Oil Jumps on Egypt Violence: Surveillance (8/15)

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Aug. 15 (Bloomberg) -- On today's "Bloomberg Surveillance," Tom Keene, Sara Eisen and Scarlet Fu bring insight on the state of the market getting you ready for the day ahead.

Egypt is gripped by protests.

The price of oil surges.

John chambers disappoints 4000 employees.

Can a fingerprint reader make billions for apple.

There is money in the future.

Virtual wallet.

Good morning, everybody.

I am tom keene.

Joining me, as always, sara eisen and scarlet fu.

An extensive briefing, egypt economics.

We are monitoring of violence in egypt.

In other news, the japanese government reporting on the economy.

Notable because the japanese government changed the wording on prices to " inflation is in dean." 8:30 a.m., an initial jobless claims.

And the cpi index is out.

The weekly look at consumer sentiment.

At 10:00 a.m., the philadelphia fed outlook.

It is interesting to see what the fed -- the fed has raised the specter on inflation.


louis has pointed out the fact that we should not think about tapering until we see a better economy overall.

At 7:00 a.m., we get wal-mart.

After the bell, dell -- the fight continuing with silver lake.

Let's do a data check.

Oil finally moving.

Yield higher.

We elevate to 272 this morning.

The euro actually stable.

A stronger euro by 0.5 to 5%. -- 0.25%. some of the attention not in non-oil-producing egypt.

Sara, you see it in a risk of trade, stronger japanese yen.

Futures falling.

Let's go to the front page where we scoured the papers and the web for the most important stories.

That cisco announcement.

It is interesting because profit rose 18%. cisco is cutting more jobs, 4000. that is 5% of the workforce.

The numbers keep piling up.

A surprise because the forecast for this quarter is a little shy of some analysts' estimates.

Europe, asia, china, japan.

John chambers have saw -- has spent a lot of money.

This is not the first time.

The john chambers we never knew.

He is doing it now.

In july, 2011, he announced plans to shut down -- to fire 6500 employees.

The other story on the front pages, jp morgan expecting to be fined.

A $6 billion loss that led to criminal charges against two former london-based employees.

They allegedly missed based -- mis-marked their trades to hide losses.

Is this going to be a movie?

It probably will.

We are also want to study the extradition treaties.

All over every front page this morning, you have to look at what is one on in egypt.

Chaos sweeping across the country.

The debt toll climbed to 421 after the military-backed crackdown on protesters -- the death toll climbed to 421 after military-backed crackdowns on protesters.

I see it out of our reporters in the cairo news bureau.

There was a comment from the u.s. government.

Secretary of state john kerry spoke yesterday.

The united states strongly condemns today's violence and bloodshed across egypt's. it is a serious blow to reconciliation and the hopes to a transition toward democracy and inclusion.

The u.s. has threatened to call off a joint military exercises that were scheduled to start next month.

Often, we have gone to brian, the senior fellow at the center for american progress.

He consulted a number of u.s. agencies across all of the middle east, including egypt, pakistan, yemen.

Brian, good morning.

Secretary kerrey talks about a transition.

What would -- secretary kerry talks about a transition.

Are we any sexual this morning in each it?

-- ineffectual this morning in egypt?

We are seeing a conflict that different parties see as an existential conflict.

It is hard for an outside party to shape and influence what happens.

We are trying, but it will be really hard.

When you see the brutality, the numbers are rising.

The 450 number is likely to double based on reporting today.

What i found you need was the sniper reports for the military.

Who is the outside actor who can advise or effect the muslim brotherhood and the is thomas -- is an honest -- islamists?

One actor is qatar and the other is turkey.

They are trying to get all involved to step back from the brink.

Syria is in a serious civil war.

We do not want to see the to go down the path of what syria has experienced the last two years.

It is a tricky situation for the obama administration.

Now a growing number of lawmakers are asking obama to declare the overthrow of mohammad morrissey and coup and withholds aid.

As he it stands on the brink, i think the united states needs to pull out all levers they have.

I understood the rationale of not wanting to do this initially.

How close is egypt to be the next syria?

Each of those not have the divisions that syria has between shia and sunni moslems.

The biggest problem is the breakdown of some of these key institutions like the police and others.

I cannot think it is close, but we should be worried about that possibility.

Thanks for joining us last minute this morning.

Ryan is a senior fellow at the center for american progress forbrian -- brian is a senior fellow at the center for american progress.

Also joining us is chris.

We will talk to him about this idea of putting a finger on an iphone and doing fancy things.

Seriously now, your world is front and center whether it is the security of egypt or the security of the banking industry.

What is different in a world?

We are doing more and more on these devices at a rapid pace.

Our laws are on these phones.

Our lives are on -- our lives are on these phones.

Our lives are on our computers.

Criminal elements can get in there.

David kirkpatrick was tweeting out from cairo.

That was unimaginable four years ago.

Where will we be four years from now in your world?

You will be more online.

I booked my hotel to get here online.

You did not stay in the " surveillance" pup tent?


what are you focusing on next year for security in cyberspace?

We might be able to do it with passwords and keys.

Never having keys or for getting your password for e-mail again.

True real-time authentication has tremendous consumer utility.

Been big thing that needs to happen is to help the people who do not have an pin or a pin that is one, two, three, four.

An extraordinarily busy 24 hours.

Here is scarlet fu.

Wiring defects in the fire suppression system on 3 boeing airplanes.

A consolation prize for ibm who lost to ibm -- lost to apple.

They will supply cloud services to the department of the interior.

The re-insurance unit of third point has priced its inch -- priced its face fund.

-- hedge fund.

Another company we have to talk about when we come back on "surveillance" is cisco.

Headwinds facing the company, which is just as a behemoth.

? this was a more important interview yesterday.

It has become ever more important this morning.

John chambers is 4000 lighter.

A conversation this morning at 9:00 a.m. on bloomberg television.

Sarah fisa -- sara eisen year with tom keene and scarlet fu.

We will talk about cisco and layoffs.

It was surprising given earnings were not that bad.

They rose 18%. cisco cutting 5% of -- they rose -- cisco cutting 5% of its work force.

You can see the stock responding.

He has put in place a turnaround plan.

What is the progress report on that?

He has blamed the governments spending less and that was affecting sales and corporate budgets being slammed.

Cisco has eliminated the low hanging fruit.

What are their new sources of revenue?

Usually i go down the income statement.

This is about up the income statement.

Nominal gdp not bad.

Asia declined 3%. china fell 6%. that is the weak part.

John chambers has been expanding to other markets.

Other companies are ahead in technology and other margins are lower.

What are analysts say about him and his strategy?

I would think i would find a lot of negative notes.

But cisco is increasingly serving as an example of old school technology done right.

They have managed to remain nimble and grow.

What do you think of john chambers' strategy?

I think it is a metaphor of what is happening.

Earnings growth has been a function of cost-cutting.

This is a been company.

I am surprised the stock is not up.

A 75,000 person company.

There are a lot of places to cut.

You did not like to hear about that because there is a lot of pain involved.

This links the business world with the economic world.

Load gdp and low inflation is finally catching up with people getting high marks like john chambers.

Ceo's are specifically addressing some of these macroeconomic headwinds.

It caps what they can do.

You also have john chambers extending into other markets and facing competition from chinese companies with computer security, for instance.

Is there american exceptional listen here?

-- american exceptionalism here?

We are the ones innovating.

We are at the age -- edge of something new.

We are saying, do these expensive transactions on your phones?

To other countries do it better because they can do it with cheaper costs?

Security settles down in a few years.

By the time they have implemented it, we have already figured out how to do it right.

What apple could have up its sleeve.

In the next hour, we will speak with ian breme about economic ian -- bremer.

? this is "bloomberg surveillance." i am sara eisen.

The nobel laureate has resigned from egypt as vice president.

He says he does not with us not -- does not want responsibility for the violence.

An airplane crash in birmingham, alabama adjusted for don.

Both pilots were killed.

House speaker john boehner says it is not to criticize the health preform law.

He says the gop have to come up with his -- with its own plan instead.

We will talk to ian bremer.

Front and center, the resignation of the vice- president in egypt.

Cannot emphasize enough to those of you joining us -- finally, we see oil moved off of the egyptian news.

The oil price is $111. there is fear about the suez canal.

I have feared that our mourning must read is this -- morning must-read is smart.

Carl icahn is asking for a bigger stock buyback at apple.

One person says the carl icahn plan is lame.

Returning money to shareholders is a business strategy for an electrical utility.

It is not a plan of vision.

Is -- it is a big thought.

You have to find something intelligent to do with the money.

He is not a technology entrepreneur.

The rage is cash management and returns.

Maybe the pendulum has gone too 5far.

That perception that it is sitting there with iphone and ipad is concerning to investors.

Speaking of the hyperloop and innovation, it is a complete political statement.

Elon musk wants to train people to look to private enterprise, not government, for the innovations that will improve their lives.

For get the government.

Look to the private sector.

It is aimed neo-libertarian message.

Your point is an interesting one.

We are waiting for governors and state legislatures to prove.

You go to europe and you see how the fish in that system is.

That used to be us.

You fly -- you go to europe and you see how e sufficient - 4fficien -- how efficient that system is.

Tom, you said we could come up with technology without help from the government.

What could be in the new iphone.

? this is "bloomberg surveillance." i am sara eisen.

We need a data check.

Dow futures -47. elevated yields right now, 30 year bond, 1676. crude $111.16. that is a real move in oil.

You did not include gold in that day the check.

It is going higher and pushing toward $1,350. some technical reasons for why gold miners are getting a bump up.

The stores market is recovering at a faster pace than anticipated.

Cree down 22%. it is the biggest slide in 8 years.

5000 employees in north carolina.

It used to be a big deal.

Let's move from cree to apple.

The portion that the new iphone will be unveiled next month.

It will have a fingerprint readers.

A digital entrepreneur and nyu professor.

Chris is one of the most influential people in i.t. is the fingerprint going to be the next cut screen -- touch screen?

I have one on a thinkpad several years ago, and never used it.

This is an opportunity for apple to do it differently.

I think people are ready for it now because we are doing things that feel like high security.

When you are spending hundreds of dollars on your iphone and you lose it and think someone can access your credit cards, people want more security on their phones, but they want it to be easy.

Tom, i wonder if york center will fit.

This is a significant shameless plug.

This is the new bloomberg security pad.

It hangs on your neck like this.

You use it when you are not by your actual terminal.

You go like this and the new new is that you brush your finger against it if you have not spilled a martini on it.

We use these worldwide every day.

Some of the companies that do this type of technology have been running up in the stock market on speculation that samsung may have to buy one of these companies if apple puts out this project and it is a game changer.

The technology has been around 10 years.

I am curious if it has the impact it should.

Is in retail?

Is in financial transactions?

What is the force -- first point of value?

People will start to use their devices for more transactions.

They will think, i can actually buy things with this now.

This is a dumb question.

This is built on the assumption everyone's fingerprint is unique.

Is it proven and can they be replicated?

It does not take your whole fingerprint.

It takes pieces of the fingerprint, samples of sections where the little whorls come together.

Every fingerprint is not unique, but it is pretty secure.

Does that mean i will not need a wallet?

I can put my credit card information online iphone because i have the finger print?

-- on my iphone because i have a fingerprint?

It helps.

Even if you have a strong pass word, people can still steal the data.

It is not the complete solution.

Thad data can follow you wherever you go.

It will be -- bad data can follow you wherever you go.

If someone can steal your biometric data?

What if you have a jailbroken iphone?

What is interesting is that apple shied away from putting a virtual wallet on.

Why hasn't done that?

Is there an indication that it might change with time?

The early indications will be that this will be just to unlock the device.

It will not be to authenticate your bank or your credit card.

Consumer surveillance, news you can use.

What is a good password?

I have five of them.

Four of them i can never remember.

Your birthday.

It cannot be your birthday.

It does not have to be that long.

You have to have some other characters in there, not just english words.

You have to use some symbols.

If you use a couple numbers and a couple symbols, you have a strong pass word.

I am against changing passwords because it is more stuff you have to remember.

The bottom line in this conversation is the final word to you.

I have an iphone.

I want to get a galaxy because i think it looks cooler.

Is this new technology going to make it essential that i get a new iphone?

You lost me as samsung.

It is so much heresy to hear someone say they will go to sam song from and iphone.

-- samsung from an iphone.

You will have a tougher time transferring to the dark side.

She is already on the dark side.

Full disclosure, i happen to be in the professor's camp.

What do you need to see from apple in september?

The pace of innovation.

Since mr.

Jobs passed away, there has not been a lot of break through.

They need something to get people excited to say, we have not gone anywhere.

We are the same apple you have known and loved.

This is still the best brand in the world.

A huge cash build.

You are going to buy a galaxy?

I am -- i do not know.

I am board.

-- bored.

You are just a magnet.

There is nothing wrong with apple that cannot be fixed with what is right with apple.

We will continue the conversation on computer technology and security.

How secure is your data on facebook?

We will talk to the company's top cop.

It is a big business.

Do not forget to tweet us.

Is fingerprint technology a real game changer?

? this is "bloomberg surveillance." a day of violence in egypt has left more than 500 dead.

The debt toll is expected to keep rising.

The vice president resigned saying he did not approve of the violent crackdown.

The president of syria and rebel forces have accused each other of using toxic chemicals.

Switching gears, the most valuable team in the national football league is the dallas cowboys.

For this magazine diffuse them at $2.30 billion.

The new england patriots ranked second.

Those are your top stories.


brady and the patriots , a little bit of a knee injury.

Here is my chart for the day.

We have come back a little bit.

This is $111 on crude.

Terrific veracity of unrest.

You wonder where it comes in in a gallon of gas.

Here is the single best start.

Detail in the of corporate earnings season in the u.s. civilian and global markets.

Profit margins may be rebounding.

Those are your gray bars.

Profit margins are at 8%. what is strange is that profit margins peak in 2012 without a recession following.

Margins have stopped getting worse.

They might be bouncing up just a little bit.

That could push up markets.

Across the span of those 30 years, the increasing transnational and multinational affect on u.s. companies' ad revenues and down the income statement -- on u.s. companies at revenues and down the income statement.

The perception is that the u.s. is doing better than china and japan in terms of outlook.

When i visited cupertino and number of years ago, this was the raging debate.

We think of these companies as u.s. companies.

They are aggressively not u.s. companies.

Apple is a global brand.

Most people see the brand as their own.

You talk about dallas being the most valuable franchise.

What are the three most voluble franchises in the world?

-- value sports franchises in the world?

Number three is the toronto maple leafs.

The reason is the newspapers.

It will be interesting to see if they go for asset value.

The toronto maple leafs?

The number three most valuable sports franchise in the world.

They have had a challenge winning over the years.

We thought we should highlight this.

Your red sox lost last night.

It was a strange play in the bottom of the third.

Davis of the blue jays hit a ball back to the picture.

It bounced off of someone's leg.

They try to find the ball.

He goes to take third base and they overthrows third base.

On an infield hit.

Was that an error?

Did i match the video it?

You did very well.

She knows baseball.

I live it and i've read it.

-- and i breathe it.

They lost the game.

Orioles of the mark.

Tampa bay off of the mark.

She has the ring on her finger.

That is the important news.


A fiancee?

Facebook invited hackers to infiltrate their system.

They are paying big money to do it.

? this is "bloomberg surveillance." i am scarlet fu.

The largest maker of personal computers says it is looking for acquisitions for pc's and smartphones.

Lenovo was in talks to buy a server division, but could not agree on price.

Loeb was buying disney stock.

Berkshire hathaway has taken a stake in dish network.

The stake is valued at $23 million.

That is today's company news from the files of bloomberg west.

Mark zuckerberg and company are paid out over a million dollars in rewards for information on bugs in their program.

This is becoming increasingly the way to go about looking for holes to safeguard your system.

Facebook has issued three warrants to 2300 bounty hunters in 50 countries.

They come from all over the world.

The youngest was a 13-year old.

Facebook is not alone.

Google offering a $2 million reward.

Microsoft is offering a reward for anyone who we -- who finds a bug in the preview version of their software.

When i think hacker, i think bad guys.

These are good guys.

They are looking for problems in security.

I spoke with the facebook chief security officer.

He was a former prosecutor during the dot com boom.

Here is how he explains the facebook program.

You need to engage with people around the world.

We are not outsourcing.

We are increasing the quality inside the company and all the way around.

We have hired two people that we got to know through our bounty program.

It has become a recruiting tool.

I wonder if they had any limits on their budget in terms of the bug program.

Chris, you were named one of the 100 most influential people in i.t. when you hear about declaring open season on your software, is this an opportunity?

I think it is a good thing.

I do not think you can do it without trying to secure the software you yourself first.

It adds to that and legitimizes what vulnerability researchers do.

We used to call them hackers now we call them vulnerability researchers.

I started doing this in the 1990's with microsoft and ibm.

Back then, it was a gray area.

I hid it from my employer.

Now companies are saying, it is ok to find bugs in our software.

Just tell me about it.

There are those who are providing innovation and those that are providing malware.

How gray is the line?

If you are going to help out google and facebook, you are on the white hat side.

There is a black market for these bugs.

That is one of the responses that places like google and microsoft are doing.

There is a black market and people will sell these to foreign governments.

Why haven't i ever had a bug on my computer?

You probably do not know it.

In terms of the actual program that facebook runs, they have a sign certain parts of their platform as high value.

Instagram is high value.

Quality of communication is also high.

Secondary damage.

The discovery of one bug that leads to another bug is something they placed high value on.

Is this something that could be applicable to the public sector?

I think so.

Think about the infrastructure that governments have.

They should be open to people reporting bucks and paying money to do that.

There was a study that came -- reporting bugs and paying money to do that.

There was a study that came out that found the program is a cheaper way of doing security than hiring employees.

Thank you so much.

Markets are on the move.

You are looking at a decline in u.s. equity futures.

We are focused on brent crude oil.

The japanese yen is one proxy.

Nothing extreme at this early hour.

Look at the euro versus the swiss franc.

Not much need for the swiss franc if you have the european economic recovery.

In the hour, we have gone from negative 3 to negative 7. wal-mart earnings due out in minutes.

The retail giant is next.

? 525 deaths.

The numbers keep rising.

Cisco sees headwinds in cuts.

4000 employees.

John chambers will join.

Which retailerpopularity rush -- contest and why?

Good morning, everyone.

I'm tom keene of live.

Our guest host on retail in the consumer -- and the enthusiasm.

Morning briefing.

We have geopolitics come economics, earnings on the agenda.

Continuing to watch each of with the death toll continues to rise, now above 500, but that is changing very quickly.

We will keep you apprised of that.

In economic world, we get the number on initial jobless claims.

We also will get consumer price index, a read on inflation at the consumer level.

Industrial production.

9:45 the bloomberg consumer comfort index.

10:00 the philadelphia fed outlook.

We see with walmart coming out, some major news here.

Walmart earnings just out.

Kohl's also out.

The drama continues.

Who will be on the conference call?

I would say it is one of the huge news items of the day, what will tell actually say?

I have no clue.

-- what will dell actually say?

$1.25 second quarter earnings per share for walmart.

Overall walmart is also looking at a third quarter profits of $1.11-$1.16 which mrs.

The analysts' estimates by a penny.

Numbers coming in a little bit lighter.

Walmart deliver earnings to as different than every other major company.

Carrier pigeon?

To get a fil they file an 8k.. third quarter comparable sales over at sam's, when you back up fuel will be unchanged to down often bearde.

At first look, a pretty good, but you're right, a little light.

Would appear unchanged.

Really hard to move the needle with wal-mart.

I do not remember comparable sales fell more than 1.5%-2%. we will continue monitoring.

I think we can say it is about get that all the other companies do such a great job on breaking up the earnings.

Moving on to get you other company news.

Sycisco's turnaround hit a speed bump.

The ceo, john chambers, will cut 4000 positions, 5% of the work force.

The bigger problem there, weaker sales outside the u.s. which led to a lower than anticipated revenue forecast.

J.p. morgan will be fined in the u.s. and the u.k. over the london whale and loss.

The bank will be held accountable for providing inaccurate information to investors.

Former jpmorgan traders face criminal charges in the case.

The company continues to investigate the matter.

Dan loeb's third point hedge fund has taken a stake in disney.

He was buying disney stock as he pushes sunday to sell part of the entertainment business.

His firm not commenting on the latest move.

Those are the latest company headlines.

Yield jumping well over 111. a true jump.

The first time we've seen a linkage and oil to what is going on in egypt.

A 400 handle to 525. this is the military government crackdown.

Ferocity against islamic protesters.

Ian bremer riding on the g-zero world.

His book is every nation for itself.

It is egypt for its self.

What would you like to see the u.s. do?

Should we cut off what is mostly military aid to egypt?

I would not cut it off without making demands first.

Right now the american official position is pretty much a identical with that of the united nations, which is condemnation and review.

Very clearly the united states has had no influence on the egyptian government over the past six weeks, despite trying to push the reconciliation process very hard.

The u.s. does provide aid to the egyptians every year.

What they need to say is you need to immediately end the crackdown despite the fact that there will be more demonstrations for the brotherhood.

You need to move quickly towards fair elections.

If that is not forthcoming, that i think you suspend aid.

I think that is pretty much required.

It will be interesting to see if they get there.

We have been here before.

What is different this time from the revolts over the past 50 years across the arab world?

To go we hate to say this, but it should be clear to everyone.

Also, the egyptian revolution was tried and failed.

Just as the green revolution was in iran.

Everyone talks about the military coup that occurred to take him out.

It is true he no longer has the position of president.

The reality is he never really had power over the egyptian military.

It was always and remains the dominant political and economic force in the country.

The real difference here is you now have a real extremism on the ground.

There are very few moderates left.

That is why you saw the nobel peace prize winner resigning from the government yesterday.

I want you to listen to this.

We spoke earlier with the egyptian billionaire.

He described the chaos on the ground there.

Have a listen.

9 that judges have been burned.

-- judges have been burned.

Police stations have been ransacked.

We are only defending ourselves.

If you do not want to acknowledge these people are threatening with terror.

An absolute chaotic scene he describes.

What does this do to the overall stability or instability of the region?

He definitely found a solution.

He has tied himself and with the egyptian military and government.

We have seen governments from the emirates understand -- say understand the need to be by went for what the egyptian military has done.

The brotherhood is not without blood on its hands.

Let's be very clear, there is no moral parity in terms of the actions.

Clearly this will cause what had been one of the most important moderating countries for stability in the middle east is now in freefall.

The military has lost a lot of its international support.

Many europeans are calling for suspension of aid without preconditions.

Very good point to bring in the europeans.


brimmer is with eurasia group.

-- dr.

Bremmer is with eurasia group.

The a other distinction is the united states and what is the relationship of the united states intervening in this front?

Will president obama cave to the pressure to declare his ousting a coup which means they would revoke the aid.

I really hope he does not.

I think morsi that his political rights.

-- overstepped his political rights.

We had huge and we hae aave a huge pension that will not go away.

-- ten sion not go away.

I do not know.

How much of this is terrorist tried to take advantage of this situation?

We will come back.

Many different stories this morning to speak up.

635 -- the average amount that the back-to-school shoppers will spend this season.

Will they do it out walmart?

? good morning, everyone.

This matters now.

We have seen in the past 12 hours, cisco undershoot on revenue.

Walmart under chutes on revenue revenue.

Gilbert harrison with us.

Is retail saudi right now?

-- soggy right now?

It is going through a bit of adjustment right now.

The consumer is still confused.

They hear conflicting things coming out of washington.

They say congress at odds.

They are looking for leadership and guidance.

Over 50 percent of retail sales are psychological.

When you feel good about yourself, you want to spend.

It is a question of getting through the bumps.

Really cautious on the mood out there.

We see transactions.

Which is going to win, the gloom or optimism of private equity?

You have 500 billion in excess cash on the balance sheets of companies.

3-1 leverage.

2 trillion dollars that can be used for acquisitions.

Of handbags.

What is it about handbags'? shoes also.

They love them both.

When i walk into sacks, ks, is the thing the private equity tie wants to acquire?

-- what is the thing that the private equity guy wants to acquire?

They have a better best formula.

There is over $100 billion initial combined it savings costs just and the combination.

Plus, the ability to bring saks fifth avenue into canada.

Hudson bay has something like 6 million in canada.

Who is the best merchandiser out there right now?

I still love mickey drexler.

To go mckee drexler.


so much news flow on retail.

The earnings report.

The challenges and egypt.

We will be back.

Good morning.

Good morning, everyone.

What an interesting conversation this will be.

Betty liu with john chambers.

His opinion all over the place after last night's huge disappointment.

Here yet john chambers with betty liu at 9:00 on bloomberg television.

The egyptian government says more than 500 people have died.

The number continues to rise.

The muslim brotherhood leading the overthrow against mohammed morsi.

The nobel laureate has resigned as vice president opposing the violent crackdown.

Trying to find out whether the pilots were suffering from fatigue.

Airbus crashed half mile short of the runway and birmingham, alabama, just before dawn.

Both pilots were killed.

New taking great says not enough for fellow republicans to criticize the health care reform law.

Says the gop has to come up with his own plan.

Speaking at the committee meeting in boston.

Those are your top news headlines.

We are faltering -- following walmart.

Walmart paging -- playing tough on prices.

Prices are 10% cheaper on average.

Walmart just out with results.

What we need to know?

The stock is down.

Disappointing read.

Sales missing the consensus.

Walmart cut the full-year forecast for profit and sales.

The comment in the press release very telling.

Wendy is with us, ceo and founder of wsl consulting.

She knows how america shops.

She has worked with walmart previously.

Is this a new strategy for walmart for taking a page at of their own playbook, undercut everyone on prices?

I think it is going back to where it began, being very aggressive to get shoppers back into the stores today.

What i look at same-store sales, unchanged versus the consensus, it is walmart so big that it is hard to move the middle?

-- move the needle?

You are absolutely right, it is a very big company.

You have a core shopper that continues to struggle.

One of the challenges they have.

Does walmart still get to dominate as price leader?

Does it get to set the rules with online retailers like amazon and everyone else?

That is the big challenge.

Amazon and cure plate retailers have made inroads.

Choppers think they can get the best prices online.

Online has become really important for them.

Does walmart have a big on- line business of its own?

They do, but they have not been able to crack that presence.

A lot of other shoppers go to amazon.

Until they get them back in the store, the that is a problem for them.

To come if they are going to make price cuts come into the ether margin or slam it down the suppliers throats?

I think about those little rooms in bentonville.

We always look at it from the shopper point of view.

I cannot answer that.

I do not know the answer.

I am not being coy.

I did what they are saying is it is about market share.

How do they get more people in this perplex i agree with you.

This time is different.

It is about week nominal gdp.

These elephants are adapting.

Walmart is such a giant.

So many segments they compete in.

Groceries have been competitive lately with kroger playing the same game, matching them on the low prices.

That is that every day trip.

If they can get the grocery prices down, then they will buy other stuff.

They really have to be tough on the grocery pricing.

The strategic shift back to their old way.

Does this follow a series of missteps from the management of walmart?

I am not sure it is missteps.

Trying to redefine retailing every year.

Every day you have a change in the customer's attitude, where they shop and do not want to shop.

We were just talking about $4,000 handbags.

That ain't walmart.

I am sorry, the paychecks are not there.

They're the ones being most hurt by the economy.

They are really scraping together every day to pay crochets, diapers, to get the gas to get to the store.

That is what helps walmart.

The customer will not go to the target for sears or penney's or some of the department stores.

They will go down because the low was price denominator is walmart, and as long as walmart gives them about you, they will go there.

The worry is how to get them into the store more often.

And they are getting better at it now because prices are lower again.

That is what is really important course chopper.

Thank you for joining us.

Gilbert harrison will stay with us.

Coming up, talking about cisco another 4000 jobs.

Does it have a strategy?

Coming up on bloomberg "le surveillance." ? this is a bloomberg "surveillance." i'm sara eisen.

Guest host for the hour is gilbert harrison.

We will take you to cairo in just moments were the death toll is rising this morning.

A nice consolation prize for ibm, which lost to amazon and competition for cloud computing contract with the cia.

Lawyers for american airlines and usair weis says they hope for a speedy trial.

The justice department moved to stop a lawsuit, claiming it will lead to less competition and higher fares.

The airline's lawyer says the government got it wrong and it will make lower prices.

As they see capital reduce stock holdings by $2 billion in the second quarter.

Sac is facing insider charges.

They have several billion dollars as a result.

The for managing 14 billion at the start of july.

Executives expect to end the year with $9 billion.

Very good.

The news this morning, oil moving on egypt.

South to a fourth crew cairo.

-- through cairo.

Covering the rouble yesterday and injury and death.

He joins us in the afternoon of cairo.

Good morning.

What is the state of egypt in cairo right now?

We just got an update saying the muslim brotherhood, the major opposition party, the party that was essentially a tax cut they are calling for mass protests and a series of mass funerals that are expected to take place later this afternoon.

The city is clearly on edge.

There is a curfew that takes place in the evening.

The one has any idea if the muslim brotherhood and supporters will obey.

To say the city is on edge, that is absolutely true.

Walking down cairo would be bumper-to-bumper, torres outcome of votes on the river -- there is nothing right now.

-- tourists out, and boats on the river.

How do we get to next monday?

The big concern is friday afternoon.

There will likely still be funerals to help -- to be held tomorrow afternoon.

Much larger crowds.

People coming in from the cities.

There is a real danger.

Today and tomorrow will be tinder box.

It would not take a whole lot to set off the crowds.

These are people who have are lost loved ones and friends and are furious.

You just referenced the funerals.

We have been lofted -- watching live pictures from cairo all morning long.

We believe we have pictures of the mosque where there will be funerals held today for the people dying in the violence.

What do you see for any resolution and how is this different from any other outburst we have seen on television in egypt of the past few months and years?

Up until yesterday, as much as people were talking about it, there was always a hope that there could have been some political revolution.

The vice president was considered a u.s. ally.

He was hopeful there could be a political resolution.

When he resigned, that put it in the coffin.

Essentially means the muslim brotherhood will not back down in the military will not back down.

There is no talk of any political revolution at all.

It is more about how bad will it get?

You talk about the violence.

What is the talk of spilled over into other parts of the middle east.

Egypt is one of the most influential countries in the middle east.

The egyptians difficult -- egyptians typically travel.

I have been to cairo many times.

I have never seen this as high as it currently is.

You have people furious.

The muslim brotherhood reinforced out of power.

They're turning to the united states.

Because of that, there is a lot of and did-americanism.

There is a likelihood people will start targeting americans.

Degummed very good.

With abc news from cairo.

To me, the distinction away from the markets and oil is the word sniper.

What i notice is different in all the reporting is is that word sniper this time was different.

And the limitations of american influence.

Brent crude at $111 per barrel.

Nymex crude approach of 108. good morning, everyone.

All of our interviews out at boulevarbloomberg tv plus.

An eventful morning.

I am tom keene.

Loads of american economic data this morning.

We look retail.

Gilbert harrison with us.

Markets deteriorated.

I know there's a lot to talk about, but futures a new low, - 8. how about the big announcement from cisco?

Another round of job cuts at the troubled network equipment maker.

John chambers, the turnaround effort.

Sputtering sales are falling short and cutting more jobs.

A lot going on.

We have seen it with walmart and retail.


chambers joining betty liu in the 9:00 hour.

A spent 10 get jillion dollars.

He bought 59 companies to shift a failed business plan.

Paul could ospkodwasky.

You look at this and look at his chin -- mr.

Chambers grambling, it says a lot about big tech.

What does big tech do in a soggy, global economy?

Not much.

Laypeople off.

You alluded to this earlier, they are a host of acquisitions dating back to the early 1990's. some of the should have happened a long time ago but was masked by the rising tide in data network.

It really had to come unwound because this company was truly an and wielding automation all of these acquisitions.

The deeper problem is is facing a number of smaller competitors.

So you have these forces working at once.

Was set out to me was scott galloway looked at the company's come to the management and said it is a good example of old tech everything new tech and changing the playbook.

Are there any lessons for old technology companies either positive or negative?

What they should or should not do from the ocis co around?

I do not think they are particularly good example of all.

I think they're very slow.

Most of the problems have been systematic and been there for some time.

He is been loath to do with it for a number of different reasons.

When you build up through acquisitions, these problems should be dealt with much more quickly.

And technology, those people are everywhere.

Guest host for the hour is gilbert harrison.

Merger and acquisition retail guy.

When you hear about the struggles they are facing, how reminiscence is it of retail and changing things with gdp growth so sluggish?

Growth really.

You have to go with the punches and if you do not change, you are dead.

When you hear what cisco spending the money and buying new companies coming is it nimble enough to play off against the smaller competitors?

Pulte i did not really think so.

I have a long debates yesterday with a friend who has a large position in them.

It is no longer a growth story anymore.

A wonderful study showing tech companies that fall below 8% year over year growth as a general world never become a resurgent again come up with apple as the rare exception.

Should john chambers x that?

-- exit?

God, yes.

Betty liu will ask that question of mr.

Chambers this morning in the 9:00 hour.

Greatly valued here.

I had the feeling he would have a different answer.

-- i have a feeling he would have a different answer.

Another violent and deadly day in egypt.

Also, we will talk about big red.

The famous lobster truck out of brooklyn.

The founder.

The business of food trucks and lobster prices sinking next.

? good morning, everyone.

Futures did -- continue to deteriorate.

Brent crude has come back.

111 handle.

110.92. a little easing up there as well.

In the loop" with betty liu, a conversation with john chambers.

She will ask evil, a tough questions.

Joining us now is betty liu.

He deserves tough questions because he stunned everyone in the investment community saying he will cut 4000 jobs.

This company has cut 12,000 jobs over the past two years.

He said the biggest mistake ceos make is when they do not move fast enough.

Questions now whether he did not move fast enough in transitioning.

Would you also say one of the big mistakes is they stay around too long?

I have interviewed a lot.

Is there a suggestion from his sources that he has stayed around a little too long?

There is certainly an awareness that he is preparing for the transition, that he will leave the stage at some point in the next few years.

Maybe he needs to leave sooner, who knows?

We know how you feel about john chambers and whether he should stay on board.

You were just telling us you think he should leave.

What would you ask him?

I have a hypothesis that we're seeing an industry that is maturing rapidly, and much of what we see in terms of the merger and acquisition cycles are driven by that, that people are trying to find growth through acquisitions.

So chambers is a growth merger and acquisition c.e.o.. cisco need someone who can bring operational efficiencies out of the company.

That era is over in the industry.

So he is the wrong guy.

What should he not do?

What should he avoid doing?

The natural instinct is another acquisition.

Look at the company's causing problems and they wait a minute, why am i not an acquirer?

That has always worked before.

That will be his natural inclination.

I think that would be a mistake at this point.

This is your real house when it comes to merger and acquisition.

You focused on retail, but there is a limit to how much you can do before you have to have organic growth.

You have to digest acquisitions.

You have to buy them and make sure they are working.

Then you could go on to the next one.


I like that.

Thank you, paul kedrosky in kansas city.

Really looking forward to this.

You will be vicious, right?

I will be fair.

Betty liu with john chambers this morning.

Coming up, $2.72. that is the price of a lobster per pound.

Walter prices at lows we have not seen since the depression.

? -- lobster.

This is bloomberg "surveillance." i'm sara eisen.

Run by tom keene and scarlet fu.

30-year treasury yield hitting the highest level since august 2011. egypt up.

Big moves.

Higher yields.

What we're seeing is a decline in u.s. equity futures.

Futures now down 10 points.

Stronger japanese yen.

There is concern out there.

It goes right back to egypt.

This time is different in terms of the market's concern.

High-yield, what that.

Initial jobless claims.

In the meantime, company news.

Scarlet fu has some.

But largest tanker a personal computer says it is looking for acquisitions in pcs and smartphone.

The company should buy if it finds the right targets.

They were in talks to buy the silver division until they could not agree on a price.

Third point hedge fund has taken a $140 million stake in disney according to a regulatory filing.

Loeb was buying stock as he pushed sony to buy part of the entertainment business.

In brazil, prosecutors are going after samsung for what they say are dangerous work conditions at the factory.

The loss-making electronics for the latin american market.

Samsung says it will cooperate with authorities.

That is today's company news.

We are going to talk about lobsters now.

Maine lobster has been a bargain.

Anecdotally i was in montauk last weekend.

Huge crowds outside of red hook lobster pound.

I was able to enjoy lobster a regular low prices because there is oversupply overall.

The state car burst -- the state carharvest skyrocketed.

The man has not met supply.

Profitability is getting squeezed.

I was in maine three weeks ago.

Towo 1 pound lobsters $10.99. a massive oversupply.

We have combined on site surveillance.

And the lobster fest and montauk over the weekend.

She was of a disgrace.

All eyes turned to brooklyn.

It is redhook lobster pound.

We are beyond honor.

Co-owner joined us.

She has a truck that will end up at lexington avenue.

This is the high point of the month for us here.

Is the price of lobster and all that cheapness, as it benefited consumers or are you making out like a bandit?

My lobster prices have increased 25%. it is a very complicated economic problem we had.

The lobster, like most food animals is sold in different parts.

So the price of the fillet will support the lesser part.

Since we opened five years ago, there has been skyrocketing demand for lobster rolls and everyone decided to use the clock.

You need an expensive price on the tail market to support the clock and a call me to.

What happened is world wide demand has not skyrocketed.

-- the claw adnnd knuckle meet.


the cost of production is still the same.

The price has increased due to the collapse of the tail market.

Price discrimination theory.

How much room to you have to move up the price of lobster rolls?

$16. outstanding.

All i can do is try to reduce my purchasing volume.

Did you get french fries with it as well?


that is a steel.


is there climate change?

Something in the water?

I am not a marine biologist.

There is anecdotal talk about why it has increased.

Cod is the number-one presiden predator.

Lobsters take seven years ago from 8 to 1 pound.

During those seven years most of them are even.

They like to hide under rocks.

Cod love to eat baby lobsters.

The caught population is going down.

You blame it the evil cod?

I believe the fishermen.

-- blame the fishermen.

Maine has put in fishing regulations.

We always bring you for their debt on a story.

We go to our chief economic correspondent, michael mckee at an undisclosed vacation that location.

Good morning.

How is the lobster wherever you are?

The lobster is good and cheap, but not what people generally eat where i am.

They are more interested in a delicacy.

I will have sara take you out for rocky mountain oysters.

What is the secret?

What is the key to a delicious lobster roll?

Key is to let the lobster shine through.

Not too much manas.

I use a homemade mayonnaise . 00 no-- not to much mayo.

I want to go back to michael mckee.

What are rocky mountain oysters?

To go something you should look up and check out because it is considered a delicacy.

I was trying to avoid that.

There is a whole combination of things.

One of the things people are looking at is global warming.

A couple of warm summers have created an oversupply.

The problem is most of the processing plants are in canada.

They have been turning away and producing the kinds of things that go out commercially.

That lowers the price because they cannot sell it in raises the supply.

Michael mckee, thank you.

Back to your vacation.

This is important.

We talk about lobster or the supply.

A lot of your work is based on the oceans.

Whether it is caught or swordfish.

Pretty ugly.

Pretty ugly.

Conservation measures were really only put into place a limited number of years ago.

I think we could be seeing the effect of the conservation measures in maine.

Hopefully we see the effects with other large fish.

You mention caught.

This seems to be this issue of choice in most restaurants i walk into these days.

Is it because fishermen are picking it up more readily than they were before?

I do think they are picking it up more readily.

The prices in the grocery store are lower.

I am not an economist or marine biologist, i just go shopping.

The future business is very complicated business.

It is subject to different regulations in every city.

Whereas people come to me and say i want to open a lobster truck, i say do the research.

Cities generally well people love food trucks come almost everyone in the city is not in favor.

I have never been to a food truck because the line is so long.

Take of the line in midtown is long but we move quickly.

This has been wonderful.

Can you come back next time to talk loads of lobster?

I can come back and bring lobster.

Thank you.

Susan povich from red hook lobster.

Gilbert harrison joining us as the guest host.

Be sure to catch the interview with john chambers next on bloomberg television.

? . .

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