George soros. He says europe still has a way to go. Yes, i was asking him on whether the fed should think about the rest of the world while setting fiscal policy and he said because they are so far ahead, they cannot be dragged down by the concerns of the emerging markets the concerns of europe and china. He believes that fed tapering is what needs to be done. Actuallys. Economy is is the best functioning. The u. S. Economy has its own momentum. Its not following optimum policies at all. The internal political struggles which have not been resolved. We had a very wideranging interview. We talked about the u. S. And china and europe and the ukraine. There was a Common Thread in everything he said he has but he sees a political vacuum. In europe and the ukraine and a little bit in the u. S. And he things president obama can do more with ukraine. He believes all the political wrangling and washington, d. C. Is just holding back the economy in the u. S. Because he thinks it could forge ahead and we are still in a state of limbo. He also mentioned as not only the Central Banks facing pressure but commercial banks as well. Exactly, we talked about Central Banks and he said its a fragile world and there is stagnation in europe but also in the u. S. Because of the political wrangling. I asked him the question on whether the markets are too complacent in europe. Because of the European Central bank saying they stand firm behind the euro are. Do they care about some of the weakness we saw in the data and deflation . He says investors want one thing which is to make money. He says in europe one of the best bets you can have is on commercial banks. It is going to be a very tough year for the banks. They are under pressure because they have to pass the stress test. The banks have an interest in passing the stress test rather than providing credit to the economy. Banks as a transmission mechanism for the peoples savings, channeling it into the real economy, they are not fulfilling their function. He believes a lot of these bank stocks are undervalued in europe which explains why there is speculation as to why he bought a big chunk of banks in spain but that is not confirmed. Thank you very much. Back here in washington, president obama is going to take action tomorrow to boost wages. He is moving on his own to do something since the state of the union. Bill mattingly Phil Mattingly joins us now. The president is now tackling overtime pay . ] he started with minimumwage specifically on federal contractors in the state of union and tomorrow he will announce an executive action that will require the department of labor to look at its minimum wage rule. He will look at employees currently being paid under 450 five dollars per we cannot be denied minimumwage. Administration Officials Say they are going to significantly propose that the department of labor does that and work on the definition of people exempt from overtime pay. Who are executives can be exempt and they will reduce that flexibility and make business organizations prove that those people are executives or professionals before they have the ability to deny that. This is going to the department of labor and these rules will to go through. The president is acting on his own once again without congress to boost wages. Its interesting hes highlighting that issue. We were talking about minimum wage and the increase. Is there any more momentum behind that in congress . There really is not. House republicans are Standing Firm they believe this will actually cost jobs. Do somethingould along those lines and you will not see movement there. What the president is doing in dad, is doing instead, the president took a walk around the gap he is calling on businesses and executives to do this on their own. If congress will not act, he will do as much as he can for the white house will ask is mr. Act on its own. Thank you so much. My guest is this morning is someone that knows all about managing worker pay. He is widely considered a leader and innovator in the retail thestry, steve sadove, former ceo of sacks and chairman of the National Retail federation serves as the director for colgatepalmolive, ruby tuesday, and most recently, jcpenney. Great to see you this morning. Good morning. Just mentioned the president shopping at the gap. It made the front page of the new york post. It was a big deal for the tv moment but also because he was backing companies that say they will raise wages for our employees. Is this the right move . I think its great he was out there shopping and getting people thinking that they have to be shopping again. We had such a tough january and early february and the idea of consumers going out and the weather is turning better and fashions are getting out shopping thats the First Priority for all of us in retail. The issue of minimumwage is a complex one. The Congressional Budget Office indicated you could lose half a million jobs with the minimum wage increase. There are alternative ways we can address this whether there is an income tax credit or in terms of helping the employees. It is not a simple answer. Minimumwage seems like a simple answer according to the democrats. They want to lift americans out of poverty so lets raise the wage. Why is it so complicated for retailers . Small businesses who are on the edge are going to have a very tough time in many cases with the minimumwage issue. Most Large Companies are already paying above minimum wage. The issue here is one of billions of dollars of impact, potentially employment risk and i think the longerterm answer is accelerated Economic Growth. If you have the economy growing, that creates more Job Opportunities and it will create the opportunity for more wealth at all levels, at all income levels. I dont know that it is an easy answer. I am not against raising the minimum wage. Where do you stand . Dont want to get into my personal view because ira present the industry as well. I think the earned income tax credit is a possible solution. I want to make sure we are not going to degrade the growth in the economy. That is my biggest concern that if you lose half a million jobs, one Million People might be better off that if we have half a Million People who end up losing their jobs, im not sure that is good. You say the earned income tax credit could accelerate Economic Growth . And could be a solution for people below the minimum wage you can offer them a tax credit. I know you cannot get into specifics but walmart, the largest retailer of them all, was reportedly backing a higher minimum wage but they recently said they were neutral. What do you read into that . They are wrestling with the same questions i am raising. Everybody wants to see the lower middle class or the people who are struggling do better. Everybody wants to see that. What is the best mechanism to do that and . Generally speaking, the Retail Industry pays above minimum wage . Most of the Larger Companies do. Tell me how much labor costs are a part of a retailers entire business. It goes very dramatically from one company to another but its a substantial component of the equation. Its more important than just the percentage. It represents your base to the customer. Youve got to make sure you have an engaged workforce. Because youith me will talk about every aspect of retail in the next hour. Moving and shaking this hour pimco cofounder bill gross when he was not reportedly getting into public squabbles with mohamed elerian, he was selling treasuries. He has cut the amounts of u. S. Government debt in his total return fund from ory 643 and urging investors to sell what the fed has been buying because they will not be buying treasuries when the tapering comes to an end. Over the last year, his fun ranked in the bottom 20 and contributed to some of the tensions reportedly between bill gross and mohamed elerian. Bain capital is still all us on bitcoin. We will talk to one of the firms partners and tell us why he is and what investments they are looking at and also, new jersey pulls the plug on electric carmaker tesla motors and elon musk. We are just Getting Started on this wednesday morning. We will get data tomorrow on retail. And back with steve sadove the chairman of the National Retail federation and serves on the board of jcpenney. Michael mckee is joining us with more on retail sales. What will we learn tomorrow . Its not what we are spending but where we are spending. When the weather warms, sooner or later, are people going to come back to the stores . The lousy winter has accelerated and already accelerating trend of dumping the mall for the mouse. We are shopping more and more online these days. That is hurting the brickandmortar retailers. Instore traffic is plunging since the middle of 2012. That has been going down according to shopper trac. Just this month alone, sony, childrens place, staples, dots, radioshack announced they were closing thousands of stores and if youre not going to the mall, you are not eating at the mall. E commerce data is a month behind and we will only learn about january sales tomorrow for Online Shopping but it made up 30 of december sales. It was 17 five years ago and it has gone up to 30 . Will the numbers tell us what people are doing these days in terms of what they are buying . You just described my saturday afternoon going to the mall and heading sbarro afterwards. Now you can click on virtual pizza. Steve, why are not people going to the malls as much as before . You haveomnichannel shopping. They want product anytime they can get it so they will go to the mall and shop in the stores but they will also shop online. The traffic in the malls is down probably in the high single digit. That will continue. Maybe it will stabilize a little bit but it will continue to have a shift toward digital but people are shopping both. The winners are the ones that are just internetbased. They are brick and mortar and internet. The macys of the world are doing well because they have been having a vibrant internet is miss as well as brick and mortar. If you talk to a retailer, they say have an online strategy. How do you know when you have it right . Its when you invest in the technology and can offer a seamless experience between the store and the web. If you look at the data over the fourth quarter, the winners versus the losers, in almost every category whether it was Sporting Goods or homeimprovement or Department Stores at the low end or high end, it was the companies, the Big Companies that had invested in technology and were doing agile, the internet, and the stores and they were winning. It is a different kind of store that can win on the internet . If you have to buy clothing or shoes which you have to try on, people send stuff back, but arent you better off with someone who has a commodity and i can buy it without having to try it on . I think theres an opportunity in almost every category for both the digital and the stores. You want to have the experience. Aght now, you are finding huge growth in the apparel business on the online piece of it as well. I look at the electronics, you are looking at the issue of show rooming and whether or not it is a commodity item. The real issue is how do you differentiate product . Not be able to say i will go to the lowest common denominator. It will be exclusive rants or it could be exclusive items within a brand. If you look at macys or jcpenney worse saks, exclusive merchandise is an important part of the max. Of the mix. The electronics side has to think about that and how they will provide differentiated product. Skas . Ipod for it could be but it could be about services or experiences. Apparel does have a decent sized return rate on the web and there are technologies emerging to reduce the return rates. In the end, people want value and service and they want product that fits them or something that is unique for them. You need to differentiate. Do you think the Retail Industry has been behind on the digital front as a whole . No, i dont think so. Retail is embracing im talking about traditional retailers. Are somef the brands of the largest internet retailers around today. Retailers have become very much web days. Look at nordstrom. These are technologybased companies and have invested quite a bit. You are right that the brickandmortar purchase it is stable or declining a little bit but there is enormous growth, 30, 40 growth on company websites. Thats were the action is. Anfrom the point of view of investor, how do i know in this new world who is really doing well . The data does not come to us as accurately about ecommerce is the brickandmortar. A lot of the companies and not rating at the percentage ofecommerce sales. I would look at their Technology Investments and who is investing in the future of technology. The ability to move inventory and buy online and ship it from a store opens up the entire companys inventory. Those are the kind of Technology Investments that make a big difference. Thank you so much for joining us, michael mckee. Steve is staying with me through the hour. Overseas profits are piling up for apple and microsoft and we will see what on rest seeks to do for those companies to bring that cash back. Plus, just what the midwest does not want to hear, another snowstorm on the way. We will be back in two minutes. You are watching in the loop, on Bloomberg Television, streaming on your phone, your tablet, and bloomberg. Com. It is 26 minutes past the era which means Bloomberg Television is on the markets. Little bitres are lower, extending the weekly decline we have seen so far. It is one of the worst we have seen so far this year. We will see if we continue to go lower. We are on the markets again in washington, there is 1. 90 5 trillion reasons for congress to finally overhaul the nations Corporate Tax code. Thats how much money u. S. Human multinationals have parked overseas. We have more numbers and how they might change the tax debate in dc. Companies parked more in 2013 and dont want to bring it back unless they get a tax break. Thats right, they dont want to pay the higher taxes in the u. S. So they are leaving it offshore. It was up 206 ilion dollars in 2013 based on a bloomberg review it was up 206 ilion dollars in 2013. Dollars. Llion ge is number one on the offshore list, 110 billion dollars. You can see the list of the top five. The apple number is quadruple what it was three years ago. They are leaving my overseas because it is cheaper. The u. S. Has the highest Corporate Tax rate in terms of returning the overseas profits, 35 compared to ireland at 12. 5 . That is one reason why chiquita announced it is moving its headquarters to ireland. We are talking about real money. The annual revenue loss in the u. S. Is up to 90 billion. If microsoft brought that money back, it could be 25 billion. There are many proposals to bring the money home but it has not happened yet. The president and Top Republicans want to use some of that money for Infrastructure Investment and would lower the rate to get that done but there is still no deal in washington. These numbers just highlight the problem. What about the new numbers . Will this move the ball in congress . It bolsters the argument for those like republican dave camp who runs the house ways and means committee. Foreleased a detailed plan overhauling the entire tax code including what happens to overseas profits. He wants to use some of that money and he wants to bolster his argument and will get others involved. I spoke to marco rubio yesterday and he is working on his own Corporate Tax overhaul which includes repatriates haitian repatriates haitian. Repatriation. Would encourage the creation of new businesses and the expansion of existing ones. Youve got some big fires in congress and the white house in agreement that this is a robb laments money needs to become back in use for better purposes and vested at home. This is a serious heavy lift in this Midterm Election year with so many other issues that it will be very difficult to get this done. Genuine agreement of bunk among republicans and democrats. Thank you very much. I am back with steve sadove, the former saks ceo and chairman of the national ceo of the National Retail federation. Where do you stand . Reform of the Corporate Tax code is critical. Retailers pay the highest tax rate of any segment of the industry. We are paying 35 in terms of taxes. The reason is that most of the businesses in the United States so that retailers are largely domestic so they are paying the high tax rates. They are not in the same situation as apple or ibm with huge resources overseas. They dont have a lot of money parked in other countries. Anvery little so there is interest on the part of the retailers to have Corporate Tax reform, lower the overall rate, and then you have to make some changes in the deductions and whats allowed. I think that is the right thing to be doing. As a part of this, if we can repatriate some of the dollars overseas and get reinvestment backing in the structure in the u. S. , it would accelerate growth which is in all of our best interests. That will fuel the consumer which is 2 3 of the economy. That ifou in agreement we lower Corporate Taxes that it will, in fact, create jobs . I think you will see more investment and that will create more jobs if we have a reduced Corporate Tax rate. The ceoe speaking with of the Red Apple Group and owns a different kind of