Ackman Goes After Botox: Surveillance (04/22)

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April 22 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Robert Albertson, Elaine Lui, Jeffrey Rosenberg, Jessica Naeve, Andrew Witty, and Rep. Sandy Levin. (Source: Bloomberg)

Bloomberg "surveillance." this is -- this is bloomberg "surveillance." keep money tribes drug mergers.

Just cheat money drives job mergers.

We speak to a market veteran on patients.

When your career stumbles, campaigning for an oscar.

We are live from bloomberg world headquarters in new york.

It is tuesday, april 22. join me back on the grand tour of europe, scarlet fu with us and adam johnson as well.

Overnight china central bank cut reserve requirements for some of the world banks.

And you say it is brief, you mean brief.

That is it overnight.

Eco-data 9:00 the fhfa house prices coming up.

10:00 the richmond fed manufacturing and existing home sales.

Still only half.

New-home sales as well.

Earnings before the bell, comcast and mcdonald's. after the bell we have amgen, at&t and yum!

Brands.

One board screen.

Futures flat.

Ten-year yields flat.

Euro-dollar flat.

Loyal 104 per barrel.

Going to the monitor.

Existing home sales.

Here is the housing boom of the middle part of the last decade.

Sales have rolled over again off of the trend line back 20 years ago.

Existing home sales just cannot get it going.

That is an ugly chart.

Now what?

Unemployment stalled out.

More on that through the next number of days.

Here is scarlet fu.

Top front-page story about changing up the guard at ford.

The chief operating officer, mark fields, will be named ceo eventually.

The announcement may come as soon as may 1. alan mulally probably stepping down by the end of the year.

He is 68 years old.

A former executive who turned around ford and kept the company from pursuing a federal bailout.

He signed up on the $23 billion loan before the financial crisis.

A stroke of brilliance.

They never had to pay government -- take government money.

The point is, ford figured out how to use assets and figure -- position itself correctly.

Between bill ford and alan mulally, it has been something.

Mark field has been at the company for 23 years.

Alan mulally's eking to stephen engle in china.

Look for that as well.

The second front-page story, bill ackman going after another company.

Dell singing -- evening up with valiant pharmaceuticals.

Pershing square and valiant think it is undervalued.

Right there.

What is interesting about this story, it valiant had been trying to interest them in a merger.

Excuse me.

They were repeatedly robust.

This is a huge deal.

An activist is getting the acquirer before the critically valiant.

So they begin the dance of 14-15% ownership.

That is right.

Shares are up in the premarket.

Al again -- allergan.

By the way, a fine looking bowtie.

We decided to be inspired i mr.

Ackman in the twitter question of the day.

If you were bill ackman, what would you target next?

He has been very busy whether it is netflix or herbalife.

We steer away from the corporate world and go to politics.

Joe biden in kiev to show solidarity with the ukraine.

His message is we want to be your friend, your partner.

John kerry warning there will be consequences.

I want to rip up the script.

What did you learn on your european trip?

That google maps is superior to apple map.

There seems to be calm and quiet after the european debt crisis from a couple of years ago.

You do not sense the panic.

At least in italy.

Your children were well behaved?

They were well behaved.

Very cool you drag your children around euro.

A dead market.

How will the economy performed?

Into summer, fall and winter of 2000 14. robert roberson has seen quiet times before.

Guest host.

She strategist at sandler o'neill.

Also joining us is jon erlichman.

What the title.

That is so cool.

Chief senior west coast correspondent in charge of the sunset tower bar for me when i am out there.

Looking at the markets.

They are dead.

Why are the markets so quiet?

Everone is still trying to grasp where we are in what is going on.

We have a very lengthy and sluggish recovery.

People point to things like housing and say it is recovering , and they look again, and it is not.

The numbers that have come out are consistently mediocre.

I thought janet yellen speech , she really hedged the future.

Do the smart people know what is coming in july in september, december?

No, i do not think anyone does.

There is so much artificiality in the markets right now.

It is very hard to see the truth.

If you look into it and see the broad demographics of the country, it starts getting much clever a cousin we are having a long term slowdown trend in labor force, and that is really holding us up.

That is the bulk of the economy.

Let's get the chart up right now if we can of wages.

Alverson does the best charts on the street.

You have wages rolling over and then you adjust for health care costs.

The great leveling of wages and salaries, up we go.

Believe construct perhaps a century.

Then we go flat or even rollover.

If you look at what we spend and how much is funded by what we earn him a their earnings is going down and down the lift it to the spending.

The total back to where we were in the depression.

If you take out the health cleric burden -- health-care burden, it is much worse.

If you look at what we can grow generically, it cannot support.

This is what steve roach says.

He takes the idea that the consumer flat on their back.

Jon erlichman, looking at media companies.

Representing a threat of the economics of the television industry but not the only disruptive force.

Why is it different with aerial?

Because they have their act together and came to market with something that work very well.

Gives you the same netflix experience but it is for broadcast television.

I would argue it is the most important case over the past decade in media.

On the one-sided is successful and raises the questions about aliens and billions of dollars the brought pastors are paid.

I go back to what you guys were just talking about, the economy.

Do people want to pay what they are paying for cable?

The cable bill is probably going up because the fees the broadcasters get will continue to go up.

To that excellent charts about the fact that real incomes are stagnating.

Who else is providing value right now in hollywood in your beat in entertainment?

Everyone is choosing new platforms.

Broadcasting works, unless you are cbs still largely the stand alone tied to a broadcast network, but if you think about the engine of growth, they are not the broadcast networks.

For disney, abc is not an engine of road.

They are looking to platforms like netflix.

Will a supreme court judge asked awereoereo today if they will take away broadcast tv?

I think they will ask if they will broadcast to a bunch of people?

Do i understand correctly a few stations are under threat if they win the case?

They would argue no because the fees to the broadcasters will remain.

That is one of the issues whether they go away.

I do not understand what this means for me.

A guy like me.

Even if i have cable tv.

It means that if they are successful, that you are allowed to continue to have a rabbit year's world.

That you are able to have the 121 relationship with the broadcaster because you have an antenna.

I think where things get obligated and where broadcasters are skeptical is what happens if they are successful and the business model starts to broaden out?

Right now they have played it very simple for the most part.

John will be with us.

We will pick this up in a minute.

I am fascinated by this.

Everyone we know in media is riveted by this.

The intersection of technology and media.

I have a great story for jon erlichman.

Did you know san francisco has a new fleet of trains for the rapid transit system and the interior was selected by someone who knows nothing about the nfl and loyalties because the seats are neon green and blue, the color of the seahawks.

Probably one of the most hated rivals of the 49ers.

A niners fan started a petition and asked that the seats be scrapped.

He noticed the general motor used to -- the general manager used to work in seattle.

He is probably a niners fan.

We can blame him as well.

Does anyone use the subway in l.a.? they are trying to implement more bike usage.

To our audience worldwide, when you say i live in l.a., what does that mean in 2014 the?

Use google maps.

It works in italy and l.a.. we have much more coming up.

Streaming success.

Netflix first-quarter sales profit and subscriber growth beating analyst estimates.

We will discuss the company's next success.

This is bloomberg "surveillance." ? good morning, everyone.

Bloomberg "surveillance." in our 7:00 our competent that he will and aereo chief executive offersicer, chet kanojia.

This is bloomberg "surveillance." good morning to all of the worldwide.

I am tom keene.

Watching house of cards on netflix is about to get a lot more expensive.

I am watching something less bloody, and name of the rooms.

Charging new customers one dollars to two dollars per month more because of online numbers.

Sales numbers beat estimates.

Jon erlichman is here with us to discuss this.

Netflix has learned pretty hard lessons about price increases.

This time it has done things a little bit differently, dipping the toe in the water slowly.

You know what is different this time around the gecko house of cards.

They have original shows.

They understand that netflix is home to their own stuff, stuff you would find on a cable channel that you like or their hbo game of thrones.

So they can say we are going to raise prices to ensure the continued to make the kinds of shows you have come to like.

They were not in that decision the last time they toyed with pricing.

By frankly, everyone always thought they would have to do this anyway.

They have billions and billions worth of obligations.

We need to charge more in order to give you the content you want.

Who was at netflix figuring out what the content is?

Who is the master behind content?

The guy who gets the most attention is ted saran toasts -- ted serantos.

They took a page out of the hollywood book.

They were nice, they were a friend of the big layers in hollywood and said we are looking for interesting stuff, interesting shows.

We write big checks and people slowly but surely said ok.

Some approaches in the past with hollywood have not been as easy.

They definitely broke the mold but no longer are the ones doing it.

Amazon does it very well.

Netflix not tapering off necessarily but no longer such a unique player.

Amazon does not share specific numbers or details or how many people are using its service but it is growing quickly.

Prime, the free shipping program , they just raised the price in part because of the content.

What is the response of netflix.com?

How does cbs or nbc response?

I think netflix has forced the traditional players to pony up more commitments to slightly move away with the traditional program of pilot season, which never made sense to anybody.

You have the new shows and test them to see what works and what does not work.

Netflix came in because they were the underdogs.

Then not only had to commit a lot of money for the shows but had to commit to long stretches of shows to say we're in it to get the content creators in it and you have since seen at other programs -- since seen other programs.

You use to see the guys who ran studios where the power players.

Everyone realized it was distribution.

Where is netflix in the food chain rocco you raise an excellent point.

Netflix said it is against the merger between comcast and time warner cable.

This after they are ready cut a deal to ensure they can get high broadband speeds, which has improved service for people watching during prime time and use to get frustrated with buffering.

Broadband is king.

Comcast is king.

Cable companies are king.

That makes netflix uncomfortable as they have to pay to get good access to the pipes.

They are worrying about having to pay others.

At&t and verizon and others.

The precedents that it sets.

Come back again.

Jon erlichman in town for the morning.

Coming up, going live to michigan to speak with sander levin about the challenges facing the long-term unemployed in his state across the nation.

Streaming on your tablet, phone and at bloomberg.com.

? good morning, everyone.

I believe we migrate towards 70 get raised this afternoon.

A good and beautiful thing.

Yankees doing better than good.

The drugs kicked in.

Good morning, everyone.

Good morning to all of you in boston after a terrific boston marathon.

With me is yankees fan, scarlet fu.

Adam johnson with us as well.

Vice president joe biden arriving in the ukraine in an ease to do tension has shown signs of crumbling.

Taking over buildings in eastern ukraine.

Militants say they are not bound by agreements.

The vice president will meet with the acting president in kiev later today.

Some student loan borrowers are being hit with automatic default when the cosigner dies or declares bankruptcy.

This comes, a study by the consumer financial protection bureau.

The agency recommends giving the borrower time to find another cosigner.

Manchester united has fired the coach after 10 months on-the-job.

The team has racked up 11 losses so far for the season.

The most defeats in 22 years.

He took over for coaching legend allison -- alex ferguson.

Jim o'neill is at the top of the list.

He has nothing to do.

Bloomberg news contributor.

If you are watching, call one 800 wayne rooney and fix this.

That is all there is to it.

Time for morning must reads.

I am going to go with morning must reads.

Former supreme court justice, sandra day o'connor.

Millions of students taking the sats will now encounter tests like the declaration of independence.

Old test prep methods will not be sufficient.

They will need more sophisticated tools.

Digital technology will be essentials.

A marrying of digital.

This is about what you write in your legendary notes.

Critical thinking skills.

How did you pick them up at carnegie mellon?

I was taught to doubt everything to learn the truth of it.

Sounds crazy.

It makes your brain work harder.

I would like to know if maybe we should all take it again as adults to see how we would do.

Stop.

You would get 800. how would we do?

How good is the critical thinking is the question?

You have to fight.

For those of you taking the sat -- [inaudible] trigonometry.

I like it.

Talking banks with robert.

? good tuesday morning, everyone.

Right to a data check.

Quiet screen.

Quiet market.

Futures flat.

Your row still elevated above 1.38. rent crude off the bloomberg, 109 .40 one.

Elevated hydrocarbons.

Scarlet fu is back with the movers.

Traffic moving.

12% higher.

Christopher rowland raising his price target.

The other big mover i wanted to highlight was lululemon down about five percent.

The biggest drop since january.

Saying lululemon does not have a clear strategy for opening sales.

That is what the takeaway was.

Is it so yesterday?

They are more expensive.

They have all jumped in as well.

Safe to say.

There is a theme here.

Can we do that with the banks?

Is there a bank we can turn into french?

What do we got?

In all seriousness, you talked about the banks as being priced too high and growing too slowly.

Institutional investor has rated you one of the top analysts for years.

There has to be niches.

I am very bullish on a subsector of banks that are focused on the business economy, because that is the part that is growing.

Step back and look right now, we are at the slow dawn of old-fashioned thinking.

We have a constant flow of banks coming in and raising new capital.

Investor demand is there.

They have to have a growth story, and they do.

The simplest way to think of it is the banks have 10 trillion -- seven trillion in loans outstanding and nonbanks have 33 trillion and the nonbanks continue to shrink.

The banks will be able to read and inherit what they once lost.

More and more people are seeing this.

This is a bolstered her a overall.

When you say it is a very said pacific -- specific subsector of loan.

Individuals?

It is commercial.

Business investment.

Business spending.

It is growing.

The demand for it, entrepreneurs, creates people who see the broad picture.

Plenty of global demand.

Both consumer slowly trying to pick up.

You see this as a leading indicator.

How are banks doing it differently than in the past?

That is the irony.

They are doing it the old way.

Putting credit on the books.

Doing basic lending.

They are beginning to understand what they used to do 10-20, 30 years ago.

The commercial side is study.

It has been that way for three years.

I want to explain to people why we have guests.

These are for ugly -- four ugly charts.

Copy write protected.

This is the secret sauce of why we have gas on the show.

I have to go home with a magnifier and freebies because they are so informative.

That is the pro level we try to bring you every day.

Continue.

Talking about return on equity.

That used to be the way they would measure profit.

Is this a preferred way of looking at it?

Return on assets is more fundamental.

This needs to be adjusted for any business model based on the current environment of interest rates.

You are earning nine percent.

Just as good as earning 14 when the risk-free rate is higher.

Is the return on equity valuable?

Over the risk-free rate, back to pretty much where they were before, even before the banking sector had it in terms of margin recovery.

This is not a broken model but a very strong model.

It will unfold over the next couple of years.

Who gets the advantage?

It is really both.

I would have to tell you the bulk of the momentum is in the commercial side on the low end and medium end.

When you say low end, you are talking size?

In many respects to my trucks to -- i trust the polling more.

These are people with next on the line.

Let me ask about net interest margin.

An average net interest margin of 2.6%. that was the lowest in a decade.

Have we seen a bottoming out?

It looks like it.

You can have little surprises.

The first is more loan growth.

The second surprise is the margins are not declining that much anymore.

It looks like we're are at the bottom and eventually it is going to do step topline.

The best education you can get, he specifies the degree to which a return to normal is massively good.

Very important.

Higher interest rates are good for the economy.

Peter huber at deutsche bank has remarkably optimistic view on the american economy.

If we get at deutsche bank economy, what does that due to the banking business?

They get back to the normalcy of the margin.

They have momentum of the valuations go.

What does the gloom crew most get wrong?

They never see the bottom or the top clearly.

They missed both.

I want to bring up something in the ft.

Talking about goldman sachs losing exceptionalism.

Surviving the crisis and immediately thriving with a crowning glory.

Over the past few quarters, goldman sachs starting to look exceptional.

Investors no longer paying as if it is exceptional.

I am not supposed to talk about individual companies.

It is still exceptional.

The larger they get a more complex they get, the more people doubt them some a particularly the politicians.

There is a culture there.

People miss that.

They continue to adjust and move towards the epicenter of the country instead of trying to do it the old way.

Tyler: writing a beautiful review -- tyle cohen writing a beautiful review.

You have seen for decades the evolution of a financial system.

From your view, is this a gilded age?

I think it is a return now to basics that work.

Return to what era?

Probably the 70's and early 80's. i am talking about the momentum focus on quality.

The idea of the financial sector can grow just as fast if not faster than industrial or tech.

Valuations do not take off.

You have a really good long-term investment proposition here.

Robert over syntel me i need wide lapels.

You can stay with that.

That is a good-looking suit.

That will work.

Definitely a winner.

What a treat having robert alverson here.

You are with us for the whole hour.

Top-rated taking analyst here in and year out.

Lex more coming up, including, have you been watching a grainy game of thrones if you stream or still seeing a lot of spinning off her wheels?

Who do you blame?

That brings us to the twitter question of the day.

If you were bill ackman, what would you target next?

Someone argued.

We will be back.

Tweet us.

? / good morning, everyone.

I am tom keene with bloomberg "surveillance." tom -- adam johnson us top headlines.

Greece turning into outrage of the government following last week's ferry accident.

Newspaper has blasted the government handling of the tragedy, suggesting officials cannot be protected to -- to protect citizens in an emergency situation.

The death toll half past 100 as crews continue to recover bodies from the passengers of the boat.

Nebraska's governor asking the state high court to dismiss a court challenge in the keystone pipeline.

The court case is delaying the white house review of the proposed object.

The court may not hear the case until september and may not rule until after midterm elections in november.

This is amazing.

A 15-year-old boy survived the 5 -- five hour flight from california to hawaii inside the wheel jet.

This is san jose international airport.

He climbed up into the wheel well of a bowling 600 77. he passed out in the air.

Did not regain consciousness until the lane -- plane landed.

Those are your top headlines.

Mind boggle.

Truly he is lucky to be alive.

Between the temperature and lack of oxygen.

Lex and credible.

Also, what does it say about security.

The whole thing.

15-year-old boy one, tsa, zero.

Single best chart.

Lex -- i caught up with game of thrones yesterday on my streaming device.

Mobile -- no buffering involved.

A lot more people spend time watching the color wheel spin and spin.

Turns out the reason might be your internet service provider.

This is from an online speed testing site.

Most major u.s. internet providers deliver slower speeds and they advertise.

The only two that do better is verizon in charter communications.

For rise in internet services, 23% below what they advertise.

Lex this is a great technological process story.

The software has go -- gone so far behind the software, most people has an older computer.

There is another side to that, the challenge is going to the app development side and software side and not going to the infrastructure side where they could work on improving the pipeline in making that a better experience.

I have the normal stuff in new york, which is slow.

I tend to use corporate wi-fi wherever i can.

To me, it is still amazing.

I cannot understand why it takes so long to get it moving probably and faster.

Go to china.

What will we'll do?

I understand that.

We were resting on what we both way long ago.

Every building in new york -- top of the mountain in far western china and they have far as -- five bars.

Latin america.

Some of the buildings like rockefeller center, we could not get bloomberg television because it was a premium channel on time warner cable and was filled old wiring.

I still cannot get bloomberg hd.

Everyone looks a little fuzzy.

Fortunately you can stream it on your computer or iphone.

Very good.

I like that.

Shameless plug.

We want to ring you images.

Vice president joe biden speaking right now in kiev as the u.s. offers 15 million in aid to ukraine.

You didn't hear me correctly, 50 million within mf.

About 47 billion.

I was shocked by the number.

I am not qualified to say that.

15 million, 11th way 4 million.

What i would notice is the u.s. is here all alone.

I do not see any rhetoric supporting what the president or vice president are saying from other nations.

They have fallen silent.

There has been a real active leadership from the world in general.

A lot of people have opinions.

Very few entities are pledging support.

Christine lagarde is the exception.

We will obviously monitor everything happening on the ground.

To say it is a fluid situation, there is a lot more than that.

Money has been cut on all of the ukraine tension.

We will continue to watch the market a lot from that as well.

Let switchgear.

Conscious uncoupling.

Wardrobes malfunctioned.

We dissect the strategy behind celebrity gossip business with one reporter who lane she has never paid for a single tip in hollywood.

Why do we even pay attention to this stuff?

This is bloomberg "surveillance." ? good morning, everyone.

Bloomberg "surveillance." futures flat.

Looking at the existing homes.

A beautiful shot of manhattan.

The deep dark distance, i believe that is new jersey as we know it.

Across the hudson river.

There is the statue of liberty.

This is bloomberg surveillance.

I am here with tom keene and adam johnson.

We start with netflix hiking prices.

The company will charge new customers one dollar-two dollars more for the online video service.

Confidence that they will continue to attract new subscribers.

The hot hi-fi will take place later this quarter but a general time of adjustment for existing customers.

Another drop in profits china mobile.

Net income falling 9.5%. third straight quarterly drop.

Blaming the decline on subsidizing the iphone as well as the cost of building out.

Samsung fires back at apple.

The company says the patent claim is 57 times higher than what it should pay.

Apple meantime is demanding $40 per farm.

That is today's company news from the files of bloomberg west.

We covered the big topics.

The ukraine, uconn huskies and obamacare.

The unconscious compelling or conscious uncoupling of when how throw and chris martin.

The announcement on the aftermath.

This is part of the celebrity industrial complex that consumes our attention and money.

Along the way reflects cultural biases.

A professional gossip.

Her blog it's more than 1.5 million unique users per month.

She has written her first book and joined us in new york.

Welcome.

You are more like a cost sociologist/philosopher rather than a regular columnist.

What is the difference between what you do, what you produce and traditional outlets like people magazine or even other bloggers like perez hilton.

We are trying to analyze the gossip stories.

View just brought up conscious uncoupling.

This is a rebranding of divorce and break up.

We all know the word on just uncoupling.

Right now trying to make it sound better.

The analysis is why we are trying to make it sound better.

Why is it we have come to a point that we cannot accept the word like divorce or breakup and have to talk about in different terms act of when the how throw gave us conscious uncoupling.

-- gweneth paltrow gave us a unconscionable is -- gave us conscious uncoupling.

It is a way we communicate boundaries, expectations, cultural standards for behavior.

What is really interesting is a couple months ago out of stanford university did a study on gossip and the value of gossip and especially the role of gossip in groups them and they said in groups, cost of helps identify and root out inappropriate behavior.

It identifies those who are exhibiting those behaviors and helps the transgressor perhaps modify his or her behavior to be able to reemerge as a productive member of the group society.

When you apply that to the everyday gossip we engage in, perhaps the watercooler, it is a form of communication among your colleagues, family members and the community to identify -- to identify what you expect out of a productive relationship.

I want to ask you about inappropriate behavior in terms of child stars.

They get prostituted out by parents at a young age.

Justin bieber, lindsay lohan.

Took a village to create the adult monsters.

You have a book that looks back at your mother's role in shaping ambitions and drive.

Talk about the distinction between what we are seeing that the young talent in this one like yourself?

I would say one difference would be that my mother, very traditional chinese mother never told me i was special.

In fact, the opposite.

Whatever i did something wrong or disappointed her, she would often say i should have given first to barbecue pork.

Would have tasted good for five months and would not give me grief for so long.

I had to earn her complement and praise.

Across your whole book, i will call it the angst of the asian america.

What does that mean?

Direct translation is strict family instruction direction.

My parents took me to a monk and i was a baby, and he assessed me and said -- he told my parents, this child needs discipline and structure.

My parents took that to heart and disciplined and structured me my entire life.

It's within your prism, where will the asian community in america be in a decade as they practice this?

The interesting thing is i am not sure they are practicing as much of it anymore.

There has been a lot of conflict within the chinese community as i know it at many of the values we grew up with and my generation, the confusion you, the value are not encourage any more and there is a new generation of chinese that is losing that fundamentalism.

Thank you so much.

Under and editor of lady gossip.com.

The forex.

Everything stable.

Remember he moves to 6.24. much more.

It is bloomberg "surveillance." ? bill ackman goes after -- his chief money drives drug mergers.

It is all quite in the markets.

To a market veteran, your need for patients.

All of the media transfixed by american broadcasting companies.

Good morning, everyone.

This is bloomberg surveillance.

We are live from our world headquarters in york.

It is tuesday, april 22. our guest is for the hour, jeffrey rosenberg.

Chief investment strategist for fixed income.

A busy morning.

But get right to adam johnson.

The chinese central bank cut the reserve requirement ratio for some of the world banks.

As gdp slows to close to seven percent.

Economic data here in the u.s., 9:00, we are going to get the house price index.

At 10:00 we get the richmond fed manufacturing.

Existing home sales.

Still only about half of what they were back in 2005. earnings before the bell -- we are getting contact -- those earnings-per-share numbers is $.58 adjusted.

The analyst consensus was for $.64. it $17.4 billion on the revenue side.

Higher than what analysts had been looking for.

If you back out olympics related revenue, which came out to $1.1 million am a that comes to 16.3 one billion.

Free cash flow per share is $1.07. i love how they break down the olympics.

Think of the magnitude of that number.

$1.1 billion for the olympics.

No wonder you have broadcasters betting online sports.

It was espn which paid $1.2 billion for the monday night football franchise.

I could be slightly off, but the point is, they are all billion-dollar numbers.

Video customers increased by 24,000. they have a plus sign.

The consensus here, a drop or flat growth.

Bc universal offering cash flow of 37%. only 300 shares on the tape.

Don't read too much into that.

It is just 300 shares.

After the bell, we will have at&t and yum brands.

What else you have?

Let's get to company news.

Bill ackman has a new target.

Thee hedge fund manager is looking for a takeover of the maker of botox.

It will be valued at about $50 billion.

Shares of the company up 18% in the premarket.

A sleeping research in the drug industry -- the swiss drugmaker is buying the company for $16 billion.

It is selling the vaccine division for $16 billion.

A changing of the guard at fort.

Mark fields will be named ceo of eventually.

The announcement could come as early as may 1. he will step down by the end of the year.

Fields is 53 years oledd.

Joe biden speaking in ukraine just moments ago, calling on russia to go and pull back its forces.

Announcing a new $50 million aid package to support crimea.

Ukraine needs $47 billion.

This is a very small amount.

It is one gesture.

Showing the flag -- it's a lonely flag.

The only other flag we have seen is that of the imf.

I guess it shows the imf means business.

Where is germany on this?

Were those visits -- where are those visits?

One thing we are looking closely at -- we mentioned earnings.

Comcast is looking at this closely.

The legal battle between aereo and the nation's biggest broadcasters.

The world arguments begin this morning.

It is shaping up to be quite the bitter fight.

Aereo has everything on the table here.

Buried back areaarry backed aereo.

This is a david versus goliath story.

They are suing aereo because they believe this companies stealing copyrighted material whereas aereo says, no, we are like your antenna or tivo where we are transferring that data over to consumers.

We met with the ceo of aereo outside this up in court yesterday.

He said, look, we are in equipment provider -- we are and quitman p equipment provider.

I have somehow made it simpler so consumers will exercise their right.

They know that is consumers exercising their right to take an antenna.

Why are those rates going up?

Why are you paying more in your cable bill?

If you look at this chart, cable providers are paying $4 billion this year for those retransmission fees back to broadcasters.

That is expected to go up to over $7 billion in 2018. the fear among broadcasters is, hey, if they can start getting their signals wherever they want using aereo, they will cut the cords a even more.

That undermines the credibility of those fees.

We will be tweeting out that chart.

Set the stage for us for what will be going on in the court today.

Who are the attorneys on each side?

There are two attorneys who represent either side.

You've got paul on the broadcasters.

He's a former u.s. solicitor general.

He has appeared before the supreme court dozens of times.

Working on behalf of 26 states against the affordable care act.

Then you have david frederick who last represented nfl players in that concussion lawsuit.

The settlement up to $1 billion for the football players.

The second case of the day, they're likely to wrap up in one hour.

After they make their oral arguments come of the court is going to tentatively vote on this case and that decision will be out by the end of june.

We will continue to see more of your highlights from that conversation.

Betty liu joining us from washington.

In the economics -- jeffrey rosenberg, i'm thunderstruck at how quiet the markets are.

Why's it so quiet?

People are in between periods right now.

It is a bit of a trans transition.

Waiting to see those growth expectations.

What is the black rock view of third-quarter?

You have all your pms out there getting the polls of companies.

Do you believe in the optimism of a better third and fourth quarter this year?

We certainly believe in the fact that the first quarter has been dampened by a lot of the special factors.

If there was no inventory cycle and the weather played a big role in that.

We should expect to see some payback in the form of higher economic growth in the third and fourth quarter.

Yes, we do expect the bounce back here.

When that happens, that is when you are going to start to see some real challenge -- 13.25, are we too complacent now?

Absolutely.

There is another chart, the bond side of the vix, which is interest-rate volatility.

Back to the store glow levels.

Talking about mov -- that's amazing.

Look at that chart.

I will put this on bloomberg radio plus now.

We go to new complacency.

Look at the spike last year.

That was the spike around may of last year.

The tapered tantrum transition.

We have unbound that completely.

You talk about quite markets in terms of aches and the equity side.

Also on the bonsai.

That is not where we're going.

We're going to a transition in the fed policy paired volatility is going to go higher.

Why's the 10 year still up to 270?/ you have a lot of expectations when the rate went straight up to 350 in terms of economic growth.

You had a lot of disappointment and a lot of offset positioning and equity market lately.

You have that in the fixed income market.

That is one of the reasons why.

We will come back to jeff rosenberg here.

The quite market.

Output a question of the day.

If you were bill ackman, what would you target next?

He has a deal coming today.

? good morning, everyone.

To our guest host, jeffrey rosenberg.

He is managing director at blackrock.

Jeff rosenberg is boarred.

Things could change.

I love the tension in your note about how we are complacent.

Wait a minute.

What are you worried about?

The title of our node was out of the frying pan and into the fire.

A lot of our concern is that investors last year.

Rising interest rates and they got out of a lot of traditional dixon come products and have been hiding out in the front end of the yield for short appreciation product.

If you look at where we are going what's going on with fixed income market, we're going to have a fed that is transitioning towards had a policy.

If not today or tomorrow, but in the next year.

We will be talking about tightening.

It is the front end of the yield curve that goes up the most.

This is where people are hiding out.

It is a bit of an underappreciated risk.

You are old enough to have seen this any number of times.

Why don't i go-something different?

You have the best reason right front of you.

Look at first-quarter performance.

One of the most surprising things -- i got it wrong.

Stocks underperformed and bonds did better.

Which bonds beat stocks?

Yet to have longer exposures -- you have to have longer exposures.

You may change how you own bonds , but the longer end of the yield curve, because interest rates went up so much last year, they were restored the balance valley.

It is why you own fixed income.

Your portfolio has a map sailing on rocky seas.

He to keep the boats from tipping over.

If you read, 60% equities and 40% bonds.

Is that math broken?

It's not so much that the math is broken.

What you do with that 40% bond?

You go back to those textbooks and the a lot of the traditional approaches to fixed income -- it worked really well when yields were high relative to inflation.

You have a lot of fixed income.

Now their negative.

Yet to be more flexible in how you manage your duration, exposure.

You can't simply put it in 40% traditional bond funds.

Jeff rosenberg with the conundrum that is the field forward for janet yellen appeared we will look at what's at stake in this huge media case.

Aereo goes before the supreme court.

? good morning, everyone.

Bloomberg surveillance.

I'm tom keene.

Our guest host, jeffrey rosenberg of blackrock.

It is a dark day here at world headquarters.

On the edge of 39 years old.

We go to birthday boy, adam johnson.

And might be 39 plus one or two.

In south korea, greece is turning to outrage.

-- grief is turning to outrage.

Editorials have blasted the government handling of the tragedy, suggesting officials can't be trusted to protect citizens in emergency situations.

The death toll has passed one hundred.

Its crews continue to recover bodies of passengers from the boat.

Manchester united has fired coach after just 10 months on-the-job.

The team has racked up 11 losses so far this season in the premier league.

The most in 22 years.

He took over for alex last year.

The story that is absolutely mind-boggling.

The 15-year-old boy survived from california to the why inside the jets wheel well.

He climbed up into the wheel well of a boeing 767. the team passed out in the air.

It did not regain consciousness until an hour after the plane landed in hawaii.

Lawmakers are demanding answers about security around the airport.

I saw a brief graphic on this.

The commendation of the cold and oxygen -- a lot of people at die die from this.

Climbing through or under or over a barbed wire fence and on the tarmac and nobody -- would you climb over the fence to get your manhattan for the day?

It does happen on occasion.

It's my birthday.

The future of television rests in the hands of a few supreme court justices today.

It will be hearing arguments about the legality of aereo.

At stake, a lot.

4.3 billion dollars in annual television retransmission fees.

For more on the high court standoff.

Not a lot of precedent here.

What clues do we have as to how the supreme court might win today?

There are some precedents.

The supreme court has tended to side with content creators in these industries.

There is a lot of lobbying power and preconceived notions about where the restrictions should rest.

The u.s. has always been siding on copyright and protecting original creation.

I believe the broadcasters will prevail.

That being said, aereo is getting attention because there needs to be overall in this industry.

Is there any area of gray where the supreme court can find comfort?

There is absolutely an area of gray hair.

Part of the problem is not only, do we consider these individual antennas to be the same as an antenna sticking out of your tv?

What president are you going to set for other industries if you roll one way or the other?

There is all this uproar, will this affect cloud computing or future internet innovation?

Content creation has always been a very protected part of the u.s. economy.

That site has some rapport to it as well.

You bring up a great point, the applications were everyone else.

Aereo itself is not that big a threat.

It only has 500,000 subscribers?

Closer to 100,000. they won't reveal the actual number.

There seems to be a key to this debate.

Whether watching something on aereo is a public or private event.

It is a really interesting -- they are not only retransmitting the signals.

They are storing them so you have access to the signal and you can choose how fast and slow and which a to watch.

They're doing this on mass in a location with mobile antennas.

They're doing it via a standardized subscription service.

I just looked up to the oxford english dictionary and most of the citations go back to 1300. the word that goes back to -- is this a debate about that?

There is a idea, maybe 50 years ago, people had the right to some kind of news content streamed over the airwaves and the government-subsidized some amount of free u.s. consumption of news and maybe some local, important events.

Now that has become a lot less relevant.

Is it theft when it's a public good?

Antenna aren't that accessible in most cities.

There's too much interference.

Are they just making the public good more wider?

Or is it a lost cause to make news a necessity for everybody?

Jeff rosenberg, what do you think about all this?

I'm following in a little bit.

It is not the focus of fixed income investors, but certainly for broadcast.

The gray area where it might find some common ground.

What is it?

The retransmission fees were sent by a law.

This is a retransmission by some definition.

It is because of the six second delay.

The fact that they're just taking the signal that is publicly available is considered not a retransmission.

Just an antenna like everything else that is currently available.

Is this taking something new into account or not?

Take you for joining us.

We will be watching this in the supreme court today.

Oral arguments begin this morning.

We will go to michigan to speak with sander levin about the challenges facing the long-term unemployed.

? good morning.

A live shot at washington, d.c. the supreme court begins to hear oral arguments from aereo and the big broadcasters in that landmark trial.

Betty liu is reporting live from washington this morning.

We will speak with her later on.

This is bloomberg surveillance.

I'm scarlet fu with tom keene and adam johnson.

The official unemployment rate of 6.7%. if you count part-time workers who want to work full-time and those who just have given up, it's 12.6%. representative sander levin of michigan wants to help by extending long-term and the claimant benefits.

He joins us now from detroit.

Thank you for being here and joining us on the show.

What is it people in new york and washington get wrong about the long-term unemployed who can't find work?

Is not only michigan.

It's ever appeared 2.5 million people lost their unemployment insurance.

If the speaker would just walk in my shoes for one mile -- i think we need to get into the shoes of people who are out of work more than six months.

Historically high figure.

Understand that they are desperate and looking for work.

We have cut off their unemployment insurance.

Sometimes they lose their homes.

They don't have the money for gas so they can look for a job.

How many contacts has she made?

Between 300-400. she was in the administrative position.

She is a white-collar worker who is looking for work and can't find it.

Here we are saying to them, you're out on your own.

You were out in the cold.

That is not this country.

Is very painful.

By the same token, the unemployment benefits have already been extended several times.

At what point -- how long does it take before helping people try to have some cash flow actually becomes a permanent handout for lack of a better word?

It's not a handout.

We have not had this percentage of people who have been long-term unemployed more than six months.

Never.

We don't have records of the depression but since then we have not had almost 40% of the people unemployed who have been unemployed for more than six months.

This is an unprecedented situation.

This is not a handout.

People work for their unemployment insurance.

They're working and looking for work.

What do we say to them?

It is bad for them and for our economy because people spend it.

You mentioned the people who are working part-time at people who are dropping out of the workforce.

That is bad for this country.

We are losing hundreds of thousands of people who are giving up.

We don't want people to have to give up.

You have been on the watch since 1983. whether republican or democrat, what is the distinction of the long-term unemployed versus what we saw in the slowdown of the 1990's and that recession right before you joined congress?

It is very different.

We have never had almost 30% of the unemployed in this country who have been unemployed for more than six months.

Everybody has to understand this.

We have not had this situation before since the great depression.

Therefore, we have to take unprecedented steps to help people so they don't lose their homes and go hungry.

It is different now.

If we were to parachute into kentucky and you were to sit with mitch mcconnell, where would you agree on support of long-term unemployed?

He needs to face up to the situation in kentucky and elsewhere.

These are people from all walks of life.

People like us.

People like you.

People like all of us.

These are people from all walks of life.

Many of them are older people and there is an age discrimination.

People tell me they've eliminated from their resume all reference to age even when they graduated high school.

Just read the newspapers.

The washington post put an article in the paper and they had comments, read those comments of people who read the article and hold them of their plight.

It is painful.

It is more than painful.

You are absolutely right.

Thank you for joining us from detroit.

Thanks for having me.

Breaking news on the bill ackman deal.

This is part of bill ackman and balanced teaming up to target allegrgan.

This is bloomberg surveillance on bloomberg television and bloomberg radio.

Look for all of our products in the digital space.

Like apple tv or bloomberg radio plus.

And on android and itunes.

I'm tom keene.

With me, scarlet fu and adam johnson.

Jeffrey rosenberg of blackrock.

Glaxosmithkline announced plans to sell a cancer product business while buying their vaccine division.

A fort $14.5 billion deal.

I wanted to start with the fact that thiss transition has several parts.

It is the biggest since he be came ceo.

Why make this transition now?

What this transaction does is three things buried we acquired the vaccine business and we are disposing of of our assets to them for $16 billion.

Thirdly, most poorly, we are bringing together our consumer health care companies to create what will be the world's largest over-the-counter medicine business with a revenue of at least 6.5 billion pounds annually.

Are these transactions meant in part to protect against the patent lifecycle?

For gs k, we have made great progress on that front already through the reinvention and development of our -- we have had more new products approved in the recent past than any of the company and the west last year alone, 19% of all fda approvals were from gs k. we have had seven major new drugs and vaccines approved in the last wealth months.

That has really helped us move on from the expiration of our older generation.

If you look today, after this transaction, 70% of our business will be in consumer vaccines, which are all businesses with very long, durable revenue.

Long ago and far away, american boys would look at three-way deal is in baseball and know it always comes out ugly.

This is a complex transaction today involving three drug companies.

You, novartis and lily.

What is the confidence that all three will benefit from this transaction?

First of all him i'm not going to make any comment on baseball because i'm british.

[applause] [laughter] as far as this transaction is concerned, there's only two parties involved from our side.

Gs k and novartis.

It sounds like a complex deal but it is very simple.

We are acquiring 100% of their vaccine business.

They are acquiring 100% of our oncology business.

We are building a newnew joint venture that gs k will own and operate.

They're difficult from a contractual point of view.

We have done all that work and cleared all of that ground.

Wethese are straightforward transactions to take to the next level.

Does this transaction make glaxosmithkline less dependent on your pharmaceutical marketing sales force which has gone into a bit of trouble with investigations?

What this transaction does is strengthen our consumer organization and vexing organization.

We believe that gives us much more of a durable cash flow profile into the future.

It is increased thanks to pair payback to shareholders.

The mix of the business strengthens the profile of the company going forward.

Thank you for joining us.

The ceo of glaxosmithkline joining us to talk about the $10 billion deal that the company struck.

That was refreshing.

The ceo off script.

We want to bring you the headlines, valiant has offered $48 in cash and 0.83 shares of allergan.

We have done the math here over at bloomberg and it works out to a price per share -- we will have more details ready here on bloomberg surveillance.

? good morning, everyone.

A busy morning.

This is bloomberg surveillance.

Welcome all of you worldwide.

Let's get right to top headlines.

Joe biden has pledged american sport to help ukraine.

The vice president met with ukraine's acting president today and sent an additional $50 million to the country.

$11 million of that money will be used to help with the election schedule.

Some student loan borrowers being hit with an automatic default when cosigners die or declare bankruptcy.

A study by the consumer financial section bureau reporting 90% of student private loans are cosigned by a parent or grandparent.

The agency recommends giving bar were time to find another cosigner.

Asking the high court to dismiss a court challenge to the keystone pipeline.

The court is the link white house review of the proposed transcanada pipeline project.

They may not rule until after the midterm election in november.

Orting movers.

Many moving this morning as we move through -- allergan moving 22%. i wanted to highlight netflix.

They went up by more than seven percent.

First-quarter profits beating estimates.

The big headline that everybody is focused on is the pricing increase.

International seems to be a catalyst for a lot of the analysts whose research has been published linked to the results.

It is really the positive catalyst moving forward because netflix in the u.s. has penetrated one third -- i'm fascinated by facebook and what else we will see through the week.

We have at&t, comcast and yum brands after the bell.

To your point, tomorrow, a huge day.

Boeing, procter & gamble, facebook and zynga.

We are at the mobile point.

Jeff rosenberg -- i know you are a fixed income guy but you do look at earnings.

What does your shop say about revenue strength with american corporations?

A big part of that is margins and whether or not companies will be able to maintain margins in this environment.

Will they?

Margins have been supported by falling interest rates and falling tax rates.

And falling costs.

And falling costs.

It is a more challenging outlook going forward.

The growth from the stock side in terms of what we expect for prices has to come from earnings growth from the top line.

That gets you back to revenue -- better economy, better revenue.

You wonder to what extent because consumer spending waits for things to pick up.

Netflix raises prices.

I wonder who else over the next six months will be able to raise prices were not.

I don't know if facebook -- i'm fascinated by what facebook reports.

Coming up, our agenda.

Aereo heading to the supreme court.

Oral arguments begin today.

What does it mean for the future of television?

We will discuss on "surveillance." ? good morning, everyone.

Futures slide.

We're looking at retail tomorrow.

The state of the consumer and the state of the freeze -- the snow is gone.

There is no snow left on the north side.

It is about time.

This is bloomberg surveillance.

I'm scarlet fu with tom keene and adam johnson.

Ours is guest host is jeff rosenberg.

Netflix hiking prices.

They will charge new customers two dollars more for its online video service.

Original shows will continue to attract new subscribers.

The price rise will take place later this quarter.

Another drop in profit at china mobile.

The third straight quarterly decline.

China mobile blames the expenses of subsidizing apple's iphone and the cost of building out its network.

Samsung fires back at apple.

The company says apples patent infringement play is 57 times higher than what it should pay.

Samsung lost -- apple is demanding $40 per phone.

We discussed the quiet in the market.

In the move to short-term bond paper.

What returns should you desire?

What returns should you expect or demand?

Jeffrey rosenberg is a blackrock.

He's in charge of explaining the future for the blackrock crew.

I'm fascinated by this question.

The dow up 21% a year.

We're addicted to these great equity returns.

That is not the real world.

It is not.

You look at the greatest equity return last year.

It was the nikkei up 57%. it comes from unprecedented outsized monetary policy.

Visit single digit expectation?

Absolutely.

The net returns outside of these monetary experiments are pressed lower on what is the fundamental backdrop for returns, which is economic growth.

In that environment, you have lower growth rates and lower returns from that.

If i look at janet yellen's speech, must i assume i'm not going to make nine percent but seven percent?

We migrate down to five percent annual returns?

Yes.

You have the trajectory right in terms of lower lung returns.

We are talking about nominal returns.

The key in that speech was, what is the outlook for inflation?

With disinflation -- in europe, it's deflation.

I did not hear of janet yellen begin to describe an idea of deflation.

Not an issue here.

It is in europe.

It begs the question for me, should i be looking at high yield right now with yields of 6.5% in and defaults at all-time lows?

You talk about high yields with not very high yields.

It is relative, but relative to not just a zero interest rates we have today, but what is the potential of where yields are going?

This year is about a transition.

We're no longer going to be in a world of low for longer.

That will change the relative attractiveness of taking a lot of default risk for what is relatively know yields.

We have not seen that in a long time.

The best return periods are behind us.

As the fed is tapering at the same time that foreign buying of treasuries is slowing down.

What does this tell you?

His domestic spying going to make up for it -- domestic buying going to make up for it?

You have supplied treasuries going down at the same time as the fed interventions are going down.

When you have tremendous regulatory change going on in the financial system that is creating regulatory demand or holding risk reactants and backstopping of the plumbing of the derivative market will have to be back stock by greater amounts of treasuries.

That is one example of how regulatory ch

This text has been automatically generated. It may not be 100% accurate.

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