Ukraine, Russia Move Toward Truce: Surveillance (09/03)

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Sept. 3 (Bloomberg) -- Full episode of “Bloomberg Surveillance.” Guests: Tom Porcelli, chief U.S. economist at RBC Capital Markets; Michael Wolf, founder and managing director at Activate; Writer and Director Whit Stillman.

The first tuesday of november beckons.

At beckons for senate republicans.

Good morning, everyone.

This is "bloomberg surveillance." we are live from new york.

It is wednesday, september 3. i'm tom keene.

Joining me, scarlet fu and adam johnson.

Let's get right to the morning brief.

I want to start with what happened in the u.k. overnight.

The purchasing manufacturers index rose.

It is now a 10 month high.

It is one of the highest in the world.

The irish are the only ones who are increasing more.

It speaks of the discrete miss of the united kingdom.

By the way, you can also understand what david cameron is talking about raising rates much more quickly.

Certainly a different tone than continental europe.

I should point out that china's service industry also strengthened in august.

In the u.s., we got the weekly mortgage applications.

We get the ism manufacturing survey.

Factory orders.

The fed beige book, that is the important one.

Then we get vehicle sales, which have been running very strong.

Earnings after the bell.

H&r block.

Taxpaying americans, were you pay them through h&r block.

That is the brief.

Let's do a data check.

We have significant headlines out of europe.

Futures dance off of those headlines of a cease-fire.

We will give you the nuance in a moment.

Futures are up seven.

Stronger euro in celebration.

There is nymex crude.

The vix, 12.25. brent crude comes back.

The ruble decidedly stronger off the news area and sterling gets my attention.

-- off the news.

Sterling gets my attention.

Here is the decline.

The strengthening of the russian ruble ringing it back to where it was three days ago.

Here is the tension with nato and here we come back as well.

Let's go to the front page this morning.

It has changed four times in the last hour.

It really has.

I have had to read it over a couple times to make sure we have the semantics right.

Leaders of russia and ukraine have taken steps toward a cease-fire.

Petro poroshenko says a conversation with vladimir putin has resulted in a cease-fire regime in eastern ukraine.

Forgive me.

A cease-fire regime?

They have revised the way they have phrased this thing multiple times in the past 20 minutes.

Art of it is because russia has denied any involvement in the conflict in eastern ukraine.

Because he never fired.

You can't be involved in a cease-fire if you did not fire.

How did winston churchill describe russia?

An enigma wrapped in a riddle.

A mystery and all that.

Absolutely.

Ukraine, the u.s., and europe have accused russia of backing the rebels and sending troops in.

We see the ruble strengthening and european stocks rising.

No question about it.

The president's press conference with the leader of estonia -- it is a precursor for nato and wales -- in wales tomorrow.

I don't think it is any less of an important conference because of the confusion we have seen in the last hour.

Kiev deleted the word permanent and put in this idea of a cease-fire regime.

This is squishy.

It is very squishy.

Russia cannot negotiate a cease-fire because it was never a party to the conflict.

According to mr.

Putin.

That is the major theme for our next four hours of "bloomberg surveillance." president obama will be sending 350 additional troops into iraq.

It is to protect diplomatic facilities and personnel in baghdad.

They will not be fighting on the ground.

The u.s. will now have more than 800 troops in iraq.

If that is not the legacy of benghazi, i don't know what is.

We did not send people to protect ambassador stevenson.

This is a good thing.

It is still more american lives put in risk.

Islamic states that it killed more another -- killed another american journalist.

The united states says the video showing the beheading was authentic.

Front and center is someone from britain.

A video also showed a british citizen and an orange jumpsuit as well.

He might be the next person.

If it wasn't russia-ukraine, this would be front and center.

Can you imagine beheading journalists?

It is hard to fathom.

Let's move on to our furred -- third front-page story.

Another company appears to be the victim of hackers.

It is home depot getting a report that hackers stole credit and debit card data, selling it online.

An independent security reporter said that home depot has been reported as having a data breach.

Take your pick.

Exactly.

What is interesting is as a follow-up to the story over the long weekend was that apple says the celebrity nude photo hack was not a systems failure.

They do not have photos of me.

[laughter] they do have knowledge that the 10 pounds of nails i bought from home depot.

[laughter] hackers gained access to logins and passwords.

Update your login and password.

Those are our front-page stories.

Here is her twitter question.

-- our twitter question.

Security or product design?

What matters more?

I would say product design.

We need to begin "bloomberg surveillance." we are thrilled to bring in peter cook.

The chief u.s. economist at rbc capital also joins us.

Peter, let's start on the president's trip to estonia.

Who is he speaking to?

To an america not against, but mainly to the president of estonia, to the eastern european baltic states, to nato members, and to president putin.

I am here to show nato unity, to show that we all know are nader -- honor our nato commitments.

The choice of estonia was crystal clear.

He wanted to be close to russia to send the message while not actually being in ukraine itself.

An important moment for the president.

Arguably more important than what my play out and wales.

How does that discussion change?

I'm not sure it changes all that much.

I don't think the president wants to change the tone.

You heard him encourage fellow nato members to step up.

I think trust and verify.

Ukraine to build up state border with russia.

I have no idea what that means.

A moving target of the headline.

Does the united states control nato?

When the united states wakes up in the morning do they say, we are in charge here?

There is no doubt who is the most important member of nato.

We can -- contribute more than 70% of the military might behind it.

But this is an alliance that has been in place for years and an important alliance.

People of question whether it was really needed in this day in age.

This last couple of weeks and months have proven to the obama administration the importance of nato.

The baltic states also agree.

A distinction here.

The war in the east is not internal ukrainian conflict.

That is a key distinction.

Is not.

Is not.

Russia instigated and continue the conflict is an added comment.

Which is why mr.

Putin would put out a chaotic statement -- quixotic statement that they are not involved.

Is nato not doing enough globally?

Do you speak with in -- people in and around washington?

What is the support for mr.

Obama from his own democrats?

You heard diane feinstein suggests that the president was too cautious.

There are democrats who think that the president is detached in terms of foreign policy, not leading from a position of strength.

You heard that from the usual hocks on capitol hill.

I don't think the president has lost rank-and-file democrats by and large.

There is a great reticence but democrats -- by democrats on getting involved beyond airstrikes in these conflicts.

Nobody is suggesting american boots on the ground in ukraine.

The idea of putting people at risk in syria is something that this president campaigned on the effort to get american troops out to read he is -- out.

He is not going to go back and lightly.

-- back in lightly.

The deliberate steps he is taking year, i do not see him changing that, even if he gets more criticism from democrats.

The escalation would be a threat to the u.s. homeland, which the u.s. government says they do not see isis posing an immediate threat.

His language today is very critical, degrade and destroy isis.

These are the same wards we were using during afghanistan, during his debate as to whether or not to have a debate -- surge in afghanistan.

We are talking along the same language here.

Difficult decisions for the president.

We will get into the u.s. economy later on, but i do want to get a sense about how often your clients bringing up geopolitics.

It comes up regularly.

In terms of the hard data, i think this is a great example.

It was a very good report overall.

When you look at the responding comments, they did mention geopolitical issues.

You still have a ripper of a report.

They are not feeling the impact whatsoever.

You see that they're out in the data.

This is not a new issue.

This has been the summer of discontent, to say the least.

Peter cook is with us for two hours this morning.

We are thrilled to have peter join us.

Coming up, the annual conference kicking off in berlin.

Who is in the spotlight in new competition for smartphones?

Samsung and apple have new ones coming out.

Hans nichols will take us there and run us through the latest.

You are watching "bloomberg surveillance." ? good morning, everyone.

"bloomberg surveillance." some do while others talk.

What a success under armour is.

The founder and ceo is coming up this afternoon.

Kevin plank on the baltimore orioles, among other things.

I'm sure we will hear about his love affair with the first-place baltimore orioles.

Good morning, everyone.

This is "bloomberg surveillance." with me, scarlet fu and adam johnson.

Get us going on technology.

Watching samsung this morning.

Smart phones, tablets, wearable technology are expected to steal the spotlight at the consumer electronics show in berlin today.

Hans nichols is there on the ground in berlin.

This sounds like it is samsung front running apple, which is expected to come out with a new iphone on september 9. why don't you front run samsung?

[laughter] i would love to front run samsung except i signed a nondisclosure agreement so i have to be very careful about what i tell you samsung is doing.

They have a lot of great products coming up.

I can only report what has been reported in the korean papers.

I will pretend i read korean.

This is a company that wants its own and has its space in the tablet market.

Yes, apple is not here.

Yes, they may be front running them.

You have algae, nokia -- lg, nokia, but can you have a tech conference if apple boycotts?

They have the ifo 6 -- iphone 6 coming out in september.

Can tom do his christmas shopping if there is no apple?

[laughter] samsung is getting squeezed by chinese and indian smartphone makers as well.

Tell us how samsung will push back on outside.

They want to own certain spaces.

A want to on the tablet market.

-- they want to own the tablet market.

This is not just about smartphones.

It is wearables and smart watches.

They may be unveiling a smart watch that is totally untethered to your phone.

That means i can go out to a jog or a run and pretend to be working with the only thing on the my wristwatch.

Maybe running shoes and some clothes.

We will keep this family friendly.

You can be tethered with one device on your wrist.

That is exciting.

We will see about the interface.

We will get a big announcement in a couple of hours.

Tethered with just one device.

It is gigantic.

Does anybody talk about just how big it is and the fact that it looks very clumsy?

Come on.

This is coming from adam johnson, who i'm sure has a big divers watch that is so vague you need to get your shirts -- big you need to get your shirts tailored differently for your left side.

Yes, it is big, but not like anything else i'm sure that someone less gaudy than you would wear.

I want to get one last question about the backdrop for samsung.

There is a lot of pressure for samsung to return cash to shareholders.

It did not increase dividend in may.

Management is under pressure?

Clearly.

This is really part of the inversion story, part of the corporate profit story.

You have maximum profit squashing around.

Apple did interesting financial engineering to get that back.

Samsung does not have to repatriate the money.

That is part of the conversation.

The other part of the conversation is vacuum cleaners.

I want tom keene to answer this question.

How many watts does your vacuum cleaner currently draw and what is your goal?

What is the dust in the living room?

What is the dust in the living room?

Tom does the morning vacuuming.

You need a robotic vacuum.

Way to go, hans nichols at ifa.

And i wear a very small watch.

Just letting you know for the record.

There it is.

[laughter] it is not clumsy.

It is not clumsy.

What wenders more -- matters more in tech, security or product design?

There have been so many security hacks.

What matters more?

Coming up in the next hour, we will put that question to you.

This is "bloomberg surveillance." we will be right back.

? good morning, everyone.

"bloomberg surveillance." futures up this morning.

I'm tom keene.

Let's get right to our top headlines.

Talks aimed at stopping iran's nuclear program have stalled.

Diplomats say there is no progress and has been no progress in months.

Prospects for the deal by november do not look good.

Western powers offered to ease sanctions if iran stopped its program.

A third missionary in liberia tested positive for ebola.

He was treating patients in liberia.

Infection rates are rising.

The upright has killed more than 1500 people so far.

-- outbreak has killed more than 1500 people so far.

Israel has dropped plans for a new west bank housing development.

Israel wants to add more than 1000 developments.

There will be new russian sanctions announcements this afternoon.

This as the president travels to wales.

Listened to what the president said about russia.

If russia is prepared to stop financing, arming, training, in many cases joining with russian troops activities in ukraine and is serious about a political settlement, that is something we all hope for.

I have said consistently that our preference is a strong, productive, cooperative russia.

Cooperative russia.

We heard earlier that russia did not agree to a cease-fire because it was not party to it.

Kiev says russia is part of the discussion and the rebels are saying russia is not.

Part of our discussion is the morning must-read.

If we try to perceive what is happening in russia and in washington's response, i want to share something that is in "the wall street journal." the share of americans who think the u.s. has done too little in the world has nearly doubled.

You have covered mr.

Obama for the past six years.

On a scale of one to 10, how cautious is he being right now?

If 10 is the most cautious, he is probably pulling about a seven or an eight right now.

He is putting pilots into harms way over iraq.

The question is, will he do so over syria?

We will discuss jobs on "surveillance" next.

? good morning, everyone.

"bloomberg surveillance." i'm tom keene.

With me, scarlet fu and adam johnson.

The 59th street bridge moving across to queens in the brilliant sunlight.

A little cooler today in new york city.

92, yesterday.

Summerlike attention.

Equities, bonds, currencies, commodities all moving on the announcement of a cease-fire regime coming out of ukraine, to use one of the many phrases.

There we go.

Up, up and up.

It is a holiday lengthen the workweek.

Five days into four.

Tom purcelli is the chief u.s. economist at rbc.

He is interested in the money we make and the hours we work.

How do you see wage dynamics right now?

Fairly constructive.

We are looking at acceleration -- looking for acceleration.

Nothing has changed in that regard.

You disagree with the gloom of the charts.

Bring it up if you can.

3% was good wage growth.

You think we are doing better than the gloom.

I hate average hourly earnings.

I will come right out of the lock up.

All of you at this table will be talking about average hourly earnings and you should not be.

We love you guys.

Why not?

I will tell you.

What is more compelling to you?

Knowing that someone is earning $20 per hour or knowing that someone earned $20 per hour and they are working 42 hours per week and that that amount of hours they worked increased?

Let's say average hourly earnings stayed stagnant.

If that stayed stagnant, everyone would be lamenting this idea.

If that came in the context of an increase in hours, that is compelling.

He will give us both of those numbers.

What i'm saying to you is don't look at them separately.

How can you lament one and be happy about the other?

Look at them in aggregate and you can find that people's paychecks increased for that particular workweek.

Look at both.

Workweek and hours.

On your eco-screen on bloomberg, you can pull this up because the pls already has that series calculated for you.

Whoever the gods are of eco-screen, put that number up there instead of the average hourly earnings.

That is a note to the guys upstairs.

Given that average hourly earnings are up at a 6% clip -- wages.

If i can set this up in little bit.

One of the things we did yesterday was we put out a chart that showed wages and salaries.

Not average hourly earnings or this aggregate number i am talking about.

We challenged people, how many people really know that wages and salaries are growing at a 6% clip right now?

The amount of e-mails i got in response to this suggest that people had no idea that it was growing at this pace.

Just so we're clear, this measure that i am talking about, in theory, this should be the broadest measure of wages we have you read this is not the number -- that we have.

This is not the number we are focusing on.

Does your work speak of two americas?

There is the wages and benefits and 401(k) america.

That has been true not just in this cycle, it is just being magnified in this cycle.

I think janet yellen is focused on the folks sitting on the sideline.

That is not an interpretation.

She has literally said these words.

From her perspective, there is still a lot of work to do.

From our perspective, there was a lot less slack in the labor backdrop and she would think.

We have written about this at length.

The reality is that the labor backdrop is basically enough to continue to grow consumption at a 2.5% rate.

Slack.

That is her word.

How much slack is there in the economy?

There is materially less slack than she thinks.

Probably something worth getting into as i am here for the next 20 minutes.

There are compelling reasons.

Less slack than she thinks.

This should be on our dashboard, but it is not.

It may be on her dashboard, but it is in a different light.

Peter, are you getting any sleep before the jobs announcement on friday?

[laughter] tom porcellyi and peter cook.

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

"bloomberg surveillance." good morning from our world headquarters in new york.

September beckons.

Colder weather.

A beautiful morning across manhattan.

It is time for our single best chart.

President obama is on the road in estonia today.

He may use time to warm up on a big seem -- theme with nato.

Defense spending.

Only four members in nato currently meet the minimum requirement to spend 2% of their gdp on defense.

Thanks for "bloomberg businessweek" for this chart.

France is pretty close.

The rest of western europe leaves quite a bit to be desired.

Thank you for putting this up.

I did not know that there was a minimum 2% gdp threshold to be a nato member.

You said there are 28 members.

Only four meet that requirement.

Grease and dystonia i was surprised about -- estonia i was surprised about.

Greece actually spends money.

For all of its problems.

As we look at u.s. defense spending, i just want to say about the 4% of gdp, let's focus on gdp right now.

4% repeats itself.

That was the latest growth rate.

Are we literally growing at 4% in this country?

Q1 was not reality, nor was q2. we think that once the debt settles from the volatility, you are going to slip back into this 2.5% growth trajectory and that is what we have baked into our forecast range.

We had this spending number four july that was a disappointment.

It was.

On the back of that, we had to/are -- we had to slash our numbers significantly.

Consumer fundamentals are actually in perfectly fine shape.

Would people have to recognize and i hate to blame it on the weather, but the reality is that utility spending over the course of the month was dramatically lower than what we have seen.

The money you have to spend just to survive?

Air-conditioning, gasoline, those things that actually relate to utility usage.

If you strip out the utility services numbers, just to really drive home how this lies in the utility number, instead of being down 0.2%, we would have been up 0.2%. it was a real impact.

That weather effect.

It was much cooler.

Scarlet is talking about countries not spending enough on defense.

Michael mckee joining us talking about states not talking -- spending enough on internet service.

How bad is it?

It is pretty bad.

Where we were, you could not get any internet.

This has people really worried.

Depending on which service you use, internet download speeds available are slow.

In new york, you can get 150 megabits.

In maine, nine megabits.

Nine?

Scarlet's favorite tv show is going to take quite a bit of time to download.

Trying to update adobe programs takes a couple of days.

What is the why?

Why is it so slow?

There are not enough people who live there.

There is a broadband corridor that runs up the middle of the state.

They do have the capability of connecting.

The internet service providers do not make any money if they connect because of population density.

For them to string that last mile of cable to your home, it costs too much money.

Literally, you could see outside his door, you could see the high speed internet cable, but would cost him $10,000. which nation were they going to pick up the speed?

So people could download photos?

You are saying than manus like some developing countries?

-- maine is like some developing countries?

Can appoint out that estonia has the most open internet country in the world and the public internet is incredible.

Maine, the problem is that it retards business development.

Business spinoffs do not want to stay if they cannot get high-speed internet.

The broadband association will tell you one in three jobs created in association with broadband internet service.

Within this conversation, i would point out that brandon is dumb as wood because of slow internet.

[laughter] brandon is fine.

Susan crawford talks about broadband.

She says that what is crucial -- comcast, time warner cable, verizon, at&t. what it comes down to is that the government has allowed for companies to carve up the nation among themselves.

Peter cook, give us an update.

That deal is totally under review.

We don't know when we will have a final word from the fcc.

These are some of the issues that are playing out.

There are millions of comments every day about whether the agreement should move forward.

These are the kinds of issues that are bubbling to the surface.

There are protesters in front of the fcc over these issues.

I continue a personal story.

In vermont, a small house we have had up there for years and years, we finally got wi-fi up there and the neighborhood parks in our driveway to use our internet and we are happy to do it.

[laughter] nine in maine?

Unbelievable.

Is anyone talking about this?

The whole state is upset.

Legislators?

Legislators have.

I talked to the governor.

He said it is a real problem.

Maybe they have to park by the border to canada and get wi-fi.

Peter cook will handicap the midterm elections when we come back.

This is "bloomberg surveillance." ? this is "bloomberg surveillance." let's get you some company news from the files of bloomberg west.

"gotham" heads for netflix.

This is according to people familiar with the matter.

The tv drama is a batman prequel.

It is one of the high-profile content acquisitions by netflix.

Iex wants to become a full-fledged stock exchange.

Sec approval would make it the first major new exchange in the u.s. since 2010. kkr is buying a stake in savant systems.

This is according to "the wall street journal." that is the latest company news from bloomberg west.

It is nine weeks until the midterm elections -- it is nine weeks until the midterm elections.

There is modest agreement that the republicans will take the house and possibly the senate.

Peter cook thinks there is never a dull moment.

Very exciting time in the nation's capital.

What is the gridlock you expect to see in november if the republicans take the senate?

We have bright orange gridlock now and it might be bright red gridlock.

Shades of gridlock.

The chances that the republicans take the senate are good.

Better than 50-50? this is going to be competitive.

It is not a slamdunk.

If republicans do take the senate, you are looking at a final two years of president obama's term in office that could be arguably more than -- dysfunctional than we have seen to this point and that is hard to imagine.

There is not a lot that will get done if the republicans take the senate.

Debt ceiling showdowns will be an entire show.

Within this, what does this mean for the business community?

Does the business community want this kind of gridlock?

I think it depends on who you talk to in the business community.

Either way, you will have a divided washington with the president in power and the republicans controlling the house.

Not much is going to change, except a lot resting in the hands of mitch mcconnell.

This he want to get something done?

Is there an opportunity for comprehensive tax reform?

Is there an opportunity?

Some in washington think there might be a sliver of opportunity for tax reform and maybe even a larger conversation about the budget.

I'm not so convinced that is going to happen.

Mitch mcconnell had to fight a difficult primary to get the republican nomination for his state.

Al hunt had a provocative commentary yesterday.

He noted that of the eight races that are competitive, six went to mitt romney two years ago.

Alaska, arkansas, georgia, kentucky, louisiana, north carolina.

Is there a strong enough republican legacy to build momentum over the next couple of weeks?

Those numbers are a reality.

There is not a lot that has changed to suggest that democrats will do better in the states today.

These are local races.

This is something that you cannot put the mitt romney imprint over.

You have to look at the candidates individually.

You look at someone like rochelle nunn in georgia.

Institutional backing.

She has run a good campaign.

Georgia is still a republican state at this moment in time.

She is going to make it close.

Let's look at another news item.

This is all the rage yesterday.

Matt levine.

This got in exchange going on twitter last night.

On eric cantor.

Are you surprised these guys are going to small investment firms?

Versus going to major wall street firms?

I'm not entirely surprised.

I think people were surprised that eric cantor was on the job market to begin with.

I think it does a couple things.

He is going to get paid well either way.

He's working with someone he knows personally.

They are personal friends.

Working at the smaller shop gives them a little insulation from the public profile and my leave the door open if he wants to run for governor of virginia or get back in.

There was always the political angle.

We knew that he was not going to go to rbc.

[laughter] no comment.

I'm going to slink out of that one.

How do you fold all of this into what you do?

I think this is a fascinating conversation we are having.

As the election season progresses, it will gather momentum.

From a macro perspective, it does not matter.

If the republicans take the senate or not, it is gridlock.

Gridlock is gridlock.

We are having this conversation about degrees of gridlock.

I don't think it matters.

If the republicans are unwilling to work with the democrats and vice versa, nothing gets accomplished.

You have a president who should be taking a victory lap on a smaller fiscal deficit.

Yeah.

You are preaching to the choir and that regard.

What i love to tell clients is that i can tell you what i think should happen, but i have to think about what will happen at the end of the day.

You are still dealing with a very gridlocked d.c. right now.

I don't think any significant macro policies get pushed in the next two years.

There has been a lot of work that has been done on the stock market in midterm election years.

The data place it out.

-- lays it out -- plays it out.

Is there any economic change in a midterm year?

It is more of a function of, tommy what the composition is of d.c. and i will tell you if anything gets accomplished.

If the composition remains the same, nothing is going to change.

Nothing significant.

One economic wildcard is having the budget return as an issue.

You talk about fiscal drag.

You talk about a spending bill that has to be agreed to in the next two weeks on capitol hill.

It is not clear they're going to do that.

You have the debt ceiling again.

Thank you so much.

A quick forex report.

The euro rallies off of the headlines from ukraine.

We will cover that next.

Another hour of "bloomberg surveillance." good morning.

? president reassures the baltic states.

Harsh bingo and putin agreed to -- poroshenko and putin agreed to terms on peace.

And for amazon, it is a house of content.

Bezos attempts to take on netflix.

It is wednesday, september 3. i'm tom keene.

Our guest host for the hour, michael wolff, former member of yahoo!

Bmi rising to a six-month high.

It is the second-highest in the world.

Ireland is the only major economy that is higher.

We should also point out, china's services industries also strengthened in august.

We just got the weekly mortgage applications number up a mere 2/10 of a percent.

At 9:45 a.m., the iso manufacturing number.

Though that is just for the state of new york.

And finally, at 2:00, the fed beige book.

All of the various credit card companies reporting their sales.

And h&r block after the bell.

We have another company, adam, apparently victimized by hackers.

Home depot is reporting that credit card data was stolen and available for some -- for sale online.

Several banks are claiming that home depot was the source of breach.

However it is agreeing to a $1.1 billion settlement.

And cbs gets the change of the name.

That is the latest company news headlines reporting.

I guess you cannot be a help company if you're selling cigarettes.

Another top story we are following this morning, ukraine and nancy a cease-fire deal with russia.

The latest headlines, there have been a lot of them.

Mr.

putin is backing the idea of an immediate truce, but he says russia could not go shade a cease-fire because evidently not part of the conflict.

Take that for what it's worth.

President obama just spoke in estonia, trying to reassure eastern european nato members and says it is too early to comment on a peace deal.

If, in fact, russia is prepared to stop financing army training -- arming and training and in many cases joining with troops in favor of a political settlement, that is something that we all hope for.

I have said consistently that our preference is a strong, productive, cooperative russia.

Strong, cooperative russia.

I tell you what, ryan chilcote is joining us on the phone right now.

He has covered russia at length, speaking with a foreign russian minister many times.

Can you tell us how this could change the dialogue at the meeting you are attending?

What this will do to the nato summit that kicks off tomorrow in wales's cause a lot of people to scratch their heads.

We have a lot of news three hours ago, hearing of a permanent cease-fire with the russian president.

The ukrainian president is a credible source and it is the first time that either party had ever used the word "permanent," not just a tactical cease-fire.

Then just about an hour ago he removed the word or minute from his website.

And then they largely agreed on steps toward a cease-fire.

But as usual, the devil is in the hills -- in the details.

Russia has well over 1000 troops in the area.

And as such, president foot and cannot actually agree to a cease-fire.

There you have it.

We also want to point out that eu proposals on current russian sanctions may be announced later today.

What kind of sanctions are we talking about?

Is this why president poroshenko made the announcement this morning?

Angela merkel let the cat out of the bag in terms of what kind of sanctions we will be seeing.

It is likely to be more of what we will -- what we have seen in terms of limiting access to the market.

Maybe restricting weapons sales to russia.

The russian president has done this before.

He has made suggestions, de-escalate tori, if you will, comments.

There are about 60 world leaders right before this summit who are just saying that we will try to hold off on comments.

Angela merkel has made it very clear that she is skeptical.

Understood, ryan chilcote, for the chess match that president putin is trying to play.

Admirals to read us -- admiral stivritas, the brass that it will be in wales, what will they advise?

Well, it includes general breedlove, the top u.s. nato commander.

One of the goals for this nato summit will be, perhaps, 4000 nato personnel that would be based in eastern europe as an offset to russia.

If you see that undermined by what happened today, that will show weakness within nato.

There is division over this.

That is something to watch for.

At the same time, there will be an effort on the part of the u.s. we see a discussion in japan of a greater and -- greater military presence.

There's the c of the german commitment as well.

How will nato address -- there is the delicacy of the german commitment as well.

How will nato address this?

2% of gdp towards -- july germany as well?

Germany as well.

Everyone recognizes they have the finances to spend more on defense.

I don't think you will a lot of pushback from the u.s. on that.

It is a delicate subject, for sure.

I want to bring in our guest host for the hour.

The founder nco of activate and founding board member.

Celebrity nude photos aside, apple says icloud is not the issue, that hackers got hold of people's ids and logins.

Is apple in the clear?

But it doesn't seem so.

The data breach -- it doesn't seem so.

The data breach is everywhere.

It home depot, target, pf chang's, jpmorgan.

A lot of the things that people are supposed to be doing in terms of two factor authorization, expecting that we will have smart pins on cards, i think we have to step back and recognize everybody's going to be hacked.

Once you recognize that, then you realize -- and by the way, given the numbers of customers of companies, it's likely you've already been hacked.

But if i am hacked and someone takes my information, what happens?

Certainly, your bank card or american express card it will not hold you liable for more than the first $50. it just comes down to a question of confidence.

Pf chengdu is using the old roller device to record your card.

-- psa is using the old roller device to record your card.

In triplicate.

Exactly.

You have to expect that all these companies will get hacked.

We will stay with technology.

It is a critical time for samsung.

They have a big roddick unveils later today.

-- a big product unveiled later today.

Will it be enough in china and india?

We will discuss.

? good morning, everyone.

Summer into temper -- in september, 96 degrees he yesterday.

You are doing a little back to school tomorrow.

? -- yeah, get a haircut.

Survived the haircut.

The hack of jpmorgan by what appears to be a russian-based entity was a one -- a one-off.

In other words, it is not part of the cacophony of hacking.

Should we be happy that it was only one bank that was supposedly hacked?

No, we should be informed by the fact and recognize that when it comes to russia, there are large groups of people focus on hacking.

There are lots more people trying to breach that data.

Hacking, hacking, hacking.

If i'm a hacker, why are they after my account?

I've got $14 in there.

If they are hacking, why aren't they taking our money echo -- our money?

It is much easier to use people's credit cards.

It goes largely undetected.

And they will sign you up for a bunch more credit cards that you don't know about in years to come.

The bottom line is, we are getting smarter by the day, aren't we?

And by the way, if you look at what this is done to large corporations, look at the turmoil that this led to in -- at target.

Look at what this means for businesses, not just individual customer concern -- customer security.

What can i do to protect myself?

Two factor authorization.

Where it is not just your password, but it also tied to your smart phone or other device.

It is tied to something with you.

Sm sunkist ready to -- as samsung gets ready to launch its new device, we want to hear from you.

Treat us.

-- tweaked us.

? good morning, everyone.

Bloomberg surveillance.

I'm tom keene with adam johnson and scarlet fu.

Our guest host is michael wolff.

But president obama says it's too early to comment on the truce between russia and ukraine.

While mr.

Obama was meeting today with nato allies in estonia, ukraine's president and russia's vladimir putin said they would make a cease-fire deal.

A diplomatic solution is what he had hoped for and ukraine all along.

If, in fact, russia is prepared to stop financing, arming, training, and in many cases joining with russian troops activities in ukraine and is series about a political settlement, that is something that we all hopeful -- hope for.

I have said consistently our preference is a strong, productive, cooperative russia.

The president also announced the u.s. will send more air force planes and units to estonia and other baltic countries.

And the president sending 350 additional u.s. troops to iraq to protect diplomatic facilities and personnel in baghdad.

The u.s. will now have more than 800 troops there.

But it is emphasizing they will not be used in a combat role.

And top aides talking about iran's nuclear process have stalled.

The deadline looked weak.

Discussions have stalled.

And in the tech world, a lot of headlines as well.

Samsung is trying to front run that release by holding its own big lunch.

They are scripted to unveil a new galaxy tablet and smart watch.

Cory johnson joins me from midtown manhattan with the latest.

The next big thing here is a smart watch.

I don't want to call it and iwatch, because that is what apple is going to come out with.

What is the significance of the watch that samsung has released previously echo -- previously?

It's the next big thing.

It will be some kind of wearable device.

Unlike the current device on him -- with samsung, it will actually let someone make it phone call.

How big it will be, i don't know.

They are trying to do this ahead of the apple announcement next week.

They did this once before.

We are seeing more and more this sort of pregame strategy to try to get ahead of what apple is doing.

You are based in california and you talk with the digerati all day.

To people outside of silicon valley -- do people outside of silicon valley want a smart watch?

I think that is an open question here to what the market will see.

We have seen in enormous success for a company called fit bit in the wearable category.

In san francisco, there is a company called job own.

Another called up.

-- there is a company called job bone.

--jawb one and another called up.

Samsung just throws things against the wall to see what will stick.

It's very different from apple.

They are all in with the devices they make.

Over the weekend, the apple icloud account had been hacked.

As jb organ doing anything to address security with these new products?

-- is jpmorgan doing a thing to address security with these new products?

A clarification.

Apple said it was not the icloud they got hacked, suggesting it was the individual phones that were hacked, but not icloud itself.

It is important as the distinction, because apple is trying to secure the cloud for people to store things.

The content delivery network might allow them to announce more products.

It is important timing wise.

Samsung does not have anything like this in terms of products that exist in the cloud or a mobile computing platform like icloud.

They are very device focused.

We will see what we get in about an hour and a half.

Something we definitely want to address in the future.

Cory johnson in new york this morning.

What matters more in technology, security or product design?

Michael wolff is with this.

I want to talk about ecosystem.

Seeing cory out in front of samsung somewhere, they don't have an ecosystem.

Does ecosystem trump all in the next product cycle that all of these companies face?

It doesn't look so yet.

What samsung has been great at is releasing phones at large-scale.

But is it the right price point?

At the right price point.

A lot of these have been subsidized by u.s. carriers.

The question he comes down to is whether there will be wide acceptance of a smart watch.

It's not just about who wanted, but about paying for it.

What is your price point, quickly?

I would bet more on the swatch sport -- swatch smart watch.

Under $300? yes.

Netflix has house of cards.

Amazon, what does it have?

We will discuss.

? this is leuenberger surveillance.

I'm scarlet fu with tom keene and adam johnson.

Let's get you to companies.

We start with apple.

The company issued a statement saying that icloud and its phone were not compromise.

Apple called it a targeted attack on usernames and passwords and security questions.

The private trading venue was launched less than a year ago.

Sec approval would make it the first new exchange in the u.s. since 2020 -- 2010. and credit suisse analyst had some advice for staples.

The analyst says a deal would cut costs and almost double combined operating profits within three years.

Shares of staples had rallied in the past week.

That is the latest company news.

Michael wolff is it activates.

-- is at activate.

Is the price of leadership one big meet and greet?

Or is the price of leadership loneliness?

I know you cannot speak specifically about yahoo!

Business.

To me, we have way over some -- way overemphasized networking.

There is a certain loneliness to being a tech leader.

But if you look at all of the tech leaders, whether it is marissa mayer or jeff bezos, they share two things in common.

One is the user, and the other is the tech talent that they can bring in.

The company with the best talent, the best technology wins.

Is this about singular decisions?

Is that what you value in tech management?

Or is it a more consensual approach?

At a singular decisions yet are -- are they singular decisions?

It is mainly singular decisions.

But they are not based on a model.

What is about is a decision based on a treasure trove of information around what users want to consume and what it will take to get there and deliver it.

Who advises these people?

With the challenges that twitter has, who do they seek it vice from?

-- seek advice from?

They did counsel from a number of places.

First, it's a lot of what our firm is doing in the background, giving a lot of these companies advice.

But they also listen to all sorts of people.

They listen to people in the valley.

They listen to vc's, big advertisers.

And they have to make their own calls about what they're going to do.

Looking at the machine a michael spence built out at sanford, and many others -- at stanford, and many others, what is the next thing in next-generation technology echo it goes down to critical thinking.

This is a major deal.

You can go to school.

You can meet all of your sections.

But companies like what we and others look for, critical thinking.

Places like stanford, that is were you get the critical thinking skills, isn't it?

Karissa meyer majored not just in -- fax marissa mayer majored not just in her degree, but critical thinking.

It is about technology and users.

You cannot just do it by writing code.

No, you have to have a sense.

It requires some digital taste.

A consumer can use your product, whether on a screen or device.

The consumer has to make it part of their habits and it has to be something that excites them everyday.

Adam johnson.

The big story is that we may have some sort of cease-fire happening between ukraine and russia.

S&p futures are up six.

The yield on 10 year is also up.

Because people do not need the safe haven.

We should mention that they have pulled back a little bit from their high earlier on.

Yes, indeed.

We are on bloomberg television, radio, tablet, smartphone, and bloomberg.com.

I'm scarlet fu here with tom keene and adam johnson.

Our guest host is michael wolff of activate.

A third u.s. missionary tested positive for ebola.

The doctor was treating patients in liberia.

The outbreak has killed more than 1500 people.

And israel is being urged to draw up plans for a housing project.

Israel wants to add newly 1000 acres to a settlement near bethlehem.

And finally, derek jeter's final days as a yankee.

Uniforms featuring his number will be up for sale.

The team will honor their retiring shortstop on sunday.

Incredible, the ending of an era.

Derek who?

Come on.

Are you sedated?

Greg i will be ok.

-- i will be ok.

I went the other day and the entire thing was devoted to derek jeter.

Thanks for your concern.

A predominant film maker is going straight to digital with his latest project.

This is one of five pilot that amazon is streaming for free.

Viewers get to vote on which show get a full season.

Speaking of baseball, can you just vote a million times?

Most of the time, they track your membership on amazon.

There is a portal that allows you in, but otherwise, if you go into your account, they know who you are.

This is the golden age of television.

Why so many potential outlets?

In this case, they came to me was an idea.

I had a relationship with them going back a number of years.

The other commissioners in this area are not directly related to the channel.

With amazon, if they liked the script, they go immediately into production.

How involved are they compared to movie studios?

Movie studios are very involved.

But they have total freedom in that area.

They give you a little bit of money and you go off and do it.

But like any tv company, executives are involved.

You have to get to know them.

And it confident in their decisions.

Have you heard from mr.

Bezos himself?

Not yet.

What is it, a benign dictatorship is the best -- the most effective form of government?

Is he putting his hand on all of these?

I believe so.

But some analysts say that amazon is spending a lot of money on this original content.

But they are not looking to get a gigantic it like also cards or orange is the new black.

They are just looking to do a -- to do well enough that users do not stray to other sites.

But i don't think that is correct.

Netflix and who are producing original content because they want to imitate the hbo model.

They want to have specific shows and series that you want to come back and keep watching, and that distinguish their service.

Amazon has roughly -- we are not sure -- 20 million prime users.

That is a massive audience in comparison to a lot of things on television or cable.

Netflix has about 30 million or more.

But for a show to have success, it can be tremendous amount of these services.

Does it bother you that amazon have not had a pilot that is memorable in the way that netflix has had orange is the new black or house of cards?

We are hopeful for some of the shows in the current crop of five pilot that are being rated.

Thank you so much.

He is a director and writer and his latest show is available on amazon right now.

I remember when [indiscernible] came out in 1990. ? good morning, everyone.

Scarlet fu and adam johnson marge warning me.

She is not desperate.

She exits active roles as she enters aol sponsored capital.

She is iconic for her courage.

She is still within aol.

She will continue to report to the ceo, tim armstrong.

She is moving from the ceo of aol brand and starting to run a venture capital fund that will be called pbg -- bbg, that is, built by girls.

Member -- remember a couple of weeks ago the article that came out about the male arrogance in silicon valley for the michael, you know about this, right?

We certainly need a lot more women in the tech is this.

You kind of need this sort of bravado or two start up the -- this sort of bravado to start up the facebook and twitter accounts and so on.

Susan will be funding women, essentially start ups begun by women.

Essentially anything from consumer related companies to media oriented companies.

She's trying to fight that bush was a this is a smart move from aol, not just focusing on women.

But also because a company like aol, it's hard for them to innovate from the inside.

Investing in smaller companies can bring a lot of innovation from the outside into their company pulls up susan lyne -- into their company.

Susan lyne is the right one to do it.

It is what is driving services today.

And you for the ceo say he has -- wants to focus on original areas in order to generate content.

Innards -- in entertainment, for instance, he has hired sarah jessica parker for their brand.

This is focused on women and ultimately, they want to generate rhenium content to get the advertisers -- generate premium content to get the advertisers on board.

Will pay subscription fees once again to aol for their content?

I doubt it.

Amazon does not have the kind of money -- aol does not have the kind of money that amazon or netflix has.

It's got to be scrappy.

And as we know, advertising rates continue to be -- go down as they generate more content.

In the loop begins at 8:00 a.m. as we look ahead to samsung unveiling its newest device, a wearable device, smart watch, we want to bring in our twitter question today.

What matters more in technology right now?

Is it security, given all the hiking accident -- hacking incidents.

Or is it product design you come -- is it security, given all of the hacking incident, or is it product design?

? good morning, everyone.

Rick--- rick joins us tomorrow.

He is a very interesting guy on the animal spirit that is out there.

He says the tryst rates will go ever lower.

What will that mean for private capital?

What will that mean for every cfo?

Rick heitzmann joins us tomorrow on bloomberg surveillance.

Trying to get as much money as they can right now ahead of the interest rate heading higher.

If you are an investment banker, you are going to every ceo in the s&p 500 saying, this is your moment.

Load up right now.

Michael wolff is our guest host for the hour.

Let's get you started with some company news from the files of bloomberg west.

He and may have gone too far in censorship rules.

When chinese users share posts, the content is blocked all over the world.

Lincoln is strongly considering changing its policy.

Netflix is cutting a deal with time warner to secure streaming rights.

That is, according to people fill you with the matter.

The tv drama is the latest in that series of high profile caught -- high-profile acquisitions for netflix.

, bravo acquiring it tech medicines for just under nine cents per share.

It is the summer of discontent.

The horror of the islamic state would be front and center.

Instead, peter cook as noted -- has noted washington enters the fall with little rest.

They used to be a sleepy washington.

It has been an eventful summer overseas and that has forced a lot of people in washington or back in their home states to respond.

I think that will continue into the fall.

What is the relationship with the white house and the pentagon?

It is interesting, because you heard some gap there between what chuck hagel and martin dempsey have said about the throat -- threat posed by isis.

I think it is pretty apparent that there has been more talk, morgan agitation if you will, the volume -- more of an agitation if you will, the volume is higher.

The commander-in-chief will still decide when and where to use military force.

In reading several books, including david plus possible -- david plus's book, and advisor for the campaign, what are the decision second out of martha's vineyard?

There should have been a discussion about how often he was playing golf, because that was clearly a pr disaster.

The reality is, the president was approaching this very deliberately.

He does not want to commit u.s. forces abroad unless he has to.

And right now, he does not feel he has to.

In dealing with the islamic state threat other than u.s. warplanes.

You will not see boots on the ground unless something changes.

Right now, we don't see it.

We were hearing from ryan chilcote about changes for the president in wales.

The headlines were all over the place.

I think we will hear from the president in the next couple of days.

But there is a breakthrough in ukraine, we want that.

This is a very skeptical white house that vladimir putin has, indeed, stepped up to the plate in terms of a real cease-fire.

What we saw in terms of the head line announced at four clock a.m., announcing a permanent -- at 4:00 a.m., announcing a permanent cease-fire.

And then a cease-fire regime.

I thought regime was french for diet.

And then they did not say in the game because they were party to the conflict.

How best for vladimir putin to undermine this nato summit and the unity that is being forced by nato right now in dealing with the ukraine crisis than to raise the possibility of a deal?

It undermines the effort for a sanctions push.

It undermines the effort for a reaction.

The commander-in-chief goes abroad.

There is executive action in what we do with foreign policy.

You and i remember senator fulbright and others who work informed.

Tell us about the elation ship of the president to the foreign-policy experts within the democratic party and the evil republicans.

The republican party right now on the hill, john mccain and others, and some within the democratic party, diet feinstein -- diane feinstein as well, -- they are not happy.

They are not happy.

There is a core group of hawks who feel that america is not flexing its muscles enough.

Those are the people you see on the talk shows that are not the rank-and-file.

Where is john kerry in this?

He has been kind of missing in action.

Arguably, he is about to make the most important trip this week.

That is, the nato summit.

And then he's going onto the middle east to try to read -- try to build this regional coalition of states, countries, that have an interest in dealing with the islamic state thread.

These are countries that do not get along already on a range of issues.

But maybe, just maybe, the islamic state will be a unifying factor.

What countries?

We have qatar, jordan, maybe iran as well.

These are countries that do not see eye to eye.

The islamic state could be the unifying force that put everyone on the same page.

Peter cook, thank you very much.

Our chief washington correspondent there.

The headlines were extraordinary at about 4:00 a.m. this morning.

And the markets have reacted to them as well.

What are you focused on for the day?

Auto sales.

And potentially, the fourth month in a row where we get annualized auto sales of around 16 .5 million units.

This is a big deal.

An auto purchase is the second-biggest purchase behind a home.

And you are focused on spending as well, tom.

Yes, mine is focused on back to school.

And just trying to get smarter on these events.

We are living every day.

I'm trying to read more on geopolitics mine europe.

-- on geopolitics, on europe.

The summer of discontent is giving way to the fall of discontent.

And a new high.

And along with a new high, a new tech announcement.

Samsung is coming out with an announcement.

The galaxy smartphone and a new smart watch.

Anything to get excited about here?

The couple of things.

If you look at all of the other smart watches, there are supposed to be an intermediary between you and your phone.

This watch is pretty much self-contained.

It is a three g watch.

You don't necessarily need a smartphone to go along side it.

The other thing that is interesting is that it is first -- the first samsung product that is not part of the google system.

They are not using android.

They are using their own operating system.

I sent a reticence, a nervousness about your industry over a watch.

Our member the pulsar watch with little butt

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

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