Obama Seeks Perry’s Help: Surveillance (07/10)

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July 10 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Robert Doll, Rett Wallace, Lisa Abramowicz and Scott Galloway. (Source: Bloomberg)

This is "bloomberg surveillance." president obama's unlikely ally.

He asks rick perry to lobby for his immigration plan.

How many predictions have been on the money?

Gathering in sun valley.

Who is ordering what?

This is "bloomberg surveillance." i'm scarlet fu.

Joining me today, adam johnson.

Tom keene is off today.

I think it's actually renting a city bike and acting like it to arrest and going to the top of the empire state building.

-- a tourist and going to the top of the empire state building.

Is there a helmet?

I want to go pro.

I want tom view.

Overnight, china, experts said global consumers are buying less.

It is a different story in the u.k. brits are busy importing.

I don't know what they are importing.

No demand for english soccer.

They are exporting the ability to be sad about your soccer team to brazil.

India's prime minister holds spending steady.

The residual bloomberg survey coming out.

Not just on economics.

Gdp, employment, how do you feel about the economy, and holding thing we are going to go through when it comes out.

That he be doing that on her show.

-- betty will be doing that on her show.

Family dollar reporting earnings.

The place that makes target and walmart look expensive.

I was in a family dollar two weeks ago.

We got a mini grill for $18. we took three ribeyes on it.

President obama speaking about the economy today.

Emmy nominations come out.

Who cares about jobless claims when the emmy nominations, -- come out?

[laughter] president obama's speech.

It is a midterm election year after all.

Let's get a data check.

Futures are following quite steeply.

Down 0.8%. that follows the drop in european stocks, down more than 1%. portugal's number one bank missed debt payments.

The 10 year yield coming down.

The british pound also on our radar because the bank of england interest rate announcement comes out later today in the next hour.

We will check in with jonathan ferro on that.

I want to show the drop we are seeing in futures.

This is not the will -- most widely traded security at this hour, but we have seen a deadly -- steady decline in european futures.

0.8%. you are absolutely right.

That is where the volume has been.

It is ugly.

You have italy down 2%. you have the u.k. down over 2%. it is all being led by the banks.

There was an article in the terminal that talks about concern over portuguese loss.

You wonder if that links to everything else impacting on the continent.

I would hope to think that something could happen in portugal without happening to italy as well.

The contagion effect being limited a little bit.

Adam, get us started.

A front-page story.

Israel getting ready for a possible ground invasion of gaza.

Palestinians keep sending rockets into israel, so israel responding with aerial attacks that have killed 75 people.

Most fighting we have seen since november 2012. it was triggered by multiple killings on both sides of quite literally the fence.

Several palestinian teenagers and israeli teenagers.

This story filled me with despair.

I feel it we have been recovering this same story for 10 years.

12 years.

I feel like this story is never different.

You could wake up in five years and we would be writing the same story.

I don't have anything good or positive or analytic to say about this, except that it filled me with despair.

It is so destructive.

We are dealing with iraq.

Remember secretary of state kerry was in tel aviv a few months ago and was trying to broker sums of agreement and it fell apart.

Here we are now with more people that.

-- dead.

It is very upsetting.

Second front-page story, chinese hackers targeting federal workers in the u.s. computer networks that have the personal data of all federal employees.

Targets may have been top-secret security clearances.

This is reported by the "new york times." this happens as secretary kerry and secretary lew are in china for the annual summit.

Makes for uncomfortable conversation.

Turns a country spy on each other.

Who knew?

In this casino?

Spying?

I hear we did it on germany and germany did it on us.

No idea.

They will have to confront this, one way or another.

Not clear whether hackers are government workers.

I think it is a problem, something the government sector has been worried about a lot.

No matter what systems you put in place, government workers are very susceptible to ophishing attacks.

Training people to not open e-mails.

A very simple thing that is very hard to do.

The data coming out of your cell phone is incredibly leaky.

Beware of online banking.

It communicates back and forth.

Be careful.

We need to get a tech guy to talk about that.

Producers, are you hearing about that?

President obama making the case for his border patrol plan.

He went to texas.

He told governor rick perry that if you want more border security, push my immigration funding plan.

This has to do with the surge of emigrants.

-- immigrants.

Supposedly, we have seen this influx of children because the parents told them they could receive amnesty if they crossed the boulder -- order.

That is the moment where rick perry is not going to be president.

Obama touched him.

Right there.

U.s. meets with north korea and you have rick perry on one side and obama on the other side.

Obama is cackling about one thing and perry has this scowl.

God for bid.

Chris christie, when he give the bear hug to obama, all of a sudden, he is an obama lover.

You cannot be that in a republican.

Don't hug the president, republicans.

There you have it, the front page.

Let's get to our guest host for the hour.

Also with us, the ceo of trade research.

Bob, i want to start with you.

The minutes came out yesterday and showed the official plan to wrap up on purchases by the end of october.

Anything for investors?

Don't think so.

Everybody expected that by october they would be done and they are ratifying it.

They are not going to change the plan.

Everything is happening as expected.

I don't think it changes anything.

What about this new set of portugal?

Is this going to be the sort of correction we have been waiting for?

Great question.

We don't know.

The fact that we have not had a whole lot of issues related to the implosion of credit and the long of deleveraging for a bunch of months is a bit surprising.

We still have deflationary -- or not enough nominal growth concerns.

Something we talk about a lot on the show is whether forward guidance for the fed works at all?

It almost seems like reading the minutes that the forward guidance is happening passively through the minutes and not actively through interviews and public announcements.

I think there is a lot of truth to that and/or it doesn't matter.

[laughter] the market often follows the fed.

The fat is -- fed is going to drag, drag, drag to do anything.

I think the market will tell us long before the fed starts to raise rates that it is going to happen.

They are slowly releasing.

We are debating the pace of the release.

Have you been following the blackrock-yellen index.

It purports to know janet yellen better than she knows herself.

It is deep in her brainstem.

It says she is late, right?

Shoe needs to make up her mind, get on with it.

The fed is almost always late at the end of the process of easing.

They want to see the evidence the economy is better.

A little more real gdp, a few more jobs.

We will get your take on equities in the second half of this here in this hour.

We do need to get some company news in the meantime.

We start with a huge airline deal that is ready to fly.

200 more jets from airbus ordered.

It would be worth more than $20.5 billion.

They want a fuel-efficient model.

The sales could be finalized next week.

Investors coming to the rescue of american apparel.

The company getting up to $25 million from standard general.

That will allow them to pay a $10 million loan that is due.

The company founder was ousted last month.

Salix pharmaceuticals will be merging with an irish unit.

To make this deal worth, they are paying $2.75 billion for three drug patents.

That is the company news.

Let's talk about a bad couple of days for brazil.

First, a record-breaking loss to germany, unbelievable, 7-1. then the archrival, argentina, makes its world cup final.

Argentina beat the netherlands 4-2 on penalty kicks.

Beat, beat.

Rough interpretation.

It was 0-0 after the two overtimes.

Everybody failed to win and then they flip the coin.

I like the penalty kicks.

They are fun.

It beats the golden goal.

Waiting for somebody to pass out.

If the penalty kicks had ended at a thai, then the -- dead -- in a tie, then they would have gone to sudden death.

We have a lot more coming up on "bloomberg surveillance." we are just getting started.

The media moguls are back in sun valley, idaho.

What to expect.

That brings us to our twitter question of the day.

What megadeal would you like to see come out of sun valley?

This is "bloomberg surveillance." we will be right back.

? this is "bloomberg surveillance." i'm scarlet fu with adam johnson.

Speaking of summer, it is the annual billionaire's summer camp in sun valley, idaho.

The annual gathering of the minds.

At&t, directv, comcast, time warner.

Those are the backdrop.

Lester, the whole jeff bezos deal emerged from sun valley.

It used to be when people talked about sun valley it was what kind of deals will come out of this?

Now it is about the guest list.

Very carefully watched.

It is watched a little bit like the vanity fair oscar party.

You see the old heavyweight types that run the big established media companies.

It is interesting to see which new media companies will be the ones people are looking for.

Like nick woodman of go pro.

We would almost call him established now.

We have seen airbnb before anybody knew what it was.

Twitter, uber.

Which companies will be looking to get higher profile?

Is this about companies like go pro making the jump to be social?

Interestingly, go pro has explicitly said they want to be a media company.

People make contact with the cameras and they want to help grow their business and help the customers by making the content more of a business.

I am never invited.

I always have trouble figuring out what is going on at these conferences.

Bike riding.

Are they actually closing deals or are they sitting around talking about how awesome they are?

It is a big meeting where the talk about what they're going to announce.

[laughter] the deals have been closed long ago.

It is all just for show now.

Most of the people there know each other already.

It is also a paid vacation for people to come hang out in sun valley, idaho, which is not bad work if you can get it.

Warmer, less far to travel.

All that sort of stuff.

They just get a lot of air time with each other.

To the extent that people get to mix and mingle, you find out what everybody else is thinking.

There is a large mind meld and to the extent you want to respect your m and a target, that is something else that is happening.

Given me -- given the attention on the space, do you expect it to be more and more scrutiny on this?

On the m&a side?

On the whole spending side?

This is interesting.

Allen and company represented facebook in the acquisition.

If you can collect a fee to help your client pay $19 billion for a company with no revenue, is that scrutiny?

There is fancy advice on both sides of the table and everybody signed off on it.

The landscape in media and technology is changing quickly.

One of the interesting things about allen and company now -- sun valley now is that this is only moving target.

Larger strategic thinking is important.

I think this is going to get a whole lot more attention than usual for that very point.

The combination and acceleration.

You can understand why a disney might want to talk to discovery channel.

Traditional.

What you are talking about is google looking at i don't know who.

Go pro.

Google buys a company a week.

They have one of the most well oiled m&a machines around.

It would be very unlikely for them to meet someone at a party that they did not know about.

As far as intel is concerned, somebody told me a funny story.

Bill gates gave a presentation years ago at sun valley about data and the phone line was the future.

Fred roberts who was not ceo of comcast at that point said, we kind of have been thinking about this and it seems that cable is going to be better and they have an argument in front of all of these people.

We know who ultimately won that argument.

It is about the forward look him a figuring out what the future is going to look like because you have the people who will make the decisions in the room.

That anecdote is fascinating.

Every time i hear about the possibility of new media companies buying old media companies, i think of time warner and aol.

What about this says it has a better idea now to fuse a content company and a digital company?

I don't think things have fundamentally changed.

Apple buys beats for purposes of getting music.

Sony bought columbia pictures back in the day.

Go pro turning themselves into a media company as opposed to it ever -- device company.

Diversifying.

It is not clear that it did not make sense.

Content and distribution make sense.

I'm going to lie awake at night thinking about that.

[laughter] don't stay up too late debating that.

We also know that everyone is sleeping a little bit easier now that aereo has not allowed to go forward.

Areaereo said that they are not quitting.

Even though barry diller is saying the party is over and idaho.

We will see how that all plays out.

That brings us to our twitter question of the day.

What megadeal would you like to see come out of sun valley?

We want to hear from you.

? this is "bloomberg surveillance." tom keene is off for the day.

Let's get your morning must-read.

Adam, get us started.

Mohamed el-erian, formerly of pimco.

Talking about the fed?

Actually, no.

Talking about brazil.

Probably comes as a surprise.

This is right up your alley.

Writing in bloomberg view.

Here is what he has to say.

In football and living standards, brazil has moved from promising to hugely problematic.

You just got back from brazil.

How bad is it?

I feel like the piece is a little condescending.

Assuming brazilians can't think past i'm sad about football and thus i must be sad about the economy.

Everybody i talk to is well aware that they have around soccer team and that has been rotting from the core for a long time and they don't necessarily equate that with what is going on.

I would give them more credit.

It is not a metaphor for economically and politically.

I think he dodged a bullet because it was just -- such a grinding loss.

I think they're more sophisticated than he is giving them credit for.

And elections are given -- in october.

Brazil is certainly going through some rough times.

Let's talk about what else is coming up in "surveillance." futures are down quite a bit this morning.

Our stocks set for a correction?

What is the outlook for this second half?

We discuss.

This is bloomberg surveillance bank." we are on bloomberg television, streaming on your tablet, your smart phone, and bloomberg.com.

? good morning.

This is "bloomberg surveillance." i'm scarlet fu with adam johnson.

Tom keene is off for the day.

Aj gets us started with top headlines.

A texas man suspected of fatally shooting six people will be charged today.

He held police at bay for hours in a suburb of houston.

His fouer children were among the victims.

His 15-year-old daughter was critically wounded.

Pro-russian rebels in ukraine are preparing for a last stand.

On of their leaders says the eastern city of don't ask will be -- donestk will be the last stand.

The court fight for the los angeles clippers turns from strange to weird and an ugly.

From the witness stand, donald sterling said he would never sell the team and then shouted get away from me.

This was directed to his wife.

This guy is the gift that keeps on giving.

The judge was so caught off guard that when lawyers try to move on, he said, would you repeat what you just said?

That is hard to fathom.

The nba wants to oust the long-term owner.

The wife's lawyers say that he is mentally incompetent.

Stuff like that, you begin to wonder.

He is trying to stop or $2 billion plan to sell the clippers.

To mr.

Steve ballmer.

He is on the sidelines saying, yes, plea -- deep playing along.

This could drag out forever.

Legally, there is nothing in the nba that forces them to sell.

The nba commissioner -- they want him to.

If you are crazy, angry, and rich, there is nothing you can't do.

Duly noted.

The fed staying its course.

Low rates for longer.

You two should stay the course by owning u.s. stocks.

Bob maybe you can help us sort this out.

How is it that the economy is growing at this rate and corporate earnings can grow by 6%? part of it is the financial engineering under the revenue line.

Take real gdp, at inflation, that maybe the revenue line.

Corporations are generally improving their margins.

Most of them.

Maybe that is an exaggeration.

Many are buying back stock.

It is stronger than revenue growth.

If you take shares out of the market, your share will go up.

Few -- fewer shares.

That has been part of the drive for earnings growth since 2009. what about the cost line?

We have been hearing about companies cost cutting for five years?

How do you keep finding more costs to cut five years after?

Technology keeps improving the ability to become more efficient.

Having said that, the transition from that revenue growth -- from that to revenue growth is absolutely key.

We have got to have some revenue growth.

If you told me gdp was going to be -122% and revenue growth would be single-digit that the low-end, i would tell you that these things would not be together.

Revenue growth will be better, earnings growth will be.

I think we will see that.

The fed is going to stay accommodate it.

What does that mean in terms of a calculus for profit companies thinking of going public?

You specialize in companies that are looking to live.

This is a very interesting question.

To the point of the fed.

A lot of the price increases we have seen our liquidity driven.

The fed's balance sheet is $4.4 trillion.

The money needs somewhere to go.

The private company investing sector we look up for early-stage companies tend to be pretty small capital base.

What we have seen recently are companies like tpg start investing in these companies so it becomes a mainstream asset class.

This capital is looking for places to go.

One of the things we saw this week that i've saw was super interesting, they decided to raise money privately rather than do an immediate ipo.

It shows you that the financing environment is healthy on the private and public side depending on what kind of healthy you have.

Which is exactly what the fed's objective has been.

Make the return on cash nothing so people are forced to be more dynamic in their use of it.

Look to take on some risk, whether you buy the other company or you buy some equity.

For you by some long dead operations.

You certainly are not buying profit that these companies.

Large pools of capital looking for a place to go.

Isn't that exactly how we could have described the world in 2006? then and probably a dozens of stops along the way before that.

There are j antic -- gigantic pools of dollars that must be put to work.

I so the story a couple of days ago in the "times." the larger problem that everything is expensive is that there are not many asset classes that have not been discovered by people who are looking for a return.

My single best chart kind of touches on that.

A hierarchy of a credit bubble.

Can click the hierarchy of needs.

-- kind of like the hierarchy of needs.

He says we are approaching the bubble stays.

We are right between the esteem and self-actualization.

We are on the cusp of getting to "i am a credit genius." people are looking at of skier credit products to find a return.

I think that is a little -- i don't think we are as far along is all that.

But there are pockets of it.

That is the fed's objective.

Do a balancing act.

We don't want to have massive credit problems.

It is a tough balancing act.

I think they have gotten a more right than wrong, but the jury is still out.

Tell me what is going to happen with the economy and inflation.

The economy was weaker in the first quarter certainly than anyone thought.

Inflation stayed low.

That is not an environment where interest rates go up.

We thought collectively that the economy would do better, and laois and would stay low, but pickup from very low to low -- inflation would stay low, but pickup from very low to low.

The growth in collateral obligations.

That to me puts us right up at the top of that.

Pull up that chart again.

At the top that reads complexity.

Terms only a mother could love.

Does that not put us to the top of this triangle?

For that particular item, yes.

You have to look at the massive amount of cash on the sidelines for businesses who are still cared -- scared.

Bull markets do not and.

-- end -- this is the least bleak bull market of my career, let me put it that way.

It is more worried about the fear of if i buy something now it is going to go down.

It has been levitating.

You don't know what the fundamentals of the companies are so the pricing is notional and it is based on emotion rather than fact.

Most unloved bull market in history.

Why is it that corporations, by virtue of the fact that m&a is up 40%, what is it that corporations see?

Why are they so bullish?

That is an interesting question.

I guess they have to be.

Corporations cannot exit the market the way individuals can.

If you are corporate, you cannot sit it out.

Expense efficiency is a theme in some of these traits.

When you look at sectors where there was lots of disruption and uncertainty, it is a matter of survival, to make sure you are acquiring into the future and not just staying put.

I would make the case that corporations are ready conservative until around the turn of the year.

How many years since the recession ended?

They would not buy the company down the street.

They would not hire a worker.

That is starting to change.

Give me a bunch more of that and then we have to get a little concerned.

Buying at all-time highs.

Coming up, we are going to talk about the latest businessweek cover.

There it is.

I can't read it.

We will talk about dov charney of american apparel.

We will discuss write your own "bloomberg surveillance." on bloomberg television.

Streaming live.

? this is "bloomberg surveillance." i'm here with adam johnson.

Tom keene is off for the day.

He is enjoying the summer.

You know he is running around, doing all the things he hasn't done.

He is the hardest working man in show business.

Tom keene, i'm glad you are taking the day off.

Tom keene, if you are watching, why are you watching?

[laughter] that's right.

At him give us our top headlines.

Stopping the fighting between israel and palestine.

Rockets being launched from gaza a reaching deeper into israel than ever before.

Israel said it nuclear plant could be threatened.

Egypt is reaching out to both sides hoping to end violence.

A typhoon set to cross okinawa is now a tropical storm.

It has been downgraded, but is heading the main island.

Heavy rains and flooding is expected in tokyo.

Tornado watches are in effect.

The storm has weakened.

It did kill two people on okinawa.

We certainly wish people well.

We hope they are safe.

A california woman said to be a prostitute is accused in the death of a respected tech executive.

Authorities say the high-end call girl and ejected him with heroin and left him to die.

He worked in the google x innovations lab.

Those are the top headlines.

Let's move onto a topic we have discussed here on "surveillance" before.

Commodity prices -- a shortage of them.

Of certain commodities.

They have expected our orders from monkey does engine and tonics.

The cost fluctuations -- mojitos engine and tonics -- and gin and tonics.

The cost fluctuated lens of the lime.

The theories are weather.

We talked about the lime blight.

Brazil through central america.

These are real problems, but they are not the real problem.

The reason we have lime price spikes is because we have chosen to get all of our lines -- i mean 97% of the lines that we drink in america come from one place.

A few states in mexico.

We used to grow limes in america.

Hurricane andrew laid waste to a huge part of southern florida, exactly those parts will regroup lmies.

Then there was a blight.

A real problem.

But that was not the final problem.

We closed the north american free trade agreement.

It was cheaper to grow limes in mexico.

The crop in america never recovered.

We grow oranges here.

We do not grow limes.

This is what free trade does.

It's except a place where production costs are the lowest in the moves production to that place.

Good news, cheap limes -- usually.

The problem is that it leaves us completely open to whatever happens in that one place.

The market does not care about risk.

It cares about price.

What we have decided is that we are ok with these price fluctuations.

If we weren't ok, we would diversify our sources of production.

We're not doing that.

We are making this choice.

Good news, drink up.

Limes are cheap again.

For now.

So we blame canada.

I blame canada.

That is exactly what happens.

I have been a part of this new cycle for three separate years.

The price of limes goes up and it is a story we all cover right around thing but a mile.

-- cinco de mayo.

I got tired of covering the same story again and again and again.

A commodity spike.

What is interesting is that grapefruit prices, orange prices, all citrus prices do not go through the same wild swing.

Their relatively stable.

Because we get them from a lot of different places.

Or me, i'm just trying to write the story once so we don't ever have to do it again.

Is it really that hard to grow a lime tree?

If we can grow grapefruit trees, why's it so much cheaper to grow limes in mexico?

It is cheaper.

We know that.

Production costs are lower because labor costs are lower.

But oranges and grapefruit should move to mexico, too?

We could just enough about the price of limes to complain about it, but not enough that it is worth anybody's while to put capital into growing them in florida.

Midi entrepreneurs will take a second look at that.

Lime.com.

We will create another social network around it.

Coming up, a three-year rally.

This is boomer surveillance bank." ? this is "bloomberg surveillance are co-." adam has our company news.

Apple is planning a new strategy.

Arguments are scheduled before a federal judge in california.

Apple says samsung infringed on its patents.

Heaven forbid.

We haven't heard this before.

Apple will narrow its attack to focus specifically on older samsung phone models.

Another game maker is making a play for investors.

The japanese company is planning an ipo as soon as this year.

The value could be chewed -- reach $1 billion.

Box.com is planning to go through with its ipo.

People familiar with the company says its objectives are practicing how to do earnings reports.

That would be a good idea.

It pulled back last spring.

Those are your company news items.

Let's talk about bonds.

They are pretty popular thanks to a three-year rally.

There is a structural risk.

Managers struggle to raise enough cash to reach the exemption.

We want to explain why junk loan funds are so popular and attractive and with who.

Junk are speculative grade loans.

People are looking for higher yields in this low yield environment.

Seemingly endless central-bank stimulus.

They are going into riskier investments.

Loans are not like bonds.

They are pegged to a floating rate benchmark.

If interest rates to rise more quickly than people expect, they offer a hedge.

They would ostensibly rise in tandem with rates.

You get a higher yield and you get that inherent hedge against rising rates.

It makes them really popular.

Is the idea that investors are sophisticated enough to understand those risks?

There is an incredible transformation in this market.

It has grown to be about $750 billion.

Mutual fund investors, individual investors, account for a greater proportion of this market than ever before really.

Last year, they funneled more than $60 billion into mutual funds to buy these loans.

Hyg would be the plain-vanilla example we all know about.

Hyg is junk bonds.

Junk loans and junk bonds are very different.

Bonds are securities, loans are not.

These are paper documents.

Lawyers have to look over every single line when they sign off on each trade.

This make each trade takes an average of more than a week to complete.

It might take you two weeks to get your money back.

If you have a mutual funds that is promising to pay investors on demand to want to redeem their money within 3-7 days, what happens if they try to liquidate the underlying assets and it takes an average of two weeks in good time to get the money back?

Bob, when he -- when you hear lisa talk, do you hear a voice going in your head, there is no return without risk?

[laughter] it sounds like mortgage-backed bonds that you cannot trade.

How do you make it even worse?

You can't sell it if it is going to go down.

If there are a lot of protections, you have short-term funding that is financing long-term assets that are hard to liquidate.

This is a problem that has not been tested.

Since 2011, they have returned 19%, even though there have been some withdrawals this year.

These are individual investors piling in or these insurers?

Is there a regulator here to oversee anything?

[laughter] these are largely unregulated.

They do not fall under securities laws.

A traditional bank loan, with a bank going out to a company come another the banks can syndicate the loans.

Can we just rename these, agreements between mutually consenting adults?

[laughter] are they?

People are going into mutual funds, but they can buy the shares like stock?

They act as though they are securities, but they're backed by -- it is a little like the apple consent agreement.

You sign it come but you have no idea what you are signing.

Please check here.

It is a further stretch of what happens in small cap stocks and international stocks.

You cannot sell an entire mutual fund today and get the financial value.

There have to be policies that are put in place and are hereto overseen by managers of mutual funds, portfolio managers themselves, and the board.

Never guaranteed.

It is not as if someone hasn't a mutual fund 100% invested.

It is a much lower percentage for the very risk.

There are some actions that fund managers do take to hedge against the chance of with drawl.

They hold bonds.

They alter the performance.

Money needs somewhere to go.

Fund managers have to put the money to work.

Maybe you can get a couple of points more return here then somewhere else.

Well put.

It is easy to buy, difficult to get out.

Thank you so much.

We want to thank bob doll and re tt as well.

Let's get you a forex report.

We have the pound on our radar screen.

It is down because the boe comes out with an announcement on interest rates and a couple of moments.

We will take a very quick break.

? this is "bloomberg surveillance." president obama seeks help from an unlikely ally.

He asks texas governor rick kerry to help with this border control plan.

Germany and argentina make it an all-adidas final.

M&a is on the menu.

Who is ordering what?

Good morning.

This is "liberty surveillance." i am scarlet fu.

Joining me, adam johnson and brendan greeley.

Tom keene is actually taking a day off.

Good for him.

I don't think he he has done that since last december.

I do remember him ever taking a vacation.

I think he is having a drink.

Adam, why don't you get us started with overnight developments?

In china, exports trailed in june.

In the u.k., the widest trade deficit in a 4 months suggest the brits are importing.

Economic data in the u.s. -- 8:30 we get the weekly jobless claims numbers.

9:45, consumer confidence index.

Family dollar over the belt -- i just checked, not out yet.

President obama is speaking on the economy and 1:15 is turned.

He is in austin, texas.

And the emmys are out.

Emmy nominations are coming out.

Earnings-per-share adjusted, $.85 when analysts were looking for any $.89. in the meantime, let's get to some company news headlines.

Dish network once regulators to pull the plug on the comcast-time warner deal.

The company made its feelings known in a filing with the fcc, saying that competition would be harmed if comcast bought time warner cable.

It would merge the 2 biggest u.s. cable providers and boost the comcast subscriber list to 30 million.

The parent of a clothing chain cutting its forecast.

Retail in japan has reduced expectations.

The company blames poor sales from its premium denim unit in the u.s. nike and manchester united are no longer teammates.

This season will be his last as the top equipment maker.

They signed the deal 12 years ago and was worth more than $500 million of the time, but nike says it is not like the minimal terms.

The soccer powerhouse is expected to talk to ideas instead.

-- to adidas instead.

Moments ago we learn that the bank of england is going to hold rates steady.

Jon ferro from the london office joins us with details.

Last month the bank of england governor expressed concerns that investors don't see a rate hike later this year.

What are you seeing now as part of this latest release?

Economists got what they were looking for him in no change in the rates or asset purchase plans.

This is not boring.

This is a lot more exciting than it looks.

He is surprised that investors are not looking for a rate hike this year.

I'm surprised those words even left his mouth.

There have been -- they have been on a committee kitchen's roller coaster ride from the bank of england.

One person stick start hand up and says that the rates need to go higher.

The difference between the u.k. and the federal reserve is -- we have to wait until the minutes are released, and a lot of people think that the time is getting closer and closer.

When that committee starts thinking about putting rates up.

Jon, this is brendan.

I can't help but notice that he seemed frustrated with mark carney's literature.

I am not frustrated with his leadership it i criticized him a lot, but let me compare it to what the united states is doing with janet yellen.

She will back away any concerns about a rate hike.

That prevents the introduction of two-way wrist.

When marconi turns around and says you know what -- when mark carney turns around and says you know what, we should have uncertainty, that gets you thinking about what the rates will be and the markets start to anticipate a rise eventually.

Janet yellen at the federal reserve now is not doing that.

When she finally capitulates and starts talking about a rate hike , what happens to the market?

Jon, i think this is what brendan was getting at.

A month ago mark tournament before members of parliament and they said to him specifically you are acting like a bad boyfriend, changing your tune.

Is there any more pushback recently?

I don't think there has been much pushback recently.

It has turned around since then.

He said, "it was my own personal view." but you will be called an unreliable boyfriend, but why should the central bank anywhere -- the u.k., the fed -- do these things that everybody relies on, that they are going to give us clarity all of the time, that they have some crystal ball?

That is really unhealthy.

That dependency has grown with conditions in the last 5 years to be dependent on central banks and eventually we have to be eased off of that, not just for the by giving them but the federal reserve -- just not just for th bank of england but for the federal reserve is will.

Another top story we are watching, israel getting ready for a potential invasion of the gaza strip.

Palestinian militants continue to send rockets into israel.

Israel responding with arial attacks that have killed at least 75 people.

Joining us from gaza city is an abc reporter.

Are gaza streets emptying of traffic?

Tell us what you see on the ground.

It is a bit of both.

When we first got here a couple days ago when the operation started, there was not a visible change.

It has certainly quieted down now.

I was on the main street in gaza city, which is normally a bustling environment, people running around, doing their errands.

A lot of people are staying home and the shops have been shouted -- shuttered.

That is not mean that people are not going about their daily routines.

Life is not yet come to a standstill, but that is a possibility if israel ramps up its operations.

Preparing to deploy 20,000 soldiers as well as 40,000 in army reserves.

What are your sources telling you?

There seem to be conflicting reports here.

I spoke to a senior israeli official this morning.

The israeli cabinet has authorized the 40,000 reservists.

So far, when you of those have been deployed.

Many of them will be sent to the west bank to replace units that will come down here.

There are brigades already on the border with gaza.

I am told it is a defensive position for now.

But they are there in case the order for a ground invasion is given.

This is something that the israeli government of prime minister benjamin netanyahu has said is very much on the table.

Netanyahu also said the military would step up its assault on hamas.

What do we know about hamas' operartiontions?

Are they crippled?

So far, no.

There are no major hamas diligence who have been killed.

The israeli military without a statement today saying that -- put out a statement today saying that hamas has some 6000 rockets, including 10 that can reach ranges of up to 160 miles, that in addition to the 4000 other rockets the militants have.

Tuesday night palestinian president mahmoud abbas asked for help.

Yesterday we found out that egypt is trying to do something behind the scenes.

Is there any hope that this will be scaled back?

In short, no.

Prime minister niche in you who care -- prime minister netanyahu came out and said there is no talk of a cease-fire right now.

With the new president in egypt, who took out the muslim brotherhood, of which hamas is an option, hamas is not dealing with the egyptian government right now.

The talks, if any, are very much behind the scenes and not at the forefront of the agenda of hamas or israel.

Alex, thank you very much.

Our guest host for the hour, scott galloway of nyu's stern school of business.

I want to get your take on sun valley.

The tech mogul gathering is taking place right now.

We have a couple of newbies.

What will you be looking for?

It is always interesting to see, kind of like a family reunion where we introduce the young cousins to the adult table.

This time it is the guys who are coming up with amazing ideas.

It is always interesting to see if deals, out of it and who is their and who is being cordoned off and trying to get a deal done.

It is amazing to see a changing of the guard take place and to see the new faces.

I wonder if facebook or google will be making a play for those smaller companies.

If you think about facebook -- and that would be the one to watch -- every company they look at is 60% off their stock price.

Scott galloway joining us for the entire hour.

Coming up, we will discuss the world cup.

A sports competition but also a marketing competition.

Brendan greeley will explain.

This is "bloomberg surveillance." i am scarlet fu.

Scott galloway says that tech companies are unlikely to win innumerabl -- in the wearables market on their own.

Do not believe that he can grow in the next five years?

It is semantics, that wearables will be huge but this is a wearable.

This is a little bit like a head fake.

I would put this with customization and 3-d printing that the media is much more excited about.

The performance is not living up to the promise yet.

But tech companies -- you talk about apple with its smart watch and google with google glass.

Look at google glass.

It highlights what the problem is with tech companies.

Do you see yourself going anywhere other than the novelty with google glass on?

Here is the thing -- consumer comedies are great at figuring out a way to get someone to -- consumer companies are great at figuring out a way to get someone to wear something on the person, entirely different than someone putting something on the desk at work.

Fashion companies who are good at that do not have the capital of technological -- capital or technological expertise.

That means someone like nike is not necessarily going to be the winner here.

There are a few in summer companies who can pull it off.

One is nike and the others apple did what you are likely to see is one of 2 things -- an organic come they, or some sort of relationship between google and -- fit is doing something with tori byrd.

They will need some peanut butter and chocolate and accompanied that knows how to make people like us -- and they company that knows how to make people like us want to wear something.

And there's also a lot of talk about how do you advertise across these devices.

But everyone has been kind of in a waiting mode to see what apple does with their iwatch.

If you look at a market that is looking to be disruptive, it is watches.

That is been held at a high-end by a few luxury players that have been printing money.

We will see how it plays out.

When is apple's smartwatch supposed to come out?

We are looking for an announcement in the fall but with apple you never really know.

We will see if they take up some of these small wearable companies.

Scott galloway our guest host for the hour.

Coming up, president obama pressing texas governor rick.

To help solve the immigration crisis.

This is "bloomberg surveillance." i am scarlet fu.

Joining me, adam johnson and brendan greeley.

Tom keene, believe it or not, is off for the day.

Our guest host for the hour, scott galloway of nyu's stern school of business.

Talks to stop the fighting between israel and hamas are starting but is really jets are still striking the gaza strip today -- israeli jets are still striking the gaza strip today.

Egypt for its part is trying to reach out to both sides, but no progress as yet.

A typhoon that swept across okinawa is no tropical storm.

It has been downgraded.

This morning it is sitting the mainland is hitting the mainland.

Pronin watche -- 20 the watches are in effect.

-- tornado watches are in effect.

A california woman said to be a prostitute is suspected in the death of a tech executive.

His body was found on his yacht.

She allegedly injected him with heroin and left him to die.

Those are the top headlines.

The excesses of silicon valley.

I know this will spark all kinds of discussion on twitter.

It was a very strange story that seems to get stranger.

It is like when you talk about the recalls at gm.

At the end of the day there were 13 people who died.

Nike, that on brazil and the netherlands and they are out.

Brendan, you have been living and breathing the world cup.

What is the adidas victory mean?

It is hard to oversell how much nike was counting on a brazilian victory, or at least brazilian glory.

When i spoke to nike executives a couple months ago, they said things like if nike were acco -- were a country, nike would be brazil.

The brazil implosion is devastating to nike.

Adidas has got both finalists.

That is great news for adidas.

I have to say i was completely wrong about this.

I wrote a cover story about this for "business week" and said that nike was making the smarter play.

It was running commercials loosely affiliated with the world cup.

Adidas was paying $70 million or to be associated with fifa and that was throwing the money away.

I was wrong.

Nike's approach -- you are an honest man, brendan greeley.

Banking on stars did not worked because all of nike's stars flamed out.

The only one who acquitted himself well was tim howard of the u.s. and he is not in the finals.

One of the stars that came out, the adidas ball.

Scott galloway, you are the marketing expert.

Stroke of brilliance.

The ball was tweeting.

And i would argue the biggest genius and the world cup the last 12 years -- oh, yeah, whenever they hold up -- wait, what are we talking about?

What?

Whenever they pulled the time clock -- they hold the thing up -- they didn't pay a lot of money.

The more interesting story is what happens to the pricing are the sponsorship deals around fifa because there has been fairly negative advertising.

When nike purposely announces that we are not in negotiations, that lowers the market, because they basically announced to adidas, it is all yours.

I wonder if the prices are coming down.

I think we have probed the end of the money that nike is willing to throw it soccer.

They threw money at france 3 years ago, which had not performed well at all in the last world cup.

It was the largest amount ever paid for national team jersey.

It was because it was a national team jersey that was up for sale.

Scarlet and i were talking about wearables.

The nike brand -- it came out of advertising.

The age-old question of it soccer is finally going to catch on.

I was watching the game with a bunch of french guys and they said it won't in the u.s. because you can put advertising.

The advertising on the jerseys do a lot -- 100%. the ultimate branded wearable.

A lot of people talk about could this reignite soccer in the u.s. the nfl season kicked off but did anybody know?

What this is doing is increasing the popularity of the world cup.

I'm not sure that translates to increased popularity in soccer.

Possibly, for me, the most interesting data point is that fox sports has picked up a contract for the german bunds leader in 2015. they play amazing soccer there but the fact that they are willing to make that investment to me is huge.

Live sports are the last little white meat of the advertising business.

If hockey is getting tv contracts -- even hockey is getting tv contracts.

We are not in our head -- nodding our head to tom.

The tide is raising the boats for all live sports.

May be covering the stars is not as smart and ids covering the franchise the way --not as smart as covering the franchise the way adidas did.

We have a number for you as we had to break the $150 billion, the combined net worth of sun valley.

We will talk about media and tech moguls at the conference in sun valley.

That is our twitter question of the day.

This is "bloomberg surveillance." i am scarlet fu here with adam johnson and brendan greeley.

Tom keene is taking a rare day off.

President obama has a message for all those criticizing him for not visiting the u.s.-mexico border as the immigration crisis deepens -- he is not interested in optics.

Here is what the president said after meeting with texas governor rick perry.

This isn't theater.

This is a problem.

I'm not interested in photo ops.

I'm interested in solving a problem.

And those who say i should visit the border -- when you ask them what should we be doing, they are giving suggestions that are embodied in legislation that i have already sent to congress.

Let's bring in phil mattingly, bloomberg last white house cook -- bloomberg's white house correspondent.

The president is looking for an ally, an unlikely ally, in texas governor perry to get congress to act.

Is he likely to be successful?

That's a great question.

It was really interesting, the dynamic between the 2 of them.

It had to be an uncomfortable one.

They had a brief detente just about the meeting.

Aides from both sides said that while it was not happy go lucky, it was a serious meeting and a substantive one.

What the president sees in rick perry is that he sees the political ramifications.

If you can get rick perry on his side to push for congress for the emergency funding, that is a big step forward for him.

Whether or not he gets that is a big question.

They have interests that are aligned in trying to solve the problem but the politics are so strong from both parties here that i don't think you are going to see rick perry jump on board and said that whatever the president i says, let's go with him.

You were the president just say this isn't theater.

To we have any reason to believe that what he did with rick perry is anything more than theater?

I can honestly say that when he said that last night during that press conference, you could almost hear republicans' heads explode throughout washington, d.c. the president was in denver last night -- 2 nights ago drinking beer and playing pool.

The idea that it was not a photo op is a bit of a stretch year.

The perry thing is interesting as you see both camps trying to negotiate and get the upper hand on the political side of this.

The meeting at the tarmac was without question a photo op, without question politically based.

The meeting behind closed doors, i think that was actually substantive, and the white house sees perry as having some sort of influence over the texas delegation in congress and they are hoping to leverage that could i don't think that is accurate.

I don't think rick perry can command his texas delegation, particularly texas senators ted cruise and john cordon, to do anything at any point.

The white house sees that as the best shot because they see the emergency plan largely stalled.

What is the fallout for mr.

Perry if he doesn't get the federal money?

That is a great question, adam will stop what the folks want to bonsall is that you don't want to because christie in -- want to balance now is that you don't want to be chris christie in 2012 when sandy hit.

Romney folks blame chris christie for giving the president the win as the 2 held hands, held one another together to work to solve the problems caused by the hurricane.

Rick perry has a difficult political line to walk.

You have seen him on one shows him last night on fox news he was already backing out, but assessing the president sharply.

-- criticizing the president sharply.

But behind closed doors the goals are the same.

How the governor balances the politics with substantive policy is important for him if he has any interest in 2016. he has actually shown a basic level of compassion for immigrants that was not anywhere else to be seen in the republican primaries the last time around.

This is actually kind of good issue for him, right?

It is, and he has stepped up and taken it.

Establishment republicans in d.c. have been impressed with what he has done the last couple weeks.

In 2012 he was one of the few guys on stage was willing to show compassion here.

Broadly in 2016 establishment republicans would like their candidate to bring that to the table.

This is an issue perry is good at and he knows it very well and is respected on in the white house.

He just has to be very careful here.

The dynamics are constantly shifting.

You are entering an area that can be damaging if you don't play it right.

Phil manning way, thank you so much.

Adam, we need a data check.

We have an ugly situation.

It started in portugal where they were worried about solvency of the banks and now down about a percent.

This is "bloomberg surveillance" on bloomberg television, bloomberg radio, streaming on your tablet, smart phone, and bloomberg.com.

I am scarlet fu.

Joining me, adam johnson and brendan greeley.

Tom keene is off for the day.

We want to introduce our guest posts for the hour, scott galloway, professor at nyu's stern school of business.

At sun valley, media and tech moguls are coming together for a meeting of the minds.

We want to bring in jon erlichman, bloomberg's senior west coast correspondent.

He is in sun valley on the ground there.

Jon, is all the talk over the potential deal that could come out because there are 2 looming in the backup that have not been approved yet.

There is definitely discussion around deals that have been announced.

What does it mean for other deals, it is one of the reasons we have come here to sun valley.

Those talks can take place because of the relationships that end up being formed here.

You talk about jeff bezos.

He knows don bramwell, in part because of the time they have spent here in -- he knows don graham well, in part because of the time they've spent here in sun valley.

Sometimes it doesn't happen overnight, but certainly the colonels can start to make sense over time.

People have a chance to discuss the various matters and think about whether or not they should pull the trigger on a deal.

Dish said yesterday is against comcast's merger with time warner cable.

What are you hearing against the various players about this deal specifically?

I think there is definitely going to be a lot of positioning . probably no surprise that dish would come out publicly against the deal.

This is a company that is positioning for its own survival.

The big question is on the content side.

Will we hear more from the broadcasters?

We had a chance to ask a man who runs the weather channel about this situation and here is what he told us.

I think it is the conditions under which the deals are going forward.

We are watching, and we will see as things roll out whether we need to say anything.

At the moment we are just watching.

I would say some of the comments here off the record are similar.

Some of the larger broadcasters to happened technically made a decision on this internally, so they haven't technically gone forward in washington to voice their opinion.

I want to get to the scuttlebutt and some of the new deals -- you read some of the analyst reports of disney for discovery.

What else are you hearing from potential deal-wise?

A lot of people are curious about the emerging world of media and attack.

-- merging worlds of media and tech.

You had one event yesterday where larry page was answering a lot of questions.

Google is doing a lot of interesting stuff.

The other thing should highlight beyond having media and tech executives and some political leaders who show up is just the huge number of sports executives and the league commissioners who now, here because a lot of people talk about the value of live sports and how important that is to the media business.

Phil jackson was one of the keynote speakers yesterday.

I think you will continue to see your out how sports leagues, teams, and rights are figuring themselves out in the new world of media.

Our twitter question of the day is what mega deal you would like to see come out of sun valley.

Scott galloway, i want to put this question to you.

Maybe it is not a mega deal we should look at.

Maybe it is a game changing you with smaller companies.

I am convinced in sun valley that every night the older media executives get around a fire of copper and old technology and pray that the internet is going to go away.

If you look at television, what do you have?

Google destroyed the newspaper industry.

Youtube and google are trying to go after the ad market in tv.

Most of the sock -- most of this talk is about how we stave away the wolves.

Did anyone have trouble trying to find the world cup on tv the last few weeks?

I can find something faster on my phone.

It is all these crazy -- all right, a lot of moving parts there.

We want to thank jon erlichman in sun valley, idaho.

As we hate to break, secretary of state john kerry and treasury secretary jack lew are speaking in china.

They are answering reports of the latest chinese hacking accusations.

We will bring any headlines across.

Good morning.

This is "bloomberg surveillance ." tom keene is off for the day but betty liu is here and she has a preview of what to expect on "in the loop." we have the ceo of deliveries.com.

It is a same-day delivery service for everything from your dry cleaning to your alcohol, the stuff that you need -- why did betty point at me when she said "alcohol"? [laughter] but they are also delivering picnic baskets to you in central park.

They can find you with your mobile phone.

Oh, with gps.

Also, we have legendary property player letters listing, the man most known for rebuilding the world trade center site.

He is talking about coming together with the port authority about a financing package.

Looking forward to that.

Betty liu, "in the loop," starting in about 20 minutes.

We need to about what is happening in europe.

Our futures were only down about a third of a percent and now a focal sent.

Guy johnson in london, maybe you can help us understand what is happening.

From what we told is started in portugal and has spread because of lack of bond payments.

What is happening here is the parent company of one of p

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

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