Beach. Lets talk, for a moment, about the revenue you have seen over 2013. It turned out to be a rather challenging year . Yes, it was a challenging year. We saw a fairly sizable reduction in our mining business, which frankly surprised us a little bit. In 2013 to do a lot of things in our company. We are very proud of our team. Strengthening the Balance Sheet, the debt equity ratio today is the strongest it has been in 25 years. If you look at the fourth salesr, we actually saw drop 10 . 1. 7 billion dollars less in sales. Taken from what we had in 2012 compared to operated earnings, we were better. We are very happy about that. The quality of products has never been higher. The Safety Record in our plants and offices is good. There are things to celebrate. More than just the top line. I know that you did a lot of cross costcutting in 2013. Cut 400 million in spending. As we look ahead into this year, do you anticipate more cost cutting . Constant Cost Management mode around here. We have been for over a year. I would say the worst is behind us, but we will keep an eye on absolutely every penny that we spend. Was,ugh a year as it taking into consideration, we reduced costs one point 2 billion. A company of our size in one year is a lot. Where we are today, particularly with our outlook on sales in 2014, it is just to do what we are doing every single day and make sure that we have an eye on costs around the world. I have got to ask you about mining. That big town that you bought. You have already written down the investment from china. Do you regret those investments . What is going to happen to cyrus in terms of writedown . I do not regret cyrus for one second. That is a longterm investment that this company made. Aroundis a key business the world and will be for many years to come. We will look back on this on 5, 10, 20 years as a very good piece of business. Remember, we bought cyrus to expand our product line to the minors. The other thing about mining today, which quite frankly is as interesting as it is surprising, production keeps rising. A lot of our machines keep moving. Customers cutting back on in 2014, we are seeing that continue, as long as mining production continues, at some point they will come back to us for parts, new machines. It will turn around. I like that investment. Down the road it has looked really good. There is so much increased competition in china from the chinese and from ge and mining equipment. What are you doing to stay ahead of the pack . Chinese business has been a longstanding business. We were there in the 1970s after the opening. Today, 2013, sales in china, we have about 25 dealers there. A finance company there. We operate in china the same way we do everywhere else in the world. Our goal is to be a leader in china, just like we are in so many other markets. We are tackling the chinese competition inside china. The good news is the excavator market, a key market for china, we are the Industry Leader there. We have had an increase in our market share over the last five years. We are building, slowly. Either longterm or over time. It will be a great market. Someone else will lead that through the world as long as i am here. You guys have picked up market share in the last year. How have you done that . Is price counting part of the strategy . We have done it kind of the oldfashioned caterpillar way, with superior product and parts through the dealership. 25 dealers inside of china selling every day, servicing customers. Our business works when our customers come to us and want the lowest owning and operating costs. In china, contractors are just like they are everywhere else in the world. Productivity, typically that is what we do. This is the model we are using in china and, frankly, it is working out very well. Down, china market slows that market has been more accepted. Customers, contractors over there, they need productivity and they want it. They are facing competition as well. They need them in top condition. Absolutely. One of the big concerns for the economy right now is that ceos are just not investing a lot in. We have seen a lot of stock buyback, but people are saying that they have not seen a big enough commitment. It was a scene in 2013. Something that you and i have actually talked about. This morning you and i are doing exactly that, 10 billion worth of your own stock. Might startthink it to change, for you and for other companies . When will these Companies Say that they are investing in people, infrastructure, not just stock buyback . There are a couple of things to volunteer. One of them is certainly that when the world grows at the pace it has been growing for so many percent,ss than three less than two percent in some cases, it does not allow for any expansion or employment gains. That is the root cause of this around the world. Whether it is in the united states, emerging markets, europe, there is just no growth. It means the companies, businesses of all sizes and shapes to one thing and that is , focusing onoing cost, market share, making sure that every day we are doing the most efficient things we can possibly do. We are lucky, we work hard on restoring our Balance Sheet. At the end of the year we had about 6 billion in cash. We will buy quarter another 1. 7 billion. In about one year we will have bought almost 4 billion in shares back. Then there is a new program over the next five years to another 10 years. Meanwhile, we are investing. Our will be up slightly in 2013. We are pretty well capacity eyes we area good word, but set for capacity. If we see economic growth, we are able to take it on. It really gets down to anemic gdp growth levels, we have to see that change. You sound very optimistic. The stock is getting juice this morning. But the stock has yet to perfect to get yet to outperform the s p 500. What are you telling your stockholders . It says a lot about how we manage the company in 2013. Over 12 waser improved profit per share. Getting the efficiency Production System inside the factories, the inventory is under control. Slightly better than we expected. We are doing all the things we need to do, operationally, to make up for 2013 on the top line. We should feel quite a bit better about it. Certainly with buyback we should see a strong signal. We are going to leave it there. Doug, thank you so much for joining us here. Great stuff. We have already seen the stocks move in the premarket. Lets get to christina. Washington, president barack obama is using just about every social media tool to promote a centrally old ritual, the annual state of the Union Address. Phil mattingly joins us with that story. What are they doing in social media right now it is different to what they have done in the past . It is everything right now. 33 Million People are expected to watch the state of the Union Address tomorrow, half of what bill clinton averaged in his terms. The white house knows that they need to reach out. They have been giving staffers the official white house Instagram Account for the last 10 days to try to show behind and connect to people like that. Get a video outreach, explaining what is going on. After the state of the union, something to keep an eye on, they will take a virtual road trip to sell the proposal tomorrow night. You will have cameras coming with him, he will be online as a regular participant, conversing with people as they walk through. Basically, social media is huge as they try to address the top the drop in viewership, related, as you noted, to the huge speech he is giving tomorrow. Another trending story thereow, tom perkins, out this weekend, making some pretty racy remarks, basically comparing the debate in income inequality to not see germany, saying that right from the epicenter of progressive thought, san francisco, he would call attention to the parallels of fascist not see germany. A war on the one percent, mainly and the one percent, mainly the rich. Any thoughts on whether or not the president is going to re examine his message on equality . Because of this backlash . Everyone thinks that this quote is crazy. A rational person would think that this is crazy, but even still, are their second thoughts about this inequality method . White house officials shook their head when they read that. To your point, the white house is aware that the inequality message, the progressive message can be divisive. They want to avoid it. This is a change we have seen in the polls over the last couple of weeks. It is not so much a message about inequality and the rich having too much and the poor having too little too little, it is going to be about action. To your point, christina, they will try to make this a positive message, not i hate the rich message. I love getting in the back rooms of those strategy sessions. Thank you so much. I am watching the global selloff from last week. This morning, futures modestly enhancing on the heels of what is called a 40 cell. They posted their worst week in nearly two years, but the two years have been straight up markets. Lets set the stage, here. Last week we saw the biggest weekly drop for the s p 500 in two years. Overnight from asia we saw more steep declines in equity. Asian stocks retreating by the most since june on these growth fears that started last week with weak manufacturing data from china. It is all about china, right . Yes. We were worried when we showed up for surveillance, but futures steamd higher, picking up throughout the morning, thanks to caterpillar, helping to drive up futures for the dow in particular. But the bigger story is the emerging markets selloff. The rupee in india, for example, sliding. , a big story peso from dominos last week, the valuation now credits negative for the bank. The peso fell 15 last week. Interestingly the turkish lira is rallying, turkey said that they would have a Surprise Central Bank meeting tomorrow, which has people feeling bullish around turkey. Action from the treasury market last week, money going back into the safety and asset of u. S. Treasuries. Yields below 2. 8 . Gold selling off a little bit . Yes. And it has been two years. With investigators not too concerned. We will see what happens there. A lot more coming up, including a story that spoke to your heart apple on earnings day. Next. Market right, emerging equity volatility rose the most in two years growing with chinas economy. But will the contagion continued to spread . Our guest this hour, the principal at dallas capital. John, good to see you. Welcome to in the loop. The selloff last week, i could not believe that people were calling for fed action after a minor selloff with three or four years straight up . 30 up, three percent down. We have suppressed volatility for four years. Now any volatility scares people. They think this is the big one. Is this the big one . In the analogy of maybe a forest strike, we have not allowed the forest to burn for a long time and there is a lot of dead kindling on the ground. All it takes is inexorable shock to set it off. The larger question, is this a sustained pullback or a correction, in your mind . Shift,e has been a tidal of sorts. Easier money, easier money, easier money. Whatever it was, for the last several years. Now it is not. All the sudden the u. S. Is trying to taper, using your money but less of it. All of a sudden, volatility sparks up again. In china, you are really seeing bankruptcies. We have one trust in the headline that represents 4. 5 billion in liabilities to various banks in china, but we saw 20 trusts go bankrupt last year that went unreported because the news never gets outside the chinese firewall. You are short for china. No doubt. What names can you specifically talk about that you are specifically shorting . We look for names where there are a lot of leverage and negative free cash flow. Burning money . Burning. It is amazing. Wait a minute. The government is always there when they come to china, but were they not going to backstop everything . To make sure that it did not unravel . The government is always there, and they have a great Balance Sheet. Is not clear what their Balance Sheet looks like. Since china owns the banks, it is somewhere between 200 and 250. Not a great Balance Sheet, all of a sudden. Provincial Government Debt is gigantic, also. Then your senior rates go up. Lets take the China Development bank proxy for the government. It is a one dollar trillion Balance Sheet and their interest costs have gone up 200 in the last few months. That eats all of their profit, right . As the rates go up in china, you will see more stress on the equities. Folders are, at the Forensic Research group you were a customer of ours. We did a lot of that work. Especially on china. That was a while back now. 3, 4 years since i did that. I wonder what kind of names you are looking at in china. I feel like they have all gone away now. Shockingly. Maybe it has become the ipo in the u. S. . They acquired a lot of reverse mergers to take them public in hong kong, but none of them had become public yet. There has been a fascinating turn of events in the last week. In the chinesebased Companies Listed in the u. S. , the sec started fighting over longtime financials three years ago, they finally prosecute the case against auditors last week, saying you are guilty. We might fan all four of you from practicing in the u. S. For six months, which would prevent every chinesebased company in the u. S. All right, but the flip side of that argument . Those companies that you listed would not even be able to file quarterly reports. Or even trade anymore. The thing about that is that this is a highly political situation, right . The administration is now working on a trade pact with china. The Chinese Government has come out and said that this is ludicrous, you have to let this go through. Is politics going to get in the way in the sense that china could come back and say that we do not like American Companies . Great point. Theyve done that. In addition, the sec their job is to protect u. S. Investors , right . That is their job. They can either punish current investors and protect future investors, or the opposite. They can punish the future investors, they will continue to get robbed. Chinese companies stole 22 billion off u. S. Capital markets. You think that that is ok . Wrote down the company by 86 of their value. The disruption in the accounting came out a couple of months later. I am not saying that it is ok, but that there are Political Considerations that may be larger. There are always political sit Political Considerations between the u. S. And china. The sec took an important step toward saying not guilty. An important thing. More on an importantly more on an entirely different important topic, daft punk winning big at the grammys. Next. To watching in the loop, live on Bloomberg Television. I am carol massar. Markets, 20 six minutes after, bloomberg tv is on the matter on the markets. Equity futures hitting the high of the session in the s p 500, also higher on the industrial average, certainly getting those caterpillar results with pencil buybacks after a very, very tough last week. We from markets to music, have that covered . Last night was a big night in music with the 56th annual Grammy Awards kicking off. Daft on swept a couple of the awards. Best Pop Duo Group performance, forget lucky, and our goal of the year, with randomaccess memories. A surprise . Not really. That song has just exploded. Macklemore, ryan lewis, best new artist, and song of the year was royals. Did you get to watch the whole thing . I did not. Here is the thing, everyone criticized them for missing the wave of electronic ants music. The biggest thing to hit music in the last couple of years in terms of profits and the amount of attention it is getting from millenials. The problem with the grammys has been that they just do not get the genre. They try to do it big in 2002. This02 they put together performance with the foo the industryspin, magazine, called the performance a complete mess. Out. In 2013, the grammys were so scared of messing it up again, they just steered clear of the genre. This year they issued sort of what was an apology by giving daft punk these big honors, but at the end of the day, daft punk, get lucky . More of a pop song. All right. Coming up, we are going to talk about the chip only ad campaign and their marketing brainchild chief marketing operating officer. A great guest this morning, steve schwartz, joining betty liu in the next hour with explosive analysis. For creatingknown great fast capital binding and highlighting how its food is repaired, grown, and raised. They have a reputation for unconventional marketing that they have taken to a whole other level, announcing the launch of their own comedy series, called farming dangerous. It can be watched weekly on hulu in february. Here is a taste. Is is the biggest improvement in agriculture since synthetic wheat farmers. It is a game changer. You are feeding cattle petroleum . No one wants oil in the food chain. Sure, they do. All right. To go viral. Joining us is their chief marketing officer. Mark, great to have you here. Abouteople think chipotle, they do not think about video series. You talk about this one year ago. Why is this a smart way for you to get your message out . Why does it bring more people in . For the food that you offer . Thank you, carol. This is definitely uncharted marketing territory, for sure, but the basic idea here is that we believe the more people know about where their food comes from and how it is prepared, the more curious they will become and more likely they will be to seek out restaurants, like chipotle. It is created to make change with curiosity and people and indirectly drive into the restaurants. This is less about nearterm traffic and limited time offers and really more about changing the way that people think about food. What is the demographic happening in the u. S. Right now that can make this message resonate . For most of my life people have not cared about what goes into their food. Particularly young people, you know, we think about the 14 1434, they are looking more and more at what is in the food that the. This is marketing that is really designed to help them become more curious abou