Summer Dealmaking Heats up: Surveillance (7/15)

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July 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.

It is not too hot or make a deal, at&t pays $1 billion to enter the pay-as-you-go mobile market while hulu is not going to sell after all.

Is it too hot to shop?

Consumers may carry the american economy, but walmart 11% of retail and they are struggling.

This is still ben bernanke's economy.

The debate ramps up over the chairman's next move.

Good morning, this is "bloomberg surveillance was caught and i am tom keene.

It is the middle of the month, july 15. joining as always, scarlet fu and sara eisen.

Good morning.

It is a hot one in new york city.

Big news overnight, china's economy slows to 7.5% growth, down from the 7.7% resell for china the quarter before.

In terms of what to watch on the agenda today in the u.s., in part manufacturing at 8:30, retail sales.

Always a big number, retail sales, looking for the sharpest rise in retail spending in four months led by autos.

Americans love their pickup trucks.

Company news, citigroup comes out at this morning.

The goldman sachs trader goes to trial today, facing allegations he misled investors.

I'm surprised it has taken so long to get to trial.

It seems like years ago.

Data check.

Afternoon adjusting weekend, a quiet weekend, and you see that on the data check, futures up 2. a little backed up in yields.

The currency do nothing, 1.30 32. this is the story of the front part of july of what is happening to your gallon of gas, wes texas intermediate, 105.44. china, 13.8, well under 14, those great equity prices.

Gold getting near the top of its recent range, 12.81. -- 1281. it is believed the chinese yuan will really move.

We look at the yen.

It really fulton to the analysis of the asian reaction -- everybody wants to be a big exporter in japan, and no exception with a weaker japanese yen.

As always we have scoured the papers for the newsmaking the front pages.

On the cover of the wall street journal and several other papers, looking at china slowdown intensifying in the not it is having on industries and countries around the world.

You mention second quarter gp slowing to 7.5% from seven .7%. this is the world's second- biggest economy and really slowing down since its 2007 peak come it even as a carry the world through the global recession and the global recovery.

Inflation was up a little bit.

It is a complex picture.

What is interesting is the chinese finance minister was visiting in the u.s. last week and talking about sub seven percent growth.

The news agency put out almost a correction siding the finance minister saying we're going to hit our 7.5% target on gdp.

Very notable they have to manage it down by so much.

In asia, making clear it they have a five-year plan to mark down under seven percent is stockgen's view.

Oil prices and silver prices in copper prices down.

Let's talk about bloomberg.com.

On the front page of our website, deals in the telecom world all over the place for it at&t buying lead choir.

This adds pressure on small competitors.

The sprint, dish networks of the world.

For at&t specifically, gives them warm the pay-as-you-go, prepaid customers with the specific cell phones as opposed to a contract.

Is it a growing part of the business?

Everybody wants spectrum.

And there are these dominant carriers.

Verizon and at&t on's top -- on top.

Then you have sprint bulking up.

Maybe we will have to pay higher bills.

It has a lot of telecom players moving.

On the cover of the ft, apple hiring aggressively for its iwatch project.

Everyone is waiting.

The take away here from what i can see is that apple is stepping up to the limit but still needs help from outside the company.

Now the ft missing a product will not be introduced until the second half of next year.

Where is the tv?

We don't have any word on that.

New word on the apple iphone fives,. the blackberry, they cut the price of the z10 to $49? looks even the other one brand- new day cut.

And microsoft, the surface, they cut it by 30%. it was done quietly over the weekend.

That is perfect for our two guests.

Legendary the retail business, he goes up and down fifth avenue getting the pulse of retail america.

And former kodak cmo, bloomberg contributor, on marketing and branding and merchandise.

A price cut is a price cut.

It is a failed product we see a dramatic price cut, isn't it?

Without question.

50% return rate on the z10. after the first week in, 50% return rate were were trying it, brought it back.

Right now, $49. did you experience it at kodak?

Yes and no.

You would not have launched it and made it as big of a launch.

This was going to be a turnaround product for them.

It has not been and it is a big problem.

Parks what is the pulse of retail?

What is the emotion of retail in july?

Let's go to the big ones.

Wal-mart, very soft.

They have negatives.

That is 11% of your u.s. retail sales.

Target is soft.

You look at the department stores, pennies and sears we don't even have to discuss.

Many have radioshack and you have all your officemax and office depot and staples.

I mean, if you go to the traditional food business, it is almost bad across the board.

You are gloomy.

What is good?

There are lots of good things.

To giant things are good that affect our economy, number one, autos.

You go from 10.5 million sales to 15.5 million cars and light trucks, now you're doing something.

Let's talk about home read we went from $21 trillion value in the united states eight years ago, we went down by $7 trillion.

We went down some money.

We went down 14 julian dollars.

That is now $17 trillion.

You have a huge change in housing.

Fulcher capitalists are buying all the houses.

Parks were what is the better knock on?

Fax it is huge.

A look at home depot.

Look at the appliance sales and all the retail sales.

The knock on effect is tremendous.

There is a lot of remodeling going on.

People have more faith in the value of their houses and a huge knock on effect in the balance sheet of consumers.

This is huge.

I know you have the ford f2 50 truck.

The auto business is the foundation for recovery, is it?

Not just for consumers and most business, but it also affects many other things like television, like newspapers, like magazine ads.

When cars are moving, you're seeing more spinning across the board, say, in advertising and that is a big determination for how well the economy is doing.

We will talk about retail this hour.

Let's get to company news.

We start with china getting tough on glaxosmithkline, the country did training four senior executives on suspicions of economic crimes.

It is part of china's investigation into alleged bribes between travel agencies and the company.

The economic crimes include 700 agencies and close to $500 million.

Regulators in the uk still searching for the cause of a fire on the boeing dreamliner.

It occurred an ethiopian airlines.

It was parked at heathrow airport.

The say they see no direct link between this fire and the battery blaze that plagued the dreamliner earlier this year.

The trial begins today in new york of the former goldman sachs vice president facing allegations he misled investors when selling investments tied to home mortgages.

At the trial comes three years after goldman agreed to pay more than $500 million to the sec for mistakes in marketing those investors.

Did you see the story over the weekend, the harry potter author j.k. rowling back on top of the bestseller list, but this one is unusual because.

It was a book under a different name.

In the uk, it was found she is the real author of the detective novel said to be written by a former british army officer.

It isn't able to the top of the bestseller list on on amazon and browns and noble.

-- it sent the novel to the top of the bestseller list on amazon and break barnes & noble.

Truly amazing.

And she was homeless pre- harry potter days.

And riding with the fictional name again.

Scholastic really made this go, did they?

She came over here and scholastic made it go.

Pre-k's she was a player -- team player.

We will talk about the telecom business.

At&t is scooping up leap's 5 million customers.

? midmorning, coming up, bank united chairman and ceo.

Citigroup out this morning.

Kanas at bankunited.

I am excited about what he says about loan growth, or lack thereof.

That is with the loop "in the loop." i am sara eisen here with tom keene and scarlet fu.

Pay-as-you-go cell phones becoming increasingly popular.

At&t planning to purchase leap wire for one point $2 billion.

Let's bring in our deals reporter.

What is at&t getting for one $.2 billion?

On the face of it it looks like it is getting into the prepaid market.

What this is about is spectrum.

The fact at&t has to compete with the larger rivals for ricin and smaller rivals that have been consolidating themselves like sprint and t-mobile, for example, having that spectrum will allow them to benefit -- be able to compete.

They are paying for this.

Shows you what kind of position at&t is in right now because regulators, remember, nixed the deal with t-mobile about a year ago and that really left them quite behind when it comes to consolidation.

It is not really in a vacuum, this deal.

We have seen so many of these companies merge.

Is the common theme everybody wants more spectrum and their consolidating?

That is definitely one of the themes.

At the big question for is, what is next?

It has resorted to doing these smaller deals instead of the bigger ones and people saying going forward, maybe the options for at&t is perhaps do a deal with dish, maybe go overseas, which is actually very interesting because if you look at the way the european carriers are trading summit they are trading at a discount to the u.s. carriers because there is been pricing pressure and pricing wars in europe that have really hurt those guys.

They're trying to roll out the fourth-generation technology, and they are not there yet in europe.

What is the premium?

I was stunned.

Here is a chart.

You don't see this.

Double over the weekend?

It is amazing.

The fact the stock is trading above or i should say after market trading from the stock traded above the offer price, even with the 88% premium signals investors may be anticipating someone else coming in to make -- what about the industry?

Everybody wants spectrum.

The spectrum is a hot commodity right now because it is not so much the customers are growing in the u.s., but the data that customers are demanding is getting so much bigger.

Think about the devices.

We all have two or three devices and using them more and more mobile he.

We have to talk about pcs and down because there is more movement on that deal are potential deal over the weekend.

Carl icon made a fourth bid and dell has struck back.

This is the deal that never dies or never gets done.

This week, the shareholders are going to vote year -- yes or no.

What will be interesting, if they vote this deal down, what happens to dell?

Does it share price fall like a rock?

Will the investors may be vote in carl icahn's slate of directors?

There is a lot at stake.

Give us the dirt.

What is the skinny?

What is the skinny?

Ryan marshall was with you on friday?

He says they should just vote for the deal and and it.

The problem is, there is hot money in the stock and they want to take ryan marshall's advice, take the money and run.

What carl icahn is saying, there is value here.

The problem with this proposal is that it is not an immediate fix.

In other words, it it is not if investors turndown michael dell they they can immediately pick up carl icahn -- but look at what carl icahn is doing.

He is systematically picking off director actor director.

He is going after these guys, a very smart guy, but he is putting a little of the cart ahead and saying, look, if you do this deal, here is where i will deliver a little later.

So pretty smart move.

A wonderful michael dell photo from a million years ago.

How is the business of dell?

No doubt there is a decline in pcs, but what carl icahn is saying is the companies made $3 billion in acquisitions the last few years that public shareholders have paid for, and just as the company is about to reap returns on those acquisitions, michael dell is taking the company private.

We have had conflicting reports from the executives.

Thursday is the day?

Correct.

Keep in mind, it is not the pc business.

They will sell that off to someone right off the bat.

It is really about the services business, the enterprise of getting in those long-term enterprise deals.

One quick addition, very interesting, analysts are saying the server and software business will be similar to the pc business 10 years from now.

That is a big story, the shareholder vote.

Thank you, cristina alesci.

Coming up in the next hour, 18 million residents in the $800 billion economy.

No question florida matters to america, not to mention its politics.

The governor of florida rick scott will be with us on "bloomberg surveillance." ? this is "bloomberg surveillance." i am sara eisen here with scarlet fu and tom keene.

China's economy slowed for a second quarter as factory output weekend.

Tdp was seven point five percent, down from 7.7% in the first quarter -- gdp was 7.5%, down from 7.7% in the first quarter.

Laying out proposal for a new airport, johnson is offered three locations for the new air hub.

Heathrow airport would close under his plan.

Is aimed at addressing noise, pollution, and congestion at heathrow.

Two in a row for "despicable me 2." it took in almost $45 million, taking the top spot at the box office for the second week in a row.

"grown-ups 2" took second place.

Everything is a sequel.

I noticed on heathrow they voted down the fourth runway.

The mayor wants to do something.

That sounds like a giant project.

It is time for morning must read.

It is not about the royal baby.

Not yet read -- not yet.

The problem the u.s. book industry faces.

We know readers by their books online, but they need the physical bookstores to discover what they like to read.

A columnist at bloomberg view wrote books are what economists wrote experience goods,. she says bookstores like barnes & noble should embrace the show rooms and perhaps charge daily monthly membership rates for customers to hang out, browse, use wi-fi, by snacks.

I am so glad you did this today.

Rizzoli holds out on 57th street.

The borders is into.

Where is barnes & noble's? let's talk about the book is news.

Barnes & noble, the all -- the owner will buy , cash flow positive.

He will know how to maneuver around.

Part of it will survive.

What is interesting in the book business, digital books of course, and people read less books ,blah, blah, blah.

60% of it disappeared as far as the stores.

But if you study this carefully, in the last year or two, we have had more independent bookstores for the first time in decades because the bookstore is a special experience for millions of people, and it can't be lost.

It is going to take some kind of retail genius and someone will find that at experience -- i agree.

We will talk about walmart ahead of retail sales.

? .. this is "bloomberg surveillance." i'm sara eisen here with tom keene and scarlet fu.

It is quiet in the markets yet we are still holding near record highs.

The vix under 14 shows you the strength.

A quiet weekend.

We are going to go to the second data board.

You can see the vix, 13.84. it is better than good.

Hold up fractionally.

China was a story, the rmb, a lot of people looking for dollar-yuan to go weaker.

We saw weaker growth numbers, 7.5%. that was down earned 7.7%. it was still on target for what the government is aiming to do.

Exports down, imports down.

A new mix for china.

Something to watch through the summer.

We will go from china to the u.s. economy because the big report is retail sales@8:30. they are set to rise.

No question autos have been a bright spot.

How is walmart doing?

Walmart is key on a day of retail.

It is such a gigantic part of our spending.

11% of the retail industry.

Sales have missed analyst estimates.

Second-quarter sales are expected to be little changed to slightly higher.

Its main customers , suffering from tax refund delays.

We have seen those affects.

It has been a little bit of a struggle for walmart.

You can see it in its share price, falling behind some other members of the dow industrial.

Up only 14%. as you said, 11% of the economy.

Howard davidowitz with decades of experience in the retail industry.

Having been director of national retail consulting at ernst & young, he knows real estate, the big-box, and also walmart.

Is walmart for real?

No, i think they have major problems.

Here is the key -- we have a bifurcated economy, and no one knows that better than you guys.

The equity, the whole growth in capital markets has driven this whole thing.

10% of the people doing 45% of the spending.

Walmart is screwed because they are selling to that autumn 50% -- bottom 15%. that is a bad place to be.

Those americans are really hurting.

They do not have any disposable income.

That is what is hurting walmart.

Is there a challenge at the top line of the income statement, revenues, units, or is the problem they cannot make money?

I think the problem is the top line.

That is costing them.

I think they have been screwing around with their margins and everything.

It is about the top line.

Look at costco -- probably the best retailer in america.

Their margins are lower than walmart, but they know how to get that top and customer.

They've got a lot of food, but it is done in a better way.

It is absolutely brilliant.

They sell it at lower margins, yet they get -- they have a mercedes in the parking lot.

Scarlet?

Perhaps walmart customer has to do why walmart is trying to increasingly get into the credit business and the banking business.

They have been trying to do this for a long time.

Now they have a strategy.

They do not have a bank charter so they cannot own a bank.

What they do is through the walton family invest in a lender , progress financial.

They target the hispanic customer, the same guys who cannot take credit cards because they do not have the history.

What they do is make loans to these guys for up to 30 $500. the loans come in the form of prepaid debit cards.

They allow customers use the debit cards at walmart.

About 4/5 of the 80 progress financial branches are within five miles of a walmart.

Sometimes even in the same shopping center.

Will this work for them?

I think it is.

Here is a real margin opportunity.

Walmart knows how to pounce on things that it sees as opportunities.

Hundreds of millions of people are being ripped off by these community banks.

Walmart sees a chance.

This is how sam walton built the business.

He saw an opportunity where the consumer was getting ripped off, food was one of them.

Why have they failed at banking?

They have been trying to do it for years.

The government will not let them.

I totally agree.

Jefferey hayzlett with us as well.

This is a different way for them to get into it.

They are having a tough time at the lower level.

These guys do not go to low -- normal banks, cannot get credit.

This is a great way to do it.

It is a most like the company store.

Does united states of america want the company store?

There were some negatives to that.

I think what they want us to get what they want.

They want to go into the store and buy.

These guys going to walmart, 11% of the retail market, and they are bigger then the second to fifth next competitor.

They are huge.

You live in the dakotas -- do you observe them being dominant?

I know in new york city you cannot go to a walmart, but i live within five miles of one in south dakota.

I live within five miles three of them.

They are dominant.

They are moving more into the smaller communities really sucking up all the trade.

Having said that, progress financial still has not made a profit.

It is operating at a loss despite this synergy that we see.

Look at the other things -- they have gotten into tires, pharmacy, vision, photo.

This is a natural extension for them without having the bank.

I like how you mentioned food.

That is big business for them.

We were sticking with grocery analysts about how walmart changed again.

The prices for all of groceries.

55% of walmart's u.s. sales are food.

Are you kidding?

I had no idea.

It really?

That is why the traditional food industry is in the because there is a huge change -- in the crapper because there is a huge change.

I love when you get wound up.

The walton family is worth more than double what warren buffett is worth.

More than double.

When i travel to stores with sam walton, he borrowed money from me to buy a "usa today," which he negotiated with the guy to buy.

I hope it -- you got some stock from that.

It was unbelievable.

Where is the middle?

We will have the data for you at 8:30. where is cole's -- kohl 's, where is the middle, not our perception but the real middle of america?

I think they are still coming out of it but they are feeling good.

They are buying these houses as we talked about.

They are starting to make those expansion plans.

Retailers are looking at that at that level.

Still you've got to get jcpenney back in the game, sears, some of these middle american groups.

Most of these customers are not going to nordstrom's. i agree, but the aspirational america , sub-2% gdp, six months in a row, where is the aspiration, and where will they spend that money?

I think there is a tremendous opportunity in the off-price business.

That is where the real growth is.

Premium goods off-price?

Online, in stores, the opportunity there is really tremendous.

Those businesses are absolutely booming and are booming like crazy.

Is the barney's shoe store, the square footage, is that like the most lucrative square footage known to mankind?

Yes, thousands of dollars a foot.

Jewelry is a little more productive.

It is a smaller space.

The shoe business is huge.

I saw sarah looking at the chinese silk, the platform shoes.

Really?

Their cincinnati red.

They look like you.

Take a look at it.

See it.

Then you go online and buy it.

Howard davidowitz and jefferey hayzlett on retail america.

We will talk about porsche.

The brand has been here for decades, but it has a change in strategy.

One that is certainly working great we will look at the car industry over the last 20 years and what porsche is doing right.

? this is "bloomberg surveillance" i answer eisen here with tom keene and scarlet fu.

Top headlines this morning, new calls for a federal civil rights investigation into the killing of trayvon martin.

This after a florida jury acquitted george zimmerman of charges in the death of a teenager.

The naacp is pushing u.s. attorney general eric holder to pursue a hate crimes case against zimmerman.

The former egyptian president mohamed morsi is calling for massive road test again today.

-- protest again today.

Egypt's new leaders are trying to assemble a cabinet.

On a lighter note, twinkies, another hostess -- and other hostess snack cakes are back on store shelves today.

The snack was gone seven months as hostess brands liquidated and went through bankruptcy.

After seven months, they are back.

Governor scott will join us of florida.

He will be with us for the entire 7:00 hour.

Attorney general eric holder is to speak tomorrow in orlando.

This is zimmerman case is without question the news of the weekend.

We want to take a look at one company in particular.

Porsche, it doesn't actually sell a lot of vehicles, but it's margins are so high that for american car dealers getting a porsche franchises like buying a gold mine.

Porsche has post it sales franchise past high-volume brands like chrysler and cadillac.

Plus porsche models like the 9/11 have some of the highest margins in the business.

The real turning point was when it began selling the cayenne suv in 2003. it was not just rich men who were driving a porsche.

Well off families could pile the kids into an suv that went for $60,000. i favorite moment was when carmela soprano got a cayenne.

Tony bought one for her.

It was like the pepper.

A big moment.

It became a car for housewives.

What?

You don't know the porsche?

My head is spinning on the sopranos.

A lot of porsche enthusiasts were upset about the cayenne.

It was supposed to be a sports car, and all of a sudden, it became a family car.

As you said, it went from older men over 50 who could afford to buy this car, and now they will have to share it with their second or third wife.

[laughter] that was the problem.

This was a very exclusive brand to mostly older men who probably left their wives.

That is what most of the guys that i know that on these cars.

They are usually single, showing off.

A lot of other carmakers went in there and came up with high- value suv's. i thought the car was a great car.

When i saw it, i said to my wife, you should buy one of these.

It wasn't a real spectacular environmental car.

It raises the question of how much you're willing to sacrifice a friend.

I cannot imagine ferrari putting out a family suv.

Howard davidowitz with us.

It is about aspirational america.

There is all the cynicism about retail and digital and sterile.

Baloney.

We still want to buy whatever.

Nothing changes.

Nothing has changed.

We aspire to things.

We are not france.

Down in the dumps.

We are a different kind of country.

When you look at this and the pulse of new york, i see you up and down and down 5th avenue, what do you observe on 5th avenue that in two years or five years will translate across america?

The first thing i look at are the rents.

I cannot believe this is the most expensive retail real estate in the world.

There is a big turnover.

By the way, it is double in tokyo where we happen to have an apartment.

It is double the rent on 5th avenue.

It is astounding.

By the way, the space is being sucked up like crazy.

Who is going to wind the high-end individual stores, -- win, the high individual stores, or department stores?

There has been no growth for 20 years.

It has been shrieking for 20 years.

It is not going to disappear, but it will be less and less of a factor.

Chanel, sarah, just opened their new wing.

It is the square footage of rhode island.

You went inside?

Barney's shoe store, and the new chanel?

I should've been hanging out with you.

[laughter] coming up, some presidents are still finding favor in qa.

We will tell you why these policymakers are not so quick load on our country stimulus great all all sorts of opinions inside the fed.

Our economics editor michael mckee spoke with a key fed president.

We will bring you that next.

? this is "bloomberg surveillance." i'm scarlet fu joined by tom keene and sara eisen.

In today's company news, from the files of "bloomberg west," we start with at&t acquiring leap wireless for 1.2 billion dollars.

The deal gives at&t 5 million wireless customers, or airwaves, and a larger chunk of the pay- as-you-go market.

It is an 88% premium over leaps last) a price cut for microsoft.

The company cost -- slashing the cost of this service tablet to try to jumpstart sales.

The surface has sold less than one million units in each of its first two quarters.

Cheapest model is not $349 down from $499 after the price cut.

The battle for dell rages after the shareholder vote looms.

In a regulatory filing, dell questions carl icahn's valuation.

Dell also says it special committee remains willing to speak to carl icahn, but that the investor requested and then canceled a meeting last week.

The shareholder vote is scheduled for july 18. this today's company news from the files of "bloomberg west." a huge story.

Ben bernanke will be speaking on wednesday to congress.

A backdrop is the fight inside the federal reserve.

At least when it comes to slowing down the bond-buying.

Fed presidents charles plosser and james bullard singing very different tunes out in jackson, wyoming.

It has never been wider.

This debate has never been wider.

The debate was engaged in wyoming.

It will be reengaged later this summer as the kansas city fed has her annual jackson hole meeting.

Our chief economic correspondent michael mckee listened in wyoming this week as doves and hawks fish for trout.

Who got the most?

The eagles get the most.

It takes a fish out of the ponds and rivers.

They are very divided.

Plosser and bullard, representing to different wings of the fed, plosser says, taper immediately, and bullard says, maybe we should wait to see how inflation develops.

Gdp is pretty slow.

The interesting question is when if you are going to do it, when do you start to do it?

There is a fed meeting at the end of july, but everybody's talking about september.

I have a communications problem, as charlie plosser told me.

I said, if you are so hot to do it, i are you saying september incident july?

That is an interesting question.

I think it is sometimes a bit unfortunate that the press conference schedule is now occurring on quarterly meetings.

Some people think we can only make decisions when we have a press conference.

I do not think that is the right way to think about what we do or how we should think about it.

I hope we do not get into that pattern and set the expectation so we can only make decisions at press conferences.

Jim bullard feels the same way, the whole press conference issue is a real problem for them.

Was there any discussion of the fed, plosser's impact, bullard's impact, for 90s impact on the markets?

We are at record highs.

Is this a bernanke equity market?

Is a fed equity market, but the problem is the volatility that has come into the market.

That is a real issue for somebody like jim bullard who says, it is our fault.

He had that statement right after the fed meeting where he came out -- i asked him, why are you so concerned about how the fed is saying this?

I thought there was a little bit of slippage back to database forward guidance.

We worked hard to get rid of that he does we think it wasn't that successful.

-- because we did not think it was that successful.

To have it creep back in was something i found disturbing.

Chairman did a good job, however, of emphasizing state dependence and it would depend on the economy.

I think he didn't mitigate that to some extent, but still there is a date that was put out.

In the mid to, he was talking about the speech that the fed chairman gave last week up in boston.

Jim bullard was sitting in the front row and ben bernanke had to acknowledge, my good friend jim bullard and his concerns.

It raises the question of what the chairman is thinking and what he is doing and what his position is amidst all this babble from the other presidents as we look towards wednesday.

What is german bernanke's position -- chairman bernanke's position in regard to tapering?

We believe he is in favor of it given what he has said, starting sometime in the near future, and i asked both of these gentlemen whether they thought there would be some sort of announcement at humphrey hawkins.

They said, no.

He will spend more time is passing what they have done.

We've got howard devitt of its here helping with retail america.

Retail america feels pretty good.

Our retirement plans look better.

Again, i go back to this single institution that controls the spirit of retail, controls the spirit of the equity markets, which is the fed.

Has never been like this before.

It hasn't been like this in a very long time.

On the negative side, you can go back to when paul volcker was raising interest rates.

It has been a long time since we have this kind of impact.

They are very sensitive to that.

The question is, is the economy on solid enough putting for the fed to get out of the market?

Jim bullard made a good point about that.

We will have much more throughout the morning.

We will talk about this at one point.

He said, gdp has been weaker since we started.

There is no inflation.

Howard davidowitz with us.

Why is macy's stock doing so well?

Things are terrible.

They are in the crapper, and yet macy's, rob laurent, up they go.

Best in class.

When you are best in class, when jcpenney threw away their entire business, who caught it?

Macy's was sitting there with the big catcher's glove, we love it.

Macy's is the winner.

They are executing better than anyone else.

My macy's local case, who's got the most exclusives?

Macy's. they are doing the best job managing their business.

They are in a no growth business, but they are taking business away from everybody else.

That is the way it is in retail.

It is all execution.

While we are on the names of the best and worst, any hope or radioshack?

Radioshack is a dead man walking.

Radioshack -- they are talking to bankers now.

Something dramatic has to happen in restructuring, and i think radioshack -- they are cadaver.

They are below the crapper.

They are really bad, these little stores that do not mean anything.

Howard, thank you so much.

The spirit of retail.

We will have the full coverage at 8:30. also looking forward to the next hour, our guest host is governor rick scott of florida.

We will be looking towards the floridian economy, jobs, and the recent verdict in the case against george zimmerman.

All on "bloomberg surveillance" on bloomberg television and radio, streaming on the bloomberg tv plus app and at bloomberg.com.

? this is "bloomberg surveillance." the trayvon martin trial, and revive the national debate about race injustice.

George zimmerman's acquittal unleashed protests across the country.

This morning the law, the politics, and the american story.

It is not too hot to make a deal or blow one up.

At&t pays $1 billion for pay-as- you-go customers.

Hulu's parents stay in the streaming service.

Decidedly off the sun valley auction block.

In washington, gridlock is going nuclear.

If you want to see real solutions, you need to look to the states, in charge of florida's $800 billion economy is the governor rick scott.

He is with us for this entire hour.

Good morning.

This is "bloomberg surveillance ." i am tom keene.

We are live our world headquarters in new york.

It is monday, july 15. joining me is sara eisen and scarlet fu.

Good morning great i will start with a morning briefing.

The big news overnight is that china's growth keeps slowing down.

It only rose 7.5% west quarter inches down from the 7.7% the quarter before.

It is also on target with what the government is forecasting.

Economic data in the u.s., 830 -- 8:30, empire manufacturing.

Retail spending, consumer spending 70% of our economy.

The biggest rise in months.

Thanks in large part to auto sales.

10:00 a.m., business inventories.

Then company news, citigroup earnings at 8:00 a.m. and the sec trial for fabrice tourre, the goldman sachs trader, he is facing allegations that he missed led investors.

-- misled investors.

Too late for them to go after perpetrators or alleged perpetrators of the financial crisis.

Scarlet, i know you've got some more company news.

Apple is hiring aggressively for its iwatch project.

The report is that the hiring of outsiders as apple makes headway.

There are some criticism that apple has been been slow to put out new products.

The timing implies the product will not be introduced until the second half of next year.

Regulators in the uk still searching for the cause of a fire on a boeing dreamliner.

The incident occurred on an empty 787 operated by ethiopian airlines.

The jet was parked at london's heathrow airport and regulators say they see no direct link between this fire and the battery blazes that had plagued the dreamliner earlier.

At&t buys more airways -- and more airwaves.

The carrier acquiring leap wireless or $1.2 billion.

The $15 a share offer is an 88% premium over leaps last close.

A huge premium.

Absolutely.

Late saturday, george zimmerman was acquitted by a florida jury of all charges in the death of 17-year-old trayvon martin.

The case riveted a national audience.

The verdict sparked protests across the country.

Is morning the u.s. justice department is waiting whether it will press federal charges.

First on bloomberg and with us for the entire hour, florida's governor rick scott, the republican going up in kansas city, missouri, and in florida after a very successful business career.

As you know, business people come to orlando.

Attorney general holder will come to orlando this tuesday.

How should the federal government proceed?

What would you like to see?

First, let's think about this -- as is a tragedy.

As a parent and grandparent, you cannot imagine losing a child.

I mourn with trayvon martin's parents.

I have met them.

I introduce them to the florida department of law-enforcement and brought in a special prosecutor.

It is a tragedy.

I want to thank the 60 militarist -- 6 female jurors.

We have a jury system.

Trayvon martin's family said that they have accepted the verdict.

The protests across the nation, if you could speak to those protesters now, what would you say?

I think every one of us feels the heartbreak of trayvon martin's parents.

To lose a 17-year-old son.

We all wish we could bring him back.

We have a sacred system that works.

The president spoke about that system, didn't he?

Absolutely.

We have a system that works.

We have to appreciate the six female jurors who put their lives unfold, listen to all of of the evidence, deliberated.

Within the civil litigation that could come from this run the justice department, from the attorney general, is it a proper system that after state judicial activity that the federal government steps in?

We have a great system.

We have lots of checks and balances.

The federal government gets to make a decision of whether they want to pursue something.

They will make that decision on their own.

We have a system that works.

What about some laws in question, the stand your ground laws that are only in certain states?

Do we need to rethink those?

Here is what we did.

After this happened, i put together a bipartisan task force to look at it.

They came back and said, we should not make any changes.

This is a tragedy.

We lost a 17-year-old.

We wish it had not happened.

We have done the right things.

We went back and looked at that.

Look, you cannot bring this young man back.

We all wish we could.

There is a polarized electorate.

You saw that with your own election.

The struggles and the primary.

It is it polarized florida and a polarized nation.

How would you move forward to bring the country together?

I think anybody in politics ought to focus on the two things most important, they all want a job.

I remember growing up, i lived in public housing, my parents struggle.

A lot of people do not know about this.

Your mother was a clerk at jcpenney.

She worked as a host at a chinese restaurant.

You entered a community college.

You do not go to a fancy school.

I went to junior college and then joined the navy.

I have been fortunate.

I got married at 19 good i'm still married to a wonderful person.

We have two daughters and one grandson.

Two more on the way.

I live in public housing.

-- lived in public housing.

This country, we need more jobs.

That is where our biggest focus ought to be.

Had we get our economy going?

It is getting government out of our way.

Rick scott of florida with us.

We will talk more about jobs and the floridian economy could also opt story, mergers and acquisitions.

Mna monday kicking off with a bang.

We've got one in the cell phone sector with at&t purchasing leap wireless.

The price tag, $1.2 billion.

Let's find out why it was so attractive, pay as you grow.

Cristina alesci who covers the deal market, it has been an exciting market.

We have seen a lot of that committee in this sector.

Why leap?

Is one of the smaller players out there that was talked about for 1 -- for a long time.

History lesson, actually metro pcs made a $77 did -- bid for this company in 2007. the world has changed.

Remarkable.

[laughter] we are talking about $15 per share.

If you liked it at $77, you are really going to like it at $15. [laughter] that was interesting.

It is trading higher on hopes respect election that somebody else may swoop in.

That is the whole thing.

This deal has everybody talking about what deals may be coming down the pipe.

If you look at it, all of these players, besides verizon, have to do more acquisitions, including at&t. they are somewhat limited in the u.s. because from a regulatory standpoint and from a price standpoint, as we have seen these premiums go up, and may have to look in europe.

That has people talking about telefonica, intentionally being in play.

That is the biggest provider in spain.

Then you've got vodafone assets that are maybe on the block.

That may be potential -- a potential target.

We also see people talking about t-mobile and the possibility for t-mobile to pair up with sprint.

Sprint has some real cash now, the injection from softbank.

Want regulators start jumping in?

The industry has consolidated so much already.

That is a next lead in question.

What regulars want to see a strong competitors the number one and number two.

We have verizon and at&t that make up almost 70% of the revenue in telecoms.

They want the third and fourth players, which is t-mobile and sprint, to also consolidate and thwart the efforts of one and two.

Cristina alesci, thanks for helping us kick off the week with another $1 billion deal.

This one in the phone business.

Equities, bonds, currencies commodities.

It is a quiet market.

Futures are up three.

10-year yield, 2.60%. the euro is weaker by 3/10 of 1%. that is a change from earlier.

Hydrocarbons are elevated, driving from miami to pensacola.

It just got expensive.

There is nymex crude.

China bouncing off the economic news.

There is the vix, 13.84. let's not forget this record bull market in equities, denial since early 2009. dollar-roman the, -- doll ar- rmb.

I know you are watching the chinese currency.

Seven point side percent growth.

-- 7.5% growth.

We have governor rick scott with us of florida.

Citigroup is the next bank to report earnings at 8:00 a.m. today.

You'll take a closer look at what makes citigroup differently, what are it will be hurt by its emerging markets exposure.

Also the turnaround story from michael corbat.

All of that is on "bloomberg surveillance" on bloomberg television and radio, streaming on the bloomberg tv plus app and at bloomberg.com.

? i am tom keene.

It is time for what matters now.

Rick scott of florida, after a bruising battle, he's the governor of the state.

After the financial crisis, after the housing bust, boy did that hit florida hard.

Now florida prospers.

The unemployment rate is set nicely below the national average.

Scott is the governor of florida.

We forget how big the state is.

It is a big state.

It takes a long time to go from key west to pensacola.

How long is the drive?

13 or 14 hours.

Remarkable when you see a 7.1% unemployment rate.

What part of florida is the best practice for florida?

What part is going to be the template?

They are all different.

Everybody wants to be in miami.

The housing market has come back big.

We sold all of those condos.

We had a 10 year supply over two years ago.

They are gone.

Tourism is up big.

91 million tourists last year.

More tourists in orlando the new york city.

Miami and orlando have come back big.

Housing has come back all across the state.

The only reason we are still getting hurt, the rural areas are slow to come back.

I was down in okeechobee.

Down python hunting or whatever.

They do not catch many.

Only about 100. they need to catch a few more.

When you look at the economic spirit of florida, there is a perception of lower wage jobs.

How do you boost up that wage?

Can you have a manufacturing renaissance in florida?

If you look at what has happened, the unemployment rate has gone from 11.1% down to 7.1%. tourism is up.

Agriculture is doing well.

I have invested in our ports.

We have 15 seaports.

We have the expansion of the panama canal.

In the last two years, 25,000 jobs created around the miami port.

It was our well-paying jobs.

I got rid of the sales tax on machinery equipment.

We will have more manufacturing.

That is higher-paying.

Housing has come back.

Instruction jobs -- has it come back too much, because of foreign money?

Is it your friend, or is it crowding out native floridians?

That has not happened yet.

I do worry about what happens long-term to interest rates.

That will impact our housing market.

Housing has come back.

Still we have a big demand for housing.

People want to either live or have a second home in florida.

They love our state.

Do something about the marlins.

Governor scott of florida with a challenged baseball team as we go into the all-star break.

They are struggling.

We are going to come back.

It is "bloomberg surveillance." i'm tom keene governor rick scott.

Good morning.

? good morning.

"bloomberg surveillance." coming up today, he needs some batters.

He's got pitching, and he needs some batters.

The king of one run games, randy levine of the new york yankees.

Excitement at citi field here in new york this evening.

The all-star game.

How are the red sox doing?

Better than good.

The reds as well.

Seriously?

Pictures, batters.

Designated hitter.

Sara hairston -- sara eisen with a gold star this morning.

I answer with tom and scarlet fu.

Our our guest post is governor rick scott of florida.

In top headlines, china's economy slowed and second quarter as factory output weekend.

Tdd 75% for the time.

That was down from 7.7% the previous quarter.

A report in line with forecasts from economist for the quarter.

New calls for a federal civil rights investigation into the killing of trayvon martin.

This after a florida jury acquitted george zimmerman of charges in the death of a teenager.

The naacp pushing u.s. attorney general eric holder to pursue a case against zimmerman.

It is two in a row for "despicable me 2." the universal picture taking in almost $45 million, taking the top spot for a second straight week.

The adam sandler, but --, the "grown-ups 2" took second place.

I do not see "the lone ranger." perhaps you should have seen "despicable me 2." deal activity has been hot, especially if you are looking at media.

Ron tribune -- from tribune to connect, the question we are asking, who is next?

The latest numbers point to the boom.

243 deals announced this year.

The total, 53 -- $55.3 billion.

You've got the tribune , the news corp.

Split, spinning off their print business.

In cable, whose owners saying, wait a minute, no sale.

We were fishing around for prices.

Everybody wants digital content.

Everybody wants recurring revenue.

Everybody also wants retransmission fees.

John malone, he has been active as well.

He's the latest cable tightened to call for more mergers.

All the companies bite?

-- will the companies bite?

Edmund lead covers the media for bloomberg news.

He joins us this morning.

The hulu deal says it all, or the non-deal.

The content people said, go away.

They got all the bidders.

The bids went as high as $1 billion.

These are not multi-bids.

After a lot of back-and- forth, at sun valley, they decided -- what is the why?

Fundamentally, what we are told his they want to change the direction of hulu.

They did not wanted to be a free service as it is now with the paid option.

They want to move it towards what they call an authentication model which is, prove you pay for television, satellite or cable, and then you can watch it.

If you select one of the bidders, directv, if you select there, it is less chance that its competitors will go into that.

A lot of the bidders were at the sun valley media conference talking to our bloomberg west senior correspondent jon erlichman, bob geiger of walt disney.

He asked him about this decision.

Have a listen.

Throughout the process, we continue to give consideration to strategic value of hulu.

And to its potential in terms of investment value long-term.

The interests of news corp.

And disney galvanized during the process about that.

We concluded that even though we had some great compelling offers on the table, the future of hulu was bright.

The future of hulu was bright, and we should hold onto it.

It sounds like bob either was saying, we do not realize how much of a gem this really was.

The fact that there were not a lot of its -- bi ds, it was like, this is a pretty nice property.

The main reason is, these guys are traditional programming guys.

They want to preserve the pay-tv ecosystem, touches they do not want to disrupt table or satellite and any kind of way.

Hulu and netflix represent opposite models.

They are cheap cable channels.

When you say some of these guys, and that is part of the problem -- owners with very different ideas about what to do, and it changed from what it was to what it could be.

So many cooks in the kitchen.

That was holding up the bidding process.

News corp.

Thought one thing and disney felt the other thing.

There is nobody to lead the charge.

Can i ask you a pregnant question?

That would be simple, when you look at hulu, is it successful right now?

Does hulu have a building momentum?

It absolutely has screwed it has 4 million paying subscribers.

There is a real audience.

It is growing.

You cannot shun that aside.

Perhaps giving netflix a run for its money.

How about a shameless plug?

You've got a brand-new podcast rid -- podcast.

It is by alex sherman and i. we are putting together weekly roundups of what is going on in the media industry.

We talk about hulu, john malone, and the moves for consolidation.

In fact, our twitter question of the day has a lot to do with what we have been discussing -- what is your favorite streaming service and why?

Is it hulu or netflix or amazon prime?

Tweet us.

Mine is amazon because i like to watch reruns of the west wing -- "the west wing." i use amazon the most.

Who has the biggest library?

Netflix does, but you mentioned "the west wing." coming up, we will talk citigroup earnings did -- ear nings.

? this is "bloomberg surveillance." i'm sara eisen here with tom keene and scarlet fu.

We need a data check.

It looks like u.s. stocks are holding their recent highs.

Let's do it quickly.

Equities, bonds, currencies, commodities.

Euro- dollar, 1.30. weaker currency.

I will call that a bounce up the move we saw on thursday and friday.

The backstory, gasoline becoming expensive.

That is not brent but west texas intermediate at 105.44. a solid seven dollars over the last week.

For me and you and michael mckee, there is nothing better than a good economics conference.

Economists got fired up at the rocky mountain economics element in jacksonville, wyoming.

-- jackson, wyoming.

Michael mckee caught up with a number of central bankers including axel weber, the chairman of ubs.

It is interesting, because he does not speak often.

He was willing to speak with us.

He's got the same concerns.

How long does this go on?

When does the fed get out?

He's concerned about what happens when the fed starts to exit because they saw what happened or what might happen when ben bernanke spoke after the fed's press conference.

Here is what he had to say.

I think probably last year over the summer, we've seen some turning points.

Things have improved slightly.

We are not out of the woods yet.

Very clearly the normalization of monetary policy in the u.s., which is ahead and on the agenda , will impact europe.

There is a strong correlation between the 10 year u.s. treasury yield and european treasury yields at the same maturity.

It is coming for europe at an awkward point in time.

He is worried about what happens to the per three because the spreads to german -- the periphery because the spread of german booms -- bunds, the periphery spreads go up and italy and spain are in trouble.

He was president of the bundesbank.

Anybody thought he would be the next ecb president.

What i have learned in the last six weeks is when we get beyond financial repression, the winner rick scott with us of florida -- you are ground zero for financial repression -- you have to go across the state whether they are democrats or republicans, retirees are getting crushed in this nation -- when does it get better?

I do not see how these interest rates can stay look at i do not see how the fed can keep building this balance sheet.

It will have an impact on us when rates go up because our housing market has come back strongly.

I am worried about trillion dollar deficits, the size of the fed.

It doesn't make any economic sense.

You are not one of the retirees of florida.

They are getting crushed by these low rates.

They are getting hurt everyday because interest interest rates are so low.

The positive for them is there are more jobs.

Housing prices are going up.

What happens when interest rates go up because the fed cannot borrow money?

We've talked on "bloomberg surveillance." is this real rates or the actual rate itself going up?

The real rate.

The actual rate has not moved.

The fed is not moving policy yet.

The not intend to.

Even when they taper, they will still be adding accommodation.

It is markets that are reacting.

When people talk about repression for retirees, one of the unintended consequences, did you get a sense of more talk of those unintended consequences, the side effects of all of this?

They are worried about what happens with the markets and whether or not there is some sort of uncontrolled reaction once they do announce a tapering program.

The financial repression question, they've thought about it, and they know it hurts seniors.

Very few seniors have significant investments in the stock market.

There is a feeling that they are doing better, so the economy as a whole -- so is the economy as a whole.

The rising tide will have to lift the boats.

I do not buy it.

They are all in savings accounts.

What happens when we get inflation back?

That will impact our seniors also good low interest rates are bad for them.

High inflation will be horrible for them.

I do not know.

You wonder, taper this, green shoot this.

I wonder when we finally see a change grade rick scott with us and michael mckee.

Let's get to some company news print we going to start with china getting tough on glaxosmithkline could the country detaining for senior executives on suspicion of what it calls economic crimes.

A legend price between travel agencies as well as the company.

The economic crimes involve 700 agencies and include $500 million.

We are looking at at&t because it has bought more airwaves assets.

The carrier acquiring leap wireless.

$1.2 billion.

This deal gives at&t 5 million wireless customers, more airwaves, a larger chunk of the growing a is you go market.

The $15 a share market is an 88% premium over the last) we see shares of leap jumping up more than 111% to almost $17 a share.

The trial for fabrice tourre begins in new york.

The former goldman sachs vice president faces allegations that he misled investors.

Those are the latest company news.

I will send it back to you.

Good morning.

"bloomberg surveillance" on a bloomberg television and.

All of our interviews are out.

I am tom keene as always joined by sara eisen and scarlet fu.

The bank earnings march continues.

Today we will hear from citigroup.

Earnings are out at 8:00 a.m. the street is expecting the bailed out bank to report 22% increase in profits.

Bloomberg industry senior bank analyst alison williams joins us.

She has been covering the sector for years with experience of that morgan stanley and ubs.

The distinction with citigroup, you look at the ceo michael corbat, it is very different than lloyd blankfein or jamie dimon.

How is he influencing the turnaround?

The key difference is the international banking franchise.

They earn roughly 60% of their revenue from international.

They really do have a presence in emerging markets.

I think that is going to be the thing people are watching.

Are you suggesting a greater write-down because of emerging markets?

The gdp numbers tepid.

Do they come out with the grammar result than what we saw from j.p. morgan and wells fargo?

I did not think they necessarily will come out with a right down or a worse result, but i think people be focusing on the future.

What we have seen in the last couple of months is really think stabilizing in the u.s. a lot of great news with the housing market and jobs.

When we look at world gdp, is he a slowdown in estimates.

We s

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

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