, you know, i think that ourmberg we supply terminals to people who use them to, you know, achieve wealth. That can be done in good or evil ways. I do not want to put down all these billionaires. There is a good reason that people feel so cynical about what goes on in the World Economic forum. There is a reason they call it a fourday cocktail party. I want to show you something, peter. Anyone who follows me on twitter knows that this is probably my follow favorite moment of the whole week, getting my hands on the bill for a World Economic forum cocktail party. Look at the bottom. Swiss 80,000 190 three francs. Converted to u. S. Dollars. 31,000 . That is a lot of finger food. That is quite a line item on of bill. 150 people. A lot of mozzarella sticks. Works out to about 670 per person. I feel guilty, i ate some of that food. You had a whole magnum . What i think about how much. My gosh. But is that the ultimate in hypocrisy . Or is it the price of doing business in the alps of switzerland . No easy answer, when you put your finger on that. No easy answer, but people are going to put you on the spot. What is the answer . I think it serves a purpose. I do believe that there is a reason that all these people come together. Things can happen when you concentrate that many global thinkers. Whether you like them or not, they are global thinkers. Are they actually thinking, though . Makingy making change, progress . Or are they pontificating on the throne . Man, you are putting me on the spot. On net, i amhat glad that the World Economic forum exists. I am. Thats be clear about one thing, this is a notforprofit organization. That bill was likely swallowed by a private party, private money. People free to spend their money however they choose, they can invite whomever they want. Happens to be a great cast of characters to having your cocktail party. Maybe if you want them to participate, you have to put it out there. Worth the money . Hard to say. But it is on net for a big part of the world. Do you think that there is a real reason it has to take place in such an obscure, difficult location to get to . Do you need to do that to get those people into the same location safely . I think that the advantage, actually, is that because there are no distractions you cannot take it back at your office at lunchtime people spend more time together. It is like going to a college in a remote location, it creates a sense of community that you would not have if it were in london. If you invite me to a destination wedding, i leave before the cake is cut. , i am in it ton win it. Dancing with old ladies. That is the new expression. Peter, thank you so much for joining us. Peter foy, bloomberg businessweek. When we come back, we will talk about the broncos and the seahawks. We will be speaking with two former nfl players going on a great super bowl trip. Here in new york city this week, it is highroller heaven. From all over they are coming to town for, you know what, the super bowl. Of course, they demand top flight service. To nfl players are here to meet their needs. Started a fullservice agency catering to High Net Worth individuals. The super bowl is just one of their big events, so welcome, gentlemen. So, if someone comes to the society looking for help, what is it that they want . Thyroid advice, first. Look at these two men. Style advice, first. Look at these two men. Get do they get wet when they what do they get that they cannot get elsewhere . You do not always have the time to enjoy the fruits of your labor. We really wanted to take that pressure off of you to go out want it. Say i we say how. How, when, why. Is this because people no longer want or the altra rich already have all the material goods that they can get . And what you can provide is an experience that they cannot get with an expensive ticket . Most definitely. With premiumrience pricing as well. It is bigger than just making a reservation. They geting sure that the customizable experience that they will continue to enjoy time and again. But how can you deliver that this week . These are very discerning customers. When they try to show up on sunday and the traffic is unbearable and they cannot get into the stadium, they cannot get out, what do you like to do then . One of our common themes, internally, within the company is hightech meets high touch. We give a personal, personal perspective to every customer and client that we deal with on a regular basis. Give everyone some details. What is your topend package that you offer this week . What is in it . How much does it cost . This week in particular, it comes with a private jet and a car service, exotic car or suv picking them up. An exotic in it car . Lamborghini . Something that you probably could not pronounce. From there they are taken to their private and house. From there they have everything catered for them. Athletes coming in with the group, dedicated managers on site with them the whole time, really walking them through their dedicated itinerary. Reservations, making sure that everything is exactly to their likeness, but also getting that experience, conversing with former players, meet and greet. If i am hosting some super deluxe super bowl event, i want to keep it cool and keep everyone interesting, i do not know if i want a bunch of rich nerds. It is a thing where our relationships, we are easily the cool kids in the sports world. I get that. At the end of the day we try to make sure that we give an experience that matters. How did you guys get into this . We both had different career paths, but we have the same goal. For myself, i had a very brief nfl career, but i understood the leverage in the meaning of walking through those doors. I wanted to expand that experience for the duration of my life. For that i understood the difficulties, like the medicine going on in professional sports, where we want to have access, longevity, living a lifestyle for a certain. Of time, but we just do not know how. Having those personal ieckpoints, making sure that have vetted everyone, that i have dressed the part and look the part consistently. I wanted to make sure to present that brand. The most expensive package this weekend, what does it cost . 7007 hundred dollars per person. Does us on that expensive. Like michael said, at the end of the day we want to be a value add, not a liability. With the relationships we arty have from the nfl, the nba, the sports world, we are able to go in the hole, rather than as an individual. When you take off that helmet you now represent a society of companies. You do not have to feel like you are alone out there. When we go through our negotiation on term agreements, they are fighting with the company, not individual pricing. Where do your customers come from . I am not asking their names, but where do they come from, exactly . Family, friends, and it moves from there. From being in the locker room, it is a difficult transition. Numbers, these statistics, whatever, but when you see someone on the outside doing well, you latch onto that. Are theye customers, american . Middle eastern . Who are they . They are a part of the different clientele that we service now from different industries. We have investment bankers, High Net Worth individuals, ceos, personal athletes as well. Thecommon chord is lifestyle, the experience of premium cost. You cannot put a valuation on time, but we make sure those packages are customized to their lifestyle. Or in some cases, the women are organizing. I have a hard time understanding this brand. I start to think that maybe i have to have this experience, but i cannot follow it. I think i will need to experience it this weekend. Most definitely. Are you doing anything to get the folks on the other end of the spectrum . Clearly, you want athletes like yourselves, you want professional sports to be as inclusive as possible. Do you spend time working with folks on the less advantaged side . Absolutely. People gravitate towards that a lot better with me, but from his perspective they understand the numbers. Out the time, all the things they have to do in their mind, the cost to them, that is easy to translate. To your point, where we are theing with urchins in middle east, native american not native american, north americans on the frontier, and more importantly the businessmen and businesswomen, the numbers just make sense. When you add the value at the end of the day, it is why not. What is your big event after the super bowl . The combine and new York Fashion Week. New York Fashion Week . We will need to come back for that. Already dressed for it. The first thing i wanted to talk about was what you were wearing, not the game, so i love that. Much, gentlemen. Great meeting you. We have the founders there of the people that you need to see if you want an extraordinary super bowl, or for that matter, new York Fashion Week experience. 56 minutes past the hour, time for on the markets. After a rocky week last week, currency volatility, this is the way that things look right now. Some early gains in the s p 500 and it looked like things were going to be modest, but it turns out again that the concerns remain buzzwords, like contagion. Know, there are a lot of Hedge Fund Managers that lost a lot of dough last week. Hopefully they can still pay these guys at the end of this week. Market makers, we will be back in just a moment. To post itsening first profit gain in a year. What does tim cook need to do to restore the company to its past glory . Live from bloomberg headquarters in new york, this is Market Makers. Will apples profits get back on track . Companyds most viable may report that earnings rose for the first time in more than a year. It looks like Holiday Shoppers loaded up on iphones and ipods. Armed and dangerous. Chipotles unconventional new Marketing Campaign. We have a sneak peek for you. Jayz and beyonce to daft punk. The big winners at the grammys. To those awards still matter . Do those awards still matter . It was yours truly, last spring, who said, daft punk get lucky is going to be the summer anthem, song of the air and everyone told me i was wrong. Everyone said it is not like katy perrys firework. Can you hear that sound . The sound of one hand clapping. Our floor director is also clapping. Stocks are fluctuating. E have seen the s p 500 fall the dow up about 12 points. Kind of does not matter. Things are more or less flat. Caterpillar is one of the big gainers. The key is that it is no longer about all about china. Theyre forecasting better demand in the american economy. You cannot have coasttocoast in a tesla model s electric car. You can now drive coastto coast in a tesla model s electric car. Much of the u. S. Will get another blast of arctic air this week. There will be snow and sleet as far south as texas. Already january is on track to be the coldest month of the 21st century. People up and holding up turning up the heat. Natural gas prices are the highest in four years. Much of the blame for the global stock fell off selloff is falling on the fed. s next decision comes on wednesday. Michael mckee is here to tell us what to expect. That investors are not ready because they love being held in the bosom of generous, commented of Monetary Policy . Investors are a little too ready. s tide is going out and some people are swimming naked. Markets are losing money because people are pulling it out and sending it back to places like the United States, where you will see rates rise and you see safer returns. Why did they search for high yields . Didnt the fed held him to go for risky assets . Essentially. Some countries prepared and some did not. Last year felt like a suspension of disbelief one akin to real economics. Are we seeing a return to real economics . Real macro principles in markets with a selloff in places that have big . , it iseveloped markets data dependent. Even why people might like to see them cut back on wednesday, they are not likely to. The data are telling them that the economy is Getting Better and they should continue. I cannot worry about the rest of the world because there are so many factors in play. Until the rest of the world starts to come if you look at emerging markets around the world, there are some notable possessed is underway right now. There are a number of them that are not falling apart. Cus of so much concern, is up for the year. The vietnamese economy, even egypt with all of the problems. Do we blame Central Banks . Two years ago, we all know how bad it really was. Somebody pointed out to me that a lot of the emergency emergingmarket economies complained and now theyre complaining. You have to have your own fundamentals and shape and then you can stand the flows of hot money in and out. Keepun a country where you your current account deficit from getting too big. Encourage domestic demand growth and keep inflation rate contained. Some people do not believe this is such a bad thing. A little volatility is what markets need to keep them honest. Cohen,e to gary president of goldman sachs. This is after we talk to lloyd blankfein, the ceo, who used the word consolidation. In the context of what we see happening now, what is consolidation mean . Consolidation is a typical charting pattern. The talk about charting forms. What you tend to see is that you have big movements. You need to get used to that level of price. You need price activity around those levels. It is called a consolidation. We had a 30 plus move and some of the u. S. Indices and equities. To get used to those 30 higher prices, you need to decide, does the world like those prices . Are those the right prices . Are they too high . Are they to cheap . Then the market recalibrate itself based on the consolidation and that is normal. Do you hear people talk about the fact that this is normal . Lets be honest, it is normal. We have had five years of almost crazy markets. The fed will not talk specifically about the stock market. They said they do not make policy for stockmarket investors. The last time we had a 10 theection 10 is definition of a correction for most people. 2011, when the fed and the qe2. The fed is directly coordinated correlated to some of the section. A lot of people think it is a good thing we will go through this. Do we also need to remember that there are so much less leverage in the system than i was a few years ago . Taperf we face a real here, it is not going to jewel the system so much like you could have a few years ago. That point. Nke made there was a lot of froth in the market the cop pulled out to read we are probably in better shape Going Forward. Now, on to something a little spicier. Chipotle mexican grill. Known for breaking the rules when it comes to fast food. It has an atypical approach to mapping marketing. The company and its marketing plans. A deeper dive into original content. We talk about content all the time. I did not necessarily think chipotle was going to get too deep into it. They do things differently. That is what they are known for. They have a four episode comedy series, an actual video series four segments about a half an hour long called for armed and dangerous. Farmed and dangerous. We got a sneak peak about a year ago. Production. Ood it is all about getting the food with integrity message out there. I have to tell you, this series is not just one long commercial for chipotle. It is very different. Check it out. Why am i here . This is the biggest improvement in acc culture since synthetic growth hormones. It is a game changer. You are feeding cattle petroleum . Nobody wants oil in the for chain fujian. Food chain. Side effects . This will start airing mid february. It will be on hulu and hulu plus. The only mention of chipotle is some mention of whether mcdonalds on chipotle. Which prompts the question, is this going to so more burritos . It seems like everybody wants to be a media company, but they need to sell tacos, burritos. Is that going to help . That is the logical question. Does it bring people into the restaurants . It is something we talked to the chief marketing officer about. Here is what he had to say. This is definitely uncharted marketing territory for sure. The basic idea is that we believe the more people know about whether food comes from and how it is prepared, the more curious they will become the more likely they will be to seek out restaurants like to pull it. Chipotle. Ands meant to create change curiosity and indirectly drive them to the restaurant. It is about getting the message out. They want this national conversation. Is food locally sourced . Are there antibiotics . Is all what chipotle about. I have to tell you, theyre not very conventional, and yet they free. E offering it it is not conventional for us, it is a little bit different. I kind of do buy into that. When they are digging into where the stuff comes from. I do care about that. I love it. Raise awareness. It is those kinds of things that make you begin to care about how the beef you are eating was raised, how the pork youre eating was raised. If im on a highway and i am faced with a chipotle, a talk about, and mcdonalds, a burger king and i have my kids with me im going to go with the chipotle. They had better live up to the promises. If you do a Marketing Campaign and usurping crap and those burritos, it is over, baby. Like the wendys frostys. They are so good. We will be talking about apple. What should we be looking for in the earnings . Guess what . Another retailer cut its customer data. You are watching bloomberg tv. Time for some top tech and media headlines. Moodys has cut its current rating. Below investment grade. Sony has been trying to capture consumer demand. Thirdquarter earnings are out next week. Liberty global has agreed to fully take over ziggo. Busyty global is in the u. S. Ziggo. N a 28 of they are just filling it out and it consolidates the Broadband Company in europe. Consolidation is necessary because europe has way too many operators. It is a fragmented market. 110 operators in europe. Do you need five mobile operators in one country a very small size in holland . We are supportive of consolidation. We want healthy telcos. We want a healthy environment for our ecosystem. It is going to happen. Google is adding to its Artificial Intelligence business , buying deep mind technology. The price is said to be 400 million. Toir expertise will be used improve search results and other products. Apple is set to reese report first profit gain in over a year. And cook has been under a massive amount of pressure. Joining us now to talk about what investors will be looking for is a principal at Investment Partners and he follows the company. Would you think we will get . I think we will get about 57 billion in sales. Net income somewhere around 13 billion. Beyond that, what im hoping we get, is some sort of color from tim cook as to what we can expect Going Forward. Not just in terms of numbers, but products. What do you want . Say is going to make you this is a screaming buy . Some of the numbers, as they come in, are already telling you that. It is 30 return on equity for five years in a row. The Balance Sheet sparkles. They are not commanding the kind of multiple that other Tech Companies are getting, specifically some of their competitors. I am hoping that he gives some sort of growth story to investors and that will translate into a higher multiple and something closer in line with the s p. Why do investors need a story . Why cant they just look at the numbers . If the numbers are relatively speaking as good as theyre going to be, why is that not enough . Technology is a whats new business. If the only thing new coming up this year is going to be new phones come in a refresh on macs, it will continue to trade on a utility. The yield props up the price. That presumes that apple is still a tech company. As opposed to what . Is microsoft a tech company . Theyre both Tech Companies. They are both suffering from the same malaise. There is a. Period of growth maybe this is what happens to Tech Companies. It happens to the ones that do not continue to grow and do not have a story. Do you become a microsoft . It has an relatively well relative to dell. In the case of the social media companies, you are comparing them to companies from the valuation of planet clown. It is a very different scenario when you have a company like apple. Thist me put it to you way, is apple as much of a tech company is google is a tech company . Team google, team microsoft, team apple are all vying to be i nformatics companies. Using algorithms and databases to improve your life. That degree, i would say that apple is way more than just a device company. If you look at the growth of their software and service, Going Forward, i would say, you can see that being a quarter of their business. , if you hadearables your phone and your tablet and your tv all integrated and youre using Lynx Software that you subscribe to for a bunch of different applications, it is not just a device company. Can help us live a fulfilled life. When we talk about the internet of things, that is what apple or google are gearing a stored. That is right. Vocal commands a much higher multiple because that story is out there. Google commands a much higher multiple because that story is out there. Is it ok that apple is making you wait this long . Lets look at samsung. Everybody was talking about how amazing it was carried leapfrogging apple. Samsungs stock is taking a beating lately partly because samsung has showed us what the future is supposed to look like in the galaxy gear is a dead. Dud. If i had to guess why samsung released a product so early, it was probably a Defense Strategy in case apples wearable device is a huge it. They can say, you infringe my patents. Right . Maybe. Maybe. Good point. A very the litigation were continues. You dont think that the galaxy in any way is a Success Story . The galaxy is. The gear is not. Even if the gear is not, it shows that they are in the game, as far as innovation. That its right. I would hope that some of what tim cook says, either this evening, or at the annual meeting, he gives a little bit more color as to what are we working on . How is it going to work . How is it going to integrate . Where do you stand on carl icahn . I think he hit some of the high notes. He is just pushing apple to give back the cash, baby. They will continue to get that if they do not show that there is a story or something bigger in terms of an acquisition or a bigger plan. Two activists in two years should be telling everything to this management that they need to know. David einhorn and now carl icahn. He does make it happen. Thank you so much. Did you stay up for the grammys last night . We will say about the winners and losers and whether the towards even matter anymore. Back in a couple of minutes. We are approaching 26 minutes past the hour. Looking at the markets because it is time for bloombergs on the markets. Nothing much has changed. The selloff, if you could call it that, in the nasdaq has picked up a bit of speed. Market volatility. Some jitters after a big selloff by argentina. Everybody is still paying close attention to what is happening in turkey, in the ukraine. Wondering, does it all add up to something for the developer can . Developed markets . Or will it burn out on its own . It is a reminder that this we have have had spoken to so many bigtime investors who have been bearish because they look at fundamentals, but tactically they have been long on the market because they could not not be. s said meeting puts everything into perspective. To what degree are they committed to a steady quantitative easing . If they pull off, that will change everything for everybody. Ben bernanke is saying, im glad i am done with this job. Not quite. Still till the end of the month. We will be back in two minutes. But live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and stephanie ruhle. Welcome back. Im stephanie ruhle. Down in washington, d. C. , president barack obama is using just about every social media tool to present promote a centuryold ritual, the annual state of the Union Address. Philphil madeleine mattingly joins us now. What i hear the state of the Union Address, i get a pit in my stomach from when i was a kid when the date of the Union Address would interrupt the muppets. Why is it so important today . It is exactly that, but even more so now. There are so many options on tv. Thenow that last year president reached 33 billion people with his address. It was about half of what bill clinton was reaching a decade before. The white house is going ahead with full on social media push. They are having Google Hangouts with staff and aides. They are also doing a virtual road trip with the president after the speech. This is not only to get supporters involved, but exactly what you are saying. They need to reach more people and this is the way they think they can do it. And isnt it fair to say that it would be normal that they do that, not necessarily desperate, because people are not watching traditional tv at 8 00 at night. By engaging social media, that is how we consume content these days. Im not watching mustsee tv on a thursday night. Im just not. That is exactly right. Both in the Campaign Arena and since they have taken over the white house, this is what the white house has tried to do. They tried to engage socially and they try to almost get around us. They are not trying traditional tv. They are trying different added supporters. O reach people are looking at twitter and instagram. They dont care what is on the network necessarily every single night. This is what their outreach is all about right now. The white house has come under criticism for just this approach, because by excluding media, whether they be traditional or not, they are giving us only one version of events and that is the official version of events. They are not at not opening themselves up to scrutiny or even allowing outside photographers to capture the president in what might be his most thoughtful and personal moments. It is all up to the white house photographer to decide what that draft of history is going to look like. That is right will stop that is right. Just because they are doing it does not mean that we like it. And it is not just about whether you and i like it. Its what the American Public sees. The American Public is getting a sanitized version of events, only what the president and his staff choose to show us. How is that thoughtful and personal . Isnt it the opposite . I completely agree. That is why i want to talk about it, so that those who do watch the state of the union and do see these tweets from the oval office know what they are getting. They are not getting the truth, but only part of the truth. They are getting the truth that they want to give us. What do you think, phil . I think that is exactly right. The white house wants to control the message and not give media the chance to shape the message the way they see fit or two talk to republicans or to talk to republicans. The hard part that the media is trying to figure out right now is how to counter this. If everybody is following the white house Instagram Account and looking at the official white house photographer photos and not paying attention to bloomberg or the Associated Press is, how do we get the medias version of this out better . There is a competition going back and forth between white house staff and the press right now. And it is because of what you say, the press use their role we are the ones who will give the unvarnished truth. The white house will pick what best reflects the president , and the story. End of story. It is not necessarily how we get it out, but a commendation of how we get it out and spin it out. Itcombination of how we get out and spin it out. They want the positive message. Thank you. Stay warm at the white house. When we come back, another withetailer is dealing customer payment issues. Now congress is coming to the rescue . I will believe it when i see it. It is a brandnew experience on bloomberg tv on apple tv. Well have more in just a few minutes. Stephanie and i are back. We are talking about Identity Theft. With congressional hearings into id theft coming next month, lawmakers may choose to act for the protection of consumers. For more on what that might actually look like, lets bring in a senior economist with bloomberg government, which analyzes the policies that affect business. Tell us, what might congress do in theory to help all of us who use credit cards and to use debit cards, and who are subject to the threat of fraud . It is good to have you back stateside. Congress cant that do. A lot of legislation has been waiting in the wings. These recent data breaches may be a watershed for congress. The two things to focus on are thatmart Credit Technology helps protect consumers from Identity Theft in europe and canada. And right now, companies, retailers i target and likeels, retailers target and michaels, they are different 46 standards of state law. Now they are calling on congress to come up with federal standards so they are all on the same playing field. In Congress Really get ahead or even on top of this issue . Technology moves five times faster than management. It moves 50 times faster than government. Youve got that right. Especially a slow government that does not like to compromise much. What we are asking congress to do from an industry perspective is to solve the stalemate within the industry itself. There are some technologies that currently exist, the Smart Card Technologies for instance on the credit card, that we could have that technology today. Because we do not have it, the u. S. Is a weak link. We have it elsewhere around the world. Now retailers are asking congress to set some standards and asking the banks to actually provide this technology. Banks in their turn are asking congress to say, ok, make retailers take some response ability for all of this credit card threat credit card theft that we see going on. And congress is like, look, we are the king of stalemate. What do you expect us to do . It is interesting how we will get out of this tightness circle of action. Do the retailers pay or do the banks pay . And im sure it differs from country to country here in the United States, banks are response before customer fraud. In that sense, retailers have been reluctant to shoulder some of these costs, which are estimated to be about 5 billion thisre, to adopt technology that is used abroad. Then who should shoulder those costs . Should the government get involved . That is dicey business there. Dicey business, and there are some concerns on both sides of the aisle where they say, look, we dont want the government telling companies how to run their privacy standards. At the same time, without federal standards, is there any initiative . We would think that there is concerning fraud that the private sector would come up with its own private sector solution, but this has been out there for years. Granted, it is not a cureall, but we have had ways to curb this kind of hacking and it has not being been adopted yet. This could be a way for the government to have a bipartisan effort to get standards and legislation on the table. Should we be frustrated at this point . Or so long as my credit card picks up the check for the fraud or so long as the retailer is on the hook for the fraud, should we care . Victim ofbeen a Identity Theft and it has changed my behavior. There is a gas station near my home that i no longer go to because a thief was able to read the magnetic strip that was developed in the 1960s. And as anmer economist, i think our Financial Stability is at risk. Why do you think any other gas station has better security than the one where you happen to be victimized . A that is a question for behavioral economist, actually. I think people do change in response to being victims themselves. I think there will be more use of cash at target. There is a greater concern Going Forward as to who picks up the cost. How vulnerable the United States is. U. S. Is a sitting target because we are not adopting these kind of technologies that are available in the rest of the world. It is crazy for an economy that is as advanced as ours. We will have bob schiller and Richard Thaler join the conversation. Richardson is an economist at bloomberg government. Richardson is an economist at bloomberg government. When we come back, it is only rock n roll, but do we still like it . We will have highlights of last nights grammy awards. We will find out if these shows actually help sell music. Stay with us. Welcome back. A french duo disguised as robots were the big winners in last nights grammys. To come five awards, including record of the year. We are joined by the editor of the lord magazine. When i first heard get lucky i said this was going to happen. Surprise for you . I would say the album of the year grammy was a surprise. Record of the year, daft punk gets that for the recording. What is the difference between the two . Album of the year is all of the songs. Song of the year is a songwriters award. That one went to lorde, the 17 yearold sensation out of new zealand. The recording itself, that went to the daft punk track, get lucky. When you look at the hot 100, who is actually looking at the album . Individually music at this point. There were definite album sales, but when you look at daft lot daft punk and at lorde, you are looking at problems apiece. They both performed and they both headwind during the broadcast itself. They will sell more songs and albums. Particularly in the case of daft punk, where you have one song you may be heard on the radio and you see them at the grammys and they win album of the year and you are a casual music fan and you think, i would like to know more about half punk. Daft punk. They had such a major year and they did it without a major label. Macklemore and ryan lewis had such a major year and they did it without a major label. That is right. Significantly, though, they have done it with the help of warner bros. Records promotion arm. They have used it for radio promotion and for a little bit of help all across the board getting their album out there, but this is really their own project. Has it rocked the record industry . I think the record industry is used to independent artist and independent labels and people putting out their own music, but at the scale it is a real surprise. Can you help us understand who is ryan lewis . We know who macklemore is. He did not get to say much at the grammys last night, but ryan lewis is the producer and dj. Remember Dj Jazzy Jeff and the fresh prince . He is the dj. Ryan lewis is jazzy jeff, the dj. Do withestion has to what weve been asking all morning long. To what degree do the grammys matter anymore . Quite honestly, when led zeppelin is winning a grammy in paul4 in 2014, when mccartney, who is pretty much a parody of his onetime self continues to win a grammy, how do people take it seriously . Ive never heard anyone quite that angry at Paul Mccartney. Hes the cute one. He won four grammys last night. Granted, three of those were for things like packaging. But you are pointing to how schizophrenic the grannies were the grammys were last night. Paul mccartney is great at packaging. If you great at singing anymore . Is daft punk rate at singing . Great at singing . Ryan lewis is a producer. I love ryan lewis. Ryan lewis and not Paul Mccartney . That is perverse. But lets not argue about whether or not, carney is talented and can still sing. The answer is, he actually is lets not argue about whether or not Paul Mccartney is talented and can still sing. The answer is, he actually is talented and can still sing. Joe, come on my there are others who deserved recognition more than Paul Mccartney for the umpteenth time. Years after the Ed Sullivan Show they were doing a beatles special. Mccartney and ringo starr were there last night and playing together. What youre talking about right there is marketing and packaging, not necessarily sincerity behind an award. Certainly see what you are saying, but lets also point out that there were a lot of new artists last night. Casey musgraves, lorde, they got great exposure for their music. And then we have artists like pink, who killed it last night. And katy perry. It wasnt just old folks. You have to join us back here in new york. We love having you. That is it for our first day back. Goodoing to say, it was a one. It was a lot of fun. We will do it again tomorrow. What is at stake with president obamas state of the Union Address. Our own man in washington, Bloomberg Economist al hunt, will be with us. I will tell you tomorrow how many state of the union al hunt has covered. We will find out tomorrow. He has not covered 56. I will help you right there. It is time to take you on the market. Olivia sterns has more. This is a big week for homebuilder earnings. In stricker says a pick up new home sales with relatively low treasury yields could suggest that this is a good time to add exposure. He joins me with two strategies for investing in homebuilders. But start with new home Sales Numbers out today. They fell more than forecast for the month of december, so showing a deceleration going into the year. But still, the best year for new home sales since 2008. Do the numbers today make you change your bullish stance at all . No, actually it plays into the trades we will talk about today. In december, the new home sales number was a little bit less than expected later than expected, but if you smooth it out yearoveryear, the critical element to the housing data now is a reacceleration from the Third Quarter into the Fourth Quarter. We actually saw that with nvr reporting this morning. You saw a reacceleration into the Fourth Quarter. It was flat yearoveryear and the Fourth Quarter for them, but it is relative to a seven percent decline in the Third Quarter. We are talking about rick celebration reacceleration into the Fourth Quarter. I know you like the homebuilder sector overall and are interested in etfs. But he for that, you are looking at individual out performers. Which names do you think will outperform the sector . The Favorite Group is d. R. Horton. The reason is they have the most exposure to new form new home buyers. Last year, the stock was hurt the most. It out underperform the s p last may. Most since the Home Construction index also by about 18 . Here. , two factors one is pork celebration and core growth. Poorer two, acceleration and core growth. And number two, if you look at the last two years, they will benefit relative to the rest of the homebuilders, we think. Do you think we will see a move after the fomc meeting this week e this week . If you look at volatility, it has been relatively stable relative to other volatility metrics we look at. Although we have seen the 10 year yield them and im pretty sick consistently pretty consistently. Talk to me about the option strategy. Dhr, before tomorrow morning, before the open, what we want to do is buy some calls. If you look at volatility, it is sitting on longterm lows. That means the options are relatively cheap. And we go out to march, so we dont want to be too cute playing around earnings. We see that as a catalyst. We will pick up with some of the spring spring selling season. Think march is the time horizon . We want to capture the front end of the spring selling season. We think there could be good upside, again, given the performance of the homebuilders relative to the broader markets. And specifically dhr, we see a different a decent amount of upside. We want to play that out over a couple of months and not just a couple of days or weeks. The is the id tgf ietf on the homebuilders . Itb implied volatility is sitting on longterm lows, just like dhr. There is broader risk that has been brought into the market. Buying calls means you capture risk at the premium you pay for that call option. Itb is heavily weighted toward the homebuilders relative, for example, fhp, another etf. We will have to leave it right there. Tanks so much. On the market again in 30 minutes. Welcome to lunch money can go where we tied together the best of stories and video in business news. Music. Than just a new Marketing Campaign, the only thing you will not see on tv. President obama says he does not need congress to get an agenda dogma so how do you think that makes congress feel . This is why possibly the coolest job in hollywood. Hike, up un