Too Slow Too Early: Surveillance (07/08)

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July 8 (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. (Source: Bloomberg)

Too slow, too early.

Probing the final seconds of the asiana plane that crashed in san francisco airport.

One of the pilots had just 43 hours experience on the 777. overnight, egypt convulses.

More than 40 dead as the muslim brotherhood fights back.

Will instability spread through the region?

The dell deal just cannot get done.

Carl icahn gave shareholders a choice, just say no to michael dell and silverlake.

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

It is incredibly busy.

Joining me is sara eisen and scarlet fu.

Michelle meyer is our guest host.

Adam johnson joining us as well with his perspective.

He has flown on the boeing aircraft.

We will get to him in a bit.

So much over the weekend, including the arrival in the u.s. of sara eisen.

I had a flight this weekend, back from a fascinating weekend in italy.


I spent time with the man credited with -- he talks in, the end of quantitative easy -- easing.

Also paul volcker along with other big names.

I will bring you some of that interview a little bit later.

Let's get you caught up this morning.

German exports unexpectedly fell.

Production declining one percent from the previous month.

The region finance ministers meet in brussels today.

In washington, the u.s. and european union began their trade talks.

Nothing much on economic calendar before the market opens but at 3:00 p.m. today, consumer credit for the month of may.

Earnings season kicks off once again when alcoa reports second- quarter results after the markets close.

Alcoa is the worst performer in the dow jones, down 10%. you have to wonder when it leaves the dow industrials.

That will get us started on a busy earnings season.

Here is the data check.

So much to talk about, particularly in san francisco.

Futures continued their fall higher, the vixx doing well.

10 year yield, 2.7%. you can see the euro, 1.2850. crude but said on , west texas crude, 103. and the backdrop, better u.s. economy.

We have michelle meyer as our guest host.

This is a better economy, framed by better jobs market.

We got that number on friday.

You are right.

Things are healing and improving in the economy.

We are running about 200,000 a month for job growth, seeing signs of life and some of the most broken parts of the economy like housing, auto sales were quite robust.

Looks like it should continue to improve.

There are still challenges ahead.

We are not out of the woods.

Overall, things are heading in the right direction.

I need to make some news.

You go up to 3% yield.

Are you ready to raise your gdp forecast?

Not yet.

She is tough.

Why not?

The reason we are still below consensus for q3 at about 1.5% , but things are looking better -- 11% housing market for michelle meyer, 11% year-over- year up, but she is still gloom and doom on gdp.

Front-page stories, what a weekend.

This is something we're been monitoring for a couple of days, violence in egypt following the ouster president mohammed morsi.

The rival protest erupting in cairo, killing at least 40 people, injuring more than 300. all this violence threatens to derail efforts by the leaders to form a new government.

Already, we have seen the ultraconservative party, the only islamist group to support the overthrow morsi, suspended its participation in talks to name a prime minister.

To me, the message over the fourth of july week and was severe polarization of what seemed to be some form of debate middle of last week area to people are wondering if this could turn into algeria in the early 1990s. i am not there yet.

I keeps coming up.

The fact is, it has really deteriorated the last 24 hours.

The other major story story we are following, the asiana crash.

The airplane crashed in san francisco saturday, killing two passengers, injuring more than 160. asiana airlines had the pilot in charge of loading -- landing the flight, this was his first fight in the san francisco and was training at landing that aircraft.

The pilot had to abort the landing, try to abort the landing, 1.5 seconds before the crash.

We are covering this from all angles.

Cory johnson is in san francisco international airport very early this morning, and adam johnson has the safety details here in new york.

Tell us what we know this early hour.

Right from the start, when we heard about this crash, a lot of detail started coming out and the data coming from social media and other data sources tells us a lot about what happened and a lot about what went wrong.

Asiana flight to 14 began in shanghai, continued on with students and teachers going to san francisco for summer camp.

The airplane stopped to take on more passengers in seoul, and a 5:00 04, began its 10 r, 20 minute flight to san francisco international.

It was typical of the dozens of nonstops from sold sentences go fy every week.

The boeing 777 was one of the newer flights in the asia and a flight -- asian on hima.

290 one passengers, 16 crew.

As the airplane approached san francisco, the sky was remarkably clear.

The san francisco tower told pilots visual flight rules were in effect read in other words, pilots could guide themselves to the runway without the assistance of instruments were traffic control.

But in the last moments of the approach to the airport, there were clues that something was not quite right we had look at this flight path from the previous day's flight.

Data shows the safer approach, a study straight decline culminating a safe landing.

Now look at the actual flight path saturday.

The airplane comes in much steeper.

You can see the pilot try to jack the plane out of its dissent.

Listen to the audio recording of the communications with the tower.

Seven seconds before impact, the tower tells them to increase speed.

Someone says, go around.

There is allowed ending sound.

Air traffic control warning other airplanes to avoid the runway.

Coming into slow and too low, the tail slammed into the sea wall, short of the runway.

It snapped off and send the airplane spiraling down the tarmac.

The fatalities, two 16-year-old chinese girls.

Smoldering ruins were found.

Lying on the tarmac, dozens of passengers who jumped from the airplane before the evacuation chutes deployed, some taking shelter in a frigid waters of the san francisco bay.

Dozens more ran from the burning plane.

Debris and luggage strewn on the runway.

All told, 182 survivors were rushed to local hospitals.

Samsung executive david eun raced off the airplane and snapped this picture.

He wrote in the midst of the smoldering wreckage,eun used thes correct, if were a bit ironicofo twitter handle.

A lot of the investigations right now are focused on pilot error, perhaps.

What do we know about the pilot at this point?

The ntsb was quick to warn us not to jump to conclusions.

We don't know what happened there could've been.

We do know they're usually four pilots on an airplane like this and it will shift midflight because of the duration, 10 hours and 20 minutes from seoul after flying from shanghai.

While the pilot was very experienced at thousands of hours of my time in the 777, the copilot only had 43 minutes.

We're hearing now it was his first flight into sfo ever.

Good to have you with us this early morning, live from the severn cisco airport.

He did a great job on that, synthesizing the speed on twitter i was able to follow this.

With the flight recorder data for urged anyone who listened to the flight recorder information.

Adam johnson with us with much experience with knowing.

I will get to the heart of the matter.

There seems to be a distinction between the major u.s. carriers, major european carriers, and some of the other international carriers.

Is a boeing boeing or doesn't matter which airline is flying at?

Boeing is a boeing and boeing is on the ground with the team trying to figure out what happened with the team from ntsb.

What you're getting at is the bigger picture, how safe are we in the area e not as safe as you might thought.

You look at the budget -- perfect.

Absolutely stunning.

Take a look where safety clocks in for the faa, where we are maybe not as safe as you think.

Safety accounts for just 9% of the budget.

With operations and training, i'm wondering about the differential between u.s. pilots or british air pilots and some of these other international airlines.

There seems to be a distinction.

Can we imagine someone from delta or any other american airline, can we imagine them having a guy land manually at san francisco?

Let me give you an example.

I was on the 77 relaunch about -- a joke.

It was a serious conversation.

I was in the cockpit with three pilots.

A were three of the most experienced pilots.

They only need two, but they have three because they want someone to writing the flight, the senior captain.

It varies from airline to airline.

I'm sure we will get much more on this through the day.

And we post that to everyone on twitter.

I know i look for flights for the right price.

Most people have to do that.

Treat us about safety on airlines.

Or company headlines.

A headline just crossed a few minutes ago, iss institutional shareholder services is backing the leveraged buyout of dell by michael dell, the founder and silverlake.

We will be getting to this in a little bit.

This is a bit of a surprise given everyone thought iss was leaning towards a negative recommendation on that proposal.

In other company news, steve:. the hedge fund manager will remain under federal investigation even after a deadline on charging him expires.

The statute of limitations to bring insider trading expires at the end of the month, but prosecutors could focus on other charges that sac.

Standard & poor's gets its day in court, begins defending itself against the government's $5 billion lawsuit today.

Prosecutors's alleged s&p defrauded investors with its ratings.

The company says reasonable investors would not have relied on its "pu ffery" downgraded to junk status, by out of sprint nextel.

S&p sets the intense opposition in the mobile phone market as one of the reasons for the downgrade.

That is a huge deal.

A is.

One of the keep players i spoke to -- are you back from italy yet?

The name associated to this country, boy is he worked up on lack of progress read -- for financial reform.

While we're not getting anywhere years after dodd frank was passed in this country.

? good morning.

Incredibly busy morning.

I am tom keene join with scarlet fu and sara eisen.

Breaking iss news.

The drama continues.

We have learned minutes ago that the shareholder proxy advisor group iss is backing the buyout offer from michael dell and silverlake and this comes right after activist investigator carl icahn fired off a letter asking them to reject the ceos plans.

We bring in our deals reporter who has been covering the story from the beginning.

Conflicting messages for shareholders from iss and carl icahn this morning.

We were largely expecting iss was going to rule in favor of michael dell and the offer they have on the table.

What carl icahn was saying last night was, every time the company, that there is some news that comes out that puts the boat in favor of carl icahn, the company would issue some dire statements about its financial situation to basically sway iss and shareholders to vote in favor of that 1365, and support that it is a fair price.

Carl icahn was saying, don't be distracted by that.

At the end of the day, the company is not revised its operating income projections of $3 billion.

Keep your eye on the ball here, shareholders.

They could say the pc market is going away, but the company is still generating plenty of cash.

The stock is going down.

What i don't get, the stock is going down.

It is going down because there are some players in here that were expecting a bump, expecting a bidding war.

You have to just it was between short-term and long-term players in the stock because long-term shareholders can still support carl icon.

What should we be watching out for?

Next is the shareholder vote july 18. what many people don't realize is the actual map -- matt is working against michael dell because he cannot vote his shares.

He has a higher hurdle to clear.

Obviously, iss report this morning helps them clear that hurdle.

But he cannot vote his shares and carl icahn can.

Why is it not trading near the $13 level?

There were is news that leaked out strategically.

One, we heard michael dell and silverlake were not going to bump their bed.

That got hot money exiting the stock.

Now iss saying it is a fair price, so we are seeing some potential selling as a result of that.

The stock not yet trading in the premarket, but did drop 2% after carl icon made his views known.

Thank you for joining us.

Retailers turning to technology, completely changing the way they interact with customers before they even walk in the door.

We will take you inside the latest buzzword, on the channel, and who is doing it best.

That is in the next hour of "bloomberg surveillance." ? this is "bloomberg surveillance." i am sara eisen.

Top headlines this morning, more than 40 people have been killed in egypt as supporters of former president mohammed morsi battle the military.

The violence erupted outside a military installation and your republican guard compound, where some believe morsi is being held.

Timothy geithner is pulling in big bucks on the speaking to her.

He received about $400,000 for three recent appearances according to the financial times.

One speech was good for $200,000 alone.

The high speaking fee putting geithner are alongside bill clinton and tony blair as one of the best paid speakers in the world.

At the box office, worse than predicted for "lone ranger" taking in just 20 $9 million in its opening weekend, finishing second to "despicable me 2." it rang up more than $82 million in box office receipts for the number one spot over the holiday weekend.

We were following the news all weekend.

Big, big news weekend and certainly to the big stories.

One of the big stories is what is going on in egypt.

The ousting does not bode well for the future of egypt and democracy there according to several op-ed.

A ucla law professor writes in the new york times, across the middle east, secularist have traditionally failed at the ballot box because they lack support among the highest masses and had to rely on the might of the military.

The predictable result he says has been the radical islamists and that is likely to happen in egypt.

This is moment by moment.

The latest i've seen are 42 dead -- and more than 300 injured.

That was just overnight.

The violence continues.

I have a morning must listen.

I had a chance to sit down with some of the biggest names in global economics, the fed,qe and financial regulation and that has paul volcker, the former federal reserve chairman, all worked up this weekend.

There are too many agencies with their own particular point of view, and it tends to get to the lowest common denominator, in this case, maybe more detailed than necessary.

That is the tendency of bureaucratic organizations.

It is unfair to the market not to know what the rules are.

It is not efficient or effective.

Is unfair to the market there are conflicting notes.

At the fact is, we don't have anything in place and he is this largely to the fact there are so many regulatory agencies.

Too many cooks in the kitchen.

Too many voices.

I will have more little bit later.

The focus this weekend, certainly on the united states.

The federal reserve considering when and how to step back.

Michelle meyer from bank of america with us.

More comments as well from italy.

This is "bloomberg surveillance." ? good morning, "bloomberg surveillance." i am tom keene with sara eisen, back from italy, and scarlet fu.

A -- to record highs.

Futures up 10. s&p futures up 10, dow futures up 74. quickly, a higher yield regime, and crude, 103. the job market continues to pick up steam.

The economy may be strong enough the federal reserve can scale back or taper it's stimulus.

That was all the talk in siena, where some of the biggest gather to talk.

Shawn myers joining us.

-- michelle meyer's joining us.

How does this set us up for what is next in fed policy?

They have told us they are looking at the employment situation.

They want to see continuous job growth.

They want to see the economy is still very much an appealing process for them to reduce the pace of using.

Not necessarily tightened, but he's less.

200,000 job growth, the unemployment rate has been trending lower.

It is encouraging.

We talked about you're not going to bring up your gdp growth.

This floored me, here is the note for michelle meyer's colleague on going to a three percent 10-year.

Ok, i have a 11 point percent year-over-year housing.

I have a three percent 10 year yield.

To me, it is all clear.

You guys have capitulated on your gloom called.

I think what we have done is acknowledged the areas of the economy that are working, and housing has been decidedly positive.

It is hard to fight the momentum we are seeing in home prices.

Almost 12% appreciation seems reasonable, even assuming some slowdown in acceleration.

To our viewers, should they do a mortgage today and refinance because they will see a six percent are de-you're out there there?

Will that slow housing?

I think the rise in interest rates is likely to continue.

It will be moderate.

We don't expect to see a big spike higher interest rates to that 6%, but we do think we will see a rising rate environment as the economy continues to improve.


A lot of that may have to do with the outlook for the federal reserve.

It is not pretty typical where you can get an outlook from another central bank from a central banker.

This weekend, set to take over the bank of israel in about two months, now chairman of j.p. morgan chase international, here's what he says about when the fed is going to taper.

Yes, it is time to start activating the plan, but by the same token, it is clearly, important to clarify that one does not talk about a quick fix.

It is a very long way.

It has to start sometime.

It seems september is a good time to start.

He says september is the time to start.

He also says it is so important to communicate and clarify how this is going to work.

Communication is taken center stage for the fed.

I think that is been one of the biggest challenges.

Overall, there has been some bumps, but they've done quite a good job in terms of medication.

Yes, we have seen a micro -- market repricing.

We will continue to see those types of reactions as they implement their exit strategy.

My econ 101 is housing is always related to wages.

We're getting a housing recovery, but not a wage recovery.

Is part of the bank of america optimism, our wages going to finally go up?

Wages should start to improve . it will take time, but that is part of the overall economic recovery.

The gains were singing housing now is a bit different than in prior cycles because we are coming from a heavily distorted market.

So the gains we are seeing are driven by people who have all caps, people who are investors?

Rising interest rates, are they a signal of a good economy or bad?

There is an ambiguity here.

There is.

I think the rising interest rates, it has been thoroughly contains and the my opinion it has gone along with some improvements and more optimistic forecast.

Is financial repression over for retirees?

Will it finally make a? eventually.

Ben bernanke's term expires january 20 14, and that was another big topic of conversation.

Who should replace him?

President obama all but said he is not going to join.

Who should replace ben bernanke?

My own deal, and maybe because i don't have other candidates, you could do worse now.

I have been very critical of bernanke.

He has been through that and learned a lot in that period and it would be better to appoint him again.

Reappoint chairman bernanke for a third term in a row this is idea.

What do the markets want?

I think that would make the markets happy if bernanke would receive another term.

But it seems like that is highly unlikely based on the comments from obama.

There could be some volatility, bumps along the way early next year.

Equity markets are on a tear.

Bank of america brings their yields up, finally, you join the optimism.

Do you have an outlook when you walk in the room, good things to happen for the united states as we get the labor day and even into autumn?

We do.

We think over the next few months we are cautious still because we are concerned about some of the and realization of the labor markets, concerned about the weak manufacturing data and week global growth and the sequester that that can still potentially impact some of those jobs.

I have not seen that.

Where is that?

I stood in line at jfk for an hour and a half.

People really complained about the immigration lines at jfk.

No matter how much you try, michelle is not -- but when you do look -- could you send us an e-mail?

We need a breakthrough.

As soon as it happens, i assure you.

But we do think heading into the turn of the year, q4 next year, the dynamics are improving and we will be in a percent growth.

We begin the seventh year of this crisis.

Great perspective as always, michelle meyer's from bank of america.

I know tom was catching up on his sports.

Andy murray delivered.

It is time . he became the first british player to win the men's title in wimbledon and 77 years, winning in straight sets yesterday.

It sets them up for a an annual payday that could hit $75 million.

With prize money and endorsements, it is estimated he makes about $12 billion a year right now.

As a sportsman, we get paid a lot of money, probably too much, definitely too much, but we have a short career and try and maximize it as best as you can.

Murray talking to bloomberg earlier.

Fans were desperate for him to win as potential sponsors were.

A pair of tickets for the match were being offered up for $105,000. they got what they wanted, right?

Big event.

Coming up, we will follow a lot more on the san francisco plane crash, echoed by second reconstruction of how asiana 214 approach the airport, and killing two passengers.

More about the pilot experience.

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

In top headlines, crash investigators are trying to establish who exactly was flying the asiana jet that crash landed in san francisco.

The probe is focusing on why the pilots did not react to a loss of airspeed until just seven seconds before the 777 slammed into a sea wall short of the.

Investigators say they have recovered the black oxen the oil train explosion -- black box in the oil turn explosion.

The criminal investigation is underway.

On a lighter note, check out this play by the baltimore orioles.

The third baseman grabbing the ball off the bat of the new york yankees luis cruz.

In foul territory, bobbles it, and still makes the throw to get him out at first.

What an arm.

The play came in the 2 -- one win over the yankees.

The red sox lost 3-0 to the los angeles angels.

Those are your top news headlines.

Crocs who wrote that script in the control room?

That throw was one of the best i've ever seen.

I tell you, it was an extraordinary -- i watched every minute of the game.

It was like 91 degrees.

The pitcher for the yankees was superb.

We were all paying attention over the weekend to the crash in san francisco.

Airline travel in the u.s. is safe.

The exceptions, tragic for those involved, jarring for the rest of us, proving the rules.

Layers of scrutiny of every corner.

When there is a crash, the scrutiny intensifies.

A questioning voice in her tenure at the department of transportation, should you fly second tier international airlines?

She joins us from mount pleasant , south carolina.

Good morning.

Good to be with you.

Why haven't we spoken to the pilots yet?

Are pilots treated differently if they are international versus they fly for delta or american or united?


we have not heard from the pilots yet, the national transportation safety board regulations that they speak to the pilots first.

The pilots can talk to their airlines and union representatives or their attorney, but short of that, they are supposed to wait to talk to the ntsb.

You would not be expecting your stay miss from the pilots whether they be u.s. or non-us.

You are probably more qualified than anyone i know to deal with the shock of this in the operational integrity of the ntsb with what you did with airtran in the everglades in florida years ago.

When you look at a crash process, is it a better process now than when you were on watch?

It is because we have some additional regulations.

In particular, it gives family members and passengers more rights and they require the ntsb to brief them.

The families have the right to have certain information, to view the scene, to be provided basic essentials in the interim.

Many of these briefings that the ntsb do msi from ensure they just want to keep the public informed, or not, but the ntsb does have to brief the families and let people know what is going on plus the additional parameter flight data recorder makes a better.

Also the protocol for crash like this, let's remind everyone that flying is incredibly safe these days.

We have a chart based on a blog at slate and he has data from all sorts of agencies and it shows fatalities and airplanes in the u.s. is incredibly rare, based on u.s. to tell these per 100 million passenger miles, in the u.s., fewer than 70 times likelier to die -- you are 70 times more likely to die driving a car or in a taxi been flying in an airplane.

We see the safety of their airplanes, is there a difference in the regulation or the safety between the united states and other nations?

Is there a sharp demarcation or is it pretty much all the same?

There is a sharp tuber kaisha between western developed nations were aviation nations, as we call them, and the others.

Places like europe, australia, new zealand, japan, their airlines and their records are comparable to ours.

In some cases, perhaps a little better.

Other places have more difficulty.

Certainly, many countries in the african continent, some chinese carriers just don't have the same record, the russian carriers don't. let me cut to the chase.

Can you imagine a u.s. airline allowing the reported process that we saw here of a first time 777 landing at san francisco with delta or united or for that matter in a southwest airlines, do that?


and also, we would have to wait to see what equipment was out.

U.s. carriers usually don't allow that visual on a first time and there is a lot of pilot reporting lines that i stay abreast of and they're pretty much abuzz with this.

Add to that, the instrument landing system was out on that runway and there is still an issue with what they call the visual approach slope indicator lights were on or off.

Without any equipment, making the first time landing over water on a hot day, that is a bad combination.

Thank you.

She created a lot of waves.

She did.

This is our twitter question of the day you know someone who looks at the safety record?

I do.

I worry about developed nations with my kids.

Do you make that demarcation?

You have to read -- you have to.

We are going to come back and talk about banks.

Are the two big to fail and join?

Increasing capital requirements will be on the global standards.

We will talk to a leading of the bankers coming up on "bloomberg surveillance." ? this is "bloomberg surveillance." earnings season begins this week, alcoa today and the big banks, jpmorgan and wells fargo, on friday.

Better than good.

The overall seems tepid.

Surprise volatility matters.

They like it.

In banking, the once, twice, not thrice effort to get banks house in order, simply they need to raise more capital.

Three dollars for every $100 in assets, but is that enough?

The fdic considers tougher requirements tomorrow.

Stanford professor and advises the fdic, her acclaimed book , on michael mckee's summer must-read list and our chief economic correspondent, he adores the anchor's new clothes.

You should read it.

The author is here today.

Have you heard from jamie dimon recently?

No, i haven't. the capitol records are pushing back.

They're pushing back saying enough.

State their case.

Why don't they have enough capital now?

Well, with a land to someone who has so little equity?

I don't think so.

I think most companies in the economy, if they don't have 20%, 25% equity, no one will deal with them.

You assume or not they can raise the money, they can load the vote, but the money aside, why is that a bad thing?

They could do some productive things with it.

All we're saying is they would have more money in the form of equity instead of in the form of debt.

Most companies retain their earnings to invest and that is the first and most important source of funding.

Thanks like it may not like the price they get, but that does not mean it is not good for them and us that they have more of it.

Paul will go -- paul volker is almost as riled up as you are.

I had a chance to talk to him this weekend.

Here's what he had to say about the subject of bank rules.

However complicated you might argue the regulation is, and i don't think you should make it more complicated, there is no regulation.

Wire was sitting here three years later from dot-franken franken have no regulation?

They are fighting all the way.

Basically, your legal challenges.

Who is fighting?

The bank lobbyists are making it much more difficult.

Every rule gets 1000, 2000, 5000 comments.

Then the politicians pushed that you have to read them all.

So it becomes all very messy.

Which nation has the best capitalization right now?

Is there an example of a country the united states should follow?

Right now, switzerland is doing a better.

I heard recently that turkey is good on that issue.

All it takes is , in the uk, you had that, or i don't know now what will happen there, but you had that.

Then the politicians pushed back area and it takes more than just -- it does not make sense that countries go at this alone?

Shouldn't they streamline in order to reduce the competitive advantage and disadvantages of the banking regulations?

I think you heard the race to the bottom.

I am advocating a race to the talk.

We don't allow companies to do unsafe things just because someone else in the world allows that.

You jump on this perfectly, which there is no indication that everybody wants to get together.

I see no indication whatsoever that everybody wants to get on the same page.

Look at the watchdog on the federal reserve, talking tough about things and stricter requirements, which makes the bankers angry, of course.


When you look at the mood we're in right now, what would you hope to see through july, through august that makes for safer american banking system?

I want america to lead the world in bank safety.

There is no reason they shouldn't. our banks are in shape to raise equity at the markets and would make us nervous about other things they do.

There are things that are also urgent like to rivet its reform.

I am really anxious -- thank you so much.

Michael mckee's book of the summer.

I know michael mckee is a huge fan.

Thank you, michelle meyer, for joining us from bank of america merrill lynch.

We start with a better jobs picture.

We will bring you the latest details on the san francisco airplane crash from asiana airlines.

New questions on the pilots record.

? . this is "bloomberg surveillance." too slow and too early.

One of the pilots in the cockpit had just 43 hours experience on the boeing 777. overnight egypt convulses, more than 40 dead.

The muslim brotherhood fights back.

Will instability spread to the region?

It was the online screaming child of bloomberg and -- who will walk away with the hulu hoop?

The big prize?

Good morning, everybody.

Tom keene and live from new york.

Joining me as always, back from italy, sara eisen.

Scarlet fu with us as well.

Michelle meyer with us on the bank of america marriage, of course.

Still retaining a lot of enthusiasm.

Adam johnson covering the airplane crash at san francisco foss -- attempted cisco's international airport.

Before we get to all that -- i did not ring you anything except for great conversations with the preeminent economist about the hottest issues in global economics.

First, a morning briefing.

A lot of overnight news to catch you up on.

German exports fell in the month of may, dropping 2.4% from the month before.

German industrial production dropped more than estimated, one percent from april.

In europe, finance ministers are meeting for a regular confident -- a regular conference in brussels.

U.s. and european trade talks begin today in washington.

As is considered a major trade eel, but also set to take a few years to work out.

3:00 p.m., a report on consumer credit.

Alcoa reporting second- quarter earnings after the bell today.

Company news, a busy day.

We saw the dell news earlier with -- endorsing michael dell's leverage's buyout.

Some were surprised that iss was leaning against a positive recommendation.

Also -- also news on steve cohen.

The billionaire will remain under federal investigation, even after a deadline on charging him expired.

The statute of the mutations on bringing in insider trading expires at the end of the month.

Standard & poor's gets this day in court.

The firm begins defending itself against the government's 5 billion dollar lawsuit today.

Prosecutors allege that s&p different at investors with ratings on mortgage related investments.

The company says reasonable investors would not have relied on its "puffery" on credit ratings.

The move is based on the japanese company's buyout of sprint nextel.

Softbank rating to cut junk.

-- cut to junk.

That is company news.

Top story this morning, the plane crash at san francisco airport.

We are covering it from all angles.

Cory johnson, or bloomberg west editor at large, is out at the san francisco international airport.

Here in new york, the safety details.

Cory johnson on twitter yesterday, out of south korea.

We are now a day into this airplane crash.

There are a lot of questions being asked.

The first thing is, where are the pilots right now, and when does the ntsb speak to them?

We understand the pilots are in a hotel near san francisco international airport, and the ntsb has yet to speak to them.

That is an important part of it because we do not know which of the pilots was in control of the plane at the moment of landing.

With four pilots on a plane like this, they would be alternating shifts over the course of this long shot -- of this long flight.

All told, it was probably in the air for more than 12 hours, going from shanghai to seoul, then sold to san francisco.

-- then seou l to san francisco.

What they knew and when they knew it, like so many of the stories, is what this will come down to.

Adam johnson, you have been in the rent is 787. there are a lot of people up front.

A lot of people, and at least for united airlines on the 787 has not just the captain and the copilot, they have what is called a flight captain, a third person sitting there monitoring.

He does not touch controls, he just make sure that the other guys are doing everything correct.

They did not have that.

With an international event like this, do the pilots speak to their nation's safety people first?

Or do they speak to the landing place for us?

That conversation is happening today.

The south korea transportation authority confirms the pilots are speaking to south korea's own investigators.

Curious because that is happening 24 hours because they will sit down and speak to the ntsb.

Tomorrow's meeting is ntsb, the south korean officials, both controllers from the control tower, plus the airport.

Curious there is the one meeting first.

As the investigation continues, there is so much we don't know yet.

Cory johnson, there is so much we do know now in the moments and seconds leading up to the crash at the airport.

Tell us about that.

It was an unusually clear day.

San francisco international airport is known for its cold weather, try them experiencing right now.

Saturday morning was very clear, very low wind.

The flight crashed at 11:27 in the morning.

I was on the other side of the bay at that exact moment, just a lovely day at that point.

But we know the pilots tried to abort the landing in the second before, and the flight was coming in too low.

According to the ntsb, significantly slower than even the plane reported to the tower, and that contributed to the crash and their ability -- and their inability to correct before the impact with the runway.

Bowling has come out with comments too.

What did they say?

Here is the key point.

They have sent a technical team on site working under the direction of the ntsb.

The ceo told me that when these sort of things happen, we attack it.

We put dozens of people on the case to figure out what happened.

To me the station that you mention, 137 knots, 158 -- to me, the distinction, which you mentioned, 137 knots 158 miles an hour -- everybody looks west across the pacific.

Do you think the distinction being in san francisco, between flying a u.s. character -- a u.s. carrier and an international carrier, particularly one not from the major european countries?

I think when we talk about what kind of people were on this flight, it was a saturday flight, a holiday weekend.

We know there were a lot of students on the fly, not a lot of business people.

The ceo of facebook almost got -- the coo of facebook almost got on this flight, did not get on the flight.

There are dozens of flights across every week, erected from seoul -- directly from seoul to san francisco.

It is a common flight.

Two adam's point about the investigation, there is also the engine investigation.

Those engines are apparently going to go all the way back east to be examined in connecticut, where they are initially manufactured.

We should point out, yesterday the ceo of asiana airlines said at this point, "we don't believe there is any mechanical issue with the engine." right away, curious he would say that without the knowledge of any investigation.

That was a very bold statement.

I would also point out that the 777, one of boeing's flagship products, has a pretty strong safety record.

There has been one of other issue -- only one other issue with the 777. over 1100 have been made.

Not just with the 777, but air flying is very safe these days, compared to riding in a car or a taxi.

This is the chart of the day, showing you that you are 70 times more likely to perish in a car crash land in a plane crash.

Many accident tissue but it pilot error and less so -- many accidents attributed to pilot error.

For asiana to come out, the ceo, and say there is no problem with the engines, you can see he is already distancing himself from the pilots, as if to suggest there was a problem.

There will be a full investigation.

It is not our position to speculate.

That is the job of the ntsb.

Curious that you see people positioning to deal with that issue.

On our twitter question of the day -- do you consider safety recommendations that safety records when you are looking for a flight?

We will talk about bank of america, without question, the investment call over the weekend.

And bob crandall will join us.

The former chairman and ceo of american airlines.

The airline's response -- what do they do and how do they make sure that the proper safety is in place?

Good morning, everyone.

"bloomberg surveillance." i am tom keene.

Our guest this hour, michelle meyer with us.

No one better to talk to.

Great jobs report, better economy.

You people change your views, it is a positive view forward.

Where will we be in one year?

I think we will see an economy of about three percent growth, job growth of two hundred thousand or so consistency, the rate coming down.

We will finally experience real momentum in the economy come next year, provided we don't see anymore shocks.

When does the unemployment rate get back to normal?

What is the normal unemployment rate?

Nobody has a clue, do they?

There is a big debate as to what that might be because the root -- the relationship between inflation and the unemployment rate has not been determined.

We would tend to say it is about 6.5%. that high?

6.5% is the nation's capital unemployment?

I think so.

Right now given the structural challenges we see, even the deep recession and the slow recovery we have been experiencing, there are a lot of implications on the labor market.

That does not have to be permanent.

I think for now that is probably what we would consider.

The 6.5% unemployment rate is politically unacceptable in washington.

Does that change how the fed thinks?

Do they taper later because they have to do with the political reality instead of dealing with a normal rate of 6.5%? they are looking at full employment, however that is defined in their opinion.

If we are seeing signs of momentum in the economy, it is set to put the scale back a little bit.

You are still easing but not as aggressively.

The next question is, when do you start hiking -- tightening industries and politicians specifically?

Defining the amount of slack in the economy and how much inflation is acceptable.

This is some of the real mystery, genuinely questions that genuine questions the economists have.

The summary from over the weekend, at merrill lynch going to three percent, 10-year yield.

Ages since we have seen that kind of yield.

We really appreciate it.

Michelle meyer bank of america.

Much more coverage coming up on egypt and the airline crash in san francisco.


We will also talk about the marriage between retail and technology.

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

Crash investigators are trying to establish who exactly was flying the asiana airlines jet that crashed in san francisco.

Why didn't pilots react to a loss of airspeed until seven seconds before the 777 slammed into the sea wall just short of the runway.

40 people were killed as the former -- as the supporters of mohamed morsi battle the military.

Tim geithner pulling in big bucks on a speaking tour.

The former treasury secretary receiving about 400,000 dollars for three recent appearances, according to "the financial times." one speech at deutsche bank was good for $200,000 alone.

He is one of the best paid speakers in the world, along with tony blair.

What is wrong with this?

There is always this implication that you are a bad person.

Actually, in japan, you are now -- you are not allowed to go speaking to the public until a few months.

Three months delay i understand.

I hope the cash is in and makes a gazillion dollars.

We are talking retail now, because retailers who embrace technology are also catching in -- are also cashing in.

Retailers demanding greater communication with stores.

More to risinger is the president and ceo -- mortimer singer is the president and ceo -- one of the world's best -- good to see you, scott.

Good to see you, mortimer.

The buzzword is on the channel.

What does that mean?

It is really about the alliance of the -- the alliance and the consumer to shop wherever she is, whatever device she chooses to shop on, and wherever that may be.

I like how you tend to say she.

We tend to say she because there are more female shoppers.

Ultimately there are 85 million consumers today actively using their smartphones to shop in some way.

Just on the 10% of sales come in total resale -- retail sales coming from mobile, but 50% of overall sales are influenced by technology in some way.

What i find interesting, and this speaks to your activities on branding.

This is not just a company like walmart having a website and online business, this is about joining all of these technological streams to promote the brand, and brand loyalty has to pay off.

You think of digital and the connective channels.

Once you get a consumer -- to buy from -- in addition to the store from a catalog, they begin to purchase more.

We should all have our linkedin profiles, and use the turn on mnichannel.

Who are the companies, mortimer, leading the way?

Some of the department stores who have a similar gross margin are not completely merkel -- are not completely vertical, pushing forward on it.

Neiman marcus group has 40% of their consumers online, those not in a retail store.

They are letting them communicate with consumers, telling them to come back in.

It is about conversion, foot traffic, but it is also about gross margin inventory, too.

It is also about not being a best buy or a showroom concept for these stores.

What is interesting about it, in the case of macy's and neiman marcus respectively, they see the customers being four to five times better than a mono channel customer.

That can give them a leg up on some the mono channel guys like amazon.

Department stores are the format of yield a chair, lost share in the last nine or 10 years, so they have to do is -- they have to do something.

They have great management and the capital.

So em commerce for them is a survival strategy.

What about retailers outside of the department stores?

Are they also engaging in omn ichannel?

Is not -- the millennial customer coming-of-age who starts to become a homemaker will start to shop in a way that will not allow the people who don't brace technology -- who don't embrace technology, the ceo's that don't make technology the nuclear support they do -- is there a bad example of this, the company going about this the wrong way?

I think in general, most companies are behind the eight ball.

Leading the charge is victoria's secret, american eagle, doing very well.

In general, a lot of people have a lot of catching up to do.

The big goal has to bring that has to be to bring customers into the brick -- the big goal has to bring customers into a brick-and-mortar store.

Instead of talking about e- commerce and mobile commerce, we will talk about e-influence and mobile influence.

Can you just rid of the dumb ads i have on the internet?

If i look at luggage or something, for the next six weeks i get luggage ads.


It is like a negative.

It goes from democratic -- from demographic targeting to behavioral.

Mortimer singer.

Coming up, who will bid next?

This is "bloomberg surveillance." i'm sara eisen, here as always with scarlet fu and tom.

I go away for a week am a the euro goes to 129. wild moves on the jobs report.

Huge moves, and they continue.

So much to talk about fuel stop -- so much to talk about.

Now futures up 62 points right now.

Higher yields.

You talk -- you heard michelle meyer talk about a higher yield.

Hydrocarbons put on a bid.

Overall a better data screen today.

And it is on the strength of the u.s. economy.

Sara, you are just in italy, and you were the only journalist there.

Pretty free to talk about their views.

The u.s. dominated all the conversations.

I was there at the same meeting, in the tuscan hills in italy.

Sorry, tom.

Last year everyone was talking about the european debt crisis and how that was a huge threat to the global economy.

This year everyone is talking about the u.s. as the surprised right spot in the global economy.

Still, challenges remain, and the fed chairman says his number one issue right now is on the lack of derivatives.

The thanks ability -- the bank's ability to do speculation and hedge funds, if it is a good thing you don't worry about it.

If you think it is a bad thing, you get together to do something about it.

So he is sort of mocking the idea that everyone is saying we need derivatives reform, hedge funds, banking reforms.

Here we are post-dodd frank for three years, and there is a lack of regulation.

These are a lot of smart people.

What was the story away from the microphones in the official lines?

Who was going to be the x federal reserve chairman when -- the next federal reserve chairman?

We heard names like larry summers, tim geithner.

The big question, a lot of folks said they would be happy if ben bernanke was reappointed for a third term, just for consistency and to calm the markets.

Finish what he started, essentially.

I am glad you brought up the word "finish their coke that is what everyone was talking about.

Jacob frenkel, set to take over the bank of israel in a few months, talked about how it is time for bankers to step back a bit.

The fed was very clear that when circumstances allow, they would start -- in a way, the good job reports give a good opportunity to activate the plan.

But i want to emphasize, nobody talks about a plan of removing the punch bowl away, a plan of contracting the quantitative easing to a contractionary level.

One talks about the very gentle turning of the dial.

A beautiful setting to discuss some very important issues, like tampering, like removing -- like tapering, like removing the punch bowl.

While you were gone, i don't know if you notice, portugal blew up again.

What did they say about europe with their high marks to president draghi?

Look, politics are huge factor here, and they are bound by the german central bank.

Mario draghi received high marks, but european politicians do not.

There is still a lot of work to be done, and nobody could even give a forecast on the recovery.

Could they be up on olli rehn?

No beating up on olli rehn, but this complacency they have about the lower bond yields and not making enough progress.

How much talk was there about the trade talks between you the u.s. and europe?

Very little talk, but it is important to watch because the trade talks open today.

You had the added layer of the nsa scandal and the european reaction off that.

It was on the front pages of the newspaper.

President obama, the word "spying" in italian.

The layover in paris -- what was that, three days?

Including some trips in a for ari.

More on that later on.

-- in a for ari -- in a ferrari.

In the last hour, michael dell picking up a key endorsement.

Iss cites the 25% premium in del's offer.

We see shares of dell rising in the premarket.

Perry capital claims that all profits seized from fannie mae and freddie mac are illegal.


This is "bloomberg surveillance." streaming on your tablet and of course on your phone.

I am sara eisen, as always, with tom keene and scarlet fu.

Our guest host for the hour is scott galloway, business investor at nyu stern.

A lot of people, a lot of having parts.

Hulu is a preferred way to watch television.

Bidders are out in a frenzy to acquire the streaming pioneer.

Richard green phil -- richard greenfield is royalty among media and technology analysts going back to vonage and other ancient stories, and is visual and aggressive.

He joins us this morning.

Would you explain why seven or eight people are piling into this?

You know, there is a big desire of consumers to stream.

You get a tablet, an ip connected television, smartphones are taking over the world.

When you look at what you can do -- people get these devices and they want to do things and stream video.

Yes, you can stream short form little clips of dogs and shorter videos on youtube.

You can get netflix, but how many other choices are there?

That when you get these devices, it just works.

You look at the complexity of developing a nap across multiple platforms -- xbox, ps3. look at the different smartphone models.

Hulu just works.

If you ask them to compare it against others, it works better.

Acquiring it for a zillion dollars or whatever the number is going to be, what am i actually buying?

Am i buying the software or the content?

You are doing two things, and it depends on who the buyer is.

If you are a distributor at the existing players, you're probably looking at it saying we have agreements with some of the existing players, this will help us be visible everywhere in the world.

You just mentioned that you are streaming live on the internet.

That ability to stream your content or put it on the internet is why an existing distributor might be interested in this.

There are other players like some of the private equity buyers, whether it is silverlake, which dropped out or turner entertainment.

What could we do with this just your beautiful plan to go well beyond traditional television?

It depends on who the buyer is.

We would not sell it to directv or an existing distributor.

We would rather have more buyers of content rather than help existing ones.

So make sense for us on why fox, one of the owners of hulu, would sell that new girl distribution rights to netflix, taking it away from hulu?

Right now there is the challenge of how do you get something that you own and get a share of revenues from, versus that direct adrenaline shot of selling it to a third party?

Hulu is owned by the parent, so they don't get the same type of direct revenue shot they get when -- they are undermining the venture.

I think there has been a lot of tension in that venture for several years.

If you look at that and all of us were sitting around a table owning this asset, you would not want to sell it.

The problem is that you have multiple parties -- nbc, which cannot even vote, abc, and fox, which is disney and now the new 20th century fox group -- they cannot sit around the table and agree what is best for their long-term future, so it is easier to sell it and it is to buy it or keep controlling it.

If we were fox, we would want to buy 100% and have a controlling aspect.

Stay with us.

This is fascinating.

To me this is all about the immovable force of what the consumer is doing.


I wonder how many people like hulu because it is hulu, versus the brand.

My kids are glued to it.

Rich greenfield, you will come back and talk to us more.

We will also speak to the ceo of american airlines, bob crandall, about the crash in san francisco.

Do you consider safety records before booking a flight?

Perhaps now you will.

It is front and center.

Adam johnson talking about the pilots speaking to the koreans today.

There is a lot of investigation and news to follow.

Keep it here on bloomberg surveillance.

? good morning, everyone.

"bloomberg surveillance." with me is sara eisen and scarlet fu.

Betty liu is here as well, talking about the airline industry.

You guys have been covering the san francisco crash, and special coverage all day long on bloomberg television.

We will talk to various people covering the story from all angles.

We will have the captain on to talk about whether pilot error had anything to do with this crash.

Asiana airlines, by the way, one of the safest in asia or throughout the world, so it has a pretty good record.

We will talk about the airline itself, the airline industry.

And the boeing triple seven -- the boeing 777, also a focus of this crash.

The first day of furloughs at the pentagon.

We will figure out how that will affect the economy, the department, and also jobs.

Thank you so much.

Morning movers this morning, and there was one earlier this morning.

Dell shares are higher.

This is one of the highest levels in about 1.5 weeks, coming after iss him at institutional shareholder services, came out and endorsed michael dell's leveraged buyout, the did with silverlake, at -- also the certainty of an all cash offer is a transfer risk because of the deteriorating pc industry.

Carl icahn came out earlier over the weekend and advised them to vote against michael dell's buyout.

A lot of action, a lot of movement leading up the vote on july 18. facebook is trying to make it easier for users to find a lost photo and other information buried within your social network.

It is the tool called graph search, and facebook is rolling out the feature to u.s. users today.

We have rich greenfield here, some of the most widely -- celebrating on facebook.

Every time you put out a note, tom jumps up in the news word -- in the newsroom and says rich greenfield.


I think it is all about valuation.

It is not like facebook has gone all the way.

It is really an issue of valuation.

It has extreme growth expectations built in over the next several years, and we think expectations for wall street analyst investors for 2014 are simply too hi, and the main reason is that the world is moving to mobile.

There is not as much display room for advertising.

Advertising because much more disruptive, versus on the outskirts of the screen.

Most important, it is just competition.

Next-door, where you talk to your neighbors online.

This is a pa

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


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