Democracy Teeters in Egypt: Surveillance (7/02)

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July 2 (Bloomberg) -- On today's "Bloomberg Surveillance," Tom Keene, Scarlet Fu and Alix Steel bring insight on the state of the market getting you ready for the day ahead.

This is bloomberg "surveillance." a showdown in cairo.

The military gives the muslim brotherhood and ultimatum.

The president rejects it.

Democracy teeters in egypt.

Amazon truly dominates retail.

Is there any shore and each player?

-- a niche for a niche player?

The latest auto sales figures throughout this tuesday.

Good morning, everyone.

This is bloomberg "surveillance." i am tom keene.

Tuesday, july 2. joining me as always is scarlet fu and alix steele.

We are thrilled to bring you david bell.

Wharton school of business.

His specialty is internet retail start-ups.

We will quiz him closely today on amazon.

Good morning.

Sara eisen on assignment in italy.

When do we get to go on one?

Here to help us out is richard falkenrath.

Formerly the deputy homeland security advisor at the white house, and now we're stuck chertoff group.

A lot of busy data coming out today.

The i.s.m. for new york.

Another peek at regional manufacturing.

Later on we will get factory orders for may.

Estimates are for a 2% gain according to a bloomberg survey.

Before the bell constellation brands will report its own earnings.

I will pour says sales have risen 12% this year.

It has really been about innovation in that sector.

Up 150% since 2012, although it might be looking to diversify into craft beer.

Auto sales figures throughout the morning, total vehicle sales, estimates are for 15.5 million for june.

15.5 million is stunning when you go back to 12 million.

15 million would be amazing.

We are not there yet.

We will have a lot on this through the morning.

Auto sales certainly very important.

Also aboard as a data check.

We are up again.

Icings the real story here with the beginning of the slowness of the holiday is up come up, up.

-- i think real story here with the beginning of the slowness of the holiday is up, up, up.

Your wrote 1.3029. hydrocarbons now 98.13. on to the next screen where we really focus.

The v.i.x. 21 into a more complacent 16.37. really coming off the 1198 range.

A weaker yen.

Dollar canada, alix steele the commodity complex shows it with a weaker australian and canadian dollar.

It china is just not buying of the rest of asia is not buying some of that will be difficult for the currency and economy.

Give us a perspective on commodities.

Really not much of a bounce.

You are bringing up commodities, not me.

What is happening here is somewhat of a rebound from the decline we have seen.

A heavy short positioning and copper.

Barclays says you have to sell cover short the rally is because china will not be as strong as we think and there will be an oversupply.

Is the consensus now that we're done with the super selling?

The consensus is the press cycle is over.

J.p. morgan overweighting commodities yesterday, but that is a large part of an energy bet.

Also joining us for the full hour is david bell, professor of marketing.

Internet retail in december shopping behavior.

-- and consumers shopping fever is a specialty.

How is the u.s. consumer feeling these days with the slow recovery?

I think the consumer feels fairly hunkered down as always.

We're seeing people willing to open up their wallets and to shopping online.

Shopping online is the way to go.

I shopped on-line like it crazy.

I am beginning to transfer to tablets.

It seems effortless to jump to a new kind of shopping.

Is the trend going to continue?

To go i think so.

The rendering is not always as good mobile.

-- i think so.

To top about what david bell.

Turning to stories making the front page today.

Dominating the front page.

Egypt on the brink again . 48 hours to satisfy the public demand -- the man or possibly face a public to.

Demonstrator spilling onto the streets calling for the leaders resignation.

The biggest demonstration since johosni mubarak was ousted.

Size its with his first year in office.

Pushing up the bed or something has to give.

Richard falkenrath with u stocks.

By -- i was struck by the new york tie miss"mes" today.

Should be the production to give each of the assistance in the time of turmoil?

We do not know what side to assist.

The best option is to monitor and keep options open.

Whoever comes next, we will have to maintain constructive relations with.

This is not a turkey, is it?

To go kick it is not turkey but we're very close ties with the military.

We will be following that throughout the morning.

There is edge shake-up at zynga.

Pincus will remain as chairman and chief product officer of the company he founded.

All of this in the middle of a restructuring of the company coming colluding closing offices.

No longer the number one game maker on facebook.

Lost more than 1 million players in the past year.

They're really trying to help it out.

People not playing mafia wars on their mobile devices.

May be online gambling is the next frontier.

And chiefeap online put option.

I the anyone in america not doing this?

-- and i the only one in america not doing this?

Absolutely.

We are all more connected.

We're more comfortable doing everything from gambling to shopping over the internet.

We need an update on mr.

Snowden.

He has applied for asylum in 20 countries according to wikileaks, but did withdraw for asylum in the russia.

We know that poland and germany rejected the bid because it did not meet the requirements for political refuge.

Ireland and austria said they will only consider it when they make it inside the territory.

Help us out.

This is now getting absurd.

To get it is getting absurd.

Vladimir prewitt and thinks it is absurd.

-- vladimi putin think r putin thinks it is absurd heat.

Is a man who is stuck.

-- he is a man who is that.

He does of asylum and does not have a passport.

He is trying to position himself to save the united states is using citizenship and passports as a weapon.

Of course the united states does that when someone is a fugitive.

This person is under indictment for federal felony.

When that happens, the government comes after you with everything they have a. it is interesting.

It did occur to me with russia that maybe when he says you need to stop telling the public, you need to just tell us.

I did not think he will sell them.

There is no tradition of that.

No one cares that much except for states that will not take him in and welcome him as an asylum seeker.

There are ready ... servers as -- elsewhere in the world and may not be stoppable.

We will have more later on this and his ability to find a place to sleep.

Company news.

More sprint before the merger.

18 investigators investigating to see how this would impact consumers.

They are concerned it could cut the connecting flights to save money.

Deutsche bank knocking off jpmorgan.

The german bank took over the no.

1 spot as the biggest underwriter of on sales outside the u.s. and the second quarter.

They managed 8.3% of the past month.

Credit nextel has legal issues as well.

The state is suing sprint for $300 million, saying it deliberately failed to pay sales taxes.

A hearing is scheduled for late july.

That is today's company news.

A lot to talk about on bloomberg "surveillance." today is about autos.

Sales on track.

We will look at the big three and how they're hitting the road.

That is on bloomberg "surveillance." ? to go good morning, everyone.

The favorite ceo.

Chief executive officer of crocs.

He is famed for his bright orange crocs.

This is bloomberg "surveillance." alix steele is in for sara eisen this morning as well.

We shift from shoes to of those.

Take of that is because of auto companies will announce sales figures for the month of june today.

One of the leading industries in the fairly lackluster recovery.

They all gained market share in the first five months of the year.

The first time this has happened in 18 years.

I really triumphant comeback for chrysler and gm.

Ford did not have to get a bailout, but did restructured through some painful times as well.

We were talking about when we would hit the 6 million point for vehicles.

Take a 1.4 million cars sold in june.

You work that out to a seasonal adjusted rate 16.6 million -- 15.6 million.

17 million is the peak.

That is a pretty steady pace.

Real estate mortgage rates rise.

What is the trickle down?

Can i afford to get a car?

Right now car loans are still fairly low because there is a short duration.

Three years, five years.

It is not like 30 years like a mortgage.

Takeover chairman bernanke's pointed that out in speeches.

He is really counting on this to be part of the economic recovery.

The banks do pervert lending to people making car purchases.

You need your car to get to work.

It is also easier to repossess a cards and a house.

That is a distinction there.

One thing we do know is there is still a lot of pent up demand for new cars.

More than 11 years old.

I just got my learner's permit so i could possibly be in the market within the next year.

I just thought it a couple of weeks ago.

It was a really big deal.

I could be on that road.

I have not even started to drive.

Step-by-step.

My question is the trickle-down.

Look at north and south dakota.

They are booming.

Detroit is not.

The big three have operations outside the city.

Some of the surrounding suburbs doing better.

Do we buy cars off the internet?

Absolutely.

You can compare models, prices and get the information before you go to the dealership.

Full disclosure.

I did not on my driver's license anymore.

We're just waves to manhattan.

A learner's permit?

I know how to drive.

You do not even know how to drive?

This is frightening.

What would be your marketing prescription?

I think they have to get people excited about it.

Young people are coming back in and building start-ups.

It is just the beginning but i think it is coming back here yet to come.

Honda east, liberty, ohio, lincoln, alabama and ohio.

Honda exporting more american-made cars.

They have become part of the big export auto story that we had kind of forgot about.

Talk about big three.

Spartanburg is bmw.

The interesting effect will be as cars increase, what will happen to the used-car market?

That was booming over the recession.

Go online and echo used cars.

11 years old.

To go that is -- that is tom's nash on the road.

Whether it's honda or gm, which company do you respect most?

Could be anything.

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

Bloomberg "surveillance." sara eisen on assignment in italy.

Top headlines.

Egypt since are bracing for a possible showdown between the president and the military.

The egyptian army gave the president until wednesday to find a peaceful solution to the unrest, is not it said it would step in with its own plan.

India, ireland, and norway are among the 20 countries edwards noted has asked to grant him asylum.

He of maine's in the transit area of moscow's airport.

-- he remains in the transit area of moscow's airport.

Could the lone ranger become walt disney's biggest blockbuster?

So far it has received mostly negative reviews.

Even i do not want to see it.

225 million to make.

One analyst predicts they will have to take a million dollar write off on it.

You wonder how that happens.

How do you get a movie that tanks that bad?

I of bad movies and still do not want to see it.

I thought it looked pretty cool.

I will be the guinea pig.

My morning must read is on the demonstrations shaking brazil.

The former foreign minister rights this all reflex fatigue.

-- reflects the teak.

The maximum benefit from reducing unemployment, and expanding credit has already been leaked.

Brazilians are tired, tired of the corruption hospitals and inflation.

Take richard falk unres richard falkenrath just returned from brazil.

What did you see?

The infrastructure is dilapidated.

Very significant increase in crack cocaine consumption.

This is something that we know from the 1980's correlated to violent crime.

And already violent crime is becoming more violent as a result of this epidemic.

Taking a different look.

Martin feldstein rights the fed should start to taper right now.

And the fed should emphasize the pace of quantitative easing must adjust to the likely effectiveness of the program itself into the cost and risk of continuing to buy large quantities of bonds.

The fed needs to start ending quantitative easing, not waiting for an improved job market, that is not going to happen.

Creates less uncertainty.

Maybe because the risk outweighs this.

More noise on this.

A different end to this debate as well.

Why the markets are turning away they are.

We will probably change the debate.

We will also be talking about the crisis in egypt.

The deadline looming for the president.

We will talk about the political implications of the protesters spilling out onto the streets.

This is bloomberg "surveillance." ? this is bloomberg "surveillance." i'm tom keene.

Looking at a data check right now.

Equities, bonds, currencies and commodities.

Futures up six.

Day after day of recovery.

Hydrocarbons putting it on and making a nice recovery, now back to 100. the spread is narrowing.

A little bit of constructive behavior in the market.

The first trading day of the third quarter.

This is all leading up to the jobs report friday.

The one big piece of data we're looking for.

A lot of media companies in that the winners and losers base.

Cablevision of big winner yesterday.

The potential to take out.

The stock gaining almost 10%. a lot of merger and acquisitions in the media sector.

News corp.

Down by more than 10%. the first trading day for the newspaper business, the one that has been left after they spun off the entertainment and tv business.

Murdoch's starts off with six.

Billion in cash for deals.

A lot of people wondering what he is gone to look at next.

Head of the egyptian military.

Summer in cairo.

Today's high is a schedule 96 degrees fahrenheit.

In many ways different than the arab spring.

Currently the egyptian military says this time is different.

Richard narp of bloomberg contributors.

It is not the era of spring, the arab summer.

-- richard falkenrath.

The next two days will decide how this ends.

The street is clear, they want him out.

They want the process of the new government coming and that has no legal or constitutional basis.

The military seems to be siding with the street at the moment against the commander in chief, the president.

How willing to is the muslim -- muslim brotherhood and the president to the more war-like tone of the islamist?

They are not linked to al qaeda.

He is a member of the muslim brotherhood.

This was their chance.

They had and the like world mandate to come to power.

For the past year they have handled it very badly, both on the economy and lack of political pluralism and resurgence of authoritarian tendencies.

To be clear you are not worried about al qaeda?

I am worried about 1992 algeria.

There was an election.

The military did not allow him to come to power.

A years of civil war followed.

Take away the military gave the ultimatum, they took special pains to highlight the role of the youth.

Why was that?

They are trying to get sympathy, and they did get it.

When the helicopters flying overhead, they get cheers.

The military has no idea what to do either.

To say they are going to do it in 48 hours is preposterous.

What is next?

He has been in office for a year.

How much patience does each of need to have been trying to transform the constitutionality?

To go rationally, they need a lot more patience.

They are inheriting a deeply fragmented society and terrible economic performance and infrastructure.

Whoever comes next -- morsi has not done especially well, but that is not the only problem.

There are structural problems deeper than him.

Which country has the upper hand in the dialogue for whoever takes over?

I do not think it is anybody.

I do not think -- in principle the imf and restructuring on the economic side, but no country it can really influence what is happening on the street and a car wrote right now.

-- in cairo right now.

Some institution has to come in with a secular egypt.

I do not know which institution that is.

You are right.

There has to give some sort of calm.

As you said, i was fortunate to grow up in new zealand where we took that for granted.

To go france has a unique heritage.

It is not the u.n.. it is certainly not the u.n.. some of the gulf states have offered financial assistance.

It has been a problem.

The government has played guitar against the government.

-- qatar.

If the suez canal gets shut down again come that will be debilitating.

It would have to be reopened, including by force.

To go free and sam lacqua spoke to the chairman of an egyptian billionaire.

-- francine lacqua.

I have been led -- neglecting my business.

How can i operate under stability?

How can you think about your business when your country goes down the drain?

So we are better off trying to save the country then the businesses.

She as how can he do business?

Tourism has to a drop off completely.

That is a big source of foreign currency for the country.

It is.

Who would go there right now?

This just out from bloomberg reported from dubai, the idea of the united arab emirates, 59 people guilty of establishing secret cells.

I go back to where is the support for the muslim brotherhood?

You have to understand in historical context.

There were no civic organizations.

The muslim brotherhood did have a degree of credibility and organization that no one else had.

It rolled into the arab spring and the election a year ago with credibility and the organization that was unique.

Going to cairo right now.

He joins us from cairo.

What do you see right now?

Well, it is 1:00 in cairo.

The crowd is gathering.

This is the epicenter of the protests since the revolution and particularly the past few days.

The military gave the president a 48 hour deadline to resolve issues or they would step in.

The ultimatum has been rejected by the muslim brotherhood and the president who said it could cause confusion if the complex national environment.

It remains to be seen how this will be handled by both sides.

No one wants a military coup.

We do not know what this plan that actually means.

There are very little indication of what the military will do.

What we do know is that talk is clicking -- clock is ticking.

Think you.

We will continue coverage on egypt.

48 hours as rapidly by.

We will also take a look at company news and make the switch to look at amazon.

Its reach could crush online retailers.

They keep on growing and keeps on hurting the competition.

We will tell you about the future of this market from the man who focuses on the very topic.

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

Bloomberg "surveillance." i am tom keene.

Futures up six.

Dow futures up 45. getting ready for a very busy wednesday and friday of economic data.

We will have the unemployment and employment reports on friday.

Betty liu will have that for you.

Turning to bit coin.

They created a fund to invest in the market.

Best known for the clashes with mark zuckerberg over the origination of facebook.

Apartment crisis in facebook 3.4% to an average price of $865,000. the number of purchases climbed 19% in more than 31 -- to more than 3100. the busiest season since 2007. landlords are raving wins -- waving a grant as vacancies climbed.

Those are your top headlines.

I go to amazon every other day.

It is where i do all of my shopping.

Completely dominant.

It is returned to scale.

Every economics course teaches that.

The dominant is amazon.

David bell from his native new zealand to philadelphia from amazon dominates.

Can it dominates even more?

I think they can still get bigger.

They're going into the final frontier, the groceries.

No one has figured out how to do it.

Do you believe they can get me broccoli that is not three days old?

It is touch and feel is the problem.

That is why it is the last frontier.

He did not know what broccolis point to taste like until it shows up here and you do not want to buy bananas and broccoli's because you do not know if they will be fresh when you get them.

One problem amazon has solved a really well is the good guy and on-line retail world.

People feel like they're not being scanned because they comprise check and read reviews.

How can they jump off of that into these markets?

To go that is incredibly important that we trust them.

You know your card to get a good deal and not going to rip you off and deliver the product.

They tend to amass a ton of data on customers but do not hear conversation about privacy when it comes to amazon.

Why is that?

How did they avoid that?

To go a lot of us are pretty naive about what is going on behind our backs.

Are they ever going to make a profit?

The have great stock performance.

Are they running of non-profits company as the steel share from bricks and mortar is?

I think the goal is to be there for the long run.

They were all about the top line of the income statement.

Can they get down the income statement?

I think so in most of what we're buying is through amazon.

They do that to the customer lifetime.

Did they make that up in volume?

They're not very high on the cost side.

I think is they get into higher- margin products, fashion, people will buy and pay a lot more money for them.

Willoughby a monopoly?

You and i do not talk about that much.

A monopoly is a dreaded word in america.

Think we will see amazon is the big player and then we will see niche players.

We see other people in other verticals.

." that was a shameless plug.

Barons has ranked amazon as 100 most-respected company in the world.

Get -- they came in at no.

6. it is to number one was?

Berkshire hathaway.

Disney, google and coca-cola snagging top spot.

You were looking at disney because bob eiger.

Take my question is how ceo- dependent are the top companies?

What would the company be without them at the home?

To go i think oftentimes we find the culture of the ceo and the public face of the company.

It would be interesting to know what the basis was for the ranking.

This is our twitter question of the day as well.

Which company do you respect most?

Amazon.com of berkshire hathaway?

Apple?

Interesting.

We will see.

For now, $1.7 billion.

Consumers spend more than $1.7 billion on hot dogs in u.s. supermarkets in 2012. that is not counting ballgames or restaurants or street vendors.

So ahead of your fourth of july, is your hot dog in trouble?

This is bloomberg "surveillance." ? this is bloomberg "surveillance." i am scarlet fu joined by tom keene and alix steele.

Zynga shake up.

The company named a new ceo as it tries to jump-start growth.

The former ceo will remain on as chairman and chief product officer of the company he founded.

Turning to china to offset weak demand in europe.

Opening a third plant in china, they hope to capture 5% of china's car market by the year 2015. here at home walt disney expends -- expands the tenure for bob eiger.

He was scheduled to give up the ceo title on april 1. the company cited his record as ceo and the need for continuity.

That is today's company news.

Continuity in the age of rapidly-changing environment.

Elevated beef prices is now impacting your fourth of july plants.

Standard o'reilly joins us from d.c. on the frankfurter.

Why will my hot dogs cost me more on thursday?

We have seen record high material prices recently due to drought and corn prices through a roof.

When raw material costs go up, the finished product prices goes up.

I'm optimistic we will seek this be a drop for consumers.

Take of the drought was last year.

When will we stop feeling these effects in the meat market?

It takes awhile because it takes quite some time to bring live markets to market -- live animals to market and process them.

It can take a while to bring the cost down.

To go we are looking at video of hot dogs.

In the quest for americans to eat more healthy and organic, where does that leave the hot dog industry?

Actually the hot dog category is a very broad category.

We have a lot of options.

Low-fat, low sodium.

That category doing very well right now.

There are three choices for everyone.

David bell with us from morton.

Is there of the bill would predict philadelphia hot dog you like best?

I like them all.

They are bad for you.

It is ok, i can have one with cheese.

A jump in here.

I will have to disagree with you.

All foods can be part of a balanced food diet.

We can be getting jerked around a little bit on what we're supposed to eat these days.

It has to be looked at in the big picture.

So many choices out there.

Marketing data with food in general.

The whole issue of is it good or bad for me is a big deal.

Take of it make you feel good.

Maybe after a the hot dog i will go for a run and counterbalance it.

What constitutes a hot dog?

We hear a lot about sausage.

What is the difference?

To go hot dog is a sausage.

-- a hot dog is a sausage.

It has to have meat or poultry.

You really cannot call it a hot dog if you make it out of tofu.

It has ice chips and seasoning and curing ingredients.

You mentioned poultry.

As we have seen prices rise, chicken has become a good alternative for consumers who want to pinch their penny.

Are you seeing more chicken dogs over pork hotdog?

To go we have sinned poultry dogs performing well in the category.

Overall my data shows hot dog sales are up, just the volume down slightly.

When you see those things together, usually an indication that the prices may be a deterrent.

I think we will see some really good value.

Bloomberg hot dog contributor.

What will the family enjoy this weekend?

We originally from wisconsin, so it is brought worst.

-- bratwurst.

I think i will opt for a burger.

We appreciate you joining us.

Thank you for joining us.

Happy fourth of july.

I will be.

I like them growth.

None of them sitting around in boiled water.

Sara eisen is in italy -- bologna, it italy, on the summit.

We have a picture of her in italy scanning the newspapers.

Her work never ends.

Looking at a paper were there is a lot of conversation.

Headlines are all about obama and snowden.

How does the president proceed next with wrapping this up?

A great annual conference going on for years.

Everybody gets together and you know they talk about europeans.

To go also keeping an eye on an italian companies as well.

In the meantime, catching up on news there.

This has been wonderful.

Think you.

Greatly appreciate your perspective.

Coming up in the next hour, sheila bair sounds off on dodd- frank and whether to big to fail is really over.

That is coming up in the next hour.

? . . president mohamed morsi rejects a military ultimatum.

Tribune's multibillion-dollar bet on local tv.

And there are profits from produce to gary.

Supermarkets are the new world in private equity.

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

It is tuesday july 2. alix steel is in for sara eisen and our guest host this hour is ethan allen, chief executive chairman and chairman emeritus.

We also have richard falkenwrath to make sense of the protest in egypt.

Former deputy of homeland security adviser.

It may be july 2 but it is still a busy day.

Another peek at regional manufacturing, 10:00 a.m. factory order estimates have a gain of 2% in may.

That is according to a bloomberg survey.

We are looking at earnings -- beer sales have risen 12%. constellations stock is up 150% since the beginning of 2012. they are looking to diversify into craft beer.

Total vehicle sales estimate is 15.5 million in june.

Company news on a tuesday, wednesday, and thursday.

Friday is the jobs report.

And a shake-up over at zynga, the game maker naming john dom mattrick as new ceo.

More scrutiny for the u.s. air waves-amr merger.

They will investigate how it will impact consumers.

Travelers will be given fewer choices.

Deutsche bank knocking off the jpmorgan.

The bank took the no.

1 spot as the biggest raider of bond sales.

Jpmorgan had 7.8%. that is company news.

With egypt on the brink as the military gives president mohamed morsi an ultimatum, that was hours ago.

The 48 hours are trundling down -- are dwindling down.

It is busy, certainly not jammed this morning.

Richard falkenrath is with us.

What is the relationship between the military and this present government?

The military essentially sided with them but they became increasingly disillusioned as morsi took away some of the traditional autonomy.

They have a new defense minister and established himself as an increasingly autocratic ruler, one with an electoral mandate.

There is no loss of love between the military and the government.

This into dependency between militaries and politics is going to stew for many decades.

From your perception, what is different?

Clocks i think that -- i think that we are going through a state of transition.

I think a true -- i think a smooth transition is not real.

There is going to be chaos before things improve.

When you take a look at the challenges facing europe -- two world wars.

It was chaos.

Egypt is going through that stage and i think that when we are looking at transition, there is a possibility the military could takeover.

Clocks could the military takeover -- cut the military takeover 30 years ago?

With a charismatic leader who was able to not only to unite the country but the arab movement, this could be a peaceful and easy transition for a country with a poor economy was never realistic.

Ifyears of poor social performance, that is bad.

The worst fear is civil war.

Is back to 1992. tell us what happened in algeria versus what could happen now.

Algeria had elections.

The military, which was a predominantly secular institution, established in the french model, the post the democratically elected islamist leader, leading to 80 years of civil war in algeria.

This is the specter that hangs over egypt today, a much bigger country then algeria.

Worst case really is the start -- this chain of events which relates to something that starts to resemble absolute terrible situations.

-- to talk about the turmoil in egypt.

Listen up.

This is half the egyptian population, this is not a coup.

[indiscernible] he has given himself power.

We did not vote for him for it.

All of these members of the muslim brotherhood was elected in key positions.

What exactly are these protesters demanding be on the mursi stepping down?

The protesters are an odd collection of protesters and secular -- they do not have a platform the are agreeing on.

They have no idea what to do next.

There is no unanimity behind them.

Of their options are behind the constitutional framework.

You came to america , had all sorts of institutional accolade.

Candy develop the institutions that we take for granted?

-- can they develop the institutions that we take for granted?

Expectations have increased.

There is a huge distinction from when you left.

I was pretty young when i left.

Today we have internet, cell phones.

But it also rates -- it is great but it also raises expectations.

It is like climbing a mountain -- if you go too fast, too high -- that is what is happening right now.

This is important for kashmir, as a geography.

You have a bunch of stuff there.

With a geography like switzerland, egypt does not have that.

Egypt has a history as a nation that was more complicated than kashmir, which was under british rule for which logger -- for much longer.

Kashmir had an international dimension that is not present here.

This is not a proxy war for other powers.

This is about the fate of this country.

Crux another story we want to get your thoughts on is what is next with edward snowden, the nsa leader who has filed for asylum in several countries.

Vladimir putin put some conditions on it that he could not agree to.

What is his endgame?

He does not know.

It is not up to him.

It is entirely in the control of vladimir putin right now.

If some other country does permit him to take asylum status he has to get there.

In order to get their he hath have vladimir putin's permission to go.

There is no extradition treaty but it is a political decision.

If vladimir putin says he wants this guy out of here he is out of here.

He did send them anywhere he wants.

What are his secrets?

Do we know?

Are they on an iphone or air book?

He is following the pattern following -- following the pattern of wikileaks.

Has included servers.

Unless you know how to decode them they mean nothing.

Who knows what else he has.

Thank you so much, richard falkenrath.

Let us do the deed check.

It is a tuesday before the storm of economic data that we see on wednesday and friday.

Futures up five.

Eurodollar churning as hydrocarbon bounced back from a 95. we are going to be talking about m&a this hour.

So far this year, $53 billion in deals announced in the media sector.

Has the market reached a -- he's the chief executive officer at ethan allen.

What matters to him is july 4. kashmir is one of the greatest success stories in american business and american charity as well.

He has looked at some of the american landscape over as many decades here.

It is a wonderful celebration for america.

It is a time where we have a new america, it was easy to project after world war two, even after the it's not there was a reaffirmation of our foreign policy.

What should be the american production abroad as in the fourth of july?

It is an important date.

Somebody asked me how i became head of the ethan allen at a young age.

I said i first landed, went to the supply, came out and said that i am an american.

This is my country.

It is a great country.

I think america is at a crossroads today, crossroads of determining whether we will be the leader or follower of the world.

That is the biggest challenge facing this nation.

To lead to a leadership of the world through the washington consensus, the prism of 20 or 30 years ago?

For others, to we have to look at a multi world with a new formula or a new calculus?

Absolutely, it is a different world.

Expectations are different.

Information is different.

I think a leader, whether it is in asia or enterprise, you have to lead by setting the right presidents.

-- right precedents.

We have to set precedents in terms of balancing our national security and the rights of people.

Those are challenges that are looked upon -- as a leader you are under a microscope.

As we go to 2014 and 2016, republicans particularly are looking at a new calculus, a new diversity that they are trying to find to win elections.

How can a traditional america find the residents were so many immigrants -- the resonance with so many immigrants.

America is a land of immigrants.

America was founded on the principle of young blood.

Immigrants are entrepreneurs by nature.

We built the railroads, the steel mills.

People came from all over.

We need that fresh blood.

It does change the demographic of the country.

Thank you so much.

We will continue our discussion with the chairman of ethan allen.

This is "bloomberg surveillance ," good morning.

Good morning, we start in egypt.

Egypt is a bracing for a possible showdown.

The egyptian army give the president until wednesday to find a peaceful solution to the recent unless, if not it will step in with its own plan.

Mursi's office brushed off the deadline.

A couple of countries edwards noted has asked to grant asylum in.

He remains in a transit area in moscow's airport, awaiting word on where he could go for next.

His request for russian asylum was withdrawn after vladimir putin put conditions on his approval.

And apartment prices in manhattan climbed four 0.3% last quarter to an average of $865,000. the number of purchases climbed to 3100 in that period.

It made it the best selling season since 2007. i am very glad i brought my apartment -- i bought my apartment in the fourth quarter.

Let us talk about m&a. it has been fairly sluggish this year.

Media has been full activity.

Media is the third most active industry, trailing only real- estate and food.

Tribune agreed to purchase 19 television stations in six years.

She is a partner at the investment bank -- i cannot help but wonder if all the steelmaking is a top of the media market?

I do not think so.

The media industry has been so sluggish in the past five years.

The recession hit harder than a lot of other industries by not only structural changes in terms of lost subscription revenue but also the rise of digital and free content.

Now that abbas have come back and companies like to give have emerged from bankruptcy, i think the mergers are just beginning as they try to figure out how to protect themselves better for the next recession, as well as position themselves better in the growth area.

Positioning themselves with negotiations over the licensing fees with cable providers.

It feels like they are playing catch-up rather than getting ahead of the story.

There is a lot of consolidation that should happen.

There are new upstarts that are trying to bypass these agreements.

It is a necessary consolidation.

Finally the media industry has a balance in place that they can take it back to jeff.

Here is my question, newspapers were a dying business.

At what point does local television become the same thing as the newspaper industry?

I think it has a long way to go.

You saw it in these last political elections, local tv had $7 billion.

As long as this election spending keeps going up we're not targeting the uninsured -- keeps going up -- we are now targeting the uninsured.

The shift you are talking about, on twitter yesterday -- "if the revenue is not there, a good gdp gross, was the belief in cash flow?

Is there a new confidence in cash flow?

I think there is absolutely believe in cash flow.

Offadvertising is more measurable on a ip tv.

Somebody will be able to monetize.

The have to pay for the content.

The advertisers are willing to because these markets are getting aggregated be a consolidation in big enough ways that it will cost them big enough to do this.

Our guest host, the ceo of ethan allen, you took your company public in 1993. advertising is a big part of your strategy.

Do you look a local television as a way to get your message across as compared to newspapers?

It is very interesting, only yesterday i was having this discussion.

I was having the discussion about this next year coming up.

We are looking very seriously at using national television and using more local television.

It is interesting phenomenon that the effectiveness of local television for us, we have 200 locations around america, we get a much-out -- a much better value for money in many cases using local television than using national television.

That is what we are looking at.

We are looking at -- we're looking less at the national television at the seoul phenomenon -- and looking at the sole phenomenon.

The idea of being able to measure of consumer you're targeting is key.

The measure ability has transformed in the last five years and hurt a lot of national tv.

Branding has been supplanted with performance in terms of effectiveness.

Now that local tv is being aggregated it is becoming more efficient for big grins like ethan allen to buy local tv.

I am sure he will be looking for to that, as well.

Thank you so much for joining us.

Coming up, there is a buy on aisle 54 cerberus, the private equity firm is scooping up super markets.

Find out coming up.

Good morning, everyone.

Alix steel is in for sara eisen.

I am tom keene joined by scarlet fu.

I am going to call it quiet before the economic storm.

Busy today but very busy tomorrow.

Thursday, squeezing right into when state data before we get to the friday jobs report.

The jobs report as right now showing a gain of 56,000 jobs -- all of 156,000 jobs.

Unemployment will likely be at 7.5%. what that will mean is crisis over.

Let us buy furniture.

That is a growing response for americans hoping to make homes comfortable out of the abyss of 2009. ethan allen's stock is simply doubled.

He is the chairman of ethan allen and an engaging mix of color and texture, and eye- catching interplay of some washed fabrics.

Scarlet, also known as a so for the family room.

What is the boom in the business?

What is the character of the show room?

2007 was a peak year.

The next two years were the great recession and for the first time in 80 years our sales went down tremendously.

The following two years we made up the decrease in sales.

We increased our earnings and made a lot of what we lost.

I think we're positioned well because the consumer confidence is better.

Consumer confidence is better in home values.

Are you under pressure to make more this up in malaysia or could you still do it in vermont or north carolina or the united states?

We are still making 70% of our products in north america, mostly the united states.

We have 17 locations in china and 60% of what we sell their wheat shipped to the united states.

This takes a tremendous amount of work.

We now produce 70% of products in north america custom.

We ship it within less than four weeks and our values are similar to if you are making large production.

Item #207656. here's my question, you have a lot of landlords buy homes to rent out.

What is the difference between a home owner buying furniture versus a landlord?

Squawks the landlord has two options, to furnish themselves or the renter furnishes it.

We are looking at that closely because the landlords need something different than an know where.

We are taking a look at how to reach these landlords.

They are out buying, especially in urban areas.

What kind of pressure to you feel to discount your items to reach a broader massive?

Restarted -- we started in 2006. we have gone to what we call an everyday best price.

We will not fool the consumer by raising the prices.

Come the great recession consumers want a better value.

We cannot artificially raise prices.

Out the merchandise the success with design in reach?

It is beyond fancy, modern furniture.

Ethan allen is known for its traditional, colonial look.

How do you pull modern design into your merchandising concept?

That is our next reinvention.

We are now repositioning ethan allen.

We have to reinvent from time to time.

This fall we are going to reposition, relaunched under the branding called "the new collectors." people are looking at different styles.

They are looking to mix.

We have gone from the classics to the modern and we have a tremendous variety of products that -- this fall is going to be relaunched.

The ceo of ethan allen telling you you have to blow up your living room.

Let us get to company news.

The liquor company of consolation brands reporting earnings.

We have first quarter earnings missing analyst estimate by two pennies.

Revenue is up.

Also coming in at four hundred million dollars shy of what analysts were looking for.

In terms of the outlook, consolation brands sees the first full year outlook of 2.16 to two 0.90. good morning.

We are on bloomberg television, bloomberg radio, we stream on your tablet, phone, and off of bloomberg.com.

We have been stunned by the use of our record it videos and audio.

Absolutely.

We are going to talk more about m&a right now.

We mentioned m&a in the media sector.

What about the sector?

-- what about the food sector?

The buyout firm usually focuses on distressed companies.

Our bloomberg pride at the expert cristina alesci joins us for more.

What is the biggest play in terms of cerberus buying them out?

As you know, all supermarkets are under pressure in terms of lowering prices and margins are suffering.

At the higher end, it is somewhat effective because customers want a bit of fresh food.

They want better quality.

For cerberus the thinking can be twofold.

Since they have a supermarket chains to begin with, combining and consolidating them could give them greater leverage when it comes to negotiating with suppliers.

On the other hand, they are serving the higher and that could be growing.

They are buying somewhat of a premium accept -- somewhat of a premium asset here.

The demographics -- the population is increasing.

We have more retirees going into that area and moving up to north carolina.

They are looking to take advantage of that.

Is this a change for cerberus, moving more into the high-end?

Are required to continue to see more of that?

I do not think so, based on my reporting.

I think this is a one-off.

If you look at the way harris teeter is run, a very well-run company.

Margins are much higher than its rival.

What cerberus may be thinking here is they bring some operational value that we can use in our distress portfolio of assets in the supermarket space, like the supervalu brands that we have been talking about.

This is the thinking there.

To be honest with you, yes it is going to be expensive.

Here is harris teeter operating on an income basis, making 3 cents on the dollar.

The net out two since on the dollar.

It is pretty close to the narrow margins.

What is the value proposition for cerberus if they go up to walmart?

For cerberus, what they are thinking is consolidation is key.

That is where this plane comes in.

The want to be able to compete with the walmart of the world.

Harris teeter is not exactly going up against the walmart of the world.

They are looking for a different audience.

To your point, any bit of savings they can get is going to make a big difference in that.

That is what they are looking for.

From harris teeter's point of view, there is not another.

You are the pro here, when you look at the stuff to you look at stock prices of what is public now and what has been taken private?

Harris teeter has been a 20 year moonshot.

They are not going to pay full price, right?

But they are not going to pay full price.

To your point, they are up 30% this year.

Cerberus, rather -- regardless whether or not it is pointed pay full price, we hear the company will probably not settled before anything -- below anything like $60 per share.

If you look at it on multiple pieces of cash flow, most supermarkets get taken out at five times.

Maybe we will see a deal in between.

If you say harris teeter is a high and supermarket.

Where does that leave companies like whole foods?

If you look at their numbers, it is a completely different world.

A whole foods has blown everyone away.

I know you look at the whole foods p e, it is must -- it is just mind-boggling.

Consider a whole foods hot dog.

That is going to cost to a lot of money.

Organic house.

-- organic cows.

The twitter question of of the day, which company do you respect most?

That is an interesting question.

We want to hear from you.

Coming up, the risk of rapid interest rates could disrupt the bond market.

We will talk with the former chairman of the fdic.

Good morning everyone.

Joining us now, betty liu and coming off of the success -- did he wear them for titan?

We should have panned the camera down.

He is probably the only one who likes crocs.

Everyone hates them.

Do you on a pair of proxies?

But i have owned a bright blue pair.

They are comfortable.

I wish i would have had crocs.

If they are very comfortable.

They are great for the summer.

They are just so ugly.

The company knows that.

The ceo is going to be joining me on my program.

It very rare for a company -- he is his own fashion victim.

They are trying to stop these issues at the back of the store and say to new customers, we make pretty shoes.

Are you going to with them today?

No.

he may be bringing some.

Great exclusive.

Betty liu out of the stilettos, you can see that at 8:00 a.m.. so much in the market movers.

The stock is trading lower in the pre-market after its first quarter earnings and sales missed analyst estimates.

Constellation brands is down 2%. and we are keeping our eye on zynga.

Dom metric is in -- don mattrick is in and mark pincus is out.

It lost over 100 million players in the last year alone.

Is the chief option for online gambling.

Let us take a look at tesla, those shares are gaining in the pre-market after a positive note from jeffrey.

Tesla is up over 1% right now, the price target goes up.

Members of our control room have a charmed life, drove to a tesla this weekend.

Richard falkenrath was saying that as the company he respects most.

There is innovation.

Where is the innovation in the furniture business?

You have to innovate every element.

We grow from design to engineering to manufacturing, sawmills, wood products.

We have to innovate at every level, otherwise we cannot be around.

For instance, when you take a look at our products, it was only a few years back we had 1 million square feet just dedicated to making parts.

Now we are making parts -- now it is down to 50,000 to three.

Coming up, we are going to be talking about banks.

The former chairman of the fdic joins us next on all "bloomberg surveillance." good morning, everyone.

Edward connor the, is a strong supporter of governor romney's run for ebit -- run for president.

You see that "in the loop with betty liu," 8:00 a.m. this morning.

Alix steel is with us, in for sara eisen on a quieter tuesday for the deluge of wednesday and friday.

What we have?

Returning to china.

The french carmaker is opening a third plant in china, boosting its stake in the country by two- thirds.

Sprint nextel suffering a legal setback, a judge clearing a way for a lawsuit with the new york attorney general.

The state is suing scripts for $300 million, saying it failed to pay sales taxes.

Walt disney may have another flop on its hand.

So far "lone ranger" has received negative reviews.

It costs $25 million to make.

Analysts are predicting disney may have to take a write-off on it.

It may be the next john cotter.

-- john carter.

The visuals look incredible.

Is he talked or the lone ranger?

-- tonto or the lone ranger?

He is tonto.

Be careful what you wish for.

Ben bernanke sees a better economy.

Are we heading for a redox of 2005? rates are rising.

Sheila bair is a former chairman of the fdic, she has been outspoken in her criticism of much of our big banking.

Sheila, good morning.

The chairman begins a dialogue of getting us out of the prices that you were so much part of.

Is there a legitimate fear that these big banks will read?

What they did five years ago?

-- will redux what they did five years ago?

What warren buffett said, when the waters go you can see us swimming naked.

There have been efforts to get the capital up.

I think the banks are more resilient.

Probably not seeing as many wetsuits as we need.

Bosil 3 makes our viewers and listeners eyes glaze over.

Give me what jamie dimon has to have in the piggy bank.

How much is the right amount of?

This comes down to risks.

One big banks brag about their double-digit banking ratios, they are on -- they are counting what the assets are.

They have a lot of leverage right now.

That is not even touching their risk from their derivatives, which is a holdup balance sheet.

They are still operating at significant levels of leverage.

I suggest we need an 8% to -- the proposal is 3%. my guess is regulators are going to move to propose at much higher leverage ratio.

I know you have been critical from regulators focusing on the entire capital standards and missing the boat on the rapid rise in interest rates and how that could threaten our banking system.

It is.

Market risk can become credit risk.

I think, for now, this is the problem with risk weighting assets.

If you treat government back security as treasuries and having a low risk so you do not have to have much capital to fund those assets, interest rate lies they lose value very quickly.

It is another reason why a we need to make sure there are thick cushion of capital on the non-risk weighted basis six.

These are volatile times ahead.

There have been significant improvements, but not enough.

You mentioned the volatility, is it's the rate we have to be concerned of or the velocity of the move that is more damaging?

It is absolutely the velocity.

Over time we want to get interest rates normalized.

I think the zero interest-rate policies have created enormous distortions in our system.

We want a gradual, control basis.

Excuse me, we had a conference at bloomberg headquarters four years ago.

A morgan stanley member stand up -- stood up and said -- that is part of your title.

How does wall street state itself if it does not want to?

That is a real problem.

Certainly regulators have a rule, wall street leadership needs to step up.

The need to think about long- term, what is best for the shareholder?

What you want to see from jamie dimon and brian moyniham?

What do they need to do over july 4 weekend to provide leadership by labor day?

I think one would be let us get reforms done.

Whether you like dodd-frank or not, it is whether or not you want reform.

We need to raise capital requirements, stabilize liquidity.

Let us get those rules done.

What these gentlemen wanted or not, here in washington lobbyists and trade associations are fighting against reform.

That creates uncertainty for them, for the system, and petraeus this grant was system.

That would be huge right there to market reforms done.

Sheila, with the banks, getting ready to announce earnings.

What are you going to be looking for?

I think interest rate risk and who is exposed and to isn't. they are easy to look at what kind of security, the yield of their data securities, i am worried about interest rate swap.

They have never been in this kind of volatile environment before.

I think long-term, they are all seeing increased interest rates is going to help them because they can start searching higher interest rates on their love.

It may well be true.

A lot of that will be how their deposits -- it goes up much faster.

, for joining us.

Sheila bair, former chair of the fdic.

You want a 4%, because that could mean a healthy economy.

Let us bring in our guest house for the hour and get his final thoughts, the ceo of ethan allen.

Do you have confidence in our banking system?

You have to deal with banks all the time.

Do you trust and after years of intense regulation?

I think that things are somewhat out of control.

When you mentioned i took the company company -- i took the company public, i took it private a few years back.

We borrow the money and paid back.

Today, interest rates are so low.

We have money in the banks, we have nothing for it.

Just sitting there.

I think always we do not want extremely high interest rates.

Interest rates are not a good for -- are not good for a tremendous large population.

Thank you so much for coming by today.

You have to get your radio right now.

Who do you have on today?

We have a great group on the economy and also on egypt.

We will begin our coverage with a report from cairo.

The 48 our time line ultimatum ticking down.

Tom keene going off to the radio studios.

I know you have a twitter answer for the day.

I do.

Which company the respect most?

We heard a whole foods, mcdonald's, jpmorgan.

Some other picks are interesting.

Apple is the only company that has significantly enabled my quality of life.

Another answer is a tie between ge and ford.

I am surprised jeff immelt got a shout out.

People usually associate g e with jack walsh.

Last one, you can only respected company that delivers consistently entreats you write as a customer.

For me, that maybe marriott.

That surprised me.

I never would have made that connection.

The record weights -- prewar rates actually help.

-- reward rate . in the loop with betty liu coming up next on bloomberg television.

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

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