Waiting on the ECB: Surveillance (09/04)

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Sept. 4 (Bloomberg) -- Full episode of "Bloomberg Surveillance." Guests: Atul Lele, Eswar Prasad, Rick Heitzmann, Gregory Ballard, Arun Alagappan and Ken Fuchs. (Source: Bloomberg)

This is bloomberg "surveillance." president obama faces challenges on two france.

He and david cameron declared they will not be cowed by islamic militants.

Can they trust putin's plan for peace in ukraine?

The dollar strengthens and global stocks fall before the central bank's decision.

Can you work out too much?

Questions about crossfit.

Good morning.

This is bloomberg "surveillance," live from our world headquarters in new york.

Thursday, september 4, i am scarlet fu.

Joining me, adam johnson and brendan greeley.

Tom keene is off.

Tom keene is looking out for the little one.

Wanting her to school.

@bsurveillance -- a tender side of tom keene.

I sent my two daughters to school yesterday.

One of them was so excited, the other was too cool for school.

Sounds about right.

It is a morning brief.

Action in japan, the bank of japan maintained record stimulus.

They have a growth problem, they don't have any.

Trying to stimulate growth and inflation.

More details on that later.

In germany, factory orders surging the most in a year.

Germany is doing well, the u.s. is doing well.

The rest of europe and japan -- stagnation.

8:15, adp implement changes ahead of jobs on friday.

8:30, initial jobless claims.

10:00 -- ism non manufacturing.

A lot of stuff.

Joining us from bloomberg businessweek.

I can't trade on any of this.

You can't trade your own attacks.

Earnings, joy global, mining.

Quicksilver, for surfers.

One thing, green bay at seattle.

Football kicks off.

I cannot believe it is september.

Do you have your fantasy league lined up?

I need help.

We spent all summer talking about football.

Kickball.

You give us the morning brief, let's get your data check.

Futures, we saw a pullback earlier and we have come back around.

A slight move higher in s&p futures, up by 2 points.

10 year yield at 2.4%, all the lows of the last couple days.

Euro, little change, stuck at the 1.31 level.

Crude oil 95.21. party of stockpiles.

We have scoured the papers and the web, a skepticism over vladimir putin's peace plan for ukraine.

A seven-point plan, the gist of it calls for a troop pullback on both sides and urges prisoner swaps.

This will be discussed tomorrow morning at a meeting between rebels and the ukrainian government.

Henry meyer in moscow had a piece, it is clear that putin will not accept anything other than a federal system for ukraine.

It is hard to see how any progress can be made.

The shadow war will continue.

How do you even define a federal system for ukraine?

Nouvou eau ukraine, it's a little bizarre.

The wording about how we are going to have a -- permanent cease-fire.

A cease-fire regime, russia was not in ukraine, how can it actually -- it was not party to the conflict.

In the future, we should only use air quotes when we talk about a federal system.

The back-and-forth is full of air quotes.

Ryan chilcote is on the ground in wales for the nato summit.

Banks falling short of the easy to sell assets a must-have on their balance sheet to avoid another credit crisis.

Falling short by $100 billion of the $2.5 trillion they must have to meet liquidity standards.

It is about how can we prevent the next financial crisis.

I feel like this is bait and switch.

We had tangible common equity ratios, we had all these different ratios.

Several years ago they got raise.

And the banks were able to meet them.

Then they ran the stress test about 15 months ago.

I think it was all but citibank, 33 banks, only cynics fail -- only citibank failed.

Moving goalposts.

Allowing regulators to exercise judgment is new.

That is a change in the last five years.

We are relying on the fed and the fdic to look at the situation and make a decision.

That makes us uncomfortable.

We like laws and to be able to negotiate.

Should we take comfort in that, these guys are more involved?

Should we be concerned that they are moving the goalposts?

If you were to leave it to congress, nothing would get done.

I'm fine with somebody in washington ratcheting up slowly -- somebody is getting work done on that front.

Talk about getting stuff done, goldman sachs getting an expanded role in the alibaba i feel.

-- alibaba ipo.

The stabilization agent, in charge of overseeing early trading.

Investment banks wanted this role because of the prestige and the fees that go along with it.

This is before the alibaba ipo, which could be the biggest in history.

Alibaba -- a year ago, there were a few people, there is this really big company in china.

Now it is the biggest ipo in history.

I think of alibaba as a suckling pig with an apple and is mouth.

Everybody is saying maybe i should not get in because there will not be money coming to my ipo.

We'll keeopp an eye on it.

Mia will join us to talk about internet companies from china.

It is a different market over there.

Baidu, alibaba, tencent.

Are they bigger than amazon, google, ebay?

There are more internet users in china than there are americans.

That is a great statistic.

There are more china mobile subscribers and then there are americans.

As nato members are meeting in wales, president obama and david cameron write a joint letter in "the times of london." "those who want to adopt an isolationist approach misunderstand the nature of security." ryan chilcote is covering the meeting.

How are ministers reacting to the session that clearly reaches beyond the obvious of russia-ukraine?

Yeah.

President poroshenko is due to speak in a couple hours.

Most of the world leaders, 60 world leaders here, are scratching their head after what they heard yesterday.

Peace deal, no peace deal.

Then-president putin has a peace plan.

Looking for clarity from him.

There's a lot on the line.

The eu says it wants to impose sanctions against russia by tomorrow.

Do they do that or do they not?

We are as confused, they are as confused as we are.

One of the goals that president obama set for this meeting was to urge european countries to spend more to meet the need a minimum.

Is there any indication they are open to that?

Not a lot.

No.

i think nato is setting the bar a little lower in fact.

The british prime minister, obama, the secretary-general, and they are going to be talking about how 2% is a good target.

Countries who spend at least 2% of the gdp on defense -- it is becoming more dangerous world.

Nato has a new definition.

What they are really trying to accomplish, i think, over the last .5 years since they have the last nato meeting in the u.k. when the soviet union had just collapsed.

They are saying ok, everybody started betting on welfare than.

Start cutting back on that and start spending more on defense.

Threats are back with russia and ukraine.

Obviously, the islamic state in syria and iraq as well.

Look behind me, the companies want to get in as well.

That is a model -- i am a model -- i am on the 18th hole of the golf course, this is where the world leaders are meeting.

A model of the f-35 lockheed martin wants nato countries to buy.

Not every day you see an f-35 on a golf course.

General dynamics has a tank.

The message here, it is a more dangerous world and you need your weapons please buy them.

No playing on the models, we will talk to you in the next hour.

Our guest host for the hour, cornell university professor, author of "the dollar trap," and former chief of the china desk at the imf.

Giving us the set up for the nato summit, i need to ask you, does the global turmoil mean the imf will respond to this by cutting economic forecasts?

What is the effect on the global economy?

The economic recovery, most of the economies except the u.s., are still fragile and the geopolitical uncertainty as to the lack of confidence.

They sent a warning signal to ukraine that they will need macro economic assistance.

There is no notion of the imf stepping and anywhere else.

And the emerging markets and the things are still bubbling along.

The geopolitical uncertainty is not having an effect.

The emerging markets are concerned about monetary policy in the u.s. and other advanced economies.

Do you agree with that?

100%. the fragility to monetary policy and also the fragility in europe.

Which was just at the early stages of stabilization earlier this year.

It is called into question.

Data is coinciding with the geopolitical risk rising.

Seemed like europe was doing better a year ago than it is doing now.

One big change was the fact that policy makers did not really follow through.

The initial stages of monetary policy, which came through, there was a large gap at the start of this year will we did not see a lot.

Hopefully we will see more over the coming months.

On top of that, fiscal reforms were done in aps male fashion.

You saw fiscal reforms in areas like italy but not france.

It was a gap in policy and the disparity across aussie.

The follow-up left a lot to be desired.

Our guest hosts will be here for the entire hour.

Some company news headlines.

Tesla will build its first battery geek factory in nevada -- battery giga factory in nevada.

No word on whether elon musk will be attending the rest conference announcement today.

Expected to create 65 hundred jobs.

Home depot hiring security professionals after a data breach.

Enlisting semaantyc.

Home depot is working with other firms on the matter.

The company has not confirmed that an intrusion happened.

Verizon hit with a fine, $7.5 million.

Verizon failed to tell 2 million customers they could withhold personal information from arthur.

It is the fcc's biggest fine of a phone company.

Your information does not have to be out there, you can opt out.

Thinking about home depot and target, when i think i know that jpmorgan has information on me.

What i buy something at home depot, i am not sure that is part of the implicit contract.

I am buying a hammer, do i know they are keeping my data?

You do not know who has your data.

I want the hammer, i want the data, you can have my money.

Ecb plans to buy $53 million of asset-backed bonds.

Is this going to work?

Is the ecb running out of options?

Atul lele, rated number one by institutional investor magazine as top global strategist.

You are watching bloomberg "surveillance," streamline your tablet, phone, and bloomberg.com.

? coming up, later this morning -- adam silver, newly minted nba commissioner will be joining "market makers." stephanie ruhle will be speaking with adam.

He made bold moves in relation to the l.a. clippers and the former owner.

Adam silver at 10:00 a.m. this is bloomberg "surveillance," i am scarlet fu with adam johnson and brendan greeley.

Tom keene is off today.

Unprecedented.

It is so rare for this man to take a day off when it is not christmas and new year's. for family.

Europe has a growth problem, gdp is flat.

It also has a jobs problem, unemployment is still at 11.5 percent.

The question is whether mario draghi will present a viable solution.

Atul lele of deltec was institutional investor's number one global rank strategist.

How might mr.

Draghi's new bond buying program might translate translate on the ground?

There is a purchase program of asset-backed securities.

That really removes the liquidity from the banking system.

It takes away the systemic importance of the banking system and getting the money from the ecb to the consumer.

It is a more direct route than we are seeing.

When money goes into the banking system, if the ecb was to be involved in another way, you would not know that it was going to flow through.

It goes into asset-backed securities, they are backed by assets like autos -- enables base to make -- it enables banks to make loans because a gets loans off the balance sheet and they can make more.

A consumer can buy a car if the asset-backed market is more liquid and there is more demand.

The status of the market is important to providing liquidity to the consumer.

It is a more direct route.

In that sense, it should go somewhere towards stabilizing growth.

European banks have been saying they are not making loans because there are not good loans to make.

It is partially true.

The ecb published a survey on the supply and demand of credit.

Up until six months ago, demand for credit, from consumers and businesses, was very low.

In the last six months, we have seen that stabilize.

This would not have done anything a year ago but my work now?

Absolutely.

In a credit driven economy, demand for credit matters.

It is very different from the scenario in the financial crisis, where it was a supply of credit problem.

Eswar, weigh in.

It could.

So far, mario draghi has managed to effectively use monetary policy without doing anything.

By just saying he will do whatever it takes.

That was enough to stabilize the eurozone.

Even the core parts of the eurozone, germany is slowing down.

In terms of structural reforms, there was some action a year ago, that kind of stalled.

Monetary policy is the only game in town.

Mario draghi has to show his cards.

This is a good time for the ecb to be acting.

Whether this is going to get traction is hard to say.

If you don't have the other parts of the macroeconomy working well, as her policy is not going to be that effective.

The ecb and mario draghi have their moment in the sun.

7:45, the breaking announcement from the ecb and that the news conference at 8:30. plenty of events for investors to react to.

A heads up on the next hour of bloomberg "surveillance," rick of first mark r join us.

-- will join us.

We'll be right back.

? this is bloomberg "surveillance," i am scarlet fu with adam johnson and brendan greeley.

Tom keene is off.

Adam has our top headlines.

Police in ferguson, missouri under federal scrutiny.

The justice department will open a civil rights inquiry.

Last month's fatal police shooting of an unarmed black teenager set off several nights of violence.

The death toll in africa's ebola outbreak tops 1900 people, more than all previous outlooks combined.

The virus has sickened 3500 others.

Johnson & johnson says it is fast tracking work on a vaccine.

The nfl season, yeah, baby, a kicks off tonight.

The seahawks will host the green bay packers.

Aaron rodgers leading the cheeseheads of green bay.

Last season's games averaged 1800 viewers.

Of the 35 most-watched television shows last fall, 34 were nfl games.

Those are the top headlines.

Our twitter question, how much time and money do you spend on your fantasy league, tweet us @bsurveillance.

Besides "too much." we need you to quantify.

Brendan, get us started on the morning must hurry.

-- must read.

"the economist" put a fine point on something i have been trying to define.

The democratic heart he feels exhausted, convinced of the need for immigration reform, climate change, and benefits for the middle class, but unable to imagine a political pathway.

Watching washington, i do not know what democrats want.

I know what republicans want.

I think that is a problem for them.

Do you think we have an idea of what democrats do not want?

Harry reid's strategy has been effective.

But his strategy has been oh, no, let's not do that.

Also just to blame republicans for returning anything from happening.

Republicans are playing spoiler and democrats are saying they are spoilers.

The pressure is on hillary clinton, the presumed next nominee.

There are some hints.

Did you read the book?

I need something lighter before bedtime.

Tension and iraq, ukraine, syria.

The dollar remains a safe bet.

We will discuss, next.

? is is bloomberg "surveillance," scarlet fu with adam johnson and brendan greeley.

Tom keene is off, taking a seven year old to school as new york city's schools open.

Get us started.

Ready?

As tom would say, flat, flat, flat.

S&p futures up.

The 10 year yield is up one basis point.

2.41. euro flat, 1.31, plan your european trip now.

Finally, i want to talk about crude.

Down $.40 cents.

Yesterday, crude in europe was up over two dollars at one point.

That is because the thought was that a thawing of -- tension.

Meant trade would resume.

It is kind of the opposite.

Plenty of supply, especially in the u.s. that keeps oil on the lower end.

We will monitor the markets for you.

Fighting rages on in ukraine as putin and poroshenko posture for peace.

As the pair gets ready to meet on a cease-fire turned peace plan.

Investors are piling into a safe haven.

Eswar prasad, the dollar remains king.

Is it because of what it reflects?

The strength of the u.s. economy, or because of what it is not?

Both factors are in the same direction.

The u.s. economy is the strongest of the lot.

Other major currencies, the euro zone growth seems to have stalled.

Japan is not doing great.

Economic areas will rely on monetary policy.

The u.s. is on an upswing and the fed is talking about tightening.

The other issue is the short and long term, when there is political or economic uncertainty around the world, people want safety.

The u.s. dollar is still the best bet as a safe haven.

Money is coming in for short-term reasons as well as over the long term.

The dollar is going to remain very strong.

It is a safe haven and remains unparalleled.

In an essay on this, you write that this is not just about the economic fundamentals, but the constitutional fundamentals of the u.s. an interesting argument.

You are saying that regardless of what is going on in the u.s. economy, there is trust that here is a system where justice reigns.

The paradox is that the global financial crisis started here and the financial systems seem to be coming apart.

Where do people come during the crisis?

They came to the u.s.. i think the chinese renminbi is likely to become a reserve currency.

Opening up the economy and the capital account.

Getting a more flexible currency . but will people trust china?

That's what it takes to be a safe haven.

Unless china pursues legal and political reforms, they've shown no indication of moving in that direction, china will not be seen as a safe haven.

You seem skeptical that the current attempt to combat corruption in china will work.

I think it is moving along the light lines.

-- along the right lines.

It is getting tied into political dynamics.

There are concerns that president xi is targeting those who are not in his wing of the party.

It builds broader support for the economic reforms.

There is a sense in a country like china that the benefits of reforms go not to the masses but to the economic and political elite.

The fight against corruption is important, whether it is being executed the right way is a different story.

Short-term pain for the economy.

A long-term chart of the chinese room in -- a long-term chart of the chinese renminbi.

Is this sustainable?

To the extent that reforms continue to occur.

China is still heavily reliant on the u.s. from a trade perspective, a capital perspective.

If you paid your currency -- ex-im -- it's pegged to the dollar and can only move so much per day.

We can look at china to an extent that we also have to look back at the u.s. talk about currencies accusing each other of currency wars?

In asia, emerging markets are getting inflows from the u.s. and other advanced economy countries because yields are low.

What are they are doing with the money is recycling it back into the advanced economy.

India is concerned that capital might start flowing out.

They've built up about $60 billion of new reserves over the last year.

Where's a lot of the money going?

Back to the advanced economies.

It is unraveling what a country like japan is trying to do.

Japan wants to the yen to fall come about money is coming back into the yen.

People are searching for a safe haven.

It will create currency tensions.

The europeans are talking about trying to drive down the volume the currency because that is the only way to get out of the hole they are in.

Tensions beneath the surface will boil over.

This summer we saw an announcement by the brics that they were going to open their own imf, funded by mostly chinese money.

Do you see that as a way to gain trust in chinese currency?

D.c. that as an effective tool?

The brics have been talking about getting out of the international financial situation where they feel they do not have enough of a say.

There was a lot of talk but finally they actually put money on the table, that's a game changer.

What i think that will do is kick start reforms in a place like the imf.

The reality is that india, china, and russia do not have any comment economic interests except insofar as they want to catalyze economic governance changes at the global level.

I think it will help him broader reforms but does india want to be in a position where he needs a signoff from china and russia to get money?

Probably not.

With that change the way you invest if such an institution comes along?

To an extent.

The bigger point is where global capital flows are.

We have got to look at those emerging markets and see which economies are taking advantage of the capital inflows they are getting and the upswing of growth to restructure their economy.

In which economies are keeping that capital within their economy.

Which economies are we seeing the capital flow out into safe havens like the japanese yen and the u.s. dollar?

The capital flows into emerging economies is the single biggest issue that is going to impact emerging markets.

Atul lele and eswar prasad.

The fed says there is slack in that job market but data shows we have a labor shortage.

This is bloomberg "surveillance." ? our twitter question of the day, how much time and many do you spend on your fantasy league?

The nfl season kicks off today in seattle.

How much time do you spend?

Sweet us, @bsurveillance.

Tom keene has taken the day off to do research.

This is bloomberg "surveillance," tom keene is off.

We're going to go to kansas, the democratic candidates for the u.s. senate steps aside.

Chad taylor decides not to challenge three term republican pat roberts.

No word about a replacement.

Taylor's withdrawal could help campaign of the independent candidate.

France says it will not deliver a worship russia ordered.

The highly debated vessel is part of the $1.7 billion weapons sale program.

French officials call the situation in ukraine serious and say russia's actions will undermine security in europe.

It has been under debate for three months.

The death toll in africa's ebola outbreak tops 1900 people, or than all previous outbreaks combined.

The virus has sickened 30 500 others.

Johnson & johnson is fast tracking a disease.

The scariest number is that it could affect as many as 20,000 people.

Unfathomable number.

If you can get treatment, which in large cases involves ivs to hydrate your body, you have a better than 50% chance of survival.

In africa, it is hard to get iv fluid and sanitary conditions.

There's a fair patient in the u.s. with ebola.

I don't know if the doctor was transported to atlanta.

A u.s. citizen in liberia.

Job growth has been lackluster for so long.

A sharp turn with our single best chart on the coming labor shortage.

A unique point in history, mature economies are seeing a decline in their working age population.

People who are aged between 15 years old and 64 years old.

This goes back to 1979. growth was once a robust 1.2%. north america is the only one where the working age population is still increasing, .25%. because immigration.

It does not make sense.

Mature europe, mr.

Asia -- japan and korea -- in the red.

Working age population is shrinking.

Atul, you've done a staggering amount of work on labor productivity, what do you make of this?

Interesting chart at an interesting time.

We are seeing a structural decline in the workforce.

At the same time, we are starting to see cyclically wages growing.

Early signs of the wage inflection.

These cycles do not last six months or 12 months.

They are three years, four years, or five years.

That is a problem the fed will have to deal with in the coming weeks and months.

Weeks, months, or years?

It will be months.

We're seeing wage growth increase.

Companies who are proposing to increase wages.

There's a clear nine-month leading indicator that that provides to employment cost index moving up.

Over the next six months to nine months we are going to start to see the employment cost index move up.

Eswar prasad at cornell university, how do you interpret this, it is structural across europe and asia?

The question is how you deal with it.

The long-term implication for advanced economies is how do you get productivity growth of.

With a declining labor force, the only way to have the same gdp growth is productivity growth.

The financial crisis hurt.

You need more expenditure and infrastructure, education, upgrade the skill levels of the workforce.

We are not seeing it.

In a couple parts of the world, india and indonesia, there's a younger labor force.

Their problem is getting the labor force ready to deal with the global economy in the modern world.

Doesn't technology help us?

You need to adapt and use the technology well so education becomes really important.

I have another bit of education in case you did not know.

Airline seats.

Gail collins in "the new york times," i love this.

This is your morning must reads.

Aviation crisis, the average economy seat is 17 inches wide.

And only 31 inches of legroom.

How miserable is it to sit in a coach seat?

On the heels of the device, the knee defender.

You can't recline because someone has put a clip there.

Three analyze have had to land in the past two weeks -- three airliners have had to land in the past two weeks because someone got angry.

Getting into an air pla ne now is like a cocktail shaker.

Pressure builds up.

Atul, how do you feel when you cannot recline?

Like i need to lose weight.

Or book business seat.

Where seats can recline completely, 180 degrees.

I wanted to fly to europe for summer vacation, instead i took a ferry.

Coach fare was $1800. is it dangerous to work out too much?

The pros and cons of crossfit.

Brendan greeley trotted out.

? ? this is bloomberg "surveillance," here with adam johnson and brendan greeley.

Tom keene is walking a seven year old to school.

He will be back tomorrow.

Some company news from the files of "bloomberg west." google turning its focus to age-related diseases.

The search giant is teaming up with a drug maker spun off from abbott laboratories.

They will spend up to one $.5 billion and tackle illnesses like cancer and neurodegenerative disorders.

Samsung unveils its answer to the large screen iphone.

The 5.6 inch screen note edge lets users read at an angle.

The isis mobile wallet gets a new name.

A joint venturer of at&t, verizon, and t-mobile.

The name change was planned two months ago when the violent military group of the same name dominated headlines.

You can never stop laughing.

You don't know what is going to be a business risk.

You can never plan that.

Talk about crazy -- crossfit.

Once described as the workout that can kill you, reebok signed up as a sponsor.

This is something you do.

It made me into this specimen i am.

Look upon my limbs!

Do i have to?

Short bursts of intense activity -- calisthenics, push-ups, olympic lifts.

You do something on the torture device called an ergometer, a rowing machine.

Why is it so special?

What makes people crazy about it?

I think the key is that people like to work out together.

It is slightly less expensive than a trainer, more expensive than a gym.

Some people who study it say that the real key is people like working out in a community.

They talk about community all the time.

You've written about this.

Yes, for this week in "business week here cap people really seem to like hanging out and talking about this, doing it as a group, and makes him feel like a team.

What is fascinating to me, 10,000 gyms have signed up.

Each jim pays 3000 bucks, the g ym can do whatever it wants.

They are not a franchise, they are affiliates.

You get trained for two days in techniques and anyone can open a gym.

Two days training?

They really believe that crossfit headquarters in a free market for gyms.

You have crossfit gyms in the same industrial park looking at each other that are applying different models.

What is interesting, i think that has been part of the rapid expansion.

You have all these gyms competing to see who can retain people best.

They've gotten good at drawing people in and keeping them around.

Eswar prasad, were you looking into this?

The mission of the gyms being open after two days of training worries me.

This is a lawsuit.

Someone in santa cruz is hearing you say this.

That is their biggest challenge.

I've talked to someone who has owned crossfit l.a. for 10 years.

That is ancient and crossfit years.

They have a program and their required trainers to train for an extra six months.

The quality of the jim varies.

Crossfit has a caveat, go with a gym that has been around for a long time.

The concept of high training makes a lot of sense.

Doing it with a group allows you to push more, i imagine.

There have been some high intensity injury allegations.

Can you talk about the lawsuit?

Crossfit has a problem, it looks very dangerous, particularly the lengthy lists.

It is easy to find videos of people dropping things and amazing ways.

This is anecdotal.

It is relatively new and there is not a lot of research on how dangerous it is.

I crossfit affiliate is suing a group of researchers at ohio state who did a lot of work to find out that crossfit is good for you and improves body mass.

It is a throwaway sentence that said nine of the 50 four people we tested this not come back because they were injured.

Crossfit alleges that that injury data was faked and they have a pretty compelling case.

But, there is a tengion right now between traditional academic fitness studies and crossfit.

They are saying we're doing this in a different way and we have the evidence.

What is the injury rate of people who participate in crossfit?

The best way to measure injury in sports, apples to apples, is a measure called incidents per thousand hours of work.

If you do crossfit for 1000 hours, this is how may times you are likely to get injured.

One has at 3.1, one at 2.9, in keeping with other sports.

Less than long-distance running, way less -- i found a study for hockey that pataki at -- puts hockey at 79 incidents per 1000 hours.

It's possible that a lot of people are getting injured as part of the natural injury rate any activity has.

Scarlet, you have two boys who play hockey.

If you draw blood, it's a penalty.

In kid's hockey it is different.

Atul, you run.

Do people talk about crossfit in the financial industry?

It sounds like it is over engineering your workout.

Strap on a pair of running shoes is something you can do at home and you can go on vacation as well.

You cannot really take crossfit equipment with you.

There are things you can do on vacation.

There's a whole list of things.

I stand corrected.

Oh my god, i am a proselyte.

Pick up "businessweek," out today.

We think our guest hosts, aeswar prasad and atul lele.

Data check, forex, euro weaker, 1.3124 before the ecb announcement at 7:45. talking about the asset-backed mining program.

The latest version of whatever it takes.

We will be bringing you live coverage of the bloomberg sports business summit.

? president obama faces challenges on two fronts.

Can the president trust vladimir putin's peace plan for ukraine?

Waiting on the ecb.

The dollar strengthens.

Touchdown or fumble?

What cities really get out of hosting the super bowl.

Today is the first day of the nfl season.

Good morning.

This is "bloomberg surveillance." i'm scarlet fu.

Joining me now, adam johnson and -- tom keene is taking a day off , if you can believe it.

He is taking a seven-year-old to school today because new york city schools opened today.

Our guest host for the hour is rick heitzmann.

Get a started with the overnight brief.

The bank of japan is making record stimulus.

They instituted the higher sales tax back in april.

They have to try to offset that.

In germany, factory orders surged most than one year as far as some of the earnings.

From joy global, a bit shy of the estimate.

$.80 versus $.83. stock is up two dollars.

As far as economic data here in the u.s., 8:30 we have trade balance.

9:45, the bloomberg consumer index.

Then the iso 90sm nonmanufacturing.

Third-best in the world behind ireland and the u.k. the bank of england just came out with its interest rate decision.

No change.

Keeping it at .5%. in terms of market reaction, the pound took -- that was largely expected.

Nobody thought the boe would do anything.

A 7:45 announcement followed by discussion.

We have started to use the german economy as a proxy for the rest of europe.

As if all the other economies don't matter.

Germany is certainly moving at a different speed, although they have slowed down.

You know what happens tonight.

Green bay at seattle.

Kickoff at 8:30. i might watch it on my phone.

Do you have your fantasy league ready?

Football on my phone.

Per member that?

-- remember that?

Goldman sachs gets a coveted slot in the alibaba ipo.

They will oversee the deals for early share trading.

Home depot hires security pros after suspected data breach.

The home-improvement chain has enlisted semantic and fishnet security to help investigate.

A spokeswoman says home depot is working with other security firms on the matter.

The company has still not confirmed that the intrusion occurred.

The company will pay $7.5 million to settle its sec case.

Verizon failed to tell customers that they could withhold personal information.

That is the latest company news this morning.

As nato members meet today in wales, president obama and david cameron wrote a joint letter.

Those who want to adopt an isolationist approach misunderstand the nation of security in the 21st century.

Ryan chilcote joins us live from wales.

How are the ministers reacting to the discussion that clearly reaches beyond the obvious topic of russia and ukraine?

The issue of defense spending, which is what they are really talking about there, was a big theme here.

We understand that both the british prime minister and president obama want countries to spend at least 2% of their budget on gdp.

It is not a lot.

They are two of just four of the 28 nato members that do it.

I don't think they think any of these countries are going to start doing it immediately.

Since the last nato summit in this country, things have changed greatly.

What they're basically saying is you have to spend less money on welfare now and more because it looks like we are sort of pack in this cold war environment, and the islamic state.

The u.s. is pretty much the only big entity in nato that spends any money.

Turkey is the second-biggest when it comes to troops.

Then you have the u.k. come a bit of france and maybe germany.

The rest of the countries aren't really contributing.

They're just freeloading.

This is to try to reduce that.

For 20 years, we've been reading about the european union attending to put together a common security policy, a rapid reaction force of its own.

Now, with nato having this discussion, can we assume that the european union force is dead?

That is pretty insightful.

I think that is the idea.

What we are looking at is -- what the nato secretary-general would like to see is a rapid deployment force that would be based somewhere in western europe and quickly deployable to places like estonia and lithuania should there be a threat.

Then, there is also talk about a u.k. led force of seven countries that would do that.

Within the framework of nato.

The brits have been trying to set up a joint force with the french.

A division strong force for five years.

It is two years away.

It's pretty clear that having that kind of force within the eu is unlikely.

Ryan chilcote live from the nato conference in wales.

Thank you.

We continue monitoring headlines coming out of the nato summit as well.

This is an era of easy money.

Startups want as much of it as they can.

Rick heitzmann, cofounder and managing director of first mark capital.

They have made investments in stub hub and other companies.

How is this different from 1999? it is very different.

The companies that are really doing well with real revenue and real growth and prospects of profitability and the leaders like facebook and twitter are showing all the metrics going in the right direction.

There is an overarching different element here of interest rates are so low, people are searching for outlet somewhere and they're saying, i would rather instead of sitting on my cash invest in something that at least has some upside.

We talked about how goldman sachs will be the stabilization agent for alibaba.

If your company is looking to go public and you're waiting for alibaba to come out with its listing, do you try to front run it or wait until things are cleared and?

There is a huge ipo backlog.

Lot of people waiting.

Conventional wisdom is wait for ali baba to come out.

They put up $2 billion profit last quarter.

And use that as a way of opening the floodgates for a lot of other things coming out.

Coming up from china or globally?

Both.

Seeing things coming up from china, india and a ton of stuff coming out domestically.

What happens to yahoo!

After ali baba lists?

It depends on what yahoo!

Does with their money.

Instead of having this shadow stock of ali baba, the liquid asset on their balance sheet, has a semi liquid asset.

What are they going to do with that cash and how will they return it to shareholders?

We are seeing a shift from companies trying to help people find each other to companies that try to help each other do things in the real world.

In terms of new funding opportunities, new things to invest in comments that were used to the movement?

There is always a blend of online and off-line.

Pinterest looks to inspire people online to do things outline.

That will be a growing trend.

A separate trend of being able to use your smart phone to have everything on demand, whether it's your hotel room with airbnb or car.

Football on your phone tonight.

That's going to be our mantra today.

Can we get a look at rick's watch?

It's amazing.

It's beautiful but not digital.

You excited about the apple watch?

I like this watch.

It's an old school watch.

It was made in switzerland.

I'm not sure where it was made.

Do you believe in the business model of a digital watch?

Of the smart watch?

I have actually tried the fit bit and other things and i haven't liked them.

They haven't provided enough personal utility.

It will be interesting to see what apple does.

Rick heitzmann, not yet a buyer.

I think brandon is a buyer of ricks watch.

Coming up, we speak with the mayor of indianapolis on the economic impact of hosting a super bowl.

? coming up later today, adam silver will be joining market makers at 10:00 a.m. he is part of the bloomberg sports summit taking place today.

This is bloomberg surveillance.

I'm scarlet fu.

Tom keene is off for the day.

We want to shift over to online video.

The latest trend.

Advertisers are struggling to deal with cross-platform issues.

Our guest host is rick heitzmann.

This has to do with the fact that we shift from screen to screen when we watch something.

Advertisers have not figured out how to follow it.

The average person changes a screens 27 times per day.

Adam is watching the nfl premiere on his tv, on his phone, on his computer.

All back and forth.

There is a new generation of companies like cap added that say, how can i identify that person?

You can monetize somebody watching on their phone.

Are there numbers attached to this as far as how much advertisers get from selling the programming on your phone versus on your tv screen?

Publishers or video makers get about $.89 if they sell in our of db2 a person on the television.

$.30 to do something premium like hulu.

They lose about 80% of their value by adam watching on his phone.

-- get about $.89 if they sell an hour of tv.

It is the way people consume media.

One billion people watched youtube this month.

Consumed 600 billion hours.

It's really become that affect the way that kids are doing it.

You have to login.

You talk about cookies.

Will we all have 40 more logins to these different sites?

You might have more logins.

Part of the tv experience is going back and watching the nfl premiere.

As a consumer, you don't want that.

You have to look at other technologies to make that happen.

Assume is i have to login somewhere, i turn away third -- as soon as i have to login somewhere, i turn away.

Apple versus samsung.

Who will come out on top?

I have a football on the brain.

It's opening day.

-- i have football on the brain.

? good morning.

Outward a question of the day, how much time and money do you spend on your fantasy league?

The nfl kicks off its regular season.

How much money do you spend?

Adam johnson can't get enough of it.

Tweet us.

This is bloomberg surveillance.

Putting me now, adam johnson and brendan greeley.

-- joining me now.

And rick heitzmann, our guest host.

Please in ferguson -- they will open a broader civil rights inquiry.

Last month, there was the shooting of an unarmed black teenager that set up several nights of violence and looting.

Djokovic advances to the u.s. open.

He scored a fourth set win against murray last night.

The clash of former champions took more than 3.5 hours.

Look at that forearm.

Nfl season tonight.

The defending super bowl champions, seattle seahawks will host the green bay packers.

34 of the 35 most-watched shows were nfl games last year.

What was the outlier ? may be game of cards.

-- maybe game of thrones.

Speaking of sports, cold-weather cities have won the right to poshost major u.s. sporting events.

Indianapolis lost its bid for 2018. the mayor joins us now in new york.

Thank you for coming to new york.

I'm looking at a report that says in order to have a successful super bowl, the key is non-resident expenditures.

What do you do to convince people to go to a cold place in january?

We had warm weather, so that helped.

We always make it more than -- it depends on how you do it.

We made it more than the event.

We had a 10 day -- buildings people could walk through and see that.

We brought an experience to it.

That's what people will be talking about.

The live experience and what does that mean.

Even on the big events, you have to do that.

We know how to put on big events well.

You have to make it more than the game.

We know the olympics are a boom for the host country.

Nobody ever bricks even on the olympics.

How are the economics different for the super bowl?

We did pretty well on it.

The revenue came in, the tax dollars came in, more than exceeding what we put into it.

Economic activity was still 270 million or something.

Again, it depends on how you do it.

How you bring the city together and draw in those nonresidents.

How do you leverage all the different parts of the infrastructure?

All of our packages mainly downtown.

-- package is mainly downtown.

In indianapolis, it's all downtown.

You park your car or you fly in, you are done.

You can walk everywhere.

To the restaurants, the museums, the games.

That helps out quite a bit.

It's a better experience for the people.

We have some famous restaurants.

Everybody loves coming into the city.

How do you quantify the prestige of hosting a super bowl?

It's really hard.

We were told ahead of time, you may not get more business.

I will tell you, the people who look at us for conventions is about 2.5 times what it was the previous year.

Quantitative versus qualitative -- the run the hard numbers and have to say this will work?

You think about future conventions.

All those pieces?

We did look to make sure the numbers weren't way out of whack and we could at least break even or do well.

We leveraged public and private dollars to an additional $150 million of revitalizing the neighborhood.

There was a lot that went on.

Long-term investing to improve the infrastructure of the city.

Outside of the sports part of it.

We used the prestige of the game itself to bring people together to do this and this.

Opening game is going to be colts and broncos.

Any bad blood?

Oh, no.

None whatsoever.

We love peyton.

I got interviewed quite a bit last year.

I guarantee you, whenever the broncos are on tv, a lot of people are watching from indianapolis.

The mayor of indianapolis.

Thank you.

We will bring you live coverage from the bloomberg sports business summit come including interviews with adam silver.

? this is "bloomberg surveillance." i'm scarlet fu.

Tom keene is off for the day.

Let's get you some company news headlines starting with tesla motors.

They will build their first battery geek a factory in nevada -- battery gigafactory in nevada.

The $5 billion factories expected great 6500 jobs.

Johnson & johnson says it will fast-track and ebola vaccine.

The company will collaborate by beginning clinical trials in humans by 2015. world health organization says it's more than all previous outbreaks combined.

A web company that reports on global trouble spots says they will extend its operations.

It runs several websites and produces hbo shows.

That is the latest company news this morning.

We are talking about china's triple-threat man baidu, alibaba and 10tensent.

Alibaba's roadshow begins next week.

This is right up your wheelhouse.

These companies compete with each other and have joint venture is.

We're talking bacon, avocado and tomato.

This is the term that's commonly used by all the big guys in asia.

Baidu is china's largest search engine.

Think of it like the google.

Alibaba has their looming ipo.

They are in a variety of industries.

The marketplace that connects consumers.

And then 10tencent, in almost everything, but most commonly known for their messaging app.

How big a threat are these three companies?

They are in enormous threat.

They have moved much quicker than what we have seen in silicon valley.

They have grown much bigger and much more profitable.

You talk about the sprawling ali baba, they are getting into a much broader swath of industries that folks here.

Are expanding, but do they need to go broader?

China is the market there currently focused on.

I don't think they will be a threat to the u.s. you will not see amazon or ebay get conquered on home turf.

But you could see them get conquered when they go overseas.

In developing markets, areas have pockets in southeast asia.

More broadly, this is the most expensive internet war being fought right now.

The first battle is in the mobile space.

Second is e-commerce.

Third is in payments.

Work is going from online to off-line.

Integrating e-commerce with brick-and-mortar.

The fifth one is gaming and entertainment.

According to analysts in asia, mobile is the most important.

You have analysts saying by 2017, 1 in four chinese individuals are going to be accessing e-commerce on their mobile device.

Clearly who was winning right now is 10tencent.

Similar to people going to snapchat and facebook, it is the gateway drug.

Tencent has twice as many people playing on the system as people living in the u.s. every day.

They have to be the leader with a sharp spear in their.

The u.s. trade representative considering looking at china's great firewall as a trade barrier, protecting these companies.

Do you feel like they grew in a protected environment?

How different is that from what the u.s. or australia is doing?

Thank you so much.

The latest on the chinese internet companies.

Let's give you a quick data check.

Not a lot of movement, but stock futures are up right now.

Crude is down.

This is "bloomberg surveillance." streaming on your tablet, smartphone and bloomberg.com.

Tom keene is off for the day.

Our guest host this hour is rick heitzmann.

Cofounder of first mark capital.

Kids in new york city are back in school today.

Growing excited bout colleges driving the industry of private tutoring.

Bloomberg businessweek tackles the subject with the pile of old -- with consultants.

You do not use out rhythms to calculate the likeliness of a jv wrestler getting into harvard.

The fact that this business model exists shows the competitiveness of the industry.

We can be overly what if with numbers.

We can't reduce college admissions to algorithms.

There is a humanistic aspect to the admissions process.

I have seen this or my experience.

Students with perfect test scores don't necessarily get in.

That is a good thing.

We are looking to build robust and talented communities that contribute to the community.

Generally, mathematical algorithms, i believe in mathematics, but i don't think we can be overly focused.

Admission rates are 6%, comparable to winning the lottery.

Talk about anxiety out there.

How much more are students and parents sweating the college admission process than five years ago?

The best way to dissipate anxiety is arming oneself through information and preparation and rigorous long-term study.

This is good for our society and country.

It will make us competitive worldwide.

We simply don't want to pander to anxiety.

Do you worry the cost of test prep -- if you have money, that's a good investment.

Do you worry that the cost of test prep will continue to divide college applicants and to people whose parents can pay for it and people's parents could not?

That is a fair concern.

We have never turn anyone down for lack of financial capacity.

What we should recognize, the colleges themselves look at applicants against the backdrops of their opportunity.

Credentials ought to be viewed in context.

An inner-city child with a certain score is not the same as one attending an independent school with the same score.

The students who are best in each environment are the ones who will have the best potential when they get to college.

It's a good idea to select the best of the best from each group.

When i showed up at princeton, i met the guy who actually admitted me and he said you were really well-rounded.

You were necessarily the smartest heard -- weren't necessarily the smartest.

People want to be able to say my test scores are this or i achieved that.

How do you build the case?

Princeton is very academically driven and it's good to have strong credentials.

At the same time, a place like princeton or any very good college is a place that brings togetherr talented students in athletics and music and art and drama.

That's what makes those communities so special and robust eared well-rounded students are wanted.

Not every student has to have everything.

We want a community that contributes to the broader life and well-being of the institution and society there.

If there is one thing you can tell parents and students right now, this fall, what would it be?

Begin preparing.

There is no substitute for study.

There is no substitute for preparing.

Commit to work.

Thank you so much.

For more on the ivy league guaranteed insurance, check out the latest edition of bloomberg businessweek.

? this is "bloomberg surveillance." tom keene is off for the day.

The nfl season kicks off tonight.

Adam can't stop talking about it.

Bloomberg is dedicating the day to all things sports.

Stephanie ruhle joins us live from the bloomberg business summit kicks off.

Adam has this great stat of 34 out of the 35 most-watched programs were nfl games last year.

That says it all, doesn't it?

It's all about live events, like sports.

We will have the commissioners from the nhl, major league soccer and major league baseball . if you love baseball, you will get very excited today because we have the ceos of the red sox and the yankees.

We will try to keep them apart.

I watched our home team gets spanked.

We are hoping there won't be any spanking this afternoon.

Have the crown jewel of the new york knicks, carmelo anthony.

This guy is a business icon.

Kind of like kevin durant who penned a $300 million sneaker deal with nike.

Think about it.

Nike has to sell a lot of snake usedeakers.

He has his own investment arm.

See putting that money with technology?

He has become a big tech investor.

He has a bunch of different verticals.

He will dig into all that.

His wife is a huge lifestyle brand.

He has become much more than simply a basketball player.

The fact that he is going deep in tec is saying that he will have a life beyond basketball.

Many of these players are taking that magic johnson model.

You have to cash and elsewhere up court.

-- off the court.

Stephanie ruhle, thank you so much.

We will be keeping our eye on all of the interviews.

The other thing we are big time keeping our eyes on, what's happening in europe right now.

The rates decision is imminent.

We get the decision momentarily and then the press conference at 8:30. what are we looking for here?

We are looking for a number of things.

We could see some sort of rate cut.

You could see the -- that is probably what we will get in the next few minutes.

We make it more than that today.

We may see some sort of garrity on the asset purchase -- some sort of clarity on the asset-backed securities.

We don't know the details of that yet.

There are a number of options on the table.

Making it clear that really, he has not run out of rope europe.

The monetary policy still has something to give to get europe back to growing.

What tools is he going to use to do it?

We are waiting for the right decision.

That rate decision.

Monetary policy decisions is the line i could see at the moment.

It has cut the benchmark rate.

It has been cut by the ecb.

We are seeing a rate cut coming through.

They're keeping the core various rates they have impact.

-- intact.

The marginal rate has been lowered as well.

The structure of the interest rates for the ecb charges are all the same.

Lowering the overall -- everything is going to zero as gdp is going to zero.

Whatever it takes.

We will see whatever it takes at 8:30? he has cut the rate.

Is it enough to keep the market on board with the idea that he is still doing more or does he have to deliver even more on top of what we've just seen?

Asset-backed securities -- that program is currently being analyzed and considered.

They brought back blackrock and to do that.

-- in to do that.

Can we talk about full-blown qe?

Doing what the fed has done and buying up large government bonds.

Much more difficult to do when you have rate cuts.

Are we going to get asset-backed purchases and then getting onto full qe?

He says he will whatever it takes.

We are getting some evidence that he is still on board with the idea that market policy can do more.

How much more from your?

-- from here?

Thank you.

Whatever takes 2.0. this is an indicator of a long purple change in europe.

There is wailing and gnashing of teeth among the german favors.

These decisions are not going the way the germans had desperately wanted them to go.

We talked about germany in the context of europe.

Germany is so powerful there.

It's a matter of how much grinding they are willing to take before they act independently.

Let's get a quick data check your.

Features are up -- futures are up about eight points.

Look at the euro.

Falling because this new asset-backed program would increase -- our guest host, rick heitzmann.

The european central bank has just come out with this interest rate decision.

It has cut the deposit facility rate to -.2%. cutting its benchmark interest rate to 0.05%. it cut its marginal lending rate to .3%. the euro plunging after the announcement.

Down to 13053. the lowest since july of last year.

U.s. stock futures at their best levels of the overnight session with s&p futures up about .4% right now.

Let's get you some company news from the files of "bloomberg west." google turns its focus to age-related diseases.

Teaming up with the drugmaker that was spun off.

They will spend up to $1.5 billion in to tackle illnesses.

Samsung unveiling its answer to the large screen iphone.

If the 5.6 inch note edge.

Made possible by setting the display beyond the front of the phone.

The isis cap gets a new name.

This name change was planned about two months ago as a violent military group of the same name dominated headlines.

It's amazing, you can have your best business plan and did something crazy happens and you have to change.

Unbelievable.

When i see that news about google doing research into antiaging medicines, i have this vision of surrogate in suspended animation.

That is the ultimate plan.

-- sergei in suspended animation.

In a fishbowl.

He is bent on world domination.

Tonight, 8:30, green bay and seattle.

We are kicking off football season.

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

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