tv Bloomberg Surveillance Bloomberg June 10, 2015 6:00am-8:01am EDT
since 2011. take that, korea. the stock market cannot get out of its own way. we consider watching paint dry for the rest of the year. it is not the bird flu. the mers virus strikes fear in the heart of korea. their president postpones a trip to see our president in washington. good morning, everyone. this is "bloomberg surveillance " live from new york. wednesday, june 10. tom keene. joining me brendan greeley and vonnie quinn. there is a lot of overnight with the german 10-year. brendan: and these remarks by: rhoda -- by coroda and the japanese market. tom: there it is:. brendan: it goes back to a bounce. when you look at what he said it does not necessarily comport with that one statement.
i do not see how it can go any lower. right now your wednesday top headlines with vonnie quinn. vonnie: the japanese yen is headed for its biggest gain against the dollar this year. this after the governor of japan possible bank says it is hard to see the yen following more. the yen hit a 13 year low earlier this month and fell 11% against the dollar since october when the bank of japan boosted record monetary easing spirit germany and france will try to break the impasse over greece. angela merkel and francois hollande -- how greece can get more bailout money. degrees are running out of money. for months now -- the supers -- the alexis tsipras government -- in germany, members of the parliament are getting set up.
>> we want greece to stay in the euro. we want greece to stay in the euro very much, and it is all wish and will, but greece has to come up with proposals, and proposals which are really serious. what they are gearing dealing -- what they are dealing with at the moment is not serious at all. vonnie: president obama is considering whether to send more troops to train iraq he forces. as many as 1500 more american soldiers may go to iraq with the goal of retaking the city of ramadi. there are already 3000 u.s. troops there. months of us-led airstrikes have not stopped islamic state forces from capturing large chunks of iraqi territory. a deal is pushing spotify valuation to more than a billion dollars, double what it was worth in 2013. a swedish own company is paying $115 million for 1.4% stake.
in the nba finals, lebron james scored 40 points to lead cleveland to a 96-91 win over golden state. the cavaliers have a 2-1 lead in the best-of-seven series. steph curry had 27 for the warriors. they rallied in the last quarter to pull within one point. did not manage to see that one. brendan: i read about it this morning. of the 291 points scored in the finals by the cavaliers, lebron james assisted, created, or scored himself to hundred of them. tom: this issue in ramadi -- we will do much more on "bloomberg surveillance" in our international relations coverage. brendan these are trainers. brendan: trainers is what you call them when you do not want to call them something else. tom: much more on iraq in the coming days.
let's do a data check. equities, bonds, currencies, commodities. euro-dollar, 115.06. -- 1.1306. stronger yen, dollar index. clearly the yen predominant over euro and dollar this morning. let's recapitulate on the bloomberg terminal yesterday. i wrote this up for joe weisenthal in bloomberg business. these are rough regressions through three cycles. crisis here, but 200000, 200,000, and what a bombshell, michael for saying -- brendan: when he said that, we all took a breath to process that. do you mean 70,000 new jobs yeah
cap vonnie: -- do you mean 70,000 new jobs? i don't know that politics is ready to handle that. politicians are graded on their ability to create economic growth even if it is whether they have any influence on it. -- even if it is bunk whether they have any influence on it. tom: let's get to the yen, and then we will get to kate more off of what michael feroli said yesterday. kuroda of the bank of japan says enough. yen depreciation has been believing the most important tool to affect all day now max -- autonomic's -- he called that bottom in the, and then up we have gone with the yen depreciation of 62%. willy pesek lives bobby now max
a abenomics in japan. was kuroda speaking to his international in asian bank community? >> there is a theory to me made -- to be made that he was talking to both. certainly it is hard for the u.s. within an election cycle coming up to bash china's currency policies, so i am sure that came up around the sidelines. the others, one of my theories is that kuroda is saying to prime minister abe it is your turn. it is excited. the nikkei -- it is -- it has excited the nikkei, it has weakened the end. the most important part of abenomics is the valuation. this was kuodroda's way of saying
to abe it is your move. brendan: what he said to parliament is in the passive voice, "i don't see how the yen can go any lower." in his prepared statement, he said the bank will continue with qe aiming to achieve price stability targets. what is the active thing he could do to prevent the yen from going lower? william: his comments was very japanese, if you will. the currency markets are ones of wastes not an secret handshakes. this is his way of saying the yen cannot weaken anymore. but we should not ask act anymore action from the boj later in the year as a rule. in many ways it becomes wobbly if bond yields -- in many ways,
you certainly feel like you have done all the heavy lifting. we should stop calling this abenomics and call it kur odanomics. tom: is japan's recovery for real, or is the issue growing inventory as well? do you really believe in the japanese recovery? william: i do not. i see this as a sugar high. you pumped trillions of dollars and yen into the system, and you will have a response. the important thing is when you have companies like toyota which is making 18 million -- $18 billion this year, give them a raise. there is not a lot of confidence in the future. abenomics in the short run has in -- has excited investors, but not the average japanese and certainly not me. tom: willy pesek, thank you so
much. brendan: this is something that kuroda has begged. he has gone to business associations in japan and said please hand out raises. we need you to do it. and they are not responding. tom: it was a unique demographic. kate moore in the next hour. we will get to the comments of our colleague mr. feroli. you see in the german 10 year breaking through the emotion of a 1% yield today. i calculated giving up about nine years of coupons. yet a 1% yield, now down 8%, 9%. do you just assume bond losses are good for kate moore's equity world? kate: we have seen significantly overweight
equities for a long time. we will say that the speed and i think the breadth of this bond market move has been a little bit surprising. but nevertheless, we expect yields to be meaningfully higher by the end of the year than they were at the start of the year. tom: is it a tantrum, or are we smarter now? kate: it feels like there was a huge amount of crowding into the curve, whether it is with the u.s. and germany, and some of it is getting washed out. the move north of 1% i cannot say it is totally fundamentally driven. at this point we would be stepping away. we are not looking to the opportunistic or add duration at this point. brendan: how prepared were you for debt and equities to have the correlation swing back into the positive territory? kate: the last couple of weeks or months have been surprising in terms of the speed and ferocity of these moves. but from a general allocation perspective, we were position
for this environment. we feel good about how our portfolios are doing. this has been front and center over the last few days. a decent portion of our japanese equities exposure has been hedged, but as we reach the 124 level, -- something else going on with the fed seems pretty limited. brendan: so you agree with a wink and a nudge philosophy, that if we cannot go any lower and we cannot do something more we're not going to do something more. kate: we do not think u.s. economic data will accelerate so aggressively that the fed is going to change its tune. we need one or both of those to happen. tom: i need you to respond for michael -- to michael feroli's call for much slower gdp equity
in years. kate: it is a very important question for it i think he and other economists are asking this. given the fact that we have this aging demographic across not just the u.s. but the developed world, we have a fairly strong bid for fixed income as an asset class, even though equities should do some stronger total returns. what can we expect in terms of bond yields? we have lowered our expectations multiple times is a private bank, and that number of 75,000 new jobs created per month is a little bit alarming. and you are right, 150,000 was the number we would go to before. to feel confident that the u.s. economy was on track. it cannot all be taken up by machines.
nothing. they got a head start of at least five hours before the escape was discovered. apple unveiled its new streaming new -- it's new streaming music service, and already it is under investigation. the attorney general of new york wants to know if music services were swayed in their direction. an airline industry group thinks carry arms be smaller than current standards. they want to ease the crunch in overhead bins. i could be more -- that could be more checked bags and fees for passengers. alibaba founder jack ma outlined his vision. tom: jack ma says he has been questioned about alibaba's u.s. strategy. jack ma: where am i going to
compete with american yak with amazon, with ebay? i would say we show great respect for ebay and amazon, but i think the opportunity and the strategy for us is helping small business in america. go to china, silver products to china. tom: the highlight for me was vonnie quinn threw a muffin roll at me. i thought he did not say much but it was a terrific performance. vonnie: a very unusual appearance before central bankers and the odd politician or two. he was very kaczmarek -- he was very charismatic and outlined the future where the u.s. and china would be much better friends. tom: i wish he would talk about his china and the government and the new regime there. let's bring him thomas or. how much does jack ma know about
his china? is he an encyclopedic about the culture, the government, and the people of china, or does he have other people doing that for him? thomas: i think there is a tendency to view these very successful people as polly matz people who know everything about everything. my view is much more likely that they are good at running successful businesses. tom: i think it is pretty straightforward. the msci index says no to china no to shanghai. how will that be received in beijing in shanghai and in hong kong? thomas: you know there is a lot of rally going on in china's equity markets and getting inside the psychology of investors at moments like this is always very difficult. the msci news was clearly not good news. at the same time, we had big
news from china's ministry of finance today. one trillion yuan in support for local governments. i think i should offset whatever depression comes from the msci non-announcement. and until one thing that bloomberg reported about jack ma's plans for alibaba is that american foodstuffs manufacturers may well be able to sell to the chinese market. is that an opportunity for the u.s., or is that windowdressing? thomas: i think it is clear that as the structure of chinese economy changes, the pattern of winners and losers will change with it. in the past it was the australian ore miners who made the difference. it will be u.s. agricultural producers getting a bigger slice of the action. tom: thomas orlik, from
tom: good morning, everyone. never dull. headlines out of brees are sort of -- the headlines out of greece are sort of like a bridge too far. brendan: what jumped out at me is the spokesperson for the european tradition saying the ball is in the court of the greek government. the commission has always been greece's best friend in these
situations. i am not sure what happened that you are the one who now mentions fifa every morning. we are staying with greece. mark buchanan of "bloomberg view " says what game is greece playing with its creditors. he says it is not chicken, it is the ultimatum game a game where you can get $100 but only if your neighbor says yes. so you think you would take it. it turns out when people play this game in real life, people will not accept less than $30. there is a basic sense of justice and fairness." "the creditors think greece should be grateful for the relief they have offered. yet greece sees that the creditors can afford to do more and feels insulted by the suffering it must endure." is this a game of chicken or an ultimatum game? kate: i get that they have
felt pain from fiscal austerity. i get that they have had a penalty, but they have been given a lot of chances. and it is incredibly frustrating. i was a creditor, and to sit there listen -- to sit there listening to them wait and wait for months and months is frustrating. brendan: along with the negotiation, i do not understand that, but maybe that is structurally impossible. kate: we have to get to a place where the greek people say it is important for us to be part of europe been so we will make these concessions. but it does not feel like we are there. public opinion polls show they are not terribly happy with the government or europe or it -- or europe. i'm not entirely sure -- there is something cultural or political, but it is definitely
different from an outsider's perspective. brendan: the primary surplus targets were unsustainable, so i had to be fever their argument coming in. four months later, watching this i am a little perplexed watching them. coming up, we are going to korea. there have now been 100 cases of mers in south korea. we discuss the effect of the virus on commerce, next on "bloomberg surveillance" on bloomberg television. good morning. ♪
toward its biggest gain against the dollar this year. the yen gained more than 1% against the dollar after that comment. the yen had fallen 11% since october when the bank of japan boosted its record monetary easing. china's stocks will not be added to msci indexes for now. msci is trying to overcome remaining obstacles. one of them is that global investors are subject to quotas on how much they can buy. >> from a government perspective , a regulatory perspectives just to regulate the pace so people do not run too fast on the highway. maybe ultimately it will be removed. vonnie: chinese authorities have wanted their stocks to be included in the msci index for some time. it would elevate the status of mainland markets on the world stage. former house speaker dennis
hastert has ended almost two weeks of silence about multimillion dollar hush money case. he pleaded not guilty to charges he evaded banking laws and lied to the fbi. a government official says dennis hastert paid $3.5 million to allegations of sexual misconduct -- so that allegations of sexual misconduct years ago would not come out. target has said on its website that they would raise its dividend by 1.8%. the board said it would not -- that it has not made a decision. later target said it would boost the dividend. the san francisco giants through the no -- the san francisco giants pitcher through the first no-hitter of the season. brendan: a 27-year-old rookie. already did his time.
tom: do you think it was an intern yak of those pesky summer interns. it is a part of sense single-stranded m&a novel species. far more, there is great concern, and analysis of the mers virus in south korea. south korea's president has postponed a trip to washington. the middle east respiratory syndrome virus is not like ebola. it is not even close to its close relation, the sars virus bird flu. camels are suggested to be to blame. our surveillance virus woman has given us a valuable perspective on a bola as well. let's be careful. it is not ebola. >> it is not ebola, and it is not sars.
wildman -- while mers is very deadly -- about one third of deeply infected died. it is very serious. it is not spread as easily as sars, and that is the big difference. we had about 800 people die of sars. tom: microbiology 101 -- antibiotics do not get it done if it is a virus. what is the solution? bedrest? shannon: some people get pneumonia, kidney failure as their own immune system tries to it off the invader. brendan: i am reading a report of this that suggests that south korea made a mistake in not properly quarantining people as they were diagnosed and let it collect in a single emergency room. they -- did they not adhere to
standard practices? shannon: someone traveled from the middle east to south korea who was infected with it. at that point, they should have been able to -- maybe it spreads to one or two close contacts, and they should have been able to isolate it. instead, over 100 people have been infected, spread among health-care workers and patients. seven people have died. the south korean government should have done more, should have done more quickly followed proper infection control procedures. brendan: it is fair to say we had this with ebola, too. in hindsight, everybody knows what to do now, and how covered you have to be. those precautions were not in place a year ago. shannon co ♪: governments across the country kind of need to know more about infection control because we are living in a world that is so interconnected and all these viruses are just a
plane ride away, as we keep learning with mers, with ebola. they can appear in any hospital around the world, so it is hard to alan's this constant -- to balance this constant vigilance with anything you walk in the door with with a practicality that is probably not going to. vonnie: we are seeing more viruses cropped up here it is that just -- we are seeing more viruses cropped up. is that just perception, or is it happening? shannon: part of it has to do with the interconnectedness of this world. this virus, for example, is found in camels, so it was probably spread among someone who has close contact with camels -- a farmer, someone who joins camel milk, not pasteurized. then it gets spread into the wider population and then someone gets on a plane and it
is spread into the u.s. or south korea. tom: what is your prognosis? does it get worse? shannon: there are 3000 people in quarantine. we will probably see more cases. if we can isolate it, it should burn out on its own. but this is probably not the last time we will hear mers cropping up somewhere. tom: shannon pettypiece on the mers virus. brendan: boomer children may be leaving town. tom: can i get the door? can i carry the boxes? to the car. what is his name? brendan: it is supported by fed data. and i am going to let tom take us out now. with a one-man show called "do not let the door hit you on the way out here co tom: please,
francisco giants. a little bit more on that in the hour. brendan: two weeks ago i overheard the following conversation. a guy said yeah, the mets are doing well. the woman next to him said yeah, it is early in the season. tom: we will revisit young heston of the san francisco giants. brendan: the federal reserve bank of new york released new data on how likely americans under 40 will move in the next 12 months. they have been collecting this data for two years. it is the highest level since they began collecting the data. 35.7% of those under 40 will travel, moving out of their parents homes. that is a fun joke. what is going on here is there is labor mobility in the u.s. the most important thing is this trendy era that nice gentle
green up. tom: jim glassman, kate moore the younger are really doing better. kate: some of this is the mib report that came out. the candidate pool is limited. we heard that from a lot of our clients that run businesses around the country. we are not finding the right candidates in our geography. if the younger people are willing to travel and be more flexible in where they live, perhaps some of this bottleneck will be solved. tom: david rosenberg is saying this is coming. is it? kate: it is coming. i do not think we are talking about massive wage inflation but we are seeing tightening among sectors and industries. there is enough reason to be optimistic in the labor market to expect this data to pick up by the end of the year.
vonnie: do we know if they will go or come back in a certain period? kate: this connection is fairly recent. one of the frustrations with previous generations is that if you bought a home, you became wed to the county or state that you lived in. we want people to feel like they can change industries and change states. brendan: renting versus owning is important. a report said there is a real distinction between forming a new household and having the credit to buy a new house. there is a real difference. this is unemployment rate, new household, consumable goods. tom: it speaks to the spirit of the country. i had an offspring who said a couple of years ago who said
"dad, when does this get fun?" seriously, kate, it is about gdp. kate: newhouse formation has stayed very low during the financial crisis. we said it would take a while to recover. the question is, is this all part of the same data? wages picking up greater mobility new house formation. maybe that takes is north of 2% because we are finally getting more moving around. tom: kate moore. what do we have on photos today? vonnie: scientists identified structures that appear to be red blood cells in our first photograph. this is dinosaur bones dating back to the cretaceous period.
researchers at imperial college, london, studied bones from a theropods, a gorgas saurus, and a triceratops. are you a paleontologist on the side? tom: yes, i was. when you have children, you become a dinosaur after -- you become a dinosaur expert. so they do not know yet if it is dna? vonnie: they do not know yet. number 2 -- one of china's most famous stars has been sued for staring too intensely at the plaintiff through the tv spring -- through the tv screen. a supreme court official said yesterday it is a case of citizens abusing their right to lawsuits. [brendan laughs]
brendan: how do you pull this off? vonnie: ryan gosling does that to me all the time. brendan: if that is what you need to get through the morning, we will make that happen. vonnie: in new zealand misleading customers with milk bottle labels. in an effort to raise money for breast cancer research. the move is called disrespectful toward women, inappropriately on lining -- inappropriately aligning cows milk with breastmilk. tom: i just never understood it. brendan: if you have been part of a new family in the last 10 or 20 years, there is a culture that is very hard to get around. i will move away from that subject as soon as possible. coming up, how should you
tom: good morning, everyone. let's get to top headlines. here's vonnie quinn. vonnie: in texas, the white police officer caught on video pushing a black girl to the ground at a pool party has resigned. his actions were called indefensible. he is still being investigated. there is no decision on whether the officer will face arches. there is a report -- will face charges. there is a report that the justice department may charge general motors with making misleading statements and concealing information about the ignition switches. defective ignitions have been linked to more than 100 deaths. who are the highest rated ceo's in america? winners of the choice awards are chosen by worker feedback.
google's re: page -- google's larry page is number one. along with mark parker of nike. those are top headlines. tom: let's move forward into the next hour. we will be talking with bob nardelli about corporate m&a. first, cost-cutting with bob nardelli. we will take a digression and look at farming in the east. i think that is what they call it. it is a lot different than farming in iowa. also, the news making headlines across so many papers -- will american troops go as trainers to iraq, and specifically to ramadi this morning? summer is upon us. the fourth of july is three-plus weeks away. it is time to recalibrate into the early winter months which i
think means watching paint dry. kate moore's chief investment strategist and charged with crystal ball gazing. would you tell mr. dimon to take the summer off? is it just boring now? kate: i do not think the summer is nearly as boring as anyone would like us to believe. for the last four or five years, summer has been as an exciting place. we've had policy announcements, and i do not think this is a time to step away from the beach and turn off bloomberg. tom: we love that. continue. but the issue is that once again the street underestimated earnings generation of interesting revenues, clash flow -- cash flow generation. will there be another surprise in the coming months? kate: second quarter economic data will look strong. retail sales tomorrow -- some of the earlier indications that the
consumer has come back in strength in may. that would be important for the september liftoff and we get markets moving. we have not all been sitting on our hands. large-cap equities have been more or less flat. our view is that equities on the whole are producing solid returns this year, and we have overweight emerging markets in asia. still a lot of opportunity and a lot of things to watch. vonnie: and emerging-market in europe? kate: europe and japan. whether or not we want to use leverage in pacific -- in specific structures. brendan: one might have said that last summer as well, and then there was a surprise snap election in greece. what are your known unknowns as far as geopolitical risk? kate: we have a lot on greece in europe -- greece and europe.
this could be dragged out throughout the summer and we will not have clarity there. particularly with what kind of communication we get out of the fed this summer will be important to watch. whether or not we get significant policy adjustments coming out of china is another thing. they have been moving steadily on financial system reform as well as an additional policy stimulus. tom: we are now down to single digit 12-month return. you say, and other pros say, it is a single digit world. are we addicted to double-digit returns in this bull market? kate: i think some individual investors have been a little bit frustrated by the fact that the markets have not moved as aggressively, but single digit, solid returns are the way we should be thinking about the equity market. single digit -- high single-digit returns in the u.s. large-cap space will be better
than what we get in the fixed income market? vonnie: how active are your times, kate? in this time of environment -- in this type of environment -- kate: we have not been doing a tremendous amount of trading because we were well-positioned for this last move over the last six to eight weeks. we are always looking to adjust our individual allocations to reach across asset classes. clients are more opportunistic around areas of the market where they have been big sellouts. looking at opportunities that save more in the alternative. where they might get slightly higher compounding returns over the next few years. brendan: i want to bring up something you were fired up about in the break as we were talking about labor mobility for this new research in the new york fed. you brought up this op-ed in the sunday review, "why i defaulted
on my student loans." you did not default on your student loans. kate: i certainly did not. i made an effort to repay in short order after i finished graduate school. but we need to talk about the culture of debt in the u.s. in general. this should be part of the conversation we are having about how much dead -- how much debt we should be staking out. should young people be going to four-year colleges if they are going to be using degrees in a way that will not allow them to repay the debt? this goes back to a conversation we were having about millennials . should they be going to trade schools, or specialized skills? tom: is there enough umph to lift equity prices? because everybody is so far behind on what they need for retirement. is there going to be such a wall of money? kate: we have to remember that
in this year when equity prices in the u.s. are more or less flat, that we have actually seen ok earnings, and we have seen, i think, significant outflows into the u.s. large-cap asset class. we have seen big inflows to bonds. if people get more comfortable that the fed will liftoff in the second half of this year we could get that set of flows. tom: the headline we have not talked about -- "german 10-year, 1%." brendan: with the drumbeat of information we are getting from jpmorgan this week -- yesterday with michael feroli, today with kate moore -- do not expect things to be as as they were. kate: be optimistic. things are not mutually exclusive or it tom: kate moore, thank you. the focus on foreign exchange
r asia. the yen has depreciated 62% since 2011. u.s. negotiations with iran may hinge on the release from jail of a "washington post" reporter. how do you execute the exit of 50,000 employees? delicately with grace and dignity. good morning everyone, we are live from the world headquarters in new york. joining the is vonnie quinn and brendan greeley. the german 10 year through 1%. brendan: it is a good bet on the german economy and the broader european economy most as if greece doesn't matter. tom: we will do that with some mixed greece headlines. vonnie: the leaders of germany
and france are trying once again to break a stalemate. angela merkel and francois hollande will talk in brussels with alexis tsipras. greece is running out of money to make international payments and negotiations are getting nowhere. the greek government will not order the new austerity that creditors want. some members of germany's parliament are fed up. >> we want greece to stay in the euro very much. but greece has to come up with proposals which are serious. what they're delivering at the moment is not serious. vonnie: some lawmakers plan to break with the chancellor and propose more a grace. -- four greece. this after the head of japan's central bank said he could not see the currency falling further. it hit a 13 year low west week. the dollar is down 1% versus the
yen. it has fallen 11% since october -- the yen. since the record-setting monetary easing. president obama is considering a plan that would send several hundred more u.s. troops into iraq. there are 3000 u.s. troops there now. the militants have made big gains despite us-led airstrikes. a new deal is putting on a fight's valuation at more than $8 billion -- spotify's valuation at more than a billion dollars. that is more than double. it has more than 60 million users. king james wins again. lebron james led cleveland to a five-point victory last night. james scored 40 and broke the total scoring record for the first three games of the nba finals.
those are the top headlines. tom: a quick data check with futures up this morning. futures are up eight right now. looking at the euro the dollar weaker as well. the ball is in somebody's court. we are perhaps unsure which ball and which court. there must be a discussion on greece. hans nichols is in berlin. it seems like an off day but everybody is still working. what is the urgency? hans: urgency for the next 12 hours is will there be a meeting between alexis tsipras, metta merkel and francois hollande. mrs. merkel talked about a meeting and everyone was planning it, in the last couple hours it seems as though her up there hasn't been enough progress to even merit a meeting. it is only a disaster and a bad
sign. brendan: throughout the course of the negotiations, greece has had one test ally with of the european commission. is it true that she is a spokesperson for the eu saying the ball is in greece's court. as greece lost that friend? hans: it seems that they lost that allied last friday when tsipras gave that firebreathing speech after meeting with jean-claude juncker. he has always been that friend for greece trying to move the germans and the dutch. it seemed like that ended it over the weekend and now it seems worse because it doesn't even look like you -- like junker and mr. tsipras will be meeting. tom: i think we will be talking to you more about this through the week. the process of terminating 25000
and then brendan greeley turned to me and said i think it is something on the order of 50,000. talking about the restructuring of the hong kong shanghai banking company. robert has been difficult strategic decisions. brendan: since 2011 87,000. that is where we are at hsbc. tom: the carnage is tangible. we turn to bob nardelli. ge sat on the mohawk river in schenectady. you are proud. it was new york and it was america. you were the guy that ruined it. that is the way you felt. a lot of people said, you are faster, you are moving it -- you bastard, your moving it from schenectady to atlanta. how is that for you? guest: it was the greatest time.
when we stepped in their it was 12th out of 12 businesses and we went from last to first. we went from $5 billion to $20 billion. we did 15 acquisitions in 18 months. tom: but you left people behind. how do you fire people gracefully? what would be your cup of coffee with hsbc jpmorgan, deutsche bank leadership. guest: i would not use ge power systems because we added hundreds of employees in atlanta and greenville. steve bowles is doing that now to expand ge power systems that will help fill the hole created. where we really had to do it, it is more the numbers. i talk about having to furlough families. we had to furlough 35,000 families. it was a matter of survival to save another 40,000.
you have to do it with tremendous respect and tremendous dignity to do the best you can financially emotionally. work with them for reemployment. give them outplacement services. you have to be very thoughtful. these are men and women who have families like you, you are talking about college education, they have children. it is not a number. it is a gut wrenching decision. brendan: this goes to the heart of the debate in america. macroeconomists and ceos like to talk about net jobs. groups of families in city saying i am not a net, i still lost my job. guest: what we're seeing, recently talking about 100 of the top ceos is technology is driving tremendous relativity technology is not creating the
jobs we thought that it would create. tom: the vast proportion of our viewers look at technology as a substitute for employment. do you agree? guest: a recent survey done by ey, is the disruptive technology -- major acquisitions are taking place in corporations to drive efficiency, data collection etc.. it is not creating an equal amount of jobs in the tech industry. brendan: in terms of labor conditions, what has been the biggest driver? technology increasing efficiency or globalization? guest: many corporations rushed to growth areas like china. now we got caught with the strength of the dollar, so they did not have a natural edge on by versus sell. -- on buy versus sell. you look at what andrew has
done, creating a new chemical plant in the u.s. because of energy prices. we have to keep that going. that is a huge competitive advantage. if you think of the auto industry, labor is 10%. energy is a big cost. we cannot let this happen where we are shutting down rigs. tom: lots to talk about. we will focus on his generous electric as well. priya ms. are -- priya miser set were you set and said when the 10 year yield gets within 3% -- vonnie: 2.489%. tom: what do higher yields due to american business? guest: depending on the
industry, we just heard from jpmorgan, they are interested in getting higher returns and better interest rates so they can generate some benefits. for the corporations that have been on a breakneck track --67% of corporations are talking about m&a work this year. they need to buy revenue and grow earnings. tom: i love that phrase. let's come back. bob nardelli. a major theme of this year has been the idea of acquiring revenue. let's look at the twitter question of the day. blockbuster news from corona -- kuroda is yen weakness over? ♪
tom: good morning everyone. we want to digress. the legendary mark that men writing it up in the "new york times." east coast farmers, let's create more farmers. the question of getting land into the hands of all who want and deserve it has been plaguing the united states since reconstruction, when president andrew jackson rejected every effort to compensate armor slaves with land. completely switched today to a
national debate about land over the death of east coast farming. robert nardelli with us right now. iowa and all that with big firms and big corporations, you ran case tractors. everyone wants to own one and be cool. i want to do a brussels sprout farm, it is to of her to do because of land costs. guest: it is tougher but one of the major technological areas is informing today. you look at the engineering going into the seed crops. when i was doing it i was getting ap enny a bail. baling hay. it is very automated. john deere -- all of them making tremendous productivity. tom: it is an east coast idea.
not just about the land but the oceans as well. brendan: without access to water one of the things that is interesting is mark started up doing recipes then look into nutrition and then went down the rabbit hole and is one of the best writers we have on the economics of food. when we sell alfalfa to china, what we are selling is american water. it takes american freshwater to make alfalfa. we should be realistic about what we are selling when we produce crops. guest: one of the biggest issue in california is that farmers have free access to water and are not paying comparable rates that consumers pay. tom: we are dealing away from the farms on the east coast, you come out of the trades and there is that french agriculture where they have a completely different state of mind. brendan: that is about to change. one of the most interesting
developments in europe has been that they are lifting these agricultural caps. countries like ireland that have a wealth of pastureland and water can start to export. tom: are you getting this? brendan: whiskey. you brought them up. i have to get us into the next block. more u.s. troops may be sent to iraq. we had to d.c. to look at obama's new plan. ♪
music streaming service but it is already being investigated. the attorney general in new york and connecticut are looking at deals that apple made with cusick labels. and what to know if apple conspired or was pressured by apple. millions of flyers may soon be shopping for new suitcases. an airline group thinks that carry-ons should be smaller than current standards. they want to ease the crunch which would mean more sizes and passengers. those overhead bins are usually pretty full. >> i think there might be a conflict of interest in that advice. that is the airline industry group saying we do not think there are enough fees that we are able to charge. tom: i don't know. i find the whole thing a joke. every plane that i am on domestically, they are taking bags off two thirds of the way through boarding. brendan: the microeconomics of baggage fees. just the other day president obama spoke in a news conference
at the g7. he addresses the islamic state and the u.s. strategy to fight it. president obama: we don't yet have a complete strategy because it requires commitments on the part of the iraqis as well about how recruitment takes place. the details of that are not yet worked out. brendan: two days later the president is calling a new tune. he is considering whether to send more u.s. troops to train iraqi forces. there are already 3000 u.s. troops there. peter, help me understand one word. trainers. when we send trainers to iraq what are we sending? reporter: u.s. troops in u.s. uniforms who are training iraqi forces. the train and assist effort that has been underway for several years.
the notion here is that the president said even at that g-7 summit, training and equipping isn't happening fast enough. the troops who do get the training -- we want them to get more of it. that is the goal if they raise the number of u.s. trainers. brendan: a poll of an account of the back-and-forth within the white house, is it fair to say that something has been decided? reporter: the sense right now is that the white house has asked for these recommendations, and a decision is likely this week. you should be hearing sooner rather than later from this white house. the administration has been stressing that this isn't a change in policy. you will not see u.s. forces on the front line. they are intended to train iraqi troops so that they can continue the fight. this probably is unlikely to satisfy some of the president's critics, but the administration
says it will bolster an ongoing program. tom: 37 miles southwest of baghdad, what i note is that it is 254 miles from ramadi to mosul. are we giving up mosul and focusing on ramadi as a first step to a partition of iraq? reporter: there has been a lot of debate within the administration over what happened in ramadi. the iraqi forces clearly need help their. they need bolstering and a lot of the focus will be on the and bar province in the western part of -- in the anbar province in the western part of iraq. it does present a change in strategy in terms of which geographic area gets the most attention. things have changed. brendan: give me a sense on what is happening and capitol hill. what policy does the president have support to pursue? reporter: right now of course
the congress and the senate is debating defense policy on the senate floor. there is not a huge appetite on capitol hill for sending u.s. forces back into the fight. you will here from several lawmakers including john mccain, prominent republicans, more of a willingness to send u.s. troops in as spotters and advisers in the field when iraqi forces go into the fight. that is the debate right now. should the administration give the green light. brendan: what we are talking about right now. is this any rock strategy -- an iraq strategy or an islamic state strategy? reporter: i think what the president is talking about right now is dealing with the islamic state. training and dealing with people
taking on the islamic state in syria. that also has not been moving as quickly as they would have hoped. i think they are talking about a broader islamic state strategy. it is clear that they are worried about what is happening in iraq. the president met with the iraqi prime minister at the g7, and they want a solution in iraq. a political sushi and -- solution as well. they want mr. abaadi to encourage multi-sectarian efforts. tom: the president can unilaterally send these traitors to iraq? reporter: yes. i don't think that is an issue at all. there will be questions about the sheer numbers and there may be some blowback on capitol hill, but right now he is using the existing military. tom as you know there has been a push for -- tom: a terrific briefing on the
just because i'm away from my desk doesn't mean i'm not working. comcast business understands that. their wifi isn't just fast near the router. it's fast in the break room. fast in the conference room. fast in tom's office. fast in other tom's office. fast in the foyer [pronounced foy-yer] or is it foyer [pronounced foy-yay]? fast in the hallway. i feel like i've been here before.
200,000. the new normal. his outgoing is 75,000. vonnie: he talks about demographics and how that is how we will end up. it is a little bit depressing. global growth and u.s. growth will be stunted. it could be the new normal. tom: the basic idea here is technological process -- progress. you see the rollover of the transportation index which has come over recently. bob nardelli with us. are you a believer in the famed nardelli theory? if nardelli rolls over, that is not good? guest: that is not good. the transportation index, you talk about it as an early indicator we have seen it go down over the last couple of
periods. coal has gone down. they tried to substitute that with oil. the energy thing has gone down. you look at automotive coal oil. a lot of indicators. tom: the bottom line is, when things get good. capacity comes on in auto. capacity in airline and trains. are we repeating history? guest: i think we could be. you look at the auto industry it is up around 70 million. -- 17 million. tom: go to another factory. guest: i don't think they will. if you look at delta probably one of the best run airlines their capacity and their revenue per seat is down a little bit. tom: i sit at laguardia with the surveillance call stream and there will just be more of them. guest: i have my own plane but i
share it with 300 other people. [laughter] vonnie: what do you see as the long-term rates of growth in the u.s.? guest: i am very disappointed in the first quarter. i don't think we are doing enough to get the gdp back where it is. why are we letting the energy sector fall? it is one of the greatest job creators. best tax revenue. tom: i promise we will come back. let's get to our top headlines. vonnie: leaders of germany and france intervening again today in the greek debt crisis. anglo merkel and francois hollande looking to meet in brussels with tsipras. talks of bailouts are getting nowhere. a german newspaper says that some lawmakers plan to break with the chancellor. the u.s. index slider is not
adding china's mainland stocks to the benchmarks. chinese authorities want and msci endorsement. msci says it will work with regulators on remaining obstacles. among them, the quota global investors face on how much second by. bloomberg asks white limits are needed. >> from a government perspective and a regulatory perspective quotas are there to regulate the pace. but maybe ultimately, it will be removed. vonnie: msci says the decision could come at any time. whispering a few words in a chicago courtroom, dennis hastert broke the silence about the charges against him. he pleaded not guilty yesterday to breaking banking laws and lying to investigators. federal officials says he was paying someone he molested to cover it up.
someone jumped the gun at target and an announcement about a dividend increase was posted immaturely. it quickly vanished and later target actually did boost the dividend by nearly 8%. rookie haseston gives the giants a no-hitter last night. only his third big-league start. tom: i got torn to shreds because i did not give enough love to the story. this guy was drafted last in baseball. 47th round said no. 29th round he said no. he finally went in the 12th round. this is like the kid for harvard playing for the tampa bay lightning. it is great to see him turn a aaa career into a no-hitter. equities, bonds, currencies, commodities. bonds in fx matter.
the german yield at 2.5%. 1.2 314, a stronger japanese yen as the head of the japanese central bank kuroda says that is enough. brendan: this is bloomberg "surveillance," i am brendan greeley with tom keene. jason has been detained for almost a year now. it was not completely clear what he was charged with. we now know that it is espionage. he was the washington post to ron correspondent -- tehran correspondent and may now be a hostage. his brother joins us from the bureau in d.c. what was the alaskan indication your family had with your brother? >> my mom was able to see him the other day right after the trial. he is happy it is moving along. but he knows he is innocent. brendan: is your brother part of
a larger geopolitical game? is he being used as upon or with this arbitrary -- as a pawn, or was this arbitrary? >> right now we think it is arbitrary. whatever you call it doesn't matter. he is innocent and it is unjustified. brendan: you grew up in marin county. your father grew up in iran. what is your family's relationship with the country? >> my dad left iran when he was 19 to san francisco. jason never went there until he was 25 years old. my dad chose to live his life here from the 1950's on. that is where jason grew up. this is what they do to him. it is unbelievable. tom: i look at what your family -- usually attached to this from the united states government. i go back to the emotion of the three journalists jailed in
cairo -- i know this is a different story, what would you like the secretary of state and the president to do? >> they need to make it really clear that jason will not affect the upside on the deal going on. he has nothing to do with the u.s. government or any government at all and that this is completely on acceptable by any international standard. brendan: can you tell us what is happening now in the trial? he has representation but it does not seem to be adequate? tom: it is not an open trial? brendan: how is it moving forward? >> they closed the trial. it is illegal for anyone to talk about what is going on. he has a very good lawyer, but by a radiant law he should have access to three attorneys and he doesn't have that. we wanted them to have english-speaking attorneys. and the most copper hence it defense possible but they have -- most comprehensive defense
possible, but they have been limiting that without access to family or anybody. brendan: your family story is extraordinary. your brother returned to iran to understand it better as an adult. help us understand. what is america's relationship with the irani and people -- iranian people? >> i am not an expert on that but as jason said, people on the streets love americans to i have been there once or twice and they want to know how it is. there is no animosity with the people. that is the story jason wanted to get out. he wanted people to know what it was like for regular irradiance and not the trite things that you see on tv that paint the whole country with a brush. vonnie: any idea how long the trial might last? >> right now we are expecting it to be several days but they keep dragging it out.
we have been having one day and then a week long or two week long delay to our hope is that the next day of the trial will be next week and at that time we are going into ramadan. we are concerned that this needs to move along quickly. brendan: how frequently are you talking to the state department? >> as necessary. we are usually in contact once or twice a week unless there is something we want to talk about more urgently. brendan: his brother jason is detained in iran's prison. what you're going through is extraordinary. tom, i was struck by what he said about his brother that his brother wanted to get the story out that people on the street love americans. tom: i have heard that time and again, what is your key take away? brendan: that it is clear that he is a part of the ongoing negotiations. he is clearly not a spy, he is part of what is being used in what we have seen. tom: this is must watch and must
the 10 year yield on the watch. 2.48% this morning. brendan: it is not your diet, it is your genetics. sanofi and others for their cholesterol lowering drug. we are about to stop thinking about our cholesterol. >> more bacon. brendan: bacon over brie. dr. ja oberg will be with us -- dr. jay adelberg will be with us this morning. it is groundbreaking stuff what they are doing it sanofi and regeneron and what and jen is doing -- angen is doing. you have heard about this alone people to live much longer who are at risk of heart disease because it lowers cholesterol. the problem with staten is that
they are not perfect and even when you are taking it, made up reduce enough of your bad cholesterol and so this class of drugs developed from genetic the two real -- very expensive stuff. $10,000 per year. finally coming to market and it one the backing -- won the backing of an fda panel. it creates a potentially enormous market opportunity. before lipitor went off patent, it was a $9 billion per year drug. that in theory is the potential market size. brendan: there is such public confusion over what causes public kilis -- bad cholesterol. will this clear it up? i don't think -- >> in one case or at least a
specific case, there are people who have a genetic condition -- i have to read it. hypercholesterolemia. in that case, this drug is the ideal treatment. it also works for other people. what they have not been able to prove yet, is whether it demonstrably extends life and limits heart attack. tom: bob delly -- robert delly, help me. -- bob nardelli help me. i've been through three cycles of cholesterol theory. can i eat eggs? >> this is a real question. guest: i think it is like everything. moderation. what i have found in my diet is that if you are thoughtful and conservative and moderate, even
if you have a genetic heritage for high cholesterol, you can control it. the lipitor and the stetson helps take it down. brendan: hopefully "market makers" will include less conversation about tom keene's diet and more about the market. is the yen weakness over? kuroda speaking yesterday in the parliament driving that price back up.
tom: let's get to our top headlines. vonnie: two people are dead after a suicide bombing at an egyptian tourism site. an official says five people were wounded and police of a kilt two suspected islamic militants. general motors could reportedly face wire fraud charges over its faulty ignition switches. the wall street journal says federal prosecutors hid information that made misleading statements. more than 100 deaths are blamed. and who are the top rated ceos.
named number one google's larry page of nike comes behind. facebook's mark zuckerberg rounds out the top five and the survey was conducted by guest door. seems like younger ceos. there it is. let's double barrel this with bob gardella. we have news -- bob nardelli. we have news on his chrysler and ge. it is -- everyone wins. bob nardelli and i have heard that before. the brazilians by america's iconic catch up. living on the edge of synergy and yet it always ends badly. bob nardelli, are we there yet? guest: there is a frenzy.
money is relatively cheap. corporations are desperate for growth. driving earnings-per-share are nation of stock buyback and acquisitions. 76% of the corporations are going to do an acquisition in the next 12 months. tom: how will this end? guest: there are two points. ending ugly. if it is, that it is a huge competitive advantage. if you think that you are done when you close the deal it will end badly. tom: that brings us to a different kind of merger. a chrysler fiat, i guess gm. you have had this conversation before? guest: we went through this during the bankruptcy period and 2008 and two to nine.
we put on the table part of the viability plan to geithner and steve ratner and the whole group. we showed a $10 billion productivity improvement. we were not talking about illuminating labor, we were talking about eliminating overhead. taking two truck plants putting it into one to run two shifts so now you're getting 150,000 in the south. it would've allowed gm to not spend money in developing a new silverado truck. tom: the government bailed out detroit so fiat could make and lot of money tossing chrysler to gm. guest: the greatest american giveaway. brendan: fiat is making a lot of money selling jeeps. guest: seattle is not making -- fiat is not making a lot of money. chrysler is making a lot of money and subsidizing fiat.
tom: bob nardelli gets pumped up on this. vonnie: given that we are in this state, what is wrong with a merger in the auto industry? guest: the idea that sergio is putting forth is not a new idea about capital redeployment. it is a good idea. we proposed it in 2008-2009. right now, she does not need an acquisition. she said the other day, they have their own m&a activity. vonnie: what about ford? guest: why would you take on something that would be diluted to your earnings-per-share if you don't get margin? four doesn't need it. we talked to carlos ghosn. i'm not sure he wants to take on another acquisition in europe when that market is depressed. brendan: isn't part of this abet on america's love of trucks and who has the best light trucks?
guest: the best thing that happened for the auto industry was fuel prices dropped. what we saw were trucks up 40%. they love it. the auto industry loves it because the margin is so high. the problem will come with the cafe standards. you will not meet -- tom: i want to go back to the emotion that got you to jump out of your seat. we bailed out detroit, everyone has an opinion. steve ratner did the best job that he could. fiat took over chrysler. is sergio getting an option on that auto bailout? guest: let's face it. they did not pay back the money that we put in as taxpayers. they got a company that was totally restructured. we sold $1 billion of assets and took $5 billion of cost out. we had a company with no
accounts payable and no liability and 3000 dealers restructured. tom: is it appropriate to say at the expense of the taxpayer? guest: totally. brendan: did we know better at the time? guest: yes. the issue was a political issue. tom: we were in the radio studio and a leading m&a transaction guy was physically shaking like this, he was so angry. for those of you on radio iron shaking my hands around. it looks the same on radio. there was a lot of emotion. guest: they did not want to take a political risk of taking two out. we will focus on gm, if chrysler fails it is a fiat problem. vonnie: what do you make of the current ge? guest: i think that jeff is making the right decisions. keith sharon is brilliant. the transactions are faster and
sooner. jeff looked at the reality and said, i don't want to spend $1 billion on legal fees. i don't want to add 5000 employees. he is switching to industrial. his ratio will go up. he is making the right moves. brendan: how could you not be happy? guest: steve bowles is a great young man and he will do a fantastic job. tom: can i go? vonnie: we have to get you off to radio. we will and fact answer the twitter question of the day. thank you for sending in those tweets. our twitter question of the day was is the yen weakness over? maybe for now, about once investors see japan's economy for the ticking bomb that it is, today's weakness will feel like strength. a mass sort of -- brendan: i did think it was
interesting what willie pesek from bloomberg said earlier. we call it of a non-mac's, it is -- we call it a banalbenomics it is really kurodanomics. vonnie: weakness in yen will be over once the boj stops. brendan: i defer to willie pesek. this is a wink and a nudge. we have the current program, but we do not have any new plans. vonnie: it over cells and they must reinvest those dollars here and that makes us the winner. brendan: my agenda for today is starting out with the yen. we have not been watching japan for a while. it is back in the headlines because of what kuroda said in the japanese parliament. we're sitting here waiting for
fiscal policy to happen now that they have had monetary policy for a year. guest: it adds tremendous complexity to running a corporation today more than at any other time. the geopolitical issues. the level of complexity is a multitude -- brendan: i'm glad i am sitting here talking about monetary policy divergence and not hedging against it. speaking in milan pointing out that italy is russia's biggest trade partner in the eu. he believe the lawn and go talk to the pope -- he will leave milan and go talk to the pope. i cannot wait to see what they say. vonnie: betty liu, will be speaking to former president bill clinton at 2:00 p.m. eastern time. you can see it on bloomberg television here and on bloomberg radio. brendan: bob gardella thank you's -- bob nardelli thank you
ahead of this step for a new drug that could prevent heart attacks. stephanie: a mere $25 billion in advertising is up for grabs. we will speak to the executive in the middle of deciding where all of those go. erik: but would you worry about if you are running america's second-largest company -- the ceo of chevron, john watson. greece tops the agenda once again. looking to leaders of germany and france. angela merkel expected to meet to talk about how greece may get more money. greece is running out of time and money to make international payments. the problem now is how greece will perform in its economy.