In the nonmanufacturing composite will report numbers. Not a lot of earnings today. Of that, withside the adp report, we begin with the American Labor economy go into a 30 friday morning. Betty liu will pick it up with in the loop on friday. Look at the data check. A big move yesterday. Subdued today. Still living the joy of a wonderful tuesday. 10 year yield back to 2. 69. Scarlet, you are rudely interrupting. We have the bank of england coming out with their interestrate decisions tomorrow. That is tomorrow. A little less pressure on the ecb doc tomorrow. And we have the draghi press conference. And john kerry meeting with lab rock in paris this morning. Let me give you a shot of the ruble. Heres what putin is worried about. A week in russian ruble. Here is the panic. Then we rollover. We really have not come in all that much. That is an elegant chart. By no means technically are we long ruble, strong ruble. The good news in the last 24 hours. We have look at the newspapers this morning and the webpages. Heres the front page. We did not have to look far. Ukraine and the crisis there. John kerry in paris meeting with russias foreign minister Sergei Lavrov who said yesterday the threat of sanctions will not change the russian position. There are reports the white house will impose economic sanctions on russia sometime this week. We will go to paris in a bit. The former managing director of the im at said yesterday, his idea of a sequence. I thought he revis eyes this is a process, a sequence. It is no surprise on neutral territory in paris is where the meeting is. Rocks and russia says ukraine owes gazprom 2 billion. They have an option and they took the option and is it, no, you cannot get white walls with your tires. And that things are on the hook as well and the banks are on the hook as well. And the debt in russia and ukraine is more than just a gymnastic debt, it is also debt they hold abroad. A domesticn just debt, it is also debt they hold abroad. White walls, really . Said they gazprom could not have the option. And you said 2 billion. China, the annual meeting of the legislature again today and the government is keeping his 7. 5 rose target for this year for the same as last year. Willremier said that it promote jobs. China needs to clean up the pollution, try to avoid an unprecedented debt search. You heard about the Chinese Solar Company that signaled yesterday the risk of what could be the first bond default in china. The Banking System as well. Help me. We look at the terrorist attack over the weekend. How does that color domestic and regional chinese politics . You can bet it moved to the top of the agenda as well after the mass knife attack. They called it chinas 9 11. Do you have a back story your two of this political meeting . Is there a backstory . It is holding in line to what they agreed on, which is focusing on shifting the economy from and export investment driven economy to more on domestic consumption. And Solar Companies . No. Are they discussing pollution . Definitely. People in china are discussing it and they cannot avoid it if they wanted to. A bit of a shameless plug. Bloombergs annual rankings are out. 1. 7 billion in fees last year. It is picking up pace this year. Last are, companies raised 56 billion in ipos. Lets remember goldman getting the twitter ipo. It may be the biggest part of that. After the facebook flop of an ipo, twitter giving goldman a lot of advantages there. Goldman m a. And goldman in gpo will cofound mollison company. Doubledhat the firm last year. We have a perfect guest. And we cansberger talk about this with him. Erik schatzker will join us later in the hour on this. A big french bank. We can talk about that later and the great challenges foreign banks are having with new regulation. Is the solution to smart entrepreneurial people on wall street to just do it myself . Sover . Days of ken moeli i cant speak to that directly, but i think entrepreneurship, there is a place for it on wall street. The regulatory overhang can be burdensome to some banks. We will see. I think the jury is still out on that. I agree the jury is still out, but all in all, it was a big up year for the ever cores of the year. With the stock market up 30 , no doubt a lot of private Equity Investors took that opportunity to cash in. The private equity space is a little different that maybe some of the core Investment Banking activities that other banks engage in. Valuations, i think they change all of these businesses at some point. None more difficult than private equity. Without a doubt. It is tied to a lot of bond investors. Equities are fully priced is not overpriced they would argue that. It seems to be disconnected and i think that is waitressing private equity take advantage of the opportunity to cash in. Timothy bitsberger with us. About safek to them havens in a bit. She is on the road. I think it was washington, new york, kiev. If it is wednesday, msp paris. The secretary of state will meet with lavrov in paris. Good morning. Good morning. How sudden was this . Was this an orchestrated event or spur of the moment . John kerry was planning all along to come to paris today for meeting of Foreign Ministers relating to support for lebanon which relates to the syrian crisis. They were brought together rather suddenly, various meetings on the sideline of interested in parties interested parties in ukraine. We saw secretary kerry, secretary haig of u. K. And also the cranium counterpart. You are perfectly advise on this. Give me account. It is a g8 . G7 . G3 . Are we this morning . It depends on who youre talking to. The u. S. Is still mad about russia is doing. There have been calls from corners in washington about trying to expel russia from the g8. But im not sure whether it will go that far. What john kerry did this morning was he referred to this budapest memorandum signed back in 1994 by the u. S. , russia, u. K. , and ukraine when ukraine gave up their stockpiles of nuclear weapons, which you may remember was the thirdlargest in the world at the time. And john kerry condemned russia, in his opinion, for not sticking to the parameters of that declaration which were to protect ukraine from any threats. We think it is a problem. To what extent will Financial Aid and dollar amounts be discussed . Russia saying ukraine owns gazprom, which is the state controlled energy giant. They have already committed some aid to ukraine. I think that is still to be discussed. Later today at 5 00 p. M. Paris time, john kerry will meet with secretary lavrov of russia, so they will have a chance to talk about that then. At 3 30, there will also be a meeting on the sidelines to talk about ukraine. Russia has been offering money to ukraine, supposedly the metallic them with the gas debt supposedly, to help them with the gas debt. Much,ira, thank you so traveling with a secretary in paris, france. Lets get to company news. We start with Standard Chartered bank. Posting a profit for the first time in a decade. Business in south korea we can. Hey broken its korean business because the bulk of its profit from the asiapacific region. A drop in the ruble slowing adidas down. Forecasting fullyear profit as much as 17 below analysts estimates. They blamed weakness in the ruble and argentineover the shortfall. Apple its a new cfo. Your oppenheimer retiring from the post at the end of september. Oppenheimer has been with the company for 18 years and oversaw the surgeon apples cash flow 2004 to 158on in billion today. That is todays companies news. How legendary was mr. Oppenheimer . What he did it apple was fairly amazing. You could look at the 158 billion in cash that he is in managing and say, this is the biggest money manager in the world. He just hasnt done a lot with the money. Tim cook is a lot of credit for what he did as steve jobs side, managing inventory and these Amazing Products as they grew like the products have an history of technology, without big hiccups in inventory or the problems does or other big problems. But oppenheimer should get credit as well. Busy morning. You know who else is sitting on a big pile of cash . Tobacco companies. Will ecigarettes stuff out big tobacco . Like that, snuff out . This is bloomberg surveillance. Good morning, bloomberg surveillance. Ben hurwitz will join bloomberg 1 00 p. M. Go to eastern time. His new book. A person of Silicon Valley. Watching the golden state warriors, which is a positive thing versus the new york knicks. We are putting up with cory johnson this morning. It is not so bad. The topic is ecigarettes. Speculation of a big deal in the works. The reports that Reynolds American is going to make a bid for its rival an early adopter when it comes to ecigarettes. A deal between the number two and number three players could top 20 billion according to the financial times. We know reynolds hired lazard according to the news, but it is not sure if it is the entire company. What i found interesting, Reynolds American is 42 owned by British American tobacco in a tenyear moratorium preventing them from increasing stake in rentals and reynolds ends in july. It comes as smoking rates in u. S. Are falling. No one smokes in california, do they . I see smoking and frequently when i travel, im shocked from a particularly in new york when i see smokers everywhere. The ecigarettes phenomenon is amazing. You cannot even smoke them inside in ballet anymore. I was in provo, utah last week and i was in this hipster and there were three High School Girls in their outside smoking ecigarettes. Theres not a lot of tobacco there, so i found that is interesting that is the trend there. Bloomberg industries will give us perspective. Have you tried the grape, apple hookah ecigarettes . Ive not tried that. It seems the flavorings, the options keep exploding. Lets cut to the chase. Are these things good or bad for you . It depends on who you ask. If you ask a lot of health advocates, they would say it is a lot better than combustible cigarettes. If you asked some of the critics, they would say because it contains nicotine, it is probably something that we want to watch, particularly when it comes to children. Can, cigarette consumption and smoking rates in the u. S. Have fallen over the past decade but the players and Tobacco Industry really havent changed out that much. Or market share has not changed, either. Why hasnt that changed . Good question. It is probably because high barrier injuries is the easiest answer. Youre nus, it means accepting a lot of legal risk to compete in the u. S. , you are accepting a lot of legal risk, you owe billions of dollars every year depending on your market share to the state attorneys general. There are high barriers to entry. That translates for investors to high return on stop performances have done well. Can we have a moment while we talk nicotine . Im going to have caffeine. Youre not allowed to have ecigarettes. My word, im having caffeine, i guess im a bad person. Tim bitsberger with us from bnp. Is this a domestic story or are ecigarettes of french and emergingmarket story . They are a global story. Im estimating around a 3. 5 billion industry today. The u. S. Accounts for about half of that business. Virtually, all of the large tobacco manufacturers including Philip Morris international are looking to ecigarettes as basically the growth platform of the year. Given the vast distribution of these companies and what seems to be a growing demand for safer alternative than combustible cigarettes, it seems to be translating into a good opportunity. You are an expert on regulation and financial markets. Do you see the washington regulation of tobacco transferring abroad to other countries . I would doubt that. The contentious nature between financial regulation, between the whole sovereignty issues and what regulators in charge of what it what country, i would be very surprised if that were to spread international. And tobacco has to look abroad if the u. S. Is shutting down. Paris several times a year and it amazes me how many street corners so many people are congregated smoking cigarettes. I used to smoke gitane. They are just as vicious. Go back to your coffee, tom. I need to ask about regulators. Toording to some, likely approve a deal between reynolds and lorillard, but the fda still needs to make a decision on ecigarettes. Who do we look to first for some kind of clarity . Both of those points are valid. The u. S. Cigarette market is highly concentrated already. The top three players are 85 of the market. A combination of those would mean the top two would control 85 of the market. Looking at the u. S. Beer industry, the top to control it up or send, i dont think that will into the conversation. In terms of the fda, the fda is supposed to come out with decisions any day now, although theyve been saying that for a while, regarding how it will regulate the mental industry as well as how it will regulate the ecigarette industry. A lot of people are waiting for a cue from them. Ken shea, thank you so much. Very valuable effort here. We tried the ecigarettes here. I found it very uncomfortable. You were buzzed at 4 00 in the morning. Andng up, leo hindery former chairman and ceo of yes network. The leads us to our twitter question of the day we want to hear from you. Good morning, bloomberg surveillance. I am tom keene with cory johnson and scarlet fu. I go straight to the New York Times for the morning must read he suggests they expose putin possibly miss by going after oil and gas. Certainly, one idea. Quick i thought the press conference shifted the dialogue yesterday. A lot of people were stunned at the body language. Look how casual he is right there. Making references to yanukovich is alive and doing well. He isnt like what we were used to. And the turmoil rock n roll and. Kind of unwound a bit. Where are investors parking their money Going Forward with this big change . We will talk about that next on bloomberg surveillance. Good morning, bloomberg surveillance. With cory johnson and scarlet fu. Features are quiet. Looking at the data check, euro comes back. The crisis of 130 the crisis of a few days ago. Calm in the market. Lets go to gainers and losers. 4 andcomm rose almost boosted its buyback plan. The notable decliner is radioshack, down more than 70 . Company reported a wider than expected losses and will close up to 1100 stores in the u. S. This year. Theyve been Closing Stores like crazy anyway. They made his big bet on cheap cell phones. Revenue growth that gave them coming earnings. Tremendous trouble on the storefront level. Theyre trained to read energized their stores and reformat them. Ring back marilou retton. She was before your time. Yes, i know. Ive seen youtube. She probably shopped at adidas. This is an interesting story and ties into not only ukraine and the geopolitics, the slowing global economy. Adidas and the sharp competition for running shoes. To be blunt, there were significantly impacted by Foreign Exchange movement as they reported earnings come as a much of their business outside germany and outside western europe, but joining us now the adidas chief executive officer from the companys World Headquarters in germany. Good morning, sir. Good morning. It is the most interesting story of what adidas is doing. How bad was the currency effect how difficult is a strong euro for adidas . First and foremost, we have to say operationally, we had a good year 2013 but of course, as you have mentioned already, the currency to valuation, especially the emerging markets turkey,sia, india, tralia cost us a lot of therefore, currency neutral. We have been very good. But when we take absolute numbers, results have not been as brilliant as currency neutral. Most funas to be the time for you, sir, as you go some 98 days away from the world cup. You have been with adidas its 1987. How much fun are you going to have in brazil . I am very much looking forward to it. I am a passionate football fan and football is heart and soul of the adidas brand. We are the sponsor, the licensee in part of fifa. Y have made great teams they have a great teams and formidable players in brazil. Contemplate ethical start in 98 days from now and we definitely will see adidas as the football brand during the world cup. What is the dynamic right now in football in the English Premier League or the United States, argentina or brazil . What is the dynamic as you compete against nike and reebok . Is it paying ever more and more money to celebrity foot all players or is there another angle . There is no doubt that football is by far sport number one in the world. Football is by far the most has the most followers. I am meeting soccer in your terms. The key players in the key teams have their price, but i definitely believe the suppliers who are spending money to outfit teams and players are getting their money back because it is a great exposure of the teams and players. This is a fierce competition. We are the number one in football and definitely will keep this position. Greatsk this with respect, does it drive you nuts that american say adidas . Ouro, as long as they buy products, they can pronounce it however they say. Spirit. Love it. Thank you, sir. Hope to see you when you are in new york next time. European ceo off script. He was great. You got him excited about the world cup. We want to bring in our guest host Tim Bitsberger. Are you a football fan . Definitely. Have to be. Lets go from football to the world of the markets. With most markets appearing to shrug off the tension between russia and ukraine, looks like russia safe haven was a little bit premature. The safe haven trade, is that still going to be a theme for the First Quarter 2014 . I will phrase it differently. I think there is a lack of conviction in the marketplace. Investors since june when we had the big selloff in bonds, i think investors are still unsettled as to how the world will unfold. Theres question about growth worldwide. Our forecast is the developing markets are probably marginally positive. Taperingthe affects of on the negative side and on the plus side, less physical drive. I think over the past few years, the larger banks have taken risk off the table. In the last couple of weeks, were looking to see them buy on dips. Developing markets you say are strong. China is a wildcard everything. They came out with a 7. 5 forecast today. It seems aggressive. Init does seem aggressive light of what theyre facing weatherby pollution or reforms. Whether it be pollution or reforms. If they paid 7. 5 as a target, they will hit it with regardless of the actual results . If theyre not achieving 7. 5 , theyll still affect the flow of funds into commodities and other prices. They still if theyre going to be achieving anything close to that, they still have to be putting money to work. If theyre not, i think well see the fallout of other prices as well. , wehe challenges out there have the ecb meeting tomorrow, the england meeting him a the coordinated and correlations of the markets seem to be really, really tight right now. How distorted is the global system that is causing the safe haven affect . The Central Banks are the ones, if you want use a powerful word, manipulating market prices. And have been in a chronic nature 43 or four years. Look at the fed. As qa bonds mature, one would argue their minute relating the entire yield process. I spoke to a president from richmond and he gave me the company line with the wonderful lacquer touch that he has, youre the expert on all of that alphabetic jargon you just gave me. Does Tim Bitsberger have offidence that jeff lacquers the road can unwind the 4 billion dollars she . I dont i dont know. You dont have a shock test model . I would be surprised if there were not unintended consequences. The fed last june, they were very surprised with the effects say on the em space. When the em markets got tanked after the paper tantrum. The fed is acting in the best of their abilities, but i think theres a little hubris involved and theyre unaware of unintended consequences. The fed with janet yellen at the head has telegraphed what it intends to do am assuming that data cooperates. What about the ecb and mario draghi . There was speculation that would have to cut Interest Rates or do some kind of stimulus. What is the next step . We believe they can cut the rates. More portly, the bnp forecast is we look for qe by the ecb in the second half of this year. We also look for evaluation of the boj. Bnp has had a more cautious year. Do you reaffirm for the developed world a cautious view on Economic Growth . Without a doubt. Until get any kind of signs inflation is picking up no sign of Wage Inflation in the u. S. At all. Until you get that type of Wage Inflation, you will see consumption muted and growth muted. There is one of the catch is you see version is versus the optimist. Continueitsberger will with us through this hour. Coming up, our single best chart. Downhill skiing goes downhill. You sell the olympics, right . Did you write that . I came up with that one. There is cory johnson. There i am. There i am. This is bloomberg surveillance. Good morning, bloomberg surveillance. Cory johnson and scarlet fu. I am tom keene. New delay for the Affordable Health care act, obamacare, Offering Health plans that dont meet the requirements the Affordable Care act for another two years. The change will avoid another wave of policy cancellations at least for two years. China says it will declare war on smog. The countrys premier said pollution is a warning sign of an efficient and blind development. He outlined plans to remove high emission cars and close coalfired furnaces. The recent frigid weather on the east coast will be to the highest electricity prices in six years. Some parts of the years, wholesale power in new england trading 20 higher than last year. Levels not seen since 2008. Those are your top headlines. Time for our frigid single best chart. We stick with the weather seen. It takes a look at the number of alpine skiers, basic downhill skiing, and how it has been declining over the past five years. Fallen from over 11 million to just over 8 million. What is on the rise is what cory johnson does, free skiing. That is how you got your injury. This is nordic. It is pathetic. It is not with jumps and tricks . No, im fragile. It turns out the thumb will bend both this way in this way, but hurts this way more. And you end up with an ace bandage. You also do snowboarding. It has been going up. There have been challenges with demographics. Young people liked it for a while, but that has tapered off as well. Theres an adjusting lawsuit going on right now. Some snowboarders are suing for the resorts that dont allow them on federal land, saying, what about us . Tim bitsberger with us with bnp paribas. What about deer valley . The only two ski resorts telluride . What do you see . We are a skiing family. I like that people are doing more part of stuff because it opens up the slopes for the rest of us. Youre not a snowboarding family. My son got run over by snowboarder and tragically broke his leg. The beginner snowboarders get to scrape the snow off the mountain as they slide down. But this is a big point. My youngest daughter broke her leg at the top of keystone. The issue is just what you said, it is not snowboarders, it is the young kids who the parents throw them on the slope with no guidance, no lessons. They are a threat to society. Im going to go equal opportunity of a skiers, but youre right, theres a whole group of snowboarders whether it is in New Hampshire or beavercreek, it is a threat. A threat . Is that lecture good enough . Come on. Just crazy kids and their snowboards. The bottom line is, these 12yearolds are out there scraping the mountains. Them off thetake mountain if theyre causing too much trouble. You skiers, please. Were going to talk to the owner of Sugarbush Resort in vermont. California having the worst snow conditions since 1974. You win on a ski trip . Massachusetts. Two of the four days were great. This is all stuff we will talk about in the next hour. And coming up, ken melis partners plenty to cash in on the companys growth, announcing an ipo. We will discuss that next on bloomberg surveillance. This is bloomberg surveillance. Lets get you some company news. Verizon wireless getting high marks for network performance, topping competitors at t, sprint, and tmobile in a review over liability, call quality and messaging speed. Sales of pcs may be worse than forecast this year, a drop of 6. 1 is predicted. It had been looking for 3. 8 decline. They blend the slowdown in emerging markets for the change. Steve ballmer was in fine Form University business school. He t said the company was awptrick pony that was to looking for a third. People would say, why did you not do the third trick right . Damn, im upset. I dont know whether we were too busy or we only knew the tools of the first two tricks, but weve done to and you know the challenges now . Those two tricks will go for a lot of years, but in our industry, you got to do a third trick. That performance was vintage ballmer. He went on to say microsoft was in the process of building new muscle. Is todays company news. Cory johnson with us. Im really starting to see some action at the new ceo. He is saying the core business is really challenged. Steve ballmer was a salesman. We just saw that. Phone, meeting with customers, that is what he does. He loves to walk in the ceos office and say, update your systems, buy more computers. It was anhs ago, atrocity. You did not answer your questions. I did a crummy no, it was not you. Against theng up strongest defense in the history. How will your interview be with the new guy . It will be totally different. Addressing some of the biggest changes in technology, which is a move away from the Things Microsoft did, which is selling software to pcs. The pc is going away. Pcs dinosaurs. Lets move onto another industry some say risible dinosaurs thinking. Ns for an ipo yesterday plans announced yesterday for an ipo. Erik schatzker joins us with the details. This is a boutique investment bank. Ive a question for you, scarlet. Why is moelis and co more like google than bowman sacks . Ive never heard that comparison. The most interesting thing about his filing as he was to create a class of super voting stock so he alone gets to control the future of moelis and company. It will not be an independent board, just like google and facebook. Are their demands for his shares like for google . Well, m a is on the upswing. Volumes are at their highest since the Third Quarter 2008. Historically when him and a begins to bubble up, you will see these boutique firms go public. Look at the last round of ipos. Goldman sachs went public in 1999. Then we had greenhill in 2004, ever core in 2006, before the door slammed shut, fbr in 2007. We have not seen this since 2007. Is this the icon effect . Keeping the activists away . Excellent question. Unfortunately, i do not get to ask ken moelis because his lips are sealed until after the stock prices. I think it is a legitimate thesis. , what are yourer thoughts . To his point, it strikes me as a little opportunistic. He is taking advantage of market conditions. T doesnt mean to help answer your question, maybe it is ken moelis taking a page from his clients book. Page can dog and it, why cant i try and do it . What we have yet to see is whether the market will apply discounts to the valuation of moelis shares relative to the best coms around. Greenhill, for example, evercore with asset management, and the mega boutique, which is lazard. I look at this, Tim Bitsberger, and we talked about this yesterday, the idea of a. Artial ipo essentially the liquidation and cash in for the principles. Is that what this is . It sure sounds like it to me. He is inviting a lot of sec scrutiny. Why is the street allowing these guys to do it the weather it is the tech boys on the west coast or the financial types on the east coast . Why is the street letting them get away with a pseudoor partial ipo . The investor demand you know, he is going to me that investor demand by selling shares. We may not think it is the best investment andnd it is not just moelis facebook and google. The dual class share in corp. ,ring was by news this is distinctly different from classic class a, class b structures. , that to the smith family was more traditional. Im a bond guy, not an equity i understand. Theunctionally, maybe intent is different, but functionally it is the same. One man or one small group of people gets to decide the future of the firm. If you are a minority shareholder, youre nothing more than an equity shareholder. What about groupon and these companies that have the same dual class structures, they have gone poorly in the shareholders have suffered. It will be interesting, to say the least. Tim bitsberger, thank you. Report, a better report watching the yen. It is a litmus paper. It is a better story this morning. This is john kerry meeting with the foreign minister of russia in paris. Joinsing up, leo hindery us as guest host. Secretary kerry will meet with the Russian Foreign minister in paris as the market surges. How did they change distribution in media . Disney and dish. Priced industry has itself decidedly out of the ski market. Good morning, everyone. We are live from our World Headquarters in new york. Joining me, as always, scarlet , with cory johnson from bloomberg west. Our guest host for this hour, neil hendry, fortunate former chairman and chief executive officer of the yes network, home of the dreaded new york make new york yankees. Dreaded indeed. I am outnumbered. This is not right. Overnight we have a lot of news of u. K. Services extending sinceency since the 2000 nine with u. K. Manufacturing growth accelerating in february. Pmi rose faster than initial estimates as germany boosted growth to its strongest in three years. 7 00, the adp employment change. Big deal with adp. Exactly. Those numbers coming up at 10 00. The Federal Reserve will release the beige book at 2 00. Plenty of stuff to look ahead to, including earnings. International reports come before the bell. Like i am just dying for those petsmart reports. Of course,. Of course. They got a lot of money from the Johnson Family this year. [laughter] doing business in south korea, weakening, Standard Chartered lowering it last year as bad loans increased. They get most of their increase from the asiapacific region. A fullyear profit, 17 below analyst estimates. They do slams weakness in the ruvell and argentina peso for the shortfall. Short sales come from outside western europe, making it very vulnerable to currency swings. The bloomberg market annual rankings are out and Goldman Sachs is number one in s p underwriters, earning 7 billion in fees last year, boosted by twitters offering. 60 billion raised in 2013, the most since before the financial crisis. That is todays company news. Since it is wednesday, folks, it must be paris. That was a movie from a few years ago. The secretary of state will meet with the foreign minister of russia in paris. Markets have celebrated their that ared intentions diffused. Key avenue, Ryan Chilcote is watching the ukraine in crimea. The markets like what they see in the last 48 hours. How did mr. Putin change market receptions in his News Conference yesterday . The think that he removed unknown and the unpredictability. He basically got out there and said russia sees no need to send troops to eastern ukraine. He did not use the same words, because russia already has troops in ukraine and crimea, but he does not recognize those as troops, he calls them russian speaking militia. He kind of removed the chance that they might selloff more troops. I think that that is what cant down the markets. I am fascinated in tm i how they will perceive the meetings in paris. Do they look at this is a distraction . As a waste of time . Or is key of riveted by what we will see from secretary kerry and the foreign minister of russia . Probably too cynical to be riveted by what secretary kerry does. They are just a tad concerned that this is going to get away from them. That it is time for them to write off crimea because putin has already said that he is not going to escalate. If he just keeps it at that, they are probably worried that the u. S. And the west are going to let russia get away with that, from their perspective. Had the ukraine already written off crimea . Was that in the ukrainian interests . They would like crimea to remain part of the ukraine. But now that you have got all of these Russian Troops there, the russian army has one million troops, they have got like 150,000, they recognize that they are not going to send any troops in to fight the russians, no one else is either. At the end of the day it is kind of like losing alabama or something. It is painful, but you have the rest of the country and if it is just that, no big deal. But if that is the foothold through which tens of thousands of troops come flowing through, that is definitely alarming. One last question, to what extent is there any discussion or timeline on sanctions . We know the u. S. Has threatened sanctions against russia. Any confirmed timelines . There is no firm timeline, which is why i say the key word is threatened. We heard that we might get some of the fine print later this week or next week, but when you listen carefully to secretary kerry and the comments that he made yesterday in tm, you got the impression that they are leaving the russians are little bit of wiggle room, depending on what the russians do next, depending on what kerry does, depending on what is done in paris. Maybe the punishment will not be as severe as they had originally been threatening. Ryan, thank you so much. Secretary kerry is in paris this morning. Managing partner of Intermedia Partners this morning, so much perspective on not only washington politics, but is this. You wanted to comment on the projection of america here . Crimea has been part of the geopolitics of russia for 400 years. This should come as no surprise. When you drop a popularly elected government in the ukraine itself you get a response. You get a response. We went on television and we shook our fists and said we would be mad if you do something later, but we do not know what it is. They will have the crimea and there will be a diplomatic solution. Scarlet, these sanctions, taking away the visas of the oligarchs, their money, it is just ludicrous. Talking about the budget, with the distractions, the ukrainian by mia, politics, i am told this is a political document. What is your best budget and best political document for democrats as they go into november . It differs from mine. The decision was made to put a benign budget out there. Neither side could really embrace it. Just coast until november. I think that this is still an election that needs to be a marker election. What does that mean . The administration should not put out the budget the democrats would like to see past. It wont get past in that form, but we have lost our ability to draw distinctions between what we want and what we believe we should have as a country then why put out a budget just because they have something to run on . Yes. You are visiting us from california. We have an immigration bill on the table that will not get past. It is a terrible bill. It asks these women and men who have been here for indeterminate amounts of time to begin a 13 year pathway to citizenship, which is ludicrous. Is unfair, almost to the point of unethical. Past,is not going to get put out a plan the cesar chavez would be proud of. It looked like it was going to get past a few months ago. The house was so gerrymandered, it was not going to get past anywhere close to the 14 election. Our washington reporters called it a dead on arrival document. Obviously he is biased here, but i was struck by the fact that there was no mention or attempt to bring in entitlements. Five years into this administration and we are afraid to talk about and defend entitlements in a way that i think defines the democratic rdbs of the republican party. We need a lot more debate in washington. To your comments, this budget is not going to be that impetus. Ago i might point out that the red sox were in last place. They did better than good. Derek jeter went without a hit for the yankees in his first spring training. You have got to love getting between the two people here. All i know is that my team won two of the last super bowls. San francisco giants. Are you having fun with spring training . With this weather, just talking about warm weather someplace is exhilarating. It is fun. What is our twitter question of the day . It has to do with all of this, but it dovetails perfectly into leos world, would you watch a nine inning game on an eight inch screen . Well, you dont watch tennis, you cant watch football comfortably. It is like ants. I would have said a nine inning game on an eight inch screen. Data check, tom. Lets do a data check now, or not now, yesterday. Those were enthusiastic flat markets. Oil under the 103 gives you some of the tom is carry in paris. We got carried away with spring training and baseball, lets go back to the winter sports. 1. 6 million, that is how many skiers there are each year in vail, colorado. Coming up on surveillance. Good morning, everyone. This is bloomberg surveillance. This matters to our guest host, leo hindery. Finally, finally the very limited partners of equity firms to the big payout. Meaning that the general partner as received a massive payday, a timeless tradition on wall street. Patience inlittle the six or sevenyear cycle a private equity, maybe a year or two. 2013 was a good year for the. Nvestors in private equity deservedly so. I think that they played the cycle well. The more concerning thing to me was the managers of private equity. The nine top managers in this category collectively made two. 6 billion dollars for managing fiduciary capital. They paid roughly 15 taxes on that. You are saying most of those profits came from the carried interest . Having taken some of these top private equity managers. That was an income that was a shared closeout, wasnt it . It was. You have structured a certain category of Money Managers and let them get taxed at 15 . The contrast was jamie dimon this week at jpmorgan. He is essentially paying ordinary income. The women and men who manage bloomberg are just managers to pay ordinary income. What is the solution for you . Raising the dividend tax . It comes into this concern of mine about income inequality and wage inequality that is an epidemic in this country. We have so isolated at handful of women and men in this economy, purposefully. We have not only tolerated theyre becoming inordinately rich, but we encourage it to pick on Henry Kravitz as one of the names, he pays those taxes and a Capital Gains transaction. He does charities. I dont know which ones. He does this, that, and the other thing. Is that enough . It is not even close to enough. For every woman or man who is philanthropic, there are one doesnt want not. We know that the Silicon Valley people, enormously wealthy, are traditionally an philanthropic. Mark zuckerberg notwithstanding. Do not assume positive behavior out of trickle down. Trickle down is a fraud. Enriching the top of society out of the hope that it trickles down philanthropic way or otherwise makes no sense. A leo hindery, on ordinary income. Not enoughthere is about elon musk. It is bloomberg surveillance. Good morning, everyone. Bloomberg surveillance. A little green on the screen. Not much, but we will take it. Our twitter question of the day, would you watch a nine inning game on an eight inch screen bloggerving seven beers . For four hours. Like the 12 days of christmas. I like that. Tweed us. Mlb. Center. I know you watch it on your ipad as well. This is numbered surveillance. Here with tom keene and cory johnson. What do you have to say . The top headlines, chinese growth, the same as last year, 7. 5 at the opening of the annual meeting. Achieving their goal could be tough, china has vowed to move away from minimum growth at all costs with a big surge in debts. Obamacare, insurers will be Offering Health premiums that do not be the requirements of the Affordable Care act for another two years. This is according to a person familiar with the matter. The recent frigid weather in the east has led to some of the highest electricity prices in six years. Wholesale power new england trading 26 higher than last year, levels not seen since 2008. Lakesterday i saw that michigan, some 90 frozen over, the most ever recorded. I dont remember that great lakes freezing over what i was growing up. I remember when the glaciers came up and got past the we go but had not make it to aust we go. A pet woollyt have mammoth . We did. It was a few years back. Folks. R lets up, on air or off air. Lets talk about the skiing industry and the weather. Resorts are seeing a pickup in visitors, the snow guns are getting a break. It seems the season may actually last into may or april. Not all winters are this white, they need to hedge against climate change, including the declining and aging customer base. The head of sugarbush in vermont joins us on the changing economic model of skew results. When you operators are like farmers, the weather does well, you do well. Are we going to see a slowdown in the increased or a lift ticket prices . For us last year was an alltime record. We are trailing behind that year to date, but in february we certainly got a record president s week, so i think we will be having a good year, lasting well into april. What about the lift ticket prices . They are unreal. 168 dollars per person . Not at sugarbush. And also, it is like any industry. You could shop around and get a very different price. Kids under six ski for free at sugarbush kids. If you buy ahead of time you get an average ticket price of about 50. There are many ways to ski without paying the rate that you see out west. Francisco, several technologies, the guest on our show last week from lift copia, they did the Airline Pricing model for skiers. For those kinds of oneday tickets, are you learning new ways . Absolutely. When you look at supply and demand, when you have slow periods of time without aggressive prices, as i said earlier, what we do is we risk share a little bit. Take the risk of buying early . We can give you a better price. The best heel is the season pass. 40, 50 a season. Some companies have come up with unique ways. There is the epic pass, where you can ski across different mountains. It does not get to the problem that the ski industry faces, alpine participants are was to savearding the industry and bring in younger people, but that is also falling off. What do you do to bring customers back in with prices so high . There are new demographics in the United States. We came up with an intriguing season pass for people under the age of 30 that were falling off. We offered a price of 300, which has brought people back in. Leo hindery is with us as our guest host this hour. You mentioned people under 30. How about the public under 180,000 annual income . I would suggest not only at skiing, but the baseball game, the hockey rink. To take for people to the new york rangers you have to sell the youngest child. Are we pricing the middle class of america out of sports . You are pricing attendance entertainment out of the realm of the middle class as a commentary. Whether it be movie theaters, for skiing. To listen to. Ugh the challenge of someone who is this isionbased the yankees without the yes network. Get butts ino seats, he has to get legs on his mountain. He also has a demographic that is putting itself between the older alpines and the older extreme people. Very carefulto be here, as a society and industry. Do not price the middle class out. Very quickly, how do you compete . Globally, sugar book is up there it sugarbush is up the river from killington. Like any business. We can keep base, we have stronger grain with a fantastic vertical and we try to be a bit more of an authentic vermont resort. And we appeal to a demographic why think really likes to be more athletic and aggressive. Thank you very much. Next we are talking about cord cutting and what that trend means for the future, more with leo hindery after this break. This is is bloomberg surveillance. I am here with tom keene and tory john cory johnson. Goldman sachs, coming in number one amongst equity underwriters, the firm has 1. 7 billion last year, which was the top spot in our annual rankings. Goldman was boosted by twitters stock offering. Companies raised 56 billion dollars to ipo in the u. S. In 2013, the most since 2007. A new tax on Telecom Services in china will cut your innings of their wireless carriers. Value added taxes could cut nine percent from china mobile, china unicom, and china telecom. The tax is part of a new system that could start as early as next month. Apple is getting a new cfo. Peter oppenheimer, retiring from the post at the end of september. Luca my street joins apple just one year ago. He had been with the company for 18 years, he oversaw the surge in their cash pile and 5 billion to 158 billion today. That is todays company news. As you mentioned earlier, this is just a huge success for the apple leadership. Not just the changing of the guard. I dont think any cfo or ceo has ever had to deal with such fantastic the cash generation. The cash piled up. Apple has done such a great job of taking most of the profits from this industry. Oppenheimer should get a lot of credit for that. Switching gears here, and the words of one disney character, to infinity and beyond. Elon musk, the ceo of spacex, testifying before the Senate Appropriations subcommittee space launch program. Since the end of the u. S. Space shuttle program, he has made it his mission to send americans back to space. Bloomberg caught up with him on their manufacturing floor. Take a listen. We are supposed to pay over 30 million on the space tatian this year. They have us over a barrel. Not a good place to be. We want to restore the american ability to transport, maybe two beyond sunday. Will be a better product for less money. It is just kind of embarrassing that the United States has to bum rides from the russians. I have to admit that i am not an expert on elon musk, but it seems like all of his businesses are all extremely reliant on government subsidies and tax breaks. The primary source of profits for tesla has been government hindery, we leo have a lot to talk about, but here we are, scarlet mentioned that it is a very interesting dovetailing of private enterprise with the taxpayers check book. Is it legitimate . It is illegitimate. Torre could not be more correct. The lastt did in segment, we cannot seem to figure out fair responses to that, yet we can get elon musk you build a car that is not this is not the volkswagen. Cars a governmentsponsored for millionaires. I want to make it clear, i do not have an opinion on this. That is not my job. I can tell you that 100 of the response that i get from what i call it informed iran shall experts is right where you were. Just about the subsidies. Inannot convey the heat peoples voices. Is that you need to elon musk . Or do most entrepreneurs follow a similar Business Model . Tesla is unique, but if you look at the three companies that he is behind right now, solar city where he is the chairman, tesla, where he is the ceo, spacex, where he is also the ceo, in every one of those cases, look, they are taking on great big problems. In every one of these cases, the accumulated debt of these companies is massive. Of thegreatest subsidies government to business, 20 billion dollars in state aid is paid to the employees of companies who pay the minimum wage. Mcdonalds, walmart. 20 billion. 1. 5 billion in state aid goes to mcdonalds because of their wages. That is a subsidy. Half of the women and men who work for fulltime in california for walmart receive some form of state assistance. We have these implicit subsidies all around that we tolerate. Very quickly, do you feel you have a voice in the democratic article . No, i have a voice in the progressive wing of the senate and the house. The administration has substantially abandoned some of these issues in my opinion. Well, ok. We will continue this. We have Employment Data in the form of adp, coming out ahead of that. The 10 year yield is a bit elevated above that level. Weaker versus the dollar ahead of tomorrow. Morning, everyone. Bloomberg surveillance, worldwide. The Digital Media is out there at bloomberg. Com. Tom keene, with me, scarlet fu, hindery,son, and leo former nascar driver, the ricky bobby of media operations. The floodgates have opened for content distribution as competition ramps up on the airwaves. Leo hindery, of course, getting Intermedia Partners. Rich, let me start with you. I was blown away by the disney news for dish. They have found a way to go over the top with subscribers. What do you make of this . You have to focus on exactly what the press release said. We put out a piece this morning detailing what i think was the most interesting aspect of that announcement. This is a personal Subscription Service, what they got. They got their traditional, broadcasting over the satellite dish. It will look just like your traditional multichannel service. Nothing is changing there. Withfound a way to deal auto skipping commercials. But as you said, the big announcement is that they announced this overthetop service. Defined that. Jargon, jargon, jargon. Defined it one has yet, but there is a line in the press release that says they have agreed to a personal Subscription Service. Separately yesterday bloomberg reported that there was a 20 to 30 per month price point that goes along with this. We believe that this is you will pay per person for television. So, cori signs up for multichannel service. He gets one stream for himself. He can watch it on his ipad or his tv. If your kids want to watch, you need another subscription. This is our card . No, this is a full bundle of channels. From a consumer standpoint, we are talking about moving from a household subscription, the way everyone around the table is used to, and moving to a personalized way. Revolutionary, to say the least. We are thrilled to bring this to you today. 420 years ofbout media experience here. You wrote an inflammatory note, tell me if i am wrong. This is so revolutionary, changing distribution. The dish would be taken up by verizon . That stuns me. The strategies are becoming very similar. Verizon has had a limited paytv business. They paid 130 billion for vodafone. Whatwant to really exploit is going on in the u. S. And overthetop as a great solution for them. Dish provides 14 billion customers already, they have low costs with a lot of spectrum that verizon needs to build these overthetop services. And now they have got the Service Organization. Content, leo hindery, you know content. How does content as king flood into this debate . When i was running these companies i always listened to these two guys. They had it right. What to enter the multichannel space, customers are owned by the distributor in every context. Now disney is crawling back in and saying, as rich has alluded to, we are going to revisit that relationship. This is not the dish customer wants to pay me my eight ahlers for the suite of espn services. I want streaming. I am less move as. I want streaming. Throwing it to rich and walts comment, you have thrown the customer into the ether. What if the customer does not want to go out into the ether . Like then he will still live on the couch. But once he goes out that door in themorning, he is ether. You do not even have to leave the house with lte. The value to dish of dish of verizon, you have a Service Organization that will hang in antenna on the side of your house. Maybe you do not even need that. You can be getting video over lte, and overthetop solution that verizon is uniquely efficient to deliver. When we come back we will have to continue this discussion. A media roundtable. We will have more, coming back from surveillance, including the agenda of an apple ceo who is on his way out the door. Good morning, everyone. Markets improving. Dow futures are up 17. Further weakness in the yen. A10 year yield of 2. 71 , higher yields. Carrie meets the Russian Foreign minister in paris. It is bloomberg surveillance. I am tom keene. Joining us, as she staggers to 8 a. M. This morning, betty liu. What are you accusing me of . [laughter] you were talking about the budget earlier, we will be having the same conversation with a different analysis rum roger altman. He is also going to be talking about a lot of the m a activity that has been going on. Particularly the private equity firms bringing lots of companies to market. We will be speaking about that, but also on the budget side, senator ron johnson from wisconsin, he will be on with me as well. He has lots of pretty sharp words against the democrats in the president for doing nothing on the budget. Thank you so much, betty liu. That is 8 a. M. This morning. Three, 2, 1. Speaking of 3, 2, 1, the oneyear anniversary of the death of hugo chavez. Died at age 58 after 14 years in power. The number three photo of the day, protesters yesterday in caracas, check this out. Protests going on against the government, going on against his chosen successor. Two, a photo of the protesters. What is the theme here . Venezuela. Marking the national flag. As we said, at least 18 people have been killed or injured killed in protests. More injured. Hanging a flag above the mural of hugo chavez, this is where he is into. The message here to me, much like the ukraine, a lot of people voted for him. There was real genuine support for the guy in venezuela. Lets not forget the role of oil in venezuela. Driving the economy there. If crimea was not going on right now, venezuela would be front and center. This has everyone talking among sports friends, the nfl is changing one of the oldest rules, the extra point. The Competition Committee is talking about moving the ball to the 25 yard line. Making it a 42 yard kick as to post as opposed to what is now basically a 19 yard attempt. Great on the 49ers. Who knew that they were all great . Sense, is just common it not . Viewership and attendance at the nfl games got pinched this year. You have got to bring excitement back to the game. The point after, to scarlets point, was just a commercial break. 80 of the kickoffs. That would be good. Our question of the day, would you watch a nine inning game out on an eight inch screen . Tweet us. Today, benp later horowitz is joining uber bwest. King about hard things joining bloomberg west. Talking about hard things. Should be great. I am scarlet fu, i am here with tom keene and cory johnson. Lets get to some company news right now from the files of bloomberg west. Verizon wireless, getting high marks for network performance, topping competitors in a review of reliability, talk quality, and messaging. They trade trailed at t in one part of the study. Sales may be worse than forecast this year, a drop of 6. 1 is predicted. They had been looking for a 3. 8 decline. They blamed the slowdown in emerging markets for the change. Steve palmer was in fine form at the oxford University Business school. The former microsoft ceo says the company was a two trick pony and they are still looking for a third. People still ask me why did you not to the third trick . I will say that i am upset. Say i dont know if we were only too busy or we only knew the tools of the first two tricks, but we have done to get you know the challenge now . Those tricks will go for a lot of years. But in our industry you have got to do a third trick. He went on to tell students that microsoft was in the process of building new muscle. That is todays company news. I flat out dont get it. I dont know what to say about steve palmer other than i just dont get it. He is a salesman. He was bill gates partner in selling the stuff. Well, we have a great lineup to go on here with microsoft and disney. Leo hindery with his managing partners, really foundational support media from the yes network, walter is with us and dragging along rich reno field, both of them authoritative on the media business. I want to pick up where we were a bit ago. Rich ring field, the assumption from the Big Media Companies is that i want to go through new stuff. Leo mentioned a couch on our couch. Do we really want to go out into the ether . Or do we want the cozy comfort of now . You just graduated college. You live your life on your phone, on your tablet. You walk into wherever you are deciding to live with a bunch of these or what not. They say that for Multichannel Television service it is going to cost you 75 per month. Dvr is another 10. And for each room it will be another seven dollars to 10. And you go like this. I dont need all that. I dont want all that. Is there an opportunity to sell a more personal relationship with your media . I think that that is what dish and disney are after with this idea of a personal Subscription Service thomas some way of bringing the cost down, but if you are single, if you are a light tv viewer, giving you a way to access a lot of the content that you want. I think of Dennis Leibowitz from years ago, the idea that we got wrong back then 75 per month, no big deal. I got that totally wrong. Or 10will he be in five years . Completely away from where we are now . What rich is describing is a variant of all a cart. When you use words like personal , choice, and lifestyle, you sort of drift into a la carte. You sort of say that you need a media world that meets my needs, my youth, my income, my lifestyle. Up couch environment was set for onesizefitsall. It was affordable. In the world that rich is describing, it is increasingly less affordable for that 21yearold to 30 fiveyearold. Walter, you covered telecom and media. What does the deal between dish and disney mean for google, apple, amazon . It these guys have to wonder about their longterm Business Plans in general. Look at what the Telecom Companies are doing in terms of pocketing wireless usage. We had all of this debate from last week or two weeks ago, when comcast and netflix came to terms. If you are google and you want people to watch youtube or are thinking about a Television Type service. You are at a disadvantage, you do not control that. If i am verizon, as an example, i can extend my product to wireless. Or these other guys will be at a disadvantage if they try to sell over the top. You have known these guys forever. I want you to ask the questions that you want to ask rich and walter right now. What matters to you when you look at the analysis on these companies . Byfor me i am fascinated where walt is taking this, which is a much more robust response him at t, wireless, verizon, wireless. They will be players when they have been fairly benign in the content world. That is certainly my question that fascinates me. In the world that rich and i grew up in, the homebased media, onesizefitsall world, where does a la carte redefine . Where does that end up . I think you have to separate a la carte from smaller bundles. When you talk about the disney dish deal at the start of the , this personal Subscription Service will not actually launch unless dish gets more than just disney content. It cannot just be espn, abc channels. It needs to be, probably, channels that are part of the consent to distribute. Of are going to get a bunch channels. I think the question is would you, if you are the walt disney company, do you want to lose something, someone who is going to the world someone who is going to go live in the world of netflix . Do you want to lose that customer . Or get 20 to 30 per month out of that person and hope to sell them on the cozy couch subscription. With these deals, particularly netflix last week, do you see the costs going up . The cost for the Network Operators will go up. It costs money to deliver this video. That would be more of a question for rich, but if they have to pay for Higher Quality service, they dont want customers leaving when the video signal is not good with rising coming into the market with overthetop services and a library of content. You have to watch verizon this year, this is a very big year for them. Walter, leo hindery, thank you so much. Let me kick things off. I am taking a look at china. The National Peoples congress is taking place right now. The growth target today is in line with last year, but it is going to be a challenge, they want to stem pollution and curb credit risks and you wonder what it will cost to get there. What is going to happen next . The next cfo is going to go through issues like Share Buyback and putting that cash to work. Agenda is baseball. Sorry. I am giving a shout out to michael and leo hindery. Watching baseball is fun. Listening to baseball is better. I agree. Choke it up with the red sox. It is great, it is back, it is spring. Our twitter question of the day had to do with baseball. Would you watch a nine inning game on an eight inch screen . I do watch parts of games on an ipad while multitasking. Not as a dedicated experience. Could not do for hours. Second answer yes, i watch all the games all day on four different screens, including my eight inch tablet with stats. They are managing their fantasy leagues, clearly. Get a life. Last one ur and a partridge in a pear tree. Leo hindery . Between innings, that has to get shortened. The bios andnto there are three and a half minute rates . That is a huge plus. Getting those pictures to just pitch the ball. Thank you. Go back to the dugout. Call the ball if he does not pitch within his prescribed amount of time. Vo hiery, we say thank you. In the loop, with betty liu, up next on bloomberg television. Good morning. It is wednesday, march 5. We are live from bloomberg World Headquarters. You are in the loop. I am betty liu. Americans who kept their health care and did not comply with obamacare will be able to keep their plans longer. Policies can be renewed for another two years. About 2. 6 million americans had their policies canceled when government exchanges opened last october. Goldman sachs is in first place when it comes to equity underwriters, taking in an estimated 1. 7 billion in fees. , the biggest deals, the twitter ipo. They just keep on coming. Secretary of state john kerry is in paris where he will meet with the foreign minister of russia over the crisis in ukraine. The Obama Administration is considering economic sanctions on russia. In the meantime, the eu