U.S. to Send Advisers to Iraq: Surveillance (08/13)

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Aug. 13 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Gina Martin Adams, Alexa Von Tobel, David Zervos, Willis Sparks and Willem Marx. (Source: Bloomberg)

This is bloomberg "surveillance." the u.s. will send 170 advisors to iraq.

The obama administration is adamant about a no troops on the ground strategy.

Markets remain impervious to the summers geopolitics.

We speak to a cautious all.

Millenial's go in search of a normal economy.

The millenial's are still searching.

Good morning, everyone.

This is bloomberg "surveillane ce." it is wednesday, august 13. i am tom keene.

Joining me is adam johnson and olivia sterns.

Going to the morning brief.

Nothing reads about this.

Starting with signs of we -- weakness across a jeff.

Japan's gdp drops.

-- weakness across europe.

The biggest contraction since the tsunami.

Half of america.

Meanwhile, in china property sales ball eight .2% causing loan growth to slow.

Growth only half of what they had forecast in china.

Different story in the u.k. where it turns out more people are working.

Unemployment falls to the lowest.

We are at 6.2 but 6.4 is pretty good.

The curious wrinkle, bank of england cuts the fourth-quarter estimates for wage growth to 1.2% versus 2.5. curious because unemployment is going down.

Aim store here in the u.s.. -- same story here in the u.s.. we will talk about the stanley fischer speech in stockholm that addresses better and if i met, better wages.

Weaker pound sterling is what we got.

What else cap go 7:00 weekly number jobless applications.

Retail sales.

Very big deal, not a big number.

Looking for up .2%. business inventories.

We call this ambiguity.

It is like about weird word segue.

It is like debut.

I digress.

Princeton.

I am feisty today.

Dear and macy's were poor before the bell.

Seaworld and cisco.

Will be interesting to see what john chambers is doing.

I was thinking macy's would be interesting.

I get a text message every other day from macy's with 50% about it.

To what extent is that eating into the margins?

That is the morning brief.

Looking at equities, currencies and commodities.

The euro 1.33. sterling weaker as governor carney speaks.

The fix is important.

14.13 is a better than good lower number.

The quiet story of the past 10 days.

There is the german two point year.

-- the german two-year.

Here is normal.

Passes for normal in the summer of 2014. here is banks and here is the negative two-year yield in germany.

Notice this.

That is new.

Now down to a persistency below negative yields.

This has ramifications on all of europe and comes right back to the united states as well.

You would not pay for the privilege of lending germany money?

A fabulous article this morning on repose and reverse repos.

This is something bill gross has talked about.

An unconventional school the fed will use as they try to pull back liquidity.

This comes at a time of increasingly week data not just the peripheral but the core.

Absolutely.

Trying to link economics to the market.

Talking equities and a moment.

Looking at the web coach -- webpages.

Starting in iraq, the u.s. trying to figure out the next move.

Now the mating -- debating whether they should mount a military rescue to mess -- rescue those on the mountain.

The question whether they should secure landing strip or humanitarian core door.

This is just amazing geography as part of the borders of iraq.

It is in east-west mountain range below syria.

Amazing that they are trying to get civilians into syria.

Goes to the troops on the ground.

The president and entire u.s. military adamant there will be no troops on the ground but sending 130 advisories -- advisors to iraq.

There are two possibilities, the land zone or perhaps using helicopters.

Further out there is a question of whether there will be troops on the ground.

At some point the pentagon has to prepare for the fact that they will have u.s. troops facing off trying to can -- avert the collapse of the iraqi government.

Dick durbin, majority whip in the senate has made clear he would withdraw support from president obama should that happen.

A very contentious issue.

Incredible iranaians and us on the same page that they wanted prime minister to go.

That has shifted in the past 12 hours.

I wonder what the next 12 hours will be for baghdad.

Think about just 12 months ago.

Appears they are working together to make for change.

Amazing how quickly things move.

We will have an important discussion later on in the show about to what extent he is really just a proxy war.

Meanwhile, convoy.

What is in the trucks?

The convoy russia says is filled with humanitarian aid is approaching the border.

Ukraine is skeptical.

Some officials say it is carrying military aid.

They said any attempt to cross the border will be considered an act of aggression.

The red cross using strong language, pushing back saying they want to hear much more clearly what is in the trucks, who is driving them.

A lot of people say it is a pretext for russians to send troops into the ukraine under the pretext of protecting.

The trucks are pristine to me.

They look like a wedding on nantucket.

Perfect, almost surreal.

Wasn't ian bremmer on the phone yesterday who described them as the potential trojan horse.

There may be something working in the trucks.

Lex and bremmer made a glib remark about how they have a long history of humanitarian assistance.

Nudge, nudge, wink, wink.

If they do not let the convoys and, he is being seen as someone trying to help and being prevented by the international community.

As richard haas of the council of foreign relations pointed out, the 80% approval rating enjoyed by mr.

Prodi.

-- mr.

Putin.

Alibaba per carry for what could be the biggest ipo in u.s. history.

-- chinese history.

A two-week roadshow.

It all begin september 3 with the ipo taking place in the middle of the month.

September 16, sooner than the act of her day people were talking about.

Christ i thought people were talking about 8-8. -- i thought people were talking about 8-8. jack maw celebrating his 50th birthday a long the way.

Preparing to raise money for softbank.

-- jack ma.

Yahoo!

Has a 20% stake.

Who owns the bigger share?

Softbank.

Is this transparent?

She is a font of information.

I had read up on this.

There is the front page.

Right now have to get smarter on the geopolitics of the moment.

I got up the map come a 100 88 miles from board as to beltran and then solved west toward the russian-ukrainian order.

Carrying humanitarian aid.

The red cross is unsure of that.

Decidedly kiev unsure of that.

Ryan chilcote joins us from london this one in.

What is on the trucks?

I don't know what is on the trucks.

The russians saved all of sugar, salt, water, power generators, 12,000 sleeping bags.

We have heard some ukrainian say maybe could have weapons.

I would point out if the russians wanted to sneak weapons into the ukraine mine -- one would have thought, probably not the safest place to do that.

Plenty of huge holes in the border that the ukrainian government itself says they do not control so i am not sure why he would want to comment on that.

Is president putin doing this so he has the show of the trucks being stopped at the border.

Then what?

He puts the ukrainian government and is a whole world of hurt because they have not been providing the people with electricity or wanting -- running water.

It puts them in a really difficult place.

That is why in the past hour they themselves said they will send their own humanitarian aid convoy.

I think it really puts the pressure on the ukrainians.

Also on the germans.

The russians can say we are ready to help the people, they have not had it for two weeks, and you will stop us from assisting these people in dire need?

The newspapers described the rebels as iraq have group and described the ukrainian forces as being in the lead here.

Are the rebels on the back foot?

I think there is some that -- true to that.

They themselves have said if they do not get help in the next couple of weeks, then that could be it for them.

The ukrainian troops can move in and move them out.

It might be messy but pretty much the only issue is how messy it would be.

No one really thinks the ukrainian military, although it might involve huge cost cannot take the cities if it does not want.

Maybe that is why we are seeing that humanitarian aid conflict right now.

Inc.

You.

-- thank you.

Today we are joined by gina martin adams.

As you travel around the country you talk to institutional investors, how concerned are they about all of these events that capture the headlines from iraq to the ukraine, etc.? i think it is a topic of discussion.

We have seen cash levels and shove that higher so there does seem to be some hedging for a bit more volatility going forward him a but i think it is more related to the fed than anything else.

It is difficult to know how to per pair in the equity market.

Maybe there is a little bit of industry and sector movement more broadly not really about the fed for u.s. were polio managers at this time.

Gina martin adams with us.

Right now company news.

An accounting giant hopes to wash its hands of the lehman brothers collapse.

Ernst and young won the new york state court to agree it was not to blame.

They found the company was not liable for the book keeping track that made lehman brothers look stronger than actually was.

General motors the latest targets of regulators in china.

Shanghai gm says talks with antitrust officials are facing penalties for breaking the country's monopoly laws.

They are prompting suggestions that china trying to worse down prices.

Apple says 70% of employees are white or asian.

Tim cook says he is not satisfied with the company's diversity.

Company news.

Lots to talk about but that in the chart.

Beginning of company news, we are getting a lot of news from retailers.

Macy's will be leading the pack.

The earnings report comes out later this morning.

We will tell you what analysts are forecasting.

That leads to the twitter question of the day, what are you willing to pay full price for?

Treat us.

Do you pay full price for anything?

Some handbags.

Bowties.

They do not go on sale ever.

We will be right back.

? good morning, everyone.

They do not have thousand island dressing.

Adam johnson lives there seven days a week.

Nicholas marsh shops creative salad sherman.

I am not kidding.

-- chopt creative salad chairman.

I am not kidding.

Not a typo.

Seriously, the salad of new york city.

A conversation with nick marsh on eating healthy at lunch like i don't do.

Good morning, everyone.

Gina martin adams with us this morning from wells fargo.

To help us with that, adam johnson gets us started on retail.

We are focused on u.s. consumers.

I know we only -- always a two thirds but that is only if you add in health care.

Commerce department reports retail sales and macy's is kicking off several days of department store earnings.

That happens later today.

Gina martin adams advises the institutional investor clients of wells fargo.

You are telling clients to underweight retail.

Yes him for a number of reasons.

Pretty terrible earnings momentum revision all year.

Inc.

We may be said for a pop as companies are said to beat expectations.

Expectations are so low.

Expectations i think there are still too high for the fourth quarter forward growth.

The consumer quite frankly usually follows housing.

We had incredible housing activity last year.

This is creating some deterioration.

Continue.

Here is the deterioration of macy's. is there any other chart like this in the world?

This is like a home run.

Look at this.

$10 in 2009. a pullback.

One of the reasons is macy's has really mastered the clicks and brecht on the channel.

Driving business by walking into the store.

Also leading the charge of the big discount.

There is always a sale.

Eating into macy's margin.

It is difficult to speak to -- individual names.

So i cannot tell you what macy's third -- is doing but i can tell you it is a shrinking portion of retail.

Increasingly it is all about how to log retail and the home retailers, and home depot and lowe's and department stores are a smaller and smaller share.

I think what macy's has benefited from his lower competition within the s&p 500 itself.

But you are right that margins overall is one thing to worry about.

I do think that is impacting retailers.

Maybe that is one thing we can help determine.

Look at acs as an example.

Earnings growth 3-4%. sales growth is 3-4%. earnings growth 18-19%. should we be suspicious of that?

I think that is pretty typical of retail at large.

A lot of this comes from retail, a to online shopping.

Margins are a big support from most earnings across the index.

One thing we're working on this year is companies that have exceeded revenue acceleration are likely to outperform because margins have become such a big story.

Ebidtda margins are starting to fall.

We are looking for opportunities.

I do you the margins are a key story for the relative opportunity.

We are glad you are here and with us the whole adware.

Coming up, will the sparks -- will sparks joining us as the guest for the next hour.

We are on bloomberg television, radio.

Any place are not?

No.

we are all digital all the time.

Go get a copy.

Back in two minutes.

-- go get a coffee.

? good morning, everyone.

Dow futures of 51. a nice start to futures.

We welcome you on this august morning.

Here is olivia sterns.

My morning must-read comes in the ft about the worrying data on italy's recession.

He writes the negative results referring to the fact that italian gdp shrank by .2% in the second quarter together with the very low level of inflation made that sustainability more difficult to achieve.

There is so much more.

He has this great mandate, but there are so many reforms.

There is a legacy of mound that.

There is of course the mafia.

They just keep revising down and down.

One cap is they had to start counting cocaine sales and prostitution to boost sales.

I love what you say about hope.

Every time i see it i circle it.

Hope is trouble in finance.

For him to bring this up -- he has a phd from chicago and he thinks mario draghi should be printing more money.

Japan with the quarterly statistic as well.

Coming up, well the market be able to correct itself after july's largest single day selloff in three months?

We put that question to gina martin adams of wells fargo.

? good morning, everyone.

Bloomberg "surveillance." olivia stearns and adam johnson.

Egypt offers a plan for longer-term cease-fire in gaza.

They are not buying it.

Gaza says forces are ready to start trooping -- fighting again.

Race fractures in ferguson, missouri.

Protesters want to know who fired the fatal shot.

Police officer say the officer is getting death threats and not releasing his name.

For the l.a. clippers, the owners -- the owner not the players being cheered.

The judge yesterday pushed out donald sterling for racist remarks.

Confirming the purchase of the team by steve ballmer.

The former microsoft chief just cheap if the hoops enthusiast.

I think his energy will be somewhat infectious and supportive of everybody else's desire.

I am not going to say steve is going to open his checkbook because the nba has rules and terms of how much you can spend and where and how much you can pay and all that stuff to keep parity with the league but he will be there.

To the extent that this team will not fail were a lack of resources.

That was dick parsons, the interim ceo.

Very good.

On to the equity markets, your 401(k). all bull markets of doubt.

Another surprise of the bears.

Gina martin adams has been a cautious poll.

Dow 17,000, still many butts.

I congratulate you on being out front about being a cautious poll.

Give us an update on the level of enthusiasm to be in the equity market.

I hate to say it but i am still relatively cautious because of the uncertain impacts of the fed removal of policy.

So many of the viewers rightly to say gina is dead on, that is exactly how i feel.

If i feel like tina martin adams, how do i act?

What is the to do list?

We focus on companies that are producing revenue growth.

Companies that are likely to produce accelerating and earnings growth -- acceleration.

Companies that are provided lower p/e ratios.

Reasonable value.

So i think there are opportunities still in the index.

Is it a broad call and hold it?

No, because i think at this point we are likely to experience a little bit of a chop.

Can you buy energy based on the framework?

You can buy some of the energy.

We have market weight on the energy sector mostly because earlier this year energy was hot and probably got a bit overbought.

Wait for a better opportunity.

This goes to utilities.

They got hot for a while.

Very hot because rates did not go up.

If that what kept it under the fact that rates got low.

Utilities is even more dangerous than energy.

There is a broad swath of companies that were also avoiding.

These are the interest-rate sensitive segments.

Utilities is one of those because historically a very close correlation to 10 year treasuries.

When rates go outside for utilities -- which is bad for utilities.

The worst-performing and the last three months.

Very volatile sector.

That is because of the movement and uncertainty with regards to where it is going here.

Where do you have overweight?

, materials.

Is a blowing -- blowing away estimates.

So much skepticism with respect to health care.

Rex and to what extent obamacare has artie been priced in.

It has just been outperforming so it is one of our favorites.

What is material stock, the wall in my suit?

-- the wool in my suit?

Mostly chemicals.

Chemicals are the biggest.

Also, metals and mining.

The ocalan is of the world.

Why are they benefiting it is you are expecting gdp worldwide to pick up?

A combination of things.

Part of the material sector benefiting because we see in -- growth in production.

They have cut to near zero the balls.

So as soon as we see modest pickup that benefit.

Within the conversation, you go to the heart of the matter, the dynamics of the income statement.

How much more can they cut?

Are companies running so efficiently there is no more to do on the income statement?

There is very little left to cut.

Ebitda margins have been falling.

What is holding up margins are interest, taxes.

So what we have to see is revenue growth comes through.

That is why it is the big theme for this year.

Little-known but the reality is financial engineering has driven a lot of earnings.

It was like emerson lincoln.

Everyone had hair down to hear.

Eva.

Margin and then vampire weekend.

I am amazed where we go from here.

Dow 17,000. you have been in the market.

Others have been more bullish.

Others have been more right than you.

Do you feel like you are lagging behind?

So far i have been lagging behind.

The evidence is pretty clear we have not been bullish enough.

This tension is you were not all cash.

Not at all.

Most of my clients are involved in the equity markets so a matter of how you beat the benchmark.

Exit is important.

-- this is important.

You are either 100% in the market or all in cash.

The real world is they have to be in the market.

You have to tie yourself to the s&p 500. there are a lot of strategies for being long and index.

Tina martin adams, thank you so much.

We will continue.

-- gina martin adams.

Apple releasing data on the diversity of the workforce.

We will tell you how it compares to other silicon valley companies.

This is bloomberg "surveillance." ? good morning, everyone.

I am tom keene.

Olivia sterns here with adam johnson.

Iraq's prime minister virtually alone in his fight to stay in power.

Iran no longer backing him.

Enforcing the designated the assessor.

The military and his own artie also expressing he cannot support their own party.

Asking a judge to stop the proposal for the detroit encrypt the plan.

The company says the plan is unfair and will not work.

You just put your lips together and blow.

Bikes that will put some spice in your coffee.

Only 19 when her seductive stare made her a marriage icon.

Her marriage to humphrey oh cart became hollywood royalty.

She died yesterday here in new york.

She was 89 years old and those are the top headlines.

I remember friends of my parents acting like humphrey bogart.

I do not think there is a modern couple to what that couple did.

This was before my time.

They framed a generation.

They were hollywood glamour.

They defined it.

They completely changed american sensuality.

Single-handedly.

Sensual single best chart.

Here is olivia sterns.

We are posted -- focusing on diversity.

Apple coming out data to show it a slightly more diverse than silicon rivals.

70% of u.s. employees are either asian or asian all white.

The gender cap a 70% male, 30% women.

Slightly better than some of the other bigger tech companies in california know for the programmer culture.

There is such a big disconnect.

Interesting to compare the graduating class of stanford and analyst cost of apple.

Something happen, women don't apply in the racial exchanges.

I would like to see the compare of apple diversity with ford motors.

I am sure that is on the terminal.

I am baffled by this whole thing other than i think the numbers are pretty obvious.

70% white or asian does not surprise me at all.

70-30 a little surprising.

What is it like at wells fargo?

Probably pretty close to 7030. i do not know the specifics off the top of my head but certainly a large female representation.

I think it is a different story for investment banking.

I think it has quite a high female presentation.

Some great photographs.

Eric, photo guy.

Number three photo, the central railway terminal in mumbai lighting up with independence day celebration.

Independence from britain on august 15. gorgeous photograph.

New democracy.

In india criticism over the pace of change.

It is easy for outside people.

There is one country known for red tape.

A huge run-up in the equity markets.

A favorite of mine, stephen slater stands with the biplane of the royal flying corporation in england.

Commemorating 100 years since the first aerial appointment to war.

August 1914. i would actually do that.

I i actually would.

I thought that was your holiday card.

That would be amazing.

Flight blows my mind.

Number one photograph, a person walking on a tight rope.

230 feet above ground.

This is brussels, belgium.

A monument that is about 330 feet tall.

Not the first time it has been walked across him as though it may not be the last time.

X how do you do that?

-- how do you do that?

I have no idea.

I have nothing to do with anything in this particular photograph.

You know what i do, running in central park, a run on the curb because i find if i focus on the curb -- when i was at school and they did -- try running.

[laughter] i have issues.

Maybe we both have issues but that is why we get up at 2:30 to do a morning show.

Speaking of mormon -- women in the workplace, speaking to a woman who is leading the focus on healthy women.

How millennial space personal financial crisis and how to circumvent that.

This is bloomberg "sur veillance." we are also on netflix and apple tv.

? good morning, everyone.

Tomorrow on bloomberg television, chris christie's train wreck, atlantic city.

Talk about lights out.

Major construction project.

We will look at this tomorrow.

Gambling on the east coast, atlantic city lights out.

Look for that on bloomberg television tomorrow.

This is bloomberg "surveilla nce." i am tom keene.

With me adam johnson and olivia sterns.

Scarlet fu rumored to return sometime in august.

Alibaba roadshow could start as soon as september 3. planning 100 meetings on the east coast.

That would lead to a trading debut september 13. expected to raise money billion dollars, which would make it the largest ipo ever in the u.s.. aol wants to raise 345 million dollars to expand the advertising business.

The operator plans to sell convertible notes.

Hoping to shift from producing sides to become a web platform for ad sales.

The maker of candy crash saga sees shares go sour.

Plunging after quarterly sales trailed estimates.

The company cut the outlook for the year.

Developing new names to attract players quitting candy crash.

Everyone wondering if it was a one-hit wonder.

That is your company news.

Like futures of 10. they improved.

Dow futures up 72. means if you are in the market, good news.

Now a topic dear to your heart, millennial literacy.

This poses an x essential threat not only to parents like tom keene that the u.s. economy as a whole.

Focusing on financial services.

The company some say could be worth as much as a billion dollars.

She has made it her mission to keep her generation of floats and on the cover of "forbes" magazine this morning.

If you are 28, the recession generation as you are your self, what does it mean to get a piece of the american dream?

Right now the average senior actuate dirty thousand dollars in debt and $35,000 got a card that and makes less money when they enter the workforce.

They start a lot of their life upside down.

You think about the american dream and often extremely far away if you start your life literally and negative financing right out of the gate.

It is hard.

We talked so much about start up of billion-dollar valuations that are in new businesses, usually tacked.

But you are in the old-fashioned is ms.

Of financial planning.

Here is how it works.

Whether your household makes $50,000 or $500,000, 25 or 65 him you can go to earnvest.com and you are connected with a planner and you get the same planner every time.

They allow you to fill out a form and we create a step-by-step financial plan that covers everything from your debt to refinancing your home.

Most importantly we hold people accountable.

I like to think of it as a gym membership for your money and real consumer financial product land.

I look at this and say how much would be solved i a better economy?

People in their older 20's have never known a normal economy.

Just a melt -- jeff immelt was adamant about this eight months ago.

He said we need 3.5% gdp and we don't have it.

This is the recession generation.

We enter the workforce coming out of 2006, the worst recession and 81 years and facing financial troubles that no generation has faced before.

So much debt they are in a position that the generations before cannot give them guidance from because they're coming in upside down.

When he think about financial struggles, they are not making a lot of money coming out of school.

They are burdened by emergency savings and saving for retirement and the financial blur is quite paralyzing.

Your father died at 14. when i was 14. the 100 days after that your house had to confront a lot of the themes you are talking about.

I think making financial planning and affordable product for america is so important.

90% of the country does not get access to really great financial advice.

If you have millions of dollars lots of people want to give you advice but unfortunately often times is not truly unbiased.

They want to sell you products.

Nine agile chronic should not be a locks -- luxury product.

Every household should get access to this.

So our message on this -- so many messages are incredibly disruptive.

We took technology and make sure you can get access to your own advisor for affordable prices.

Is there a place, a book, a website where i can go and as a millennial, i am not but if i were to say i grew up in the miserable recession, how do i educate myself about this?

That is one reason why i started this.

I dropped out of harvard is no school for that.

I was cowering the website finding misinformation here and there.

We have an enormous volume of library.

People at merrill lynch and charles schwab are looking at you like you have rocks in your head.

How will you make money at this?

We are not running a charity.

For $500 or year is we see clients staying on track for well over two years.

We have been doing this for well over a year-and-a-half and can project a lifetime client.

Can you make money at this?

Absolutely.

We are able to project positive margin.

It is subscription based financial planning.

We give you a human to hold you accountable.

When you scale back it is actually the human interaction that is helping people make progress.

Are you profitable get?

We just raise $50 million in the last 11 months.

Making a lot of really important investments right now and looking forward to good financial returns.

Founder and ceo of learnvest.

I cannot tell you how little, many people my age, they know nothing about their finances.

They are not investing in their 401(k). they do not have one.

Thank you.

Tina martin adams, appreciate it.

To move with governor carney, weaker sterling.

Ruble over 36. the convoy moving towards ukraine.

Euro-dollar weaker him a one point dirty three.

-- 1.33. talking about the envoy with willis sparks.

So much to talk about in the headlines.

We will be back in the 7:00 hour.

? the u.s. will send 130 advisers to northern rock -- northern iraq to assist those thousands trapped.

The u.s. is adamant about a new ground troops strategy.

Kiev considers putin's trojan horse.

And a new neutrals speech from stockholm.

It is wednesday, august or team.

I'm tom keene.

Joining me, adam johnson and olivia sterns.

Scarlet fu is off today.

Willis sparks is with us and joining us as well, david euros.

New sales tax cut into consumer spending in japan.

Chinese properties sales fall 8.2 percent.

A different story, though, and the u.k., where more people are working.

6.4%, just slightly where we -- just slightly above where we are.

And the german numbers yesterday, this is a blanket.

I would say there is a huge divergence between what is going on in the u.k. -- the strength is going to be the g7 economy and what is going on in the common -- the continent.

Which is why it was signaled that perhaps rates could go up sooner in england.

And the animal spirit in japan, which we forget is a large economy, 2.2% topline nominal trailing gdp, that just does not get it done.

No, no.

What might get it done here in the u.s. is mortgage applications.

It is a volatile number.

It goes back and forth.

And when you focus on retail sales, that comes up at 8:30 a.m. we have some earnings.

John deere, actually, comes in at two dollars 30 three cents.

That is above the estimate of $2.20. fourth quarter equipment sales down about 18%. crop prices seem to be weighing down on that.

What i would focus on, olivia, is 4% down has become 6% down across equipment sales.

And of course, global ramifications as well.

We do, indeed.

Cutting profit forecast, cutting sales for costs.

-- forecast.

On wages, on wages.

From a look at the stock, i see only about 1700 shares on the tape.

It's not really trading on this news.

I bet you david servos, he probably cares about john deere -- about what john deere does.

But as well as macy's. that will be after the bell.

Also, seaworld and cisco.

Let's get you company news right now.

And accounting giant hopes to wash his hands of the lehman brothers collapse.

Ernst & young wants a new york state to agree -- a new york state court to agree it was not liable for the bookkeeping trick that made lehman brothers look stronger than it actually was.

General motors is the latest target of regulators in china.

It is in talks with antitrust officials there in shanghai.

There are probes of u.s. tech and car companies are prompting suggestions china is trying to force down prices of u.s. companies.

And tim cook says he is not satisfied with the report diversity.

An ongoing story, changing and mutating day by day.

No troops on the ground is the mandate, the line in the sand for the president.

This as the united states will put an additional 130 troops on the ground to it it -- to assist this is dying thousands on mountain jar.

If congress playing any part in these discussions?

They are not.

This was a recommendation by defense secretary chuck hagel a few days ago.

The president authorize that.

The 130 advisers landed in rebuild -- in irbil yesterday.

They feel they have been invited by the iraqis, so therefore they are abiding by international law and they do not need to report to congress immediately.

They can do this on their own right now.

I am confused this morning about where this goes.

And the bloomberg news articles, there is a discussion candidate -- discussion of tentative 10,000 migrating troops.

How tentative is that?

I would say this.

All sorts of plans are in the works at the pentagon.

They have to be prepared for anything.

No one thinks 10,000 troops in an advisory capacity or boots on the ground is even remotely tenable.

I do think pentagon officials are briefing the white house right now.

What we have heard from administration officials is that there is a real recognition that the 700 advisers that are in there right now, the work they're doing on the humanitarian side to help these refugees stuck on the top of mount sinjar, they will not have a long-term issue -- long-term effects.

This is a band-aid type of move.

Dick durbin, majority leader, and obviously a democrat, he is supportive of president obama up to a point.

To the 130 advisers on the ground fall in that area of support?

Anything he does in the next couple of weeks is lucky in the sense that everybody is at home for august recess.

There are not a lot of lawmakers that can get to the microphones.

There are not a lot of lawmakers that our focus on campaigns right now and i come back and give him a hard time.

They are trying to hit the sweet spot.

These 130 advisers are going explicitly to work on the humanitarian issue, the work on the refugees.

This is something that appeals to democrats.

This is something that dick durbin specifically said he is supportive of.

Any time you send an authorization like this, even advisory trips, members of congress targeting worried.

Thank you, phil mattingly, from washington.

We will continue our discussion this morning.

We have two wonderful guests.

Willis sparks is with your ages -- eurasia group.

David servos is with jeffries.

Bring us up-to-date within a synthesis of eurasia group of iraq.

Where is the dynamic right now?

When you are talking to your colleagues.

It is an awful stalemate.

You have a group of jihadi's, the so-called islamic state, that controlled certain portions of western iraq, but they're probably not strong enough to take baghdad.

Part of this larger story that we've seen with the u.s. troops is to protect the kurdish areas, which are in oil-rich part of iraq.

At the same time, the iraqi government in baghdad does not have the power to get rid of these guys.

A week ago, there is a tanker off of houston the cubs baghdad says, no.

The kurds have the oil on that tanker.

That is their oil, not our oil.

Is this some new geopolitics for iraqi?

Yes.

The kurds are trying to protest -- to press their advantage.

They believed they could move toward independence.

But as the jihadi's have now turned and began to threaten the kurds themselves, they have forced the kurds and the government of baghdad to work together.

Irbil is not that far away.

It is not.

They have tried to draw a line and say, if you get close to her bill --irbil, we will bomb you.

The u.s. cannot afford for these areas to be overrun by them.

And we've already sent the kurdish army weapons as well.

There are many options on the table now.

130 people for humanitarian assistance.

Is it a matter of time before we have boots on the ground, whether to confront the islamic state rectally, or to support the kurdish troops?

The only way you would have boots on the ground, and this is very unlikely because there is no u.s. public support for this, is if irbil and/or baghdad were rectally threatened.

Remember, if the gres were to control curtis dan -- if the jihad ease were to control curtis dan, i --kurdistan, that is a lot of oil.

We will be back after the break.

What is in the struts that are trying to cross the border?

Good morning, everyone.

I'm tom keene.

Futures up nine.

Markets right now, though, we need to have adam johnson into juice david servos -- introduce david servos, because it's a bull market.

My favorite line back when i was on a trading desk among -- trading desk, by the mended them.

What does that mean -- buy them and bid them.

What does that mean?

It means the quarter is ending.

He is going to make sense of all of us.

Would any of these dips be possible without the sugar along the way?

Cutting the deficit is an advantage and a progressive for the coming out of this crisis.

They have been holding our hands and getting us out of the rubicon since the boko of the great depression.

They are still holding our hand and i suspect they will continue to hold our hand.

A lot of these dips, i call them garden-variety dips, these credit risk off, ukraine, iraq, things that have nothing to do with the economic outlook, but more orthogonal to the outlook.

Orthogonal.

You love these words.

What do you have, olivia?

You put out a note this morning because it had a reference to a popular song "turn down for what." tom, you should look it up.

I think the market is going to have a little trouble when the fed does transition to higher rates.

10% is probably a big number.

In 1994, when the fed started to raise rates, they raised rates 300 points that year and the equity market dipped a bit.

Turndown for what.

The good news is an equity market is not going to take seriously a bear market.

Bad news is going to be met with more stimulus.

The real danger over the long run -- this is a danger i don't see as a very likely danger -- is that the stimulus doesn't generate the real economic activity in the future that we all hope for.

We could talk about that.

We can talk about that will he get done.

Mercifully, that is not what is coming up next.

What is, though, a return to fighting in gaza.

We take a look at the countries don't system.

-- we take a closer look at the country's dome system.

Good morning, everyone.

I'm tom keene.

Let's get to the top headlines this morning.

Here's adam johnson.

But a russian convoys headed for used in -- a russian convoys headed for eastern ukraine.

There is one potential outcome.

Russia says they are carrying food and medicine for embattled separatist, but ukraine wants to make sure there are no weapons on board.

Ukrainian troops have surrounded the pro-russian rebels.

And iran is no longer backing nouri al-maliki.

It is instead endorsing his designated successor.

The military and his own party are also saying he cannot expect their support.

And in a missouri city where an unarmed black teenager was killed by officers, police say, the officer is getting death threats and they will not reveal his name.

It is a fluid moment in eastern ukraine, to say the least.

Even the red cross questions the contents of the content -- of the convoy.

At last point, the convoy was making from the southwest toward the border.

Kiev is up in arms over the possible military aspects of the convoy.

Do they need humanitarian goods?

Absolutely.

There are people who do not have food, water, electricity.

The humanitarian assistance is definitely needed.

Why the pushback year?

The red cross, i thought their comments were stunning about the mystery about this.

The russians have made a big show about the truck's, painted them white, taken them on a long, securities -- circuitous route.

They want to take momentum off of sanctions and make a humanitarian gesture.

What is on the truck is probably overrated, but this is nato and other governments way of saying, if the russians are thinking of introducing troops in a humanitarian capacity, don't even think about it.

It will not fool anybody.

Do you look for the red cross to be the catalyst here and aid people who are starving?

Yeah, they should be.

And the understanding -- and they have said this many times.

Russians drive their true -- their troops -- their trunks to the border.

And then ukrainian troops take over with the red cross.

That is the importance of text, that the rebels are losing.

-- the important subtext, that the rebels are losing.

He is scrambling for some solution.

Worse case scenario, if the ukrainians had a definitive victory over the rebels, then you have a flow of ethnic refugees across the border into russia and then pruden has no leverage in ukraine.

Then that russian population is not part of the uke -- the equation anymore.

It is not going to be easy, but that is what spruce and -- what pruden is most afraid of.

The idea that there is equipment is probably overrated.

The russians have demonstrated they can get equipment out across the border without doing it in this way.

I do think this is much more about pr, about changing russia's image, about drinking -- breaking european sanctions.

Your boss made a flip remark that russia is not well known for its humanitarian assistance.

What happens when they stop a convoy at the border?

The question is really simple.

Why not just have the red cross come in and inspect every truck and let them go through?

That may be what finally happens.

At least on the ukrainian side within nato and then the red cross, they are not sure what is coming their way.

They are drying every worst-case scenario to make sure that by the time these russian truck's do reach the border that they have minimize the risk that somebody starts shooting.

That is a risk, but given the fact that this is taking so long, it allows everybody to sort of ward off worst-case scenarios.

Jump into this conversation, david.

Why are the markets rattled by this?

I think it is hard to draw conclusions that are highly negative for markets based on the sorts of actions.

History is littered with geopolitical unrest from iraq to iran to all throughout the middle east all the way now to eastern europe.

We have come to grips with the idea that maybe our interventions in these places will be a little less in the future.

I think everybody is probably ok with that.

I think there is a focus now on the economic recovery in the u.s. but what is going on now does look a lot worse than it has for 20 years.

We're talking about the worst relations between the u.s. and russia since the cold war.

I don't think so.

Look at the iraq war and the troops that we had on the ground in their early 1990's and all of the geopolitical uprisings in countries -- i think we put out a piece of couple of weeks ago that what had a history of conflict around the world.

We're actually pretty low right now.

Jim grant, let's just say jim grant.

By russia, it's too cheap on earnings.

You are talking about an economy that is almost run by one guy at the top.

Otto that i would want to buy a one p there.

I would rather buy a 16 p e here.

The threat in iraq is to oil production, which is already -- all the way at the other end of the country for the jihad ease are.

But no longer supporting maliki, that is important.

Our twitter question of the day.

What are you willing to buy at full price?

Good morning, everyone.

I'm tom keene.

I'm here with adam johnson and olivia sterns.

It doesn't end in israel, does it?

No, it doesn't, and now we are talking about the iron dome defense system that is protecting most of the residents living near the country's border with gaza.

Local businesses are not as safe from destruction.

-- disruption.

About 200 rockets have been fired out of the gaza strip in the past five weeks.

With residents in southern israel often the intended targets.

The iron dome defense system may protect most people here, but the impact of this aerial assault is still damaging for local business.

It's not easy.

And israeli father of three lives a 10 second rocket flight in a village where his employer was founded.

He just returned to the company's main plant, where his colleagues have been struggling to rebuild their daily quota.

Instead of building 100 mattresses, you build 150. you work quickly.

Five or six times of day you will run to the bomb shelter.

One consequence is that orders are falling.

This past month, the company's sales have dropped around 30% from the past alive.

They are looking at spending $2 million to renovate the old factory space, but when it comes to investing in business in southern israel, there are some unusual factors, including security, that you have to consider.

For one, your military could take over the office building.

And then there is the uncertainty.

The tax payments are quite severe.

He runs a plastics manufacturing firm just a little further south.

The industry here has played an historically important role.

And national politics also play a role in his decision for locating here.

It is a long-term view about the weight israel should look -- about what israel should look like.

His cost for storage and shelter has risen.

It is a risk premium.

But there are some things that money cannot buy for those who live in this part of israel, and that includes peace of mind.

My wife for the first time did ask me, what are we doing here?

Why can't we move?

It is hard.

What do you say to her?

You don't run away from your home every time it gets really hard.

We will give it another go.

Live from tel aviv now.

Of course, this is the third ground incursion in gaza in six years.

Willem sparks joins us now.

How scared are people in these communities?

How nervous are employees?

Is it different from years past?

Some people say the system something they got used to and that tends to be older men compared to younger women i talked to.

Those with young children, they are terrified about what might happen.

There are measures in place to make sure that people don't feel quite as scared.

There are shelters very close to every workplace.

You need about 10 seconds to get to the shelter.

People have absorbed their phone to tell them when there is danger in their area.

But people are nervous about the future.

It almost sounds like with the apps on the phones, ok, we live in a technological era, but it almost sounds like we've gotten accustomed to war.

Mike somehow, we've made it too easy.

Do you ever get that impression?

I don't know about too easy, but certainly, these businesses over time, like a plastics manufacturer we spoke to, they have spent quite a bit of money building these bomb shelters.

I'm afraid i've lost two guys.

No, continue.

We can hear you.

All right, think we are having some audio problems.

That was willem marx, our colleague, joining us about the iron defense system possibility to protect those new the border.

Now i time to check dated futures.

Barely in the green.

The euro slightly weaker against the dollar, falling on some disappointing inflation data coming out of the u.k. crude is little changed.

This is bloomberg surveillance.

We are on bloomberg television and radio.

We're also streaming on your tablet, your phone, and at bloomberg.com.

I'm tom keene -- i'm adam johnson here with tom keene and olivia sterns.

And we are joined by our guest hosts for the hour, willis sparks of the eurasia group and david servos --zervos of jeffries.

Baltimore streets look like canals after record-setting rainstorms.

More than eight inches fell, causing flash flooding and closing major highways.

You know how to whistle, don't you, steve?

You just put your lips together and blow.

Only 19 when hers set -- when her seductive stare and smoky voiced major an icon.

As you know, she died yesterday in new york.

She was 89 years old.

A judge yesterday pushed out donald sterling's racist remarks sparked a furor over purchasing of the team.

Ballmer's a doozy as it will make the team a winner.

He spoke yesterday with our very own trish regan.

I think his energy is going to be somewhat infectious and supportive of everybody else's desire.

I'm not going to say that steve just going to sit there and opened his checkbook, because the nba has rules in terms of how much you can spend, and where, to keep some kind of parity within the league.

But steve will be there to the extent that his team will not fail, let's put it that way, for a lack of resources.

Resources totaling about $2 billion.

That was roughly the purchase price.

It is time for this matters now.

Our guest host, davidzervos is at jefferies.

He traveled the world from washington to stockholm and gave an important speech.

Janet yellen read every word.

This is a long speech.

I read most of it.

This is a thorough introduction of our new vice-chairman.

Absolutely.

As i read the speech, i sort of got depressed.

The word "disappoint" was there five times.

"slow down" 16 times.

A lot of negative on occasions, but there was a point in the piece that i got really excited.

That was when they took the bob gordon view of the world that we will not have growth, that we will not be productive.

And he kind of pushback on it.

And he said, you know, there is a supply shop that is going -- supply shock that is probably going to come.

They come.

We don't on how to forecast them.

But these are wonderful technological advances and they are the drivers.

He turned around that we need to find a diamond this.

There is a more cautious view.

He posits the more optimistic view of american exceptionalism.

Does that dovetail with what janet yellen has said?

I don't know that she has been as focused on the supply side.

She is more focused on the demand side.

The fixing of the markets.

The raising of aggregate demand through excess monetary stimulus, which by the way, has worked pretty well.

I don't think you have heard janet come out with this, but to -- it sounds greenspan-esque from the 1990's almost.

How far are the chair or the vice chair relief from charles plaza?

Is the grand canyon.

It's as big as you want it to be.

Go back to when i was there.

The gulf between an alan greenspan and a wayne angell was pretty deep accident.

And i don't think it mattered that much.

David zervos with an update on important speech.

Coming up, retail will be out this morning.

That brings up our twitter russian.

What are you willing to pay full price for?

? good morning, everyone.

That is correct, the lights are out on atlantic city.

All-day coverage tomorrow on the huge struggles that chris christie and all of new jersey are having.

I guess i will call it an albatross around their industry.

This is the industry -- interesting policy of atlantic city.

We will look at that all day tomorrow.

We welcome you all worldwide to our headquarters.

I'm here with adam johnson and olivia sterns.

Scarlet fu is off today.

Espn, they owned sports.

They now have plans to go granular.

They will cover the southeastern conference.

Betty liu joins us with a new angle on the new s -- the new espn.

How big a deal is this?

It is a big deal.

College sports is a big deal for not only sports, but the television networks.

You guys know the big ten network.

Now there will be the sec network, which is devoted to the southeastern conference games.

We are talking about hundreds of millions of dollars.

I'm a georgia fan.

Do we allow georgia fans on said?

Only if they bring their bulldogs on a leash.

Justin connolly will be joining me to talk about this decision, and this move.

Last year, espn announced this.

Now they are actually launching.

And you know that these guys get paid a lot of money.

The networks and the universities.

Willis sparks, you're obviously a football fan.

Because i could care less.

Are we getting over football?

It is like eight games on.

Quick it is the american pastime.

I personally watch football to get over not having any college games.

I'm a college football fan.

Football is religion.

It is religion.

Tim tebow, known for writing on field -- for preying on the field, will be one of the analysts.

But that is right.

-- known for praying on the field, will be one of the analysts.

That is right.

What i saw the sec is that espn is getting into business news.

I didn't realize it was the southeastern conference.

I thought it was a securities and exchange commission.

[laughter] that would be such riveting tv, to watch the commissioner at their meetings.

But there is a naughty and for that, i think.

-- there is an audience for that, i think.

All of the sec in all of their splendor.

Anyway, bank of england cutting their wage forecast.

We will find out what that means and why you should care.

We are streaming on your tablet, your phone, amazon tv.

Is there any place we are not?

And apple tv.

? good morning, everyone.

Tomorrow on the program, america's fiscal policy.

One of our most popular guest will join us.

You know him as the congressional budget office director, now the american action form.

Douglas holt eakin on improving the budget deficit.

My first question is, can we go to surplus in our nation's budget?

Will do that on television and radio tomorrow at 7:00 a.m. good morning, everyone.

It's bloomberg "surveillance." i have adam johnson and oblivion john -- willis sparks and david zervos joining us.

Right now, olivia sterns.

Jack my is planning about 100 meetings over three continents in two weeks.

Alibaba is expected to raise up to $20 billion.

That would make it the largest ipo ever.

And raising as much as $345 million to expand its operating business at the huffington post.

-- at aol.

And the maker of candy crushed saga, it shares go sour.

King digital stock plunged after the company cut its outlook for this year.

Kenya developing new games -- king is developing new games to attract new players.

Everyone is concerned it will be a one-hit wonder.

The dynamics of the united kingdom, the consensus call of spring.

U.k. forever.

U.k. booming.

U.k. doing great.

And then there is august.

Is the head of the bank of england mark carney -- as the head of the bank of england, mark carney, signaled he would not raise rates.

Jonathan ferro joins us from our london newsreel.

I think of carl weinberg and i think of economics making very clear the consensus call is wrong here.

Is mark harney with the consensus, a better u.k., or with carl weinberg and those more cautious?

I think you draw a decision between better or worse and find a medium ground.

That is the similarity between the that -- the fed and the bank of england right now.

The headline numbers, 6.4% and going south, but when you look at wage growth, there isn't any.

Why is there no wage growth?

How contentious is the bank of england?

We know the difference between charles plosser to eric rosengren at the boston fed.

Is it the same thing that carney faces?

The short answer is no.

There are more hawkish members of the sec.

But we don't have a plosser.

We don't have a fisher.

We used to.

I interviewed him this morning and he talked about getting a hawkish group of people to do that, not just one single individual.

There are couple of names, but i don't think it's the same as what is going on with the fed.

I think there is more of a consensus of the bank of england right now.

It might not be contagious within the bank of england, but i'm thinking back to the mansion house speech a few months ago where everyone was surprised that mark carney came out with a hawkish move.

Today, we have a very dovish mark carney.

Is this confirmation that, as his critics say, mark carney is an unreliable boyfriend?

Has he let his side down?

I put this question to him today in news conference.

I said growth is going to be 3.5% this year.

How do you justify record low interest rate?

How do you reconcile the two?

And aren't you putting too much emphasis on this momentous occasion of a 25 basis point rate hike?

He said it is you that is upset with the rate hike -- the rate hike, not us.

There you go, libya, unreliable.

-- there you go, olivia, unreliable.

When unemployment falls, wages fall.

They don't usually move together like that.

There is a lot of concern that the jobs being created are part-time.

Is there evidence of that in the u.k.? it is a different story there, actually.

The animal and rate has come down to six .4%, but those who are self-employed are at a record.

Why cannot -- why can't they get full-time salaried work?

There is a difference between the u.s. labor market and the u.k. part -- the u.k. labor market right now.

Our participation is higher.

Jonathan ferro, thank you so much from the london bureau.

To me, we can not extrapolate the london and u.k. experience over the united states.

I think right now, we have an unreliable girlfriend as opposed to an unreliable boyfriend at the helm.

An island economy with massive immigration, we don't have that, except on the island of manhattan.

There are big differences.

But from the standard of l

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

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