Google announced its acquisition for more than 3 billion. Tony fidel is here with us in switzerland. Great to see you. How will being owned by google change things for nest . Us, we have been on the market for two years. Producing new products, but we wanted to roll them out to multiple countries. We are in 96 countries where we dont even sell today because we can see these items being connected but we can get there fast enough. For us going with google, we could get financing, no problem, but we can get access to resources to allow us to move these products much more quickly around the world. As a small startup, you have to build this. And why was 3 billion the right number . When we see snap chat, i like to say im not sure what the ng,pose is besides sexti why do you want to sell at that price point when they dont . This was about a vision that larry and the board understood. They wanted to build this out in a big way. For us, it was about getting out to the world faster. 3 billion is a big number. We have a revenuebased business. We make money. Nice money. We have right customers and a great band and other assets besides our radix, patents, and other things, and our vision for the future. Im fascinated by what you said about who will being the key to expanding geographically. Google being key to expanding geographically. Will they get as much out of nest as you will get out of google . They have offices and services around the world. I think were both coming together to learn from each other. Theres a lot of things that i think i benefit of sides. Typical mergers happen when there are two competitors timing together, and they reduce overhead. Are two likeminded visions coming together with consummate drew resources and putting those together and then letting those things grow and flourish. You offer google data and intel and many people say that is what google is, a big data company. Should we have privacy concerns that google will know more information about our habits . Lets be clear. The nest terms of service, we use it to improve the products and that has not changed and that will not change. If it ever does, we will make sure to let you know. Rit now that data is not going into all the other google, sorry, youre not going to know how cold i am. Tony, you revolutionized the thermostat business. Youre in the Smoke Detector business. Product im going to say it what other products ripe for disruption . There are lots of things. Wouldnt have these bits and bytes from cell phones, billions of cell phones and smartphones, all these different ingredient pieces are tangible to put into all of these different products around is that you have never seen. You can see refrigerators. Or not talking about refrigerators with basically a tablet on the front, but connecting it so it gives energy signals and also when youre home or not. It can actually turn off and use less energy and help you save more money. It doesnt have to be a screen, but he can have these little bites into a to help you get smarter. The internet thing, everyone loves to talk about, you actually believe all of this hype is limitless . I dont know about limitless, but it will gradually over time come into our lives to help bring more convenience to our lives to allow us to do other things we like to do. Over the last 30 or 40 years, the only information information that is happened was appliances. And five years, what is my apartment going to look like . What you wanted to look like. What could it look like . At the end of the day, making sure it is safe, saving energy. Much, we are wasting so energy because it is cumbersome. Why doesnt he know more about you and just to the right thing for you on your behalf so you dont have to sit there and press all the different buttons . It is not about getting in your face with technology, maybe we think about the smartphone everyone Walking Around like this, but taking these cumbersome things away from you. , is that the best opportunity Energy Savings because it is so practical and the money is real . Energy savings is one aspect, but it is also convenience. You can overstate convenience. Does everybody need to do everything remotely from a smart phone . A not remotely, but there is piece of mind that comes from having a cell phone and looking at the status of your home when youre not there, like traveling like we are today. It is a piece of mind. We found no one cared about their thermostat two years ago. We have our customers and now they are actually checking their apps all the time to make sure their home was ok. Now all of a sudden they care. Just like you did not check email before, now you have to check it every five seconds. What is in the future for your relationship with apple . I have lots of friends, great thank yous and support. Today we are in the apple retail stores. We have ios support and that has not changed. But will you still be in the apple stores now that youre the google family . That is their decision. But will you be . You should ask them. They have been a valued partner. We have a lot of ios device owners that use our products, and we want to offer them as products and it is that for apple to decide if they want to continue. How might else you change what nest is . Might you think of doing Something Else now that youre inside the google family, you have access to the android platform and a number of other things from inside that would have been much more difficult to do from the outside . I think there are a lot of things we can trim about. The transaction is not closed, lets be clear. We cannot jump the gun. Right now it is business as usual. When things close it is premature to talk about it. Who calls who . How did this transaction originates . Did you have a relationship with them already . Google has been an amazing partner. They were an investor. And through that relationship, and ive known many people at google for years, it is Silicon Valley. It is personal. Did you have a bank to mediate the process . Oftentimes when we see these things happen in oldschool m a, a bank may be infraction or introduction. In Silicon Valley, youre in the same pocket. Most of these things happen at a party. We were not up for sale, so we did not have an auction per se. You see a lot. You see a lot that goes on inside Silicon Valley. Eat pizza, going for beers. What is the most interesting thing youre saying that does not involve google or nest . That is an interesting question. Some interesting things i seen . Say there is a self driving car. Im seeing the automation of vehicles. Computerassisted driving. I think that is really interesting to us because we are taking all of the Sensor Technologies and putting them in cars and making people safer. Im really encouraged by that and seeing where those things are going. Much more will happen rapidly than we think. How long . Between three and five years. How long is it going to be before you see your self owning a self driven car . Self driving is very different. Assisted driving, we have that today. It is only getting better. It will be assisted parking, all kinds of commerce and things we do in a car today that will be taken away to make it safer. I cant take credit for parking these days, its the car. The truth is, i dont actually do it. Congralations. Ceo and cofounder of nest, tony fadell. You need to say, im going to disneyland. Lets see how things are going in new york. Scarlet fu is going to check todays top headlines. Feed. s get you the news the top business stories from around the world. Jpmorgan. A year after the bank splashed jamie dimon conversation by millions, the ceo is getting a raise. His board agreed to a pay increase despite a vocal minority of directors who are opposed. Jpmorgan is paid out about 20 billion in legal fines and settlements. No word on how much of an increase he would get. Currency plans to ease controls after letting the peso devalued by the most in 12 years. Those controls blamed for creating a black market in speeding up inflation. Arginines will be allowed to buy dollars in proportion to the income and a tax on foreign currency will be reduced. Carl icahn making an 800 million profit by selling more than half his stake in netflix back in october. He is losing a bet on the stop with his son brett and his fund comanager, they that that never looks would keep rising. Out on a netflix rally that would have made him almost 200 Million Dollars richer. I want to go back to the argentinian move. The effect it has had on markets around the world is phenomenal. Take a look at a chart that gives you an anatomy of a Global Market selloff. We have come off our lows, but that is almost a 1 decline in global stocks. Emergingmarket currencies really leading the way down. The s p 500, down by two thirds of 1 , pushing yields lower to 2. 7 . The dollar is weaker. People are going back to the yen as a safe haven, not helping japanese stocks, either. We will continue to monitor these are good movements. Violent selloffs on this friday morning. Theyre talking about that right here in switzerland. We will bring you more big names as we wind up our week in the swiss alps. And stevechs chairman miller, talking to them about the markets. Ceo of one of the best performing hedge funds out there , brian taylor. Welcome back to Market Makers. We are joined by someone who marches to our beat a bit, brian taylor. They have been one of the bestperforming fund managers. This is your first trip to davos. You dont have a similar profile to many who are here. What made you decide to make this trip . Taking a step back, you mentioned it has been a Good Environment for strategies like ours. The main reason is, the financial crisis kind of changed the landscape of the Financial Markets, and as a result, a lot of regulation for banks, we assume them pull back from training activities in a number of businesses. Pull back seen them from training activities and a number of businesses. What is happening . What are banks thinking . Who do you want to meet with this year . Do you want to raise money, meet bank ceos . I participated in a number of the industry Breakout Sessions where there are clients and other managers, so lots of big names in industry and it has been fun for me. Really, just to understand the thinking, understand the likely direction. Davos everyone is here. Lots of opinion leaders and thought makers. It is interesting to understand the themes of the direction of policy and the impact of our banker counterparties, which we want to partner with to understand what businesses are competitive for them to engage in because of Financial Market reregulation, because of decreased capital requirements, and find out if there are opportunities for Asset Managers like us to step in. The discussion that takes place here is at a very macro level often. Does that Say Something about the kind of investing pine river once to do in the future as opposed to what it does now . Valueare relative investors. At the core is thinking about investing from a relative fell you perspective. There are lots of businesses and assets that banks hold that can be positioned in a relative value context. What is the big take away here . What do you have your eyes on . A lot of things. It is understanding theres a plethora of test banks have to undergo for capital advocacy in the u. S. These have constraints on different types of businesses. Real estate loans . In addition to hedge funds, we manage to harbors, which is a listed Mortgage Rate in the u. S. It has been able to take advantage of one of the capital changes which makes it punitive for banks to hold. Able we had to make a big investment in infrastructure and licensing, but it is able to invest now. Argentina is cracking today. How concerned are you . Unfortunate. S there have been issues. We do have an emerging market presence. We dont have a lot of exposure. Unfortunate as, it may be, creates good investing opportunities. Last have witnessed the five years. We are watching closely. We will try to decide right, on subprime, the wrong side and the right side. What is your next home run . Oh, boy, if i knew that. Everyone here is talking about driverless cars. For you, what is the next big trade . It is figuring out what opportunities historically banks are pulling back, where we can step in and take advantage of larger scale opportunities. If you were a different kind of investor and you were long emerging markets right now, either long reddit or long equity, seeing what you see in argentina and turkey and russia, wouldve the time to pull back . Would it be time to pull back. In my 25, 26 year career, it is really hard for me to be long only. Shouldnt make people feel nervous . I think you have to take a longterm perspective and go for value. Sometimes you have to wait for it. If you believe in longterm fundamentals and policymakers cant you just have to stick it out. Even if youre not heavily invested in emerging markets, are you think your team, take risk off the table and see how things play out . No come a replay a lot of attention to portfolios. We dont have a lot of direct exposure to you markets. M markets. We are watching closely and looking for opportunities, but are not going back risk so much. Brian, thank you for sharing your thoughts. Brian taylor, ceo of pine river. Folks, we are going to take a quick break on Market Makers. When we come back from the World Economic forum, gary cohn from Goldman Sachs and with them, steve miller, chairman of aig. We get them both. Not space cowboy, sorry. We are putting 26 minutes past the hour. Continuing selloff in u. S. Stocks. Dow jones industrial falling for the fourth straight day. It is off by more than tubing percent this week. 2 this week. S p also losing as is the nasdaq. A couple of individual movers to highlight, if it werent for microsoft, the dow would be falling even further. It is up by two point three percent. A reported record revenue last quarter. Onle investors are focused Steve Ballmer successor, he appears to be doing a pretty good job as he gets ready to close out his tenure. Juniper networks is another big gainer, up by 9. 5 . The networking equipment maker has momentum as it faces off against activist Hedge Fund Elliott which has about a 16 stake 6 stake. We want to highlight kansas city southern. It is a Regional Rail operator earning railroads traveling north to south as opposed east to west. Results missed analyst estimates. The big art because of a decline in coal shipments. Southern falling by the most since 2000. We will continue to keep an eye on that. In a moment, we had back to davos, switzerland. The president of Goldman Sachs gary cohn and the chairman of insurance giant aig next. They are parting with a purpose. How to work the room at davos. This is Market Makers. This is a special edition of Market Makers. Welcome back to Market Makers. Is the president and chief operating officer at Goldman Sachs and steve miller is aigs nonexecutive chairman not the space cowboy, as i said before. Even though everyone here at davos is in breakout rooms, Panel Discussions talking big ideas, you have got to be getting calls today, at least from new york and london and south america. What is going on in argentina . First of all, thank you for having us here today. We are excited to be here. We are getting calls. Throughhave been going some dislocation for the last two or three days. Markets going through jitters trying to figure out exactly what is going on. Emerging markets, repricing of assets. This is not extraordinary movements in the market. We have seen movements like this before. Remember back to when been started on the tapering speech early last were middle of last year, we saw 100 Basis Point Movement in 10year. 25have seen it move about basis points. We have seen normal reaction to things that go on in growth markets. These are growth arc its, not developed markets. Steve, given what we saw play out last year, the taper tension not with standing, conditions were benign. Returns and equity markets were very strong. Do you feel like maybe we are reaching or getting close to the point where a correction is due . Ive got to tell you, it is interesting to come to davos each year. The mood changes, the focus changes. Two years ago, everyone was focusing on if europe was going to implode. True. It is a different attitude each time. This time everyone is saying, happy days does that make you feel nervous . At lunch today, the most terrifying moment i heard, it feels like 2007 again trico here we are surrounded by mountains and people are panicked at home due to overseas. My problem is, the current stability of the various developed Country Markets is against an environment where the physical situation is not sustainable. At some point, the bills are going to come due and the developed entries do not have the wherewithal to meet the obligations that are piling up. I am an optimist, but longterm, deeply concerned. Are people too bullish . Im not sure people are too bullish. I had a conversation with you, something i was concerned about, one of my risks is liquidity. I said, one of the things coming out of the market as we continue to regulate market, continue to increase capital charges you have seen all of the banks withdraw balance sheets. We need to get used to seeing more and more moves like this. This is just a Natural Evolution of where markets are headed. When Lloyd Blankfein was here earlier, he told us he described this as a consolidation. Help us understand the goldman lingo. What does consolidation mean . Consolidation is a typical charting pattern. When people talk about consolidation, theyre talking about charting terms. You have big movements. Then you need to get used to that level of rice. You need price activity around those levels, which is called a consolidation. Inhad a 30 plus percent move some of the u. S. Indices last or inequities. You need