This is bloomberg "surveillance." it is august.
Congress begins the five-week vacation.
What will they hear when they go home?
Should the president get involved in the pot and wars is front and center this monday.
-- pat wars.
He deliverent wars.
We will be one of the richest men you have never heard of.
Good morning, everyone.
This is bloomberg "surveillance." i am talking.
Joining me is scarlet fu and alix steele.
We will study commodities and oil.
Busy monday morning.
Signs of stabilization in china.
The gauge of business expectations improving.
Take a look at non-manufacturers purchasing managers' index.
Been trying to target the 7.5% growth rate.
To come also here in the u.s., the non-manufacturing report.
The reason why that is important is the friday's drop #resolve the services sector was a bit light verses the 3 and six-month trailing average.
We want to see how that delivers as well.
It is a food day.
Tyson's food day.
We of jack in the box.
Record high data check.
Yield all over the place on friday after the jobs report.
Back on down.
A lot of volatility.
Your rope making a dash.
Not there yet.
I mentioned weakness.
Crude 1 06 0.36. framing it up for you, where you are with your to a one201k. look at the vix.
All were number is a better market.
1312. with the search on friday, 11.98. there is the dow at record high.
Stronger yen this morning.
There is something we really do not follow, 6.12. it has appreciated 26% since they let it go a good number of years ago.
Better economic data.
Getting started on this monday.
This morning these are the stars that make front-page.
Patten war trauma.
A back door when for apple, because the white house vetoed a ruling that banned the imports into the u.s.. samsung had a victory in the court, but turning out to be a major loss for the caribbean company.
U.s. trade representative appointed by the presence of the bands were unwarranted.
1 million in market cap loss.
The president unilaterally for the first time says forget about it.
Since 1987. people are thinking this could discourage companies from taking disputes.
It was not that it just infringed perhaps, but did not increase consumer competitiveness.
We're keeping an eye on that one, and shares of samsung.
Another one is the cbs blackout enters the third day.
This matters because there are 3 million viewers in new york, l.a., dallas.
This began friday.
We do not know when it will end.
The sides are arguing over fees of transmission fees.
I missed under the dome.
Is this just about sports?
That is part of it.
They do broadcast nfl football.
Some people say waiting for something to happen before then.
Also a revenue stream.
You have a more diversified revenue stream.
That is really what it comes down to.
"the wall street journal" reported the ceo said there could be a day when cablevision stops offering them completely and makes broadband a primary offering.
This is as part of the country that does not have cbs.
Part of the country, but a couple of big markets.
This did not affect me.
To cut the other story we have to talk about is how u.s. embassies and consulates will remain closed for the rest of the week because of terrorism threat.
This is not a new threats but the state department says it is staying on guard for potential terrorist attacks.
On sunday lawmakers both -- of both parties that it was very credible, similar to the pattern before 9/11. increase over the weekend.
On from there.
Bringing in matthew dowd.
Also joining us as well is matthew miller.
Not on the list of bloomberg millionaires.
He keeps in touch with those that have $1,000 or more.
Is this the usual thing or something unusual?
On the whole national security thing, it is unusual.
We have it in the state where we are constantly had security checks.
This seems to be a bigger deal.
They said this is as much traffic going on among the terrace as happened before 9/11. the idea that this is not been gauzyenghazi of florence but more like 9/11. seems much broader and deeper.
Seems like the communications they have intercepted shows it is a big deal like that it has ever been before.
How much are they not telling us?
Probably a good bit, because i think they want to warn us, but do not want to scare people.
They also do not want to signal to the terrorists they know exactly where they are going.
Is anything st.
To go there is a threat, it is real as big.
All of that is true, but they do not want to pinpoint it.
Could be an embassy think of a domestic bank.
It is real in the way that they say this is something going on and the conversations are happening.
Is this related to the jail break out results couple of weeks ago?
I did not think so.
-- do not think so.
This is planning for months and months and even years.
I think this is something that has been in the plans for years.
Icy brands involved as well.
This is a form of terror in itself to have these warnings and tensions.
What do you do?
I think patrick o'brien was a more innocent time.
How do we get out of this if nothing happens?
I think it is very difficult to get out of this.
All of our lives changed dramatically after 9/11. there was no return to before 9/11. i hope the terrorist threat to get lower than this.
It seems it will look at past history, once we get to the level, we stay at that level.
Did you know we're eight minutes 16 seconds into the show and have not mentioned a-rod?
Will get our fell later on.
Investors giving a thumbs down to hsbc earnings report.
Reporting a drop in first half revenue.
There were cautious on growth in china, predicting the economy will grow 7.4%, slightly below the government target.
They did post a 10% increase in profit in the first half.
Sales are driving gm growth in china.
Seeing an 11% growth in sales in july.
Cadillac sales were up 83%. the buick line jump 26%. the plan to introduce 17 new models to fuel additional growth.
Lloyds has big plans for dividends.
Called -- wanting to pay down at least 70%. lloyds has not paid a dividend since the 2008 bailout.
Those are today's, bridget top company news.
-- those are today's top company news.
Do have to talk about a- rod.
Will make his season debut tonight in chicago.
We all read about it over the weekend.
The manager says he has been penciled in to the lineup.
Really interesting in terms of the business of baseball and what the penalty should be for using drugs.
Matthew miller with us.
Important and interesting study.
Nobody in baseball is a billionaire, right?
Certainly the richest baseball player.
Highest-paid no doubt.
The lower they get, the harder it is to determine that.
Obviously the highest-paid player.
Whenever + million at stake.
This is the guy that will be fighting for his contract.
So it will be interesting to see how it plays out.
I am lost on this.
He could say it is in the best interest of the game to not let him play.
To go there is a clause that says if you are harm to baseball, you can appeal but do not get to play during your appeal.
It they do a lifetime ban on him, he loses his entire contract.
That is why he wanted to be in the midst of this.
Take of this from what goes on and on.
We are asking, should his million-dollar -- million dollars be clawed back?
This is like the lance armstrong question.
To go i would suggest americans are much more riveted by this family of armstrong.
I think so.
Such a debate for so long.
Take a we will talk about this and how newsweek is changing owners for the second time.
-- we will talk about this and how newsweek is changing owners for the second time.
This is bloomberg "surveillance." ? de coming up on bloomberg television, global head of the investment-banking at credit suisse.
"market makers" at 11:00. holding down the court today to scarlet fu and alix steele.
-- down the fort today.
I used to read it in junior high and high school.
It's dying and painful.
Talking about newsweek.
Another media deal.
The eight-week old magazine has been sold again.
We do not know how much they paid for it.
We know in 2010 the washington post bought it for just $1. that get to a sense for how bad it has been.
Barry diller called his purchase of newsweek a mistake.
He said it was a fool ahrens, a mistake.
His holding company took a majority control of the magazine after the billionaire bought it from washington post.
The globe over the weekend was another big one.
The owner of a baseball team in boston, one baseball team, the red sox.
Of boston residents will buy the boston globe.
Price tag is $70 million, all cash.
$1.1 billion the new york times paid for it back in 1993. we have wonderful guest to provide creative destruction.
Matthew dowd with bloomberg television and the political correspondent.
Matthew miller, bloomberg billionaire.
Let me go to you quickly.
This is just billionaires' playing.
It really is.
It is so fascinating how you will receive billionaires' wanting to buy their hometown newspaper.
You are always seeing -- whenever kirby and talks about splitting up assets, it sounds like john henry got a pretty good deal.
Pretty much on the water.
Worth a lot of money.
Tell us about the newspaper of our nation's capital.
Wash"washington post" has had its own challenge.
What is this date?
Every newspaper struggles with the financial model in the world to deal with.
They still sets the tone for a lot of political coverage around the world -- country.
A lot of what the new york times, a major media markets look to the washington post.
The financial markets still struggling with.
Struggle in financial model brings us back to "newsweek." what does a buyer get when you have so many problems?
To go a few international editions.
They are published in a few different places.
-- a few international places.
To all of you, who has time to read all of this?
That is the problem.
The magazine has lost traction because you can get 24 hour news through cable tilt -- cable television, twitter.
To articles, one in the nieman foundation.
The news media as a second-day story.
I was leading an urban of like this weekend.
I turn to match your doubt come in touch with my inner self.
To go-- matthew dowd.
What is doing well is short, quick analysis of what is going on.
-- former journalism get your perspective.
"the atlantic" never made money since the 1950's and has made money for the first time.
People looking for something quick, and perspective.
I think of newsweek were smart come in time magazine has done this sort of well, focus not on news, but perspective.
They did shift to something more like opinion of cometary but that did not work out so well.
Bonnie fuller at hollywoodlife.com.
Former editor in chief of "us weekly." 9 it is about inside.
A shameless plug for bloomberg.
Prison obama overruling a patent war between apple and samsung.
-- president obama.
That is the second hour of bloomberg "surveillance." ? good morning, everyone.
Bloomberg "surveillance." i am joinetom keene.
Joined by scarlet fu and alix steele.
At least 19 embassies and consulates will remain closed this week.
The facilities are located in the middle east, north africa and central asia.
This follows a move up in threats.
The movie with the and the washington finished number one of the box office.
-- denzel washington.
"2 guns." a-rod will face the long the suspension, possible through the end of next season.
He is now 37. the others will place -- face 50-game suspension.
In ] i watched san diego padres baseball yesterday.
cabrera on the list.
Should a-rod's millions be clawed back?
My morning must read is about baseball and the whole performance-enhancement drug dilemma.
The commissioner of major-league baseball rights that you should tell the baseball druggies, strike one, you are out.
The problem is real and getting worse.
vincent will join us in the next hour.
You are a big texas rangers got worse.
We have a scandal today and it does not involve anthony wiener.
That is why he is under pressure that he will get a huge penalty.
The evidence there is overwhelming.
We will see this afternoon, we will begin to see announcements.
I believe it is a night game in chicago.
We will be watching for that.
Unprecedented but a good thing as congress goes on vacation?
We put that question to our guest host, but matthew doubt.
-- matthew dowd.
Good morning, everyone.
I'm tom keene.
Joined by scarlet fu and alix steele.
How about a data check?
Friday's jobs report.
S&p futures well over 1700 flat.
Euro had some strength on after a strong dollar friday.
Leave it at that.
Matt miller with us from bloomberg billionaires'. the stock market v.i.x. for more billionaires', right?
115 headed billionaires'. will find a lot of wealth creation as time goes on.
You will see hundreds of billions of dollars at any given market.
Known that billionaires' get richer.
Unknowns billionaire sell their companies?
It is the appears that you value, those are the ones that go up.
You are able to find them as a result.
Revenue will go up and you will see the companies expand.
The valuation will reprieve -- will be a premium.
They are everywhere.
We find them in asia less so than we used to.
Latin america is very big.
Brazil is huge.
We will continue this discussion.
Political gridlock in washington.
It has never been worse, at least in the past 150 years.
Matthew dowd joins us.
And all other writing extensively about the this function during a retreat.
1840, nothing has changed.
We have done a piece on this for bloomberg media.
Immigration was a huge issue.
Technological change, the invention of the telegraph and road.
Political gridlock in partisanship going on.
The ending -- the ending of an unpopular war and race discussion.
He decided the only way to get through this is to simplify things.
Which person are you looking to to be the hero in washington to break the grid lock?
I think the hero will come outside washington.
I think washington has become so dysfunctional the american public will look outside washington.
They had great hope for barack obama.
Has not turned out that well.
The history of the country is there is hope of pollution.
I think you have to see one party evolve into something different than it was.
How about this theory, it is not that bad?
I want to bring that up because there is an article saying it is not that bad when you compare it it to other countries.
He writes that anyone who has visited brussels or springfield, ill., if it could be much worse.
It is like standing next to a bunch of fat people, you might feel better but does not mean you are in shape.
You have to compare to where the country has been.
We're the most polarized we abandon our country.
I did not buy that at all.
The 36 ballots.
That convention nominated james garfield.
Huge divisions after the civil war.
I agree but we have an infrastructure and something in place now.
We have these battles and fights, but much easier to come across now because of redistricting and the way people are moving and living, it is very difficult for people to see the other side.
What was the catalyst that got the sides back together back then?
People in communities saying enough is enough think -- enough is enough.
Washington has never led, always followed.
Take of this this reflect the electorate?
If they cannot change across the aisles themselves, how can washington do that?
To go we have now 400 districts that are no longer fightable.
If you look of the country as a whole, the majority of the country is a mixed month.
They're not on the fringes, but only in washington and other media represents the fringes.
Your book on apple these restaurants and apple these america.
Would we wrote that it was the emergence of tribes in the country and the tribes of people that allied western tribes.
An inability to come to a place.
If anything, it has got worse.
You cover bill did theirs.
-- you cover billionaires'. has anyone come across who might be an agent for politics?
Most of these people are looking for their own advantage.
They're looking for politicians to give them an advantage.
Even the builders to lean democrats, they're doing that for social reasons and still looking for tax breaks.
Not many billionaires' come to the political frame and make active change.
They do most of the things from behind the scenes.
They have far more power than politicians usually.
They hire hundreds of thousands of people.
They controlled the price of gasoline and food.
They do it far more quietly than politics.
To go from where we are in 2014. mid-term election.
Precursor to the presidential race.
What does it look like right now?
We have to watch as things developed over the next six- eight months.
I think it is important to watch because that could affect it.
My guess is we would be having an even bigger split in the aftermath of 2014. republicans would pick up seats in the senate but would not win it.
That is what would happen after today.
Watch the waves.
Sometimes that happens at the beginning of the election.
Tacoma go to bloomberg.com to watch the entire series of walteon pond.
Looking forward to that.
Also a story on how there are no margins in the great business but one man who has become a billionaire from it.
The richest guy you never heard of in new hampshire coming up on bloomberg "surveillance." ? good morning, everyone.
The v.i.x. well under 12. 11.98. a bull market.
Good morning to you.
Joined by scarlet fu.
Alix steele in for sara eisen who was on a world tour.
We start in china.
The economy showing signs of stabilizing.
Official indices rose in the gauge of business expectations.
The report increasing confidence that the premier policies are helping to prevent a deeper slow down.
Syria's president said the nation's civil war will end on the battlefield.
He said wall parallel political course is possible, the government will stop combating terrorism.
The war has claimed 100,000 lives.
Work on the world's second tallest building is completed in china.
A steel beam was placed on top the tower over the weekend.
It is the highest power in asia.
Second only to a tower in to buy.
The building cost almost $2.5 billion to build.
Those are your top headlines.
I am sitting in the bathtub looking out the window going to have to be kidding me.
I did not feel safe that far up.
I did not trust the air traffic controllers.
Would you go up a skyscraper like that?
It is too tall.
There is tall and then there is tall.
Talking about millionaires and billionaires.
There is a billionaire that most of us have ever heard of that has made his fortune delivering apples and other types of groceries.
An intriguing story.
The drum up.
How about making pennies on food?
Richard cohen of billionaire filling that i also of safeway.
The great atlantic and pacific tea company.
Matt miller, editor of bloomberg billionaire and does each penny of his wealth.
Keene, new hampshire.
Worth $11.2 billion.
The 95th richest person in the world.
No one -- most people have not heard of him.
He did it all through still in new hampshire.
To go all legitimate through wholesale food business?
He takes products and moves them in an unmarked trucks.
He does not want the company's name out there.
He wants to make sure he delivers for his customers.
Does not to be a showboat for his own company.
Almost 22 billion in sales last year.
Very small margins.
He owns the whole thing.
95th richest person in the world.
Also the case of a harvard business school case study.
What we know is he had acquired big business to move out groceries for anc.
As a result, the warehouse was in total shambles.
He pays his workers more for not making mistakes.
As a result, much more efficient and brings the profitability higher.
Is that the billionaire best practice?
They get paid to fill orders faster and wage reduction if they make a mistake.
That is like a-run.
How is keeping a low profile help the business?
To go it does not help being able to sell the business, but you want to remain in good with your customers first and not make it just about yourself.
Some billionaires' take that approach.
Rare to see someone so wealthy.
Worth more than $11 billion to be headed in new hampshire is quite well -- rare.
We know his wife is the head of a traveling musical based on the holocaust.
They have done a lot of giving to new hampshire colleges for holocaust studies.
One of his daughter works for the company and another is a teacher in massachusetts.
Full disclosure, keene, new hampshire, no relation to the family.
I related to the drunks in maine.
The dow / the first test to burger will be created and even today.
Guess how much this costs to make?
It will be more than a dollar.
Nearly $400,000 for this burger.
It will be fried in a pan and tasted by volunteers.
Take a democrat, right?
Would you eat it has to burger?
-- eat a test tube burger?
Of course he would.
This has put the issue of cowls on your side -- on the sideline.
A really big deal if you can make it affordable.
Take you might as well drink it.
Why would you eat it?
To give it will have to come up with a different brand in order for people to eat it.
I would not be in the tall building but absolutely need the test burger.
To go a lot more to discuss.
We will talk about how you make lenovo the next g? we will talk about the guy who wrote the book on bloomberg "surveillance." ? this is bloomberg "surveillance." i'm scarlet fu.
We start with the white house handed apple a win in the patent battle with samsung.
The u.s. trade representative overturned an order that stop shipment on ipads and iphones into the u.s. it had been ordered by the international trade commission.
The first time they overturned an import ban since 1987. the losing company was samsung in the memory chip dispute.
In a battle between cbs and time warner cable entering day 3. the two sides fighting over fees that cbs charges time warner cable to retransmit shows.
Cbs says no negotiations taking place right now.
They predict the battle could last weeks.
Shares of h-p see gains in taiwan trading after the mobile phone maker announced a share buyback.
They will repurchase 15 million shares between today and early october.
This follows a disappointing earnings report last week.
They are known for facebook 1 phone that i did not know of anyone picking up here yet to go there looking at another quarterly loss.
Sales may drop for the eighth quarter this quarter.
Another example getting the e.p.s. rising.
A lot over the weekend about iphone 5 and iphone at 6. -- iphone 6. they're supposed to announce something coming up in the fall.
Speaking of apple, which is one of the best well-known brands, talking about economic power versus brand power.
Brand recognition is pretty much unrecognized.
73 companies from china, more than any other country aside from the west.
When it comes down to the best global brand, none of them.
Take of the whole idea of marketing and granting a waste of money to many.
The fact is it works.
Legendary in marketing and branding.
The book is brand break out, how the emerging market brands will go global.
You look at the book and you look at the lead novo enovo, why is that?
They have not started that long ago.
Give them a little bit of time.
There are some brands that a number of americans know and have in their homes.
Some are making inroads in the markets.
Currently not that much.
To go page 152. their slogan is legendary spirit of china.
They are in the liquor business.
Take a that is harsh stuff.
Is branding throwing a wall of money at the product?
That is not what most american companies would think.
It is not a waste of money, but these companies still have a ways to go.
To go one company i thought and drinking was the chinese baby food market.
=--- one company at thought was interesting was the chinese baby food maker.
It is currently not there.
Let's not kid ourselves.
One of the biggest mistakes western companies can make is to ignore the emerging-market companies with brands.
Does it sound familiar?
In the 1970's the japanese came.
I asked my father, why is this guy driving a japanese company?
Probably he is very poor.
That is not the case anymore.
Look at where gm and ford or in europe, thompson phillips.
Is there still a distinction of quality versus quantity.
Really trying to refine one or two products.
How did they get to that point?
The basic route to do that is what i called the asian work out.
You enter the market at the bottom like the japanese did with a decent quality at a fairly low price.
Then you up the game.
That is what honda is doing.
I have seen that.
A lot of americans have a piano in the house will that is made in china.
1 manufacturer and the world.
They have now launched the premium brand.
It sounds very german.
I have seen it.
Bringing in matthew doubt wd.
A few weeks ago in india come up that children's food.
I would say that the stories trust instantly and keeps american brands' strong.
How do we develop the relationship with emerging markets out of washington to build a brand quality and trust?
Trust existed for japanese products before the 1970's and 1980's. we were involved in a world war with japan.
That did not stop them from buying a toyota and other products because they decided it was good quality it could cost.
I think over time the brand is one of the most important things you can do with any sort of economic market for corporate market.
Emirates is so well-known it has really lifted the city state of dubai.
Increase tourism and made it logistics' center.
To go again, it has to do with the branding.
How do you build a printing?
It is just about spending money?
S wrong -- strong brand starts with a good product.
Product quality is getting ever better.
Because of some of the scandals you are talking about, very importantly, these other chinese companies need to develop their own plans to separate themselves from these fly by night skies.
China has political considerations.
They began to do branding more and more, especially in this country.
A lot of political consideration.
Take a brand break out.
-- brand break out.
Ozzie well under 0.90. the challenges.
-- aussie record strength in the yuan as well.
Talking a-rod in the second hour of bloomberg "surveillance." ? ? of a quiet weekend, the threat of terror in america's embassies is all too real.
And it is d-day for a rood, make that drug day, had the suspensions in baseball after of new.
-- 12 newbury joining as always, scarlet fu.
Alix steel is filling in for sarah eisen.
Also with us, scott galloway of the n.y.u. stern.
He founded firebrand partners and the digital iq index as well.
Time for your morning briefing.
Signs of stabilization coming out of china.
Services rose in gains on business expectations.
Nothing huge, but definitely for the 15 grateful it also wrote fear in here in the u.s. at 10:00 a.m. we have the u.s. and non-manufacturing index.
We do have some earnings before the bell.
It is still a busy day here on this monday.
We start with the white house, apple winning its patent for with samsung.
Overturning an order stopping shipments of ipad into the u.s.. the band has been ordered by the international trade commission it is the first time that they overturned a ban since 1987. , and the battle between cbs and time warner cable and tuesday 3. they stopped broadcasting cvs to 3 million viewers in big markets.
They are fighting over the fees that are charged to retransmit their shows.
Cbs says there are no negotiations taking place right now.
Shares of u.b.s. sliding in london.
Also cautious on growth in china, predicting that the economy there will grow slightly below the government's target.
The bank did post an increase in profits in the first half.
But top stories over the weekend, no question about it, over the weekend there were repeated and expanding warnings on attacks on u.s. property and citizens.
With embassies closed and that america hunkered down abroad, richard felton wrath, former white house security adviser, joins us from idaho.
Have you seen this before?
What is the new that is new this time around?
We have not seen something like this in a few years.
One thing that is new is the global travel alert for u.s. citizens.
Thinking about the history of this with two of these before, this is the sort of thing that the government believes may be likely.
No one likes it because it is so unspecific and worldwide.
There is this incongruity between citizens and an embassy closed focused on the north africa area.
We are into this mess and we will get through the next couple of days, even weeks, how do you get out of a terror a letter like this?
You find the people who are likely to do it and you kill or capture them.
The u.s. can read the rules of the game in a way that does not work with normal situations.
The ordinary response, if he know about the plot, you locate the plotters.
If they happen to be in a place like yemen, you go at them directly.
If they are already in the wind, in europe or if they have come to north america it is a more difficult proposition.
How has allocated change since 9/11? they are a much more decentralized operation now?
It is much more like a confederation of different regional groupings.
The one we are talking about here is called al qaeda in the arabian peninsula.
Operationally active mainly in yemen and saudi arabia.
They have attempted two significant cross border attacks.
Richard, thank you so much, coming to us from idaho this morning.
A really interesting conversation, always backed up by the edward snowden debate and the argument it makes for keeping the surveillance program happening.
I think that some people are questioning the timing of all of this in relation to that.
I think much of the accusations there had to deal with specific surveillance of citizens in this country.
It seems like everything we hear about this, this is about international surveillance overseas.
A little bit of a difference.
This is a broad program, but the edward snowden case had much more to do with domestic surveillance.
I was struck by how much their focus is on yemen.
How does saudi arabia assist us given what we saw this weekend when you look at al qaeda?
Someone said in their native al qaeda holding shop in yemen.
That has been a question with saudi arabia for 60 years.
The problem is they are conflicted.
They know there is an economic interest in being an ally, but they have the internal politics of their country that only complicates it for them.
I look at this and over the weekend keep going back to this, sorry for that, folks, but this idea of how do we get out of this?
Wednesday, thursday, there is no terror attack, there are these tensions, how do you go stand clear?
Richard is right, we could get out of this by killing or capturing, but the problem is that we may not do that.
Probably will not do that.
We will basically be left with the vestiges of that.
Once the public is told this, they will not have confidence that we told you that but we cleaned it up.
You get to a new normal in every time we go to these things we are at a new normal.
We also want to talk about some company news, a new normal when it comes to media broadcasting, the cbs blackout entering its third day.
Hitting viewers in big markets like new york, los angeles, dallas.
Scott galloway, there were reports that james dolan was saying that they would stop offering cable television service will stop and focus some become a broadband operator.
Every traditional broadcast medium has taken its turn at the wood shed over the last 10 years.
Newspapers cut in half, magazine revenues down 1/3, now it is television policy term.
Have we not seen good earnings?
T b has held but you are now starting to see some resistance in terms of prices.
There was no underlying produce -- no underlying increase in productivity.
Who has the most power here, a cable distributor like time warner cable, comcast, or the others?
Or a network, a content creating a network like cbs?
You probably have to give it to the content guys.
All of the innovation is still going into a thing where they need the content.
It is an innovation around the delivery of content that challenges the distributors.
What does cbs do?
What is their ultimate threat if this continues?
When you have one -- we are basically price takers with time warner cable, or whenever you have in new york.
You have to take whatever they offer you and every year u.s. yourself, has there really been any innovation?
So much in our phone, very little around the television.
Right now we get more shows that we know what to do with.
At some point the program is going to grind to a halt, is it not?
I think that what you will see here is that less is more.
People will have the opportunity to pick the channels they actually watch and just pay for those.
How many subscribers this time warner cable news over this?
Difficult to say.
There is so much as they, they probably wind up solving this.
Matthew dowd has been keeping track of each politicians' response to cbs and time warner cable vision, politician comments are hilarious.
Something along the lines of -- if we straighten this out, free beer.
The constantly yell and scream around it and then wind up doing nothing.
Constantly saying -- i cannot believe this is happening.
The other thing that i think is a dramatic shift, to me, when netflix got 13 or 14 emmy nominations?
That was a sign that the world as we know it, all of these things, content creation and delivery, are changing.
I would guess that youtube gets an emmy nomination in a few years.
A youtube original program?
Very good, let me know.
[laughter] very topical.
Let's look at the data check to save ourselves.
The dow jones, record high, flat, euro, 169, oil was elevated, west texas intermediate.
The president is backing apple over samsung.
The justice department wants apple to show competitors.
Is this a new era in government involvement in technology?
We will discuss that in a little bit.
? ? the most remarkable thing about this?
This matter is now with our guest, scott galloway, new york university.
Scott, let's get right to it.
I love with your thinking here.
People are really beginning to question the value of brand advertising and facebook.
The study that we did block shows that less than 3% of the traffic to brands in retailers was actually coming from social media.
Priced in context, social media as not having as large an impact as originally thought.
What is the response to big companies?
I see this out there personally, it is a big -- so what?
Is that the mood of ford?
What they are still embracing social media, it is innovation to constituents and they are still trying to figure it out and experiment, but there are telltale signs of a blow back.
Social media manager at the job is declining and the pay is not what people thought it would be.
The kids coming out of business school are more interested in e-commerce.
Part of this is technological progress, part of it is experimentation in failure.
How are twitter and facebook responding to this idea of less of an impact for visible companies?
You have to give it to facebook, they are probably the most nimble company out there, pivoting in creating products to match where things are headed.
One-third of their revenues for mobile, facebook exchange is basically for targeting, facebook is now responsible for 45% of their targeting.
How are they responding?
They are moving away from the notion that they will be impacting a lot of commerce.
Everyone thought facebook would be a huge pointed distribution and it is not.
They're moving around retargeting, of which is behavioral.
It has proven to be quite effective on the web.
Bring that right over?
That is right.
The new paradigm is classic for targeting.
Can you please inventing easy cookie take awayrer?
You can do that.
You can clear your cookies right now.
For all the talk about privacy, people do take the steps.
Fl, it is all about corn.
" "bloomberg surveillance good morning.
? ? good morning, everyone.
Monday morning, i am tom keene.
Joined by scarlet fu.
Alix steel has our important top headlines this monday.
The state department has extended the closure of 19 u.s. embassies throughout the week to guard against terrorist attacks.
They are located in the middle east, north africa, south asia, a terrorist threats coming from affiliated with al qaeda terrorist in the arabian peninsula.
"two guns" was number one at the box office this weekend.
13 major league baseball players could be suspended today for using performance enhancing drugs.
Alex rodriguez is said to face the longest suspension, probably through the end of next season.
Other players have received a 50 game suspension.
Alex rodriguez could return tonight, possibly playing while he appeals his penalty.
He had four walks for trenton.
You wonder how he is going to do.
38 years old, he has been out for a jillion years.
Maybe he just has not been delivering.
A lovely home run for derek jeter.
First pitch right over the center wall.
That was nice.
That was that the control room.
The twitter question right now , should bethe a-rod and millions be clawed back?
Collect a controversial question that we will take on later on.
Another story we are keeping our eye on, president obama overturning a decision against apple, handing them a victory in the latest twist of the ongoing patent battle.
Our guest host calls this an intrusion into apple's business.
Petrie -- he teaches brand strategy at nyu.
Is this latest patent decision, if you want to call it that, better for innovation or consumers?
I think it is better for apple and the obama administration.
The narrative is straightforward.
He has decided that he wants to associate his brand of new media companies and he cannot drive by a web of 2.0 company without being -- without doing a press conference.
The fact that he stepped in, he is absolutely going to be the guy showing up with an apple computer and blackberry.
Unilateral discrete events like this have to destroy our bilateral and multilateral negotiations.
The biggest customer in the world, you can throw around your weight more than anyone else.
I'm curious if you know what the ramifications will be.
I consider it a non- event other than the branding expectations.
As you say, there was no surprise that he did this.
The president cannot drive buy something with a website on it without stopping in and having a press conference.
It will be interesting to see if he weighs in between u.s. companies.
Having said all that, this internal patent battle, have we learned anything from all this?
If there was a chart, it would be the most complicated ben diagram -- divert -- venn diagram you have ever seen.
They do encourage risk-taking, but now it seems like they are in a constant state of suing each other.
Does it end, then?
This is a tiny slice of the pipe.
There is a constant war between p are in a legal front.
This makes the news, but in reality this is just a tiny leash.
This is war without a military.
We just lined up with one side.
Does this stifle innovation in a phone and smartphone innovation?
That will be the statement on the side of the victims.
Without proper protection, there is no reason to invest in innovation.
You are literally seeing people trying to handle the notion of trying to pinch on your ipad or iphone.
They have applied for a patent with a round of curves.
If you and i agree, getting a patent is ridiculous.
Increasingly complex and political, innovation is still moving forward with these smaller companies asking for forgiveness after the promotion.
What does it not feel like one of the world's most valuable companies?
What do you mean?
No negative news about apple, right?
We don't look at it as the u.s. less valuable company.
Why is that?
-- most valuable company?
Why is that?
We talk about it being below the ipo price.
It is just a more interesting story to talk about the slope of the company.
The slow but apple over the last year has been down.
It still has them the strongest brand in the world.
Thank you so much, scott.
Interest rates as their top concern in a new survey.
We will talk about that, next.
? ? good morning, everyone.
A summer morning in new york, 53 degrees is in new york city this morning.
Freezing on top of mount washington, alex steel and scarlet fu with us this morning -- alix steel and scarlet fu with us this morning.
Ever climbed mount washington?
I do not think i could take it.
I did it by sitting in a cockpit.
[laughter] let's talk about big oil verses ethanol.
It could affect our gas prices.
Let it is a big fight between big oil and corn.
It is fascinating, if you have never heard it.
Basically big oil wants to get rid of the ethanol mandate and the others do not.
When the renewable fuel standard took part in 2007, congress expected gasoline developed.
Then the entire world changed in 2008. as the gasoline gets smaller, it gets smaller and there is not enough to blend with the right amount of methanol.
They turn to the epa and say -- look.
When you do not have any more of this the blend, you have to buy the credit on the open market, up to 25 cents.
Is there a glut of that and all right now?
Can they put more in gasoline?
That is the issue.
Cars to 40,001 cannot have more ethanol in their tank.
When people stop by, 30% of cars right now cannot use it.
I would say that this is 100% correlated with cut -- correlated with the iowa caucus.
They can lower but there restrictions are, right?
I would be shocked.
One of the people with the least amount right now is big oil.
I can tell you who is going to win that fight.
But without blinking.
How is this playing out in congress right now?
There is one in the senate, one in the house.
If we wind up seeing prices at the pump going up, eventually that can do something to the overall economy.
I would like to be able to have a market investment in the status quo.
Forget about the oil, of what is the thing to be right now?
Where is pat roberts of kansas -- kansas?
But corn people, how do they feel about this?
The men of the corn.
If i am looking at record profits and corn prices at a three-year low, i am happy that the ethanol producers are going to be producing this demand.
Could the price collapse even further?
You have to look and decide whether the good news is baked into the price at this point or if they are expecting that at this point.
There could still be concerns in terms of the yield.
What if it is just an overturn of that?
Of course, it is the record high with a great weather for harvesting.
It is a global story as well.
The good crop is adding to the surplus in inventory.
After this i will read a book on microeconomics.
You cannot beat that.
Considering producing cars in brazil, mercedes-benz, import taxes imposed by the country, with a growing number affluent countries there.
The automaker saw 11% gain in june.
Lloyd's has big plans for dividends, paying out 70% of its earnings.
. morning, everyone.
"bloomberg surveillance," all of our interviews on bloomberg tv plus.
Scarlet fu, holding court today with alix steel.
Sara eisen is a small -- rumored to be somewhere over the date line.
Not sure where she is.
She will keep us posted.
I actually know where she is.
We are going to talk about housing.
One percentage point makes a huge difference.
The average for a 30-year mortgage gained a 4% since may.
First- time home buyers are getting more skittish, homebuilders are adjusting their forecast accordingly.
We are seeing talk about housing slowing down a little bit.
This is the 30-year fixed.
Our next guest says to buy, do not rent.
Buying is cheaper.
He is the chief economist.
Those of you on radio, moving from the three area to the five area, it is miles distant, from 6%. as the housing market slowed down?
We have not seen the increasing rate.
Remember, normal rates were 6% during the bubble.
Double digits in the 80's. rates are well below historical norms, making it much cheaper to buy than to rent.
Cooler than case-shiller in the other real estate, but the numbers, does that continue into may and june, even july?
We have seen prices rising into may and june, we have seen it across the country.
I suspect that because of rising interest rates, things will start to slow down.
Between rising rates, rising inventory, and the last interest to investors, we will see prices slowed down before the bubble territory.
We have already seen it in rising resources.
The banks for the made their case, what is the spillover effect into the rest of the market?
They are down by more than half over the past few months.
That is because refinancing, and like buying a home, is a purely financial decision.
What could happen as banks focus more on low purchase lending.
They have less demand for refined.
Meaning that even though rates are rising, because the credits start expanding.
The rate is great, but those who would rather get a 5% would rather get that than the ones they cannot.
Not only investors have been buying homes, what is their trajectory as we see their rates rise?
We have outside opportunities.
Fewer investors are getting into housing.
Is that a bubble issue?
Will there be a downtick in prices?
Only if they sell them off right away.
So long as the rents keep rising, there are more than 4 million single rentals . as people lost their homes to foreclosure, there is the huge demand for rental.
Does rental supply come on?
It is coming on to the market.
An unusually high share of new construction is in multifamily.
Rents are still rising.
I want to pin you down before we go, year-over-year, how much does housing go up in the next 12 months?
I suspect it will be slower than it has been.
I suspect that going forward it will be closer to the 5.8%. next we will talk about the fate of a-rod.
Our twitter question of the day, should his millions be brought back?
? ? good morning, betty liu spent the entire weekend testing vodkas.
I will tell you about that in a moment.
You have added me as a lush.
-- outed me as a lush.
First, the fed, all of this talk in washington, if you are on the golf course, do you drink vodka?
[laughter] it might improve my game, but i do not do it.
They are going to be sponsoring the pga championship for the first time, a two-year deal.
Vodka on the greens.
All new hazard.
All new hazard.
Brands in marketing?
I am familiar.
Betty liu, belvedere vodka, right here in bloomberg headquarters.
Apple is moving to the upside after the white house intervened and overturned the ruling against apple in favor of samsung.
The stock is up 3/4 of 1%. as you might expect, samsung shares are trading lower.
Declining as a result.
Looking at microsoft, the service per tablet, it is like please, please buy products.
We just found out that it went down by 30% a couple of weeks ago, desperate to sell their competitors to the ipad.
Another mover you have never heard of that has to deal with patents in general.
Ring go, up 16% in early trading.
A judge ruled that they are entitled to damages in their patent disputes.
A lot of people on the other side.
It is a portfolio company.
Facebook looks like it is going to hit above its ipo price.
Friday they closed above it for the first time.
Over $38, look at that.
Like to have gone through morning movers without talking about commodity?
True, but i think we wore that out.
We do not know if he is going to stay on the yankees or played this year or next year.
Big question, deal or no deal with alex rodriguez.
Coming up next we will speak with fay vincent.
Tomorrow, peter orszag, the economists from the london school of economics.
Tomorrow on bloomberg television.
Really looking forward to that on monday morning, with me scarlet fu en alix steel are in for sarah eisen this morning.
The market value of samsung taking a hit after the white house had apple with a patent it, wiping out the electronics company from trading in full after the u.s. trade representative overturn an order stopping shipments on iphones and ipad into the u.s.. the battle between them enters day 3 right now.
3 million viewers in new york and other markets late on friday, both sides are fighting over charging time warner cable to negotiate terms.
Shares gaining in taiwan of htc, buying 15 shares between today and early october, following a disappointing earnings report from them last week.
Baseball, it has been a tense weekend for major league baseball.
Both of their fans want to move on from decades of drug enhanced play.
Lenient the has been the order of the day.
First, a baseball commissioner from 1989 to 1982, always controversial, fay vincent joined the from connecticut.
Good morning, how are you?
I think we have an understanding of a-rod and the yankees.
What is the dialogue with you would resume between but ceiling, major-league baseball, and the new york make it -- you -- new york yankees?
I think it is between the union and mr.
Seelig at the moment.
I would doubt that there is much going on between them today.
When we look at the drama of the next 48 hours, can you say that the drug war is over in baseball?
Can we move on from this to something newer and better?
Of course not.
I do not know that the drug problem in baseball or any other sport, olympics, cycling, is ever going to be over.
I think that is the beginning of wisdom.
The problem is they're coming up with things that milk enhance performance, they are well ahead of the cops.
All of these sports are threatened because the form of cheating, that form of malignancy in sports and ruins the sport.
A-rod is clearly the poster boy for this scandal, but this begins well before in college rock -- college locker rooms.
It is a culture problem.
How do we begin to address that?
It is an educational problem, much as it was with drugs generally.
I think that the real problem with this issue is that there is so much money involved.
If you are a 15 year-old kid or a 16 year-old kid and you are told to take these drugs and that it will be worth millions of dollars to you as a basketball player at the professional rank, it is hard to imagine a kid with no resources and very little perspective who is going to turn that down.
He wants to get his family out of debt, out of poverty.
It is all very understandable.
I think it is an enormous problem and i think what is going on in baseball is a tiny slice of it.
It is not even the biggest slice.
The biggest slice is kids in high school and college.
Everybody using the drugs.
Does that mean we should pay the baseball players and sports players last?
So they have less incentive?
I do not think you can tip the market that way.
I think you have to deal with the the reality.
The deterrence have got to be much more painful.
In baseball, gambling does not come to this service at all because we have a deterrent that if you touch that third rail, you are out.
One in you are out.
Like you are known as an east coast guide, it was widely understood that they cost you out of baseball.
How do you grade above deceit -- but ceiling -- bud seelig ? i think he has done a terrific job.
The economics of baseball, which is what he is paid to do, the economics have improved enormously.
It tells you that the people in baseball are happy with how things are going.
Thank you so much, former commissioner of baseball.
What should we look for through this monday?
The day it sounds like a-rod will be suspended for this year and next year.
It sounds like he might be able to appeal and keep playing, although there are conflicting reports.
The only appeal lister him.
You are talking about the best interest of the game and whether he should put that into practice.
The question here is, what would be the damage from doing that?
He would have a strong case and he might lose the battle.
Basically they have had him write letters in the past.
Around the time of collective bargaining the use this.
It was here for gambling, they would not over -- and use it.
Do you think that they understand the problem in all of this?
It is a difficult situation for them.
Most of those players, we help, are not using.
They have to protect the reputation as well.
He is up like everyone and he clearly cheated.
Standing up for him does not look great, but they do need to keep the process.
They have their washington nationals franchise, the antitrust, the freebie, where do they fit in?
They would like to see more of what they said.
They understand that america and baseball is so interlocked.
They know what happens when people do not pay attention to the winner because they do not trust it.
Something like he said, one strike and you are out.
Waxed to get out from under the bad deal, are we going to see something similar in baseball to get the reputation back?
That might try that policy when they go to talk about it the next time around.
The problem with that is that it sounds great until that happens.
You are not so happy with that.
Which of the players do we watch for?
Nelson cruises on the list.
Cabrera, the padre is?
San diego loses him?
Those guys, they think.
One dozen of them are 50 game suspensions.
This allows them to play in the playoffs at the end of the season.
Not that i know of.
On that note, you are headed off to the radio studio to continue bloomberg surveillance on radio.
More to talk about their.
On the markets as well.
We do want to get to our twitter question of the day.
Should the millions from -a-rod be clawed back?
Short and simple, yes, the rules of the rules.
Or would clawback be wrong?
If this goes to court, they will show physical proof.
We will continue to monitor these headlines.
Surveillance continues, "in the loop closed but the next.