Vodafone Needs $130B: Surveillance (08/29)

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Aug. 29 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Chertoff Group's Richard Falkenrath, Telsey Advisory's Jason Blair, University of Missouri's William Black, Moffett Research's Craig Moffett, Ford COO Mark Fields and Mario Gabelli. (Source: Bloomberg)

This is "bloomberg surveillance." the united kingdom each $130 billion.

-- needs $130 billion.

The u.s. military.

We prepare for action in the mill -- the mediterranean.

And they compare -- prepare for cyber-retaliation.

And the latest on jp morgan.

A daily jp morgan report.

Good morning, everyone.

This is "bloomberg surveillance." i am tom keene live from our new york headquarters.

Sara eisen.

Scarlet fu -- alix steel is here for scarlet fu.

Overnight, the big news.

German unemployment unexpectedly increased.

Keep an eye on the german data.

Angela merkel faces reelection.

A lot of economic data to get through in the u.s. we get a new look at the second quarter gdp, which is predicted to rise even higher than we saw the first time around.

We will get numbers on personal consumption.

We get a weekly read on the consumer comfort index.

Krispy kreme and sales force.com.

Where is the inflation?

We have not seen much inflation on this supposedly healthier economy.

Ben bernanke would like to see more inflation.

The still a data check right now.

-- let's do a data check.

The euro is weaker.

Crude oil 109.13. brent crude 115.76. still elevated as the politicians try to sort things out.

But 10-year yield has gone lower.

0.40 is a big deal.

We will speak to the number one free-trade economists in the world, in india.

The indian rupee.

Merabank had to come in and intervene.

In dea -- the ir they had to come in and intervene.

Rupee hit by worst selloff since 1995. this is a big deal for emerging markets.

They were so excited, opening their first store in india.

There are certainly a lot of worries right now.

We saw were the papers for the most -- we scoured the papers for the most important stories.

Red flags across asia.

And internal spreadsheet that linked appointments to specific deals pursued by the bank.

The doj and the sec teaming up to cover this.

They have possibly violated bribery laws.

This is in turns.

The task is finding out if these were real jobs to win business.

It is just the latest in a slew of stories.

45% stake in verizon while this could be sold by vodafone.

Put some skill to this.

A big deal is $60 billion.

We are looking at verizon having to raise $60 billion from multiple banks.

The more you borrow from multiple banks, the more you will have to pay out.

The back story is vodafone is struggling with a lot of their other businesses.

Is it correct to say they need the money?

Maybe they needed to expand their european presence.

It only had 45% stake.

It did not have the kind of skill to make bigger decisions.

We will have two voices on it.

Our third front page story is we are looking at syria.

The waiting in the reaction.

A couple more days is what we heard.

The u.s. and the u.k. said they were ready to lead a military strike without the united nations' approval.

President obama spoke on the pbs news hour last night.

What we are saying in a clear and decisive, but limited way -- we sent a shot across the bow saying stop doing this.

That can have an impact on our national security over the long term.

It may have an impact in the sense that chemical will -- weapons will not be used again on civilians.

Present, -- president obama speaking of a limited strike on syria.

There has also been talk of a computer attack.

I have been reading about this.

It just gets deeper and deeper.

The former white house adviser and director of national security adviser is here.

Do i understand the u.n. has x number of people on the ground in syria?

Weapons inspectors are there to investigate the allegations of chemical weapons.

The report from this hour is that they are in rebel territory, where they are collecting samples to see if they can determine what chemical was used.

Are they blocking the efforts of united kingdom and the u.s.? the country can be attacked while the u.n. inspectors are there, but it is unwise to do so.

Many people in the u.s. government would like to see them out of country, report to the security council.

This may.

Sink -- thi8ss may not sit well with the president's military strike plans.

Since the action will not have the authorization of the security council, president obama wants as many partners with him as he can get.

He needs to take it in front of the security council one last time for the resolution to be vote down by the russians.

How important is the possibility of a response by iran?

It is a factor.

They do not have a block where they can keep us from acting.

What does our audience need to know writedowns?

-- right now?

What do we need to know about what our soldiers and sailors are doing?

The weapons we would use can attack from much further away, in some cases from missouri.

We have a missile from mo.? -- missouris?

-- missouri?

I wonder what the danger is in terms of having this public debate?

It is an excellent question.

We are a democracy.

What is the objective?

What are we trying to accomplish if we use force in syria, which everyone expects us to do?

Since the president says it is not regime change, what is it exactly?

Is it to show we will not put out hollow rhetoric?

Are we saying it is ok to fight it out?

Richard will be here each day over the three day weekend.

There is new information on that.

We want to get to alix with more company news.

The u.s. airways merger is at risk.

The government wants to start the trial in march.

The hearing on the matter is scheduled for tomorrow.

Caballero one expands into energy.

They have advertising firms in the oil and gas industry to increase revenue outside its consumer credit card lending business.

See world shares hit a new low.

It has moved to aggressively lower ticket prices after attendance fell 9% last quarter.

Coming up, a big story in the company world.

A deal to talk about between verizon and vodafone.

This is a $130 billion deal.

What does it mean in the u.s. cell phone market?

That is coming up on "bloomberg surveillance." ? good morning, everyone.

"bloomberg surveillance." he is coming up on his seventh anniversary at the ford motor company.

Alan mulally of ford motor company.

This is "bloomberg surveillance." we have to talk about this deal.

$130 billion for verizon bank.

Vodafone buying back its stake in verizon.

It is going to buy back its 45% stake that vodafone has.

In 2004, they got close to a sale and it did not work.

In 2009, it came up again and did not work.

It is important to verizon.

This venture is its lifeblood.

The mobile business relief funds its dividends.

It is critical.

It is a good back story on this headline of a $130 billion deal.

I have a media analyst joining us on the phone from new york city.

What is the impetus here.

This is financial conditions or something that is happening in the u.s. cell phone market?

There is really not much of a scale advantage for vodafone to have this 45% equity stake in horizon and -- verizon.

It values the dividend higher.

It already controls verizon wireless.

Only 100% is a financial decision.

If they can do the deal at $130 billion, that is about eight times even.

That is a good deal from one of the biggest communications companies in the world.

They have tried to make this deal many times.

What is different this time?

The 110 basis point rise has been placing pressure on verizon to get the deal done.

It is one of the most unlevered companies.

Just over two times ebitda.

That has got to be a signal for investors.

It is clear that verizon is stalking an elephoan.

-- elephants.

-- elephant.

Let me get your attention.

Vodafone in the last 10 years has outperformed verizon.

They have 91,000 employees.

Verizon has double that.

What do i need to know about vodafone?

It is a gigantic mobile phone company in europe.

They have a new ceo since 2007, which they needed.

This company was put together in 2000. the size of the merger was 150 billion euros.

It was a huge deal in 2000. the ceo came in in 2007. he has been selling out -- off joint-venture is.

This is about control and trust.

That is what they say about the ceo.

He is walking away from the verizon.

He may end up with cash.

He is going been in africa.

This is london talk from managing director.

He is not a doctor.

The point of it is that he has not trust.

One of the biggest names in nfl football is drrew -- drew brees.

You sell him and you get a bunch of money.

Are you going to buy five other things equal in value or more valuable?

Welcome back to "bloomberg surveillance." -- what is the country he would look at?

He is doing -- going bake in africa.

-- big in africa.

What was the sports i used to watch on the wide world of sports with a stick?

Coming up, america's surprising return as an energy superpower.

It is threatening russia's the timing.

It is this week's bloomberg business week cover story just out.

Vladimir putin and the energy dynamic changing.

We will discuss it with richard falkenrath coming up on "bloomberg surveillance." ? this is "bloomberg surveillance." i am sara eisen here as always with tom keene and alix steel in for scarlet fu.

The united states is ready to lead a military strike against syria without united nations approval.

President obama said no decision had been made about what course of action to take.

Unemployment in terming -- in germany increased by 7000. economists forecast the number to fall by 5000. a dispute over offshore tax evasion.

An agreement calls for swiss banks to be categorized by how they are complying with u.s. tax evasion laws.

Those are your top news headlines.

Now it is time for the morning must-read.

Bloomberg business week just out.

A story on vladimir putin, the man of the moment.

They can block any security council action.

Brian, the challenge for putin is to punish russia on a track to break free of its hydrocarbon dependency.

Russia needs a 12 step program for its energy addiction.

Richard falkenrath with us with a lot of perspective on this.

This is not the russia of five years ago.

The oil price is down to $84 a barrel.

According to the article, 17% of gdp depends on petroleum.

Are they a third-world country?

Third world is a term that does not make sense for them.

The global energy market is shifting because of the ability to tap into unconventional petroleum deposits.

We are on a path to energy independence.

If you are the number one exporter of energy to russia, this is big news.

They have a seat on the security council, which gives them political power.

They have energy, which makes them not a total basket case economically.

It is a wasteful energy sector like mexico.

I love the body language when mr.

Clinton gets together with mr.

Mrmr.

Putin its together with -- mr.

Putin its together with mr.

Obama.

Coming up, jp morgan's practices in china in question.

? . this is "bloomberg surveillance." i am looking at the markets.

We have a few key economic reports out, initial jobless claims, second quarter look at gdp.

Oil a little light, almost like an august it a check.

Oil a little light in the euro a little light.

That is about it right now.

Talking about oil, one of them moving up with oil prices altogether, exxon up over emerald two percent.

-- moves up over 2%. a decline in sales because of weak growth for metals and cold.

Overall thieves the picture of weak and market.

Minors are not buying equipment because no one is buying their product.

We're also watching jpmorgan today, very closely.

Another flareup.

Remember the probe of their hiring practices in china?

It is uncovering all sorts of red flags across asia, including an internal spreadsheet that linked appointments to specific deals pursued by the bank.

We need to find out more about this story.

Dawn, what exactly did you find out?

Specifically, what does the spreadsheet tell us?

We found out jpmorgan has flagged more than 200 somewhat suspicious hires throughout asia.

They're also looking in europe.

Maybe they were questionable, they deserve a greater scrutiny after the svc uncovered 2 highly suspicious hires in may.

In looking at this, they found at least one spreadsheet, at least one spreadsheet that actually linked the hiring of interns and other personnel to other deals the company was pursuing at the time.

Do we know where the spreadsheet is from?

We don't know exactly.

It is expected to be -- suspected to be investment banking.

It is definitely not something that was just another intern.

It is something kept in a somewhat official capacity, i'm told.

It is unclear right now whether or not this was beneficial program or whether or not this was just widespread practice.

In other words, it is unclear whether or not there was someone , a higher executive, saying, we need to use our intern program and other hiring to get these deals.

Critically, to be clear, we don't know that.

We don't know that.

I don't know if the company knows that yet.

They launched their own internal investigation after the sec families highly questionable hires him a couple of what they're called prince links in hong kong, so they're looking at it and cooperating, turning everything over to the sec.

A great story.

You can find it on bloomberg.com . finding that probe into hiring of chinese has expanded with evidence here.

I use that phrase with my children, princ elings.

Let's talk about two experts on jpmorgan.

Every day there is a new thing.

William black, and academic the banks left a hate.

His 2005 book is the best way to rob a bank is to own one was to be polite early.

He joins us on set today.

And bloomberg law, anyone who has talked anyone about this issue know to mankind.

Professor black, good morning.

What do we need to know right now about where we are in finding the bad guys?

You have said, we got to get the bad guys.

Who are they and are we anywhere near getting them?

What we emphasize, of course, is what everybody emphasizes in economics, and that is incentive structures.

The point is, we basically gutted effective banking supervision for 20 years, and we have alter aggressive executive compensation programs.

You combine those two things with an organization that is way too big to manage, and you're going to have widespread fraud and abuse in what jpmorgan would consider the periphery.

It is not clear.

It is very much the heart of the economic system.

Since the last time i spoke to you, has anything changed?

Well, the justice department still refuses to prosecute anybody that led the fraud that caused the crisis.

Jpmorgan my sound like the exception, but it's not.

The only criminal cases against two relatively minor folks, and it is for post-crisis events.

The real crime is that they reduced the bonus of jamie dimon by losing money.

You follow all of this, especially against jpmorgan.

I remember in 2009, jamie dimon was called obama's favorite banker.

What has happened since then and how did all of this come to pile on to him?

My cynical size, political response to overwhelming public pressure to appear like they're doing something on great reform.

It is also possible that this is a gambit by the government to get banks to expense increased in scope -- expenses on the legal side and thereby, put them in a position where they might be amenable to the idea of selling some assets or exiting lines of business getting smaller.

This might be an elegant way of ending too big to fail.

$6 billion was the headline yesterday.

What is the significance of jpmorgan admitting wrongdoing for future litigation?

It exposes them to potential witness on the civil side if they admit wrongdoing.

It was certainly open up the more liability -- in terms of financing.

Professor black, should we be going after other banks?

It is just jpmorgan, jpmorgan, jpmorgan, jpmorgan.

Would you like to see a broader set of banks involved?

They should go after all forms of illegality, but i would say something quite different.

Look at hsbc.

They would have been the perfect case to bring the criminal case that would begin unwinding the systemically dangerous institutions.

There simply too big to manage, too big to prosecute, et cetera, et cetera.

And given how you began the whole block with the potential attacks in syria and such, would they just -- with hsbc, the allegation is they deliberately aided and abetted iran innovating the sanctions with the goal of assisting the production of nuclear weapons.

Talk about a perfect case for the u.s. government to bring.

Of course, it would not have been a u.s. entity, but hsbc.

That was the full depth of how badly their justice department has fallen.

Lee pacchia, you look at all of these cases, is this likely to affect jpmorgan business?

Our customers pulling away when they see their bank, jpmorgan, on the front pages every single day?

What it is still the biggest bank in the country.

Things are treated the u.s. government as a business and nearly important international interest.

It is important see any of these cases has decided take the entity off the face of the earth.

At the same time, it is becoming increasingly expensive to be this big.

At a certain point, it will affect their operations.

Charles peabody mentioned, some cause for the entire industry.

Lee pacchia and professor black, thank you so much for joining us this morning.

Stick with us because of the next hour, our guest host will be mario gabelli.

I can't wait to talk to him.

Talking about the overall markets, specifically the big deal in his media industry.

And boston college football.

? we need a twitter question for thursday.

What is the next megadeal you would like to see?

Tweet us that.

We have got some top headlines for you this morning, starting with syria.

U.s. security planners are bracing for possible wave of computer attacks against companies in retaliation for the military strike against syria, all according to a person familiar with the planning as part of the preparations here, the nsa has tapped the computers of the lease turn hackers to gauge their ability to disrupt power grids and financial systems.

North korea says the u.s. is threatening a nuclear attack by flying b-52 bombers during military drills.

They have been staging more than a week of the lifter exercises and north korea says the use of the b-52s is a brazen nuclear threat.

U.s. declined to say if the bombers were actually used.

The use of sleeping pills increases as age and education levels rise according to a new study from the centers for disease control and prevention.

4.4% of adults with at least a high school degree took a sleep medication.

Just three percent of those who did not finish high school took a sleeping pill.

Use is greater among those older than 70. do you take them?

I take the natural stuff.

I do.

I take half a xanax.

We all go to bed about 4:30 in the afternoon -- speak for yourself.

It does get pretty challenging.

I took a look at markets.

I have a good chart for you.

I'm awake.

Click what happens to the market after u.s. strike in syria?

-- what happens to the market after a u.s. strike in syria?

This is 20 days before and after for the s&p, leading up to him before a u.s. military strike.

You can see a decline, the moment the military action takes place you see a rally.

The strongest one thing in the gulf war.

Stocks are not the only asset that sees this kind of reversal.

You see a rally in gold and then falls back after military strike.

Similar in oil.

I read three or four research knows today that are calling for a very deep slide in brent once the u.s. -- i would say that is a consensus.

If you look at what happened in 2011 when it off he was deposed, yet a very steep slide.

-- you had a very steep slide.

Five dollar geopolitical premium right now was said.

What have you read?

I've heard five dollars even before this happened with syria.

So you would go $10 total gekko i would say between $10 and $15. is the concern here syria gekko as you pointed out a number of times, not a major energy player, it is a disruption.

Especially with iraq.

Richard falkenrath giving us terrific perspectives.

How tight is a ran with syria?

Russia and iran are the two friends of syria.

Iran is the principal supplier of weapons -- not oil?

Not oil.

It is not a big consumer.

The most important relationship is with a third-party, has below.

That is the shiite party in southern lebanon, the most effective terrorist organization in the world.

It is directly supported by iran.

All of the weapons come to has below through damascus.

When mr.

Assad wakes up in the morning, does he look east to iran or west 11 on, north to russia?

When he looks abroad, outside of -- russia.

Russia is the more important one.

But who is his best friend?

Hezbollah.

Has below sort of bailed them out when the rebels were really gaining on the dash has below really bail them out when the rebels were gaining on them.

Hezbollah is very important force in lebanon and syria.

I want to keep tabs on the situation because the prospect of an imminent military strike here is receding a bit.

As we understand it, the u.k. and france favor waiting for the results of the united nations investigation into the alleged abuse of chemical weapons.

We will continue to bring you the very latest as the world watches the u.s. response to syria.

As the rest of care -- prepares for a potential retaliatory computer attack, companies need to take notice of their safeguards against terrorism.

New war technics coming up.

? this is "bloomberg surveillance." alix steel has some company news for us.

Verizon and vodafone, vodafone may sell its stake in verizon wireless to its partner for rising communication for 45% stake for about 100 $30 billion according to people familiar with the matter.

-- $130 billion according to people familiar with these matters.

Amazon taking a high-stakes legal battle to the supreme court for reporting they have hired olson to fight the taxation of shoppers in new york state.

A petition to the supreme court was filed last week, urging the justices to take on the case.

The u.k. gambling website has made -- named nokia's ceo as the head of microsoft.

He was given five to one odds at s the replacement to steve ballmer.

As we have been recording, bracing for possible wave of computer attacks against companies in retaliation for potential military strike against syria.

The battlefield has been brought back to to mystic shores.

Cyber break-ins have become more successful.

How can companies and government work together in the digital area?

It is a timely topic for richard falkenrath.

How far could this go, the hacking?

The searing electronic army trait.

These high-profile attacks against the new york times and twitter is either sympathetic to the regime or response by the regime.

They will keep this up as long as they can go.

It is important recognize this was not an especially damaging were sophisticated attack.

While the targets were high- profile, they basically had a socially engineered phishing attack against the no main -- domain.

They got an employee of the domain name company to provide login credentials and logged in and they changed the websites to which your times.com -- new yorktimes.com resides.

To resolve it into a numeric ip address.

It was routed to another site for which wasn't the new york times.

So a lot of people could not login to the new york times, had trouble with twitter.

What is the danger?

This is part of the new world.

Companies are collateral damage.

You're on your own to protect her own system.

In this case, i think this is the most interesting part, u.s. government is not without some instruments.

I suspect offenses cyber operations will be part of offense of airstrikes.

They will be simultaneous.

All the servers the searing electronic army is using, all of them will be targeted by u.s. offensive information.

What does that do for syria?

It could in principle shut off their internet.

I think we could -- this.

Internet could go dark before the explosion starts -- the syrian internet could go dark before explosions starts.

Let's expand this.

I was the just the syria and internet industry is -- small.

Isn't the real focus here on eastern europe and russia and the pacific rim?

The focus is there to the extent that is what we call the bulletproof servers.

That is where the grown-ups are.

The grownups could be anywhere in the world, but they need the server.

Those are typically in eastern europe and russia and, of course, china, the biggest of them all.

Those servers are beyond the reach of u.s. law enforcement.

We could and probably will target them directly with offensive information operations, but that is, in a way, an attack on russia.

What is my risk that mr.

Assad is going to get into my bank account where there is $428 right now?

Low, for you personally.

It is not zero for anyone, but it is low.

The 420 dollars matters because risk is a punctuality of probability and consequence.

If you were a big property, and internet provider, media company, bank, then it is different because the consequences of a preacher far hiler -- higher.

Is there anything meaningful they can do to prepare for this?

They need to look after their own i.t. systems and make sure their employees cannot respond to phishing e-mails.

They need to be careful about their vendors, the people who do things for them, which is a weak spot for many large companies.

Jpmorgan spends $200 million on data security.

What does the number need to be?

It varies by industry.

Banks are the highest.

Sometimes they will put her compliance cost into that figure.

In general, you take the total i.t. spend of the company and what we've seen is a range of 1% to five percent needs to be focused on information and data security.

If we put an airplane above syria with that dish thingy on the bottom of it, what do they listen for in syria?

Can you get me the pizza with the mozzarella?

What are they listening for?

First, the airplane with a dish is for combat operations and they can operate another airspace.

You're talking about electronic surveillance where we will attempt to ingest everything, every piece of data transmitted on any electronic media in syria . we will collect the data and someone else will analyze it to try to find the needle in the haystack that is actually useful and ignore all the pizza orders.

It is like the movies.

It is a whole new level.

Richard falkenrath, thank you for joining us on the new threat of cyber warfare two american companies.

My favorite portion of the show, -- we kept ample time.

Weak euro, strong u.s. dollar.

Major pairs moving on fed tapering feels.

Watch at 8:30 today.

Indian rupee, south korean yuan from emerging markets are getting pummeled but not all of them.

They're finding -- investors are looking for the weaker spots, looking at india and turkey -- but not korea.

There is real divergence there.

It says a lot about the view on the economies and policies.

One day can we have a vanilla currency report?

No.

commodity report.

Coming up, mario gabelli joins us with his top picks.

This is "bloomberg surveillance." ? this is "bloomberg surveillance." the united kingdom's vodafone.

They consider selling their stake in america's horizon bank -- verizon wireless.

And the indian the economy is in crisis.

We speak about the indian future democracy.

Good morning, everyone.

This is "bloomberg surveillance." i am tom keene live from our headquarters in new york.

Alix steel is in for scarlet fu.

Mario gabelli joins us, chief executive officer of gamco investors.

I will get you caught up with the morning briefing.

News to discuss out of germany.

Unemployment unexpectedly increased despite signs of a stronger economy.

In terms of economic data, a weekly report on an issue of jobless claims.

And we will get a second look at the second quarter.

It is supposed to be better.

Personal consumption and core pce is supposed to be due out at 8:30 a.m. 2% is the threshold.

That is why it is interesting to look at the personal consumption numbers.

9:45 a.m., we get the consumer comfort index.

Campbell soup after the bell.

Tom's favorite doughnut store, krispy kreme.

There is your morning briefing.

Alix, bring us some more companies news.

An internal spreadsheet has been found that link appointments to specific deals jp morgan has been pursuing in asia.

The justice department has joined the sec to see if they violated bribery laws.

American airlines in u.s. airways say their proposed merger is at risk.

A hearing on the matter is scheduled for tomorrow.

Capital one expands into energy.

The bank has hired an executive to oversee its energy banking office in houston.

The hires are part of a push to increase revenue outside of its consumer credit card lending business.

We have to talk about the news but an overnight.

Verizon said to be near talks to sell their 45% stake.

We are talking about $130 billion.

Joining us is the founder of moffett research.

Is this a good deal?

It is certainly a good deal for vodafone.

You are seeing that in the overnight action in vodafone shares.

It is probably good news for verizon as well.

It gives them much more dividend coverage.

You cannot get better than this on verizon.

Mario, you follow this for years.

You said this should have happened seven years ago.

What took so long?

It is a question of price.

How big is the ring you want?

, many flowers to i have to give you?

-- how many flowers to a have to give you?

They have got about $16 billion in capex.

45% of that is owned by vodafone for a long period of time.

How do we make love?

You do that by giving them tax efficiency.

The tax ramifications of this action, do they get in the way?

Verizon says they can do this deal efficiently.

But it is not the verizon tax problem, it is vodafone.

They are confident in their ability to avoid taxes.

It will determine if this happens in the $100 billion range if they are more confident.

It is interesting to talk about some of the synergy here.

The backdrop is interest rates are rising.

That could be the impetus of the tie -- for the timing of this deal.

You are talking about potentially $60 billion in debt.

Each percentage point of additional interest is going to cost you $600 million.

That is real money and there is urgency to get this done before interest rates rise anymore.

-- any more.

They have some privileges, but they do not control the cash flow.

There is a give-and-take.

There are a lot of ways to structure the deal.

Is it going to be 50-50 cash stocks or some other formula we have not thought about?

Is this ben bernanke helping out?

These guys are in a panic.

Rates are going up.

Let's get this deal done.

They have been romancing each other for a long time.

There is no synergy to verizon.

They on it and operate it.

What is vodafone going to do next with the money?

Whether it is $100 billion or $130 billion, what are they going to do with the money?

When are they going to make a baby?

You have seen verizon stocks trade up every time this is mentioned regardless of the price.

I would say that is a tribute to ben bernanke.

This is financial engineering to some extent.

The market has gotten focused to the idea that at any price this is credence to earnings and the stock should go up.

If verizon pays more than the stake is worth, verizon stock can go down.

Interest rates are so low that anything looks good.

Mario gabelli, here is a research note on every point of interest.

A $600 million delta.

Add 600 million to the verizon- vodafone transaction.

They have to get this done before larry summers or janet yellin raise interest rates.

We all $16 trillion.

Our deficit is $900 billion.

Imagine what it does to the u.s. economy if you want to extrapolate.

That is pre-tax.

$600 million on $160 billion is not chump change.

That is nice to say that is the motivating factor.

There are other elements.

They have always wanted to do it.

This is a really valuable assets.

It is the best run wireless operator in the u.s. and may be the best wireless operator in the world.

Everything comes down to price.

It is not crazy to see why vodafone wants to be a seller.

Unit growth is under 2.5%. you are looking at one company that is the seller at the price and one company that is the buyer.

You brought up competitiveness.

Where does it go from here?

At&t and verizon could make a joint offer for vodafone.

At&t has been looking elsewhere in the world to acquire assets.

Europe looks like the most attractive to them.

At&t has some of the same motivations and they would say their strategy is to go look elsewhere.

You can see them looking at vodafone as a possibility.

This has been fabulous.

Craig moffett, and you so much.

Big story.

Verizon and vodafone looking at a megadeal.

? good morning, everyone.

"bloomberg surveillance." i am tom keene.

Read barron's to get stock picks.

We thought we would have some fun with three quick stock picks.

They carve greater thanniche -- they carve out niche markets.

They had a deal they did a year- and-a-half ago.

The ftc is holding it up.

At some point, they will have to sell it.

9 they are paint.

I used to use their paint.

I own it because they have great cash flow.

Great new products in the pipeline.

It is also a certain play on the housing market in the u.s. and houston-based company closed at 15 yesterday.

A company is trading at $27. here is another company, which g.e. bought.

They have had a lot of management mishaps.

Foreign corrupt practices act.

That is background noise.

They have $18 billion in revenues.

$13 billion is really good stock.

It is an example of what the market will pay for them.

They have $5 billion they are working out of.

U.s. cellular.

Does vodafone have to sell their part to u.s. cellular?

It is a company that is a sitting duck.

In a world of consolidation -- the family that controls it has never been good for shareholders.

Are you optimistic about equities as we go to the end of the year?

When you start a firm in 1977, which i did, and everyone is saying the debt of equity, i am is glad bloomberg bought to business week.

Mario gabelli with three stock ideas.

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

With us for the entire hour is mario gabelli/ . the u.k. and france want to wait for the results of a united nations investigation on the alleged use by syria for chemical weapons.

France said military action requires proof of chemical weapons use.

A surprise rise in german unemployment.

The number of people out of work increased by 7000. economists were looking for the number to fall 5000. the u.s. and switzerland to settle the dispute over u.s. tax evasion.

Switzerland will be categorized based on a in a variety of criteria.

It is the result of the teen years of negotiations.

Those are your a -- two years of negotiations.

It was one of the most promising brics.

The indian rupee is in crisis.

Companies aren't banking -- are yanking investments.

Samson night, the luggage company -- samsonite , luggage company, has 5.78% invested in india.

The expansion seems to be halted.

I want to congratulate you for your coverage of the rupee.

You are out front.

It is a flashpoint for what is happening in the nation.

India is not china.

A professor at columbia university.

That barely describes his heritage in trade academics in his native india.

He is the author of why growth matters, a book on the challenges india faces.

He is here to discuss his india.

What is different this time about the tumult and the crisis in india?

The current government did not maintain the pace at which reforms are occurring.

The revenues have not been increasing.

That related to the growth of the economy.

Is it part of an emerging market slowdown?

It is entirely internal in my opinion.

An indian problem.

The government went on a holiday on reforms instead of waking up now.

The result was the revenue intake has been slowing down.

Right now, the real problem is , the current government is doing more social spending.

They are getting ready for the election.

The concern is that it will weigh on the deficit.

If you always -- already have inflation, this will make it worse.

The prime minister is an economist.

An old friend of mine from college days in cambridge.

I am sure he understands it, but he cannot do anything about it.

We see a man from the university of chicago go home.

What is the relationship of all of these elites with the people of india?

Is the government disconnected from the people?

The party is more important than who the prime minister or president is.

All of the action is at the level of ghandi and her sons.

They are not understanding is this will cost them the vote.

If they have inflation breaking out in a much bigger way, it hurts the middle class.

Risking the vote is going to definitely hurt the poor.

You've talked about this rolling over into other emerging markets.

Or the potential the developed world.

There are some companies exposed to india around the globe.

If there is a real economic crisis, what is the spillover affect on the rest of the world?

The rest of the world might benefit as people begin to see this not as an area where you want to invest.

They will be looking for other locations, which is the usual story.

Mario, you want to be multinational, or do you stay in the u.s.? the way we did it until 1989 was to go visit companies and countries to decide whether to invest in them.

We are looking at our comfort level.

If india has to consume something, we will have to find a company that sells booze to the rest of the world.

It could be in the united states.

The same thing in regard to agriculture.

The legal and cultural dynamics.

Mario gabelli with us.

He will continue.

The book is why growth matters.

We are also watching syria.

The prospect of an imminent military strike.

We will check in next.

? this is "bloomberg surveillance." i am sara eisen with tom keene.

Alix has some company news at this hour.

Fast food workers plan to walk off of the job to put pressure on mcdonald's to raise wages.

The non-union workers are demanding a raise in wages.

Northup is buying the defense unit of qantas.

The move helps northop boost revenues.

Seaworld shares hit a new low, dropping 6.5%. seaworld has moved to aggressively lower ticket prices.

Ticket prices fell 9% in the last quarter.

They are lowering ticket prices.

We can go to sea world.

Who does not s doeshamoo -- who does not love shamu.

Newspapers splitting up.

Television stations coming together.

Who is a good for?

It is good for mario gabelli, who launched media general.

The latest tv deal.

We are curious.

Where is your cablevision deal?

65 million households have cable.

The smaller companies do not have the buying power.

The cable business is dominant in the new york market.

Time warner has 1.5 million.

My goal is to migrate back into another company.

Are they running out of time to get this deal done?

The stock is $18. you need to have buying power.

You need to have size.

Are you advocating monopoly?

No, because there are a lot of options.

Google is coming in with cable assets.

They are doing it in three or four markets.

There are a lot of alternatives.

How does cable span of the alternatives?

-- spinoff the alternatives?

Speed is the issue.

Should you pay more because you are pending -- using mourned?

Can you do -- should you pay more because you are using more?

Are they the winners because they have the infrastructure?

30 years ago, it was content.

They want it now.

Speed is what matters.

How to do it at 2:00 in the morning if you are looking for a netflix download.

? espn and fox are coming out to try to raise your bill in terms of sports.

How does that work?

Jimmy dolan said never say never.

How many tv stations would you have to buy if you could go a al -- a la carte?

Within the context thea la carte, do i want to watch -- a la carte, do i want to watch x,y, and z and pay for it?

It talk -- cost me a lot of money to go to a baseball game.

Is the deal realistic?

They have done a phenomenal job.

He has good scale.

It is logical someone would want to partner up with that if they have more content.

Paramount is owned by viacom.

Colombia is owned by sony.

World war z and star trek, they are doing a two-fer.

Who has time to see bill t. movies in one day?

-- see two movies in one day?

The indian rupee is having a good day for a change, up more than 3%. good morning, everyone.

"bloomberg surveillance." wonderful videos out bloomberg.com.

-- wonderful videos out of bloomberg.com.

Commodity does not apply to where i am at the moment.

Thank you.

Glad we got that straight.

Quality interviews here on bloomberg.

The subject is syria.

The u.k. and france are saying they are in favor of waiting for the united nations investigation into the use of chemical weapons.

We need to go to why into a cult -- ryan chilcote th.

What can we expect to hear from lawmakers in the u.k. today?

What we can expect this to get a healthy debate on syria and a vote at the end of that debate.

We will not get a vote that will into with the prime minister getting permission to strike and syria using the military.

That is what the prime minister was hoping for, but that will not happen today.

He says he will come back to parliament when he does want to have military action.

We will get a sense of if this is a pickup in the governments's plan, or if there is heated resistance to -- government's plan, or if there is heated resistance.

What about the united states?

What is the latest in communication between the u.s. and u.k.? this will take the u.s. off guard.

The idea was this was a done deal and he would get the support from the labor party and from his own party.

That has changed.

That is why the british prime minister changed his tune.

I was talking to a member of the opposition party and he says, our opposition is to fold.

We -- twofold.

He was to see the evidence.

He wants to make sure the evidence is made public.

In 2003, the invasion of iraq looms large.

People want this to be a public discussion before military action is taken.

Interesting to see how that is affecting the political debate.

Thank you for the update outside british parliament.

The market votes every day.

Is syria a distraction or does it link to how you and your team look forward for the rest of the year?

There is no question the middle east has been a problem.

We can go back to 1948 or 1800 years ago.

Oil prices at $110 a barrel.

It does have an impact.

It takes money out of the consumers' pocket.

If you fill up, that has a negative offense.

How long do prices have to stay that high?

We had a rest at the beginning of the year.

If you make $50,000, 2% came out to pay for social security.

That is $20 a week if you are making $50,000. if you fill up your car and you are paying an extra 40 cents, that is a big number.

Do we need a correction?

Do we need a correction in the market?

Do you wish we could get a pause to get the theater market up?

Markets go up -- do you wish we could hit a pause to get the markets to go up?

This is wonderful.

This is the pre-market system.

When a look at companies over the next five years, will they maintain cash flow?

Why did warren buffett go up and buy heinz?

Did you hear him say over the next five years?

Over the next five years.

So calm, cool, and collected.

Two and 20. we are going to talk to you about automobiles.

We will get you to forward with an interview.

? today's bond market update was brought to you by pioneer investments.

Good morning, everyone.

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

In the loop, betty liu with a show today.

Good morning.

What do you have today?

A congressman from virginia.

He is on the house armed services committee.

There are some members of congress that are bad about any possible plan of attack on syria without congressional approval.

He has led a group of lawmakers.

116 have signed a letter to the president.

He has led the charge.

He will be on our program to say why he insists the president get congressional approval before any action against syria.

Morning movers.

Never a dull moment.

You have the deal of the day.

We are talking about verizon -vodafone.

Here are the standouts point.

We talked to an analyst that said this is a good deal.

Second, it is all about interest rates.

Verizon needs to borrow $60 billion from multiple banks.

3, you heard craig say it will be as much as 50 cents per share.

Also, these companies need to grow.

That is the backdrop behind this deal.

Is the banner constructive consolidation?

Also, where are you going to find the growth?

T-mobile and metro pcs merging in the u.s. someone was adamant that africa was vodafone's future.

Some photo is making news today.

Working to clear debris in the search for survivors.

Two 3 story residential buildings collapsed.

At least 11 people were killed in india.

Bitchy buildings, part of a governments -- a flash month to let -- to commemorate the 50th anniversary of the march on washington.

The project was launched to honor the late dr.

Martin luther king.

We also have spain painted red.

20,000 people splattered 130 tons of ripe tomatoes.

It was a tomato fight.

Why would you waste the food.

All you need is constant.

This was in spain.

That seems like an enormous waste of food.

Coming up, a conversation from ford on "bloomberg surveillance ? this is "bloomberg surveillance." i am sara eisen with tom keene.

Blogs is mario gabelli, the founder and ceo of gamco investors.

Alix has some company news from the files of bloomberg west.

The retail price of a con sole -- console was cut by $50. it will face challenges from microsoft's xbox.

The financial times reports that amazon has hired ted olson to fight taxation.

Olson is one of washington, d.c.'s most prominent lawyers.

A u.k. gambling web site has named the nokia ceo as the favorite to replace ballmer.

That is today's company news from the files of bloomberg west.

If larry summers loses, maybe can go run microsoft.

We are going to talk about the choice now.

Not all negative news.

Ford is moving production of the ford fusion.

The ford motor company chief operating officer with matt miller.

He has worn just about every hat there is to wear at this company.

Some say may be the final had.

Let me ask about this new production.

You are moving diffuse and production and doing a lot of them to this flat rock, mi plant.

There is a lot of consumer demand for our new fusion.

We have production in mexico as well.

We have who have 1400 jobs.

It is evidence that our plant is driving growth in the country -- the company.

I was talking with toyota about their camry.

Rusion has -- fusion has taken a huge bite out of camry.

Why is this car such a huge success?

Our share is up significantly.

It is growing in importance trend markets.

What is driving it is design, the great fuel leak timing, -- the great fuel economy.

It is an important segment.

A lot of people land in that segment first.

We are pleased at where our business is surging.

You are the chief operating officer, so i guess the buck stops with you.

We are absolutely committed to make sure -- to making sure we give our customers the best product.

Our launch here is going extremely well.

The fusions coming out of mexico are excellent.

We have a great work force here.

We are excited to get these vehicles out to our customers.

You hear all the noise and production.

A fusion rolls by and a mustang rolls by on the same line.

Are you thinking of bringing anything else to flat rock?

We want to make sure we are responsive to market demand.

We have married that to a factoring response.

Down the road, we produce our focus gas and focus electric vehicles.

Wherever consumer demand goals, we can react quickly.

It is a matter of being as efficiently as possible and bring greater value to the customers.

You recently lowered the miles per gallon rating you announced to consumers.

There may be an issue with the epa test.

What is the issue?

How he is miles per gallon?

How he is communicating the right figures to -- key is committed can the right figures to consumers to embalm -- to consumers?

The mileage is sensitive to driving conditions and driving styles.

We some feedback from consumers.

We acted proactively to make sure we address the the customer satisfaction issue.

We will continue to work proactively with the epa to improve that.

I like the five leader v- 8. that would be my engine of choice.

-- 5 liter v-8. interestingly, our share of the hybrid market has quadrupled because of by noon -- our new c-max.

We have quadrupled our market share of the electric vehicles.

We are a strong number two in the marketplace.

It is all about consumer demand.

Consumers want these products.

We are in a position to provide them.

It is all about the power of choice.

When a consumer comes into our showroom, we have the model and the powertrain they want.

I appreciate your time.

Big investment.

You can hear all of the noise.

They have added 1400 jobs.

Sara, back to you.

Matt miller joining us from a busy ford factory.

That is matt miller reporting from blackrock -- flat rock.

Talk about what is moving ford right now.

Alix, us started.

Bank of america saying maybe at&t and verizon will team up to buy vodafone.

Mario gabelli, do you think that is attractive?

If they sell it for a 80 billion pounds, they are going to by italy.

If they have an old-fashioned one on one, that is how it works.

The economy.

We have gdp.

A rich report.

We will dive into that.

I am fascinated by the states of the american consumer.

It is supposed to rise above 2%. in the labor day weekend, that is the biggest mystery.

Is the consumer flat on their back?

I will take this opportunity to answer our twitter question.

What is the next megadeal you would like to see?

Acquisition of the jefferies group by jp morgan.

I would like to see officemax and best buest -- buy to challenge amazon.

Let's finish a thought.

Can you buy amazon with lack of profits and promises for the future?

This is not complicated.

You figure out what bezos is going to do.

The generic answer is yes.

That is not a complicated investment decision.

10 seconds.

Are you going to buy a newspaper?

We have an interest in the data and the ability to pay on a pay wall.

In the loop is next.

?

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

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