Adidas, Nike World Cup Fight: Surveillance (05/15)

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May 15 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Brendan Greeley, Bryant VanCronkhite, Avi Steinlauf, Steven Levitt, and Ed Moy. (Source: Bloomberg)

Bonds are a bit higher, yields plummet.

Italy and france show we growth.

The united states has key inflation data this morning.

It is america's worst nightmare, shopping for new or used car.

Nike, they may take away the ball from adidas.

The world cup is upon us.

Good morning, this is "bloomberg surveillance." it is thursday, may 15, i am tom keene with scarlet fu and adam johnson.

Along morning brief.

Get a started.

Next data in europe.

German gdp rises, however, france stalled, italy stalled, the netherlands stalled.

The whole thing was tepid, tepid, tepid.

In japan, the economy grew at its fastest pace since 2011 in the first quarter because consumers are spending ahead -- in other words, there's a new sales tax that kicked in in april so people went out and bought ahead of the sales tax.

What else?

Economic data, cpi and jobless claims at 8:30 and 9:15, industrial production.

9:45, the bloomberg consumer comfort index.

10:00, the philadelphia fed.

And other data as well today and then we going to housing data tomorrow.

We are getting a read on the economy.

We are going to find out some earnings.

We have kohl's and dillard before the bell.

After the bell, jcpenney and nordstrom.

The dedication of the september 11 memorial museum begins at 10:00 this morning.

This is a live shot.

President obama will speak at the ceremony.

It is been overwhelming.

I just spoke to caroline hyde about this in london.

In front, the memorial has been out for two years.

Michael mckee and i wear there the day president obama and president bush and the first lady's walk lightly -- quietly around it.

The gorgeous waterfalls.

They're deeply moving.

In the background is the new museum.

It is a little hard as he from that picture, but those waterfalls just fall down into the ground.

That notion of the world trade center's coming down, falling down from all the people in there, so it is a dramatic moment coming.

Go.

what else do we have?

Janet yellen will be speaking at 7:00 this evening at the chamber of commerce.

Will shift chicken, beef, or fish?

I'm guessing with chicken.

I don't think that is a request and.

Let's get a data check.

Euro -- look where it is, 1.30 657. all of this correlated to the low yields.

Onto the second screen.

Vix, 12.17. still complacent.

There is a 30-year bond.

Just grinds in as well.

Euro shows the dynamic there of an ever weaker euro.

Mr.

putin's ruble --i never show this on "bloomberg surveillance," the french yield.

There's no other chart like this.

Italy doesn't look like this.

Spain doesn't look like this.

Now we go down to new french low yields.

It is not about -- it is big money betting on where the return will be given inflation.

You see this massive bid into bonds in the last 48 hours.

French gdp year-over-year going only .08% we have looked at the front pages and the web.

Widow local bond rally taking -- we have a low bond rally taking place.

Mario draghi has, that policy acres will be ready to act in june.

That means some kind of stimulus.

In the us, that makes yields look attractive on a relative basis.

If we go back three months or eight months.

Where is consensus?

Consensus is that rates are going to rise at the end of 2015. goldman sachs has, that's wrong.

Looks german u.k. yields are also sinking.

The latest gdp numbers show economic fundamentals are not growing in their favor.

The two-year note yield shows going full circle.

What else?

Let's go to a company, the board of general motors is starting its own investigation of those recalls.

The feeling was, information was not getting to the board level quickly enough so gm has hired a new york law firm to conduct a probe according to "the wall street journal." they are meeting weekly with the ceo to review her overhaul after gm took almost a decade to recall all the parts.

Your preparation, is this cover your ass?

A bit.

This is an attempt to get ahead of the next problem to make sure they don't have mystification.

They said, they did not want to put their names on this, off the record.

That is the way it was done at gm.

You did not filter bad news to the top.

That was the culture.

Remember john poindexter smoking his pipe, trying to shield ronald reagan?

He is the only one not staying up for game 7 in a hockey game.

You and i are brain-dead.

I would not be able to talk today if i were staying up late.

Our third front-page story, citigroup warning of more employees being punished for fraud in mexico.

Michael corbett has come under fire for not moving quickly enough in addressing this fraud.

Not firing senior executives, for instance.

Up until yesterday, the only person fired was one junior employee.

Some have said the way citigroup debt with the mexican fraud may have been part of the reason why the fed was reluctant to allow it to raise its dividend or buy back its shares.

It just shows i'm internal control issues.

We are still waiting for some kind of resolution.

The discussions continue.

Saying it is a week or two out?

There's a lot of negotiating taking place.

Our guest host for this hour, brendan greeley.

We will talk to him later about nike and adidas.

Who is that, rinaldo?

Certainly not me.

The headline is europe is weak, is that what you observed in your travels you gotravels?

Most of your trusts angela merkel and i don't understand why that is true.

It seems like the ecb for so long has been driven by concern over offending the germans and the sign that maybe the ecb will loosen and the next month.

It seems like the ecb will do the right thing but only after having exhausted all the alternatives.

There's a small group of economists adjusting for you mentioned push back.

We're nowhere near that.

It really feels like the whole continent is still frightened of germany.

Germany is running the economy like everybody is germany and needs to be germany.

Spain does not have the light manufacturing that germany does and portugal doesn't either.

To correlate visit with a lower bond yields, the euro goes 1.39 to 1.36. pros are suggesting we need to go to 1.25 to assist these other economies.

Especially countries like france.

It has been taken so long for their pimp politicians to start getting worried about deflation.

It is not like the euro is under threat the way it was a few years ago.

I think as long as they don't have to bailout greece, everyone things it is fine.

Term is growing at the four times rate overall europe.

Doesn't angela merkel deserve respect?

Germany is to the right thing by germany.

I think germany gets all of the best things they can without making any sacrifices.

It is a great economy.

Ever great -- small, independent companies.

Germany wants the rest of europe to be runaway germany is.

One of the things like suppressing wages.

I think germany thinks it is good that deflation might not be so bad, that there might be internal to valuation's. that is painful to do.

Do you get to go to brazil to the world cup?

I'm going to brazil because six months ago, friend of mine from college said, i'm entering the lottery for tickets, can you go?

I said to my wife, can i go?

She said, sure, sure, if he wins the lottery, you can go.

So i'm going and watching greece versus ivory coast.

Oh, boy.

That is what was available.

We might see we can't scalp tickets for u.s. versus germany.

Exclusive, full coverage of greece versus ivory coast.

The ivory coast is an underappreciated team.

Save us, scarlet fu.

I'm going to look up ivory coast.

Let's get to company news.

Surprise shakeup that "new york times" may have been months in the making.

Ousted as executive editor.

The chairman was never comfortable with her and according to those in the know.

Companies that sell goods to sears are feeling the pressure.

The insurance firms has scaled back policies in recent months.

Those policies are designed to reimburse manufacturers if a retailer like sears cannot pay.

Sales at sears have fallen for seven years in a row.

Alibaba has launched a new campaign against counterfeit products as the chinese e-commerce giant prepares to go public in the u.s. they started automatically removing brands that have been identified as fake.

Ebay has a similar process.

That is this morning's company news.

What are you working on?

Ivory coast, morocco -- it is a qualifying round.

I know, i need to know how ivory coast got to the world cup.

They beat out some strong african teams.

Nigeria -- had him a choice of games, that is not the one i would pick, but -- hey, you're going to the world cup.

We say good morning to all of you watching in africa this morning of "bloomberg surveillance." ivory coast world cup.

Coming up, small-cap stocks.

They're getting the cold shoulder.

We will talk about it.

This is "bloomberg surveillance." ? good morning, john chambers join us later in the day.

John chambers of cisco at 10:00 a.m. this morning.

Look at the equity markets.

They are all the rage.

Small-cap stocks are persistently outperforming the larger brethren.

Large cap experts suggest the tide has turned.

We speak to a small and mid-cap expert for wells capital management.

Brian, have a large caps on or day or can the small caps comeback?

We think small caps can come back, but we are very inflection point now.

If they continue to rate lower on an absolute basis, the large cap outperformance we think we'll have to come to an end as well in the broader implication for that is negative in general.

Small caps can bounce back.

Within your work day today in the equity markets, are these dynamics signaling a flagging of a bull market or even signaling the beginning of some form of intermediate downturn?

Taken be the canary in the coal mine, if you will all stop if small stacks -- stocks move -- we have seen it in a weaker broader market.

It is so significant, we would expected to revert in the short run.

Talk about reversing, our friends put together a chart comparing the exhilaration of small caps versus large caps and only twice since 2009 have small-cap scott in this discounted to large caps in the past.

That meant they bounced back quickly.

What is the timeframe?

We're not sure if we can quantify the exec bounceback.

The stock syndicate about 5% to 10% move coming in and those things if we are correct.

I would not want to quantify that for the broader market.

I want your take on what we're seeing in treasuries.

The prices rallying.

Large-cap stocks have been railing as well.

As one leading the other?

I think they're rather cool with it.

As we are thinking about the bond market and the 10 year bond, it is an indication people are concerned about the direction of the economy, the fight to safety.

Some are fighting back.

If you think about the small-cap market as being the canary in the coal mine, i think the 10 year bond is similar in it is moving with the small-cap moving lower.

Bryant vancronkhite, thank you so much.

Particularly the mid-cap space, we will do some work on that.

I think are greatly under loved by the media.

Apple, apple, apple, google.

There is more -- like very, apple, apple, apple.

Like very small-cap.

Twitter.

There's a media frenzy on the equity markets.

Coming up for freakonomics co-author steven levitt out the new book with steven dubner.

Our twitter question of the day -- how about the new york rangers?

? good morning, "bloomberg surveillance." let's get started with our top headlines this thursday morning.

The senate may vote as early as next week on stanley fischer's nomination to be the vice chairman.

He is one of three nominations for the board.

All three have been approved.

Senator paul rand has produced all the nominations.

-- rand paul i think.

In turkey, minors are dead in the worst mine disaster ever.

Rescue crews are still trying to reach 100 coal miners.

They're still trapped underground.

They're being slowed down by fire and gas.

The in a chill flails, montreal canadiens -- nhl playoffs, montreal canadians.

They now face the new york rangers in the eastern conference finals.

Game one is saturday.

Those are the top headlines.

1:00 p.m. on saturday.

Boston did not look like boston.

I thought there started its with really injured.

-- i thought their starter looked really injured.

I am surprised you are a canadians fan.

Maple leafs, canadians.

This is the glacier.

Time for morning must read.

It is a must listen this thursday morning.

President obama will be speaking at the dedication of the national september 11 museum this morning.

Stephanie ruhle sat down with michael bloomberg who is chairman of the memorial and museum.

Here's what he told her about what ticket worth the way at the museum.

To me when i saw one of the fire engines and wondering what happened to the guys on the fire engine.

It just brings it back to human beings.

I did not know very many people who died.

Christie's husband was running the port authority, the world trade center site.

One of my employees -- three of my employees, young people, hide.

The son of a guy i worked with died.

There's a handful of others.

But that is what brings it -- this is all about people and ideas and freedoms.

It is the freedoms for those left behind.

Will disclosure, is the founder and majority owner of bloomberg lp.

I was in hong kong and it happened.

You were here.

You were downtown.

I was standing outside the south tower when it they'll.

I was just lucky.

A lot of people around me died.

Are you going to go?

I will build a go for a long time.

It seems compelling but it will take a while before i can go.

I was in boston.

Nothing like what you went through.

Michael mckee was there.

I was in boston.

I have trouble visiting the site.

We do the opening of the memorial, michael mckee ni.

I could barely get through it.

I was sitting at my desk and my phone rang, and it was my broker who was down at the world trade.

I called the i.t. people said, fix the phone.

Little did i know the phone was shorting out because of what had happened.

Do you think they have done it right within the wonderful reporting in the newspapers and images?

Did they get the tone right?

The best article i've read, this was the one written in "the new york times" a year afterward.

It was sort of a direct play on the eb white sa "this is new york" from this 1950's. i get chills.

I've never had any other piece of writing that is so perfectly captured the moment.

Wonderful to have you with us on this day.

The president will be in new york today at 10:00 a.m. this morning for the dedication of the museum.

There is the memorial and the waterfall in the distance of the new museum.

? good morning, "bloomberg surveillance." i am tom keene with scarlet fu and adam johnson.

Quick data check.

Oil still elevated.

Euro, weaker euro, lousy european data.

Let's get to the gainers and losers.

How do you say ibm in french?

It was a decliner yesterday.

The ceo talking to wall street analysts -- not good.

A lot of people are thinking that is the canary in the coal mine.

Sears down almost six percent, looking to divest its 51% interest in sears holding canada.

That might be a possibility.

It is exploring strategic options.

I think it has lost money for the past three years and forecast a loose this year and next year.

It is kind of a black mark for a deliberate.

Zulu lee?

Online retailer for children and mothers, apparel retailer.

Like lululemon for three-year-olds?

Casual wear.

Are they transparent?

Or have they learned their lesson from the other guys?

Are you in the market for a new car?

One third of all people who test drive a car by it on the spot.

Most don't even have over the best price.

Suckers.

A new study.

How does this data compared to 2007 when we were also flush with cash?

In 2007, we were selling over 60 million cars a year in this country.

We're working our way back up.

This year, we forecast you will likely sell 16.4 million new cars in this country.

We tend to be a little on the bullish side, but we're feeling good.

Why aren't people haggling?

Only 20% of people consider themselves a true price haggle or?

On the continuing of extreme price hike was versus timesavers, the majority of people, 64%, are in the middle and both are important.

Price is important everybody, but so is time.

You do great anecdotal work.

The first time ever test drove a fancy car, i was going 114 miles per hour.

They let you do that?

We have a team of 40 folks who do that full-time, test cars and give the opinions.

It gets us to buy the car.

That is the idea.

We are giving it to you on all types of cars.

How fast were you going?

I took out an audi or something.

Driving 114. toyota has had problems.

What is it you project you're going to be buying?

Domestic or foreign?

We are buying both.

The interesting thing about our data, the recalls that have occurred for a number of the manufacturers have not really affected the consideration of their makes on our site.

Shoppers are still looking at their vehicles the same way they were and some even greater, to a certain extent.

People don't read the news.

Or they don't tie the names of the companies to the brand plates.

There is a lag effect and that perception.

Most of the consumers who show up at dealerships are a lot more informed than they were years ago thanks to their mobile devices and transparency available online.

Are the sale stuff that dealerships up for meeting the challenge of these more difficult questions from the customers?

I think what we're saying is there's greater transparency there, more people have information prior to coming into the dealerships.

That is fostering quite a bit more trust in decreasing the friction in negotiations between shoppers and salespeople.

I'm amazed.

Rarely, tom, you know this being the statistics guy, really cheesy the number 100%. but what hundred percent of smartphone owners -- 100% of smartphone owners use it for shopping for cars.

I'm not sure we will see all the transaction take place on the phone, but more and more is being done on computers and mobile devices so when showing shows up at the dealership, it makes the transaction amateur easier.

They always get you with the rough stafford added $289 -- rough stuff added, $289. the rubber mats.

That was the upscale.

As far as transparency and getting information online, i had a conversation with a used car salesman who told me he loves it when people come in the office and they have sheets of paper.

Is the tone still there of "used car salesman"? there is still an allure, but the reality is, most of the cells folks love the fact that consumers are coming in armed with information because it makes their job that much easier.

Is autonation the future where you're selling multiple cars under one roof, multiple brands?

Big brands like autonation and others that have aggregated numbers of dealers are moving, but the percentage overall dealer population, there are still relatively small.

Of the 30,000 new car dealers there are in this country, there are still a lot of mom and pops out there as well.

What are they anticipating what the customers want and need before the customers even realize it?

Some of the information that the dealers have in advance is they have a better sense as to what is going on from manufacturers perspectives on incentives and rebates, things along those lines would be some of the things they have.

Consumers have access to quite a bit of that information as well.

Taking some of the pain out of buying a used car, adding some trust there, has that changed the willingness of people have to buy a used car?

I think what we've seen is carmax has done a good job along those lines.

We're seeing other large groups do similar sorts of things.

The used market is a big market, three times bigger than the new market.

Which car holds it's all you best -- holds its value best?

Which is these all you car three years out, five years out?

The one i am most interested in is the tesla model s. we have one in our long-term fleet we bought as a company that is doing fantastic.

22,000 miles and has held up well.

Now that we have come to having owned to just over a year, we will likely sell it and i think it will retain quite a bit of its value.

I could see them putting the rest undercut on that tesla am a $289. that is your next test drive.

The in new jersey you can't have or can't sell directly, have to go through new dealerships, what is your take on that?

Tesla has taken a long road, working on a state-by-state basis to work through those issues.

But i think it will shift focus toward china, europe as they begin to increase sales in other markets as well that may be more favorable to them.

Ceo of edmunds.com, thank you for being here.

Coming up, walmart be reporting earnings in just under half an hour.

There's one thing that has the potential to severely damage sales and it is not necessarily the weather.

Our single best chart is next.

? good morning, "bloomberg surveillance." our twitter question of the day in honor of steven levitt -- thrilled to bring you steven levitt in the next hour.

This is "bloomberg surveillance." we welcome all of you worldwide.

In new york, president obama will dedicate a museum to the victims of 9/11. the president will be joined by victims families, survivors, and rescue workers.

The museum is on the site where the world trade center once stood.

South korea, crew members of the ferry that sank last month have been charged with homicide.

Among them, the captain post-up more than 300 people died in the disaster, most of them teenagers.

The crewmembers could face the death penalty if convicted.

Popeye is moving to las vegas.

Casino mogul steve wynn spent $20 million to buy the sculpture of the spinach eating sailor.

He plans to display popeye in front of his las vegas hotel.

I'm sorry, but this is just too absurd.

Those are your top headlines.

Is that really a headline?

Olive oyl?

Where is miley cyrus?

I'm not sure i want to know.

Do you spend a lot of time in las vegas?

I've never been.

I did a speech out there.

It is just not my kind of town.

Exactly.

I'm trying to match up the popeye with a steve wynn casino and how that would look.

Let's get to the single best chart.

It is on the other end of the income spectrum.

The reduction in food benefits.

Snap for short.

Not just the benefit amount that is come down, but a number of individuals receiving benefits have come down as well.

In a regulatory filing in late march, walmart added a new disclosure saying one risk factor is changes to snap and other public assistance programs.

Previous to that, it went the reduction for benefits hurting its profit.

This speaks to the two americas would talk about all the time.

Do you aggregate everybody together or are there different parts of america?

Is unemployment 6.3% or -- 12. or whatever.

The sobering -- it is sobering.

Books walmart earnings that 8:00. 7:00. and jcpenney.

It is an argument that if you spin on social welfare, you're crowding out other spending but that doesn't seem to be the case right now with walmart.

Walmart doesn't seem to think that way.

It is a bit of an odd story.

We will get much more with the same store sales, sort of the global and domestic as well.

Let's look at some photos.

Some of these are challenging.

What do we have?

We are going to start in turkey.

Specifically, where they're digging graves following the coal mine disaster.

100 are still underground.

We hope they are alive.

Can you imagine digging 300 graves?

It has been 48 hours of almost disbelief.

A fire in a mine in turkey and the problem is, it is still raging.

It was caused by methane gas.

Hard to put yourself in those shoes.

We sit here and talk about, is going up and down, and it is good to be reminded of what drives the economy.

Coal drives the economy.

People have to dig it out of a hole in the ground.

That is useful to know.

That goes to the labor issues with nike that we will talk about in a bit.

Tweets today but the evil brendan greeley not discussing the labor issues.

I haven't seen those.

How do you actually do business?

The cost of everything.

Cadet of the national defense academy japan practicing the martial art of bayonet fighting.

What is this, our 5:00 a.m. meeting?

On some days.

This morning was very cordial.

You wonder, what is behind it?

Bayonets, even in this day and age?

They still do formation.

It is tradition.

We did close drill formation.

Don't spill at any cost.

What else?

Kentucky derby winner california chrome getting the spa treatment in preparation for the preakness on saturday.

That horse was against all odds.

The breeder brought -- bought the mare for like $10,000. the stallion was like $2500. and they are off.

We say thank you to our bookie who advises us to lose money three times every year.

Although he nailed it.

The odds were off.

You're better with this than i am.

5 to 2 or something.

Like the boston bruins.

Speaking of sports, soccer brings in almost four times more money worldwide as its closest competitor which would be american football.

We will discuss all of this i'm a what it means for nike and adidas in order cover story.

How nike may be stealing soccer from adidas.

The author is coming up next on "bloomberg surveillance." ? this is "bloomberg surveillance." let's get you some company news from the files of bloomberg west.

The air force says it is spending $60 million up elon musk can launch military and spy satellites, as many as 100 people are trying to get the company certified for the launches.

He filed suit claiming the military is trying to protect a monopoly for lockheed martin and boeing.

Cisco forecasting fourth-quarter profit and sales that beat estimates.

Orders are coming on demand for networking machines that handle mobile data.

The ceo says -- restructuring management.

He will be on "market makers" at 10:00 a.m. for the first time, google will release statistics about just how diverse is workforce really is at a time when the tech industry is being pressured to hire more women and minorities.

Major u.s. employers have had to file diversity reports with the government.

Google has never made the information public.

They have a report who worked at apple and facebook?

I don't think the minority parties issue, probably the mail/female gender rate.

What we saw last night, the uproar in "the new york times" some confirmed and unconfirmed.

How was the worst soccer player known to mankind?

Who would that be?

That would be me.

I can give you a run for your money on that.

Brazil will play croatia in the first game of this year's world cup.

And adidas ball will be used on the field.

It is the global leader in soccer but facing a serious threat from nike.

Printing greeley wrote about it in this week's cover story for "businessweek." we used to think of who is winning the sponsorship race depending on who is sponsoring what team.

It is a draw between adidas and nike this year.

It is.

Nike has been working hard to catch up.

One thing that has been happening the last 20 years, their intrigue to the market has driven up the price of sponsoring the top 10 teams.

If you look at the difference in 1994 between sponsorship for the top 10 in the bottom 22 in the world cup, he looked about like this.

In the last 20 years, the top teams have gone like this and the lord teams have gone like this.

Very smaller balanced.

France, for example, did not perform well in the 2010 world cup at all.

Her contract was up for were no.

Nike took it and paid more than ever before for mediocre team, but it is a large market and contracts for soccer jerseys are just not to be had now.

That is lopsided, the economics.

The adidas ceo spoke earlier this morning on the growing competition from nike.

This is a time period of 20 years and they are heavily investing in 20 years because they've realized football is back as the biggest sport in the world.

This is a head-to-head race be at basketball, running, tennis or whatever.

This makes those companies better.

What i found amazing is that adidas invented the sponsorship of pro athletes.

It'd never been done before until adidas started -- adidas likes to say they are a company of innovation.

They were founded by a simple cobbler, but he realized he of the falling apple moment in sports marketing when you realized you can give away shoes for free and then use that to drive sales.

That is very much in adidas invention.

One thing that -- nike has done two things right in the last 20 years.

One is, they realized the simple innovation, they made soccer cleats colorful.

Kids loved that, driving sales in early 2000. adidas has caught up.

The other thing they did was, the world cup was always adidas who was the company that invented sponsoring an event.

The olympics, the world cup.

The world cup is now long -- no longer the only global soccer event and that is a problem for adidas.

I went into an adidas store to buy a pair of running shoes and they said none of the shoes in here are for running.

It is all fashion.

How much does this morphed where now you just use partnerships to sell stuff?

That is what they're doing, but adidas and nike both have realized something smart which is puma went down the route of just selling fashion about 20 or's ago.

Puma is investing more heavily in actual sports gear now because you cannot sell leisure gear unless you're also clothing the applets that are winning.

Train wreck.

Who?

Exactly.

Precisely.

They're going out with lionel messey.

Are we anywhere near caring about soccer in america?

My goodness, yes.

I don't care about soccer.

It is religion in seattle.

I will tell you something that surprised me, america is adidas single biggest soccer market.

The sheer size of the american -- the money and all that.

Adidas sponsors mexico for one reason, which is it is american -- in your reporting, are we going to see finally an american interest in what goes on in brazil?

We are.

I will tell you what proves it.

Nbc has seen its viewership numbers with the premier league on saturday mornings spike.

There is interest in high-quality soccer.

Is there a rule when they fall down they cannot fake they are injured?

Please.

I don't know, are we in the italian leagues?

If someone in the new york rangers or montreal canadiens did that -- it is a whole different story in the playoffs.

How do you pronounce adidas?

Do the guys care?

I asked and they said both is correct.

It is completely legitimate to pronounce it like run d.m.c. i'm talking adidas.

Thank you so much.

Really a smart, thorough article in "businessweek" to get you ready for ivory coast playing -- who is it?

Greece.

Here's our report, major currency today, euro-yen gets my attention.

Steven levitt joins us in the next hour.

We will be right back.

? bonds are bit higher.

The united states'key inflation data this morning.

Economists as rock stars.

Can cold catch a bid?

-- kecan gold catch a bid?

Our guest host this hour, steven levitt of the university of chicago.

Co-author of freakanomics.

We will go to the morning brief.

Adam johnson.

Missed data today.

It schizophrenic about it.

Up from 4/10 in the previous quarter.

In france, growth stalled.

In italy and the netherlands, it contracted.

It just accelerated buying the previous month.

We have a lot of economic data.

8:30, the cbi.

9:15, industria -- at 10:00, the philadelphia fed business outlook.

Rings before the bear, walmart -- before the bell, walmart.

After the bell, nordstrom's. we will take you at 10:00 to the ceremony.

Janet yellen is going to be speaking at the chamber of commerce.

That will be about 7:00. we will cover all that either on tv or bloomberg.com.

Walmart says its first quarter earnings were one dollar $.10. lighter than what analysts had been looking for, which was $1.15 on average.

The weather affect was equivalent to three cents per share in the quarter.

You look comparable sales, that was down 20%. -- .2%. it just boggles the mind that walmart makes $115 billion per quarter.

Lighter than what analysts had been looking for.

We will see what they say about the effect of less food benefits.

And may continue into the next order.

The range for the current quarter, the estimate had been $1.20. gdb coming off a miserable first-quarter.

There is an optimism forward.

It is wait-and-see for the companies.

They need to make some adjustments.

It's not going to be the big box store model anymore.

We will have much more on this with walmart.

You have some company news for us.

The start with general motors.

The board is launching its own investigation of all those recalls.

Records want to make sure they learn more quickly about future auto safety defects and started weekly meetings with the ceo.

The was attorney general is taking another run at airbnb.

He has issued a revised subpoena for information about hosts to allow their homes to be rented out.

The previous demand is too broad.

Ebay is now targeting shoppers in latin america.

The company will start sites in spanish and.

It is all part of ebay's multiyear expansion in developing markets.

That is your company news this morning.

Very good.

It is thursday.

That means it's time to retrain your brain.

After the stunning success of 2005's freakonomics, steven levitt is back with think like a freak.

They suggest we have too much mileage and we need to think and do like a child.

I adore your chapter five.

It is one of the most frightening things -- we want to do something and we can do it because we don't think like we did as kids.

Discuss.

We have written these books -- the idea was telling the story about my research and other people's research.

People kept on writing us e-mails and wanted us to solve their problems.

We said, ok, let's solve some big problems.

We can solve about the scope problems a year.

We are going to let people down.

When don't we go back and try to give up the magic?

What is the secret to what we do?

There is not a lot of magic in that book.

When we really thought about how we solve problems, it was really simple.

The basic thing we do is, we have a strange curiosity and we're not afraid to make fools of ourselves.

We think about possible outcomes . what is the best practice to think like a child?

Thinking like a child is not being embarrassed, when you are wrong.

Being willing to investigate anything.

One of the stories we talk about -- we have this guy doing a -- he did a demonstration for us and showed how kids have been unfocused way of looking at the world.

Consequently, the magician tries to pull them by putting one hand on one ear and the kids are looking at the wrong side all the time.

It is a metaphor for the world.

Instead of looking exactly where everyone want to the look, you should look everywhere.

And see things differently.

You talk about kobayashi -- he a double what had been the previous record.

What he did was figure out how to make hot dogs more evil.

He broke it in half.

Is that what it boils down to?

He is unbelievable.

A lot of people care about it.

They were good at it.

They could eat 25 hot dogs in 12 minutes.

Which is incredible.

Kobayashi come instead of asking the question, how can i need more hot dogs?

Should i fast or binge?

He took a hot dog said, how can i eat that faster?

He experimented.

I was with kobayashi last night and we did a demonstration for a live audience.

It was unbelievable.

He ate three pounds of pork blood in two minutes.

He broke it down -- he's in economics major.

He found out bit by bit -- the limit is how fast you can get it down.

He is a think like a freak hall of famer.

We have business leaders who think like a freak.

Academics who do so as well.

Politicians to do so get punished.

Why is that?

Politics -- one of the things we say you should do is say, i don't know.

The business people don't say it either.

They are the ones who are not willing and able to go out in public and say, i don't know.

When in doubt, take it.

Absolutely.

I have come to believe that the primary thing we teach in the mba program is how to fake.

You guys must say it constantly.

Surveillance exclusive from steven levitt.

What does this mean?

They don't do this at booths.

Just putting your hand out there?

Help me here.

He can do it.

There is an inauthenticity to that.

It's like you can't find the words.

How about not finding the way?

Karl rove and the wall street journal.

North carolina house speaker won the gop primary for the u.s. senate seat by knitting together the diverse coalition of those who prefer a business oriented candidate.

Where is the new here?

How does the republican party think outside the box?

How would they think?

How would the candidates for 2016 think like a freak?

I don't know.

Here is what economists say.

What a strange about our system is how polarized it is.

Every mumble that economists -- every model that economists have pushes people to the middle.

You have this problem where you can't -- there is something else going on where you need the extremists to show up at the polls or you need money or something.

It strikes me that -- the only research i have done is showing that campaign spending is a lot less important than people think this.

Steve levitt with us for the hour.

David lee roth is in here.

Output a question of the day.

What should the freakonomics team focus on next?

Coming up, why gold is not gaining the price increases about a lot of people expect.

That's coming up next.

We are on bloomberg television and radio and streaming on your tablet, smartphone and bloomberg.com.

? good morning, everyone.

To our guest host, steven levitt.

He's at the university of chicago.

The institution -- professor becker was revered across all of economics.

He terrified steven levitt.

I love what you wrote.

I felt it in the times that i interviewed him.

Tell me why he terrified you.

Especially when he was younger, he was tough.

He learned to never tolerate anything but where abs factor of zero.

He studied praised.. -- price theory.

He knew everything about it.

People like myself were not trained that way.

I remember the first time i met him, i was a grad student and i had always heard about him.

He was almost like a demon.

People would call him darth vader because he had the force.

He was not using it in the right way.

I agreed to pay for my own way and go to california to speak at a conference.

It was a two day conference and he sits there and as i get up to give my talk, he gets up and walks out of the room.

So i give my talk and he walks out of the room and i blew it.

He walks back into the room and its q&a time and he is the first one to raise his hand and he asks me an incredible question.

He actually read the paper and was not interested enough to stay around.

When you look at the media today with the superstar status of freakonomics, there is not enough rigor like you are professor becker had it within the broader economic verse today.

Is that true?

We need more price theory?

Academics embrace price theory completely.

You talk about the talking heads -- there is not much interest.

Why economic -- academic economics has a little to do with the real world.

From a business sense.

Steven levitt.

His new book, think like a freak.

We will have much more on economics.

Walmart's earnings.

Stay with us.

? good morning.

I'm tom keene.

With me, scarlet fu in adam johnson.

With us this hour, steven levitt.

Think like a freak.

Your christmas holiday season.

The movie comes 2018. you're too kind.

The senate may vote as early as next week on stanley fischer's nomination to become the vice chairman of the fed.

He's one of three nominees for the fed board.

It's been a long time.

The senate banking committee has approved all three -- ren paul has threatened to stall the nominations.

One of 280 miners are dead in turkey's worst mining disaster ever.

Rescue crews are still trying to reach 100 additional miners were trapped underground.

In the nhl playoffs, the montreal canadiens beat the boston bruins.

A decisive game seven.

We are moving a little slowly today.

They now face the new york rangers in the eastern conference finals.

Game one is set for saturday afternoon.

Those are the top headlines.

Saturday at 1:00 p.m. i thought they had a lot of injuries.

They were off their game.

All of these series are going to seven games.

It's amazing.

Anaheim and los angeles.

Huge uproar in los angeles.

Game seven.

The whole country is involved.

You have the series out in california.

The east coast and the middle the country.

The courage for nbc to pick this up a couple of years ago.

Home run for them.

Gold had a 12 year homerun.

Then companies started hiring again and inflation virtually disappeared.

Europe's weakest links survive.

Gold is down six percent this year.

The west meant under president bush -- what is driving the psychology of gold in 2014? there is a lot of geopolitical risk that people are worried about.

We have seen violence in ukraine escalate.

That caused a nice pop on goal yesterday.

-- gold yesterday.

There is concern out there about the mixed signals in our economy.

Not going as fast as people think it should.

Finally, quantitative easing.

That certainly is tapering down to zero.

There are still $5 trillion of excess liquidity that needs to be stopped up.

That is a huge experiment that has never been done before.

The outcome is uncertain.

What about asian buyers?

I think about how my grandmother, when she sent me to china, she sold her gold ring.

My mom had a gold necklace with five gold coins around it.

She had a gold bracelet with 10 gold coin surrounded.

It was a wedding gift.

When the japanese invaded hong kong, she fled with enough money.

Why is it that asian buyers by physical -- buy physical?

In the west, you separate the individual investor from the institutional investor.

Institutional investors invest big into paper gold.

Individual investors are still buying fully on coins.

I want you to define it for me.

Bring up the gold chart.

For those of you on bloomberg radio, we have sent out on bloomberg radio plus.

What is the gold buck?

How do you define it?

It is someone who has a high opinion of the value of gold long-term.

Are we in a bear market?

Or bull market?

Bull market last year.

It had a horrible year.

Now it's up eight percent.

How do you teach gold under the price theory regime?

Is it part of the legend?

We don't talk about gold at all.

I don't think gold makes any sense to economists anymore.

I don't think it serves any real purpose.

It seems to me -- why would it be a decent investment?

You would think it would be hoped to fundamentals.

But it doesn't seem -- let me change her mind.

One ounce gold coin.

For the amazing, isn't it?

Take him out for breakfast.

I love what you said about the economics of gold.

Except scarlet's story resonates about people selling old to do something like transformative -- selling gold.

Bitcoin might be the new gold.

I think bitcoin makes even less sense.

At least gold is tangible.

Why would it be the case that if the world goes to hell that gold is good for anything?

That's the whole reason people are buying bitcoin.

It's the same mentality.

It's a backup against governments that don't work.

A lot of people who support bitcoin are libertarians were concerned over the economic stimulus.

They want some form of currency that is not manipulated foreign governments.

There is a lot of interest in bitcoin.

Gold has been around for 5000 years.

Gold will never be worth zero.

If you invest in lehman brothers stock, you took a huge hit.

It or if you invested in bonds, you took a big haircut.

Gold might go down, but it will never be zero.

Thank you for joining us.

Economists are gaining celebrity status.

Why they appeal to the mad sses.

Which of the freakonomics team focus on next?

? it is 13 years on.

The president of the united states will be in lower manhattan to dedicate the building in the background in front of the new museum.

You can see the names on the black marble in front of the stunningly somber and gorgeous falls of water.

This has been a spectacular success for lower manhattan.

People still have trouble visiting the site.

The museum is in the background.

70 feet down below, you go to the bedrock of the world trade center attached to the island of manhattan.

The president at 10:00 a.m. will cover that worldwide.

Let's get you some company news headlines.

A surprise pick up at the new york times.

She has been ousted as executive editor of the new york times.

The times chairman was never comfortable with abramson.

They say the situation got worse in recent months.

Comedies that sell goods to sears are feeling the pressure.

-- companies that sell goods to sears are feeling the pressure.

Sales at sears have fallen for seven years in a row.

Alibaba launching a new campaign against counterfeit products.

That comes as the chinese e-commerce giant plans to go public in the u.s.. ebay has a similar process.

The headline story today is the market reaction.

Bonds are on the move.

The recovery simply fails to gather momentum.

He was investors are fleeing.

They're buying treasuries.

Joining us on the phone, the director of u.s. interest rate strategies equities at credit suisse -- the consensus -- we were part of the consensus -- yields were going to go up because you were going to have better growth this year.

We expect better growth in the second-quarter purity of tepid growth in europe as well.

We just cut the gdp data out of the euro area this morning.

It was a bit lower than expectations.

Now, you have central banks talking that they're going to cut.

You have the second thing going on, a bit of a tail wagging.

The difference between the yields is that the will whitest it ever gets -- you end up with treasuries following that.

You talk to her chief economist, is this about the bond market catching up with better economic data?

Or do the smart people like you have it wrong?

Is a combination of really bad positioning.

Almost everyone that we have spoken to at the beginning of the year was either short treasuries were underway treasuries in their portfolio.

Secondly, everyone thought this year would be better growth and more hawkish policy from the central banks.

You have not had that robustness that we were hoping for.

The continuation of the fourth quarter economic trends did not last.

The west long bond is back in favor, catching a lot of investors by surprise.

Short-term debt has barely move.

What signals does that send?

Very technical.

Doing so have the inventory on their balance sheets that these to have.

Some of the blows that have come out of pension and insurers from japanese investors have turned around quite a lot.

You have this demand for duration, which just seems to be insatiable.

It is particularly acute in times when you do have the slowing growth.

You have a bank of england keeping interest rates extremely low there, people instead of buying 10 year japanese government bonds and 60 basis points, you could buy u.s. government bonds at 260 basis points.

What do you want to buy?

Pimco has gone to the new neutral.

Rates will be low for longer.

When is there heard going to figure this out?

Rates will be low for longer.

You're talking about a fad that won't get interest rates up in 2017. thank you so much.

The 10 year yield at 2.54%. we have a lot of economic data coming out this morning.

Empire manufacturing, cpi, jobless claims and industrial production and 9:15. you have u.s. futures down just slightly ahead of that.

2.537% on the 10 year.

Good morning, everyone.

All of our digital products on bloomberg.com.

Download bloomberg radio plus.

I'm tom keene.

With me, scarlet fu and adam johnson.

We are thrilled to bring you steven levitt.

His latest book is "think like a freak." their celebrities.

These guys are rock stars.

There is a new one on the block.

He is always cited in the op-ed.

His tone on incoming quality -- income inequality is a raging debate.

Steven levitt knows a thing or two about being a rockstar economist.

He practically invented the category in 2005. it's atomic that we're all interested in these days.

-- a topic that we are all interested in these days.

Are we still dealing with the financial crisis?

Before the financial crisis, economists were very in vogue.

The whole world turned on capitalism and markets and economists would we solve the financial crisis.

This is the beginning of a rebirth of people liking economists as opposed to a reaction.

People are tired of talking about the financial crisis.

We are assessed with figuring out how economic gains are divided.

Answering the question of who deserves to get paid.

Who deserves the money.

You see it reflected in our culture.

It's whatever tv shows are all about.

Economists don't have very much to say about that.

It's the idea that there is a trade-off between inequality and efficiency.

Consequently, it's a more popular discussion than an academic one.

Difficulties with economics is coming were interested in a bunch of questions that the real world is uninterested interested in very much.

Nonacademic economists turn out to be the ones who do that here.

Here is a very real-world issue.

Income inequality.

How are you dealing with that in your work?

Not at all.

Income inequality is a critical question.

You can look at it in different ways.

Within the u.s. across the world.

Most of the income equality that we see is tied to education.

Returns to education have skyrocketed in the u.s. if you don't have a college degree, you're committing economic suicide in the u.s. you're talking about the response that education is rewarding.

You have to lower returns to education.

I don't think anybody wants to do that.

It's a tough problem.

We think about how theaters empty folks.

Here is lawrence summers.

This is my morning must read from lawrence summers.

Mike mckee brought this to me this morning.

Thank you for that.

What everyone's view on capital mobility, there should be a consensus on much more vigorous cooperative efforts to go after its dark side -- tax havens, bank secrecy, money laundering and regulatory arbitrage.

How does that and?

When the people not want to go to wall street?

When they stop having so much money and wealth.

Do we have to wait for economic growth to take over or do you redistribute it?

Were asking me questions that are so far out of my pay grade that it's insane to even think about.

You see things that others don't see.

You've found the correlation between crime and the rise and abortion rights.

That's easy.

Talking about whether or not you should walk away from wall street -- that is hardly economics.

It's a question about how society should run.

There is huge returns to talent -- there is a lot of money on the line.

It that is markets.

It's capitalism.

You can move away from capitalism -- i don't think that's a good idea.

I go back to milton friedman and his articles ages ago.

I put a question of the day.

-- out what a question of the day.

-- our twitter question of the day.

What should the freakonomics team focus on next?

Michael bloomberg on the significance of the 9/11 memorial museum.

? in morning, everyone.

-- good morning, everyone.

Let's get right to top headlines.

Here's adam johnson.

President obama's going to dedicate museum to the victims of 9/11. they will be joined by victims families and rescue workers.

The museum is on the site where the world trade center once stood.

Three crewmembers from the ferry disaster have been charged with homicide.

Most of the victims were teenagers.

Crewmembers could face the death penalty.

Steve wynn spent $20 million due buy jeff koons sculpture of a spinach eating sailor.

Amazing.

He plans to display popeye in front of his las vegas hotel.

It looks like if you threw a rock at it, it would shatter.

He has made a number of these.

He has a gigantic poodle made of the same material.

They're 20 feet high.

That's a $20 million popeye.

Joining us right now, betty liu.

What is on your show in about 15 minutes?

Someone who likes his art is -- he continues to sniff around.

He has backed down from his firm.

He is the chief strategy officer.

He handed over the reins to his executives.

He stepping back and looking at the big picture.

He continues to focus on europe.

One country that is new for him is greece.

He has gone into greece to privatize one of the banks there.

We will talk about that experience.

Sounds great.

Wilbur ross coming up.

Is time for morning movers.

Synergy is in the air.

Bidding $1.6 billion for -- kindred is looking to expand.

Nursing a big move up.

62%. $1 trillion of deals have been announced so far this year globally.

Steven levitt with us from the university of chicago.

Do you trust the system?

Do you trust all of the fancy suits and ties?

I don't know.

Who knows.

Why trust them to make good choices?

For society.

I believe the markets and capitalism.

I would rather have those guys deciding how to do it than the government doing it.

I wish they would read my book.

They are certainly looking up for shareholders.

Walmart is not looking out for shareholders.

The company missed estimates here at falling about 3.5%. guidance down for the next order by several pennies.

Some issues this morning.

We will see how that plays out with other retailers.

We have our agenda coming up.

Retail is my agenda.

We will get to all that on "surveillance." ? this is bloomberg surveillance.

Here with tom keene and adam johnson.

Our guest host is steven levitt.

Let's get you some company news from the files of bloomberg west.

The air force says it is spending $60 million for that you want must -- for that yuan muselon musk space x. cisco is forecasting sales that beat analyst estimates.

Cisco's ceo has been closing two minutes and restructuring management.

For the first time, google will release statistics about just how diverse its workforce really is.

It comes at a time when the tech industry is being pressured to hire more women and more minorities.

Major u.s. employers have had to file diversity reports with the government.

Google has never made that information public.

It is 13 years on from september 11, 2001. the president dedicates the national september 11 balmoral and museum.

70 feet below ground and resting on the bedrock of manhattan.

The museum has elicited a varied and emotional set of responses.

Michael bloomberg was the mayor of new york city -- he is chairman of the museum.

Michael bloomberg will introduce the president.

There was a small handful of people who tried to take away your children's right to say what they want to say and believe in what they want to believe.

And associate with whomever they want to associate with and be in charge of their own destiny.

The world came to our aid when this cowardly act took place.

Democracy has come out stronger because of this that it was going into it.

Mike bloomberg -- i spoke with him at a function and he really emphasized the leadership that existed at the time.

Whether it was him or giuliani or bush.

Other leaders within the gloom of what we remember.

January of 2002 or june of 2002 with the shock and agony of this eerie that the leadership was the key determinant.

And the key to pushing forward.

Maybe that was the toughest thing at the time to try to understand why this happened.

How do we push forward?

Steven levitt with us.

This is that intangible, isn't it?

We can study mathematical functions.

Leadership is about the human condition.

How do you interpret that?

Partly, you just accept that economics is one part of the equation.

You can be good at that part.

I can't understand why countries are different or why companies are different.

It's i don't think we're there yet.

It's something to work on.

What you do so well is work with data sets attractive come up with an answer or questions to ask based on the data you collect.

You have done some work related to terrorism.

I worked with a british bank.

We were going after and looking for terrorists.

It was after the bombings in the u.k.. we write about it and we use the tools of macroeconomics and data analysis.

We are not allowed to talk about all the secrets.

I think you can really make things happen.

You work with alan krueger, he worked on terrorism as well.

Do they act with predictability or is there different behavioral economy to how they think?

Everybody response to incentives.

The

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

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