Jpmorgan hired important people's children in china, the scandal of at all, it is outrageous.
Good morning, it is monday, it is august, we are going to invent -- i am tom keene, august 19, joining as always, sara eisen and scarlet fu.
Scarlet fu has vacation coming up.
The middle of the week.
We're not inventing news, there's a lot going on out there.
I am watching what is happening in the morning briefing.
Japanese exports shot of the most since one the 10th, thank you, prime investor abe and the weaker yen.
Also, moving overnight, and over the weekend, but some data on china in terms of new home prices, rising the most since henry 2011 in the nation's four major cities, record gains in cities like beijing and shanghai.
Wyatt day in the u.s., no significant economic data -- quiet day in the u.s., no significant economic data.
Some of the struggling retailers and better ones like him deeper later in the week.
China back on the bid little bit with the real estate ices, australia doing with black surprisingly strong -- surprisingly strong.
We look at equities, bonds, currencies, futures flat, 10- year yield is not flat.
Remember 180? now it is 283 and recruiter will join us in a bit.
-- and rick reader will join us in a bit.
Currencies are uncorrelated so far in the bond market area that is of great interest.
Let's look at oil.
Brent crude is up six cents since i walked in the door, that is very important.
To see above 111 would take us back to the moments of a week ago.
Moving 12 to 13 on the vix.
A little more fear in the market, but look at the 30-year yield, 3.88. gold moving up as well.
It squishy, mushy, wildly uncorrelated.
And that is what we're watching, to see if that trickles down and affects the stock market.
Time for front page where we scour the papers on the web this morning, as we always do, for the most important stories.
Oil is elevated as thomas showing is on the rising tensions between egypt and its western allies.
Egypt's military led government is reviewing strategic relationships with the u.s. and other western governments who criticized his treatment of islamists.
The death toll in the country now at about 900 since the violence began anew last week.
On sunday, dozens of muslim brotherhood supporters were killed.
The government says it was a prison make -- was a break.
24 police officers were recently killed.
Box that is reports from sinai, there's great confusion about the actual events.
I was literally the last 90 minutes we saw those reports from the associated press.
That president obama is back to work in washington, what happens next with u.s. policy toward egypt?
We will keep an eye on that one.
Another front-page story, the troubles for jpmorgan continue.
The most recent one is the new york times reporting the bank faces questions from the sec's anti-bribery unit about hiring children of chinese officials in hong kong.
The growing number of lawsuits and investigations, the big picture could result in 6.8 ou nose and is in future legal losses if you want to take a look at -- $6.8 billion in the future legal losses.
Six separate doj investigations.
People are thinking brooks jpmorgan to get in a lot more legal hagan makes -- headaches.
Really underscoring that with the cautious view.
And the china issue, it is wishy-washy.
We're not talking about interns.
Sons and daughters and granddaughters of party leaders in order to get ties, but it is a practice with seen across wall street.
It is not illegal.
And not just wall street, but across plenty of companies.
Deadline day for unions, creditors, retirees to file formal egyptians to detroit's eligibility for bankruptcy protection.
This is a legal fight over whether the largest municipal a group see in history should proceed.
Detroit has an estimated $18 billion in debt.
It goes to show you, the fact that it even qualifies for accuracy, this is going to take years.
We have two wonderful guests to get you started and smarter.
Blackrock steve investment officer joins us.
We will talk bonds with him.
We must turn to egypt.
Our guest host for the hour, bloomberg contributing editor, former senior adviser to a returning president to washington.
Stuff always happens on vacation.
What do you do when you go to martha's vineyard with the president?
You just know something is going to happen every year.
And it is a moving target right now.
We saw the sunday talk shows on the back and forth read what will be the tone and the meetings this morning in the white house?
I think you need to step back and see how any white house would handle this.
We want an answer right now read this as decision that could affect our country in the region for decades.
You have to make a decision or predecessor is going to be comfortable with.
Should we eliminate aid?
We will talk about that -- why haven't we already?
We have strategic alliances in the country.
I think a lot of the aid helps our national interest.
I think it is absolutely impossible to believe if you got rid of a that congress six months from now, year from now -- you have to live with that.
Is there polarity between republicans and democrats?
You see strange bedfellows in this.
Listen, we see more reports this morning, this is going to be a very fluid situation.
I think will come to a head in september when congress comes back.
Threshold of violence at which the u.s. government will say, we need to withhold aid or withdraw it or make a bold step to push back on the government there?
Given what you're seeing, your instinct would be, enough is enough.
On the other hand, you have to live with this decision for decades, really, in an unstable part of the world where we have to to be a player.
We're beginning to see more members of congress of both parties -- yesterday you had some saying and in some saying suspend.
If you think about the suspension, some would say, for a few months, then congress is not going to vote this aid again.
David is a supporter of the president.
At the company line right now.
The company question has to be and the debate within the white house has to be, should we have a reactive foreign-policy?
How the other proactive foreign- policy right now?
I think you can have a proactive foreign-policy, and he has in many parts of the world.
This is unusual circumstances.
When i got to the white house in 2011, we were dealing with the follow mubarak and the protest in tahrir square.
Think about the change in egypt in the past 24 months.
You have to have a sense about what is the u.s. fundamental interest year.
We see oil elevated with brent crude.
Richard reader of blackrock is with us.
I would love to be in your morning fixed income meeting worldwide with blackrock right now.
State how critical this moment is for the bond market.
Is it another day at the monday races for blackrock or is there a sense of not panic, but emergency as bond prices decline?
Every day is a sense of how much more could we decline?
Think about since may, long treasuries are down almost 15%. it is a question of where do you go, where'd he go in fixed income, how do you manage the risk in fixed-income knowing we are moving to this higher rate threshold?
How do you manage around that?
We will talk about this much more in this hour and through the morning on "bloomberg surveillance." let's get the company news on this busy monday.
Blackstone engleman sacks are in talks on an insurance deal.
Blackstone they buy jpmorgan's european insurance business.
Goldman could comply with new rules requiring banks to hold more equity to absorb potential losses on assets.
The stronger dollar hitting walmart, stronger greenback took 600 $80,000,000 deal you out of the retailer sales last quarter.
Walmart which operates around the world and reports financial results in dollars, does not use hedging strategies to protect against wings in u.s. currency.
Cigna will start requiring genetic counseling before it pays for tests for hereditary breast and ovarian cancer.
The company becomes the first insurer to require this extra step before testing.
It will apply to the most common forms of hereditary breast cancer and takes effect on september 16. that is today's company news.
What a weekend for sports.
One of the best-known rubber lorries -- rivalries, new york yankees versus the boston red sox.
Many thought boston's ryan dempster targeted a-rod, hitting him on the elbow.
It is like scarlet yelling at me before the show.
This is before his suspension of the drug use.
It was the fourth pitch.
Look, alex got the last laugh.
He got the ultimate payback when he had a homer and to set off a 4-run rally, the yankees beat the red sox.
Did they throw the ball back?
Did they throw the home run back?
There it is again, see the umpire coming out.
Joe is upset.
For those worldwide, this is august baseball.
There is baseball and there are a few rivalries.
Right now the robbery is the mlb versus a-rod.
Do you think that everyone thinks that it is a distraction with alex rodriguez over the season?
It is a bit.
All signs of a-rod have been scrubbed.
They don't show any of him in the highlight reel.
Roid rage, the cover of "the post." more legal problems for jamie dimon, this time for hiring children of powerful chinese officials.
We will dive deeper into the story on "bloomberg surveillance." ? good morning.
Later today, bloomberg television "in the loop" with eddie lou -- betty liu.
Here we are on "bloomberg surveillance." we are going to talk about jpmorgan because the legal challenges continue.
Over the weekend, the new york times reporting the anti-bribery unit is investigating the bank.
This has to do with hiring in china.
This is a civil investigation and jpmorgan reportedly hired the son of a former banking regulator, now the chairman of china, one of the biggest financial groups in china, and the daughter of attorneys railway official, by the way, has since been detained on accusations of doling out bribes to government officials.
After their hiring, jpmorgan reportedly went on to win a lot of business such as underwriting the stock offering for ever bright, underwriting the ipo for china railway, which is a construction company whose biggest client maybe the chinese government.
Did they disclose this?
What's they say they did . they said the sec asked for information about its employment of certain former employees and hong kong and business relationships with certain clients.
Legally, they disclosed it.
Is this a crime?
You're telling me other businesses are not doing this?
Know, tons of banks it in during this.
When i read this, i was thinking, what is the big deal, it happens all the time.
Hiring daughters and sons a very influential officials are state owned enterprises is a common practice.
These are prince links, what they're known as.
It is that personal connection.
It is how you get things done in china.
Another name comes up in this as well, the politician, by the way, is set to face trial this week because he had one of his offspring -- goldman sachs did this a long time ago.
This is not unique and it wasn't a problem until maybe someone decides it is a problem.
It might be a hard one to prove in court because a lot of the sons and daughters of these politicians were educated in the united states, with a good universities, reputable universities.
They had been recruited.
I have been in aging and they have these big red lacquer doors, 20 feet tall doors behind them is worthy elite live.
The practice is not illegal.
It might be unseemly, and might be unflattering, and if they can draw connections between winning certain businesses, it may not be the best headline for banks.
I'm dying to ask you, former senior adviser to the president, is this political noise trying to keep the jpmorgans on the front pages under investigation?
I don't think there is a strategy behind it.
Let's get some news.
Did you make it into this town, the new book?
I am told i am in their.
Make people read the book.
What is the regulatory strategy?
Again, it is not just overseas, people hire kids and family members and state capitals, altra washington.
-- all throughout washington.
From a management standpoint, how do you isolate dealing with these fires so you can deal with your long-term?
At least eight federal agencies, state regulator and two to four nations.
How is jamie dimon doing with that challenge?
That is the challenge, these are headaches, yet to minimize them.
Is some in washington saying, we want to keep jpmorgan's and things on the focus?
I don't think so.
At first blush, i think this is not illegal but may be unseemly.
From blackrock really doesn't want to talk about this.
You're on the investment side.
I will say this, how does a global platform like you delegate authority?
Does everything run out of one office in new york?
How do you delegate to asia?
How do you delegate to london?
To run a global platform, yet have decision-makers in each region.
We have portfolio managers in tokyo, hong kong.
They make decisions.
You can't stay up 24 hours a day.
The media image here is everything is decided by meetings.
That is not the way it works, does it?
i run a strategic income fund and we look for opportunities around the world.
You have to let people you have confidence and make their decision and look at what your aggregate risk is, but that is what makes a firm with great skill make sense.
You have to have the trust.
One more note, to break the law, comedy must act with corrupt intent -- a company must act with corrupt intent.
A lot of foreign banks are finding it difficult to hire these people.
Most of the influential kids are not going there read much more with our guests.
Coming up at the next hour, you know what i was doing this weekend, fox sports 1. is this channel really the espn keller?
? this is "bloomberg surveillance." top headlines this morning, the european union is considering suspending agent egypt in the wake of the deadly crackdown on islamist protesters.
It would affect aid and loans, which the du had planned on making to egypt for the transition to democracy following the revolution last year.
At the weekend box office, "the butler" get it, number one, taking and $25 million.
"jobs" finished a distant seventh with less than $7 million in box office sales.
Reviews are not too hot.
A rare 1967 car sold for $27.59 at auction over the weekend.
The price tag on the convertible was the most ever for any car bought at u.s. public sale.
It turns out the fashion entrepreneur from canada was said to be the winning bidder.
Those are your top news headlines.
Morning must-read, we have a doozy for you.
It is on the clintons.
Maureen dowd with her sharp tongue goes after the clintons and their money, money, money, money.
That is the title.
Just as an example, for the money machine bill and hillary and chelsea have come -- she uses that example among many others to showcase the money machine that is the clintons and how they might be pursuing noble causes, but they continue to rack up money.
She calls it sort of an incestuous relationship.
There it is, the scandal.
David plouffe is with us.
Is it business as usual or is the money more corrupt now?
I think in a case like the clintons, there are doing good work with the foundation, obviously making a lot of money doing speaking.
I sense people are not giving money to go clinton expecting something but the payoff good --. the money is out of control.
You say they're not expecting anything from bill clinton, but his wife might be the next president, ostensibly.
Her bread was buttered on the clintons of the 1990s. she has done a lot.
But my view is, most people viewed the clintons in a positive light.
Coming up, rick rieder.
. this is "bloomberg surveillance." sara eisen with tom and scarlet.
It is exciting as you are looking at the bond market.
Let's get to it quickly so you would can get to rick reader.
Equities don't move, bonds move.
Higher yields, lower prices.
The 30-year bond, 3.88. oil was elevated a little bit.
My eyes are failing me on the bloomberg screen.
110 .60. you feel the higher yields in your mortgage, your retirement account, even in your stock portfolio.
This is a surprise of the summer, interest rates at multiyear highs, and this is a seismic shift.
The world as -- the world as indicated by bonds has changed.
Richard rieder has enjoyed higher yields, retirees in florida have as well.
The financial repression eases up.
David plouffe with us as well, bloomberg contributing editor.
Let's go to the 10-year chart, and you can see the carnage.
It is simple, where we have price, not yield.
That is the price.
We have given up 6.7 years of yield, 2.8% have been lost since may.
How bad is the pain western mark it is bad.
As i go around the country and people talk about the safety in bonds?
Bonds are different.
Nobody really understands the volatility of fixed income.
You have seen it over the last few months, quickly in the past few months.
Thank bank will equities follow bonds to lower equity prices?
We have been a big believer -- people don't spend any time looking at cash flow discounted by financing, which is where i think equities should be valued.
Equities are too cheap compared to where rates are.
If you got a significant move, equities have to feel it, but as long as we stay -- i am going to pin you down there.
Where is your tipping point?
Once you got to the backside of three, 3.25, as long as you do it in a stable way, as long as rates drift up, equity should be ok.
One move that could affect whether the bond move -- bond yields move higher or lower, the president has a decision to make when it comes to the next federal reserve chairman.
We are expecting it this fall.
David plouffe -- janet yellen or larry summers?
I don't know.
It is a decision kind of like egypt, something you are making in your 10 year, but it will outlast you -- in your tenure, but it will outlast you.
I want to talk about bond flows, the critical question that we see, rick reader.
The idea of where the money is going.
You know more than anyone else out there -- where is the money going?
We have seen a lot of money in unconstrained bond funds.
People have this tremendous feeling around, they need and want to have income, so it is going from our core passes funds, moving into more unconstrained funds that can get their income in other ways as opposed to just interest rates.
Are they going to shorter, two 23-year maturities?
-- two 23 -- translate this.
There's a lot of jargon.
The bond funds are up 7, 8, 9, 10 years, are going to bond funds where you can jump through question mark people are looking at how can you get income in different ways?
What is the worst-case a merry oh-fer bond funds?
We live look like equities -- we have been saying you have got to taper down qe.
It has created this tremendous distortion in interest rates.
We think fair value in tenure closer to 3, 3 .25. but can investors expect not to move money from bond funds?
We think you will have modest returns on bond funds.
You have logged $8,000 in the last number of weeks.
Mom and pop at home are like, what is this?
What will they do?
There is no volatility in bonds.
All of a sudden you are looking at your muni bond statement, and ub, detroit, whatever, and you are down 9004 hundred $20, and you're like, call somebody.
-- you are down $904,020, and you're like, call somebody.
Again, it gets to we have distorted interest rates so far down, and we talk about we are at a 170, 180 10 year -- 180 tenure.
But is an speed something to worry about?
And that could hard -- that could harm the recovery?
Look at mortgage interest rates?
I still think they are going to move down the road to tapering.
The hard thing is you have shifted rates up so quickly, and mortgage rates.
As you go into september, you are managing for three percent -- for 3% to 3.25%. we think we have found a range where rates should be reasonably stable.
We still think we are going to a higher rate threshold.
To get to three percent -- to get your 3%, not a big move.
We have already moved 120 basis points.
What is the biggest mistake investors are making with regard to bond funds?
People don't realize if you stay in a straight passes bond fund, that has worked for 30 years, rates have been on a straight line down for the last 30 years.
Not in a jagged way.
Now all of a sudden you have to think about it differently.
Very valuable, rick reader with black rock.
David plouffe as well.
Did i get an exclusive there for larry summers?
I don't think so.
Before we go to break, we want to show you pictures of a volcano erupting in southern japan.
Yesterday afternoon, a volcano sent ash raining down on city streets.
Oh, my word.
Its 500 corruption of the year.
I'm bank and reported back in 19 -- it's 500th irruption -- eruption this year.
And reported back in 1955. wow.
Coming up, the new jobs.
Steve wozniak, a stunning interview in which he also takes a shot at steve jobs himself.
You have got to hear what he says.
"bloomberg surveillance -- next on "bloomberg surveillance." this is "bloomberg surveillance." sara eisen with tom keene and scarlet fu.
The state-controlled brokerage was banned from proprietary trading after it missed -- after it miss priced a bond sale.
The wildest chinese stock swings in four years.
President obama is meeting with fed chairman ben bernanke and other financial regulators for an up eight on the implementation of dodd frank.
Treasury secretary jack lew and others will chart the progress at the white house meeting later this afternoon.
The president cited the need to avoid another financial balto -- and other financial bubble multiple times.
Another night at the ballpark.
This homerun by alex rodriguez sparked a 9-6 comeback win.
Earlier in the game, he was hit by a pitch from boston starter ryan dempster.
Those are your top news headlines.
May i stay, as a -- may i state, as a diehard red hearts -- red sox fan, mr.
Girardi was 100% correct.
The guy should have been gone, see you.
We have a chart.
This is a really good when.
It looks at whether apple is going the way of microsoft, and it is from a: financial publications.
-- from mccullen financial publications.
Apple from 2010 until the present.
Even though it is different time periods, michael -- microsoft ', the white line, after the antitrust lawsuit.
Apple has been slumping on concern of falling behind new products.
It has been capitalizing on emerging markets with lower- priced devices.
If we were to look at the chart, may be apple is due for an uptick.
I must admit i am distressed, for over the weekend, the news there is a gold iphone come or champagne, or red?
That is innovation?
The cheap iphone, the lower- priced iphone is the next one.
You have got to be kidding me.
Did you guys see the movies this weekend?
The jobs movie came in seventh at the box office.
Terrible outcome given how much publicity there was.
It really did not get very much good reviews.
Not only did not get good reviews, but some of the founders were not happy about it, it either.
Apple cofounder steve wozniak had some uncharacteristically harsh words for the movie and for fellow founder steve jobs on bloomberg television friday.
Listen to what steve noe us next.
These kinds of things are all phony.
It was really coming from other people.
He was a good filter for it, is better.
In these time frames.
He failed with the apple 3 , with the macintosh.
People do not know from that movie how deeply the macintosh failed.
How we had to rebuild the macintosh market over three years over revenues from the apple 2. steve was doing unrealistic things to it.
That is not known.
Steve wozniak all fired up.
I lived the lesa failure.
You came out -- it came out and you said some are you kidding me?
It was $7,000 back then.
He said there were plenty of missteps, and that was not reflected in the movie at all.
You can catch that full interview with steve bosniak -- with steve wozniak at bloomberg.com.
Our twitter question of the day, the eye on washington -- the president back in office today.
What should he focus on first?
Egypt, financial regulation?
We want to hear from you.
? this is "bloomberg surveillance." scarlet fu joined by tom keene and sara eisen.
From the files of numbered west, a gold iphone?
That is what is predicted.
If apple offers a gold phone, it will break with tradition of offering it in black or white.
And both samsung and sony are ready to unveil new devices shortly.
The rollout is to bring in -- it will -- sony will bring its handset out the same day.
In the online retail estate giant zillow to pay for -- tom is a big fan.
It attracts more than one million users a month.
We will get more details tomorrow.
At his company news from the files of bloomberg west.
I just hope -- there are two enterprising people to cash in on this deal.
It is so clear and simple and useful.
That is the right word.
Just more power to them.
I pay a lot of taxes -- they pay a lot of taxes, retire, and have gold iphones.
We will talk about companies and some of the problems they are facing.
Dell, a disaster.
Those jpmorgan cheap?
It does jpmorgan cheat?
Companies -- david plouffe is with us.
He ran messaging and to medications for the white house, for the president, now a bloomberg introducing editor.
Certainly your skills could be used.
For a company like dell, no matter how it plays out public or private, this is a company that has to refresh and convince consumers that in a dying industry it is still relevant.
How do you do that?
It starts with, what is your strategy?
It is hard because we live in a financial world, politics, at every hour you are judged on long-term strategy.
Be consistent because i think you are right, is has to be over a period of months, a sense of this is a different company, they have something new to offer.
For jpmorgan, how do you isolate problems to make sure your water strategy and message is getting out?
That is a tricky thing.
They have to pay attention to the wildfires.
Jamie dimon is synonymous with it.
Should the ceo be carrying the brand here?
That is not going to change.
In some companies, it is less the company than the brand.
In this case, it really is the ceo.
He has done a pretty good job.
He has got universal name recognition.
Did he do a good job with the london whale?
My sense is that i think they put that to bed eventually, but that is the challenge.
Given something like this china thing, this is going to get a lot of attention.
You have thing after thing after thing.
If you let that dominate your internal and external thinking, you're in trouble.
Sometimes you cannot be heard.
During the summer when you had the trifecta of scandals, you are not going to be heard.
Sometimes you have to be patient and wait for that to flow out.
That is the key thing.
Do not let it dominate everything you are doing.
There is definitely the sense of pile-on for the big banks in this current environment.
Does jamie dimon need to appoint or elevate a strong second?
They have to think about that.
They also have to think about, are some things -- are there some things they can announce that might stifle this a little bit in terms of changes or policy.
I had a conversation i will guess five years ago with a senior pr guy about the pr of wall street.
We saw lloyd blankfein grow a bernanke-like beard.
Is this simply the elites, whether they are in the white house or at jpmorgan or at john deere, then need to get out and be more visible?
I think you never pay a price for being more visible.
Be more visible with your employees, more publicly.
Why is this so hard?
Because i think people are worried about getting slapped down.
So they will not run the risk of getting more negative attention.
You see too many companies afraid to engage in social media the way average americans are.
Did twitter still change the debate?
Elites are sensitive to twitter, so there is some concern about that.
But be willing more to take risk and put yourself out there.
They cannot hurt.
What risks can they take as they sort out the company?
You have to say ok, what are we going to a articulate in a more broadway?
-- in a more broad way?
You have to imagine in what world can they operate successfully.
The question is, with tablets, is there going to be a period of time where there is a hybrid device that is more interesting?
Scarlet, you mentioned it, vice president biden percolating about 2016. with all of your ex he's -- with all of your expertise, will we see a different convention and a different process in 2016, and have we moved on to something new?
Do you perceive a larger political flame work -- framework is business as usual?
The republican convention may move earlier -- you are talking about the network?
Right, the network now.
Maybe bloomberg will do one, largely fox, i think.
But largely it will be the same thing.
Now, if hillary runs, you will have a democratic run -- but it is process as usual.
I think it is.
With twitter and -- the delegates will be the same.
The campaign will be the change.
From 2008 to 2012, huge change.
I remember eight years ago, the social media people, literally had 10 tables lined up.
They are driving the bus now.
They are having a family debate.
It is a debate they need to have.
The question is, to win the presidency, the republican party has to do better with latinos, african-americans, asian voters.
I don't see any evidence they are putting anything out that has to be more appealing.
And it depends on the candidate.
Someone like chris christie will be different than someone like rand paul.
The ceo of yahoo for more than a year, all of the praise that she has gotten since then, this may be the most surprising.
Check this out.
"vote" -- "vogue:" " magazine calling her a "stylish geek." she doesn't look like a geek there.
I am trying to think if the ceo of emerson electric's -- i cannot get there.
I think it gets people talking, and tom, you are getting after her a little bit.
There is a lot of focus on the pictures.
They probably won more focus on what she said in the article.
This is a case where there is risk.
She was able to talk about her values and her company.
You have got to try stuff.
David plouffe and rick rieder.
Thank you so much.
As the bond market moves -- don't forget about the foreign exchange market also on the move.
In the next hour, the forex report.
It has been a strong week.
The euro, 1.3356. coming up in the next hour, retail and midday -- retail m&a. ? chaos in egypt, reports of mass killings by both militant and government forces.
Oil prices remain elevated this morning.
High-and retail has finally stumbled.
The party is over.
And a-rod gets hit by a pitch, galvanizing the yankees.
Scarlet fu loves it.
Fox sports loves it.
Joe girardi did not like it.
He was tossed out of the game.
Good morning, everyone.
It is "bloomberg surveillance." monday, august 19. joining me is sara eisen and they fired-up scarlet fu.
And the ceo of marvin trout associates.
Not even to describe what they are, a retail consulting firm.
singer has detailed experience working with the late mr.
The bond market is exploding right now.
One week where i bought three sets of designer fancy paint stains.
I bank -- i can see you in it.
We will kick it off with a morning briefing on that note.
Premium denim, tom keene in premium denim.
That change the subject.
Thanks to the new prime minister shinzo abe, up 12.4% from one year earlier.
The other overnight headline, china's new-home prices, rising the most since january 2011. in the nation posco four major cities.
Record gangs -- rickard gains for beijing -- record gains in beijing and shanghai.
Urban outfitters -- rag and bone or urban outfitters?
Which one do you like better?
What i would suggest is we have said minutes coming up, and then esisen, junket, jackson hole.
The governor of the bank of japan will be there.
Janet yellin will be there.
It is all about yellin versus yellin.
Arm wrestling by the bar?
That would be great.
More regulatory trouble for jpmorgan, the bank facing questions from the sec's antibribery unit.
This is according to "the new york times." the firm has not been accused of wrongdoing.
Jpmorgan also faces separate investigations.
The stronger dollar hitting walmart.
A stronger greenback took a $680 million bite out of retail sales last quarter.
Walmart reports its financial results in dollars, but does not use hedging strategies.
Bloomberg has learned that -- goldman could sell a portion of its blackstone unit.
That is today's company news.
The news overnight.
Oil elevated across egypt.
This morning in sinai, reports of over 20 government officials killed by the militants.
That is the latest news.
We need to go to the washington -- to washington, the president back in washington for marketers -- from martha's vineyard.
No clarity from the white house perspective on what happened in egypt.
It is still a pretty unclear situation there.
When you look at the challenge facing obama, it has been the same all week.
Does he or doesn't he cut off aid?
Yesterday, a little more pressure on him to cut off aid.
Senator mccain jumped in on that.
It's listen to what he had to say on the talk shows.
We have no credibility.
We know the administration called the egyptians and said if you do a c oup, we will cut off aid.
This administration did not do that after threatening to do so.
Here is the challenge for the administration.
While republican senators like mccain are pressuring him there, in egypt, the foreign minister in egypt is also saying they want to review u.s. aid.
It is not that important.
You can go ahead and cut your aid.
This aid western does not seem to be the typical one.
What is the dialogue with egyptian officials right now?
Is it through the state department, the ambassador in cairo, or is it their equity out of 1600 pennsylvania avenue doors -- or is it directly out of 1600 pennsylvania avenue?
He has had numerous phone conversations with secretary of defense chuck hagel.
Chuck hagel has had dozens of conversations in the last week and has yet to convince him to do what the u.s. thinks is the right thing, and that is have a little more openness and dialogue with the muslim brotherhood.
There are so many ties between the two militaries.
He canceled exercises last week.
And there is money that gets deposited in the federal reserve bank of new york.
We have not dispersed -- the $1.3 billion in u.s. aid, we have not dispersed some $585 billion of it.
They can draw down for maintenance on military equipment.
The president has that decision to make.
He will be meeting with the financial industry to talk about.-frank.
Talk about what else is on his plate.
-- about dodd frank.
It is optical, right?
The president bringing people in for a meeting at the white house and he will go on his roadshow in upstate new york this week to talk about the economy.
It egypt continues to bernanke can use the wildfires in idaho, the president will not have much of a chance to talk about the economy and refocus attention on that.
Hans nichols, thank you for briefing us on the president's first day back.
Crude over 111. and brent may be rising over $100 -- over $115 per barrel.
The president and ceo of marvin trout business consultancy, which barely describes a heritage of looming gales in the state of retailing.
I will be as direct as i can.
I have never seen the sell side more cautious than this back-to- school season.
I think in general the consumer is still very cautious.
There has been this two percent hike in payroll taxes, obviously a hike in oil prices.
And we will have to watch egypt.
The suez pipeline, the suez canal.
I could have some impact going forward.
I think in general it is something to watch, but -- have you ever seen retail more divided with high-end, where you focus customer tiffany's, walmart?
Have you seen a wider focus?
I think you are correct.
With the amount of globalization, these brands' higher-margin, and going into meet -- a brand like gucci, etc.
, these guys can go global and have huge volumes through globalization.
Also talking about some of the challenges facing retail, it is not just low wages and the sluggish consumer, but also the changing technology continues to be a challenge for some of these retail giants.
It is a challenge, but it is also a huge opportunity.
The biggest guide out there -- home depot -- the technology piece , getting customers through mobile devices in particular to drive -- have a master that yet?
Is it working?
Using geo messaging to give coupons to people as they are -- you can get the coupon for that new chanel bag.
Also joining us this hour is jason, who has been advising the media for decades.
Another channel also launching this week.
We are talking about al jazeera's u.s. channel.
With all this talk about egypt, what does al jazeera need to do to get past the negative connotations that some people have about it?
Al jazeera acquired true tv -- acquired trutv, and there is a mismatch here with continued audience fragmentation and specialization.
They are suggesting they intend to be more plain vanilla, and to me there is something, just a mismatch.
It does not make sense.
Equities, bonds, currencies, commodities, obscure, but important records.
The euro, dollar, $133.60. 2.86% in hydrocarbons, elevated off the weekend with two nader news announcements in egypt.
Not obscure, the record low rupee.
Coming up, jason blair will stick with us.
We will talk about fox sports one, the channel watching over the weekend.
Does it stand a chance against spn -- against espn?
? good morning, everyone.
"bloomberg surveillance." i am tom keene.
Rag and bone and acne, and the likes of rag and bone need capital to develop.
What i know is there are no blue jeans riced on the planet under $250. -- blue jeans priced on the planet under $250. ward risinger, where did overpriced blue jeans come from?
-- mortimer singer , where did overpriced blue jeans come from?
I think they wanted to price jeans at a bucks converses 5.5 bucks, and that was the beginning of it.
How did -- i think ultimately rag and bone are the contemporary brand, as they are called, whether they are jeans based, or contemporary fashion braced -- fashion based.
They are really sort of becoming a new luxury.
There are luxury brands, and certain brands came along and decided to provide the same lifestyles but for a more sharp price point.
When you say breach, what is bridge?
Is that an age category?
It is an industry category that defines maybe a bridge between the old other sportswear classification and luxury.
It is an easier media area, a little bit of an age term now.
I think it is an industry terminology.
You go through page after page after page and, why doesn't anyone smile?
It is not -- what are you watching more closely?
Particularly with the luxury , lvmh, etc., we are starting to see a slowdown in growth rates.
Just under eight percent versus 18% a year ago.
They have less organic growth.
Now they are focusing on acquisitions themselves but also acquiring brands that are not completely in the sweet.
Meaning not just luxury, but the life style aspirational brands.
You have seen a big deal recently with text specific -- tech specific groups that just bought brands from -- i have no idea what you just said.
It is european.
Coming up, we will look at the hurricane business, and i will now give you my fashion look.
This is "bloomberg surveillance," with tom keene and scarlet fu.
In top headlines this morning, the european union is considering suspending aid to egypt in the wake of the deadly crackdown on islamic protesters.
All of this, according to the financial times.
At the weekend box office, "the butler" did it.
It took the number one spot, bringing up $21 million in retail ticket sales.
A distant seventh place with less than $7 million at the box office,. and a for ari -- and a ferrari selling for $27.5 million.
Lawrence stroll is said to be the winning bidder.
Did either of you catch a game this weekend on the new fox sports 1 channel?
I was too busy watching netflix.
9 million tuned in saturday night.
It was the biggest launch ever.
It stole some of espn's market share hummable when you look at the numbers, fox sports has a long sprint to catch up.
Espn gets almost 2 million primetime viewers per night, 100 million american households subscribing.
Paying five dollars a month tep -- two years p.m.'s table channels.
When you combine that with ad revenues, guess how much you are talking about.
$9 billion a year at espn.
I watched es -- i watched nbc sports a little bit over the weekend.
Jaison blair with us, analyzing sports industry and media forever.
What do i need to know?
There is not much new from a stock perspective.
The consolidation of fox, of its cable channels around global platforms, the consolidation of nbc, of its work rights, is really to more effectively compete with espn, which has emerged as the oligopolistic.
Can you have a tryout bully?
Nbc -- espn -- fox has a long way to go.
Espn has over 27% of all fees paid from time warner, comcast, basic cable networks.
Is it just competition against "sportscenter"? the distinction here to me is if you are going to have a duopoly or a tryout the lake, you have to enter and spend a ton of money.
Do you just presume that spock forex -- spock's -- fox sports is committed to spending the money to make a duopoly occur?
In the mid-1980's there were only three networks in the united states, and sports network was a platform for primetime shows.
Espn has effectively become the price center in any auction.
They have the highest margins, they can pay the most for any piece of content.
Any competitor, it is almost like the wireless guys competing with at&t and verizon.
Espn has been around for 30 years, and about 10 years ago was drifting and they shifted strategies, narrowed their programming, focusing on their target audience.
Can spot -- ken fox sports -- most of espn's sports writer locked up through 2022. they have major league baseball, basketball, big 12 basketball.
It will take them a while before they get to scale.
They are taking speed network and converting it to fox sports 1, getting $.60 per sub per month.
I want to go back to content for a moment.
They clearly carved out a different audience and a different niche for themselves.
What is the value proposition that fox is trying to do that is different than sportscenter?
Why would the sportscenter offense -- audience even want it?
This afternoon, "the crowd goes wild" is expected to be the "sportscenter" competitor.
The way that rupert murdoch has positioned it, it will be fun and -- younger and -- versus espn, which is considered more intellectual.
Espn is intellectual?
When you see the drama last week on espn of a-rod, playing for the yankees, with the red sox, there is some price to that.
You have to pay up to play.
Ken fox and nbc sports pay up to play?
You can create megastars or superstars in sports, and it dries headlines and viewership.
How many people watch english league soccer?
I enjoy it as a curiosity.
Joe girardi was good theater.
So this was -- excuse me, the manchester united won 4- 1. what nbc universal is doing, which is different from what 21st-century fox is doing, is boosting strategy.
Rather than competing head-to- head with major sports rights, they go on to something called "american ninja warrior," it's my six-year-old loves.
Jaison blair, thank you so much.
This is not going to go away.
This is a big deal.
I am all over it.
Numbers from big retailers like walmart.
Home depot, lowe's, best buy reporting earnings.
We will discuss on "bloomberg surveillance." ? this is "bloomberg surveillance." sara eisen with tom keene and scarlet fu.
Scarlett is here with company news.
I banks that start with alibaba.
It could lose shares with hong kong as early as this year, according to "the wall street journal." the chinese internet giant valued as much as $70 billion.
Meantime, more trouble for china's ever bright securities.
The brokerage was banned from proprietary trading after mispricing bond sales.
The wildest stocks wings -- stocks swings in four years.
And cigna becomes the first insurer to require an extra step before testing.
It takes effect on september 16. that is today's company news.
The height of hurricane season starts this week.
When in 75% of all main storms hit between august 20 and the end of september.
We already know that forecasters are seeing very active year this year, primarily in the gulf of mexico, florida, and possibly another east coast impact, this as summer is still cleaning up from sandy last year.
Bloomberg special correspondent bonnie schneider got has through schneider got us through hurricanes and the last year, she has been studying the latest fema revision.
This will impact hundreds of thousands of homeowners and will require a lot of the homes on coastal plains to raise their elevation.
These homes were built before 2009. with the new construction, we are talking about raising it four feet above sea level, and that could make a bid difference in terms of the value of the property and the construction that needs to be done.
So our executive producer, who lives by the water, will need to put his home on stilts?
It depends on where he lives near the water.
Home never not previously part of a serious flood some may now be.
These matters have not been updated since the 1980's. the science and modeling behind it has really changed things.
We are seeing a series of nor'easters and other big storms pummeling coastlines.
This is the beginning of a lot more changes, going forward, about where people build their homes.
And greenwich, connecticut is a test case for all of this?
You have a lot of the older home that will need to be looked at.
What is the average price of a home in greenwich?
Hollande of the homes that are looking at what cost about $800,000. if you do these changes, another $300,000. i think there will be a sudden burst of activity within the next coming weeks.
We are coming into the peak of hurricane season.
For those who think it is calm this season, back in 1992, we had a monumental storm late in august.
Why is it getting worse and worse every year, global warming?
Some of the science and technology has improved in forecasting, so we can better tell you.
Before hurricane sandy, we got through all those letters of the alphabet.
It was interesting, because it was so late in the system.
There is this sahara test layer over the atlantic.
Right now, that layer of dust is starting to recede, so we could see some more activity.
What are the prospects for the gulf of mexico?
The water there gets more than the atlantic, but now that we're coming up into the heat of the season, anywhere up along the atlantic.
Tomorrow is the first day, august 20. the start of the season.
We are flat in equities.
Bearer gold is up about 1%, approaching $20 a share.
You look at gold, now at 1373. up for a fourth consecutive day right now.
Good morning, everyone, (bloomberg surveillance -- " bloomberg surveillance." mortimer singer is our guest.
We're looking at retail with him.
We get earnings this week from home depot, and j.c. penney, gap, just to name a few, this after macy's paints an uncertain picture about the american consumer.
Davis dresser covers retail at janney montgomery.
Is there anywhere better to be right now than home depot?
That is where the strongest fundamentals will come through.
A hard thing is that the valuations are pretty rich.
People are hiding their because they know that the numbers are good.
They told you back in the quarter that they had started off well.
You have glowing analyst reports for home depot right and of.
Is this the state of the consumer or something else?
It is definitely a share of dollars going to that area as the housing market has gone stronger.
It is also a company that is in this we spot of a nice turnaround, operating really well.
Mortimer singer, it is about merchandising as well.
What is the new new in merchandising?
If you can create an environment that is compelling, and actually help them shop, either through their mobile device, but technology is at the center of it.
David, there was a state of emergency that it was going out of business a while ago.
That has changed.
We talked about that earlier this year.
It was never nearly as bad as people thought.
The also have a competent management team.
I think they could have a bump in the quarter.
You have the television category remains tough, but progress will show.
He talks about merchandising.
At home depot come if it is all about price, isn't it?
If it were, they probably would not have had the difficult times.
It is merchandising and service.
To the example of best buy, they did get in right with the price matching, but they have not figured out how to get a profit.
Nobody has done a really good job getting a profit on-line because of the margins.
Merchandising on line still has a long way to go to figure out the real profitability.
Basically selling a full basket is not as well done online.
Best buy is taking a page out of the guys at the higher end, shop and stops.
They are in with to get their message across to the consumer that way.
Are they working, the apple shops?
We will hear more about that tomorrow when they print, but that was a big deal when it happened.
Best buy stock rocketed.
The best buy proposition, and taking in vantage of its shoe room aspect, it pays up in that sector.
Yes, the brand is able to show their marketing initiatives, interact with the retail itself, and then the customer.
I am fascinated by it.
So varied around economic data.
Which is why the strategy matters.
What will you be wearing to jackson hole?
Coming up, we talk about the cost of solar and the economics of the industry.
Good morning, everyone.
"bloomberg surveillance." sara eisen and scarlet fu are with me.
Joining me right now, betty liu.
I get the feeling that you will follow sara to wyoming.
We are all media this morning.
We had fox sports 1 over the weekend, we will have some views about that.
We will be talking about that works, the standoff between time warner cable and cbs -- still continuing -- with the former founder of usa networks, the sci-fi channel as well.
The sham the moment of truth will come when the nfl regular season kicks off.
Looking for 2 this season?
[laughter] i just started following baseball.
Homer bailey is your man.
Speaking of the media.
Did you watch any movies?
Apple better hope the new iphone does not do as poorly as this bio pic about steve jobs.
It finished in seventh place at the box office.
Critics did not care for the film, and it ends before jobs took apple into the new era.
Maybe it doesn't work in theaters, but it works later on?
Steve was jack wade-in on the movie and he did not really hide his displeasure.
My wife and i read it, and we were kind of a bored by it.
If you are going to write a script -- it was a hard job.
Secondly, i did not like certain things in the script at all.
Some, because they were so wrong from the truth.
He was on a roll right there.
And that came out before the movie was released.
Mortimer singer, our guest for the our, you were looking forward to seeing this?
Wozniak seems incredibly upset about this.
That raises questions of accuracy.
How accurate are they, really?
The twitter vigilantes' changed things dramatically.
One of his gripes was that ashton kutcher did not call him up to asking for advice.
A timely interview tomorrow.
They must website for anyone in the greater new york city area, zillow, on real estate.
Spencer rascoff, the ceo, will be here tomorrow.
Sarah eisen here with tom keene, and here with our guest, mortimer singer of marvin traub.
Zillow striking a deal for st.
It attracts more than 1 million unique users a month.
The founder, spencer rascoff, will be with us tomorrow at 6:00. and how about a gold iphone?
That is what one company is thinking.
Gold is the most popular color that users match with their cases and colors.
Samsung will it introduced a wristwatch-like device near september 4. sony could unveil their latest and said the next day.
And the wearable technology war heats up.
This summer, the white house goby installing solar panels on the roof -- will be installing solar panels on the roof.
Can they make sense financially without permanent incentive?
It has been a huge argument all decade.
One company is creating a new way to finance this.
Daniel kennedy worked for greenpeace.
When you look at this -- i love this new york times article.
When do we get from the gee whiz to a mature, profit business?
We are in the future already.
This country has hundreds of thousands of citizens living solar-powered lives.
We provide our customers services with no money down.
We are on track to be a $5 billion industry in america everyone is going solar.
The president is getting in on the game to be part of the 21st century.
The company is performing well and the market right now.
In terms of broad consumer market use, we are not seen that yet, why?
We are being transformed before we realize it.
While it may only be single- digit percentage points, as you know, exponential curves grow fast.
If you look at more mature markets like germany or australia, germany has 30 gigawatts of solar from rooftops.
That is the equivalent of half of their power capacity.
Australia has 10% of their homes with solar.
We are still around 1%, which is good for the business, and the only way is up.
This year, we are looking at a 50% per annum growth.
That is a good point.
Does it work where it is cloudy?
It works well in germany, which has less of a solar resource than the united states.
The chinese and japanese are leading the charge.
China will do three times as much smaller than the u.s. , and this is an american invention.
China has been a very big players in the industry, subsidizing its bigger players.
Now that they are slowing down a little bit, what kind of opportunity does that present to you and other smaller companies?
The two segments we have to think about, and manufacturing, the volume and production, is something that china has done very well on.
It is kind of like silicon chips.
In the five years we have been in business, the price of a watt per panel has come down more than half in the last year alone.
That is the good news.
The chinese market is now opening up to a absorb some of the supply, which is good, but we have to keep on driving down the sales cost, the cost of capital in the finance system, and there are business opportunities in the u.s. how dependent is that success on the government crutch?
The oil and gas guys have had their tax credits for hundreds of years.
If there were no tax credits, we would beat them hands down because we have no fuel cost, and there are also no byproducts.
The fact is, we are up against 800-pound gorillas that have been heavily subsidized for years.
Also, most of the rebates are going away.
California had an extensive reprogram that is gone now.
The tax credit will go through in 2013, and we will begin to be competitive.
Is elon musk a tough competitive win comes to solve our?
Solar city is a great company, but we believe sungevity has a more scalable model.
We are already in australia, the netherlands, and the united states.
This is a marathon, not a sprint.
We are talking about rewiring the world with silicon-based architecture.
The world is going to go solar, and we will be one of the household names.
We are here with our guest mortimer singer.
The uncertain state of the american consumer.
What will you be looking for?
It will be interesting to see what saks does.
Everyone says that the consumer is cautious right now, but when you look at home prices, amid ma