This is "bloomberg surveillance." they will be targeted and precise in their actions.
The president sends 300 advisors into the maelstrom that is iraq.
Changes to house leadership.
Should you make changes to your retirement plan?
The dow approaches 17,000. good morning, everyone.
This is "bloomberg surveillance." it is friday, friday i say.
I am tom keene.
Joining me, scarlet fu and adam johnson.
Adam johnson gets to a brief morning brief because it is summer.
Tomorrow is the longest day of the year.
Make sure you make your plans accordingly.
Britain's budget deficit is a little changed.
The subtlety is that the tax receipts rose slightly as the uk's economy improved.
This is the success economy among the g7. correct.
It is like the greatest story never told.
Summoning people working part-time because they can't get full-time jobs, but if you dig down deeper, there is improvement there.
No economic data here in the u.s. next tuesday, we are going to get a ton of data on housing.
That is probably the best read, i would argue -- we will be talking about housing a lot today.
We have carmax and garden restaurants.
Summer starts tomorrow.
Make plans accordingly.
Watch the world cup.
I don't know anything about it.
We have the u.s. on sunday.
U.s.-portugal on sunday.
Are portugal's stars not playing,, right?
Were null the?
Are you spreading rumors here?
I am still in mourning over the red sox.
I am in mourning over the rangers.
How about a data check here?
Futures are up fractionally.
The market is grinding up, trying to get to record highs.
Oil is the story, story, story.
The vix shows an equity market performance well under.
There is a touch on brent crude.
Gold advances again.
This as the challenges in iraq.
There is the pound-sterling.
Let's go to the monitor.
We look at the bloomberg terminal to get you the story on oil.
A gallon of gas.
Brent crude, we're bouncing up against 120. do we go through 120? you could get five economists to give you seven opinions.
You have the technicals.
Look at what is happening in iraq.
Yesterday, we were talking about the possibility of the terrorist taking the largest refinery.
They didn't. a lot of perspective here.
Right now, we have scoured the newspapers and the webpages.
Here is the front page with scarlet fu.
President obama sending 300 special operations advisors to iraq who will be helping the iraqi army fend off the sunni militants.
The u.s. is basically hoping that they will buy some time for iraq to form a new government, one not led by the current prime minister.
They hope that the government will be a little more inclusive.
It is so hard to try to bring the sides together.
This goes back to 700 a.d. it is something we can barely understand in the west.
It has been out there for years.
Everybody can read up on this as they choose.
The basic story is we have got to get to monday, we have got to get through the weekend.
To be careful here, we had 200 troops going to protect the embassy.
275. these are new advisors.
President obama said the u.s. does not have the ability to solve this one by sending in troops.
I run troops fighting the war on the ground is not an option right now.
President obama used the term mission creep.
300 new advisors.
575. that is creep.
Listen to the analysis of the tension.
We have to get to the sunday talk shows, let alone get to monday and were oil can be at that time.
There is a little less tension among the house gop leaders.
We have new leadership there which could make it easier for john boehner to keep his speakership.
Kevin mccarthy will replace eric cantor.
We wonder if they're replacing like with like.
He is a moderate, as was cantor in some ways.
You have to get something done.
It is a statement more about the tea party not being able to get traction.
Finally, a corporate story.
The battle over alstom continues.
Siemens, mid to be cheap hitachi raised their bid.
-- mitsubishi, and hitachi raised their bid.
Thing that increased their bid.
-- they net increased their bid.
They also shifted some of the stock into cash, so that the cash component is about $1.4 billion.
A golden share.
The heart of this is that ge is not capitulating, but is aware of the sensitivities of the french about nuclear technology.
That is what ge is doing.
They are adding a line to nuclear technology to sweeten its bid for alstom.
Jeff himy -- jeffrey immelt will be meeting with the french president later today.
Nuclear steam technology.
I thought it had a veto anyway, regardless.
Here is a surveillance break-sclusive.
Jeffrey immelt will root for france this weekend.
The founder and chief economist at pantheon will join us.
Also joining us, the deputy chief advisor at pimco.
Wonderful to have you both.
Do you have any comments on ge-alstom, any unique wisdom?
Remember, i am french and american.
I am a bit more neutral on the french perspective.
What is happening are those assets are very important.
If you look at demand for power over the next 40 years, demand will grow by two thirds, which is absolutely extraordinary.
This is the battle of those assets.
Of course, you are dealing with the french government, which tends to want to do things a little bit differently.
I think they are trying to get the best price while remaining or retaining the power they can on jobs.
That is really important to them.
I think many of us know that nuclear energy and technology is a new -- unique feature for france.
Explain to us what jeffrey immelt will convey to president hollande about the understanding of respecting a nuclear france.
That is really important.
A new policy has been laid out over the last couple of days were france wants to reduce the total electricity generation of nuclear.
A lot of countries are trying to increase because of the need to be competitive in a lower carbon economy.
France wants to try to support other lower carbon review -- renewables.
Some to get the rosetta stone out.
Save me here.
[laughter] if i understand the numbers correctly, france gets about 70% of its energy from nuclear sources.
Why would france want to give that up and go more toward carbon or wind, which is hard to make economically viable?
This is part of the new minister's -- and i believe it is under pressure from smaller parties in france toward renewables.
I'm not saying this is bad.
It is sort of out of whack with what a lot of other people are doing.
People are going toward nuclear, given the lower carbon footprint that you have.
It also is that it is so large that it might make sense to diversify.
You might want a little bit more balance to rid -- balance.
This is valuable perspective.
Ian shepardson is with us.
Christine lagarde earlier this week meeting with bill gross on a slower 2014. do you believe in the new neutral and this incredible caution witnessed by the imf toward economic growth?
Can ian shepardson be more optimistic?
I am much more optimistic.
I understand the relative pessimism.
That is all because the first quarter was dreadful because of the winter.
The winter is long gone.
The short-term indicators have picked up quite a lot.
I would not be surprised if things were actually a little bit better than indicated.
In the same time, in the u.s., we are seeing inflation pick up a little bit as well.
The markets and the imf may be on the wrong thing in the fed may be making a by a bit as well.
We will talk housing year later on bluebird surveillance bank." i know, it is friday.
Bank of america will have to face that lawsuit about mortgage backed securities.
A federal judge cleared the way.
Bank of america is accused of misleading investors.
Discount change family dollar not responding to carl icahn's call for the company to be sold.
Carl icahn controls 9% of the company's shares.
Bargain hunters may go after american apparel.
Shares rose 22% after the ouster of the controversial ceo.
They have not had an annual profits and spec in 2009. -- an annual profit since 2009. as we learned yesterday, house leadership has chosen -- i should say the house republicans, kevin mccarthy as their new leader.
He is a former sandwich shop owner from bakersfield, california.
What is he going to accomplish in this new role?
This leads us to the twitter question of the day.
What does the gop leadership change mean for 2016? this is "bloomberg surveillance." we are streaming live on your tablet, your phone, and bloomberg.com.
? good morning, everyone.
A bloomberg television.
Later today, the chief marketing officer at yahoo!
-- 9:00 a.m. good morning, everyone.
This is a friday edition of "bloomberg surveillance." i am tom keene.
With scarlet "one foot out the weekend" fu and adam johnson.
[laughter] both feet out the weekend.
Let's get to the house leadership.
Kevin mccarthy will be taking over for eric cantor come july 31. joining us is phil mattingly.
To what extent does the election , elevation of kevin mccarthy heel or widen the risk -- risk ft in the gop?
Everyone is very surprised.
Leadership elections are historically very bad for the party.
A lot of blood on the floor.
This ended up with good unity when it was all said and done.
In the short term, the republican party feels good about getting out of this unscathed without causing more big problems.
In the grand scheme of things, there is a core group of 40 or 50 tea party guys who were not happy with eric cantor and they will not be happy with kevin mccarthy.
There are a lot of issues that could cause major splits as the go forward, at least on the legislative side of things.
The number three cut -- spot got a standing ovation.
Why the enthusiasm?
The most shocking thing of the last three days was steve scalise.
He was going up against an established guide.
Steve scully's killed it in his ability -- steve scalise killed it, without mincing words.
There is going to be tension on the leadership side.
But i think you did an excellent job in terms of getting people behind him for this vote.
He is from the first district of louisiana, he is a disciple of the governor of louisiana.
What is his support within the tea party?
Let's be direct.
Is he a key party type?
-- tea party type?
I don't think he is part of the group that wants to burn the whole thing down.
He has been head of the republican study committee, which is the core conservative group in the house.
He has worked well with leadership, particularly over the last year.
He worked very well with eric cantor.
This idea that he is the kind of guy who was going to shut the government down -- is he more in line with them ideologically?
Yes, but he is a worker and he understands that things do need to go forward.
I don't think this idea that he is majorly problematic is an accurate one.
I think you are dead on, phil.
What fascinates me is a roman catholic from louisiana in a party within evangelical fascination -- foundation.
Look, i think it all goes down to retail with steve scalise.
He has not been in the house very long.
His ability over the last nine days to get people behind him -- he pulled all of the right leverage.
He was texting within an hour after eric cantor lost, starting to whip support.
He had a big dinner at his louisiana soul food restaurant.
He gets it in terms of how to deal with members.
He is a short termer in the house.
This is a big deal.
The food behind the leadership battle.
Put this into perspective.
Does the new leadership but the party in a stronger position heading into the 2016 election?
I think 2015 is still an issue where you will have debt ceiling debates, government shut down possibilities.
Those are always on the table.
This current leadership is not going to put issues on the stage in the next six months.
I don't know if they will move quickly to put them on the table in 2015 -- i am pointing primarily to immigration and things of that nature.
Will put them in a better position in 2016? it is tough to say right now.
For 2014, they're not going to do anything to severely damage what looks like a very good year.
Does that help them in a national campaign?
I think that is unclear.
It does not look like there will be a major shift.
Phil mattingly, thank you very much for giving us a brief on this.
We will continue this conversation on the future of the gop with our next guest.
He is the guest host of the next hour of "bloomberg surveillance." he is a republican.
We are on bloomberg television, streaming on your tablet, your smartphone, and bloomberg.com.
? good morning, everyone.
"bloomberg surveillance." it is 1299 feet above the atlantic ocean.
It is real, waking up above sugarloaf mountain in brazil.
Every day, this is cool, even for someone like me, who does not get soccer.
By the way, just as with sochi, where everyone was focused on whether the thing could get done, once we started playing the games, we focused on the games.
That is what we are doing in brazil.
The colombians are doing this.
That is they samba.
You've got the moves.
Tom keene on a friday morning.
[laughter] here is scarlet fu.
How europe's past and present could serve for a model of the middle east.
He says that most of the middle east's problems require regional answers and no single country can solve the problems on its own.
He is hugely respected.
Can the politics that we witness in iraq fold over into our investment markets?
We are seeing a world that is quite constructive for risky assets.
The fact that on that path, we could have external pressure in the world of low-ish growth.
What is happening in the middle east in terms of geopolitics is at the core of this.
We absolutely must pay attention.
One of the air pockets -- i will be blunt.
They don't agree about the next 12 months.
That makes for an interesting conversation.
This will pivot on housing, as well.
The federal reserve worried about the state of housing.
It is in the spotlight next.
Will it disappoint?
We will discuss write your own "bloomberg surveillance." ? the skies are gray and leaked over st.
It is in england in morning.
They need churchill at this moment to explain the loss.
It is london, england.
This is new our new head -- near our new headquarters.
This is a stormy friday.
They could still a vance to the next round.
A lot of things have to fall in place for that to happen.
It is "bloomberg surveillance ." i am tom keene with scarlet fu and adam johnson.
This is just a quick data check.
There is a movement in the vix.
Oil is elevated.
One third of americans under 30 are still living with their parents.
Unemployment is still at 11% for 20 roles.
We are joined i ian shepardson and pimco cio virginie maisonneuve.
Do the low rates actually help the housing market in new -- in any way?
I think will be less plausible over the second half.
We are seeing some emerging inflation pressure.
We have some clear evidence of margin building.
We have costs offsetting in the business sector.
We have a clear and present danger of accelerating wages.
I think markets are going to become less and less convinced that the fed can hold rates.
Long-term interest rates and mortgage rates are going to rise again.
We have some economic data coming up next week.
You don't have a lot of faith in the numbers.
It is hilarious.
That is joe.
Every other indicator says the market is slow down drastically.
We had the biggest deterioration in housing affordability in more than 30 years.
That is why we saw a big drop in home sales.
It is taken the wind out of the pricing numbers as well.
It makes no sense.
Let's adjusted for inflation.
Let's call it the real home price aaron this is in today's dollars.
We are way up before that in 2014. i think this is the idea of a wealth affect versus income effect.
What psychologically is the affect of an event -- diminished home price?
The hit was enormous of the time that happened.
All that was funded through home equity withdrawals.
It is gone.
Home equity lending is still shrinking every week according to the fed's data.
We are relying on faster payout roles of need wages to pick up.
In our investments, do we have a wealth affect?
Do we feel better?
You are putting it in the right perspective.
A lot of places there is a gap doing rich and poor.
It is at a very high level.
You put that into longer-term pressure that we have, they have pockets of growth in the economy.
There is a lot of liquidity which means risk assets are being supported.
They are containments.
When you look at affordability, i think we will be in this sort of narrower range of growth.
We will have a very high debt.
Did you see how she mentioned new neutral twice?
I want to point this out.
That is the thesis.
You guys were the new normal.
You downgraded to the new neutral.
That is 2% gp the -- gdp for a long time?
A lot of slack in the global economy.
The world is in a multispeed mode.
During the crisis, everybody was working together trying to get the shipwreck avoided.
Now you have the u.s. at the front of the line.
You could with the u.k. in the same place.
That is a very good example.
Then you have europe putting in qe.
You have japan in the next few months going to talk about qe.
China is the second largest economy in the world and they are in deceleration.
They should still get 5% growth.
We have headwinds between politics in china with anti-pollution.
We all know that 7.5% growth is going to be hard to achieve.
This is putting some headwinds in the world otherwise recovering and healing.
We have pockets of strength like the u.k. doing well.
The u.s. has a pocket or strength as well.
I know that after the last report in april, will it be a net drag on the growth?
It could be a drag easily.
If long-term rates have to rise, mortgage rates will go up and that will push housing back down again.
Housing construction was 3% of gdp.
90% -- 97% of the economy is not housing.
We can live without it.
Last time everything was focused around this crazy housing boom.
They don't have to be.
Some countries do.
In britain every cycle is a housing cycle.
Then go right to that.
We will look at this from an economist viewpoint.
Does that mean use of cash appropriations has changed away from dividends and spending money to create jobs?
I am looking for action the small business sector.
That is not where the action is going to be.
What we have instead is a seven-year catch up where the small business community did nothing because they could not get any credit.
The banking system is putting as much credit into small businesses.
It is a big turnaround.
Frank keating is joining us in the next hour.
We have these guests for the entire hour.
Coming up, bloomberg rankings came out with a list of the biggest over and under achievers in the world cup.
You might be surprised.
We will tell you who came on top.
This is "bloomberg surveillance.
It this is a beautiful friday morning here in new york city.
We'll be right back.
? this is our twitter question of the day.
What is in the republican leadership mean for 2016? this is house leadership.
The what does the new gop meeting -- leadership mean?
This is "bloomberg surveillance ." this is the final day of spring.
Adam johnson and scarlet fu are with me.
I am mixing it up a little but -- bit today.
The united states was to buy time for iraq to start a new government.
Things are very threatening right now.
Air pushing iraq to include more sunni muslims of the government.
New york will become the 23rd state to legalize medical marijuana.
The deal was approved to be used for cancer and other diseases.
The deal does not allow pot to be smoked.
It should only be used in food.
And vaporize into oil.
Isn't that curious?
English fans had nothing to cheer about.
Uruguay beat england leaving them on the break of illumination.
They could still advance, but it will be very hard.
Mathematically, not impossible.
Now we are talking about odds.
They are slim.
Let's stay on topic.
Our chart is on the world cup dream we are focusing on rankings looked at the biggest over and under achievers in the world cup tournament.
You might be surprised to came out on top.
We put this one together.
Bachus to this.
What we see our fee for points --fifa points.
These are the countries that are in the world cup.
There are points repopulation.
We really wanted to get more complex.
We looked at research that soccernomics did.
If you did a linear regression, gdp per capita and population and experience in international games, there is a different group of over and under achievers.
Is really interesting note is england in particular.
They focus on why did they always lose.
The demographics on the working class population has shrunk because the middle-class has grown so much.
They only recruit unintentionally through working-class people.
In shepardson joins us.
The you buy this idea of a class structure?
English soccer is a working-class game.
The demographic has changed in there are other problems.
Fantasy the game played at one million miles per hour.
The world cup games and not play that fast.
We have never made that tactical adjustment.
We come to the world cup and everybody is making little short passes and we can't compete because we don't do it.
That is with the spanish and dutch are really good at.
It is an inside game.
There are short passes and holding possession and thinking more about it than just learning on the job.
It should be more intellectual.
Can i ask a dumb question?
Is world cup better soccer then angus premier league soccer?
You are talking to 70 who doesn't really watch it.
It is different.
I love the mayor league and i am a season ticket holder.
I fully understand the red sox.
We haven't won anything since 1969. that is more recent then england's world cup.
It is a different game of the world cup.
We find it difficult to adapt going for what we play on saturday to what is being played in brazil now.
I still have result winning.
The host has a huge advantage.
I have argentina because i like their uniforms.
I can take 50 years of misery.
Thank you so much.
We are going to go through our top photos.
We want to start with number three.
This is the international human rights group demonstrating for indian at workers kidnapped in iraq.
This is not made it to the surface.
Ordinary people in iraq are being caught up in this.
You don't hear a lot about this.
We wanted to bring that to you.
This is much more nuanced and complex than just teammate against team b. we don't know enough to know.
We think of it as sunni versus shia and it is so much more cap look into that.
Our number two photo is in north carolina.
The youngest player ever to qualify for the women's u.s. open.
She ended at eight over par.
She is 11 years old.
Is that incredible?
She looks like an 11-year-old.
There was some criticism.
I love it when she was holding a popsicle when she was talking to the press.
What is your take?
Younger and younger.
Gymnastics is going younger and younger.
I don't have an opinion.
She started playing when she was six.
40-year-old and 50 or older complaining about this?
I don't know the details other than it is very cool.
Our number one photo is clint eastwood and the cast of "jersey boys" taking a selfie.
This is during the los angeles film festival.
This is an adaptation of the broadway show.
Have you guys seen on broadway?
I have not.
I am told it is pretty good.
Is the history of frankie valle i? i have not seen it.
I have seen the publicity for the movie.
It was a broadway play statistics.
Let's talk about what is coming up on "bloomberg surveillance." rates will remain low.
We will speak to our guests.
This is "bloomberg surveillance ." we are streaming on your smart phone, television.
? this is "bloomberg surveillance." i am scarlet fu with tom keene and adam johnson.
Shares of oracle are down 5%. profits missed analysts estimate.
They try to remake the company as a cloud computing provider.
The japanese company that wants to buy team -- t-mobile called the wireless industry would've the least satisfactory in the world.
They paid $22 billion for sprint.
They are close to buying t-mobile.
Apple will offer multiple versions of its smart watch being offered later this year.
It will come in different screen sizes.
It will have more than 10 sensors.
That is the news from "bloomberg west." it is a great distortion.
It has been reaffirmed by the federal reserve and other central banks for that matter.
Forced investors are into risk.
Virginie maisonneuve is at pimco . mostly she is running as fast as she can.
Has it ever been hard to invest with all the central bank dynamics that we see?
You have a distorted world.
The key thing is to understand that the central banks want to make her that things are ok before they normalize.
That is really important.
From a stock perspective, the world is not bad.
You have rates that are relatively low.
Even though growth is lower, you don't want market exposure.
You want strategies.
The way i look at the world is lower rate, you wanted dividend strategies.
You want some roast at a reasonable price and you want quality stock.
I think you really want to have part of your strategy in capital preservation.
If you have all of this structure, you will do well.
The key mosaic is executive management.
They don't read like they did six years ago.
They have meeting after meeting.
What is the distinctive feature of new corporate damage meant generating cash and raising dividends in this world?
There is a different style and strategy of the equity platform.
We look for different things.
We want growth at a reasonable price and looking for sustainable growth.
That is born.
This is not the absolute growth in it is what people expect.
From that standpoint, i look to look at long-term themes beyond the three to five years and compete in the lower economy.
We need to look at the emerging markets as it affects the middle class.
There is so much happening.
If you look at the market, only 35 million people created economy of $6 billion.
How come she looked at me when she said the 80-year-olds?
She said of the dementia market.
I would be the cholesterol market.
I have my own issues.
I like the idea of growth in a reasonable price.
There is not a lot of value out there.
I think it depends on what you look at.
If you are able to participate when there are air pocket, the two air pockets i see are oil and china data.
There will be some volatility.
Be patient and long-term.
Pick up stocks when things don't look that good and be prepared to sell them.
Ensure that you are very fundamental in your analysis and talk it -- target price.
You are seeing quite a bit of that.
I think that will continue.
The key things for europe are small-cap and access.
Small-cap is still starved.
We are going to help with that.
You still have competing forces of micro-regulation and demand for loans from the bank.
All of this means it is going to be exciting.
We hope will be exciting.
Thank you so much.
Thank you so much and deadlock -- good luck.
Let's do the report right now.
I am looking at y in sterling.
Frank keating will be our guest in the next hour.
He is the former governor of oklahoma.
? the president sends 300 advisors into iraq.
Republicans make targeted changes to leadership.
Rex ryan of the new york football jets looks forward to a six season.
How does he keep his job?
This is "bloomberg surveillance ." it is friday, june 20. i am tom keene.
Joining me is adam johnson and scarlet fu.
Our guest is frank keating of the american bankers association.
We are talking about the u.k. and we're not talking soccer.
Britain's budget deficit was flat in may.
That is in part why the bank of england is saying rates are likely to go up sooner than people may expect.
No economic data in the u.s.. on monday and tuesday we will get a slew of housing data.
Stated for that.
As is a key part of the discussion this morning.
We have carmax and darden restaurants.
Not really comparable to the consensus.
We thought was $.94. we don't know if you can compare that or not.
Darden is the owner of red lobster and olive garden.
, meanwhile today is the last day of spring.
Tomorrow will be the first day of summer.
It is the longest day of the year.
Tom, how do you plan to celebrate?
You did that in the middle of winter.
How did you know that?
He is very consistent.
Let's get to the company news.
Ge is in paris.
He is meeting with the french president.
He has revised the bid on energy independence.
The french are considering another bid from germany's siemens.
Bank of america will have to face the lawsuit about federal back securities.
They are accused of misleading investors about the quality of loans.
Harley-davidson has something new view.
An electric motorcycle.
They are coming out with a green bike that is quieter.
The company is taking 22 of the bikes on a cross-country tour to get reactions.
There is a lot going on.
It is all about the house leadership after iraq.
Let's talk about that.
House republicans chose evan mccarthy of california as the majority leader -- leader.
He will take over for eric cantor.
Joining us is our white house correspondent, phil mattingly.
Does mccarthy's rise but the gop in a better position after all of the tension and conflict with the party?
I would say it puts them in a very similar position.
He and eric cantor are not that different.
The major difference between cancer and mccarthy is mccarthy knows this conference better than everybody.
He recruited a lot of the gender tea party members that have been so problematic for the house republicans.
There might be a little bit of a change because of that.
These are two lawmakers that were very similar in ideology and aligned in being pro-business.
This is not going to change.
What does this mean for john boehner?
The boehner side of this is the more fascinating part.
Nobody took a shot at john boehner was a little bit interesting.
Everybody also looked at eric cantor as the heir apparent.
They always had tensions in their relationships.
Kevin mccarthy was often the middleman.
I think the key point here is in six months the leadership elections happen all over again.
What does that mean for republicans and washington politics?
Is speaker banner a lame-duck speaker?
I don't think he is.
There is conventional wisdom that he is on his way out or may retire.
I think he is a lawmaker and he is very cognizant of his legacy.
For him to leave this conference he would want to feel comfortable in who was coming in behind him.
That person doesn't necessarily exist right now.
He wants to do something big legislatively.
He wants to make sure the party is in good hands when the leaves.
I don't think either of those things are on the table.
Mccarthy is a continuation of eric cantor.
He is a safe choice.
It was the representative from louisiana that got the standing ovation.
His rise is something people should pay attention to.
He is a prominent lawmaker in the sense that he is running the study committee.
He had some leadership parts of his resume.
Visibility over the last nine days to get lawmakers to coalesce behind his effort to secure the whip position, that will get anybody to pay attention.
He locked up a lot of people very quickly with very little infrastructure in place.
That should make everybody around washington pay very close attention to him.
There are different republican parties.
They are represented in the new gop.
Frank keating is a former government -- republican governor of oklahoma.
This is fascinating.
I feel like i am watching the movie "lincoln." the republicans are battling it out in congress.
As a governor, what is it like to observe the chess match in washington?
Governors are executives.
We call those adults.
I would agree.
Phil's analysis is really spot on.
There is a difference.
I think kevin mccarthy has a sweet spirit.
He has a put you at ease manner.
His grandfather was a cowboy.
His father was a firefighter.
That is going to be a wonderful face to have in front of the electorate.
Within the swirl, would you seek just republican advantage?
I think you have to have both heard the votes are in the urban areas.
A lot of voters are in the rural areas that are less populated.
With these two new leaders you're going to have a new fresh or specter.
Boehner is effective politically.
He will listen to them.
I think you will see some attitude and approach change.
You are only the second oklahoma governor who was reelected twice.
What does it take to build that kind of consensus?
You have to have the president or governor bring people together.
If the president is aloof or the governor is aloof, you will never get anything done.
I brought the democratic house and senate together and had the oklahoma state economics department ample met the agenda.
That made a dramatic impact on our state.
I want to get back to fill in washington.
How does the house leadership change the democrats'playbook?
The team started to mention that they wanted to work with the senate.
They wanted to find a way to work with the senate.
They want the send to pick a bills that they have passed?
Republican leadership thrives on their ability to run against the president and harry reid on everything.
Ida mccue will see any change there.
Do they feel like kevin mccarthy is a different kind of leader in the sense that he is or darius and people can talk to him, to they feel like they can reach out to him and start conversations or does everybody in election mode it doesn't feel like talking to the other side.
We will have more of what we've seen for the last several years.
Phil mattingly, thank you so much.
Thank you for the growing interest.
We can't get to all of them.
What does the new gop leadership mean for the presidential election of 2016? that is our twitter question of the day.
It is friday.
Summer starts tomorrow.
The 10 year yield is 2.63. there is no data on tap for today.
We have a ton of housing on monday.
Coming up, a regulator who is cautious on regulation.
? oil and crude touches 115 per barrel.
The sunni extremists are upsetting the alanson iraq.
-- balance and iraq.
Frame for me the weekend.
What does the white house's fondest hope to get to the sunday talk shows and monday morning?
They hope to have a unified response from the government.
Unfortunately, it looks like they may not be getting it.
The kurds have seized some territory.
The sheia's don't look like they will respond to the president's demands.
The company teeters on the branca of -- brink of fracture.
You are the expert.
What is the likelihood that our children will see new borders within the greater middle east?
We see new de facto borders.
The fact that it is exporting oil right now without coordinating with the iraqi government.
We have that.
Whether the, borders are being redrawn or not we will see.
That is up to the iraq ease and the syrians.
The terrorist group is using bulldozers to knock down the borders between iraq and syria.
It is already happening.
Is there any chance that somehow more moderate sunnis will be able to come together with shiites in order to take on isis?
There is some chance of that.
The moderate sunnis may push back against the radical group isis.
I think that is going to collapse.
Whether they combined forces, i think that is less of a possibility.
Thank you so much.
Without question, that is the top story.
Coming up, kanye west.
Stephanie ruhle got an exclusive.
,, how did we miss that one?
This is "bloomberg surveillance ." we'll be right back.
? good morning, everyone.
"bloomberg surveillance." we are looking at the gop politics.
What does the new leadership mean for 2016? rumor is it is free.
Good spring morning.
Tomorrow there will be summer.
I am tom keene with adam johnson and scarlet fu.
We want to bring you frank keating, the former governor of oklahoma.
He is now with the american bankers association.
They are beleaguered and miserable right now.
We will talk about that.
Small-town bankers are doing just fine.
It is another story we look at the cities.
The u.s. hopes to buy time for iraq to form a new government.
300 troops will be sent to work with iraq he forces.
The u.s. is pushing iraq to include more sunni muslims in the government.
New york will become the 23rd state to legalize medical marijuana.
The deal was approved to treat cancer and other diseases.
Here is the catch.
The deal does not allow pot to be smoked.
You have to eat it or you can vaporize it through oil.
It at the world cup, english fans had nothing to cheer about.
Uruguay beat england.
England is on the brink of illumination.
They have lost both games they have played.
They are not out yet.
They need to win or draw.
I am just learning about soccer.
A another team needs to not do well for them to advance past this round of.
60% of americans aren't interested in world cup.
You did better than i would.
Usa and portugal play on sunday.
I have no clue.
That is our favorite french lace to watch soccer new york.
A regulator is cautious on regulation.
He was the fcc commissioner.
Thank you for joining us.
Businesses are competing with next flex -- netflix to get bandwidth.
There is a lot going on in this space.
It is great for consumers.
We have over the top offerings.
That is something other than your linear cable channel.
It is also causing some network congestion on the internet.
The engineering of it is very complex.
The middle mile for businesses and the backbone connections all across the world.
Companies like netflix which produce 34% of the internet traffic at any one time, that kimmitt clog up anything.
It is causing a lot of angst and exasperation.
Hoosiers possibility as it to figure out the right solution?
Is it the government or individual businesses?
What happens is a lot of the attention is paid to these issues.
This is been going on for over a decade.
When the fcc starts to look at acting again, they have tried twice in net shared national neutrality to do something.
It is been smacked down by appellate courts.
They are trying for the third time to hope that is the charm.
They have this very little needle that the courts have handed.
We will see what happens.
In the meantime, the best thing to do is sign contracts.
Netflix and verizon have been negotiating for years.
They are reaching deals.
There are other companies that are providers.
They are doing a great job as well.
There are a lot of strains on the internet as consumers demand more video.
What did we learn from other countries whose internet structure is more sophisticated than ours?
South korea is interesting.
You have a large group of the population that lives in one city.
They been able to cram them a lot of fiber intensive inactions into those densely populated centers.
We have a vast continent.
Some markets are better wired than others in the last.
You want to create incentives to invest in those pieces of infrastructure.
The best way to do that is allow pricing freedom so those who can see more would be paying more.
This is the same way you would do gasoline or food.
That kind of economics should be applied.
Thank you for joining us.
We were talking about netflix.
They brought us "oranges a new black." they are going to bring you chelsea handler.
The unity she is?
Netflix is going to get her talk show.
She hosts "chelsea lately." she is unhappy with her network.
The real narrative here is netflix is becoming the fifth network.
It is doing that by drawing in talent.
Kevin spacey was a good example.
How does rex ryan at work with his team in the off-season?
? this is "bloomberg surveillance." but gays and company news now.
We start with family dollar.
Not responding directly to carl icahn, but up for sale.
They say they're open to constructive talks with shareholders.
Icahn says he seeks to replace three of the board members.
A warning from corinthian colleges.
They are being investigated for falsifying trades.
Corinthian says they may have to go after -- the government limited their access to student aid.
Many end up with lots of debt.
Bargain hunters may go after american apparel after spandex leggings indicated some problems.
They ousted their controversial ceo.
The company has not had an annual profit since 2009. green capital says its foothold in the demographic could be attractive as a takeover target.
If you have been looking for stephanie ruhle, she has been in france.
The cannes creativity festival host some of the top names in technology.
She got to see some of the most innovative names in music.
She joins us now from london.
You got to talk with kanye.
You never know what is going to come out of his mouth.
Did he have any insight to share about the business and his wedding?
That was not so secret, and florence.
Without a doubt.
Less than four weeks ago, he was married and florence.
Annie leibowitz, one of the most famous photographers out there, she shot the man vogiue.
She pulled out of the wedding the day before.
He was obsessed with perfecting the wedding photos.
They spent the first four days of the honeymoon perfecting the photos.
Does that speak to him being and hoover -- an uber creative?
He feels that that is his obligation.
He wants to use the media to raise the pallet.
I dream to help raise the pallet -- raise the level of a generation.
And also, be involved with the production and distribution and advertising of providing that thing that everyone is begging for.
Scarltett, clearly he is an artist.
For him to say he wants to raise the taste level -- he thinks things are too vulgar.
Many people said give me a break.
You're married to a reality tv star.
One who has a sex tape.
If the audience has a theory about what his folder, some people are scratching their head.
Should've thought of that one a couple weeks earlier.
What do you have to say about music?
Obviously, he is an artist.
There's a way that we consume music that is changing.
What is his take on streaming?
Beats just happened.
It is not a one off that you would have dr.
Dre and jimmy selling a product to apple.
The content creators have to be the artists.
You cannot just have an ad exec here.
When you look at air b&b, they are led by design people.
This is what he says the he thinks the internet could be.
The internet is our new rome.
But, tiit is time for the best visual artists, the best content creators, to be in power.
He is saying this is our opportunity to take the internet and make it significantly more beautiful.
He loves instagram.
In large part, they're so much chaos and noise.
This is a chance to clean it up.
He compares himself to steve jobs.
He believes that he could be that for culture, music, and art.
He has now partnered with jay-z. he had a good partnership with samsung.
What is kanye west doing in cannes?
He is selling his style.
Thank you so much, great job.
Stephanie covering the conference in london.
What is this about rex ryan?
He has lost a lot of weight.
A ton of weight.
This is an exclusive of the day.
He had surgery.
He came back last season looking a lot thinner.
People will be very sr urprised.
You want to lose weight, it is simple.
I used to cut weight for r wrestling.
Run and drink a lot of water.
We do have futures, a little bit higher.
2.64% on the 10-year yield.
Good morning everyone.
All of our interviews are on the digital media as well.
I am tom keene, with me scarlet fu and adam johnson.
We bring you the former governor of oklahoma, frank keating.
Scarlet, this is interesting.
Hockey season is over.
Football teams are now in mini camp.
The preseason starts in august.
Rex ryan, the head coach of the new york jets, had some time to do chat with me.
I asked him some hard-hitting questions.
Given your childhood in toronto, which you rather play hockey or go curling?
Madden nfl or nfl 2k? don't know about anything.
I'll say madden.
Front page of the new york times or back page of new york post?
Front page of the new york times.
That means we won the super bowl.
That would be the headline, right?
That would be the own way out beyond their.
Micromanage or delegate?
In 2011, you change things up.
Is a tough question.
There are times when you do have to delegate.
There are times when it is -- this is better off giving you this opportunity to lead.
It is a give-and-take.
You had a cameo in an adam sandler movie.
Would you rather watch an adam sandler sports movie or drama?
I go back to "happy gilmore." would you rather invest in blue-chip stocks or it tech startup?
I play safe.
Johnson & johnson, right?
This is a guy who is a defensive coordinator.
This is his sixth season.
You have to put some numbers on the board.
Who is quarterback?
It is geno smith.
Tebow is not there.
Michael vick and geno smith are the quarterback.
Michael vick is with the jets?
I did not know that.
He is with the jets.
I know the jets like i know switzerland in world cup.
Rex ryan has a lot of millenials on his roster.
I thought he was in mind when he considered the workplace balance.
Usually, i have a bunch of ugly guys.
Sometimes you get a couple guys who are like that.
That is great.
If there are other interests out there and people are interested in your players, that is fantastic.
They should have that part.
For policy not -- all consuming.
It is not who every one of these guys are.
There's a lot off the football field as well.
And, if they can take advantage of it, especially in this market, and it does not interfere with their preparation, i am all for it.
He is referring to eric decker, who the jets picked up.
He missed practice because he was supporting his wife's music career.
We have the perfect guest.
On america's football.
Frank keating is from oklahoma.
It is a college football field -- is it still the same?
We have an nba franchise, the oklahoma city thunder.
The whole focus is on the nba franchise.
When i was governor, my favorite coverlor was plaid.
Oklahoma will do very well.
Oklahoma state will do well this year.
They have put a lot of money in that program.
The politics for, boone pickens/ ? he is the football expert.
I don't know how much money he put into that program.
What is the biggest ask?
I will get to boone pickens -- coming up, the big isssuue for the u.s. housing market recovery.
All most one third of adults are living at home with her parents.
What does that mean for home construction?
This is "bloomberg surveillance." ? good morning everyone.
This is "bloomberg surveillance." i am tom keene.
Dow futures even flatter.
Final day of spring 2014. i said they were up earlier, but 0.01%. was on that on 3rd avenue?
Sun, love the sun.
Joining us now is betty liu.
Your focus on house leadership changes.
Some of it was expected.
Mccarthy was going to ascend to the home of majority leader.
There was a three way race.
Tim coming out as majority whip.
Now we have this leadership in place.
How will the rest of the party align then?
We have a congressman, scott ritual, who is warren buffett's favorite republican.
He believes that he is one of the down the line, moderate republicans.
He has been fighting the extreme.
What does rigell have to say about the change in leadership?
If you could please ask mr.
Rigell my question -- whether the change in houses will have any bearing on the six senate seats the republicans are trying to grab.
That is a great question.
Midterm elections and 2016 presidential election.
Looking forward to it.
Inky so much.
Thursday morning must-read i want to share.
This comes from the new york times, from roger:. pretty poignant.
Here is an excerpt.
Forecce in the absence of a sustained political strategy leads nowhere.
This has been obama's failure in afghanistan and iraq.
Frank keating, you're a two-time governor of oklahoma.
What is the role?
To assemble the facts and make a decision.
It is really important to have people with information and talent and integrity around you, who know about what is going on.
You break the tie.
You have to make a decision.
Obviously, i think all of this -- we have concluded that if you're in the middle of a religious war, you need to pause.
It takes leadership and it takes information and courage.
The question is whether we have the right amount of information.
So much of our intelligence has been removed from iraq.
Governor, there is a great presumption that our forces came from the south.
We have done a series of interviews here, in the sense that we lost iraq.
Let me talk to someone who lost a few funerals.
I'm of the view that we did.
I was of the view that we should not be there.
This country has not invaded us.
There were no weapons of mass destruction.
Why were we there?
The problem is iran.
We should do a pivot to iran, as opposed to iraq.
This is something all the politicians will debate.
What this new gop leadership mean for 2016? good morning everyone.
Good morning to all of you worldwide.
Monday, the mayor of boston, martin walsh, he will explain the boston red sox.
He will do more than that.
He will join us in the seven hour -- 7:00 hour.
This is the mayor's conference and we will get his perspective.
He should talk about the projects.
The big dig, what a triumph.
In the rose kennedy walkway -- it is just amazing.
I'm a diehard new yorker.
Being up in boston -- great job, boston.
Every time i am on the fdr, i think they should put this underground.
This is "bloomberg surveillance." our guest host is former obama governor, frank keating.
But get you some company files.
Shares of oracle are down.
Profits missed analyst estimates.
They're trying to remake themselves into a provider, like so many in silicon valley.
The japanese company that wants to buy t-mobile is promising faster speed and lower fees.
They say it is one of the least satisfactory in the world.
They pay $22 billion for sprint last year.
Sprint is close to an agreement to buy t-mobile.
Apple will provide multiple versions of its smart watch later this year.
It will likely come in different screen sizes and will have 10 sensors, including one that tracks health and fitness.
Our guest is frank keating, a two-term governor of oklahoma.
Chief executive officer of the beleaguered american bankers association.
American banking is not shirking on regulation.
These are the worst that you have used in recent articles and op eds.
I thought bankers were fatcats.
90% of our members are 1 billion and lesson assets.
My grandfather owned -- my twin was a ceo.
The fiber of america, the big banks -- they provide service on a regional basis.
Community banks are hugely important.
They are saddled with so much regulation.
Thousands of pages of regulation.
All of these complexities, new capital.
People are fleeing to other places to bank money.
Is washington listening?
We had some movement on basel.
No movement on dodd frank.
What is important is to have the president choose a community bank.
He has that opportunity and i think certainly, if he sees the importance of focusing on community banking and lending, he will make that this vision.
How do you respond to the shrinking number of inks?
We go from the jacksonian banking to the spirit of oklahoma.
We're in a new regime now, aren't we?
Since fall 2008, we have lost one community bank a day, every week.
How is that good?
Many small towns in america, the big banks will not serve them.
The bank of adam johnson went under.
That a staggering.
One more time, one bank?
One bank today, five days a weeks,, since the fall of 2008. can you quantify all this regulation?
If you went to a restaurant and 15% of the bottom line of that restaurant was -- or the top line, was to provide whatever services the city, county health department expected.
What can obama would you get?
Community banks now are spending 15% of their income on complain iance.
What does that do?
We are not responsible for the crash of 2008. their character lenders.
Now, mortgage servicing.
A lot of these things are getting out of mortgage servicing because they have to have all of this new capital.
How is that good for america?
We need to focus on banks as the mainstay of the economy, the place where americans will have confidence in financial services and not demonize them all the time.
Let's talk about long ago that.
Home loans led to the financial crisis.
A lot of people point to the student loan debt that is outstanding.
More than $1 trillion worth.
What kind of prescriptions are out there that could get us toward some sort of fix?
Think about adam's point.
One out of three americans live with their parents.
The unemployment rate among young twentysomethings is 11%. we have a soft economy.
We have her problem with a huge $1 trillion student loan debt.
What are you going to do?
Pull back and not buy a house.
This is bipartisan pain in washington.
What is your prescription for washington to solve this debacle?
Make sure the people who get a student loan are getting a degree that they can use in the workforce.
Do we need to change the bankruptcy law?
That is probably not a bad idea.
If you have bad debt, it will wash out in bankruptcy.
You need to make sure -- there needs to be a mother and that involve saying that this degree, this money is not going to employee you.
You have to spend your whole life now.
I bought my first house when i was 27. today, the figure is 37. people are saddled with student loan debt.
Maybe even 42 in manhattan, right?
He was talking about the degree in tv and radio journalism.
But get to that agenda.
The story over the weekend -- 114.393. oil has advanced through the we ek.
How far have we come since june 13? i'm trying to read as much as i can.
Fiu nailed it with that op ed.
The outside solution to any distant regional conflict is still an exceptionally difficult task.
It has to be organic and come from within.
And be supported by leaders from outside.
We are not getting that leadership.
Again, we will just try to bring you as much perspective as we can on "bloomberg surveillance." here's what is on my agenda.
It is very curious -- this deal involving ge, trying to buy the assets of a french industrial giant.
Mitsubishi and siemens have a joint venture.
That group of companies from two countries has raised its bid.
It is now significantly above ge.
We expected ge to raise their bid, and instead those guys raced their's. he is probably rooting for france.
This has gone to politics.
Speaking of soccer, the world cup is one my agenda.
Team usa takes on portugal.
We talked about it being a no-brainer that were to go with win.
Rinaldo is questionable.
Pepe head butted against germany and is not playing.
That helps the u.s., big time.
I cannot believe it.
You and soccer do not mix.
A global shout out to bloomberg news.
A 14-year-old son is my font of wisdom.
Let's bring in our top story of the day.
That is new republican leadership from the house.
What does this new leadership mean for 2015? some of the answers, same thing you meant six years ago.
Hillary is the next president.
Counterintuitively, a handshake with obama and higher functioning government.
There's an optimist.
Same circus, different clowns.
[audio deleted] frank keating is with us.
You always avoided -- you had such in a questec republican tenure.
Can we get away from the sun is him that we saw on that last tweet?
I hope so.
People are focused.
They use the internet and cable news.
They're focused on what they want to hear.
What is really important is to get a broad perspective of other people's views and decide what is best for all of us, not my own isolated aisle.
Thank you so much.
Frank keating of the american bankers association.
We continue on the radio.
"in the loop" is up next.
We continue the conversation on the new house leadership.
Tom will also discuss that on "surveillance" on radio.