And allow the borders of europe to be redraw and. Redrawn. A slow rise for Chinese Consumer prices in january. It is the slowest pace in more than five years. Falling food and tumbling oil and metal prices are pushing inflation lower, raising real Interest Rates. I trust regulators and china have reached a decision on qualcomm. Regulators in china said the company used its dominant position to force unfair conditions on customers. The Measles Outbreak is spreading. The cdc says there is now 121 cases of the measles across 17 states. Until recently in the u. S. , it was on unusual to see more than 100 measles cases in the u. S. In an entire year. Boston smashing records for snowfall. 69 inches of snow in the last 30 days. Truckloads of snow have been removed and dumped on fenway park. That is not where they are putting the snow. I am kidding. Boston is just getting hammered. We are not. We keep forecasting this blizzard that is yet to materialize. Boston has seven feet of snow on the ground. I have been chasing down an economist from harvard and she could not leave her house. [laughter] are you buying spring yet . Not yet. It is in the windows. It is like spring is in the windows. I am buying for fall. Fall fashions start coming out in the early spring. Ok. Im lost on that. Lets do a data check. We have some time to talk about the markets without the hurlyburly. The eurodollar, a weaker euro. On to the next screen. The dow is near 18000. It is churning. The german twoyear bond is a negative. That is a stunning to statistic a stunning statistic. Alix steel is doing a great job on this yesterday. Oil is down to 20. Maybe green is good news for some people and bad news for others. Back here is when we were lasted 20. Last at 20. I feel it when you watch this kind of volatility right now, if you say you have a call on oil you are lying to me or to yourself. Everyone has been wrong about this. It is a directional call. It is not like a single point forecast. It is a tough thing to do. Oil at 20 barrel. How about the markets . There is a quiet on the markets this morning. Equities are flat for the year. Up 13 in the past 12 months. The dangers of too much recalibration, too much overthinking. I think it is a great theme for the show. We are always like ok, worry, worry, worry, worry, worry. The courage has to be looking through a couple of the biggest worries for investors right now. It has to be deflation, Slower Growth outside the u. S. , the impact of energy on earnings. The courage chester come from being a longerterm investor. Has to come from being a longterm investor. Look on the left side of the chart how much real yield there was years ago like two decades ago. It is not there now. How distorted is your world from what the fed is doing and what the bond market is doing . Fixed income has very strong returns for the last 30 years. We have a hard time seeing value anywhere in the asset class. We heard Steve Schwarzman a saying he is spending as much money as he can in energy. We are not quite comfortable with energy. It is one of these things word is difficult to predict where we are going to bottom out. There is a lot of technical pressure. To your point, brendan, does jpmorgan have a single hall on oil . We dont have a single point call. We are letting it be a moving target and recognizing that the supplydemand fundamentals and the price do not match for us. People dont want to get caught on the wrong side of an oil call. You are pretty bullish on europe. I would say we are neutral. [laughter] what is a bigger deal in your world right now . Is it the qe announcement by the ecb or is it what is happening with greece . I think greece is a far bigger deal. Qe came too little, too late. The bigger question i have is, will this political overhang in greece and these negotiations holdback Business Investment . I am worried that investment has closed down. Jim paulsen was optimistic and he has shifted to greater caution and over to europe over to multinationals. I have seen plenty of reports that suggests that Credit Demand is not even there. Thats right. You can create supply but you cannot require people to take out credit. Im talking about high quality companies. If you dont get that, you dont get the growth you need to take up something north of 1 . What will you be watching to see if your suspicion is true . We have not seen a lot of movement in bond spreads outside of greece. I will be watching a lot of language from the policymakers. The eurogroup meeting. The discussions over the next couple days. I will be watching how perceived to be confident the other antieurozone parties around the Different Countries are. Here is Mohamed Elerian this morning. Investors face difficult calls. Microsoft goes 7 billion large in debt. Are they using it to raise dividends . Maybe. The bigger print is that u. S. Companies should be continuing to use this open window of incredibly low rates and available financing to buy back stock. [laughter] loc in capital to allow them to expand in the next wave of the u. S. Recovery. When and how is that going to happen . They should be using this opportunity to spend this cash on something other than buybacks. On something other than buybacks. We want them to engage in more expansionary activity. We want to see more m and a and capital expenditure. We are starting to see cuts in capex in many parts of the energy sector. What we need to see now is, does this decline in energy kill a little bit of confidence or do people feel buoyed by a . By it . What are you seeing among your clients . What is the appetite for risk . The appetite is fairly muted. People are concerned after five years of a bullish market. They are looking for negative headlines. They are already riskaverse. Do you see a as a sign of confidence . I think we can take it both ways. A couple of years ago we thought, why not Companies Taking advantage of this . Are they so concerned about the future that even at relatively cheap valuations they are not going to buy assets . Now asset prices are little bit higher. The fact that they are doing these deals people are speaking out of both sides of their mouths. If you are putting cash to work, it means you are no longer fearful. Are you seeing a lot of cash being put to work . Not on the individual side but on the corporate side, there is a lot of willingness to take it out. Kate moore of jpmorgan with us for the hour. Coming up, got milk . Cocacola brings a new modified milk. Will it work . The twitter question of the day is what is the future of cocacola . Tweet us. This is bloomberg surveillance. Tom is mooing like a cow. [laughter] good morning. Good morning, everyone. Bloomberg surveillance. Later this morning, Mortimer Zuckerman of Boston Properties looking forward to that on in the loop. This is bloomberg surveillance. Good morning. We need to get to some top headlines. A thirdquarter profit mesko ms. For softbank miss for softbank. The company maintained its fullyear target. In egypt, the cabinet has suspended the National Soccer league indefinitely following a deadly confrontation between fans and Security Forces outside the Cairo Stadium over the weekend. More than 20 people died after a stampede. Egypts Public Prosecutor has ordered an investigation. A major setback for indian Prime Minister narendra modi. Modis party demolished the competition in National Elections in may. Those are your latest top headlines. This is a big deal. She had seemed unstoppable. The bigger deal and the he had seemed unstoppable. This is like a new india. Remember 1993 . Brendan was heading off to college, i was learning to ride a bike. There was one commercial that year that none of us can forget. And that was the vienna would dancing be one of my alltime favorites. Thats make a random call. Who shot Alexander Hamilton . [indiscernible] im sorry. Got milk . Despite the success of the campaign, fewer and fewer americans have been drinking the white stuff. The demand for value added milk is increasing. The president of coke america thinks fairlife could rain money. The dairy market in the u. S. Is very fragmented. People dont buy storebrand milk. People are not brand sensitive. They are putting stuff in milk. Talk about what fair life is. It is a brand name. It creates a revolt in. Revoltulsion. It has extra stuff in it . It is like super awesome. Extra protein, extra calcium. The dairy industry is fragmented and in decline. Coke is hoping that its marketing prowess can turn that around. Coke as distribution all over the world. Nobody wants the liquid it is used to selling. Bubbly is gone. There is no growth in carbonated beverages. They are trying to add value and up the price. A gallon of fair life is 3. 69. Would you buy this stuff . Im a little bit more of an organic shopper then an additive to my drink type gal. I like to go in little bit more on the purest side. The allman milk is booming. The plantbased milks are growing. U. S. Milk alternative sales on the rise. It is a 2 billion industry in the u. S. It goes to a point that olivia made earlier in the story today. Coke is trying to jump onto this trend of healthier milk and completely missing what is going on which is that people want more natural things. We dont do three glasses per day. We still have an 18monthold who is drinking a lot of milk. That is where the growth is. Infant formula. Another place were coke is branching out. [laughter] what is the future of cocacola . Diet coke . Coke zero . Fair life milk . Good morning, everyone. Bloomberg surveillance. The euro bears a modest watching this morning. We have an outstanding morning mustread. Fed governor jay powell sat down for an interview. It was a wideranging interview. What stuck out to me was jay powells comments about the audit the fed movement. It is a huge movement. Rand paul give a speech. This is about Getting Congress into the meeting by meeting making of monetary policy. Over time, we have learned that when that happens, elected politicians want more accommodative policy that results in bad economic outcomes. We have had lower inflation and it is under control. Why we would change that now is a mystery to me. The issue here is how much control should congress have over the fed. His argument is that the less control congress has, the better the fed does. Yes. This goes back to 1951. The push in congress for an audit is an violent conflict with the fed. I will leave other people to debate this, but it is important to bring this up. His father, the congressman paul, dr. Paul he has made this a staple of his campaign. This is a huge part of appealing to the right if you are going to run for president. Yes. It is a basic distrust of those ugly capitalists up in new york city from the 19th century. [laughter] it is no different than William Jennings bryan. Perhaps it is just politicians trying to score some points. Great interview with governor powell and peter cook. Go to bloomberg. Com and check it out. Powell still sees plenty of slack left in the economy. The number this morning is 83. That is our number of the day. That is how many rigs u. S. Oil producers closed last week due to the weak rebound of oil prices. Our next guest says to not worry about oil prices. Good morning, everyone. A tuesday bloomberg surveillance. Microsoft is selling 10. 8 billion of debt and its biggest bond sale on record. The Worlds LargestSoftware Maker is taking advantage of investor demand for corporate rated securities. It sold more than 2 billion of fortyyear obligations. California is now home to the largest solar power plant. The 550 megawatt plant generate enough electricity to power 160,000 average california homes. Governor jerry brown called for an increase in renewable energy. There is nothing out there. I lived out there when i was a kid. Heinz will include the popular sriracha in their catch up ketchup. I did not know microsoft did fortyyear paper. This is the greatest chart in equities. Yesterday, they tried to get their costs back up to where it used to be. Cheap, cheap, cheap, cheap, cheap. This is the conundrum of every company in america. Kate moore this is why stocks were not good. They have lots of wiggle room. They have lots and lots of wiggle room. We have good underlying growth. This is like college financing. Wait a minute. But then what do you do with that money . You give it back to shareholders. Im sorry. Everyone would welcome more dividends with open arms. As i was saying before, we want to see them put their money to work with real investment. Do your clients of interest in a 4 for your coupon . Fouryear coupon . Everyone wants to have a Little Pocket of yields. Were going to talk oil right now and demand for oil. Elasticity. We want to dive into it. You have Great Research on this, skip. What we are going to do with cheap oil. Are we going to buy more . We are starting to see that. We saw a surge of gasoline demand in the Fourth Quarter. We think that u. S. Oil demand growth will be up 3000 Barrels Per Day this year. Are you going to push against that . Do you buy the idea that we get to 20 per barrel . It is hard for us to see getting down to 20 per barrel. That would be a world where we are destroying demand not growing demand. We think the manner is going to grow 800,000 Barrels Per Day globally this year. Im getting a church van. The rising demand you are predicting, argued talking more church or bigger cars . We have started to see rotation to heavier vehicles. People are not trading in vehicles priuses for escalates, but people are going to crossovers. We are starting to see more driving. One of the interesting numbers on the friday jobs report was when you look back at the Fourth Quarter, we added 400,000 jobs. We have created jobs out there and that explains a big part of that Fourth Quarter pop. We are a Global Energy and metals researching consulting firm. We have 1000 employees and 24 offices around the world. But you are mostly in texas, right . Are secondlargest office is in houston. We have over 100 analysts. How ugly is it out there . How ugly is it for oil . You mean, houston . [laughter] i thought you are making a disparaging comment about houston. [laughter] not the baseball team. [laughter] so far, things are ok. People are walking on not quite a shells. Egg shells. Things are getting a little bit tight. Are they furious . I think they are shocked. Nobody ever thought that the saudis would not be the saudis. The conventional wisdom is that they are trying to write out the drop of the price of oil to push Oil Producers out of business. Does that work . Dont apply conventional wisdom to an unconventional problem is what we are saying. What did you think of this prediction from opec yesterday that nonopec production is going to drop . They wish. We cant square to those numbers. If you think about all of the momentum just in north america. It is hard to get that number to go negative. You were talking about natural gas. What is the implication . What is the correlation . We dont see there being much of a relationship at this point. You hear talk about the associated gas. We dont think it is a mover on the market. What we could see is a bit of pressure on gas prices through coalfired generation. What is fueling the increase in demand for gas that we are showing on the screen . What drives that is a couple of things. It is the Power Generation rotation away from coal to natural gas as a cleaner burning fuel, a cheap fuel with gas prices where they are. The other sources the industrial demand. Give me an update on ethanol please. Where did this debate go . Disappeared. It got punted to 2015. The refining industry is in a Holding Pattern waiting what the 2014 mandate can you breathe ethanol . You are probably not supposed to. What you make with the rest of the stuff when you are done making whiskey. [laughter] we have been seeing Oil Service Companies competing on price. The breakeven points in the american west, are these not as firm as we thought . Breakevens have already come down. Just as a rule of thumb, we think if youre looking at a 70 breakeven he year ago, you are probably looking at something at 60 today because of the cost compression that is happening. We dont think that is over yet. We think that continues into 2015. Have you buy yourself a hummer . Know, we already have an Aircraft Carrier in the driveway. [laughter] skip york, thank you so much. I have a minivan and the driveway and my children cannot move out fast enough. Maybe they will sooner than i think. Mom and dad may be getting their basement back. The millenials may be moving out. Good morning, everyone. Bloomberg surveillance. Here is our twitter question of the day. What is the future of the Cocacola Company . This is an important question when you look at the challenges at mcdonalds, as well. What is the future of the Cocacola Company . Lets get to our single best chart. It was supposed to be the generation that could not be bothered to leave home. It was cyclical. Our single best chart thanks to Deutsche Bank shows that the millennials are moving out. New household formation was down and that is no longer true. It has picked up. Kids were staying at home. That is the yellow line. That was on the rise for a good decade and that has dropped, too. We have kate moore. We were talking about this over the break. What i am wondering is new household formation, is that a leading indicator or a lagging indicator that we already know about . I think it is going to be a leading indicator because it has been so stubbornly low relative to precrisis trends. There are three reasons why it has bee