Looks like 1856 is the level we are at now. It looks like heading to the lows of the session right now. We will see a little bit of suspense here. Lets talk about the big three stocks we are watching into the close of trading today. The first one is monster beverage. The company has been leading the s p 500 in terms of percentage gains. The companys earnings per share missed estimates but sales keep going up for monster beverage and the shares are going up as well. Sales beating estimates with a gain of more than 10 . Second starch we are walking is wereds stock watching is deckards. This Company Coming out with a negative forecast. A lot of people talking about the harsher than typical winter weather, saying that could have benefited them. Like thehead, it looks momentum will not continue necessarily. Shares, salesforce. Com, sharply down by 6 . Even though the numbers look relatively strong, there were disappointments in its Earnings Report so those shares are taking a hit as a result. Gdp expanding at a slower pace than initially estimated for the Fourth Quarter and u. S. Home sales rising less than forecasted for january. Despite soft data, we are staring at a strong comeback. Investors looking past the economic damage done by the polar vortex, or is very a dangerous disconnect between equities and the economy . For fully the manager of the inflation rotation fund. Michael, is it whether or we in bad shape in the economy . When you look at 30year treasuries, the bond market does not seek to suggest it is as much about whether as it is about slowing down or removal of this idea of escape velocity. The soft market has disregarded that notion. Everyone asks themselves, how was it after that 30 rise in stocks, the supposedly 12 effective last year, retailers have not performed that great. That the idea to that everyone says, it is just weather. At some point weather translates into real problems. If you are a Small Business owner and you are not seeing a lot of traffic because of the weather and you are not able to make ends made on a given month, at some point that may translate into laying people off. And then it becomes a compounding problem for the economy. It will bounce back . Could you get a bounce back or will you be out of business . Maybe you will bounce back in other areas. Maybe the business one out and Something Else on the upswing. If you look at the Market Reaction today, leaving bonds aside for a moment the s p 500 just turned negative. Now it is actually down on the day. To be broadly by economists that they are looking not just past the Fourth QuarterTony Crescenzi of pimco joining us as well. Always a pleasure. Were talking about the weather. It is freezing out. We are getting snow on monday. None of this is good in terms of retail Sales Numbers or if you are a local business that runs a pizza shop. Does this really catch up with the economy, or does it not . Some activity gets delayed or destroyed. Thes thinking about president from 1970s. He grew peanuts in the 1970s. One week in the northeast, thousands of flights were ed. A lot of peanuts were not given out on those airplanes. Jimmy carter and others were suffering during that week. Certain sales will not be replaced. That activity gets destroyed. You will have a few extra dollars in your pocket so that you might i Something Else, you might buy two cups of coffee buy Something Else, you might buy two cups of coffee. What happens to that business that did not receive the dollars . Money gets reallocated to different areas. Certain things there are needs for. Think of the average age of vehicles in the u. S. Manufacturers are faring well. The average age of cars is 11. 3. It has been shooting upwards because people delayed buying cars in the crisis. Even if you will not i two cups of coffee, even if you come back to the level where it would have been were it not for the weather, is that good enough . There will be missed sales for some companies but other companies will pick up. Does it come back in the second and Third Quarter . Unless consumers decide, i saved a few dollars in the first quarter. And i did ok. The savings rate will rise. That is a onetime effect. Like there is a general concern about the weather issue here. Down, barely positive. S p just turned negative. We are at an alltime high on the s p. I we getting ahead of ourselves . When you look at emerging markets, which have been poor performers, the suppliers of the developed economies have not performed well. There is a universal theme of a rising rate environment out there. I will keep saying until it registers. You cannot normalize retail unless you normalize growth and inflation. Inflation has not been normalized. The wealth effect is supposed to be benefiting the consumers. Didnt the Inflation Numbers come up to an extent . Morelittle blip is transitory to begin with. There is no real demand. The only way we will get inflation is from cost push inflation. Clearly we will not get it from the fed. Thank you. Ago told you five years that the bank of japan in england and the Central Banks would be pumping trillions of dollars we would be talking about bitcoin. We have to ask ourselves what is happening in the mechanism here, where inflation is not being treated. If the emerging economies are in their anticipation of future earnings growth, the u. S. Stock market is very wrong. What will it take to get inflation . Higher wages. 77 of inflation comes from wages. You think about, what is the biggest cost to all these employers . Wages. Not nickel or zinc. We could get a little boost from policymakers on this. Perhaps, but it is still under the control of the privacy private sector. The old normal was 3 . Less companies are paying more for people. Up, usuallymy picks you get a little inflation but he could pick up a cousin invest more in equipment and factories and that boosts productivity. But we have not seen the best productivity numbers as of late. There has been softness there. Auld one interpret this as good thing to the economy because companies are realizing they need to do more . There are three sources of productivity. People, stuff, computers, factories, etc. And how it is used. Where it is weak is in the stuff, the capital intensity perunit of labor. Companies have decided to keep their investments low. Companies with a liquid assets are the lowest since the great depression. Inple think it will pick up 2004. You guys were talking about equities but you guys were both bond guys. Bond and stock on our side. Where do you think yields will be . Where are you allocating your resources . Since last june, the 10year 3 . Sury maturity, 2. 5 to it has not budged. The base case is a slow normalization of rates. Two and three quarters, three and a quarter. That is the best case based on a Consensus Forecast coming to fruition. Everybody hates bonds. That would drive yield down. Notyone came into the year liking bonds and they had to change their mind. On whether the Consensus Forecast comes to fruition. Janet yellen will continue her taper. Thethe market will fed has pulled back. The market has replaced, pushing yields lower since december. You continue to buy treasuries as an investor . If you believe in the broader disinflation or a trance, probably. If you believe the search for yield flows outside the u. S. , you want to look at emergingmarket debt. Im still waiting for this crisis everyone is saying out there. Junk debt yields are historic lows. Currency can be a strength if everyone has bombed out the currency. Areasnt to look at the that have been bigger laggards. Brazil and china are showing signs of life. Thank you so much, michael gayed. Were going to go live to kiev to bring you the crisis. Ukraine could be on the verge of tearing itself apart. Russia putting pressure on ukraines new government to act today. Ousted leader yanukovych says he is still the nations president , urging russia to refrain from military intervention. Ukraines acting president said russia is trying to provoke conflict. Our bloomberg reporter on the ground in kiev with the latest. It sounds like we could be getting closer and closer to a splitting apart of ukraine. Im not sure i would go that far. I would say that the new acting president has said that russia is trying to provoke them into a conflict. The region that georgia and russia fought a war over. I spoke to one of turchynovs cabinet members and asked him whether he was worried about Russian Military nearby. Yes, i am. I am worried about it for sure. The capture of the government in crimea, units in my opinion which were sent from moscow, from russia we see very aggressive methods of carrying out politics towards ukraine. With all the tension in the crimea region, would you call for nato support against russia if required . Yes, for sure. We think that we are owed from the u. S. And britain. Nato is a guarantee of safety in the black sea region. Of coarse we are sure about nato and it has been announced that they have their own vision and will not allow the Russian Federation to create conflict. I know you have been talking to a lot of people there on this street. What are you hearing from them, and do they think that a separated ukraine might be the direction the country is heading in . That security chief i spoke to said that was one of his big concerns. It depends who you ask. Some people say they are hoping for this new government to be one of National Unity that will avoid this fate. That people understand there are big divisions inside the country and those in russia looking to exploit those differences. What is the economy dealing with right now there . You and i spoke earlier and said there is still commerce happening. It is getting more difficult to access money . Absolutely. The tensions flaring in crimea in the south, but in kiev things are relatively calm today. The main revolutionary square behind me is surrounded by hotels and cafes and they have been doing business as usual. The one concern people have is about withdrawing cash. A lot of the banks have been refusing to allow drawing of money from atms. I met one American Lawyer at one of the banks i went to to get dollars out of and he was standing there with atm card after atm card, trying to make money out. He said, ive got to pay my expenses and my staff and im going to drain this machine until it is dry. You certainly dont want to see a situation like that. Willem marx, thank you. We have seen the market since we began at the top of the hour turn lower. You could ask the question whether or not this is linked to , and as thosebles continue to boil over, the market is getting nervous. As we get more and more headlines about troops entering the crimea and questions about who the troops are affiliated with the ukraine is alleging it is Russian Troops coming into the region under the guise of a training exercise. Theres no confirmation on who these people are. Theres a lot of mystery involved in what is going on. Certainly russia wants closer ties to its bordering neighbor and so does the rest of europe. It is up for grabs. Interesting. It feels like the cold war in some ways. Very much. Up next, we will be talking about that twine. Mt. Gox has applied for bankruptcy. Today mt. Gox, the Worlds Largest former Bitcoin Exchange file for bankruptcy in japan. Lost 750,000 bitcoins belonging to its customers and 100,000 of its own bitcoins. Trackingter has been the bitcoin saga for a while now. My favorite part of this is mt. Gox saying that the Company Believes theres a high possibility that bitcoins were stolen. Yeah. If they werent stolen, where could they it reads sort of like a comedy of errors, they just disappeared. It reads a bit like a punchdrunk boxer sort of shocked at what happened. They dont seem to know precisely. It will take a lot of smart techies, a good amount of time to figure it out. Theres probably some cash gone to. If you still bitcoin, what do you do with it . T can spend it and if you get this amount of bitcoin turning up somewhere, there is so little of it, wouldnt that be obvious . The beauty of this crime, if we can call it that, is that it was done over a long period of time, possibly years. So it may already be spent. It trickles into the bitcoin ecosystem. Who knows . There is a Cottage Industry of people trying to assemble the bitcoin addresses where this money came from, see if they can track it through this public ledger. Can you track it . Theres a dispute as to how anonymous this is. People in the Bitcoin Community will tell you its not that anonymous. Does that mean we can actually trace it back to its original home on mt. Gox . The tricky part of that is that when you entrust your bitcoin to mt. Gox, they are putting it into a Company Controlled wallet so they can resolve trades. Somebody wants to sell bitcoin for dollars, they pull out of that. They want to buy it, they pull out of that. First of all, you need to know exactly what wallet addresses that mt. Gox was using. So far they are not talking. This would have to start with the Company Making a goodfaith effort to figure this out. There have been questions about the viability of bitcoins ever since their inception and even more questions raised because of what has happened in mt. Gox. Not just for mt. Gox, but what is the next move in the bitcoin world as a result of all of this . Do we see more regulation attempted in some places . We have already seen the prices fall. What is the next thing . The next thing is already underway, a massive effort at damage control and proving that other Bitcoin Companies do not suffer from the same problems that mt. Gox did. That will include things like security aduits, where Companies Make them public. They will attempt to cauterize the damage. It is safe to say that this is the end of the kind of amateur hour of a couple of guys working on computer code, pulling a few all nighters and setting up an exchange. At the end of the day, it is a currency. A currency needs to be regulated because people need to know if they can trust it. Yesterdayr yellen say that she did not think it needs to be regulated they were looking into it. Doesnt need to happen, carter . And thereds to happen is no regulator who does not think that Consumer Protection is the main focus of this. Bloombergs carter dougherty, thanks so much. , and yourup next money get out from under the governments umbrella . Penny stock or billion Dollar Company . When it comes to fannie mae, not quite sure. As of right now, fanny has to fork over all its profits to uncle sam. Bill ackman and Bruce Berkowitz are making a bit bet that that will soon change. Will shareholders get their hands on the profits . We are joined by a banking analyst. Josh, brick it down here. Bill ackman and Bruce Berkowitz thinking here that at some point the money will get return to shareholders and theyre going to get out from under the governments thumb. At some point we have to recognize that the companies have functionally paid the government back. Income into the government coffers does not really make sense. So long as the government is on the hook for having to bail them out. On the hook for bailing out a large number of institutions. All of them had the opportunity to pay back. We have said fannie and freddie cannot pay back. At the end of the day where watching these crazy machinations in washington, focused on restructuring the Mortgage Finance system and talking about dismantling the cornerstone. That would be having a fannie and freddie that were not actually governmentsponsored entities. There would be no government involved at all, which would thatif you default on mortgage, if you are the bank holding it, no one is there to guarantee. Right. I would go further. We are watching the legislative process, with these wonderful are attemptsthat to suggest we can create a fully private market. Why cant we . Europe did. At the end of the day we want a 30year fixed mortgage. Do we . Trillion mutual fund supporting and 8 trillion market. The government will be on a catastrophic pace on the hook. The goal is to structure the market to minimize that risk. The bets these Hedge Fund Guys are making ackman and berkowitz are on opposite sides of the trade because ackman owes the common stock and berkowitz owns the preferred stock. I getting too much i think it getting too much can we have a Housing Market that is healthy and sustainable without Government Intervention . Part of the market supported by the private except her, there is no subprime mortgage. Its difficult to get any mortgage beyond the amount that. Annie or freddie backs up thats the problem. We are saying we have the government propping up our housing industry. Or you need a system i wrote a book that was specifically about fannie and freddie. I have been one of the biggest gse credits. The problem with fannie and freddie were not their function, it was the fact that they were undercapitalized, the credit box was not commensurate with the risk they were taking. Telling them youve got to lend. Right. If we fix those aspects we could have a different conversation. The problem is the terms. We keep referring to the gses. Areof our utilities ultimately governmentsponsored enterprises, where the catastrophic risk is backed by the government. Its different. You have people putting their entire life savings into a home and making a bet. Housing is still a bet. Be a good thing to get the government out of this equation because then you would have a more natural there ishs point, realistically what can happen. We had more of a private market before the creation of fannie mae where most people could only get five your mortgage is