Bnp paribas shares plunge.
Steve ballmer go search of long-term value as he crushes the competition, $2 billion large for the los angeles clippers.
undergraduate, your table manners are a disgrace.
Good morning, everyone, this is what bloomberg surveillance." it is friday, may 30. john amy as always is scarlet fu and adam johnson -- joining me as always is scarlet fu and adam johnson.
Every interview begins with the new york rangers.
That's all you need to know.
Onto the stanley cup.
Tonight we get the -- kings.
Some good news in the u.k. -- consumer confidence rising to a 16 month high on improving economy.
Home prices are rising by a similar amount.
Japan inflation rose to a 23 year high.
In japan, they have been fighting deflation.
In the u.s., 8:30 a.m. personal spending and the fed watches if we have deflation.
945 a.m. chicago purchasing managers index and at 9:55 a.m., the university of michigan consumer confidence.
Is next week a five day work week>? yes, sorry about that.
A couple of more weeks until fourth of july.
It always feels longer because you keep telling yourself it's a four day week.
In hollow -- in radio we call that a holiday at length in the workweek.
We are out of earnings season.
Let's do a data check.
There is a churn to the market.
Everyone is looking to the ecb meeting next thursday.
Equities are giving it up in the futures market after a terrific week for equities.
The 10 year yield is there.
The vxx shows you the bull market sense.
Howard ward will join us in the next hour and there's the 30 year bond, finally the yield, gold is shocking the gold bugs.
You can see the court deflator is what the fed watches.
This is one percent.
I get under one percent and everybody starts getting sweaty we are not there ought - we are close and look along we have been there.
The scale goes back 20 years but we have been down here for a couple of years.
Consensus is that inflation picks up nevertheless, there is that's what factor that janet yellen has to worry about.
What a busy day.
We scour the newspapers and found 2 billion stories.
How about $10 billion?
U.s. authorities are looking to get more than $10 billion and bnp paribas to and that criminal probe.
This is to resolve allegations it whether they violated u.s. actions by doing business with sudan and iran.
Credit suisse was accused of helping u.s. citizens over taxes.
We try to put scope and scale on it and we did this separately.
If this fine is $10 billion, that is more than entire years worth of profit.
You are just wiping profits for 2014 off the books.
I compared it to james dimon and jpmorgan.
Their $13 billion fine was 13 days of revenue.
The $10 billion bnp paribas fine is more, that gives you the 49-63 days.
They had not anticipated this big of fine because the shares are down about six percent.
Kbw which is ago to research houses had estimated $7 billion.
What else do we have?
It's still a moving target.
The second front-page story is the markets with risk on with investors shrugging off the gdp yesterday.
The s&p 500 closed at a record high and the dow is approaching a new market high-end corporate bonds rallied the most since 2009. into the weekend, the heat of the notes has picked up.
Howard ward will join us next hour.
Alberto gakllollo will be on radio later.
It is about getting to the ecb meeting.
Think about the concept of a 10 year yield under 2.5%. one analyst said we got this thing wrong.
All the bond strategists are on the wrong side of bonds right now.
What else do we have?
Here is the third front-page story -- steve ballmer wins the bidding war for the l.a. clippers.
He will pay up to $2 billion, the most ever for an nbi team -- for an nba team.
The surprise here is not that it's him.
The surprise is the amount?
The amount is pretty significant and that he beat out some of the other big bettors which included oprah winfrey, david geffen, the guggenheim group which owns the l.a. dodgers.
This is a trophy prize.
If i understand this correctly, it does not include the stadium nor does it include tv rights.
The tv deal comes up for renewal in about a year so you will get a piece of that what are you really by?
You are buying players.
It is so much about sports when we talk about media.
Media is sports.
To a great extent, sports is where it is at.
What are the new york yankees worth?
Can you imagine?
Erik schatzker was at the game last night.
He is still recovering.
What are his maple leafs workup and that's worth up in toronto.
What are the rangers work -- worth that they win?
Steve ballmer has a reputation for being a little over the top.
He's got a big personality and is a former salesman and can really turn it on when he wants to.
There he is ramping up the crowd at a microsoft conference.
That is cool.
They will get him off the court.
Look at him go.
He will need botox and a facelift to fit in.
He lives in seattle but he says the clippers will stay in l.a.. he will keep that part of the tradition alive.
They used to be the old buffalo braves.
It is our twitter question of the day -- he paid 1/10 of his net worth.
Enters they call that tithe.
Let's talk about the titanic changes in europe.
There were european elections but none more than france stunned the establishedment with the french nationalists that wanted to away -- want to read rack the french franc.
For americans, explain why i care about european elections.
It did not change anything.
That's a high bar to clear but the european parliament elections that happen every five years in europe.
Europeans don't know who represents them at the european parliament.
They are in strasburg and brussels.
It's very complicated and expensive.
The turnout is always low because nobody cares.
This time around, they care so they sent a clear message.
It did not change the german approach to europe one and will continue to win.
It's got 96 delegates to the european parliament.
You cannot get in the rabbit get -- get around that size.
Angela markel one and they cannot do anything about the german approach.
Is it because germany is dominant or is it because france particularly has gotten things wrong for the last 10 years?
I thinkhollande is already deeply unpopular so the european parliament functions as a protest.
We have had problems in the european union for the last five years.
It is still a protest vote.
That is the reason why the result was so skewed in france.
There is no opposition so the german approach works because there is no real coherent operated -- opposition.
The parties that one cannot stand each other.
The greek protest party one.
They don't like the u.k. independent party.
The u.k. independence party has an original with the national front in france and they don't like each other so they cannot be in opposition party.
We will talk world cup which is finally upon us on this friday.
Let's get to company news.
Let's start with auto news.
Ford is recalling about 1.1 million suvs in north america and the problem is a sudden loss of power steering while driving.
Almost 23 million vehicles have been recalled this year.
Both wagon is ready to speed up the introduction of new cars to the u.s. a plan calls for new cars to be introduced every five years instead of every seven.
The company wants to sell 800,000 vote -- volkswagens per year.
They have sold only 118,000 cars in the u.s.. fox broadcasting is looking for a new entertainment chief and you can blame it on "american idol." fox is struggled to develop shows to replace "american idol" whose audience has fallen.
This is fascinating.
The digg deal was to get rid of pilots.
That was his all thing but he was the only one who went out to do that.
There has to be a massive backstory here.
The biggest story of the morning or last night is in new york what happened -- hockey fans were partying like it was 1994 because the new york rangers are headed to the stanley cup finals for the first time in 20 years.
They beat the montreal canadiens one-nothing.
Four games to 2. the gentleman scoring from the slot will lost his wife to cancer at age 32. he took the year off to regroup and this team -- the idea that pro sports is jaded has been completely destroyed by these new york rangers.
They are the emotional favorite.
They don't know who they will play yet, the la kings and the chicago blackhawks face off tonight.
For the rangers this is fun.
I think scarlet is getting a name change.
It's already my middle name.
I was at the first rangers game when they kicked off the playoff series.
In front of madison square garden, there's a flat-panel tv and there were 75 or 80 people fixated looking at it.
That's what it's doing to the city, it's great.
When we come back, we've got a little dinner table takeover talk.
We're talking about tyson's $6.8 billion bid for hill sure daschle scheier -- four hillshire.
This is "bloomberg surveillance ," on bloomberg television, streaming on your phone, your tablet, and bloomberg.com and now available on apple tv and amazon fire.
? good morning, everyone.
Scarlet lundquist is with us.
It's friday and we've got tons of merger news in the food industry.
It's a takeover bid for hillshire brands.
Tyson foods is making a $6.2 billion bid, topping the pogroms price of $5.6 billion.
We are joined by phone by jeff maccracken.
Let's start with wife hillshire is such a prize for these different companies.
In some respects the real value is it's a dream vertical integration.
These guys like tyson and pogroms pride have the -- pilgrims pride can buy different products and drop it into the plans and processes that exist.
It's a pretty easy deal for both of them in that respect.
This industry is so concentrated, why would regulators let tyson do this deal?
There are some antitrust issues that would get caught up.
That's why you probably won't see one of the other meet competitors hormel get involved for it most likely, there will be some assets divestiture is depending on who wins.
You have seen that in other deals as well.
I'm wondering if there is another regulatory risk in terms of market concentration but there are movements and some states to change the way animals are handled and put chickens and bigger crates and put pegs in bigger crates.
This is what tyson does, packs the chickens in.
Is there any sort of risk the companies are aware of that this will turn into a national movement and change the business model?
Not that i'm aware of.
I don't know to what extent these are driving these transactions.
Hillshire was viewed for a long time as a takeover target and nobody moved on it.
They decided to go after an unrelated company and that got tyson and pilgrims pride moving.
I don't know the state regulations is what's driving the moves or the aggressive moves by either one.
China smithfield foods -- smithfield foods was taken over by a chinese company in part to secure supply for china's growing middle class.
Can we expect a foreign buyer to step in here?
It does not look like it but i will not rule anything out.
One week ago, i was having a conversation with someone close to hilshire and they were dismissing the idea anyone would come along to try to buy them.
Here we are a week later and there are two bidders.
We have not picked up on any foreign bidders at this point.
It will be hard to compete with both of these companies.
Tyson and pilgrims pride have deep pockets.
We will be checking in with you for more on this developing story, hillshire farms jumping 17% yesterday.
Coming up in the next hour, the target interim ceo john mulligan will join us on "bloomberg surveillance" for an exclusive interview.
We have a lot to talk about.
Isi says the ceo and chairmanship should be split up and seven director should be replaced.
That conversation is coming up in the next hour.
? did morning, everyone.
-- good morning, everyone.
Here are two terrific morning must reads.
Mine is on the principal owner of bloomberg lp, the former mayor of new york city, mike.
He gave an important speech yesterday at harvard and pushed back against the politically correct crew.
Michael bloomberg continues the trend i have seen him do as mayor and he clearly supported the muslim meeting place by the world trade center a couple of years ago.
Whatever your politics, consider his speech at harvard.
We usually don't talk about what he does.
All the college student seven protesting against commencement speech yours.
This goes right to the heart of the protests in the 1950's down south.
We had a commencement speaker who was a heart surgeon and nobody listened to him.
I am not a stressed about this as michael bloomberg is because the kind of people that have been turned down like christine lagarde, condoleezza rice -- they don't want for a speech.
They have plenty of opportunities to speak.
My understanding about the protest at rutgers was not that they did not want to hear what condoleezza rice had to say but giving her a chance to speak was condoning a life's work to did not agree with.
You pick somebody and you go with them them and it harkens back to when i was in school.
I am with mike on this, this is a bad trend.
They have a lot of other places to speak.
The other key point is that it's a very vocal minority of people were causing these protests.
These decisions to cancel's biggers or speakers canceling is happening because of a very vocal minority.
I would like to get rid of commencement speakers altogether.
Students don't care about it.
It's an opportunity for the university to profile itself.
I have never understood this ritual.
I feel we should give them their diploma and let them go.
He's fired up.
Coming up, the world cup begins in two weeks but the protests have already started we'll talk about how the government is trying to sell the events next.
? good morning, everyone.
June beckons, this is friday, may 30. after a cold winter in a very cold early spring, it has been fabulous.
Absolutely gorgeous, this morning and yesterday.
We say good morning to you at oak quote bloomberg surveillance." we have a data check with the reversal off the bond markets this week.
There is the 10 year yield.
Everything else is churning today.
The s&p futures are down fractionally.
The real money is moving in sports these days.
You know about the l.a. clippers with steve ballmer betting billions on the l.a. clippers and has agreed to by the team for $2 billion which is 10% of his virtual -- of his personal fortune.
Is he overpaying?
That's the question.
If you're not getting the stadium or the tv deal, what are you getting?
You are getting a piece of a monopoly.
Franchises in sports are not to be had for love or money.
They'll come up that often so the chance to get one of them -- you are not getting the players, you're getting the name and the nba franchise and that alone is worth all of that.
There is no way to value this.
This is what he is thinking -- you all want it and you can't have it i've got a! that's a steve ballmer and her monologue.
Mark cuban would not do that down in dallas.
He's more internal.
He would hurl insults at people.
It's a long-term field.
This happens in sport teams in europe.
Soccer teams are way overvalued because if you've got a lot of oil money and love the game, there is a limited number of franchises you can buy.
There's only one liverpool.
There is only one manchester united.
We see huge not -- shoots sums pouring into that dame.
There's only two basketball teams in l.a.. will it change the l.a. clippers to a number one team?
Maybe he will drop $5 billion on a stadium.
The clippers were notoriously cheap.
It's what he has been through at microsoft.
He gets to hang out with cool people now.
Part of sports is you instantly -- john henry was a hedge fund guy doing brilliant work.
To most of the world he was unknown until the bought a small baseball team in boston.
That change things.
It is, it's instant access.
The twitter question of the day -- we need your response.
We were gone ago with his botox to sit in the front row.
There it is.
The world cup soccer event is starting in two weeks.
Tickets are 89% off.
Three of the 12 stadiums are still under construction including the one in sal paulo.
That is two weeks away.
I feel like i did the european union and i am the chief correspondent for bloomberg for things people don't care about.
In brazil, people care so much they are protesting in the streets.
They want money being put into education instead of studios that don't work.
Brazilians are in different about the world cup.
This is unprecedented.
How can that be?
They love the world cup so in 2010 they were so excited about the brazilians and south africa.
It turns out they are really aware of the $11 billion that has been spent by the brazilian government on the world cup.
The government made bad decisions and tried to build to studio -- to stadiums a good not do it and public is aware that despite their love of soccer, this was a bad deal.
I'm going to the north part of the country.
A friend of mine one tickets in a lottery which is up north and we were excited that we what tickets at.
-- we bought tickets.
Tickets for the game i have are going for $15. we can all go.
What about getting their?
Paint the picture of what you think you will land into.
Will it be a million people protesting?
There have been protests even against the brazilian team.
These are national heroes.
They mean everything.
The brazilian team was in its buzz going to a training ground and teachers blasted the bus with stickers that read " we want more money for education.
This is a concern.
Where i am going, they have not been able to finish the airport in time.
We are disembarking into a tent.
They really aren't ready.
Brazilians are embarrassed by this.
In 2007 when they ones franchise, it was supposed to be a great coming-out party for them.
A celebration of the brazilian economic miracle with gdp growth and low inflation.
There are stories about how if you make it there to the world cup and you end up in brazil, you will get sick because they don't have the infrastructure to deal with that.
There are not enough hospitals.
They are smarter than we might have given them credit for.
The brazilians know that of all the money that has been sunk into the world cup, $11 billion, and a bump they might have gotten for the economy has already happened.
It was not that great.
The tourism revenue, they know this, it is not supposed to provide more than 1/10 of a percentage of a gdp bump.
Can they pull this thing off?
We worry every four years like with greece.
I think they will pull it off.
I think it comes down to for brazil -- will the brazilian 11 win?
If they win it all, i believe the brazilians will be for given.
It will be an amazing party.
If they lose in game one, who knows what will happen?
We know the midfield player in croatia is a real find.
If i find a souvenir, i will bring it to you.
They were banned in south africa.
You can download a filter that would filter out that noise and plug it into your tv.
We are not going to have that.
We will have apps for it.
We will have the sound of rioting in the streets.
When are you going?
June 22. it starts on the 12th.
I may be going to a game where brazil plays the netherlands.
The netherlands is a problem for brazil.
It brazil loses and i am in the stadium and i looked very dutch, i am concerned for my safety.
Brendangreeley did it all.
Let's talk about hockey, it less night was a big win for the new york rangers and we'll tell you what madison square garden may be cheering as well in-house -- our single best chart next.
? good friday morning, everyone.
Adam johnson has friday top headlines.
Russia is now pull back most of its troops from the border with ukraine according to a pentagon official but ukrainian border guard said that russian soldiers some of their equipment which suggests that they could return.
The world's most expensive hotel rooms are in geneva, dubai and miami.
The average room costs $308 in geneva and dubai is second at $273 and the miami average hotel room is $245. the four seasons around the corner from here, you don't know want to know what that costs.
In hockey, the new york rangers are headed to the stanley cup rivals for the first time in 20 years.
They beat the montreal canadiens to win the best-of-seven series four games to two.
Next is either the los angeles kings are the chicago blackhawks.
Game six is tonight there and those are your top headlines.
That brings us to our single best chart.
So far, madison square garden has been home to the most expense of playoff aims to date this season.
Game six last night, the average ticket price was $939.46. now that the rangers are headed to the finals, where a ticket prices trading?
Game six at new york against either chicago or l.a. is running for $3150 per ticket.
That would make it almost as expensive as game seven at bank over in 2011 between vancouver and the boston ruins.
Hockey translates poorest on tv of any sport i know.
For those web never been to an nhl game, you completely underestimate the speed.
Not just the speed but the noise.
The audience and the velocity -- it just does not translate well into the.
It is an awesome experience.
By the way, there are not that many cities.
In a football stadium there might be 90,000. the new york rangers is a team of over performers.
Brendan boyle is someone who has been great but he has blossomed.
Carlhagelin has also been great.
Gary bettman would be implicit the la kings played the new york rangers.
The number one and two media market.
You get the entire country involved.
This tells you a little bit about how much it's worth to have a major sports franchise.
More on the rangers to come later on but coming up, that's all we will have for the next two weeks.
It is college graduation season we are talking about one lesson the college grads may not have learned in school that may make or break your chances of getting hired.
We will talk table manners.
Tom keene will get schooled on etiquette.
This is "luber surveillance." . ? good morning from "bloomberg surveillance." there is your morning shut up and attend manhattan where everyone is recovering from yesterday celebration of the new york rangers heading to the stanley cup finals in 20 years.
I am here with tom keene and adam johnson.
This is company news.
Elon musk says his new spacex reusable capsule will be able to take astronauts into space in two years.
He revealed it in l.a. in it can carry as many as seven people.
Apple has lost a last-ditch effort to avoid a price-fixing trial with e-books.
A lower court judge concluded that apple violated antitrust laws in its contract with publishers.
The trial is set to begin in july.
Google is acknowledging the lack of diversity in its workforce.
It may pressure silicon valley to increase the number of women and minorities.
The facebook ceo mark zuckerberg and his wife placed 120 millions to help struggling schools in the semper cisco bay area.
It's their biggest publicly announced donation and a comes a time when silicon valley companies have taken heat from critics who say they are driving up real estate prices and giving too little back to the community.
This is meant to turn that around.
I love the headline.
You made a lot of money and you're giving it back and putting it into education.
Is there any evidence that this sort of thing works?
i'm not cynical about this.
He seems genuine when he donated $100 million to schools.
I believe this is genuine as well.
In newark, money could not fix everything.
There was so much resistance from the teachers unions.
He created -- newark has a new mayor and most there is are that he was elected in part because of widespread resistance in newark to just house would be be changes were.
The money that mark zuckerberg donated went to high-priced consultants.
He spends a lot of money on that and is yet to be seen whether it made its way down to the actual pupils.
More power to anyone who wants to enter into education the better man than mark zuckerberg have done that.
That is the challenge of the time.
He is not disrupting education yet.
Tom keene, you are out at the news table?
You have a special assignment?
It's the most important interview of the quarter.
We see this all too often, the newly minted college grad, the pristine resume and the your applicant goes down in flames with horrendous table manners.
Debra goldstein is a strategic dining instructor.
It is a boom business as college grads struggle with everything.
Wonderful to have you here.
Where do you start?
When kids sit down with you, with the first and you tell them?
The most horrible thing you can do in the business meal is hold your silverware incorrectly.
Let's start with that.
This is what i say.
I call that playing the cello.
I show them that if your fork in your knife up with your fingers at a 45 degree angle and turn them over, you got your fingers on top and that will allow you to cut your meat in a super fashion.
We have to bring this over to english or can i do this?
I would not put my knife up to my mouth.
We are going to be civilized in america.
I prefer european-style silverware handling because you don't want to be mixing.
You want to be very clean and crisp and the purpose of strategic dining is to medicate second-guessing at the table.
I keeping your fork and knife in the same hand come you don't have to think about the juggling.
How do i order a drink when there is a bunch of people around the table?
Do i get my cue from them?
Two a order wine or other drink of scotch?
What do you do?
As a person interviewing, i would start off with the club soda.
If everybody else is getting a drink, i would order one glass of wine.
In stressful situations, alcohol affects your brain differently.
Keep it cool, keep it clean, start with club soda and if you want to have a glass of wine -- how quickly can you turn around someone's bad manners?
Is it in today's? no, actually, it's important for people to learn these basic skills and practices as they learn them.
Strategic dining is like building a muscle.
You learn something like cap to hold your silverware and i'm cursed to start right away in practice.
In that way, when it comes down to crunch time like interviewing for a job, you are not even thinking about the silverware.
Scarlet fu has important question.
You also had the women's professional compact in the new york city area.
Our women held to a different standard when it comes to table manners?
Can they get away with less than men?
Women have a more difficult time with the strategic dining on business meals because we are often asked to order first.
We are also often overlooked by the waitstaff is the host.
We talk about how to make sure as a host of business meal that we are the person in control and we are the person leading the meal.
The number one thing not to do when you sit down and you are sweating, you look like steve ballmer and you got the sweat going -- what's the number one thing not to do?
I think the number one thing not to do is lose your focus.
It's important that your crystal clear and focused on the person you're with.
It still comes back to the conversation?
Absolutely, it is about building rapport and putting your estimate for it.
Next time debra goldstein will join us on tactical approaches next.
I love your articles in "bloomberg businessweek." you find the stuff under the service we should all be talking about and you've got something coming up in telecom?
Yes, there has been a rash of arguments over what the regulation should look like in the u.s. we had the at&t merger pending and the fcc decision on net neutrality.
I have been covering telecoms for five years.
My editors are finally letting me compile a list of lies the telecoms tell you every time one of these things,. everybody, regulators and customers.
They always say we are worried if you passes regulation about regulatory uncertainty.
What that means is we are certain that we will sue the fcc to get the -- if this regulation is passed or if they say we are worried about infrastructure investment which means they are holding their own infrastructure investment hostage.
If you don't give us this regulation, we will not roll out more fiber to our people.
I've got a long list, glossary of how to listen to speeches by telecom operators.
The whole thing is changing like with at&t and direct tv.
And sprint trying to bid for the mobile.
There's that great quote from the ceo of sprint who said it's like smog and china, broadband america so bad, you are smothering under it and you don't know it.
I like that.
We all want to be able to watch tv on our cell phones.
But there is not enough bandwidth, is there?
Spectrum crunch is another glossary term.
It does not exist.
There is plenty of spectrum.
The telecom operators want you to think they have to get as much spectrum so they can lock it found.
Spectrum crunch is a euphemism for spectrum hoarding.
Back in 2000 when all the champagne producers said they're going to champagne and buyer champagne now, there is no shortage.
I'm also very cranky and cynical about telecoms.
What will you be on the lookout for after you compile this glossary?
Angry e-mails from at&t, that's what i will be on the lookout for.
I will watch whether the fcc is committed to regulation.
It is the way every other developed economy regulates its telecoms.
We don't do it.
I'm interesting to see whether the fcc is interested in doing it the way the west of the world doesn't. i love the chicken dance and good having you on the show.
Let's do a fourex reports -- quiet in the market.
The euro-yen has been turning all week.
Coming up in next hour of "surveillance," john mulligan joins us for an exclusive interview.
? washington and new york up the settlement from $5 billion to $10 billion with bnp party about.
The conversation with pimco about a bond market turned upside down.
We are live from our headquarters in new york.
I am tom keene.
Joining me is scarlet fu and adam johnson.
Our guest is howard ward.
Adam, you get to start with the morning brief.
Tom, overnight, consumer confidence increased for the u.k. economy.
In japan, inflation rising to a 23 year high on a tax rise that is pinching consumers.
Ironically, they need more inflation because it had so little growth in japan.
At 8:30 is going to be -- 9:45, -- there are really no earnings to speak of.
Plenty of news to tell you about.
Authorities want bnp to pay $10 billion to settle investigations into whether it violated american sanctions.
A final deal may be weeks away.
Chevron is backing off efforts for clean energy.
Managers told employees that fundings for effort would dry up.
They are encouraged to look for jobs elsewhere.
Order is shuffling its executive ranks in the midst of growing concern about slowdown in member loads.
Twitter wants to speed up the release of new tools and features that will encourage users to spend more time on the site.
This is the backstory, scarlet.
I am saying there are some real angst here about the glide path.
That is why twitter is so focused on developing its member base.
Six months from now we will be talking about what you just talked about.
Here's another big story.
We're talking about former microsoft ceo steve ballmer winning the bidding war for the los angeles clippers.
He will pay a record $2 billion for the nba team, which the league forced down -- forced the former owner donald sterling to sell.
He is worth almost $19 billion.
He may not need any cheering section.
He is a one-man cheering section.
Remember the chicken dance that he did?
Chicken dance at the microsoft meeting.
He was getting into it.
He is going to be on fire.
To think you would do that in the front row of the hookers game?
-- of the clippers game?
Howard ward, our guest host for the are?
Do you think is overpaying?
When you see woody pay for skype and nokia, this is consistent with his modus operandi.
Yeah, he is overpaying.
No one is close to $2 billion.
He put a different handle on the bid.
So he wanted.
It is great.
This marks up the private market value of msg for both the new york rangers and the new york knickerbockers.
Good news for shareholders who own msg.
It goes with what we are talking about earlier.
This clippers acquisition is a big deal.
What is it mean for the toronto maple leafs and the dallas cowboys.
This is a huge game changer, is met?
Yes, it is consistent with the pricey l.a. dodgers received a year ago.
There has been a step up in the price and the private market value of the premier professional sports teams.
You could argue whether or not the l.a. clippers even belong in the category.
Is because of the value of sporting events?
When it comes to media events, sports reigns supreme.
Impatiens in that now.
We have seen a three-year nirvana in media stocks.
Would you suggest as an example mr.
Ballmer's acquisition that the media frenzy just continues?
There is going to be a lot of activity in this area over the next couple of years.
I think my friends would agree with that.
You get the same kind of price performance out of the stocks over the next year or two that we have had in the past.
They have done pretty well, but nevertheless, the fundamentals you continue to evolve, content continues to get more leverage over distribution.
It is an interesting area.
It has been an interesting week.
I wanted -- i want to bring it back to the moment at hand.
Equities are supported.
Do you agree with david rosenberg at this is about an equity market signaling better times ahead, or du hedge towards the gloom many are talking about?
Let me be clear about this.
The decline in bond yields in the last month has nothing to do with what is happening in our economy.
It has more to do with spillover effect from declining yields in europe.
Continued easing monetary policy.
Here in the united states, that was unexpected.
It has to do with the dollar.
The bid for the dollar, when you think about major currencies, the yen, the euro and the dollar, the yen and euro want to cheapen those currencies.
This is critical.
As we go into the weekend, as her but he looks at the retirement plan, you are not changing your portfolio allocation because of what we have seen this week?
Not at all.
That is a tremendous predict it indicator of what is happening in the labor market.
The labor markets are getting better.
The last months number of 280 8000 jobs, the best number in two years.
The economy is doing well.
You're going to post a four percent gdp number.
Absolutely no change.
Let's get it -- if you are not available -- wavering on your view of the economy market, that dislocation spills over into stocks?
The stock market is being held up by a one percent inflation rate.
The one percent inflation rate allows all this to happen.
It allows the fed's policy to be successful, it allows the p/e ratio to be where it is, it allows the economy to grow.
It allows corporate ceos a conference -- the confidence to do future deals.
Things are looking very good right now.
Highly confident that the low yields are doing nothing but continuing to support even higher stock prices.
We consider forward earnings multiply up another point, close to 17 times.
We have the return of goldilocks.
Timeout, gdp was down one percent.
You're saying it goes to four percent in the second quarter?
How to get a five percentage point swing?
We have to go back and forget about that.
The market has forgotten about it.
The market is at a new high.
We had the polar vortex, i think as tom said yesterday, the snow melted in central park three weeks ago.
You watch the show on a daily basis.
Of course i do.
Radio is up to 47 listeners, so it is not bad.
And a lot about the weather and where -- forget about it.
If economy is doing just fine.
You've said forget about it.
Boy, do you look smart now.
Can apple have further legs with this new product rollout?
The critics have gone silent.
They have done 28 acquisitions now, when you include beats this year.
28. beats is the biggest one.
They're putting cash to work.
Now the new product cycle begins.
The critics have been silenced.
The stock is up 100 points since i was here one month ago.
It is up 20% in one month.
It is a 12.8 times next year's earnings.
10 seconds, really quickly.
Do the rangers want to play the blackhawks are the kings?
I want the.
I want my team to have to travel all the way to california.
Let me do a data check right now.
Equities bonds, currencies, commodities.
There is that 10 year yields.
Howard ward says forget about it.
Just three digits.
Two point -- 2.471 on the 10 year yields.
Is a big sport they.
It continues into next week.
When does a world cup start, two weeks from now?
Everyone is talking about the opening game between brazil and croatia.
In a stadium that has it to be finished.
We will be joined by targets interim ceo john mulligan when we come back.
? good morning everyone.
This is bloomberg "surveillance.". john mulligan is an interim ceo.
He will have much to answer two.
A common stock in its own mini bear market.
An uncommon set of recent malfunctions from a data breach to troubled canadian division.
Wonderful to have you here.
You have been with target 18 years.
Describe the level of the train wreck right now.
How bad is it for your target?
We recognize we have had a lot of progress to make.
We need to work on regaining our guests'trust.
In canada we still have our work to do in front of us.
We have great assets.
We have an outstanding brand.
We have guests that love our stores.
We have a very strong balance sheet.
Despite all the difficulties we made $2 billion last year.
You have a red bull, which is iconic.
What is your message to your troops to make greater acuity toward that brand?
Get back to where target was?
When we are at our best, we are around newness.
We have a great pipeline of innovation that we're going to bring to our guests over the next several months.
We need to expand that i plan and get more newness out to our guests.
Is that jargon?
What is newness?
It is new product.
Here is more jargon for you.
We have a hot syndrome of newness.
It is about having new products and new merchandising in the store.
The guest experience is always something new.
That is when we are at our best third we always know we're going to target getting our two pieces of whatever, but i circle the race track and there are seven of the things i like her in the store and are exciting for me.
Is that newness expand to new management?
Target management is ready insular.
Is it time to bring in someone from the outside to shake things up?
We will have a new ceo.
You don't want the job, right?
I want to be the ceo of target for long time to come.
We have brought in a lot of new senior leaders over the past several months and years.
We brought a new chief marketing officer when i started at cfo, we brought in a significant amount of digital talent.
We have a nice blend of people who have been in target for a long time, and those bring a different perspective.
What have you learned by the train wreck known as jcpenney?
At the comparable to jcpenney.
I know, but what have you learned from that career debacle.
Very some people trying to change too much too fast.
If fired their existing guests and couldn't acquire the other guests quick enough.
The change was just too rapid for what they wanted to do.
When we talk about target, we want to bring all the greatness of targeting the digital world and online and our guests where they are.
You are lower brand, it was just doing it a different way.
So many retailers have messed up along the way.
An incredible effort to fire up the faithful.
How do you fire up the target employees who have had to deal with a tough ride here for the past six months?
The great thing is, think we recognize we have work to do.
I think having a conversation with the team, they are excited.
They know we can win.
We have a great rant, but i actually.
-- we have a great brand.
We spent the last month having an open conversation with our workers.
Everyone has a role in that hate our store team has never lost a focus.
I go back to the data breach, right after that.
Our job is to serve our guests every day, make that an irresistible shopping experience.
They have done that consistently.
I just did a panel with the cfo 's of several companies.
What is john mulligan's ideal ceo to work with?
The ceo and cfo have to be hand in glove.
Your board says julie want after this monumental screwup.
It is john mulligan want?
We need somebody who can lead us to become, transform us to become a leading omni-channel retailer.
What is great about target today, the brand and what that brand represents and how we transform that in a digital world.
John mulligan with us.
We look to a data check here.
We have a lot of economic data coming out this morning at 8:38 a.m.. and the confidence number later on.
That is after the market opens.
Let's take a look at where futures are trading right now.
You don't have much movement there you able to want to get too far ahead of that data.
1916 on s&p futures.
2.471%. there is that incredible rally in treasury prices that we continue to see extending into this week.
Good morning, everyone.
I'm tom keene.
We are in conversation with john mulligan.
He is a chief financial officer in the interim -- and the interim chief executive officer of the beleaguered target.
You also have to search for a chemistry with the arch competitor amazon parity wake up everyday day and say how to write the jet a zealous?
We wake up everyday and say how do we beat everyone else.
We compete with walmart very every day i have less reason to go to walmart or target or the others.
What is your amazon killing strategy?
Digital is incredibly important.
It is about meeting our guests where they are.
On a guest side, that means mobile.
Nobody has really want mobile yet.
That is bringing mobile chart digital and stormed.
We service up a bunch of offers.
When we get the right app, our guests engage with us, both in-store and online.
Is a one critical meeting for you where you knew target had fallen behind?
Or was it an evolution over time?
Probably the moment where we all knew we had a lot of work to do was when we had website issues in late 2011. we relaunched after coming off the amazon platform.
With significant website issues with our launch.
We had a significant amount of investment to make to bring our desktop.com experience up to where our competitors were.
The good thing that came out of that is it forced us to focus on mobile.
We have focused on mobile.
Our mobile experience is outstanding.
We go back to cartwheel.
In nine months, we get 7 million users.
Once again on there, they love it very.
We all have strengths in our own way.
We are up there with anybody.
On desktop, we are not where we need to be.
There, we're catching up as well.
We introduced pick up and store last fall.
We are high living ship from store, incredibly important for our guests.
Also, very important for our economics, getting much closer to the guests.
We are rolling that out this year.
I want to ask you about the flawed canadian expansion.
Once he expanded, and there were also severe issues with rice income inventory and stocking.
These are operational hurdles, but there is also a subtle piece of the canadian market that management didn't fully appreciate.
What are you doing to change at?
We have not met our expectations.
We have fallen far short.
The first thing we have to do is get our operations in line.
You can't disappoint guests.
What we have done is unacceptable.
No one feels that more than the canadian team up there.
We have a new leadership whose focused on fixing the technology and the supply chain.
We are looking at everything we have done their, the assortment, the promotional cadence, how we display the merchandise.
It has to be a holistic review of everything we have done.
We just put a new senior leader in charge of canada.
We're bringing a chairman who has a deep experience in the canadian marketplace.
I has commented pretty hard.
They want to keep changes.
Seven new board members as well as a separation of the ceo and chairmanship positions.
How do you respond to that?
I can say we disagree with their findings.
What i would tell you is that i sit in the room, we have an active and engaged board.
There are not afraid to ask hard questions.
We have very open dialogue with them.
They take their commitment to reviewing the enterprise risks of target for u. they are very engaged in where we are going.
They view that -- they like the flexibility.
Where is the chairman role five years ago.
I think their view is, let's do what is best for the business at that time.
Your active and new year's should -- active and engaged.
Do you alienate your shareholders?
Will make our case to our shareholders.
We certainly what the feedback.
We spent the last three days engaging with our shareholders.
Our board is engaged with our shareholders having these conversations about governance as well.
Within the media gloom and as chief financial officer you deliver terrific growth.
Double-digit dividend growth.
Can you maintain that as you invest against amazon and your competitors?
Over the past several years we have increased our dividend.
Also, we continue to see improvement.
We saw improvement in our businesses in canada and the u.s.. where been very disciplined about returning cash to shareholders.
Gma news and the vikings?
I am a packer fan.
I can't speak about the vikings.
The vikings were good 15 years ago.
That was a while ago.
You're getting a new stadium.
Thrilled to have you here.
Thank you for clarity on target.
Coming up on bloomberg surveillance, we will discuss the conversation starter status.
Is the cover of this week's bloomberg businessweek which is available on your tablet and newsstands today.
We also want to bring you our twitter question.
This has to do with a big business story we're are following.
Steve ballmer making a two nil -- a $2 billion bid for the los angeles clippers.
Treat us at @bsurveillance.
? this is bloomberg "surveillance." let's get you some company news now.
We start with some automobile news.
Ford is recalling about 1.1 million suvs from north america.
Almost 23 million vehicles have been recalled in the u.s. this year.
General motors accounts for more than half of that.
Volkswagen is ready to speed up the introduction of its new cars to the united states.
It plan calls for new cars to be introduced here every five years instead of every seven.
The company wants to sell 800,000 volkswagens a year by 2018. cw has sold only 118,000 cars in the u.s.. broadcasting looking for a new entertainment chief.
You can blame it on american idol.
Fox has struggled to develop shows replacing american idol.
It has fallen 60% from its peak a few years ago.
$2 billion, that is how much former microsoft ceo steve ballmer has agreed to pay for the los angeles cliffppers.
Joining us now to talk about it is mr.
Billionaires expression self.
$2 billion is a big number for a company.
Does he write a check?
Does he finance at?
he could sell shares.
You could pay was stock.
That is another way.
Typically, we to finance this is to borrow against his microsoft shares.
You're part of the bloomberg billionaires index.
Any sense for what billionaires pay interest rate wise?
It depends on how they finance it.
One-to percent seems to be reasonable.
Can we get access to that kind of money?
What did you learn from this transaction?
I am thunderstruck and how it feels like oligarchs buying british football teams.
I make light of this, but this is a big deal.
This is what the billionaires 'work at bloomberg is about.
It is about scope and scale.
This is a game changer.
What disguise do with the money.
Is really a measuring stick.
There are very few measuring stick assets out there.
You can build up a huge fortune, be back in the limelight.
He needs to have an asset to have fun with.
It is really a game changer for the nba.
If you look at all of the billionaires who own nba teams come other teams are much more valuable today than they were two days ago.
Is is part of the cheap money?
Apple does a share buyback and they don't even think about it, do they?
Cash is earning nothing.
Any kind of a return is it houses of incremental -- what are the rangers and the knicks worth this morning?
Most of the value they have is through the yes network's. you could just take the whole package, it is worth more than $3 billion.
The value of nba teams, according to forbes, $1.4 billion valuation.
L.a. clippers are 570 $5 million.
Those rankings are based on old numbers.
Because it is such a transactional-based valuation, you have to look at the last valuation our last transaction.
Do think this is a blow for mr.
Larry ellison, who could probably have written a check just as easily as mr.
No, larry has been wanting to get into the sports game for a while.
Larry will have his day in the sun in terms of having his team.
He has a huge line of credit against his oracle share.
I want to rip up the script.
Which billion or should i watch at the world cup?
Are a couple you should pay attention to.
A lot of them have to do with other companies.
There many making money off the soccer industry.
Our twitter question of the day.
His steve ballmer overpaying for the l.a. clippers?
Tweet us at surveillance.
$2 billion is what he is ready to spend on the clippers.
Let's get to a data check right now.
We have a lot of economic reports coming out later this morning at eig 8:30 a.m.. right now, futures are little changed.
Trading at a record high right now.
2.470% on the 10 year yield.
We will continue to keep an eye on that one.
Good morning everyone, bloomberg surveillance.
Bloomberg radio plus and bloomberg tv plus.
With me is scarlet fu and stephen johnson.
We want to talk about the turmoil of the bond market.
Turmoil when it comes to discussions on inequality.
After critics charged with using faulty data, he published another 4400 word essay defending his book.
No wonder where you stand on the math, piketty mania has struck america.
Clive, i know you have plenty of misgivings about piketty's work.
A lot of americans are convinced that his book provides hard evidence that they are right in feeling that there is something wrong.
He put his finger on the pulse of american culture, hasn't he?
America's political culture is assessed with this issue of inequality.
There is a longing for a book like this, a long, serious, data rich, theoretically rich book that confirms this fear that a lot of people have that inequality is getting worse and will carry on getting worse.
It is the right book at the right time.
what issue you have at the book is at his view that inequality is all that counts, and his prediction a capital stimulation is worse than that.
You say the real issue is on the growth or lack thereof in wages and living standards.
I do think it partly misses the point in that sense.
In many ways, it is a distraction to focus too much on inequality, at least in my view, because there is a lot we need to do to advance opportunity at the bottom and of distribution.
Piketty has nothing to say about that.
I think that is a distraction,. here is clive crook in bloomberg's view, talking about the sweeping ideas that come out of narrow assertions by professor pike tty.
Clive, i would suggest you say this with respect for his academics.
What did he get wrong?
Well, the center of the book is his theoretical claim.
There is a mechanism that he claims to have discovered, that delivers this perpetual rapid rising inequality.
This is the crucial thing.
He describes implication of this mechanism that is potentially terrifying.
I do think the evidence is there in the book to back this claim up.
I think the data does not support.
I am not talking about the mp's critique.
I think the theory actually falls apart when you examine it.
I sense there is a bit of an emerging consensus on that.
Quite a few distinguished economists have put their finger on floors and i think it is not going to survive this scrutiny.
-- their finger on the flaws and i think it is not going to survive this scrutiny.
I think the initial response to the book was ridiculous, actually.
It was so passionate.
I think people delighted in the book.
I think a lot of people delighted in it without having read it.
I think the initial response to it was in cautious.
People did not think through the details of what was claimed to be done.
I think the theoretical core of the book is beginning to unravel.
All right, clive cook.
We could go for two hours on this.
Have you read the book?
I have skimmed the book.
The key assumption is that the rate of return exceeds the growth that we have an economy g. there are plenty -- pretty simple formula.
We will back -- we will be back with paul mcculley from pimco.
? howard, for little context here, $10 billion, that is more than an entire year's worth of profits.
This is the biggest we have seen.
What is going on here that they're getting tougher on the banks as we get into this thing?
They're using the banks as piggy banks to some extent.
This is somewhat unprecedented, with the regulators putting the guns to the banks and using criminal charges.
They really have no choice but to get the checkbook and write the check.
I don't know what all these banks did to deserve all this, but once again when you're finding the bank, your findining them for something that management did.
Stop taking the shareholders wealth.
He talked about how banks need to be more accountable to the public.
He said, just as any revolution eats its children, unchecked market fundamentalism can devour the social capital for long-term dynamism.
We have entered a touchy-feely era of high finance, haven't we?
Major financial institutions in the united states do play an active role in getting -- in giving back to society.
There is a lot going here.
I am not the apologist for big banks in this country, but i think they're gotten a bit of a bad rap.
They create a lot of jobs and they are the foundation of our capitalist society.
In fact, if you want to talk about why the housing market is weaker than it should be, is because the banks have imposed some very stringent lending standards and admitted extreme the difficult to extend loans to otherwise very qualified borrowers.
We went in and bought a handful of banks a couple of years ago on the show.
That has worked out very well.
But you're not selling them.
Except for b of a domestically.
Aig, on the financial side, that is your discount.
Howard ward, our guest for the hour.
Paul mcculley returns to pimco.
He speaks to us next.
? this is bloomberg "surveillance." let's get you some company news now from the files of "bloomberg west." mosque unveiled the dragon the two spaceship at his space x headquarters near los angeles.
Apple has lost a last ditch effort to avoid in e-book pricing trial.
A lower court judge concluded that apple violated antitrust laws in its contract with e-book publishers.
The trial is set to begin in july.
Google is acknowledging the lack of diversity in its workforce.
This should pressure silicon valley to increase the number of women and minorities that are hired.
91% of its staff is either white or asian.
Thanks so much, scarlet.
It is been a very good 31 days for legendary bond investor bill gross.
gross welcomes back to pimco, paul mcculley.
mcculley has provided thought-provoking wisdom.
He joins us now from newport beach.
Joining also is our chief economic correspondent michael mckee.
What will you do for mr.
First, good morning tom and mike.
Good to see you.
Tom, as you know me for many years, i like to do three things -- i like to think about macro, i like to write about macro and i like to speak about macro.
Converting macro to micro implications, trying to make money.
I think that is a pretty good description of what i try to do at that meeting you're talking about.
We see the amazing bond market this weekend.
First, do you like to think about macro?
I know what you did in your time off, because w