Civil War in Ukraine?: Surveillance (04/21)

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April 21 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests include Citi Private Bank Global Chief Strategist Steven Wieting, Eurasia Group Director of Russia and Emerging Markets Strategy Alexander Kliment and Methuselah Advisors Managing Partner John Chachas. (Source: Bloomberg)

This is bloomberg "surveillance." ukraine consider civil war.

Congress calls for harsher actions now.

Can mobile come in on planned?

36,000 will run 26 miles from hopkins to boylston street.

All will finish strong in boston.

Good morning, everyone.

This is bloomberg "surveillance." we are live from bloomberg world headquarters in new york.

It is monday, april 21st.

Joining me is adam johnson and cristina alesci.

Scarlet fu rounding up her tour in europe.

What do we have today?

A different kind of brief.

I feel like asked week was three weeks ago.

That extra day makes all the difference.

Awesome.

I sell the rangers play and win thursday night.

Then they lost sunday.

Overnight the trade deficit widening as exports fall to the lowest in about a year.

A couple of items.

The big one is leading economic indicators.

A forward-looking index.

Markets are closed around the world in celebration of easter.

Hong kong, rizzo, most of europe.

Netflix and scions bank after the closese.

-- zions bank after tehhe close.

We have housing this week.

Housing growth this year.

Putting a blanket on it last thursday and friday.

That is typical of the markets.

We had a huge run-up in now this year is flat.

Looking at stocks, bonds, currencies and commodities.

A very quiet world.

Hong kong and london are closed.

10 year yield back soft.

Two point 74%. euro-dollar goes nowhere.

Nymex crude still elevated.

Brent crude 109 as well.

There is the good tone in the markets.

Fix 13.3. -- vix at 13.3. rubel does better at 35.66. this with joe biden visiting kiev.

Gold under 13 and -- 1300 announced.

Here is cristina alesci.

The top rampage story is a ukraine and tensions there.

They have gotten worse with several shootouts over the weekend.

This comes after an agreement in geneva last december.

That called for disarming all illegal groups in vacating buildings that had been seized.

Ukraine accuses russia of exploiting violence to find a way to invade.

Of course we have congress calling for more sanctions.

We could talk about this in a bit.

To me, there is no news.

I do not a lot of headlines coming across the bloomberg.

It is really unclear what they want.

Do they want to be part of a separate country or want to be part of a rush not exactly clear . also unclear as to whether they are ukraine.

Some come more from russia.

In a number of the cities talking about just a couple of hundred protesters.

Let's recognize.

It is not 10,000 people, a couple hundred.

The second front-page story, one of the world's biggest commodity traders is planning to exit a big part of the business.

They will cut meadow -- metal and agriculture business.

The move expected tuesday.

Nancy jenkins expected to cut several thousand jobs as a result.

One of the top banks and commodities.

The bank wants to cut exposure to areas that do not generate returns above the cost of capital.

Becoming more like utilities at the end of the day.

We will probably see more and more banks cut exposure to very risky areas that elicits a lot of government oversight.

Do you see a lot of cost coming to the banks in general?

Absolutely.

They say we will just reward the people outperforming a lot more than the people underperforming, and that is how they hope to keep the best and most talented people around.

At the end of the day, compensation coming down on wall street.

This is.

Frank.

-- dodd-frank.

Good luck making return on equity of 14%. goldman sachs did that.

I do not know how they did that.

If you are a bank, how will you make or team percent?

Our last story, square.

They have discussed sales with several big tech companies.

Google, apple, paypal in the past.

The problem is the losses are getting bigger in cash is shrinking.

Said to applause a hundred thousand -- hundred million dollars last year.

Jack dorsey heads the company.

Payment is not technically a very lucrative area.

Lex the bottom line, it is not working.

It is not working.

On the secondary market, a valuation of 5.2 million.

Incredible.

Air b&b worth $2 billion.

What does it mean when we say someone is worth $6 billion?

It means there are investors willing to take the other side of the ua should and.

Whatsapp.

What does it mean that someone is willing to pay 19 billion?

David kirkpatrick runs through this in the facebook effect.

To me, a grossed up number.

Lex gross him-- gross him ashore along.

At least three killed in ukraine.

Diplomats provide this diplomacy -- diplomacy.

Richer falcon that formal white house adviser and security.

He assesses the value of increased sanctions against russia.

Also joining us is stephen whiting.

Wonderful to have easier.

Vice president biden lands in kiev.

I do not think i would call it the civil war yet.

Facing a presidential election in about a month.

I think the big gain these days is to keep the country stable enough so it can have elections.

Without elections you have no one to talk to.

The president of ukraine suggested economics and ims support is the key attribute right now.

Is the military situation so fragile it trumps over economics and funding?

Not yet.

It is really confined to the far eastern edge of the ukraine where it is a problem, armed groups taking over.

The rest of the problem -- country the problem is economics.

And whether they can get a problem -- handle.

He may be going there to assess whether this government is up to it.

He will try to top them up and give them extra support.

The basic economic package is set.

I think he will be under extraction -- instruction not to go too far.

Some of the commentary has to do with u.s. strategy of isolation and containment.

How applicable is that strategy in the modern day when you have such interdependence in the global economy?

Much harder to put in place.

Talking about strategy in russia.

It is much harder to do.

There will be pushback from western companies with equities in russia that far exceed any that existed during the cold war.

That was the theme over the weekend.

We understand germany has real questions about sanctions.

What about american multinationals?

We're less independent with the russian economy.

If you have deep equities.

Calling up the white house and saying wait a minute?

I think it works more through the allies.

London of financial center were much of the money goes.

Bp having an enormous investment in russia.

Strategist at citigroup.

Help us make sense of the money flows.

Talking about the 10 year yield.

You put up the 10 year yield for russian bonds at nine percent.

How freaked out when you look at that chart our international investors over this?

Keep in mind the bulk of the financial difficulties have been confined to russia and ukraine.

Remarkable targeted sanctions have harmed the economy but have done relatively little to the outlook for europe and the world at large.

It is critical it needs to stay that way.

For this to not be a geopolitical event.

The wheelhouse of citigroup economics is a great team.

What have you learned in the research about eastern europe and the ukraine thank you apply over to american investing?

A lot of things.

I think it has made the u.s. a safer safe haven.

The fact that yields are somewhat below three.

It is the fact that geopolitical risk has emerged.

Might be a small risk, but it is having some influence.

I just think this is a pretty binary issue.

If this is a part of the world that is going to stay and be troubled, that can coexist with global growth.

A dozen serious and all over the world.

If it goes over certain boundaries and involves a military force between some of the largest in the world, that is a completely different force.

Getting to the company news this monday morning.

Heiser considered a buyout of asterism the cup.

Informal talks about an acquisition according to people familiar with the matter.

Talks started several months ago but were discontinued.

Astrazeneca 100 billion during those talks.

Bp refusing to pay 150 million dollars for studies on the effects of the 2010 gulf of mexico oil spill.

The research included a look at the impact on dolphins and oil -- and wales.

They said they should not have to pay for the study since they have not been able to see the results.

Volkswagen on track to be the number one automaker in china.

Sales will rise at least 10%. volkswagen edged out general motors and china shares -- in china last year.

The car business is amazing.

I saw a lot of cars this weekend.

You went to the auto show?

I took the chains off this weekend.

Lex i have my car detailed.

Cost me $178. took him 2.5 hours.

I have a 2004 land rover discovery series two.

White with that hand interior.

Gorgeous.

A pin stripe down the side.

Black, tan, and read.

That is style.

I cannot believe you have a white car.

It is cool.

Classy.

Lack is classier.

-- black.

Cars are expensive.

Coming up, u.s. food inflation at its highest level in three years.

Sending producers and consumers searching for profit and proteins that taste just like -- you can see what we are looking at.

We will be right back.

Bloomberg "surveillance." streaming on your tablet, phone, and bloomberg.com.

Make the sound , rooster.

? good morning, everyone.

Bloomberg "surveillance." beautiful morning in manhattan.

Lower manhattan in the distance.

A beautiful monday as we began a five-day work week.

This is bloomberg "surveillance." coming up this morning, john patricof, chief executive -- chief operating officer, senior vice president of ee goes at the tribeca film festival.

We will talk to him.

On the noted film festival.

A sure sign that spring is in new york city.

I am tom keene.

With me is adam johnson and cristina alesci.

Chicken.

Why not?

Farmers can produce chickens five times faster than beef and at half the cost.

Those are gorgeous chickens.

It is why burger king and kfc introducing new chicken sandwiches.

The one i kfc?

The double down.

To chicken patties.

How important are basic issues like food inflation for working families when you talk to ivory tower economist of the fed?

Inflation is inflation whether it is up the core or food and energy.

Agricultural prices move mostly because of supply.

Mostly because there is a background that can affect livestock.

Usually not because of some overarching monetary policy stimulus.

It is not that sort of ink.

I think it is important in the sense that you can harm her to sing power.

People should not go out and say deflation is eating us alive.

We have had the fastest growth in consumer food cost since 2011. that is not concerning?

These are numbers that move around a bit.

If you look at head find -- headline -- food prices and americans tend to eat more tv dinners hummus a lot of the emerging markets, these are 50% of all consumption.

You are buying fruits and vegetables and cooking up home.

The variability can really swing.

Food price shocks.

I remember doing a thing on cambodia during the rice crisis.

80% of the cambodians income.

Chickens, up it goes.

Everyone adapts to this.

I thought 60 eight dollars stake the other day and a restaurant.

$68. status discretionary food.

You can choose to go to the cheaper restaurant down the line or stay home.

If you're only choice was to purchase food commodities at home and cook them, you are at the bottom of the food chain.

It would have a bigger impact than the sorts of things you can decide to purchase or not.

The key thing in the program is a letters that say why did the suits in your program safe there is no and nation.

You will find it in consumer prices.

You will find them in the statistics where they belong.

You will find inflation rates are there in fact.

One thing that is concerning is the hourly earnings adjusted for inflation.

How much of that is a concern to you?

I think we have had a very modest wage growth.

The labor market that has been through a bitter downturn.

9 million people lost jobs in the downturn.

We have only regained that seven years later.

This lowest labor market recovery since the 1920's and 30's. where we are now, gains of excess of 200 million per month, i think you will see hourly earnings pick up a bit more.

That is the undercurrent of optimism.

Coming up, is weakness in the texaco dirt a sign of trouble ahead and?

Also to twitter?

Head, has the tech bubble burst?

Tweet us.

We want to know what you think.

We will be right back.

? good morning, everyone.

Bloomberg "surveillance." the freedom tower.

We say good morning to all of you after easter and pastor.

Housing data front and center in the next few days.

The metlife the link -- building which i took a sideways look at.

Every building looks different in new york.

Top news headlines.

Like south korea's president said the actions from the crew on the ferry that sunk last week mark will"are like murder." the sinking of the ferry left more than 300 dead or missing.

Still searching for them.

Japan posted a wider than forecast trade deficit last month.

Export growth the weakest in the year while imports jumped 18% in march.

Heard of the gain attributed to a spending spree some consumers before the tax increase as of april 1. " captain america" rang up another 26 million in sales over the weekend, taking the top spot.

The movie is now grossing 170 million in the u.s.. "rio 2" in second place with 22 million in sales.

Morning must reads.

Cristina alesci has a wonderful morning must reads.

It is on the ferry crash in korea.

He says what we have here is an abject lesson of the limits of using rapid gross domestic product for a nation success.

The sea wall tragedy is a wake-up call for all of korea to address blind spots and business and political culture.

Thank you.

That is the morning must read.

Much more on ukraine.

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

I am tom keene.

With me adam johnson and cristina alesci.

Scarlet fu fish may -- finishing up her grand tour and will be with us tomorrow.

Futures up to.

10 years yield backs up to 2.71%. many other market shut down for easter.

As you know, it is a bull market, right?

At tech selloff separate from the rest of the market.

Down 15%. a busy week of earnings.

Will the market do facebook or will the broader market shut off the recent tech malaise?

Stephen whiting studies profit within the american economy like no one i know.

I love the way you can parse a economics and profits with the investment of profits.

Which one is the high ground?

For the market, i think we need to see follow-through on profits.

Fortunately profits have risen more since 2007. we had decline in valuation from the last time the economy and markets the.

This time we do not believe the expansion is over with.

The distinguishing feature to me is the use of crash -- cash.

The idea that suddenly the very high cash files are going to be spent in the economy, tons of capacity.

I do not really buy that.

I think it will be a matter of time for us to gradually see capacity restraints build.

There is a lot of capital discipline.

That has an effect on slowing growth that tends to make it more sustainable.

We do not get into the type of environment where art on a major ceo's wall is investments.

You are also saying capital expenditures have been held back for so long where gunmen to the point where companies have to invest.

I think there is some of that.

Capital spending has picked up.

I think what is important is the busy week upon us.

A lot of tech earnings starting with netflix.

Tech earnings.

Earnings are 6.6%. those estimates have been revised 2.9%. that is quite a big revision downward.

It is fairly typical.

I think the estimates are clearly too low.

We actually have not seen a sequential decline in profits for s&p 500 companies from the fourth quarter since 2001. since the 2000 one recession.

If you look at the annualized rate of return in estimates, implies more than a 20% plunge in fourth quarter.

This is the really bad corder for earnings.

I think the economy is held back in one q. when you look at industrial stocks, big lou chips, they are in another world from tech.

Is that unusual?

There is growth momentum stock -- tech.

Firms that are given large market caps on the basis of promised profit.

All whole variety of other tech firms in the s&p 500 that are massively profitable and considered to be bolded text.

Twitter and tesla versus intel and microsoft is what you are saying?

Absolutely.

If you look at the broader aspect of information technology on the market, nothing like c99 where i.t. had a third of the market.

You are saying investor should buy more steady earning companies that pay dividends.

What does that say about the economy now?

That is a good strategy for the long run.

Information technology area, this is an area where the best-performing companies may be priceless.

The second-best may be worthless.

This is a part of the market that requires active management.

It is very different from what we would expect out of body -- that out of body experience is the earnings, looking at six of 13.36. that is the market priced to perfection.

Which is a? it?

It is not quite perfection.

Half it they're going up.

Study valuation with expert nation below consensus.

You would have a gain of eight or nine percent total return in u.s. stocks.

Now it is pretty rare when revenues and profits and share prices do the same thing.

The bottom line is there has been a thawing out of the bearish expect haitians.

Isn't for them to see bond money moving into equity money?

I do not think it is immediate.

I think it is far less complacent than it was last year.

Little by little, the bond yields will prove to below in relatively unrewarding compared to the past five years.

So if i am reading you correctly, follow the money and go where valuations are still reasonable.

Is that right?

Dividends have gone up 15.5% in the first quarter.

That is growing income.

No one's bond coupon payments were made larger.

Thank you.

Looking at earnings this quarter.

What are you focused on?

Even though the ipo market is quiet this week, i am focused on whether investors will continue to buy ipo's. seems like investors have had their fill of the newly issued companies and are completely satiated.

The big question, what does this mean for alibaba?

Icad file as early as this week.

Started ipo.

When is the ipo?

May.

Fantastic.

All right.

You believe in the american dream gekko i do.

The only problem is it can get really expensive.

Talk about buying a home.

The decision to buy a home or investing in stock sort anywhere else to put your money.

We will talk about that right here on bloomberg "surveillance." streaming bloomberg.com on your tablet and phone.

We are everywhere.

We will be right back.

? good morning, everyone.

I am tom keene.

Adam johnson and cristina alesci with us.

Antigovernment protesters and national guard soldiers battled on the streets in venezuela.

Thousands of protesters marched peacefully and then groups began hurling rocks at security forces, churchgoing -- triggering the battles.

Violence between the two sides has rocked the country since february leaving 24 people that.

Property taxes rising at the fastest pace of the property market crash.

Nashville, san jose and houston are among the cities on pace to set records in revenue from real estate tax collections.

I was in houston and are adding 1200 people to that city per week.

The sec considering the role that require brokers to tell investors where stocks -- stock trades will be executed.

The proposal is aimed at giving investors more insight into whether they are getting the best price on trades.

Those of the top headlines.

Right to the single best chart this monday morning.

There is no place at home, at least according to american survey.

Single best chart highlights real estate as number one ahead of stocks and bonds and gold.

It is kind of a tough chart to make sense.

All you need to know the green line is real estate.

It is going up.

A lot of the others are sideways or down.

People are not pouring money into the stock market.

Turning to real estate as an alternative.

The men whining -- stephen whiting with us of citigroup.

Is this more leverage coming on?

It is a location for liquidity to find its way.

I think it is interesting when you look at surveys of single-family homebuying intentions, there has been a very modest recovery.

Numeral the construction and single-family market home sales, apart from multifamily properties, whether they are condos or for rent, there has been a very modest recovery.

You see that in buying intentions.

The lack of a full recovery is very memorable.

This conversation will advance tuesday and wednesday with housing data coming out.

We will see that on bloomberg "surveillance." i done boy poses with an armed guard in military fatigues and ukraine guarding a barricade outside the regional administration building in eastern ukraine.

Very serious situation.

We have used -- richard falcon raft with us, expert and security.

Is this -- is there a border to join the russian people in the non-russian people?

They are intermingled.

This young boy.

The other thing i would take is the gunman is wearing a mask, trying to conceal his identity.

One thing people are worried about is there are russian special forces operating in the ukraine.

Some of them without a doubt.

The big article on this with the individuals operating seem to be the same individuals who operated in crimea.

My basic take is every photograph they look like zz top.

Number two, this is another serious one.

Relatives wait for missing passengers of the ferry in south korea that sunk.

59 confirmed dead.

Over 240 people will still missing.

A lot of questions to be raised.

Goes back to my morning must-read where he asked the question whether expansion of gdp comes at any cost and south korea and whether the ferry operators were cutting corners on the?

Amazing how hold several tragedy is.

Amazing whether it is a malaysian crash or what we witnessed a year ago.

It is all very human.

Number one, we have pope francis.

Leading mass easter sunday on easter sunday.

Lots of people taking pictures with cell phones.

Seems to be a pope that is very popular.

Getting reenergized.

Out there with the people.

A man who has had regular jobs over the course of his life.

That looks like a white range rover discovery.

That is the mercedes g wagon.

I kind of like cars.

We hope everyone had a wonderful passover and easter.

The weather here was perfect.

Gorgeous.

There you go.

Easter egg roll.

That is today.

The sun rising in washington.

Vice president biden on his way to ukraine.

He will land shortly.

I am sure mrs.

Obama and others will be out in full force.

I think it is weird the april is done the day after.

It is like opening presents december 26. you are ready did that.

Coming up, boston police department security of the marathon one year after the bombing till three people.

We will talk about the risk of terrorism today and how cities like austin around the country are doing with it.

This is bloomberg "surveillance." streaming live on your tablet, phone and that bloomberg.com.

? good morning, everyone.

Bloomberg "surveillance." a busy week ahead.

The easter egg roll this morning.

Julianna goldman complete coverage of the white house.

I am tom keene with me.

Adam johnson.

Scarlet fu rumored to be back tomorrow.

The most serious issue, what you do after thousands cross the finish line.

It is what you do, you take the kids down to see the finish line.

All that was shattered last her with an act of terror.

Richard falcon raft -- falkenrath here with us.

Thank you for your help last year at this time.

It was difficult.

How unusual was this event for experts in security?

Area in usual.

A lot of terrorist attacks but in the -- in the united states, extremely unusual.

This was a major event.

It was being broadcast live.

We had almost immediate video coverage.

In some sense fortunate because there was a large emergency medical cousins which is why the casualty numbers were low work than they otherwise would have been.

Would you take your kids to the finish line this morning?

Absolutely.

Security will be much tighter, as it was for the new york marathon.

Banning backpacks from the finish line.

Very difficult to secure a marathon.

The big thing they learned is the individuals were on the radar screen prior to the attack.

They were interviewed by the at the eye.

An opportunity to prevent this was missed.

Essentially we did the good work, right?

But we did not execute the prevention.

Some of the good work was done.

The basic lead information was received from the government and was an investigation.

Did not immediately produce initial information.

I think in hindsight you have to say we missed an opportunity to prevent this.

There is no escaping the conclusion even though frankly the fbi does not want to say that.

We know you cannot bring bags.

What is happening behind the scenes?

A difference in the scale of efforts.

Fundamental organization is unchanged.

A lot of different jurisdictions involved in this.

Fire, medical, political authorities all their.

This is every resource imaginable lightning the entire way of the huge event.

What is the security expense and research of other events around the nation that are not as visible as the boston marathon?

Of a concert.

What is the coverage there versus what we have seen?

A huge difference.

What you are seeing in boston is about as tight as it gets.

The vast majority of events across the country have none whatsoever.

What do you do to give us confidence that we can go to the super bowl?

The confidence comes from a successful effort to maintain the skill of a threat.

We live in a country that has millions of potential terrorist targets that are unguarded all the time.

That is just a fact of life.

The confidence comes from an apparatus that finds people who want to do this and stops them.

The probability of a terrorist attack are low.

We distort that probability because of events like boston.

What do you think is the state of cooperation now looking forward to train russia and the u.s.? it depends on the particular case in self interest of the russian government.

The russians, if they want someone to get arrested, they will tell the country where they are to arrest them.

They do it because it is in the russian interest.

If the russian security service has something they want wrapped up or don't with by a foreign government, they will still tell you because it is in their interest to tell you.

Where are the threats coming from?

Of very targeted threat.

It is a combination of locally generated threats, many of which are homegrown and emerge without any formally international linkages.

We do not have the machine we had prior to 9/11 operating out of afghanistan trying to attack us with long planning horizons.

As a result, security operations have went down dramatically?

Much more original.

Two guys operating on their own, it is a more difficult task to get them.

Their conspiracy is so much smaller.

Most of what we know comes from the external linkages.

When you have a cup of coffee, what is number one on your wish list to fund or budget or spend money on?

He and i have been very preoccupied by electronic surveillance.

It is a very complicated area.

What we both learned is these techniques of penetrating the private communications of conspiracies are relieved vital.

Turned out in the boston case that was not a missing ingredient.

Tends to be the thing we talked about most.

Lex cameras everywhere.

Do they work?

The record video.

They do not work in a preventive way and also a deterrent.

People know if you're going to carry out an event or attack in any kind of populated area, you will be on video and will be used to find you afterwards.

Thank you so much.

Forex report.

A quiet global market.

London shut down as well.

Dow futures up 21. strengthen to 35.67. waiting for vice president biden in kiev scheduled for 8:00. we have a lot to talk about in the next hour.

We will really look forward to their earnings.

A very important supreme court hearing this week.

Greg store, the acclaimed supreme court reporter will join us on what has gripped the media, aerial.

The idea of a new way to distribute content for con -- where content is king.

Stay with us.

Adam johnson and cristina alesci.

This is bloomberg "surveillance."/ good morning.

? this is "bloomberg surveillance,." : scraping the stabilization as the ukraine considers civil war.

Earnings this week, can mobile come in on plan, and 36,000 will run 26 miles, 385 yards, the boylston street and all will finish strong in boston.

Good morning, everyone.

This is "bloomberg surveillance" we are live from our headquarters in new york.

I am tom keene, joining me is adam johnson and christine -- scarlet fu will be back tomorrow.

My guest is from methuselah advisers, and also alex clement of the asia group.

Overnight, japan's trade deficit widened, as trade exports fall to the lowest in a year, and we have the chicago fed manufacturing activity and in the biggest one is leading economic indicators, coming out at 10:00 and they are looking forward.

Markets around the world are closed today in celebration of easter.

Hong kong and brazil and most of europe.

Before the bell -- we have halliburton and the netflix after the bell.

Joe biden will head to kiev, and the first running of the boston marathon since the bombing.

A lot is going on.

We will start with barclays.

They are shaking up commodities business.

They will leverage a large part of their energy and metals trading.

They will update investors in early may and they are excited to/several thousand jobs at the firm as they cut costs.

Pfizer considers a buyout of astrazeneca.

According to people familiar, these talks took place several months ago but were discontinued.

Asters and a cut was being valued at about $100 billion in this discussion.

Big deal.

Volkswagen is on have to be number one in china for a second straight year, posting sales that will rise 10% to 3.5 million vehicles in the country this year.

They edged out general motors last year, selling 110,000 more vehicles and that is today's company news.

What a sea change that that is.

You go to shanghai and there is the buick sign, the general motors owns china thing is gone.

How do you deal with pfizer and astrazeneca?

That would have been a big deal.

These guys talk to each other all the time.

We have companies with ideas for deals all the time, more of them probably don't happen.

And there was newmont over the weekend, that seemed to fall apart.

Number one on your screen is alibaba.

That is an ipo that will file this week.

We will have more information on the biggest e-commerce company out there, this will trump amazon by multiples and we will get more information about its financials.

Dow futures are up 21. in the ukraine, a weekend of death and continued stands off in the ukraine as the west grapples with a response to vladimir putin.

Alex clement is the head of emerging markets at the eurasia group.

Also joining us, john shock, managing partner at methuselah capital.

Alex, what is president -- vice president biden going to do when he lands in kiev?

He will try to implement the four-party talks.

Literally -- in 24 hours.

The big problem is that there are 2 underlying parts of the agreement as it was last thursday.

The first is disarming the illegal armed groups.

The ukrainian government had a hard time disarming the paramilitary nationalist organization and russia has little interest in pulling back their proxy groups so both sides are basically saying, you move first and neither has the incentive.

In your study of military history, does the united states of america have a defined foreign policy?

I think with a respected to the ukraine, this is an ad hoc policy, this is not something they wanted to deal with in congress or the presidency, this can of the clear blue sky and if you look at what the united states foreign policies are, look at where president obama is going this week.

He is going to asia.

There is an important echo there because of concerns about territorial sovereignty, u.s. foreign policy, standing by its allies in territorial disputes, this is an issue in the ukraine on a small scale but in the next decade this could be a huge issue in asia.

The philippines are looking to the u.s. to come with a strong statement of support if this becomes an issue in asia.

Over the last couple weeks, john kerry has been going back and forth to europe as well as the ukraine and now we have the vice president going.

Is this the u.s. trying to ratchet it up a notch?

Going from secretary of state to vice president?

On the one side they wanted her russia from further actions and sanctions but the other side is to show increasing support for the ukrainian government itself, as europeans are trying to bring ukrainians more into the european fold.

At a certain point, diplomatic overtures only go so far.

This has much greater interest and leverage.

John shock is with us, you ran as a republican candidate in nevada, it seemed like an age ago.

It seems like an age but it was four years ago.

If john mccain wanted much more strident -- wanted a much more strident response than the diplomacy that mr.

Clement talks about, do we need to be more strident with a republican diplomacy?

This is like sending food to someone who has lost someone before a funeral.

The idea of sending a vice president to someone with russian troops on the border, from the republican perspective they are waking up and finally taking a posture, that you are standing for freedom and will the ploy military aspects and do things to help the ukrainian government -- why should we get involved?

When the american people do not want to get involved.

If you look back over 100 years, every time we don't get involved in stability creates more problems.

Is the ukraine the right territory to deploy our resources?

You can wait for latvia next, and maybe next on the border of poland.

This is a domino theory.

Responding to what -- how a very large part of america feels.

I think that the american military is focused on military engagements, to send more money to the ukraine -- i don't think anyone in the american public or congress has the stomach for a military engagement.

He have -- we have always had this tension, we want to have a stable world and our ability to feed -- to enforce decent behavior and then get the junctures where it is very difficult to do it.

If you don't do this and you watch them take georgia in 2008 and the ukraine in 2014 and send weapons to the borders of the baltics -- what is so important is the idea about the coaching to debate in the united states.

I feel that many americans do not want to have a debate.

The option to put your head in the grass.

Alex clement, you are the expert.

On the one hand, putting troops there or military, and on the other, sanctions, where is that shade of gray that actually strikes more at tangible results?

I think that escalated sanctions, if we saw the united states have sanctions on the energy and mining sectors, this would have a much more broad impact.

Christine, i think this is important, what are we waiting for?

Alex, you don't think that putin will follow through on these invasions because he is very aware of the impact on the domestic economy?

The outright invasion that john mentioned is unlikely because of the economic cost of doing so, but also the military cost of invading and occupying a large share during where the majority does not support this.

In the calculation he is making, he is opposed to that, but that does not mean he will not continue to sort of engage in a problem -- in issues within two support the government in kiev.

Republicans go to iowa to get ready for 2016. is this being discussed?

What's my sense is probably not, except in small quarters.

We have an american populace that is focused on a very weak domestic economy, five years into a recession, and i think that things like this, sending troops to different parts of the world is fundamentally very difficult itself.

John chachas with us as we look forward to a busy week, alex kliment with us as well.

Who else is closed?

Most of europe.

London and germany, italy and france, hong kong is close, brazil is closed, australia.

We are very open.

A 10 year yield at seven percent.

They have easter egg roll at the white house today.

Coming up, something else is happening in washington.

The supreme court will hear arguments for and against aereo, the streaming service.

Our question today, "has the tech bubble burst?" we want to know.

This is "bloomberg surveillance" today.

? good morning, everyone.

It is "bloomberg surveillance" from new york city and boston is getting ready for the marathon, this monday.

Our guest host, john chachas, managing partner at methuselah partners.

He says the obama administration has a legacy of slow growth and not change, we hear that from any room public ends, -- for many republicans,. and what is the legacy of slow growth we have seen from the president?

This is in every sector, it comes from the legacy of a great deal of government regulation.

At the finance sector, and the big daddy of them all, the health-care care sector, with constant government innovation, ways to rethink regulating businesses -- someone say that they republicans handed the president these train wrecks.

There is a strong tension between free marketeers, where things went off the rails and this creates the ability to blame economic events to a lack of regulation, but i think there is a great deal of regulation and the more they regulate the slower we will grow.

Governor romney has reemerged, what have we learned more about the romney tobacco -- debacle and what can you learn from that?

One of the weakness of the system is when someone is out of power, there is no number one on the out of our team, unlike -- on the out of power team, unlike in the u.k. where they have the opposition leader.

I think the one thing we learned is that the primary process is a very small number of people vote in primaries and we send up candidates who are appealing in those primaries because those single issue voters -- we will have a tough time appealing to the masters.

-- masses.

Are the southern republicans listening to the rest of you?

I think republicans in general are listening to this.

From texas and alabama and florida, and nevada, i think that the scene will be the same.

We have to put forth candidates who are progrowth, focused on small government and that message will resonate with people because this is what worked.

Is immigration a legitimate issue or will this die before the election?

This is both, this needs to be addressed, congress is incapable of not making this a political football.

John chachas is with us as we go from 2014 two 2016. -- to 2016. next, aereo.

? good morning, everyone.

"bloomberg surveillance," i am tom keene adam johnson and cristina alesci.

South korea's president says the action of the crew on the south korean ferry last week were "murder," and you'd uses them of violating maritime law by abandoning the passengers.

This left 300 dead and 4 missing.

In japan, a wider than expected trade deficit last month, export growth was the weakest and imports -- weakest in a year, and imports jumped.

There was a spending spree by consumers before the sales tax began on april 1. "captain america" was the top spot the third week in a row, this has $170 million in gross, on its third week in the u.s. and "rio 2" was in second place.

Tanya chen, the "bloomberg surveillance" reviewer said she liked the movie.

She saw this in imax 3d but said it was not worth it.

You saw this in the fourth dimension?

Are you kidding me?

No, i am not.

But there is a lot that we could talk about.

Content is king.

That is exactly what has been decided by the supreme court this week.

They could decide whether barry diller"s 's aereo could stream for free in the posted online for profit.

Could this be copyright infringement?

We have our legal scholar, he has won the new york press award, one of the best commentators on the supreme court.

Joining us from washington, greg, it is always great to have you on the show.

Great to be here with that introduction.

Let's jump right in.

How do you think the supreme court deals with a technology that it not exist five years ago?

Certainly we realize this is a disruptive technology and the decision for aereo has the potential to disrupt the broadcast industry.

The question at its core is not about the marketplace, it is about copyright law, and there are sniffing and questions about whether aereo did or did not violate the copyright from broadcasters.

I am excited about what will happen tomorrow, the justices go into the room in who will speak the most?

Will it be stephen breyer?

He often speaks a lot and this is an area of law that he has expressed some interest in, back in 2005 -- he laid out a concurring opinion and he asks a lot of questions but typically, every justice except for clarence thompsons -- clarence thomas will ask some questions.

What is your feeling on the closeness of this decision?

This is hard to say, asking that question in terms of the finance case or the abortion case, we have seen enough cases to know where they come out.

The court really has not had that many copyright cases in recent years and this is not something i would expect for the court to debate with a conservative liberal, anthony kennedy in the middle.

They filed a brief in favor of the broadcasters, how much effect does this have on the supreme court's decision?

It probably will have some, this is widely respected by the court as a neutral arbiter.

That said, this court in particular, and in general under barack obama, have not always seen eye to eye.

The court will not just defer to these views but they will take them seriously.

2 appellate courts have ruled in favor of aereo.

What is the new new for the supreme court?

Several district courts have ruled the other way, and this is definitely an area of law where this is not settled, and forces can disagree.

-- courts can disagree.

The supreme court may be affected by the lower court's decision but this will not be thumbing noses down below to see which number of lower courts are in play.

John chachas is with us, active in republican politics and methuselah advisers.

This is not abortion and we just saw a 5-4 decision a few years ago.

This is boring, do people in america care about touring copyright law?

The -- the copyright question does not interest people.

The fact that they could lose their local television showed interest people.

This case focuses intently on the idea of the pay model, -- let me ask you as a media expert.

People don't really understand that the network fx -- the way that these were created, the reason you have local news in denver or cincinnati is some local broadcaster lives off of his content and broadcast stuff that you like in the local market.

The idea that this is argued from the standpoint of what is in the public interest when there is little discussion about how much local broadcasting will be of -- will be disrupted by this is remarkable, and barry diller has taken this into an art form.

What is the tradition -- the cable tradition business will say, i am not going to pay you fees if the content is exclusive, i will certainly reread what -- rereate ate what i pay you.

Nbc -- they will go directly to cable.

Greg stohr, from the news bureau in washington.

Coming up, we look at ukraine and the state of investment in eastern europe.

With futures up 3. from new york, good morning.

It is "bloomberg surveillance." ? 26 miles and 385 yards west of boston, before boylston street and the finish line, and the horrific hill near boston college.

This is the most beautiful and ancient town in america and this is where 36,000 marathoners will begin a very emotional boston marathon this morning.

What a beautiful shot with the sun rising in massachusetts.

From new york city, this is "bloomberg surveillance." here with adam johnson, i am tom keene.

Rosina alessi is not running the marathon.

Scarlet fu will be back tomorrow.

We know that you are cut and chiseled.

This is on netflix?

Netflix is on deck to report earnings after the close today, after the stocks slumped the company had a chance to remind investors that we are quickly becoming a netflix nation.

Jon erlichman joins us on set today.

What are the investors expecting?

This is simple when you get down to it.

If they can keep adding users around the globe, then all of the naysayers go away.

It is about subscribers and how many people are using netflix.

The company has 36 million people in the u.s., about 12.5 billion overseas at the end of this quarter -- 12.5 million overseas at the end of this quarter.

This is in line with -- with what is expected.

They have to create compelling original content to keep subscribers coming in.

How much more efficiently are they doing this than let's say, the traditional pay cable tv networks?

This is costly for them, and they have billions of dollars they have had to spend on movies and tv and then doing their own shows like "house of cards," they don't get this easy and they have higher rates than many traditional players.

But if they can find new ways to make money and have new subscribers, going to the markets overseas and toilet the pricing plan and maybe partner with new players, bloomberg reported vodaphone -- one thought, playing with the pricing.

They tried that a year ago and it didn't work.

This could actually increase arises without a backlash?

Let's take a family plan, 12 bucks, $11.99. at my house, we are not doing a family plan.

We have a dollars and sort of share with everybody.

That is because your daughters are 3 and 4. they are watching the kids stuff.

If we can get more people to be paying for the service, this is incremental revenue.

Of the thing i noticed is my television broke and i could not watch the hockey game on nbc, but there it was on the app, the nbc network sports app.

Your world changed my world, it is moving at light speed.

What are they doing to adapt for 2016? all of the big players know that if they can make their content available for all of these devices, everyone is happy.

The pay-tv players are happy because they get to keep them -- if private content is king, i will overtake distribution and just give it to everybody.

That is why ease-of-use is so important.

You talk about authentication.

You pay the cable company and they allow access on every advice.

-- every device.

That is why netflix -- john chachas is with us.

They will have to deal with it.

Television developed a nielsen rating.

They could measure me watching the hockey game.

In some places they can and in some they can't, but the advertising side of this equation has not migrated away from years and years -- because big advertisers like ge and procter & gamble are looking at a nielsen rating while all of us are streaming on the ipad.

Where is the debate right now?

This is the crux of the matter, the ad revenue has not caught up, you were talking about this on "bloomberg west." this is when the advertisers get together and say, this is fine, thank you, traditional tv.

Netflix does not share its numbers of people watching a show because they don't care about advertisements.

And what about "game of thrones," they almost want that theft.

It is easier to access this through hbo go as opposed to tuning in or watching -- they are encouraging the use of this and around the world.

Really and.

Jon erlichman.

"bloomberg west" at 6:00 p.m. p.m., that is twice a day we get jon erlichman.

And that is twice per day we get tom keene, on tv and radio.

Here we have the data check, because you want to know.

S&p futures are up by three, and the bonds and euro and oil are all kind of flattish.

"bloomberg surveillance." good morning, "bloomberg surveillance" worldwide, on apple tv, bloomberg radio plus, and the android -- this is free.

Out on the ipad.

I am tom keene.

We have cristina alesci and adam johnson with us.

Joe biden traveled to kiev and should be there in a bit.

Rush is front and center which suggests sanctions and more possible sanctions.

Alex kliment is a senior fellow at the eurasia group, and john chacha, senior fellow at methuselah advisers.

What do they actually do -- the actual trade is 40 but million dollars -- $40 billion per year.

That is not that much.

And exxon mobil has a deal with the russian oil companies for more than 30 years and these companies care what happens.

Should vice president biden go to berlin and not kiev?

Berlin is the leading edge of european policy and if you can get the germans to agree to more forceful sanctions you can have a more robust policy towards russia.

But they are hemmed in by the industrial lobby that counts on russia for 200,000 jobs in popular opinion, which does not support acting against russia.

Why should a u.s. vice president use germany instead of going directly?

Europe has a more robust economic relationship with russia and therefore more leverage.

The u.s. direct trade relations with russia are fairly limited, but what the u.s. can do is shut them out of the global financial system, in terms of sanctions and policy -- at this point this has not happened, the sanctions are focused on people.

They could be more broad.

They could, and the plan is to affect decision-makers around vladimir putin by affecting their interests rather than the russian economy as a whole.

The u.s. is increasingly going to want to move to that higher level, which could really affect their calculations.

I'm trying to get my head around who has more leverage, does russia need europe more than europe needs russia?

They need that to supply energy and they need russia as a consumer -- in the short term, russia could cut off the gas flow to europe, which would sustain a financial blow from that.

But if it happens in the winter, it gets very cold in europe and they would be left without gas.

In the long term, europe needs russia more than russia needs europe.

In the very long-term and they are diversifying away from russia and they are slowly losing that market.

John chachas is with us from a perusal advisers.

Can you redefine nato for me?

This weekend i was very surprised -- is there a new nato, a more effective nato?

They have been in the process of redefining themselves for almost 20 years.

The original purpose was to counter russia.

I was reading about anthony monteque-brown, talking about the redefinition of nato 40 years ago.

They have been doing this over 20 years.

They were experiencing with anti-terrorism, this was the key motivating idea behind nato.

Ukraine is not even a member.

And i think that there are some misgivings on the side of nato itself, with bringing the ukraine in.

I set this up for john chachas.

Is this the real response, making the ukraine a member this week?

We do not make our foreign policy based on what nato tells us to do.

We help other countries when they say that we should -- but as a defense matter, they are not in question.

We have to decide if we stand for the free ukraine or we don't. they can go out and buy mrs.

Mer kel's purse and throw it at them.

Talking as one voice, nato has this mechanism -- where is that mechanism right now?

This is really missing.

In defense of democrats, where is that one voice?

There was an article saying that this is the administration of go to war or ignore.

We seem to want to ignore it.

John chachas and alex clement.

Adam?

We are talking about ipo, facebook and amazon.

We will be right back.

"surveillance?

Good morning, everyone.

"bloomberg surveillance," i am tom keene.

With cristina alesci, and adam johnson.

Scarlet fu will darken the door tomorrow.

The employees are running in the marathon, they are all from cambridge.

A relatively unknown company has reached an agreement with the fda on potential early approval of a drug for muscular dystrophy.

That is causing the stock to go up 76%. not a bad market cap on this company, about $1 billion.

Smallish but sizable.

That is quite a move.

A lot more sizable as we speak.

This was up 76% at the pre-open.

You have our earnings?

A lot of earnings happening today.

Netflix is what we are focused on, this is coming out right after the bell.

As i look at the past four quarters, they have beaten by 10%-50% in each of the last four quarters.

This typically trades up by seven percent.

There will be some fireworks.

What else do we see this week?

That one is today and also we have mcdonald's and comcast, at&t, radioshack, lockheed martin.

Those, but april 22. i like that day, april 22. that is my birthday.

A big celebration.

47? 48. don't you start counting after a while?

Radioshack is 120-151. we called this a dollar and 5/8. remember when you had to count in feet, and you said 11 feet -- this is greater -- this era that was done -- all written in triplicate.

Are we talking square?

Let's talk about square.

You are a media banker, john chachas.

This company seems to lose $100 million this year, and the key is payment in trying to make sense of it.

Why can't they make money?

I have no idea.

At the end of the date payment is a commodity and there is not that much to be made and that is why they were trying to diversify outside of shared raiment like that, for that piece of hardware that they had.

That thing.

They were trying to diversify away from there and get to the sales system that is really helping small businesses manage their business better.

But are we at the tipping point, where it is show up or throw up?

Is it that simple?

I think that we could be heading into a revisit of how all these companies are not making all this money getting these enormous valuations?

The investors wake up and have to say, the growth curve has to be 100% per year.

That will be a real theme this week for "bloomberg surveillance," i come off of the negative nine percent dynamic from google last week.

Meanwhile, vice president joe biden is landing any moment in kiev and we talk about the implications of that trip right here on "surveillance." ? one of our most popular guests will be with us tomorrow.

Robert l burson -- elbersen, who writes truly brilliant -- albertson, who writes truly brilliant essays.

He was a goldman sachs partner and was one of the most acclaimed banking analysts for many years.

You swear at him because you have to read the whole 32 pages.

About three weeks ago, i recall, he said you can buy banks right now because the growth is too low and valuations are too high.

Robert albertson will be here tomorrow.

We are here with you on bloomberg television and bloomberg radio and our digital product.

With me, adam johnson and cristina alesci.

Joining me is john chachas and alex kliment.

Mobile payments start up square has posted a sale with a big tech company, they have spoken with google and apple and k-tel.

They have battled losses as cash reserves shrink.

The company is said to have lost $100 million last year.

Elon musk says he will be making cars in china and the next 3-4 years.

The tesla ceo says his company is working on building battery charging stations as they make their first delivery of their model s in china.

Google and apple and intel discussed hiring plans with each other, according to the wall street journal.

Documents in the antitrust trial that is scheduled to start in may and one big-name holdout that was not involved was facebook -- in the hiring discussion was facebook.

Really interesting.

It goes back to the ipo, the tech people playing by their own playbook.

You can't do that.

It is curious, companies contacting one another and saying we agree not to hire them.

If you do this in the ball bearing business -- i go back to a constant theme of the show, whose playbook on a playing by?

We can see this over time how this work sound.

How about another debate involving technology, the u.s. government is helping the dissidents overseas with digital surveillance.

According to the new york times -- "new york times," they are paying hackers and software geeks to find alternative to the internet, a local system that is known as a mesh network.

One of them is up and running in tunisia of all places, and others are planned.

The initial plan of the mesh network is to foil government spying.

This has become an awkward subject for some u.s. officials because of the revelations about the nsa and the internet spyin

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

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