Oil Surges as Iraq Crumbles: Surveillance (06/13)

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June 13 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Center for American Progresss Senior Fellow Brian Katulis; ThinOptics Co-Founder David Chute; Graham Fisher and Company Managing Director Josh Rosner; Gabelli Asset Management CEO Mario Gabelli; AIG Non-Executive Chairman Steve Miller and Bloomberg Contributing Editor David Kirkpatrick.

This is "bloomberg surveillance." oil surges as iraq crumbles.

Eight years of u.s. effort is done in days.

Mark carney moves market austerity.

And twitter goes in search of its inner adult.

Good morning everyone.

We're live from our world headquarters in new york.

It is friday, june 13. i am tom keene.

Joining me, scarlet fu and jonathan ferro has come abroad.

He gets us started with a morning brief.

It is an honor to begin with your morning brief.

The sterling reached its highest mark in weeks against the euro.

They may raise rates earlier than expected.

The prime minister says he aims to stop corporate taxes in 2015. . no earnings today.

President obama will be visiting tribal natives from native american indian tribes in the dakotas today.

In the middle of the country, up at the top.

I am familiar.

A data check after he learns where north dakota is.

Commodities focus on oil.

They have been soggy and a little bit correlated.

The euro is stronger.

American oil, 106.94. the vix shows some of the tension, moving from the rana.

-- nirvana.

113.05 on crude right now.

Let me look at oil here.

This is from the news and we will discuss this in a moment.

Iraq, back to 2003, sturgeon oil -- surge in oil and collapse.

Above that 100 level and we have moved a lot this week from 110 to 115. it is a busy morning with the papers.

Here is scarlet fu.

On the heels of that oil chart, we have to talk but this crumbling situation in iraq.

That is the front page story.

In al qaeda's splitnter group is on the way toward baghdad.

A civil war is brewing and the white houses and scramble mode.

The president says he will not rule out airstrikes.

Is just so ramped up.

Did we undo all the work of the last eight years?

Prime minister cameron is talking about the british experience.

From where you sit, what is this between the british and the u.s.? we have had a very similar experience.

We have seen those areas where we have fought alongside the united tape and collapsed in the last week.

The key for me is how quickly this moves.

Overnight on tuesday, one city has fallen.

The kurds in the north and the jihadist outside baghdad.

Scarlet will talk to ryan in a minute.

Are second from page story is bank of england governor mark carney signaling that interest rates may rise sooner than expected.

He was speaking at the mansion event in the city.

This is where they go down and look at that suit.

Mark carney looks great.

Let's not distract from how symbolic this is.

He has said that the rates were not rate until 2016, then said that they might rise this year.

This has and locations for the united states and the federal reserve.

And the drama -- the mansion houston or, there is no u.s. equivalent.

No, there's not.

That is where the lord mayor of london resides in the city of london.

It is about the chancellor and the finance minister's speak.

Ch.

-- speech.

The equivalent in the u.s. is pulled chicken at the marriott.

Is that even a comparison?

What else do we have?

Owners of univision are looking to sell, according to the wall street journal.

The spanish broadcaster is the largest in the u.s. they're holding talks with time warner.

They are owned by a group owned by a billionaire, who but univision in 2007. top of the market, world cup, sell ourselves, that is billion.

Everyone is looking around to sell or buy.

There is a frontpage for this morning.

Unbelievable.

No news flow on monday or tuesday.

That exploded on wednesday.

Let's continue on iraq.

Trying to give you the proper perspective on oil.

Brian has been a huge help to us.

He joins us now after an incredible 24 hours in iraq.

With in the north, in the kurds, the northwest and the jihadists, what does ryan katulis focus on?

I am most focused on whether iraq holds together the country and whether they reach a war.

It looks like iraq is on the brink of yet another sectarian soul or.

-- civil war.

When you look at the reactions to the spread of the jihadist movement.

The kurds have taken over the oil-rich city of kirkuk.

And the shia government is starting to respond.

This is not just one isolated incident.

Iraq is linked to broader regional dynamics which could have spillover effect on the oil market.

Paul sullivan a georgetown talks about the callous state.

-- caliph state.

What is new about this jihadist -- this pan islamic effort, versus others who have studied?

What is different about it is that it is actually very effective, connecting with us and with each other on the internet.

This is why it has been able to move very quickly and build support.

You see the photos and videos of them tearing down the border between iraq and syria.

They are very adept at building their support for the social media.

This is quite different from what we have seen 10 years ago.

This would not have existed.

We have recently done a long report in jordan, next-door to iraq.

It is full marble to these trends.

I wanted your thoughts on what the u.s. response should be.

The white house says the u.s. is not contemplating use of troops.

They are considering -- would that the ineffective response?

I think so.

The u.s. still has 10,000 personnel on the ground.

When you add up the u.s. government and the contractors, and we have a sizable militr ary collaboration inside of iraq.

People think we just left -- no.

I think airstrikes could be useful, but we have to be intelligent on who we are trying to hit.

The best thing to do is to get the iraqis to stand up for himself.

They're really upset with the fact that we spent $20 billion building in iraq he security force that essentially wilted in the face.

We will speak with you next week, the story is not going away.

He is with the center for american progress.

Away from iraq, wall street confronts a quiet -- he wrote an important book, " reckless endangerment," one that made a splash.

Martinson and rosner on where we are going.

Give us an update, as we look at the quiet of wall street.

Is this you faulr fault?

I think it is wall street's fault.

We're seeing with the world is going to look like.

We are heading into july 1, when the next round of living wills are due for the bank, and trying to figure out if their resolvable under dodd frank.

It is interesting that there was nothing done with last years living well.

It is quiet, but it may be the, fore the storm.

I think we are freaking the banks through narrow business rush.

So getting this $10 billion fine -- 13 for jpmorgan.

They are pushing out some senior cricketers.

Will that change their behavior?

I think that the department of financial services has oversight of the foreign banks here in new york -- they have a different approach than we have seen from washington.

He seems to want to take senior executives and hold them accountable.

I do think that is a much more fine a deterrent.

And so, to the degree that that changes, it is interesting.

However, we have seen hollande has tried to reach out to obama and say the fines are too high.

You have to wonder if that politicization of the process does not reinforce too big to fail.

David kirkpatrick is with us, bloomberg contributing editor.

We will talk about twitter here in a bit.

Univision, talk about univision.

Here's this news that we have.

The owners were looking to sell.

They have media reigning supreme again.

In terms of ad revenue, they are still number one by a long shot.

Media reign supreme, however.

That is the wrong way to look at it.

We are in a transitional phase where we are moving from one kind of economy into a more digital economy, and both new players are scrambling to get pieces of the old economy and the old people are trying to get pieces of the new economy and blend into one universal system.

Are the owners looking to sell before tv jumps the shark?

I bet everyone at this table is watching more tv than they were five years ago.

Tv is extremely successful.

It is also distributed over the internet.

Univision is playing with that like any other network.

I think any kind of media business, digital or otherwise, that has a big audience, is valuable and will thrive over time.

Print may be one where there is a longer discussion.

We have a lot to talk about.

Mario gabelli is with us in the next hour.

Scarlet?

The major executive leaving twitter.

What does that signal?

That brings us to the twitter question of the day.

Should twitter drop its 140 character limit?

David kirkpatrick will help to answer our questions.

Tweet us.

Do it in 140 characters.

? the great disinflation of david rosenberg.

He's looking at inflation down the world, -- road, in three-five years.

This is an important interview.

3:00 this afternoon, on his call of a changed american economy and a changed finance investment.

That is must watch this afternoon.

Good morning, i am tom keene.

With me, scarlet fu and david pharaoh.

-- djonathan ferro.

The coo of twitter is stepping down.

Here's the door, what is your hurry?

It is not clear over what, whether distraction of the company, control.

This is all very curious as the company struggles to maintain its growth.

David kirkpatrick had the same effect.

Is this all part of their transition from start up to publicly traded company.

It is their transition from relatively small business to a massive pop service for everybody.

Which it has to become given its public nature and the expectations of investors.

I think that is a much more difficult process than most investors thought about.

It is not going that well.

This is just come back to what everybody was talking about to begin with?

People just are not using twitter.

They do not understand.

My mom does not know how to sign up.

She gets facebook, but not twitter.

Not many people do.

I would say the same thing.

Everyone at this table uses it, i'm sure.

Very aggressively.

We understand that.

Are third cousins probably do not.

None of my three siblings have ever used twitter.

It is really hard to use.

The problem is that, its users are passionately devoted to it.

We insist there's nothing wrong with that.

If you change too much, they would be upset.

I just read the george clooney is engaged on twitter?

? you are so behind.

If it does not change -- ordinary people will never become the accusers.

What about the 140 character limit?

It was so unique and novel when it was first rolled out.

I'm on twitter -- here's twitter on my ipaq.

There's a giant photo there.

You can have photos and tweets, why not a few more characters?

I know that i can write a 140 character tweet.

Why should ordinary people have to think that hard?

Is about tweets, it is about links.

You had a massive pissing match last week?

I had a battle with the mortgage bankers association two weeks ago.

There was a speech at the annual meeting of the nba.

They talked about numbers that were unjustifiable, opaque on the denial rates for blacks and minorities.

We ended up in a huge back and forth twitter war.

You can link links with evidence.

Public people have a far more recent -- i think there is a huge value here the short focus news force.

I think there is value to them.

That is the kind of thing that will compete with facebook at $1.2 billion.

It is the kind of thing that will compete with and generate news or more understanding, hopefully.

I love it for that.

Is that something that is worth many more tens of billions than the current stock value?

Where's the revenue model in that?

Or does it become the new alternative to newspapers?

I will be honest, i am not as gloomy on the future of twitter as you are.

You have been.

The twitter question of the day is foundational.

Daivid's twitter question of the day -- should twitter drop its 140 character limit and increase it?

What would you increase to?

160? unfortunately, you have to make it more like facebook.

No, i would keep it small.

Links are everything.

Tweet us with your answers.

Your viewers will like it the way it is, i think.

We will see.

Mario gabelli will be our guest host.

Yes.

I believe i have seen him.

We will see if he wants to use 140 characters or more.

You are watching bloomberg tv.

We are streaming live on your phone, tablet, and bloomberg.com.

We are also at bloomberg tv.

? good morning everyone.

We have a 113 handled now on crude.

Let's get to our top headlines now.

Jonathan ferro has those.

President obama will not rule out airstrikes on iraq against islamic militants.

They're threatening the government stability.

He says all options are being looked at, other than sending u.s. troops into the fight.

There are bigger trades in the u.s. stock rocket, happening while regulators question the wisdom of letting it continue.

On june 10, they have 40% of total volume.

Dark pools should be kept private.

The spurs are one game away from an nba title.

How did the miami heat -- they have a three games to one lead.

Game five is on sunday.

I feel like the americans are talking about soccer right now.

Is that what it looks like?

Is your knowledge of basketball factors bigger than hockey?

I know michael jordan and i sort of get who kobe bryant is, and that is about it.

Better than soccer.

You know where to tweet jonathan ferro on lebron.

We need to kick off an important must-read.

There was a report from m.i.t. that suggest a correlation between internet use and the decline of religious affiliation.

Minus from christine rosen at the new america foundation.

Is google replacing god?

Our online experiences are convenient and remarkable, but also performance oriented.

We are relying on the internet all the time now to answer questions that religious institutions used to help us answer.

To me, it is a new definition of modernity.

She wrote "the facebook effect." i am biased, but it is not dated.

It is not a dated book.

Religion of silicon valley has changed?

I think it is a very shrewd report.

People should be legitimately concerned that it is not so much that google is doing something wrong, in my opinion.

We as individuals are as much at fault as the company's. we are living our lives at such a pace.

I think there is a risk, because of the digital sensations, that we are losing touch with human soul rich, god connected kinds of things.

I think it is hard to figure out where that is going.

It is the right question to be asking.

Also, data can answer everything for us, when there are limitations to date out there.

And the internet does not filter the accuracy of information.

We do not know the quality of information we're looking at.

We will be back with josh rosner to talk about the unwinding of fannie mae and freddie mac.

How that is going and what is next for those institutions.

? it is washington.

They are a bit distracted -- studying the effects of mr.

Cantor's lost and iraq.

This is "bloomberg surveillance ." good morning everyone.

With me, jonathan ferro and scarlet fu.

Let me do a dated check.

Futures flat.

Oil with elevated earlier.

Still elevated.

106 on west texas.

Right now, 113.26. tick by tick on news, from the various fronts on iraq.

Finance, records complete since he moves forward.

There is a new global wall street, part of our regulated future.

Is it a pass for fannie mae and freddie mac?

Do we need to be careful what we wish for as we amended move forward with these two dinosaurs?

Give us an update on my general knowledge of fannie mae -- how big of a dinosaur is it?

The book that i wrote -- obviously, it was not favorable to fannie and freddie.

That said, they served us well for a long time.

Use of portfolios could give leverage.

At the end of the day, they did not praise credit correctly.

Do you the vehicle and he and the business to the big banks?

Or do you fix them?

That is the battle going on in washington.

Fannie and freddie are not allowed to lobby.

The big banks are pushing to replace them.

The battle that you see from a distance, does it work itself out a decade out?

Or is there things that need to get done?

We sell some of the senators, leadership of the banking committee, put forward legislation based on the warner bill.

That barely passed out of the senate banking.

Probably will not make it to the floor.

I think we're back on the slow track.

Probably will not see anything meaningful until after the next presidential election.

There seems to be an option at the end of every report.

300 pages.

Ever since i looked at the mortgage market, 9 out of 10 mortgages in this country -- the home of capitalism - are backed by the government.

The biggest reason is, prior to the crisis, one third of all financial mediation was done through the securitization market.

As we saw with the breakdown in the cdo market, mortgage backed securities market, we had a market that was unregulated.

It was the wild west with no disclosure.

There was no discussion of the liquid thing.

So, part of the problem is that the private market has not been forced to standards.

Why would an investor purchase?

I would an issuer sell into the market if they can sell right onto the market balance sheet?

That is part of what we're watching happen.

Fannie and freddie, what the future is.

Are we going to fix that and re-privatize them?

And the private market needs to actually fit the private label market.

Is the problem that we are confused about how to refund the mortgage market or the government cannot amazing done?

The republicans need to beat up on fannie and freddie.

They were seen as a democrat supported companies for a long time.

The democrats are embarrassed to state that we need to reform it.

Here's is a general agreement that we need to replace them.

Replace them by putting are too big to fail banks?

They are merely supposed to be a utility to make sure that banks have somewhere to sell their mortgages or inshore them.

-- insure them.

We have the other side of them.

This is the heart of the matter -- are they utilities or not?

That was always the debate.

Banks themselves are now the government-sponsored enterprises.

Fannie and freddie had implied government guarantees.

The dodd frank actually has absolutes.

Jon ferro, the united kingdom is totally different.

It is changing.

The government is used to this.

The u.k. government was involved in the mortgage to market.

This is a front and center issue.

This is the issue in the united kingdom right now print -- now.

What we have seen this is the 1980's is the government pushing this.

Homeownership is universal.

It is leverage without the expectation of payout on principle.

I am shopping this weekend.

How much more expensive is london and new york?

New york was much more cheap before.

It is relative.

It has gotten expensive to the fact that property is ridiculous.

On an average salary, you can afford to live in the cent ral of london now.

You cannot afford be rent.

Just for rent, it has gotten to that point.

This is not going to end.

This is something we will continue to debate.

Washington's attention has been divergent.

I want to bring in other stories.

Chris christie -- he is showing off his moves, ok.

It has nothing to do with politics.

He and jimmy fallon had a special father's day dance off on the tonight show.

The host dressed appropriately for the occasion.

Chrristie walked away in mock anger when he introduced the bridge is closed, which was a tribute to the bridge gate's kindle.

-- gate scandal.

Michelle obama was the first to do this with jimmy fallon.

He is no napoleon dynamite.

Wow.

The past metalico call -- passionate elliptical.

Scarlet did do the lawnmower in the morning meeting.

She did the sprinkler.

I did not do the springsteen dance, though.

What is great is the challenges the governor has faced.

You just undid it there in 3 minutes.

I could never imagine him actually knowingly lawn -- mov ing the lawn.

That was not very presidential of hemp.

We will go to our new jersey correspondent, betty liu, on this.

Coming up, our single best chart on how we are welcoming more foreigners to our colleges, but not necessarily the workforce.

? good morning everyone.

The twitter question of the day -- should twitter dropped to a 140 character limit?

Should they become more verbose?

As we go to top headlines, jonathan ferro, the prime minister chairman's office is saying the united kingdom would commit troops.

Bowe bergdahl has arrived early today in san antonio where he will be treated at a military hospital.

This is his first time in the u.s. since his release.

Popularity keeps sliding.

52% of americans view the former secretary of state fair verbally.

-- favorably.

That is compared to 70% a year ago.

Also, she does not have majority support.

The u.s. is trying to figure out what to do about the big surge of minority children entering the country illegally.

Texas has asked for $30 million to beef up security with max coco.

Immigration is certainly a hot topic in politics.

Her single best chart has been from leading technology profit.

A former morgan stanley analyst -- today's focus is on visas.

What you see is going back 10 years, they were knmocked out of synch.

Now you have a rise in student visas, and employment visa issuance gap.

There is 380,000 difference.

The overlay here is eric cantor.

The action you have seen in washington change that chart.

Is that there?

The causality is unclear.

How many people are filing for those visas?

Who wants to stay here and is not able to?

My daughter graduated college and has two friends.

One is from ghana and one is from indonesia.

They're having trouble staying in the u.s. they got degrees from highly subsidized american universities and they cannot stay.

You still do not know the causality of whether that is trie.

Ue.

we are shooting ourselves in the foot financially.

I saw this with my kids.

They came out of fancy technical schools.

A lot of their friends could not stay.

When you think about how many young startup companies are begun by entrepreneurs from other countries.

Children of immigrants as well.

That chart could easily be a chart in the united kingdom as well.

It is much easier to get a student visa.

Universities in the u.k. can charge what they want to foreign students.

They cannot do that to u.k. students.

This is a massive money than her for the colleges in the united states.

Immigration is much more political in generating money for colleges.

We know this whether it is london school of economics or caltech.

Where would you like to see the debate go in washington on keeping students?

Why is that chart from mary meeker's presentation?

One of the biggest problems is we are educating at the highest expense, engineers, phd's -- we are then kicking them out.

The industry desperately needs this talent.

This dispute continues on.

On a busy week, on a friday, let's get to our top photos.

We're going to start with number three.

Iraq human volunteer to join the fight against a major offensive by the jihadists in northern iraq.

They were outside of a recruiting center.

You see how high tensions are.

This is baghdad.

70, 80 miles northwest.

That is a poignant photo.

This is happening aggressively fast.

I was wondering when we were talking about hillary clinton.

How much of this will fall back on her?

It will be on the sunday talk shows, to say the least.

The senior vice president at samsung has a galaxy tab computer during the 2014 event yesterday.

84 inch tablet, adaptive.

You have all the specs.

That sounds a little bit like an ipad, maybe.

Do they have forward motion?

Great forward motion.

I was talking with you by phone a week or two ago about apple.

One of the things i think a lot about is -- one reason they needed to buy that is because they did not want samsung to get it.

They needed a cool factor.

Even though they have the market way below -- they are really good.

Not as good as apple, but they are relentless.

They restore their focus on this market.

Apple will do well as well.

Apple is struggling now.

In the u.s., it is getting a little saturated.

But it is a global market.

Would've of the biggest business opportunities is technology.

Globally for smartphones.

And our number one photo -- a rally in the capital city of brazil for the world cup.

Uc police standing behind their shields during the demonstration yesterday.

What we did not see lester during the confederation cup was the police moved much more aggressively, small crowds, acting fast.

Making sure they shut this down before it happened.

It was a lot bigger last year.

Did you watch the game yesterday?

The match, sorry.

It was boring and they gave it to brazil.

I will not say anything.

Brazil could get very far in this torment because of what you just saw two seconds ago.

Did you watch the world cup?

A little bit.

We are all part of the percent does not care.

I have england, italy -- i will help you.

My father is italian, so i will support them.

Italy will win.

I know wayne runi, like you know lebron.

Are they letting you go back home?

They let me into london.

We have the beautiful european union, they cannot shut me out.

All right.

Coming up, we show you the perfect gift to give tom keene and other tech savvies out there.

The age-old question, where are my glasses?

Argentina!

? this is "bloomberg surveillance." jonathan ferro is in poor adam johnson.

Let's get you some company news.

Elon musk wants to adopt electric car technology.

The founder of tesla motors will make patents, available at no charge.

He will not sue anyone who uses the patents.

A judge has ruled that linkedin must face a lawsuit.

The ruling means that customers could get damages for revenue that was gotten by accessing their e-mail accounts.

And alibaba will respond to investors who say that they need to be more forthcoming before their ipo.

The chinese e-commerce giant is preparing a new filing with new details on its individual businesses.

The filing will also disclose the names of their 28 partners.

That is company news from "bloomberg west." is this another case of a chinese company that everyone in the west failed to understand?

Is that where we are at?

We are starting to understand it very quickly.

It is very important and their ipo is finally giving us the attention it deserves.

Whether it is 100 plus billion is another matter.

That is the biggest company in china.

It dominates online commerce and a way that no american company does.

It is doing crazy things.

But.

I think it is a great company.

There is a great movie coming out.

I just thought this week, about its history.

Jack ma is a next or later.

We will keep an eye on jack ma with that ipo coming on.

Let's move on.

Speaking of technological solutions, the invention of glasses solved the age-old problem, that i type.

They created a new problem, where did i leave them?

There is one solution.

Our guest is the founder of thin optics.

They attach to your smart phone.

Thomas wearing them.

So does david kirkpatrick.

You can barely see them.

This is about convenience, right?

It is at the intersection of demographics.

My dad and the rest of the baby boomers who cannot read the fine print can now use it.

What inspired this idea?

When you start aging, at 45 years old, you're are no longer able to focus.

130 million americans have this problem.

Regular glasses correct for distance.

We need to get your mic fixed.

Howard taymor,. -- our team will work on that.

They are thinner than two credit cards.

You have your smart phone.

Full disclosure, this is mine.

These are my glasses.

I have bifocals.

They are not the correct bifocals.

If i had the correct bifocals, i would have otherwise like chet on nbc.

I do not have the correct glasses on.

These involved -- this is a two-year development process that involved 200 prototypes?

Over two years to get the fit perfect for people of all different ages and genders.

You go to the back of a cell phone and you can see your cell phone.

You can see you menus and prices and small print.

Josh, if you're listening, from bloomberg businessweek, i can now read business week with these classes.

The patent on this -- i was a two-year problem.

There are so many different types.

We wanted a single sized to fit everyone.

Henrik lundqvist does not.

Where is the patent on these?

Is it easy for me to replicate these?

Is he dissing the brit?

We have two utility patent applications.

Our intent is to be able to have it work in many different factors.

The cell phone is the obvious one.

Then a small universal pocket would go on anything.

Here is this morning's washington post.

It is a transformative thing.

It is a big deal.

Going on the patents.

It takes a long time to get a patent approved.

The office is overwhelmed.

They are completely overwhelmed.

It can take 2-3 years.

We put our applications in and get on a fast-track.

You have to have great manufacturers and supply chains.

Get your name out there.

A glass?

Any innovation in the eye care sector is a good thing.

We are going after people who have difficulty reading up close, but perk up their clas ses-- forget their glasses.

Your cell phone is with you all the time.

Wherever you need them.

Are you expanding them into farsight?

Our intent is to deal with a close reading, but it is a simple solution.

Up close rating for now.

That is your father's day gift.

Let's do a forex report.

Wait, i cannot read it.

Sterling, 169.32. thank you so much.

? oil surges as iraq crumbles.

The kurds take kirkuk.

Eight years of u.s. effort is undone in days.

Where is value?

Mario batali joins us in this hour.

And twitter goes in search of their inner adult.

Will good morning everyone.

We are live in new york, it is friday, june 13. joining me, scarlet fu and jonathan ferro is across the pond.

Our guest host this hour, in a time of activism -- mario gabelli is with us.

Let's get to our morning brief.

Overnight, the pound sterling reached its highest level in months against the euro.

Mark carney said the bank of england may raise rates from a record low earlier than you might expect.

In japan, the prime minister told reporters that he aims to start cutting corporate taxes in 2015. the u.s. will get 8:30 eastern -- no earnings to be released today.

President obama is visiting native american indian tribes in north decatur.

-- dakota.

Ok.

let's get you some company news as well.

The owners of the largest spanish broadcaster in the united states is looking to sell.

According to the wall street journal, univision has held elementary talks with time warner.

A group led by a billionaire bought univision in 2007 for $14 billion.

They won more than 20 billion for the network.

For the second time in my city or, for his lower their fuel which economy estimates.

They also will compensate more than 200,000 customers.

6 models are affected.

And boeing is making a big sale in china.

China eastern a line has agreed to buy 80 boeing 737s. the list price is $7.4 billion.

Chinese turn will get a discount.

Those are your company news headlines.

Front and center.

We did not know this on monday.

Iraq crumbles.

In the last 24 hours, the kurds have advanced on baghdad.

They have moved the oil-rich region.

Jihadists attacked baghdad.

We do not know what iran's involvement will be.

Peter cook is our chief washington correspondent.

The washington post beautifully captured the multiple fronts in the cacophony of iraq.

What would you expect to be the white house work on this friday?

I think this is a real headache for them, tom.

They're getting a lot of criticism from congress, including john mccain, who are saying, i told you so.

If u.s. forces left as they did in 2011, without a more substantial american presence -- this is a very tough choice for this president.

It seems clear from his comments yesterday at the white house that he is going to do something here in terms of airstrikes.

Most likely, at a minimum.

There is no appetite in washington to send u.s. troops, by any means.

This is a president facing a difficult foreign-policy decision.

In the past hour, we got a headline from prime minister cameron and his people suggesting no response by the united kingdom in terms of troops.

I assume that washington will do ploy troops as well.

Forget about the look back.

What about the look forward?

What will the white house do?

There's already talk about airstrikes.

There are questions on capitol hill about whether there should be drone strikes or whether american pilots would be in the air over iraq again.

There is a real feeling among folks who wanted to get out of iraq.

They do not want to commit any forces to this fight.

I think what we're talking about here are drone strikes.

That may help in the north.

This is an enemy -- drone strikes will not be sufficient.

This has to be taken on the ground.

President obama has all but declared that involvement in iraq is over.

I wonder if you can tell us what extent we have changed the policies on the ground there as well.

We now need to rely on intelligence and it may not be there.

The u.s. has added a substantial presence in terms of the embassy there.

It is nowhere near what the president envisioned.

This is still a country that is very important to the united states.

The second-biggest oil producer for opec.

The u.s. has plenty of information on the ground in iraq.

Peter, a nice song formrom the new york times.

Here is brooks -- the big burn, the dangers of american under reach have been displayed.

The answer is not to send troops back in.

It is to provide maliki help to reduce sectarian tension.

To me, the calculus here is more about turkey and specifically iran.

Describe washington's relationship with tehran.

It is an interesting situation right now.

You could see the possibility of both iran and the united states moving in the same direction on iraq.

Maybe not side-by-side in a coordinated fashion.

A prospect has been raised as well.

The iraq use have been looking to the iranians.

There are militia groups on the ground.

Paramilitary forces.

There have been reports of more substantial forces.

This is an area where there is a collision of interests in the united states and iran.

Do not be surprised to see them moving in tandem here.

They may be working directly together through the iraq use.

Both have interest in seeing iraq stabilize.

Peter cook, thank you.

Crude right now, 113.41 it is part of the washington dialogue.

Before i run, it was all eric cantor.

There is much more to the new and fractious washington.

We need to focus on business and markets.

We need to do something before the gridlock of two elections force mr.

Cavalli -- he cannot wait for 2017. wonderful to have you here.

What would you like to see washington do after the eric cantor defeat?

Not much.

Jonathan mentioned before -- in japan, they are lowering corporate tax rates.

We are stuck in terms of allowing american corporations to compete globally.

We raised $2.9 trillion.

Only 350 billion dollars of that is from corporate taxes.

Unleash the power of creating jobs.

Drive around anywhere.

Bridges, infrastructure -- let's get our act together.

The financial time is focusing on the tax of 2014. i'm interested in what you take from this.

Has the fed's actions stop congress from doing anything?

You have a dynamic here that i think is the polarization of the parties.

How do we negotiate?

How do we get once had to give and the other two get?

As a result of that, monetary policy has been one engine, one cylinder in trying to drive the economy.

They have succeeded in consumer wealth through financial assets.

The consumer wealth is at an all-time record.

It is $80 trillion.

The debt has stayed 14 trillion over the last five years.

They want to allow the dollar to weaken.

That has worked.

It is not enough.

Lobbyists.

Can the stop the u.s. from passing this corporate tax break?

Where's the private interest?

Forget corporate tax breaks.

If you run a hedge fund, that is a disaster.

It is so obvious to anybody that should be eliminated.

It is so easy to fix.

Having everyone sit down -- now with this change, you may not get it.

I wonder what could be done at the state level to reduce the tension here.

Can anything be done?

At the state level?

Maybe not federal taxes, but everyone is so eager to not play ball on this.

You have to look for a solution somewhere else.

The state governors -- you have to applaud, even new york.

Andrew cuomo is trying to be a practical person in terms of creating tax-free zones.

Same thing in alabama and florida.

Now, extending that is not going to work on a global basis.

We will talk about this throughout the hour.

We all want to know what mario gabelli thinks about 17,000. can you be long on neck woody's right now?

-- equities right now?

We have a difference between the russians going into crimea and what is going on in iraq.

The shia and the sunnis -- this is a long thing.

In that context, oil 107 takes money out of the consumer product.

That create some confusion and uncertainty.

This is an impact on main street.

It does not come from the russians taking advantage and crossing the red line.

Mario gabelli is with us for the entire hour.

Crude is approaching $114 per barrel.

Violence spread quickly around iraq.

What happens next?

How does opec respond?

This is bloomberg surveillance.

? this is "bloomberg surveillance." our guest host, mario gabelli, is one of america's greatest investors.

After the 70's and 80's, during the late 1990's -- the era of activism.

How do you adapt to carl icahn?

We use him as an example.

This is a new activism.

What is new about?

In the 60's, you did not have as many -- there are a whole bunch of companies.

But, in the 1980's, you had 10% down and you could do a yield.

The activist is just another arrow in the quiver of catalysts that helps surface value.

Unlike the 80's -- the activists are good or bad depending on the situation.

What they do can target.

They also have value for all of the owners of a particular company.

In your world, there are rules of engagement.

There is a message from company to company.

To the activists get their communication right?

There are a lot of dynamics.

There's a bell shaped curve and there will be feedback over time.

At the moment, a short seller does not have to report what he should.

You buy that to take control of the company.

There are a lot of minor things.

There will be changes that are appropriate.

I do not like the notion of an entity buying stocks through the derivatives.

That is not in the fishbowl of the free market process.

We can look at and say what is going on?

Are their phone calls to trish regan -- is that productive?

Would you do that?

I have no idea what that is about.

Activists using the media gets the message out there, doesn't it?

Everyone has to file a 13-d. you have to say what you're doing when you go over the 5% threshold.

The degree that they are telling the world what they're doing, that i like.

That is part of the free market process.

It is the notion of buying a percent or 9% of the company by buying derivatives and not being visible as a trading.

The exclusive therefore surveillance -- mario gabelli likes what trish regan is doing with carl icahn.

Big news from the mansion houston or.

The annual pageantry of london.

Mark carney announces that rates will go higher.

Good morning.

? / good morning everyone.

Joining me is scarlet fu and jonathan ferro.

Our guest host the power is mario gabelli.

John, you have the top headlines.

Bowe bergdahl has arrived back in the u.s. he is in san antonio, where he will be treated at a military hospital.

He was freed in afghanistan last month in exchange for five taliban fighters.

Dark pools are taking a bigger share in the u.s. stock market.

Chairs are changing hands in private accounts and account for 40% of total value, the most in two years.

Dark pools allow bids to be kept private.

The san antonio spurs, this is it.

One game away from the nba title.

They pounded the reigning champions, the miami heat.

They have a three games to one lead.

Come on, the spurs.

Is that what you say?

No, go spurs.

There you go.

You get an a for effort.

When you come to london, we will go see some proper football.

This is special, folks.

They began in the auto business in the 60's. mario gabelli was in auto parts analyst.

He was a value investor.

And a young doctor named steve miller.

We bring both of them to.

Mr.

miller is now the chairman of aig.

Mario gabelli looks for value and insurance stocks.

Mr.

miller, much has been said about you in the past few days.

Many call this an inspired choice.

Why did you pick mr.

Hancock over other candidates?

We were blessed with two very fine candidates.

Real smelly picked peter -- we u ltimately picked peter.

We were a global company and he grew up in hong kong, come from the u.k., and so on.

He represents the globality of us.

He has also been running the casualty business, which is our biggest sector . thirdly, when he came to her company, we put him to work cleaning up the mess at the financial products division in connecticut.

You are known for transforming -- i use that word seriously.

Transformative movement and companies.

How was the aig that mr.

Hancock takes over different from the old aig?

Where a somewhat smaller and more focused company, run as one aig, rather than independent silos.

It will be a much better run company.

They have just come through the survival mode.

The stabilization mode.

Getting ourselves down to the core businesses.

That is the company that peter takes over.

Sanford bernstein is suggesting the size of aig could become -- it has already shrunk down quite a bit.

By anointing hancock at your new ceo, that is continuity.

What new initiatives would you like to see aig under hancock take?

All of the big stuff, the restructuring and reshaping of the company, is now complete.

We are now a property-casualty company on a global scale.

We are a life property on the domestic side.

We're going to between gaining and sucking in and adding a few things here and there.

We're no longer doing this massive reconfiguration of the company.

65,000 employees around the world, we are the largest insurance company on the planet.

Now, it is about execution.

You have done media and financial companies and insurance.

Is this category specifically a value to mario gabelli?

Some of my colleagues own it.

I own a little bit.

We have no compounded knowledge.

We are looking at sony.

They have life insurance company in japan.

Maybe they do not sell it.

Warren buffett is known for his investment in insurance.

When you look at mario cappelli or warren buffett, is there a decade where you can stay with broader insurance business?

Warren buffett has created float.

He has done a great job of getting free money where he is earning a return.

He is making an underwriting profit while he is doing it.

This is a great execution.

It is not insurance along.

It is everything.

Mario gabelli is jealous of warren buffett.

I want to follow that path for the last 40 years.

You say you have 65,000 employees.

That is down 45% in the last six years.

The market cap swore 80 billion.

This aig ever get back to it was?

Aig make it back to being very large, particularly with the international side of the li ght businesses.

We will look for opportunities to regrow ourselves there.

In order to pay off the u.s. government -- we were sad to do it, but we had to do it in order to get the government paid back.

We are not going back to the polyglot of unrelated businesses like aircraft leasing that do not fit with insurance.

Is this mission accomplished?

Order you see yourself staying on?

For the time being, i am going to stay on as chairman.

As long as things are going well, i will take credit for it.

Doing a great job fixing up companies.

Thank you for everything you have done in the automotive industry.

I love how he has his exit plan all right.

We will talk about a major executive leaving twitter next.

? this is "bloomberg surveillance." i am scarlet fu coming here with tom keene and jonathan ferro.

Adam johnson is off today.

Let's case and company news now.

Certain with intel.

Shares are up in the world market.

Annual sales will increase for the first time since 2011. plus, they raised their second-quarter forecast.

The reason is improved business demand for personal computers.

Mickey drexler has been trying to revive sales that j.crew, the clothing retailer that he took right years ago.

This is according to company filings.

Sales have been slowing down as shoppers choose trendier, more affordable rivals.

And john malone is off to the races.

Liberty global and discovery communications are trying to buy a stake in a formula one auto racing team.

They are valued at $100 billion more than companies.

They only to work that one out.

Very good.

Competing forces invaded northern and western iraq.

The distance from kirukkuk is only 104 miles.

Oil has surged.

Near 115 this morning, now back down with a 115 angle.

Our guest had seen this before and joins us this morning.

I'm looking at the kirkuk pipeline, moving northwest.

Kirkuk -- pipeline.

How friend is that pipeline?

How threatened is that pipeline?

Is 100 miles or so from where this terrorists are.

And, to my knowledge, they surrounded one of the refineries yesterday.

Obviously, they know what they're doing.

They're going to cripple the central government or what is left of the central government.

Obviously, oil resources are the most important assets.

On this friday morning, do you have a price point for us where it begins to impinge the global economy and the american consumer?

120, 130 a barrel?

Can it be lower?

It hit 127 at the peak of the arab spring.

I think we will see the impact if oil prices go up another five dollars or $10. we will see tremendous psychological impacts.

It will slow down economic growth.

We talked about how it was up p earlier.

Brent and nymex crude are stuck in a range.

How do you make money trading oil?

You can't/ we think oil prices are inflated by at least $20 per barrel.

The reason for that is the margin of production is below $80. keeping oil prices at this level is concern over supply.

We have plenty of concern.

Now, we have iraq and could be iran.

The entire area in the middle east is volatile.

I do not think it will get any better.

They most likely will get worse.

Where is the service now/ you have iraq producing free billion oil today.

Unlikely they will get up any time soon.

Libya does not look very serviceable.

Can they put their finger on the pump?

There are $2 million.

That is the rule.

Opec is $2 millionto $3 million.

Most of that is in saudi arabia.

Saudi arabia does knowledge to see oil prices go out of control.

That was flown on a number of growth.

-- slow down economic growth.

Fadel, and use a much.

Mario gabelli, is this an opportunity for gamco?

We need an energy policy.

I was saying this in the 70's. we have had so many oil shockers.

We're cutting back on our oil transport.

Getting it back down to where the lungs.

What is the energy policy?

It is not only venezuela, all of the countries we have mentioned.

It is balanced payment, deficit.

Money going out the door every year.

Within that framework, we are buying companies that have reserves.

Consol energy.

You are buying the smaller companies?

Not only that.

Based on deals.

Activism.

Oil is trading at 113.40. futures are lower.

Back over to you.

Good morning everyone.

We are on bloomberg television and bloomberg radio.

All of our interviews, including with mario the belly and steve miller, look for those on our digital platforms today.

With me, scarlet fu and jonathan ferro.

John, you are taking us to petrol stations?

Convenience stores -- mario gabelli is the ceo of asset management.

Mario, convenience stores.

Why are they the winners now?

It is a structural dynamic.

I will take you to your corner store.

I will take you to the locations and the united dates.

Not only did they send you gas.

You have pizza, coffee, cigarettes.

The notion of these companies starting off as financial engineering -- some names, murphy oil, hess just sold.

Hess just sold their gas stations for 16 times ebitda.

This underscores the convenience thrust.

A crucial part -- it is a very interesting acquirer.

Those are some of the names that i want to own.

You have never seen money this cheap.

How long does this fund continue?

There's no question that the currency is important.

The buyer's stocks have been going up.

When company x buys company y, you look at the valuations.

It is not like they are selling at 11 times.

These companies are eight times and nine times ebitda.

That is a cap.

I want to rip up the script on hill scheier.

Did tysons overpay for hillshire?

There is no question.

When one wants a picasso, there are since you -- so few of them.

The price of tickets are up and cost is down.

You have a currency.

Within that framework, no.

Let's go back to the auto business.

Are they undervalued?

I think the auto business has a very bright future.

Cars are getting more and more efficient.

Oil prices are not going to have the impact as a decade or two ago.

We still have a huge global competition.

There are chinese companies coming up.

There'll be a lot of pressure.

This goes back to governor carney last night at mansion house.

Is janet yellen the grease that is making this process go?

In the near-term, what she is doing asterisk.

It has provided funding.

It is not a sustainable economic model.

At some point, it will come to the end.

Interest rates will go back to normal levels and they will be in pain.

70 million cars sold in the united states.

80 million in the world.

You cannot just look at the united states.

Their 50 million cars in the world.

250 million in the united states.

It is a global marketplace.

You have a global marketplace, and who gets the benefit?

Is their great opportunity in emerging markets?

He is preaching his book.

Mario gabelli is not preaching his book.

If it is not jenny allen, investors can also think mark carney or mario draghi.

This is good news for the multinationals.

For as long as the party continues.

The party is going to be over at some point.

If you look at the u.k., it is set to end abrupt way.

-- abruptly.

The turn must night, we will talk about later as well.

What is going to happen will happen fast and europe will not expect it.

You have to have your fire hoses and they have to be open.

Let's hope that they have the tools.

Never before have they tried to get rid inflation started.

This is a discussion worth continuing throughout the hour.

Coming up in our agenda, we take a look at twitter's future.

The coo abruptly steps down.

That is our twitter question of the day.

Should twitter drop its 140 character limit?

Sweet us.

? good morning.

I'm tom keene, with a scarlet fu and jonathan ferro.

10 year yield is 2.61%. pulled back a little bit this morning.

We're 18 minutes away from the start of "in the loop" with betty liu.

Betty, you have a chicago themed show today.

We have some chicago players.

Jim reynolds will be joining us.

He is the chairman of luke capital.

He is a friend of our program.

He will be joining as guest host.

He is bringing his friend, the other of penny pritzker.

He will come on because both of them are big democratic fundraisers.

J.b. has been a huge hillary clinton supporter.

He talks about why he believes she will win.

He is also a venture capital investor.

And alibaba.

I wonder what they will say about eric enter -- cantor.

We have been talking about this and lost it is.

Certainly, he was a royal of the republican party.

Also a friend of big business.

Lots of democrats like him as well.

Sounds good.

Pritzker and reynolds on in the loop.

Very good.

Mark carney is the governor of the bank of england.

He warned of a rate hike length night -- last night.

It is where he didn't. next to a building and bloomberg news headquarters in london.

Steeped in history, describing the pageantry behind the speech that the governor gave us.

You need someone from london.

Jonathan ferro gets it.

It is a massive deal.

I have never been to it, you have.

It looks a bit pompous and pretentious.

What he did last night was key.

It is my morning must-read today.

12 page speech.

One paragraph.

Already great speculation about the first rate hike.

We knew that it would happen sooner than markets currently expect.

This is the take away.

12 months on the job -- he tells the british people.

Rates will stay low, until 2016. less than 12 months later, we're looking at early 2015, lay 2014. what does that mean for the fed?

Mario gabelli, will we see this replayed in washington?

Is the fed going to move sooner than we expect?

I would like if the market keeps going up.

That would reduce the market requirement to take some of the steam out of speculative.

Within that framework, you cannot keep rates down at this level.

Particularly afraid start -- is wages start going up.

Are you paying above the minimum wage again?

You are?

Your interns and everyone.

We pay 1000 zimbabwe dollars per hour.

Very good.

This is a big deal.

Coming up, we're going to go over our agenda.

Including the latest in iraq.

? good morning everyone.

We are getting your week started with the most important stories.

With pimco, global strategic advisor, we're talking about the announcement overnight.

We talk about the american economy.

That is at 6:00 on monday.

This is "bloomberg surveillance." i am scarlet fu, here with tom keene and jonathan ferro.

Our guest is mario cavalli from gamco.

Let's get to the files of bloomberg west.

Elon musk wants to speed up adoption of card technology.

He will make patents available at no charge.

Musk says he will not sue anyone who uses patents.

A judge has ruled that links in must face a lawsuit claiming that it violated customer privacy rights.

This means that customers can seek damages.

Users can send it to linkedin, sending an endorsement e-mail.

And alibaba lowers onto investors who say the company needs to be more forthcoming with its ipo.

According to the wall street journal, they are preparing a new filing with more details on their individual businesses.

The filing will also disclose the names of their 28 partners.

That is company news from the files of bloomberg west.

Good morning everyone.

It is a leadership transition.

That is one of the key deterrents of a successful business.

Yesterday afternoon, twitter moved from an entrepreneurial focus to a publicly traded executive office.

With us today is mario gabelli of gamco.

And steve miller joins us.

He is the chairman at aig.

He is considered one of america's foremost experts on the doing of leadership, rather than the talking.

Twitter is doing this, aren't they?

They're going through a leadership change.

They have found that as they grow up and age better -- they are consoling it.

How does he show him the door?

People may be the right people for their time, but according to a position or eight change, they are no longer able to handle it in the right way.

You have to be gracious for their contribution, but at the same time, get on with life.

The person who is leaving his the coo.

He was originally the cfo in transition.

The current ceo of twitter started off as coo for yourself.

I found one of his first tweets.

He wrote first day as twitter coo -- he is known to have a bit of a sense of humor here.

My question to you is, now that he is gone, they will not replace him.

Dick will take over his duties.

Do companies need a chief operating officer?

Many companies no longer have them.

A lot of companies have coos or do not have them.

Typically you do not need one unless the ceo is more strategic and not into detailed operations.

It does not matter whether it is tech or any other industry.

It is all about the talent of the leader and his number two.

There is a shift from strategic to tactical execution.

Where do you find that?

How do you find if a company actually answers?

Based on comments.

They are right on.

The ceo -- the chairman has the vision for the company.

And a path and articulates that.

Someone has to run the details of reporting dynamics.

It is no different then bloomberg in new york and his deputies running at.

It depends on the size.

And stocks.

When you look at a company that cannot make money -- whether you do this with it or that with it.

They struggle to make money.

How do they turn around?

It depends.

If company x is a business that has a lot of cash and t

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

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