U.s. attorney's office reaches across the atlantic.
Jpmorgan employees in london may face charges on the london whale trade.
The first family on arthur's vineyard.
We will look at opportunities lost from business by edward snowed in.
A critical week for jcpenney.
Good morning, everyone.
This is bloomberg "surveillance." i am talking not live from bloomberg recorders in new york.
Joining me as always, she is back, sara eisen in scarlet f and scar with let fu.
I will kick off with a morning briefing.
Big news overnight out of japan.
The gdp report came out and surprised.
It was worse than forecast.
Raises questions about the planned hike failed.
Here in the u.s., a light day for economic data.
Watch out for the monthly budget statement here in the united states.
Yvonne bus -- elon musk unveiling plans for the high- speed travel system.
Twice as fast as an airplane, cheaper than a ball a plane and completely self-powered.
San francisco to l.a. in 30 minutes time.
It is going to be a complete physics lesson.
Take of the physics lesson.
Let's do it dated check.
Equities, bonds, currencies and commodities.
Few tourists - 5 earlier, non - 9. 10-year yield has done nothing.
This is really all over the place.
Nymex crude puts on a dollar.
On to the second screen.
Dollar-yen off the gdp report, front-page topic, 9627 yea.
The japanese index down by 1 percent at 13,519. we will do this in the front page.
Everyone is surprised by this report.
Japan is certainly out there.
We scoured the paper on the web for the different stories.
J.p. morgan finding itself on the front pages again.
The good this time from the london will trading loss.
The government might announce charges against former london- based employees on allegations they try to hide losses.
They named names.
The executives an executive who oversaw the trading strategy in ditch -- and a trader that work for him.
The investigation is centered on whether employees attempted to inflate the value of trades on the bank's book by ms.
At top guy and an under guy.
Where are the guys in the middle?
Or the london whale himself who is no longer cooperating?
You cannot put a guy in jail for first-degree stupidity, can you?
It depends on how much they knew.
I cannot wait to talk to michael holland who will be here, and noted investor because he watched the legal headaches pilot for j.p. morgan and the stock went higher and higher.
There could be penalties from j.p. morgan, including a fine.
Another company is j.p. -- jcpenney tension rising on the board.
-- j.c. penny tension rising on the board.
The board is now firing an executive.
You have been there a million times.
Lovely boutique in her husband is in the pilot.
Everyone on the board who is not with bill ackman is now calling him a rogue director comes zinnias gone off in his own direction.
The board met last night to discuss the latest remarks.
The report earnings next thursday.
A lot of focus.
Mark: with the retail perspective.
-- mark cohen.
The drip pan -- japanese economy slowing more than expected.
And this certainly clouds can outlook for economics and could mean they put off tackling the country's debt.
You mention the sales tax increase that will take effect next april.
They decided there were one to pass it in april.
Raises the sales tax by 3 percentage point and put japan on a fiscally credible path.
Something japan definitely needs.
The problem is, will they grow fast enough to put the tax hike into place?
This is complex math.
Go to bloomberg.com to learn about this.
There is the inflation in japan.
It is below zero.
It has been there for decades.
But it is getting better.
The vectors is in the right direction to stop deflationary.
It is a shell game to get to april.
2% growth that japan has been experiencing, that is something they seem to be jealous of.
Giving the japanese economy a boost faster than predicted.
It is mass monday.
-- math monday.
Japan's math is totally different.
Here is nominal.
Deflation goes the other way, so you go up to the real big gdp number.
And physics all in one page.
And there is our front page.
We have to talk our guest host now.
Michael holland, chairman and founder of holland and company.
He has been in the markets and enjoyed the move up.
Still fully invested?
I think the best may be yet to come.
Take out what is going to drive the best is yet to come?
The continuing negative psychology.
Just coming in you have futures down.
You look at the numbers coming out of china, it ain't so bad.
How can there be so much negativity?
Record high with 14-15 times earnings and a 1% world where all this was not a disaster as it has been for the past several years.
People keep waiting for the disaster.
The disaster was maybe the president's press conference on friday.
Former white house security advisor, currently bloomberg contributor.
We could go for an hour.
What did we hear friday from the president that was not in the media reports.
He is now worried about maintaining political and popular support for his surveillance program.
He achieved legal support.
But it was in a cocoon.
It wasn't of all of secret clearances.
The rest of the public finds out and now the politics have been changed.
He is trying to figure out how you maintain a top-secret surveillance program that is operationally secret but has a degree of policy.
Transparency and spying?
To go there is a difference between operational secrecy and policy/legal transparency.
The argument is the details of the program need to be kept secret but maybe we can be a little more transparent about the rules of the game.
Are we getting too much transparency on the terrorist threats?
All of this transparency is not necessarily helping security matters, is it?
Don't eventually the details come out.
It has dribbled out it was a human-focused plot and has allowed us to relax with the closures elsewhere in the world.
The terrorist threat is over.
You can get a tax anytime, anyplace with any weapon.
We will touch on this later on in the hour.
Going to company news.
Rockwell collins buying an aviation company.
It will pay $1.4 billion.
They manage ground work informational networks.
Charges may be filed this week in the jpmorgan london whale trading losses.
It is also reported they may face penalties.
It looks like apple and samsung will step up the never-ending battle.
Apple expected to unveil the latest iphone on september 10. they may trick to take away the bus by launching the new galaxy smartphone several weeks before.
That is today's company news.
The cheaper iphone or the fancy?
Do we know?
Some talk about how it could be the lower-price iphone.
I have heard reports it is called the iphone 5c. c is for cheap.
We certainly do not know what it is going to be.
What do you want to see in the new iphone?
I want better functionality.
I always look over a people with samsung and looks much cooler.
$700 a share price.
To go biometrics security.
The middle button.
Which one has better security functionality?
This has not come out yet.
We will see.
Take a shameless plug.
When we log in worldwide we put our finger on the thing.
Your fingers are too big.
We missed you so much.
I told you i would bring you gold dragon coins.
It was very bloody and be heading.
Seriously, we of michael holland here.
You are a shareholder.
How important are the big blockbuster release is for the stock?
I think the most important thing right now is the valuation.
We talked about the valuation of the markets being very attractive.
I think the valuation of apple is a great microcosm of this.
The yield on the stock is more than the yield on its bonds.
Blockbuster things going on.
1.7 on the bonds.
And michael holland with us for the hour.
We have to talk about j.c. penney.
The board firing back against mr.
Bloomberg "surveillance." ? coming up later on bloomberg television, after a long mustelon musk reveals his plan for the hyper loop, he will be on bloomberg.
Many people call him the disrupt air.
9:00 eastern time and pacific tonight.
Here as always with tom keene and scarlet fu.
Retail is the same.
Certainly a big week ahead.
Retail sales numbers for july at tomorrow.
Richard perry at perry capital has joined in on this battle.
The second aspect shareholder with a 7.3% stake.
They want to oust the ceo who is actually an interim ceo.
He was brought to replace ron johnson after his disastrous tenure.
They want to oust the chairman.
The board not taken kindly to the big risk that is being made public now.
They called him a distraction and disruptive.
The timing is terrible.
Back-to-school shopping season.
I see them trying to advertise.
This is a huge play for them.
He has put in place a turnaround plan from the ron johnson debacle.
The question is, is it working?
Analysts say they do not believe they will get a clean it read of that when earnings come out next tuesday.
What he has done is stop the bleeding for now.
He has resuscitated the whole department.
Restocked the department.
Brought back coupons.
Trying to bring back the old customer that ron johnson chased away.
The market is peaking.
The chart is down.
Take a there are questions.
They are burning cash.
Take a 1.5 billion in cash as of the end of july.
They have enough financing to last to the end of last year but if sales keep falling, the survival is in question.
Have you ever seen anything like this?
Not quite like this.
This is unique.
Richard perry is a great guy.
And to go he owns barneys.
Takeover mark cohenm from columbia business school, he says he cannot get it done.
He looks -- who is jcpenney competing against?
To go it raises the question, how long will he be there?
They named him as interim ceo.
He was brought in to stop the bleeding.
Now bill ackerman says we need to replace him.
Perry is pushing for the foot locker ceo and other names that have been mentioned.
Bon ton ceo.
This is definitely a big question mark.
The board said it will name a permanent ceo by the end of the year.
Ackman wants him gone by mid- september.
Do you like walmart?
-- retial/ >ail?
Walmart comes out wednesday.
I think walmart on thursday will be an interesting indication of back to school.
I think it will be ok.
To go walmart thursday, kohl's thurday, macy's thursday.
Coming up, we'll talk a lot more about security.
Edward snowden has cost american businesses billions.
We will explain as the president tries to readdress security in the gauge the national discussion.
Richard falkenrath joins us on bloomberg "surveillance." ? this is bloomberg "surveillance." i'm sara eisen.
Time for the morning must read.
I really missed this.
Paul krugman every day.
The governor went to push back.
And take of this is a good one.
And sham oris about an article who revisits women who have opted out of the full-time work force to raise kids.
Where are they now?
Opt out generation once back in.
Many of the women were troubled by the traditional rigid gender roles that crept into the marriage once they quit work.
Twitter was all over this.
Take a huge ramification for everyone.
A big debate.
The typical fee of reentry the workforce after taking time off, especially with the economy much more difficult than a year before.
You have been doing this through different manifestations, including a liquor cabinet opening up at 11:00. is it going to change?
Are we going to get to a europe with flexible hours and flexibility between business and family?
It is a movement that will not stop.
Women are in a position now where they are not going to except the old ways.
The young women i speak to, the reason this had a big play over the weekend because it's such a sensitive issue we're not live back to the old days.
Take out of the same time, people find it difficult to find any semblance of an old job it once had.
That is the old economy.
That is the key.
The college graduate unemployment rate is 3.8%. pretty interesting.
I think this will heal itself.
Is government leading the way or is government behind the debate?
What is government doing?
We are not sweden where we're trying to create a child care structure that incentivizes this and makes it possible.
The federal government stays out of this.
There is no new initiative on anything.
The difference between this and article its technology is really plugged in.
Take up technology has made a big difference.
People are working from home.
A couple of people interviewed said there were looking for part-time work and technology allows them to do that.
If you do not have the salary and do not have the life structured to enable this -- what is the difference if a guy took 10 years off?
If they did, there would have trouble getting back into the workforce.
There is a gap in the rest of it.
It is a problem.
We're talking about the social economics of the nation.
I will introduce my morning must read, joseph stieglitz say what happened in detroit is a problem of inequality.
Suburbs like the median household income is more than $125,000. something to think about as you think about the bankruptcy proceeding still going on.
There is the pick-up between detroit and oakland county.
Coming up, talking about american security problems and the companies involved.
? this is bloomberg "surveillance." in top headlines this morning, a potential stumbling block in the peace talks between israel and palestinians.
They have announced plans to build almost all hundred homes in the west bank and east jerusalem.
The captured both regions during the 1967 war.
In china, the mother of a british businessman whose murder led to the executive speaking out.
Telling the wall street journal that no financial provision for the future.
Big weekend for golf.
Jason duffner won the pga.
Jim furic finished second.
Names like tiger for way back.
Those are your top news headlines.
There is not really a dominant player these days.
And the 19th player to win in the last 21 majors.
Take you never know who was ground to win.
It has been five years.
I am guessing you did not watch golf this weekend.
I watched the yankees-tigers.
The reds are phenomenal and other big talking point besides sports is our nation's security.
President obama calling for changes to the patriot back amid the controversy over the national security agency.
President obama can take executive action to bring greater transparency if congress does not make the changes he wants.
He is setting up a debate for the fall.
You wonder who will be on the other side of it.
The collection of data was approved by secret court under the patriot act.
The president and members of congress were briefed on it.
Is that enough?
Joining us is richard fal kenrath.
John mccain is the guy in the other side of the debate to me.
Take of this is really interesting where he comes out on this.
He has not been as spoken -- the outspoken on this.
Before the edwards noted debate, congress had signed off on this.
-- edward snowden debate, congress had signed off on this.
The consensus is breaking down.
I go back to the fact that every washington discussion i see whether it was the -- it is with al hunt or peter cook, the liberals and republicans, once they are briefed, all singing from the same hymnal.
That is right.
As the public learns about this, there is a sense that you cannot run a program of the scale of magnitude and complete -- in a situation of transparency among many people.
Fed listening to him address this issue from the news conference friday.
I believe there are steps we can take to get american people additional confidence that there are safeguards against abuse.
For instance, we can take steps to put in place greater oversight, transparency, and constraints on the use of the authority.
I look forward to working with congress to meet the objectives.
My question is what ever changes the president is talking about, can he get away without compromising the integrity of the actual programs to do what they need to do?
To go a very hard questions.
People will always say the answer is no, that if you do anything you look disrupt a serious program.
The question for him is to balance it, the need for transparency.
Some of this is applications of law.
In the old days, a telephone record was not that powerful.
Tom calls scarlet at 7:30 in the morning for 2 minutes.
What you just said is the content, that has always been protected speech.
The fact that you made a phone call is called omitted data.
In the pre-internet age it was not that valuable.
Today it is very powerful.
How long the conversation lasted.
What was your e-mail address?
What was on the subject line?
Then you are able to take all of that and correlate it can generate in sites that in the old days were impossible.
Big data and the internet age has changed what it means to be met a data -- meta data.
You also say the industry feels the effects.
The cloud computing industry not getting out easy from this peer yet to come/ s. this is one of the most dynamic sectors of the economy.
They are really good.
U.s. firms dominate the world industry in this.
The revelations have not just told the american people, but has told foreign governments and foreign consumers what they are doing.
There is a prediction, and evidence of this are ready, this will go to national champions.
I like that idea.
Within this, the president's comments friday, reacting to snowden or a new debate?
He would have very happily just kept going on with the programs that he approved.
He is continuing to say that.
These are among the most damaging leaks of national security leaks in u.s. history.
Takeover he said cloud computing are the big losers here.
Who are the winners?
National crisis and michael calling tried to make money off of it.
Who in germany -- right now they have u.s.-chartered companies.
The reason they cannot have their own national.
The same in france.
Who knows what it will be.
China coming up the technical reasons why you did not have confidence in the protection of that data.
An exclusive on china.
Think you so much.
Contributor on an amazing press conference.
To go coming up, a lot to talk about come including j.p. morgan bankers being charged this week for the london whale trading loss.
How the bank could be hurt or not.
Bubbling down on jpmorgan.
-- doubling down.
Bloomberg "surveillance." captioned by the national captioning institute --www.ncicap.org-- ? this is bloomberg "surveillance." i am sarah eisen here with tom keene in scarlet fu.
A judge in california has blocked transit workers for striking for 60 days.
The transit system has not been able to agree on a new contract with the union.
But the matter has asked for the strike began, saying it would endanger public health and safety.
An offering survivors of last month's crash $10,000 each.
The airline may pay more one state complete the probe and do not give up the right to sue.
Three people were killed when they should just hit a sea wall while trying to land.
The world's biggest airlines have ruled out moving from london heathrow airport to another british airport.
This raises the chance a third runway could be billed as europe's busiest airport.
Already had airport commission considering what to do at heathrow.
Sir howard davies running that committee.
The crush the idea of the new airport in the river.
You have to wonder what that means.
British airways just a note.
Time for a single bus chart.
We threw this out the window friday.
I caught this and brought it back.
A potential moments of and collection for the u.s. banking industry.
What you have is the white line showing that net interest margin for u.s. funds, basically the profit margins.
And the yellow line is the yield curve.
The spread of the by-year notes and three-month notes.
Goes all the way back to 1984. there is a divergence in 2013 since the fed started talking of the tapering of the program.
Banks may be left with a simple option to boost earnings and to make loans.
Actually make loans or cut expenses or both.
I think what scarlett just pointed out is the opportunity over the next few years to banks to move in to back what -- beckon to what they have traditionally done.
I think that is what we hear from management.
To go with this come from the consumer side or enterprise side?
Did not worry about higher interest rates driving at mortgage rates and other harmful effects?
There are negative effects and positive.
Overall heavily weighted towards positive.
Especially with interested in the historic lows.
Take a week david kotak essential their record cash.
Not so much because of being negative on equities, but the set a policy uncertainties that are out there now.
Are you affected by taper in that discussion?
To g sure, and david is marked in the markets.
They have been affected by the bonds.
I think overall we have had this wonderful run, we are up 160% since the market lows.
18% year to date.
I think they're all reasons to expect a pullback.
What is going on in washington, everyone knows that.
I think once again we are in the midst of a bull market, the likes of which i have never seen as hated or unloved.
I do not think a single person this we can talk about the stock market.
To go no participation.
We have seen markets were 20 and 25 and 30 times earnings are not crazy numbers.
These are p/e multiples.
Jeff bezos is near 150 multiple.
At nine times earnings, and jpmorgan -- the yield will be serving medicines to michael holland.
We will get more insight a little bit later.
How about a first look?
The photographs making news today.
Look at this.
One of the largest refineries in venezuela erupting into flames.
This happened yesterday evening after it was struck by lightning.
Luckily no one was injured and the plant is back to producing 200 barrels per day.
We will move on because of another oil accident in the philippines.
Diesel oil pouring into the bay.
Spreading across 12 miles of the coast line.
15 percent of the bay is covered.
The busiest body of water in the country.
To go the fishermen are trying to clean it up.
This will have a huge impact.
Take the many people dependent on this.
Here we go to germany.
In the 60th annual bavarian finger wrestling.
This must be a cultural sport.
Maybe we should settle the meeting with thing they're wrestling.
They are matched in age and wet -- and wait.
They pull up a small rubber band.
The good they also drink some beer spear yeers.
-- they also drink some beers.
I need a beer right now.
Forget the german elections.
Which banks should you be buying?
Should you be looking at j.p. morgan?
Eight federal agencies are looking at the bank, inquiring about the practices.
Still, michael holland is binding.
Jpmorgan next on bloomberg "surveillance." ? this is bloomberg "surveillance." in today's company news, shares of nintendo rising 36% since january when a chinese newspaper said the company appearing to end a 13-year ban on game consoles.
Even if it is with it, nintendo could have another problem.
Chinese gamers have gotten used to mobile devices and consuls could be a tough sell.
Matt damons new movie came out short of the box office.
It brought in more than $30 million over the weekend, less than estimates.
Dan loeb has been pushing sunday as a partial sale to boost overall performance.
The next new attraction at disney theme parks may involve star wars.
They hinted as much during the convention of california.
It was an area of the convention highlighting area attractions.
Perhaps we can all look forward to that.
That is today's company news.
That is from 40 years ago.
I think when i was like a kid.
40 years ago was like humphrey bogart.
That is sick.
We have to talk about jpmorgan.
Back in the spotlight under renewed scrutiny of from the government.
Authorities are planning to arrest former employees on fraud charges related to the role in the trading loss of the london whale.
Our guest is not worried one bit.
Why are you unfazed by headline after headline and legal headache after legal headache for jpmorgan.
It is not that i am not worried, i am not surprised.
I believe jamie dimon over the past 18-24 months has acknowledge this is a wave of stuff coming out of washington and other capitals that will continue.
It is part of where we are after every financial debacle.
This is not a surprise.
You mentioned the agent.
Eight federal agencies looking into jpmorgan.
There will be more.
If they have bad stuff that they did and could hurt the enterprise, i would be concerned.
I believe there run a good business.
The stock trading at one time over book value.
The look at wells fargo.
You do not have to talk about history.
Wells fargo and bank of america has a huge metric valuation.
Bank of america has done a good job recently but not nearly as good a franchise.
They are far more expensive.
Wells fargo and large part because of warren buffett.
These make no sense to me.
Reputation of risk.
I think in the financial crisis it was the best performer, the best job getting through it.
They had a horrible environment.
I would say we missed the scope and scared.
Colgate-palmolive has 16% in operating volume.
J.p. morgan is six times bigger than colgate-palmolive.
We do not get how bad -- how big apple is.
The bigness we still miss.
Because of the dominance, they should get some kind of reward in the marketplace.
They have a discount because of the negative things that are out there.
Both companies are less than nine times earnings and both are yielding nearly 3%. the dividends will grow much faster than inflation.
Do you look at them like intel work over 10 years they've retire a third of the stock?
I own all three.
Do you worry about a succession plan for jamie dimon?
No, he is too smart.
Make sure he has continuity.
You say investors are not necessarily rewarding for them right now.
At one point the supermarket model was a big drop.
Now they're being punished for it.
When does it become a premium?
An issue for investors to get excited.
They will get excited when it is much higher in price.
I think the underlying business is already there.
To go it is august.
You and i know wednesday after labor day.
Everyone comes back from the summer.
What is the labor day resolution come investing revolution for the first wednesday of september?
They go to stay fully invested.
-- to stay fully invested.
To of the housing, stock market, both supported by ben bernanke and his successor, which i understand is mr.
Yellen, he actually said that.
Thank you so much.
Richard falkenrath you have worked in washington.
It will be a crowded calendar and less than 10 legislative days.
It sure is.
August is when things happen.
My world and there always seems to be some sort of security crisis or natural disaster.
I always get nervous in august.
You remember how to do it?
Take up the japanese yen is front and center after the japanese gdp report came in 2.6% growth, not bad for the economy.
Japanese yen at weakening below the 97 mark to the u.s. dollar.
I am watching the ozzie -- aussie down .55%. j.c. penney in the spotlight.
We will talk to a former executive next.
? this is bloomberg "surveillance." high-end and low-end retail boom.
The great little lost in america.
We look at the changes in american consumption.
It is retail week.
When will the kids get a paycheck?
As the president vacations, we go to basses to sits.
Least aware of reports -- and we solelisa laier reports.
With me as always, sara eisen in scarlet fu.
Guest host this hour howard did vi tistz.
Great discussion to look at the state of things.
Especially a big week for retail sales.
Are you back?
Yes, i am back.
I enjoyed my time at came up around camp.
I am trying to get the parade of my hair.
On monday morning, a big number out of japan.
The gdp report surprising.
This was worse than economists were looking for.
Also, raised questions about the planned sales hike in japan.
Eighth here in the u.s., a light day for economic data.
We will get the monthly budget sales.
Retail sales out tomorrow.
Pay attention to mr.
Pilelon musk unveiling the high-speed travel system.
It is supposed to be twice as fast as an airplane, cheaper than a bullet train and completely self-powered.
To go at the row, a dynamic free lunch.
Are you kidding me?
You go really fast.
My basic thing is there a depression of near vacuum in air.
We will look for that.
And there is the physics lesson.
And that helps.
They just said in my year, no physics.
There is the morning briefing.
We have mergers and acquisitions to tell you about.
Rockwell collins buying an aviation company.
Cable plate -- pay $1.4 billion.
They manage ground-based navigational networks and they have owned the company since 2007. charges could be filed in the jpmorgan trading losses.
U.s. prosecutors could charge former london-based traders tried to conceal more than 6.4 billion in losses it looks like apple and samsung will step up the never-ending battle next month.
Heiss samsung make launched a new galaxy smartphone the week before.
That is today's company news.
Take of that really is the twitter question of the day, what the you want to see from the new apple iphone?
Set to launch september 10 according to the reports led by all things digital.
You want to see a new camera?
I want a new plug.
It is a $30 adapter.
It is a real pain because you cannot use other people's chargers.
Leading a romantic life with the president on martha's vineyard.
We go harvard side.
Having the presidential vacation.
What is the first day of the agenda?
What do you do?
The second full day of the president's vacation.
I have already been to the black dog.
The president spent the first day golfing and going to dinner.
We of been told not to expect the news but expect the things they have done every year, which is to go to the bookstore, got ice cream -- all of the normal, american beach vacation activities, it just was secret service protection.
To go the daughters are a perfect age.
-- the daughters are up perfect age.
They are making their way here.
They did not come with the president.
He came from florida.
And i believe they are on speaking terms, as far as i know.
While the president vacations, what can you look forward to in terms of fights in congress?
He set up pretty important issues friday.
What has been the weekend reaction?
It has been somewhat muted from republicans.
A lot of the focus has been on what is going on for congressional republicans.
They are dealing with their own internal battles in terms of primaries during the august recess.
That is one reason why you always expect the unexpected during presidential vacations.
In a number of things going on.
The embassy closings and the talk of edward snowden.
Then as you mentioned, congress comes back and has to deal with a number of budget battles, raising the debt ceiling and extending government spending.
A number of things that could get quite heated while he is here.
And this could mess up his time at the beach for sure.
I know the president just got on his vacation, but what is number one on his to do list?
Tacoma number one will be the g- 20. -- actually, i should take that back, number one will probably be trouble.
He will make a number of trips in the final two weeks of august across the country to promote the economic agenda, the jobs agenda.
We have seen him do that in the weeks leading up to the vacation.
Expecting a couple more stops to set up the budget battle.
Time to get the argument out there about ending across-the- board budget cuts.
At some timber 4 and 5, he has the g-20. -- se ptember 54 and 5, he has the do-20 meeting.
People want to see what will happen there.
The key for pointing that one out, the president has to go to g-20, russia, where he just cancel the meeting.
He must be a very good golf player.
He is always playing golf.
Guest host this hour with decades of experience.
Mark cohen, really interesting set up with the leadership of retail and how work with the kids of consulting.
I will make a statement, you have never seen anything like we have with j.c. penney.
The craziest management i have ever seen.
The management right now did not do anything.
I meant what happened before with all of the customers and decided the record to get new customers and destroyed the new customers.
When you look a retail today, why are we seeing eddie lambert and ron johnson and all of this?
Where are the retailers, other than the specialists who seem to not be very skilled.
A week business brings stock prices down.
They see the opportunity to improve the value of the enterprise.
This is something that has happened before.
At the end of the day come at the retail business has to be run by people who understand the retail business, and none of these folks do.
What is that they did not understand about the customer right now?
I do not think they have an ability to relate to the underlying fundamental relationship between a store and what it has to sell and the company.
The transaction, the emotional transaction, there is an emotional transaction different than when you go to saks fifth avenue.
No question about it.
Retailers spend their life getting a customer, nurturing the customer.
You did not throw them out, and that is what ron johnson did.
By the way, when bill ackerman was a good company target if he acted up.
They threw him out on his posterior.
That is what happens when you go to a good company.
Howard davidowitz and mark cohen.
Just getting started.
Here is a number on the discussion.
25. this is the discussion of jcpen pennyey stock owned by bill ackman and richard perry.
Should management take the threat seriously?
We will have a discussion about this coming up on bloomberg "surveillance." ? good morning, everyone.
Bloomberg "surveillance." i'm tom keene.
Neiman marcus is not.
Their whole other price category.
Mark cohen is with us.
He is in search of this.
The whole retail business seems in a jumble.
Take a first of all, we of come through a recession that has not really ended.
Businesses are struggling to get back to consistent performance.
We have different people looking at neiman-marcus.
The soap opera j.c. penney.
Do private equity people know what they are doing?
I would have to say no.
The people we talked about today just did not seem to have any connection with the business itself.
You were at sears when eddie leopard came in?
I had just left.
It is private equity guys jumping into a sport they do not know about.
I do not know that they have any interest in the sport.
They have interest in seeing tremendous returns on their investments.
If the business can perform conventionally, but if the need to distort the behavior of the business to see their returns, that is fine as well.
When you teach retail leadership, what you teach?
To go a talk about the fact that the person at the front of the parade has to be able to motivate and guide in enormous numbers of people following in his or her lead.
If the customer sees the benefit of their activity and appreciate what they see in the store, they come back.
If they do not, they shop somewhere else.
Amazon is a big store.
What does jeff bezos get right?
He has had a tremendous sense of individual customer experience.
He just does not disappoint customers.
The secret of the ongoing and i think future success is linked just to that fact.
I do not know where his vision is.
I am not a fan of the job he did the first round of the company.
I think he is an extremely difficult position at the moment.
Probably the things you're doing are the only thing that could be done.
We will come back with mark cohen onad howard davidowit and howard davidowitz on retail.
? this is bloomberg "surveillance." i'm sara eisen.
Guest host for the hour is howard davidowitz on retail.
A potential stumbling block in the peace talks between israel and palestinians.
Israel announced plans to build almost 100 homes in the west bank and east jerusalem.
They were captured during the 1967 war.
In china, the mother of the murdered business -- british man whose murder led to the executive be shunned out is speaking out.
He would saying they have no financial provision for the future.
In golf, jason dufner won his first major oil -- a major championship.
Jim uric finished second.
Those are your top news headlines.
He is from ohio.
Where did tiger and up?
Not too hot.
He has not been doing well in the majors, but still number one.
This is all i know.
I thought the yankees-tigers' game was more interesting.
Alex rodriguez with the first time around here yet to get the new york post called it a miracle.
He had to change the conversation.
The other sport we're all watching coming getting he did between j.c. penney and bill ackman, pushing forward with the man's on jcpen.c. penney.
Basically open warfare on the board.
On one side you have builill ackman, the director and biggest shareholder.
He is candid now like, rick perry.
-- richard perry.
They are demanding the ousting of the chairman.
They want a permanent ceo named by mid-december.
Getting them back on track before the crucial end of the year holiday season when retailers make the bulk of the money.
This is the big question mark.
There is a lot of high, single-digit owners.
Mark cohen teaches leadership at columbia business school.
Formerly ceo of sears canada.
Howard davidowitz has follow this story for decades.
Looking at the broader story of the struggle for the middle market.
The middle market is not happening in retail, is it?
The go a very hard place to be.
The king is in the middle market getting killed.
Going to close a lot of stores.
They will have to obviously close a ton of stores.
That is what is going on now.
They will have to close a ton of stores.
When they say they will get a fix for the holiday season, that is nuts because this is already done.
Take it you find this challenging?
To go there is no fix.
They may stabilize their loss of sales from -25 last year to something like -10 this year, but certainly no solution.
That certainly does not speak for any kind of future.
There have been a number of fixes.
Reintroduced private labels.
None of that is enough to get them past the first quarter of next year?
They dropped $4.2 billion last year.
Just getting them to some sort of a position of even business will be heroic.
Getting the $4 billion back is something that will not come from the efforts we're hearing about.
Do you side with bill axman / / / /c kman or is he making it worse by making the demands public?
I do believe they need a permanent ceo.
He clearly is not the right choice to be ceo, because if you look at his prior performance, it was terrible.
Where is the market?
You have walmart and the low- cost people you've been out front on.
The high-end doing pretty well in other big cities.
Nothing in the middle.
If you look it jcpenney is .c. penney, this was never a great company.
Productivity was always near the bottom, but if you look of the business, they were making $3 per share.
They had a loyal middle-range female customers.
This was a viable, stable business.
It was instantly destroyed.
That is not good.
You have to do something to stabilize the business.
If you look at the loan agreement, i have done about 64 restructurings.
I would not have signed up for the loan.
They have the liquidating value.
You have 30 cents on the dollar.
This looked like a crazy loan to me.
By the way, they do not have enough cash flow to get through.
This is a major problem, my friend.
Howard brings up the cash issue.
The uc bankruptcy in the horizon?
D--- do you see bankruptcy on the horizon?
There is no way they get through 2014 unless business picks up.
We will come back on retail america.
Coming up, our market to singles.
Americans are unmarried, shopping alone, and living alone.
A whole new world of advertising opportunity.
? is is bloomberg "surveillance." i'm sara eisen.
-- this is bloomberg "surveillance." data, check, not much on teh move.
-- the move.
- 9 on the futures not too long ago.
A weaker euro.
I believe we had a 34 print.
We give it back a little bit.
West texas intermediate on a 6.07. hydrocarbons elevated.
-- 106.0 7. now we're back on currencies.
We are watching the japanese yen and advertising world.
What has been notable lately?
Rebeld bull making a name for itself with a new advertising way.
So effective that, has started drinking it.
We will tweet that out.
Doesn't make you want t odo it o do it./ that is one of the ways they're doing it, going in a different direction.
Targeting 18-35-year-old men.
The big thing are the extremes funds.
24 mile high jump they funded.
A record audience of 8 million people to watch that.
The question is, who are they targeting?
18-35-year-old men appeared in . they have sponsored formula one for three straight years.
They own four soccer teams and own an aerobatics team.
We have the right man on the set.
He knows marketing.
He advised companies like blackberry and p&g. we will talk to you in a moment about marketing to singles.
What are they doing right?
Most advertisers think about paid media but they haven't focused too -- been smart to put this on owned media.
We think about paid media come a very straightforward to buy advertising time.
Own the media will be the old media assets.
Something like my old website.
My facebook channel.
Those are owned media assets that i have.
Earned media will be what consumers are talking about, the things that i put out there.
This earned media, how long can we keep this going before it comes old and tired?
Of this is the beauty of where we are today with marketing technology, it is always on.
If you need to be engaged, you constantly have to of new content out there.
As to keep producing more content, you will have to learn media.
Why did they target is two men and not women?
The good they do.
They are focused on the lifestyle.
This may be the predominant group fighting a lot of their products, but we think about extreme sports, you have women as well as men and very focused on the lifestyle.
2012 revenue, $6.7 billion.
The amount they spend on marketing was down by a third appear yet it goes back to the idea that on the media is deleveraging what they do have.
This is a guy in thailand and austria?
Don't -- they actually have their own media company based in new york and produce a lot of their own content.
Their focus on targeting the millennia generation.
Take a very sweet.
-- very sweet.
Carl icahn once again asking a delaware judge to fast-track the lawsuit against dell.
Tried to stop michael dell from taking the pc maker private.
And the ceo of the most cash- rich semiconductor company says they're holding on to reserves.
Paul jacob says the company needs the cash hoard to maintain dominance in the phone should market.
They have more than $30 billion in the bank.
No longer fighting with ticket scalpers.
Instead, they are joining them.
For this month's black saw this concert, up there will be an unusual seating chart.
It lists baseball you see it right next to other ones being offered for retail.
I think it is a huge deal.
The fact that it is black sabbath mix of all the more interesting.
Good morning, everyone.
And bloomberg "surveillance." all of the interviews that bloomberg tv plus.
Bloomberg radio plus.
Sara eisen is back.
Scarlet fu is back.
Howard davidowitz has not taken a vacation since eisenhower was president.
Much more to talk about.
When is your vacation?
I am curious about that.
In to go more americans are traveling come evening, and shopping alone and unmarried.
Marketers are taking notes.
We now see commercials with a solo by in their eating a big mac.
Advising coca-cola, p&g, walmart.
Why do your clients need to pay attention right now to the zingales market?
-- to the singles market.
This is a two trillion dollar opportunity.
Single people in the u.s. spent over two trillion dollars.
50 percent of all consumers in the united states.
Do they spend more because they did not have to take care of families?
Take them it is more a life style, not the demographic.
You have millennial scum a single adults and retiring boomers.
The way you have to focus on the segments is very different.
Certainly retiring boomers will have more disposable income but on a fixed income budget.
Millennial are postponing marriage, have more debt, and our focus more on things like the shared economy.
What are you seeing from companies that you work with and what changes have been made?
Tried to focus on not only created, but the means to reach these audiences.
You think about all of the different methods in terms of technology, digital marketing -- they are focused on how to go through social media.
They are also not just focusing on the marketing of the product.
Tacom howard davidowitz with us as well.
The retail come into the core retail is huge.
How poignant is retail?
Tacoma retailing is soft.
Going to a back to school time that is bad.
If he does this look at what is going on, the lowest labor participation rate in 35 years.
One in six americans are in poverty.
47 million people are on food stamps.
People are decimated.
Net worth is gone.
Unmarried to me as a whole new dialogue.
Less about the 20-something.
They're getting older.
I think it is important to not buckets everyone the same.
Where 28 percent of women are now never married in the west.
35 percent from men.
That is up from low to mid-20s in terms of percentages.
At the same time, you see all the growth in the millennial market.
So there is a lot of opportunity here.
A lot of aspiration.
The when you reach the consumers will be different.
Norway has the highest percentage of single dwellers in the world.
Does is right.
-- that is right.
You have folks like state farm were you see commercials for the have cinko guys watching a tv screen.
Then they have the state farm jingle.
Coca-cola has longstanding different marketing tactics to reach audience.
It's certain folks like procter and gamble with cover girl focused on women that are cinko.
Joining us this morning on the singles marketing.
I would think is realistic companies they would need to do this.
In certain cities the number of households growing for single people is outmatching.
To go right.
Coming up from $6.4 billion.
That is how much annual revenue university's own from athletics.
N.c.a.a. stopping athletic jerseys as a controversy.
We will discuss next.
? this is bloomberg "surveillance." time for morning movers.
We need to start with apple.
Shares are moving on specific reports coming gaining in the pre-market after there is a report that they will unveil the next big thing at the next big press a bed at september 10. reports it could come within their printing technology.
What core processor is expected.
There may be a budget iphone unveiled at the same time.
Speculation heating up.
We have tom fortay on the line.
Bullish on the stock.
$540 price target put the potential launch as soon as september 10 and focus for how important it is for apple stock and the vision going forward.
The notion on september 10 they will announce the next generation iphone is very significant.
This will be new products, including the iphone that will draw the stock higher.
An important announcement.
Included in this is the idea of the budget phone.
This would be primarily for emerging-market.
I would argue people have gone mildly more excited about the stock.
I do think the combination of high-end fund and a less expensive mini version could give investors more excited about the stock.
The great debate of unit sales vs profit.
I am very curious as to how much money apple is making relative to how many units other companies are making.
They clearly have the lion's share of the profit.
If the market moves and the direction of a lower margin and less-expensive device, how much degradation will appleseed?
-- will apple see?
You could see a 10% degradation in gross profit.
That would be pretty significant.
The difference between the new iphone and first iphone is apple has intense competition from apple and samsung.
What features to you need to see so that apple can compete with the giants?
To go i think the performance may have more impact on google stock.
I would like to see a bigger screen.
I think there is low-hanging fruit for apple in the next generation device.
To think you.
-- tom, thank you.
Twitter question of the day, what the one to see in the next iphone?
Make sure to tell us whether you want the creepy camera or not.
We want to hear from you.
Coming up, we will talk about one hot issue, the n.c.a.a. and whether papers are not kidding -- players are getting a fair deal.
That is next.
? new york city, a wonderful weekend it was.
Good morning to all of you on bloomberg television.
A blue -- a view of new york.
Of lumber called hundred and boston.
In boston, the strategic partners, but the college.
A steamed economist scott sumner mentioning the words about the debate over the fed president.
Really went after larry summers and the need for nominal gdp.
Endorsed janet yellen.
You hear a lot of janet yellen but to get the impression larry summers has the loyalty of president obama.
Is there anyone else really involved?
Donald cohen, he actually has not had the political experience and not part of any administration.
The president through his name out there.
They said it is early in the process.
We will have to see.
Strategic partner in boston.
For his work on the great bed debate.
Now, company news from the files of bloomberg west.
Shares of nintendo up 36% since january when a chinese newspaper said the company was preparing to end a 13-year ban on game consoles.
Even if it is lifted, nintendo could have another problem.
Chinese gamers have done pretty used to mobile devices.
Consuls' could be a tough sell.
The new matt damon sci-fi film came up short even though it did finish at #one.
It was produced by sunni -- sony.
30 million over the weekend, at less than analysts had -- less than analysts had estimated.
The next new attraction could involve up star wars at disney.
They hinted as much during the weekend at the convention in southern california.
It had star wars preferences.
Disney acquired star wars maker, lucas films, last week.
That is today's company news.
Trading has been halted for blackberry.
We do not know what the news is.
We know the back story with blackberry, increasingly tough to re-enter the smart foreign -- smartphone wars.
When you work on last week, it really heated up about the idea of do they have to go private?
Which is why we're watching for the news pending.
To go where the only one left using the blackberry and scarlett is the only one who has seen "the lone ranger." let's talk about basketball and money.
The n.c.a.a. calling it quits when it comes to the profitable jersey business.
He is just one in a really long list of college players accused of financial impropriety -- and propriety.
The came under fire for its own roles.
Another example here is the n.c.a.a. just advertise with electronic arts.
It was selling the game for $50 per pop.
And age was questioned.
-- ageless question.
The next guest is qualified for should qualified players be paid?
He invented marketing with michael jordan.
He went on to adidas and reebok as well.
Marketing and promoting players out of high school.
That is a distinction.
Nice to be with you.
You and i were younger when the debate began.
What is new?
What is new is they are exposed.
I think the public is grasping what the n.c.a.a. has been doing for many years.
A very silent way to manipulate.
I use that word freely, the athletes who play in amateur sports.
I think that is what has happened.
How should they be compensated?
Do you suggest deferred compensation?
Some form of payout if they graduate?
This is not a pay for play.
It is really pay for playing.
They're not playing right now.
They played the games.
What the public will find out is of these individuals, past and present, have been not only not compensated, not been doing the right thing with the n.c.a.a., because the use of amateurism is award that they apply only to their meeting has not done anything for these kids.
We believe that they should not get paid well they are in college.
That has never been in my mind set, but when you are in class, you graduate next year, 2018, the four-year term , then if you play a monetized sports endeavor and you were a part of the game, part of the photographs, then you individually are entitled to some of the moneys reaped from that.
That is what the class action is all about.
Joining us from california this morning.
This never ends.
To go that is right.
He is a legend because of the nike basketball shoes deal.
Now taking the lead role in the lawsuit against n.c.a.a.. you are right.
I remember this guy back to the fab five in the 1990's. -- going back to teh he fab five.
Who owns a star quarterback from texas a&m star brand?
To go at the end of the day, this is big business.
Who owns the brand an image, i will not get into that debate.
When you think about the media perspective come n.c.a.a., highest rating since 2005. up 4% since last year.
Look at football.
Certainly all of these deals, the reason why they are so expensive is because people are looking for a live audience.
There will always be this debate in terms of how it affects the players.
This is what drives ratings.
We also want to get to the twitter question of the day.
The other big news is the next big iphone deal.
What do you want to see?
Because some of the answers included a discounted price.
Certainly the answer from a lot of shareholders.
And a higher pick sold camera.
Extended battery life will be key.
When it comes to the strategy, you have to wonder whether the retail strategy in place by ron johnson is the working anymore.
They have the highest productivity of any store in the united states.
But they are slowing down.
They have slowed down the expansion over china.
It is all about product.
If they can get going on product, that will fire up the store.
I think pricing will be key.
How has the smartphone changed pricing?
It has really changed the game.
Affordability is everything.
It is impacting 40% of the purchases.
You see people walking around with their portable devices checking prices.
So it is dramatically changing retail.
The winner in all of this will be amazon.
Howard davidowitz, thank you.
We go to break with blackberry trading halted.
Trading halted, pending news.
The other big stock to watch will be retail sales report out tomorrow.
We continue on the radio now.
Tom is headed over to the studio.