Housing Hits A Speed Bump: Surveillance (06/10)

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June 10 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Matti Leshem, John Burns, Rick Waddell, Misiek Piskorski, and Liz Ann Sonders. (Source: Bloomberg)

This is bloomberg "surveillance." mary barra faces general motors shareholders.

She will recall the recall.

Uber harnesses social media to mint a 17 billion dollar valuation.

Good morning, everyone.

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

It is tuesday, june 10. i am tom keene.

With me scarlet fu and adam johnson.

We begin with an optimistic brief.

Absolutely.

We found that industrial output rose the most since 2011. it is like a big deal.

In china inflation accelerates to the fastest pace in four months.

The u.s. a couple of data points coming out today.

Is ms.

Optimism.

-- business optimism.

Same-store sales.

Are people buying?

I don't think i have been biting all year.

I have been missing out.

Watching too much hockey.

Radioshack before the bell.

Amc movie theaters.

T.j. maxx.

Linkedin.

What do you do at a shareholder meeting?

You fire up the phone and say here is what we are going to do.

Having been to walmart, not a lot of substance.

You are also fighting off protesters.

General motors fighting off matthew miller.

Matt is in detroit.

Angela merkel meeting with david cameron in sweden, the northern lights this time of year.

President obama taking questions today regarding student debt.

That is a real problem.

A huge problem.

A data check.

Stocks, bonds, currencies and commodities.

S&p futures, down they go.

250 up to 2.61. figure broke a big deal.

That is a weaker euro.

Maybe that is the headline item.

Rounded up.

Drama here.

Brent crude is 1.10 when i walked in the room.

Look at the vix.

Shows a complacency.

The ft makes a big splash on that today.

Breakroom near 110. the brilliant raoul has been stronger over the past number of days.

Here is the news for pros to my which shows how unusual central banking is.

The italian bond yields 20 years back.

A tight trading range.

Down we go.

You and i have never seen this.

The bidding for paper is a fever . a little trivia.

Is it cheaper to borrow 10 year money in the u.s. or spain?

I would guess spain.

Liz a.m. saunders will join us for the next hour from charles schwab's. right now going to the front page.

Here is scarlet fu with device of the morning.

Time warner in talks to take us take an vice media.

Have you ever watched it?

I follow it on twitter.

It is really cool.

The younger male audience is why they are salivating over it.

I wanted to report from hot spots around the world, takes irreverent approach and really in your face.

East talks currently value it between 2 billion and $3 billion.

Is it nothing more than an tv for 2014? -- mtv . they actually report on news.

It started as a canadian music magazine.

Shane smith is canadian.

He has his own edge he brings in here.

It is interesting.

Time warner made the biggest deal that did not work out very well.

Is a desperation here?

Have to find audience.

I am not entirely sure what time warner is morphing into.

They spun off the cable cash flow business.

Our second front-page story is a new investigation by the fcc.

Investigators want to know whether dark pools are telling clients how they operate and whether all investors are being treated fairly.

They are electronic exchanges that do not post buy and sell orders.

They only report traits after they take place.

A not so flattering picture by michael lewis.

Just starting to appear when i was first rating.

It was a marketing thing.

Matching up with buyers and sellers in our own dark pool.

Then it morphed into less than positive.

When i started trading dirk poole was the inkwell.

You didn't -- dipped the quill in.

Does my face look ok here it?

Donald sterling.

Donald sterling has never burst himself once again because he says he does not support the two billion dollars sale of the l.a. clippers to the former ceo steve ballmer.

He also says he will pursue the $1 billion antitrust suit against the nba.

The sale was negotiated by his wife.

Can these reports be taken seriously?

At this point it is in his interest to get in the way and see how much damage he can do.

To your point, the been, and 2 billion, 2.1 -- that was nearly double what the other bids were.

Why would you mess with that?

Life is said to provoke an envision involving mental impairment.

His lawyer spoke.

He said sterling is doing this because the nba has not agreed to revoke the lifetime ban.

Is mr.

Ballmer's transaction it in threat?

A good question.

Breaking news.

Metlife set the $1 billion share buyback.

The first repurchase since 2008. buying back $1 billion of its stock.

This is the latest headline.

No trade in the premarket just yet.

You said diane one billion of stocks.

Total market cap is 60 billion.

Seems like a small market cap.

That a strain cash to do this.

Shareholders will like the news.

Maybe we will have more announcements as we did yesterday.

We will bring you the breaking news across bloomberg television worldwide.

The greatest of great divides.

It is on fire.

Real estate is nearing what is seen in the rest of the economy.

John burns is chief executive officer.

In california as one example.

Luxury manhattan is on fire.

Adam and i see that each and every day.

Wonderful to have you visit us in new york.

One in 99% says he is never seen it like this.

Can you make the same statement?

I've never seen it like that either.

My staff in san diego just finished this.

The new home communities cheaper are not selling the ones as the ones above.

Business healthy for the american housing market?

Is this helping the trepidation?

I think you have the potential for a mini of things -- bubble forming in the high-end.

The overall housing market not impacting those people.

Would you explain to mrs.

Burns -- mr.

Burns that 200,000 or 300000 and manhattan is like a casket thing you lay down.

I am not even sure you could -- those are taxes.

New york real estate is its own beast.

I've a tough time explaining to people in manhattan at $200,000 is the median home price in the rest of the country.

I don't know that you can buy anything in manhattan for $200,000. it is bizarre.

Our other guest host for the hour, i want to get your thoughts on the front page stories, which is time warner.

Adam pointed out how they took the ultimate folly of by ailing -- buying aol.

Is this different?

Vice is a new fresh take on news.

They have their own reporters and go to places where no other organizations go.

They give us an in-depth look.

Ringing young people to news.

The median age of news viewers being around 60 plus.

This is a coveted advertising demographic.

Not only that, but there has been about three weeks ago disney acquired maker.

That was a big deal.

Now you're looking at time warner acquiring priced.

They have eyeballs, content that people like.

Is this the place where you can make money with millenial?

I think you will see ultimately all these companies will make money.

How will the money be made?

More than just advertising, right?

I think you will see advertising as a base and premium offerings from the channels as they try to use the massive bout with all of the demographics.

Is time warner on the up and up?

I say this with a spinoff of publishing.

On the same day they get vice, they have jettisoned one of the great brands of yesteryear if you will.

It is a very poignant moment from a brand perspective and business perspective.

I think they making great moves.

John burns on real estate.

We will dive into this and a bit.

Particularly in a california market.

California on one side of the coast.

Gm, detroit.

Mary baarra facing shareholders of the company's annual meeting.

We will talk to her and find out what she will tell us.

This is bloomberg "surveillance." on bloomberg television and streaming live at bloomberg.com.

? good morning, everyone.

Bloomberg "surveillance." this morning.

You know him from nine west, vincent komodo, this is the guy in women's shoes.

One of the great founders of nine west as well.

-- vince camuto.

Joining me is scarlet fu and adam johnson.

Going to the midwest, millions of recalled, in pending lawsuits.

The ceo of gm has a lot to contend with after speak in with media and shareholders last week -- and the public last week, she is set to speak to shareholders.

Families protested outside gm headquarters yesterday.

Expected to show up once again today.

There will be a lot of emotion there.

Probably a very emotional meeting.

The family set up around 4:00 yesterday.

Right in front of the renaissance center in downtown detroit.

They are expected to come back here in two hours to protest.

At half-hour after that the press will have a q&a session.

She will give us the lowdown ahead of the shareholder meeting.

Last year was only one hour long.

I have never been to a shareholder meeting that was one hour long.

She will certainly be in the spotlight.

Tell us about the board of directors, in particular fishermen -- the chairman.

He is been leading the board for few weeks only when -- when this first happened.

He is not really said much since the recall except for giving his support to the executives and also saying they will have independent counsel because they have been named as defendants in the oh lawsuits.

A judge in new york allowed about 80 of the lawsuits to be combined or told them to be combined as one lawsuit.

Those are not personal injury, just the economic loss lawsuits.

Trying to combine as many as it can.

The personal injury and wrongful death are a different matter than this scores of economic loss lawsuits.

You know this company very well.

You know the spirit of the place.

Last week mary barra told employees if you do not speak up and talk about the problem, that is a problem.

As you talk to employees and managers, what is the sense for how they will change that culture day to day?

I thought it was really an amazing meeting with employees when she said tell your supervisor if something is not working out.

And if that does not work, come directly to me.

That represents a real shift and general motors.

In the lucas report, the independent report ordered into the ignition recall scandal talked about the gm not which is where a lot of executives would just shake your head yes, yes a portable problem and then not do anything about it.

She is trying to really reverse the culture and asking employees to come directly to her if they have a problem that has not been resolved.

Matt miller, thank you so much.

Outside general motors annual meeting that takes place this morning.

Guest host for the hour, one thing interesting about gm and the problems with the recall is operationally i have done very well.

A great april and may, why have they been able to keep up the brisk pace of sales?

It defies logic that you said have -- should have seen a drop in sales and in fact consumers don't care.

She is doing a very good job of handling this.

I think the transparency she is trying to infuse the company with right now is the thing helping them.

She is saying what she needs to say and it is working?

Yes.

Ceo of the tag and vest.

Coming up, charles schwab chief investment officer will be with us.

She will help answer the twitter question of the day.

Lack of volatility in the markets were you?

Most volatility and 89 months?

Does that worry you?

Tweet us.

? good morning, everyone.

Bloomberg "surveillance." mr.

Johnson at the top headlines.

A trial has begun for the ferry that sank in killed hundreds of teenagers.

A separate trial will be held for the chairman of the operator.

Prosecutors blame a lack of sleep.

According to work papers, the driver of the walmart truck had not slept for 24 hours before the accident.

It crashed into the back of morgan limo.

In hockey, one win away from the stanley cup.

Winning 3-0. against the kings 3-0 lead.

Game read tomorrow night.

Those of the bottom headlines.

We want to ruin scarlet fu's day.

La kings fan is our guest host.

Why are they so good?

They are good because they are the most aggressive team in the league.

They are showing that on the ice every step of the way.

The goalie is the best possible in the nfl.

-- in the nhl.

We are now 75% through the series.

How incredible is that?

This was his own series.

He is from milford, connecticut.

A local boy.

Sac state me to move the kings out of the way so they do not take the longest -- the longshots.

I believe the key numbers.

Nobody on the frontlines lines under 200 pounds.

You should get used to the disappointment.

Trash talking.

I think we need the surveillance trapdoor.

Getting to the morning must-read.

Frank rooney of the new york times talks about the solitude, the noise and angst that comes in politics these days.

The valued solitude makes it difficult.

The media keeps scornful watch over a elected leaders.

On their on a crucial place to be.

His idea is politicians need time alone to reflect and come up with big ideas.

Right now it does not get them very far in terms of setting an agenda.

That is a great point.

You advise companies like pepsi on how to get in front of people . how do you strike the balance?

It is critical.

I think ceo's me the time to reflect and figure out what the next moment is a not just be constantly in front of keep all.

We advise all of our companies to do that and create the opportunity for them to do that.

It is really about a lot of it is scheduling more than anything else in the real desire to do it.

We find ways.

We will continue the conversation and john burns as well.

Coming up, uber worth $17 billion.

What should they learn from past big internet start up that may be on the verge of failure?

Are they on their way cap go this is something we will discuss next on bloomberg "surveillance." ? good morning, everyone.

Bloomberg "surveillance." liz ann saunders with us in the next hour.

Data check.

1947. euro-dollar is a big story.

Draghi getting the weaker story over the past couple of days.

David will bingo america -- bank of america merrill lynch in the forward view.

Uber valued at 17 billion.

Harvard business schools analyst wrote the book.

How we profit from social media.

Joins us here on set.

How does effectively a taxi dispatching company transcend cars and putting people in touch with cars to become a social media phenomenon with a record valuation?

I like the comparison to hertz and avis, that is actually not the best comparison.

They make a lot of money out of the drivers every day.

They get $50 on the driver, which is a lot of money.

If there are 360 days, $18,000 they make on every taxi car driver in one lifetime.

That is a lot of money.

You think it to really big whether new quickly.

In theory, about 1.7 billion?

If you think about paying $17 billion for revenue, that is not bad at all.

Fair enough.

Those are the numbers.

What about the whole social media phenomenon?

Doing me to think about this as a lifestyle company?

>-- do we need to think about this is a lifestyle company?

They were fantastic at getting people to share with their friends.

My facebook feed was polluted with uber.

Curious choice of words, polluted.

Sometimes you have to pollute in order to win.

Zynga was polluting our fees with big house.

They never stop.

I think they were smart to prime the engine.

John burns, real estate consulting.

You recently took the car and had nothing but rave reviews for it.

I love uber ./i was recently in san francisco and knew for sure i would be able to catch a ride to the airport.

Two minutes later right in front.

Was in the technological process, what i love about the book as you talk about the need to finally make money.

You have been a critic of twitter.

I did not agree with your assessment of the twitter, but you are dead on.

They have to figure out how to make money.

How the -- how will make money if it is "polluted?

I think they have a different problem.

One reason they are having trouble getting revenues is the advertising they sell is very cheap.

The reason they sell a cheap as they do not target well.

The reason is most of us do not tweet.

Media people tweet but the average person in the street -- i agree with you strongly there is a wide body of twitter people are just following people but can you monetize them?

You just do not know enough about them in order to target them appropriately.

Do you have a phase they can monetize, even with the stock price going back to where it is?

I do not understand how they make money?

They are making money right now.

It is just not growing at the right speed.

The thing that would really help them is if they started targeting better.

Facebook was originally in trouble and they figured out the model and appropriate targeting, and that has pushed the stock through the roof.

L twitter is fully in the sphere.

Company like uber has integrated, too.

Isn't that really the key.

Interbreeding -- and are grading.

-- intergrating.

The reality is they took the experience of writing and a taxicab and democratized it and made a better.

I will go out on a limb to say at 17 billion and could be undervalued.

The reality is you could see a world 10 or 15 years from now where transportation in major cities does not look anything like it does today.

I did a speech in columbus, ohio, getting to the airport was like a foreign country.

I will tell you something, and it is a phenomenon in los angeles right now.

I have a 15-year-old son and gets trapped at a party and no one wants to pick him up.

Do you mind if i uber home?

You would never have told the 15-year-old to call a cab.

I think it is fantastic.

It is also word-of-mouth.

Cannot destroy them just as quickly?

You are saying a lot of regehr companies come into the space.

The reality is you have cab drivers.

They will go where they get paid the most money.

If someone could come in and start to break up the marketplace.

I feel like they have a great start.

You can charge more, but are we going to pay more?

There is uber x. you have choices.

I want to go to you with your real estate knowledge.

Do you think it is transferable.

I think we're missing the big point here.

They make it so easy to pay them using the phone.

I have just handed over $50 by pushing a couple of buttons on my phone and you're done with it.

The collection of money is so easy.

Telling my friends all about it.

I also think we have to think about international.

Many countries you go to southeast asia come you go to russia, parts of europe, it is not like that.

I would much rather get in uber in brazil than a taxi.

They need to be armor plated as well.

What he said on -- said is dead on about kids.

I remember as a high school kids i volunteer for safe rides.

At the time it was brand-new.

To help people get home when it was -- when they had been drinking.

All these different ways you can use it.

At a cost.

The star of the world cup may be the soccer ball itself.

First reviews of the adidas ball have been pretty positive, quite a change from a few years ago.

Players hated it.

When they kicked it, it went everywhere but straight.

Nothing counts until the week against.

You can bet at least one losing team will lose the ball.

Why do we need a new ball?

Baseball does not have a ball -- new ball every four years.

Ball was problematic.

-- the last balls was problematic.

Help us.

Roland or england.

Why do i need a new fall?

I think they wear out rather quickly.

I think if they get kicked out of the courts, people grab them.

I understand you need a new ball but aerodynamic i do not understand it.

I think this is about creating the perception of innovation.

Perception of innovation.

The same thing is going in for golf clubs.

Every year a new golf clubs that will do that to your swing.

It is not going to make that much of a difference.

It is like skis.

They get sent and then sat.

I did my bracket for the world cup.

Did you do yours?

I have not done mine yet.

I am still hurting over the rangers.

Argentina.

I think they are weirdly underdog because they are hated in south america.

Matthew on the cover of the sunday new york times magazine.

Helpless with the call with england, italy.

It is a tough one.

England, italy?

I have no clue.

That is in the stadium where extractor was a few weeks ago.

Not done yet.

We want to thank harvard business school for joining us this morning.

Coming up, do you buy or rent your music?

I investors need to spay attention to spotify and pandora.

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

Bloomberg "surveillance." your nations capital.

History as it starts down about now.

Those days are long over.

Others the washington, d.c. here in june.

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

I am tom keene.

Dow futures may get a 15. single best chart.

We are focusing on a different mary meeker week.

This has to do with the call on the music streaming websites and companies.

Our chart illustrates the seachange taking place in the digital music market.

Last time -- last year was the first time they did not flatlined.

They decline dropping six percent year on year.

The first year of decline according to the 2014 purport.

-- report.

Streaming services of 13%. fiscal sales -- physical sales down 13%. you are in l.a.. is this the talk of the town, businesses and floating?

You have the new model of everyone straining.

No one owns a model, cd or owns the data modems anymore.

Why would you when you can listen to everything all the time you go the problem is, there is no real business model here yet.

There is a business model for those providing streaming for business bona fide.

The only people really making money are the publishers getting paid on every single stream.

That is a system that has to be overhauled so the artist can get their fair share.

I know john burns is like me, still buying the music.

I listen to pandora.

Leaning more towards streaming.

I can see some of that.

I think this is important.

Kids are telling us what to do.

Two things interesting, one is some cloud.

-- sound clouds.

. songsa.

You can say i want to hear jazz party and they will literally curate an entire album for you.

We have three, starting with the following.

Los angeles kings beating the new york rangers.

Look at that shot.

The third straight loss.

Amazing shot to see the roof, the garden from effectively behind the goal.

John burns, you are in l.a. fan or ducks fan?

More of a ducks fan but i am not a hockey guy.

-- second photograph.

I question our producer who had to show that one shot.

Number two, the annual electronic entertainment expo kicking off yesterday in los angeles, california.

The world's premier trade show for computer video games and related products.

Watching a logo displayed on stage at the event ahead of the expo.

I would never let this in the house.

Time waster for the kids.

A lot cut their experience through playing video games.

What should kids be doing in the tom keene household?

Math.

And with that, going to the next photo.

Pakistani rangers keeping watch of the fire damage premises of a cold storage facility following yesterday's attack.

There were many deaths.

Taliban effectively seized the airport and the pakistani army came in and killed i believe 11 of the taliban and.

Lex the distinction between afghani taliban and pakistani taliban.

The key thing.

That story we will continue to monitor.

Coming up, big foreign investment.

California real estate very pricey.

Signaling and nationwide home price surge?

This is bloomberg "surveillance." ? this is bloomberg "surveillance." i am scarlet fu with tom keene and adam johnson.

Let's talk about real estate.

Yes, we will.

California real estate has come roaring back.

Luxury sales nearly doubled.

Even the troubled empire.

Seeing permits up about 70%. guest host john burns based in irvine, california.

Who are the buyers in california at?

They are very different.

Silicon valley is not just a tech buyer.

They're not being talked about the influx of foreign buyers.

The traffic from china to san francisco has doubled.

China to l.a. has actually tripled.

We are seeing a lot of foreign money flow in.

The valuations driving a lot of wealth.

Walk us through a typical chinese transaction.

I have a handle on a transaction in miami.

We are living in new york and decide to buy in l.a., what happens?

There are a couple of different groups.

There are people parking money here and finding ways to rent it out.

More often than not they particularly love new homes.

Some of the communities are 80% chinese and finding a family member to live in it.

If someone is in the united states going to school and paying all cash.

Blackrock -- blackstone private equity firm has become the largest holder of real estate in the country come a right?

They went and bought thousands of properties.

Has that distorted the market?

Blackstone and those guys at up to less than five percent of the investment activity in the country right now.

They are buying 70% less than they were a year ago, and we are still talking about the market.

They're not buying at all in california.

You have a lot of investors but not the institutions out of new york.

It is the mom-and-pop.

California tends to lead.

Can we look at what is happening this time around in california and make a grand statement about real estate health?

I don't think so and all.

I think the next has been the leading indicator on the way down and the way back up.

It slowed a lot this year.

I am looking to the mix as the leading indicator this year.

California has its own quirks.

You have the briefing of the value of the home on the purchasing.

In many cases, it goes back to the late 1970's. is that holding back the market?

And hold back the economies because they are collecting less revenue because of prop 13. it requires a two thirds vote of the public, and that is never going to happen.

You get foreign investors.

You are in l.a., good or bad for you?

Has to be great, right?

It is fantastic.

The influx of chinese money is doing great things for the late economy.

If you are a real estate market to july, you are doing really well.

This will not transfer to dallas?

It is transferring to where they can flying in directly.

That is the paradigm.

Fueling fannie mae or freddie mac were the fed or great distortion on this event?

-- do you blame fannie mae or freddie mac or the fed for the great distortion of this event?

People trying to get their money out of their country into the united states.

We did a 57 page paper.

They are doing business in the u.s. and do not want to bring the prophet tom.

So they put it in real estate.

The chinese buyers coming in, or on the coast.

Blackstone buying properties for investment.

We have the one percent.

What about the average american young families?

Young family is dead . 35-39 and has a seven percent lower homeownership rate than parent or grandparent of the exact same age.

The kids born in the 70's. i think rents are going up.

Double-digit?

Silicon valley will go up double-digit.

The rest of the areas, people cannot handle it.

Lex what you are really saying is people who cannot afford to buy will rent.

They will drive up rents but in the -- in theory, rent gets higher than fighting so it becomes attractive?

Quack to find a love of migration to a portable markets.

You see a lot of people going to texas and carolinas.

Do they go north to oregon and washington state?

They are not as much.

There is a tech movement to seattle.

They are moving to arizona and texas.

Fascinating.

Please come back.

West coast of the nation.

Can the rangers win one game?

Why are you asking him?

They can't. limit of forex report -- let me do a forex report.

Markets are quiet.

The quiet it is out there.

Trying to figure out how argentina will break result.

We need volatility.

A lot of people be welded or why the yields are slow -- so low.

Leviz ann joining us in the next hour, chief strategist at charles schwab.

He will ask her, does the lack of volatility where he heard?

? .. low rate signals continued financial repression.

Hillary clinton launches her book.

And the too big to fail banks, will they face a hot summer?

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

I am tom keene.

Joining me is scarlet fu and adam johnson.

Our guest host is chief strategist at charles schwab and also josh green is with us.

We are starting with what happened overnight in the u.k.. industrial output rising the most since 2011 and china inflation accelerated at the fastest place -- fastest pace in 12 months.

Throughout the day retailers will be releasing their sales numbers for may.

A number of shareholder meetings today, best buy, tj maxx, german chancellor angela merkel is meeting with a vid cameron.

That will be in sweden.

Finally, president obama will be taking questions on student debt.

That will be on tumbler.

Kind of an interesting one.

It is a big discussion point in washington.

Art of the big inequality debate.

Let's get you to the company news headlines.

General motors have a warning for the automaker.

That is creating an urgent need to settle lawsuits.

Gm says 13 people died in accidents related to their defect.

A bet on the bank of ireland paying off.

He is selling his remaining five percent stake in the bank after nearly tripling his investment in three years.

Bank of ireland returned to profit for the first time since 2008. for the second year in a row radioshack investors have expressed unhappiness with executive pay at the struggling chain pitch shareholders rejected their compensation plan in a nonbinding referendum.

The ceo was paid almost $9 million last year.

What you see there on radioshack?

Con sales down 14%. revenues were $736 million.

22 stores will be closed in fiscal year 15. the loss is $.98 versus an estimated sense of 51. this has been a 20 year train wreck.

I look at the earnings quarterly.

We can call them losses quarterly.

One quarterback in 2012, -- one quarterback in 2012 -- one quarter back in 2012. it is a dollar 46 after yesterday.

It does and the quarter with $423 million in liquidity.

I have an idea, seven for one refers split.

It can be eight bucks per share.

That is enough on radioshack.

Let's get the markets.

We are on the dow, 17,000 watch.

Have a diversified away -- diversified their games?

She has been a committed old since two thousand nine and is the chief strategist at charles schwab.

Congratulations on a structural call of optimism on the markets.

Can you maintain investment here after going from 29 -- from 2009 where we are now?

I think so.

Gains have been made.

You have both seasonal and election cycles with potential problems this year.

We did have a bit of internal correction from january to mid february.

We may be able to get through that without taking the entire market down.

The great missed call was the assumption shared by -- shared that dividend growth would slow be an chances are the corporations still to play cash to shareholders.

If you look at the time from the mid-1990's to the mid-to thousands -- to the mid to thousands, it was about seven percent of cash been deployed by companies went to cap x. that reversed effectively since the mid-2000's. we are seeing a capital spending cycle pick up.

We have signs of a summer coming on.

Here's traffic research from the team of lives and saunders -- of liz and saunders.

-- liz ann sonders.

Would you please explain why it's not in cash?

The share would not have been a great strategy.

There are up -- there are exceptions to this.

Looking at the long-term on average he tend to get this week -- this weak period.

The good news is if you combine the seasonal and election cycles, we are in the worst state right now.

We're about to launch in the best phase.

Bama may be scarlet will bring nvidia new york rangers cycle.

As we continue to melt up and make new record highs people are looking for a catalyst.

I don't think anyone -- any of us could have potato that would happen.

One thing to keep on our radar screen is the possibility of a little bit of an inflation scare . the expectations bar is almost on the ground.

I know we were talking about rents going up.

Nonsupervisory wages are starting to pick up.

Lending growth is running at a 10% annual rate.

You are to see some philosophy.

Some of the short term signs that we may get a little bit of a scare, that resets thinking on fed policy.

If you look at the investors intelligence data.

-- data, there are a lot of bowls up up it is the 95th percentile.

That is how many bowls there are versus bears.

--many bulls there are versu ss bears.

Like sentiment is frothy enough that that is probably good for the market.

You don't talk about for one case directly.

You don't talk about individual stocks.

-- about 401(k)s directly, you don't talk about individual stocks.

What is your counsel to people who feel like they should've, could've, but they didn't. inappropriate in hindsight may have been what is a highly correlated environment.

I think diversification, i think tool rebalancing becomes increasingly important as we look forward.

Correlations are coming down.

I think you are going to see bigger divergences among asset classes and within asset classes.

I would not stay out of the u.s. equity market.

I think it is the last -- the lack of diversification and so much money, concentrated.

We want to bring in our twitter question of the day.

Does the lack of volatility in the markets worry about -- were you?

-- were you?

Volatility is measured by the vix, which is a common.

The vix is used as a training the local -- trading vehicle much more.

Here's the irony of a sentiment indicator.

It may not be the contrary an indicator because it has been so widely used.

I think other ways to judge volatility are probably more appropriate.

There are a lot of derivatives associated with that.

As a sign of complacency tied in with investors intelligence or market vein or call ratios, they do tell you we have a lot options right now.

A lot of optimism.

Let's welcome in john green from bloomberg businessweek.

Adam mentioned the president will be taking questions on student at today.

Student debt loans is a huge issue.

It is getting a lot of attention in washington.

Have you heard any creative solutions about how to deal with this?

This is as creative as it is for washington.

If you want more volatility in the market -- short of that congress has basically -- congress is basically in stasis and both parties are in the trench warfare waiting for the midterm elections to happen.

Obama has said at the beginning of this unit one of the things he's going to do is try to govern buying second of action.

This is the latest in a line of executive action.

I think goldman sachs did an analysis that this might help 5 million people per then there is a congressional component that probably does not have a good chance of passionate.

Is the same old story in washington.

We're going to continue this discussion on the stasis in washington.

Hillary clinton is promoting her new book, "hard choices." is a precampaign run?

What is it?

I think it is a precampaign run.

She wants it, she just doesn't want to admit it.

I think we know.

This will be a hard choice for her.

We would discuss that coming up on "bloomberg surveillance." ? i am tom keene.

This matters to our guest host.

She's chief investment strategist at charles schwab.

It has been a pillar of the recovery.

Wise liz ann sonders writing about the house?

He had to be keenly -- why is liz ann sonders writing about the house?

I am amazed at how many people solve problems in housing the did not connect it -- saw problems in housing and did not connected.

We are seeing the fact that housing can go through this pause.

We had four quarters in a row where it has been a negative contributor to gdp.

We don't have the tentacles and the financial system.

I still think it is -- when i wear my economist hat he have to keep an eye on housing.

Within housing and the idea of pausing, what would it take to rekindle housing?

Is wage growth still in number one factor.

I think we need more inventories.

Some price increases -- you and i have talked about the concept of real mortgage rates.

That is still mildly negative.

You can borrow from -- bro at a low rate.

Within a affordability, what is your number one message to charles schwab, shareholders, and clients right now?

What is the number one to do list?

I think we are on a secular bull market.

I think we are still in the middle innings of this thing.

When investors here secular bull market's they think it goes on forever and ever.

Five-year-old birthday parties corrupt and tears at any point cap -- parties can corrupt in tears at any point.

That doesn't mean short-term timing and trading.

Make sure you use the tools like rebalancing, moving in and out of asset classes based on depreciation.

Let your portfolio tell you when it is time to do something.

Don't worry about listening to me or any other yahoo!. coming up, we will speak to another one.

A conversation with olivia sterns.

It is bloomberg surveillance, stay with us.

It is bloomberg surveillance pay let's get right to our headlines.

Right now adam johnson has it.

We're going to start and south korea where the trial has come for 15 crew members of that ferry that sank and killed hundreds of teenagers.

The crew is in -- the crew is charged with homicide.

A separate trial will be held for the ferries operator.

Prosecutors's blame a lack of sleep for that accident that injured tracy morgan and killed another man.

The driver of the walmart truck had not slept more than 24 hours before the accident.

The truck crashed into the back of his limo bus.

And the strangeness continues, the latest chapter in the saga of donald sterling and the los angeles clippers.

He has now reversed himself.

He says he will not support the $2 billion sale of the team to or microsoft -- two former microsoft ceo steve ballmer.

He also says he will pursue a billion-dollar antitrust suit against the nba.

Those are the top headlines.

I have to go right to our man josh green of bloomberg businessweek.

I cover washington.

Usually when you see this kind of flip-flopping you are talking about it presidential candidates.

It is terrible for the sport.

Starling doesn't seem to want to go away.

He is in the process of rehabilitating his image, if that is even possible.

If he tries to extract as much as he can, is the last for a desperate man?

He has extract quite a different guy who was booted out of the leak for making racist comments.

He is probably coming out far ahead from where most people think you ought to come out ahead and he doesn't seem to have a strategist or publicist.

Of no moral compass.

It is unbelievable.

I wonder if none of this had happened and he just decided six months ago to sell the clippers, he wouldn't have gotten $2 billion.

Maybe it is wacky brilliance.

Tough to tag him with the word brilliance.

It is wacky something.

Let's talk about hillary clinton.

Is it a book tour, a precampaign to, an apology to her?

-- an apology to our -- apology tour?

Her first up was an interview with diane sawyer of abc.

Am going to decide when it feels right for me to decide.

By the end of this year?

Certainly not before then.

I will be on the way to making a decision by the end of the year.

Rocks but probably not announced by next year?

Clock syme not positive about that.

I think the way i make decisions, that is probably likely.

Hillary clinton on how she is not ready to make a decision.

I haven't made a decision yet.

It is a big decision.

Josh green of bloomberg businessweek, who has written a lot on hillary posco 2008 campaign joins us now.

Up hillary in her book, she stopped trying to finesse and nuance her iraq war vote.

This is clearly a setup for a campaign.

The book makes and no hard character.

If you juxtapose bob gates -- a lot of unsettled scores about who was good, who wasn't, what happened behind the scenes.

The clinton book and has none of this -- book has none of this stuff.

The biggest problem she had in 2008 was her vote for the iraq war.

Having covered through that campaign, she went through contortions to explain how she didn't really vote for the war and she doesn't bear responsibility for it.

Here she comes out and says it was a mistake to vote for that.

Clear is that off the table long before a campaign ever begins.

I see this as a precampaign.

Of after she ended her candidacy, you wrote about all the infighting that took place in 2008. does she go back to that same well of consultants and managers?

Clock stoutly -- hourly the answer is no.

Ofshia still in contact with a lot of these people and she needs to get a new campaign team.

I would say the group reviews -- the book reviews are skating.

What a success the president had with that little book.

Did she try to do too much?

Isn't too much of a reach to write 630 pages?

Her purpose was not to garner excellent reviews from book credits.

It was to set the stage for presidential campaigns.

And that is exactly what it has done.

We are talking about was not in the book rather than some terrible confession or some attack on somebody else that would have started a food fight.

That is what hillary clinton does not want in this stage.

There is another curious thing she disclosed yesterday.

She said she and her husband bill were broke when they left the white house.

She said they did not have a lot of money saved up after the presidency.

They had to pay for whitewater.

They had to pay for chelsea's education, for the house.

Does this not ring true?

It is narrowly true in the sense that they had to take a loan from their friend, the governor of virginia, to buy the house.

I think they made that money back within the first six weeks of bill clinton's post-presidency.

It is not true anymore and it doesn't sound right in an economy where many people are struggling.

She will have to sharpen those political instincts.

She has been off the campaign trail for six years now.

As i do with ben bernanke, they serve in public office and make no money in public office, they deserve every nicholas beating fees they get coming up.

I totally disagree with the media.

Don't cry poor.

We're going to be right back with the ceo of morgan trusts.

Looked at you some company news, starting with targeted the new interim ceo has launched a war on bureaucracy.

And in to employees, john mulligan says he moved the entire leadership team to the same floor.

That will lead to faster decisions.

We will also gets going back on governance.

At&t is settling a lawsuit over its refusal to carry out a zero's u.s. cable news network.

According to people familiar with the matter the deal will allow them to shut down at&t universe service.

At&t says the dispute was over contract terms.

A slow start for -- shares of time fell one percent.

The company poshard -- couple -- common to times and people.

That is this morning's company news.

It is the most controversial emerging-market.

When talking russia, mark is chair of templeton erlang.

-- templeton earning.

Of you know mobius, he is perennial.

He is funding opportunities in the selloff in russia pick he is particularly lish -- particularly bullish on mining stocks.

The crisis in ukraine -- i asked if the crisis in crane -- in ukraine is making him think twice.

He said not at all.

Take a listen.

It will sanction their ability to operate.

I think this fear is overdone.

He thinks the market was oversold.

We should point out that the main benchmark index in russia has bounced back significantly.

We are back at trading levels we were at in january.

There has been a big uptick.

He is still adding to his equity portfolio.

Ecd emerging markets and you go to the world cup in brazil -- you see the emerging markets and then you go to markets in brazil -- though to the world cup in brazil.

He thinks the world cup is going to be a net economic benefit for the country.

He says reform is on the way, which will ultimately lead to a more robust economy.

He particularly is bullish on the beverage sector, anything with an cymer exposure and agriculture.

This is a big consumer play for him.

Listen to this.

He has shown a great deal of control and restraint.

He has been very logical in his decision.

We were talking about various leaders.

I was asking about food and.

He was responding to my question, what leader has impressed you most this year?

He said putin has done a very good job showing restraint and knows he doesn't want to cross the line.

He thinks the situation in ukraine will be resolved over the next year.

Greatly appreciated.

Liz ann sonders with charles schwab, we are looking at emerging markets.

Is that where we were earlier, and overinvestment in the united states?

We have been at negative emerging markets until the middle of last year and then became a little bit more positive.

That of origins is -- the divergences of the emerging markets will stay.

Whether you are on the losing or winning spectrum is whether you are a deficit nation or have an inflation problem that may prevent your schedule bank -- your central bank from seizing up near the export nations are doing very well paid the commodity producing nations are doing less well.

They'll be the name of the game to the extent you have managers.

I think more of an active approach to emerging markets as opposed to passive.

Jim grant was on the air a couple of weeks ago.

He says you have to look at gas problems.

Where do you see value in emerging-market specifically?

I know you can't talk stocks.

But sectors as much as you can.

We don't even go down to the sector level.

If you are on the consumption end of commodities, we believe the commodity super cycle ended in the end of 2011. you tend to go into the long up super cycle and then flatten out for about a decade with a lot of volatility.

In general been on the consumption side of commodities is probably going to be the winner.

I think she just described china.

We like china.

Let's get you a data check.

We have an economic bit that includes wholesale inventory at 10 a.m.. also jolt's job openings are due out.

Bloomberg surveillance on bloomberg television and radio.

Our conversation with our guest -- i am tom keene.

With mia scarlet fu and liz ann sonders -- with me is scarlet fu and liz ann sonders.

They are located at the storied address of 50 south street with a focus on integrity for decades . they have managed money for the well heeled.

The dividend was not cut or eliminated in the most recent financial crisis.

Now with low yields, financial repression ever present, frederick witold joins us.

He's chief executive officer.

As you speak to people, they are dealing with financial rotation -- financial repression.

Has it changed the way we manage money?

I think it has in the sense that what our plans are looking for our solutions.

It has taken on a much much higher of scrutiny with our clients than before.

It used to be a large blue-chip kind of growth and now the search for yield is a global market we operate in.

How do you respond to traditional northern trust client who says i just need to make four percent and you as a fiduciary cannot make that happen?

It is about asset allocation and looking for growth.

We are often emerging markets so we ratchet that back.

It is looking for yield in alternatives.

Ofthat takes a different time frame.

It is finding the right combination of investments to get the return the clients needs on the risk adjustment expectations they have.

I want to get your take on financial institutions in this day and a. -- day and age.

Systemically important financial institution, what is your take on that?

I think it is a process to analyze the impact of the financial management business.

Being a large investment manager with over five -- with over $900 billion, we watch it very carefully.

I think they will go through a disciplined process.

The real focus they have coming out of the crisis is on money markets.

The money market industry has been debating for almost five years.

You are on the board of the chicago fed.

I want to share with you something claimed by an economist out of harvard -- you are with the federal reserve of the bank of chicago.

What is your take on it?

I think some inflation expectations would be good.

That would mean that the labor markets are improving and we are seeing that with the jobs numbers that are coming out.

I still worry about underemployment in the labor participation index.

I think there's a lot more work to go.

In my opinion it would not be a bad thing.

There is a comfort going into a trust company like the northern trust it is this a time to be comfortable -- like the northern trust.

Is it time to be comfortable?

I think we can take more risks.

It is not all that unique.

It is the most difficult time to be willing to take that risk that we know that inflection points is when you get -- i think it is probably appropriate.

Just the sleep that night factor for a lot of investors.

If they have that trusted company through asset allocation and diversification, it probably prevents them from making the most egregious mistakes.

Thank you for stopping by.

We are going to take a look at the markets.

It doesn't bring in that bring us to our twitter question of the day.

Tweet us.

We will be right back.

Good morning everyone.

I am tom keene.

With mia scarlet fu and adam johnson on this tuesday morning.

Futures at negative four.

Dow futures down negative six.

A potential dow day.

Inc.

Care -- anchor betty liu is with us.

We are doing a bit of navelgazing.

We are looking at our own industry.

Dave morgan is joining us.

It used to be the head of advertising strategy for aol.

He will have a lot to say about how television and the gentle are both competing for ad dollars and how they are going to converge in the next 10 years.

And then jerry kent -- now the ceo -- from or john oliver at hbo -- remember john oliver at hbo ranting against net neutrality?

He has a rant against john oliver.

That was awesome.

He said net neutrality -- he made fun of it.

It was serious.

He calls cable companies the mafia.

They are like the drug cartels.

They have their own dominant regions and he doesn't understand why the government is trying to break them up.

Captive audience.

Eddie lou, in the loop starting at 8 a.m. -- betty liu, in the loop starting at 8 a.m. a feature story not about google were robots or facebook acquisitions, it is about a machine that is helping our military.

Josh green of bloomberg businessweek, author of the peas, this is a remarkable story.

Let's go back to this quote you had.

If michael bay had devoted himself to making medical equipment this is what he would have built.

Can you explain what this device is?

It is a tank chair.

It is a hybrid between a powered wheelchair and a tank.

The story behind this is amazing.

The guy who built it has no engineering training.

He was a plumber and volunteer in high school.

He and his wife or big outdoorsman and she was paralyzed in a car accident.

He built this thing for her so she could go out camping again.

He said that he started this amazing business in 2520 -- he started this amazing business in 2005. he became the incarnation for the wally robots.

No one has tried to boss him out to -- tried to buy him out.

He says there are a lot of sponsors that want to slap their name on these chairs.

He says this is mostly about people who have been egregiously injured.

How did you find him?

Cooks tank chair.com.

How did you find him?

Isaf -- i sat next to him at a political fundraiser.

Coming up on surveillance, today's the gm annual shareholder meeting.

Our agenda is next on bloomberg surveillance on television and radio.

This is one of the great american and new york city stories.

One that the poor -- none that clip or will join us.

-- nanette lepore will join us tomorrow on the program at 6:00 a.m.. also jeffrey rosenberg would join us, their chief investment strategist at blackrock.

I am looking for to a summation of volatility.

We have a lot to talk about.

Let's get to some company news from the files of bloomberg west pinnie we start with the president of paypal.

He is leaving to join facebook.

He will be in charge of their mobile messaging service.

His job will be finding business models for facebook messenger, which does not make any revenue.

Walmart is ramping up for an e-commerce battle against amazon.

The world's largest retail -- fernando madero would try to integrate web sales with brick-and-mortar stores.

And go daddy is going public.

The company that has sold millions of internet domain names has filed for an ipo.

They have raised their profile in recent years with commercials featuring celebrities like race car driver danica patrick.

Good morning everyone.

Futures at negative four.

Last week we had the thursday cb announcement.

Friday the jobs report.

And then we slipped into a bit of quiet.

Liz ann sonders is with us, chief investment strategist at charles schwab pretty she looks out on no volatility.

Someone like jamie dimon is suggesting that is a little quiet out there.

Have the scene at this quiet?

I am not in the city every day but i hear the departure every thursday.

It is extremely quiet on friday.

I am on the capital market side of the business.

You are seeing firms get out of certain lines of business.

Traditional wall street is very very changed.

We go back to 2007. six, seven years into the market.

What is the law here?

Have we legislated our way into a baking quiet?

Are we so safe and cautious now we can't take risk?

What is the wife or why we are going to the hamptons on thursday?

I think a lot of it is muscle memory.

The difference between large bank lending and small bank lending is extraordinary.

Described that.

Large bank lending is growing but not at the pace small bank lending is.

Just looking at that spread i think shows you that large banks are a very different animal.

What you see anecdotally?

You are the social guy, partying far more than i am.

It is not so much what i hear as what i agreed -- what i read.

It really is the goto place for financial analysis.

It is a small bank where the growth is, that is main street america.

In terms of the rankings of individual stocks there is definitely more.

We have more on financial neutrals overall.

Don't think it is going to be the leadership sector in this bull market.

You cannot have a bull market if it is the most lagging of all sectors.

Josh green, senior national correspondent for bloomberg businessweek.

The doj is up to its eyeballs in dealing with the foreign banks and figuring out the sanctions against them.

Is it still favorable amongst washington politicians to hate on banks and the finance industry?

Absolutely.

One of the things you see dominating the washington conversation is the debate over inequality.

Lyrically banks seem to be on the bad side of that issue.

You don't want to talk about weakening or even changing bank regulation because then you're in the pocket of wall street.

We begun to see a lot of the interim republican primary battles and television ads in arkansas.

They are going back and forth saying you are in the pocket of wall street, no, you are in the pocket of wall street.

It goes back to what we saw with tyson yesterday.

Of 1.8 trillion dollars.

Equity and m&a, did that help you stay optimistic on equities?

I have been getting a lot of questions about whether this he'd stop -- this heated up environment is impending doom for the market to if you look at the level of deal so far, either in absolute terms or market cap, we are not at the highs of 2007 or 2000. it can mark the beginning of the end but we first broke records in 1998. we still had two more years to go in the bull market.

It is put on your radar screen.

What are you not seeing in the space of a mende?

What is missing here?

I think the smaller companies, because they tend to be more domestically focused, they are swimming to get that market share back.

I think we are in a manufacturing renaissance right now.

That is happening ground up.

There are less deals going on.

That may be an ok thing because it is becoming cheaper to build them by.

You own the knowledge of what retail is doing.

What is retail actually doing right now?

They are elected bowls -- they are reluctant bowls -- reluctant bulls.

That is why longer-term measure sentiments are ok.

Are you stunned by this?

I am absolutely floored day

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

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