Transcripts For BLOOMBERG Bloomberg Surveillance 20240622

Euro, and he is now accused of tearing it apart. Tom where will germany be monday morning . Brendan i do not see how this fails, but germany is talking about having a discussion with itself about the euro, and it is entirely possible that they may be ready to contemplate after some time what we have been talking about. Tom lets get to top headlines. Here is vonnie quinn. Vonnie thank you, tom. Lawmakers in germany are getting ready to vote now on the new greek bailout. The plan is expected to pass backed by the majority held in parliament by Angela Merkels party. The german chancellor spoke this morning in favor of the bailout. Angela merkel the dramatic events of the past days in europe cannot be overestimated. These days are dramatic, first and foremost, for the country that is the subject of our thoughts and consultations greece. Lets imagine for a moment what it would mean is at home in germany pensioners would be queuing in front of closed banks to wait for their weekly pension of 120 euros. Vonnie with the promise of help on the way, greek Officials Say the countrys banks will reopen monday. They were closed 20 days ago. Greeks were allowed to draw 60 euros per day from atms. Federal authorities are not yet pinpointing a motive for an attack that killed four marines in tennessee. Friends are being questions questions about the friends are being questioned about the suspected shooter, mohammad youssduf abdulazeer. He is from the suburb of hickson two women were led away in handcuffs. He is not on a federal watchlist. A Police Officer and another u. S. Military member were wounded. The suspect had no criminal history. The u. S. Dollar is poised for its best week in two months after the fed chairs latest remarks about Interest Rates. Janet yellen told a senate panel she expects the central bank to raise rates this year. Rates have not been raised in nearly a decade. Yellen wants to ease back into tightening gradually. Ms. Yellen my preference would be to tighten in a prudent and gradual manner. There are many reasons why i would like to be able to do that. I agree that there are certainly risks to the recovery and to the labor market of tightening too soon, but there are risks on the other side as well. We are trying to balance those. Vonnie the surge indicates investors are focused on Interest Rates. The dollar is up by nearly 1. 5 this week. It has been the best performer in the last month against currencies from nine other developed nations. Google shares are on the rise after the Company Reported secondquarter profit and sales that topped estimates, and operating expenses rose at the slowest pace as the cfo plans to bring more spending restraints to the search giant. The company has been looking for ways to boost Revenue Growth and ceo larry page has been investing in costly new projects like Driverless Cars and Better Internet service. It looks like hbo will be a winner. The Big Three Networks are losers. Hbos game of thrones tops the nomination with 24. 31 Cable Networks got at least one nomination. The awards show will air september 20. Tom somebody told me that the only show that has raised the budget most people flat line it or cut the budget, and they just keep doing it. Brendan i can give away that they spend their money strategically on battle scenes once a season. Vonnie that is all you need to do. Tom game of thrones doing better than good for the emmys. The euro under that 109 level, commodities soft. One of our themes, quickly, the second board, euro swisse is all that you need to know. It has not moved much this week. Brent crude under 50. I want to go to the mac monitor. What is germany left the euro . Here is the euro . Here we are down at 1. 08. It is this is where we became the euro before this. The Deutsche Mark. This is where the overvalued Deutsche Mark would be versus greece somewhere down here finland down here belgium down here, and there is a lot going on here about a theme that Marty Feldstein and others have said which is germany, grow up and get back on the Deutsche Mark. Brendan the great irony right now of european policy is that germany was the strongest advocate for a strong Monetary Policy. But the week Monetary Policy of mario draghi benefits germany. It is a statistical expression of a political reality. The Deutsche Mark became the euro. Tom when i started studying foreign exchange, it was the dominant currency, more than the u. S. Dollar. We need to continue our coverage on europe. It is friday. Madame lagarde makes the headlines. This is mr. Tsipras this as mr. Tsipras desperately tries to keep his government intact. Hans nichols is in berlin. Let me start with you. We see the heated speech of mr. Schauble and ms. Merkel, saying that things will move forward. Is there any discussion of debt restructuring away from madame lagarde . Hans not really. We heard from the finnish Prime Minister saying that was one big distraction. What you have here and mr. Schauble mentioned how big it is. What you have in parliament is clearly a vote that is not going to fail. But the debate is setting up a failure of the negotiations. You clearly see a telegraph by mr. Schauble how difficult these negotiations are going to be. He is acknowledging that it is going to be hard for greece to accept that because they can. According to mr. Schauble right down the nominal value of the day. Negotiations that i think everyone behind me in the bundestag is prepared to let them fail. Brendan where is the vote count on this and how does it compare to Public Opinion in germany . Hans Public Opinion is more divided against. 49 voting no, 46 with say vote yes on this. This is clearly going to pass, but it is a remarkable moment in the bundestag. I have had i have not had this much fun covering a parliamentary debate since george w. Bush ran through Medicare Part d. Brendan middle of the night, pressing bills into peoples hands. His Angela Merkel finally doing what we have asked her to do take her popularity out for a ride . Hans she will face a real challenge if the spd and abandons her and the spd so far is in lockstep with her in her approach degrees. She will lose a little of it but she has plenty to give. She has plenty of political credit to burn with the german people. Tom caroline, my guests are focused on the banks opening money on the banks opening monday, but much focus is on mr. Tsipras. That is the question on the minds of many in athens. Four were against him when it came to the bailout. 38 of them, more than a quarter of his own party voted against it. How can he keep unity in his government . He says he is weakened but will he reshuffle . Will they exit the cabinet because he needs to show some strength. Brendan caroline, i am sure you have been spending plenty of time in taverns gauging Public Opinion. Has the mood changed, the possibility with the possibility of the banks opening up monday . Caroline not really. The people on the street, lines keep gathering, but then there is no medium pressure. The bank doors may open, but no relief in capital control. That means these guys can still only get 60 euros. In fact, only 50 euros, they can only get that each time they go to the catch point. How then can you afford your food and beverage, which i might add is going to get more costly. My hotel check is already charging me 23 percent on my food and beverage, where he was 13 a couple of days ago. Tom Caroline Hyde, thank you so much. The original economics of europe and greece, dr. Come our with us. Without question. Lets be direct. None of this is in the textbooks that we are in right now. Madame lagarde was the most visible force overnight. She came out on french radio and give it to them. Is she a proxy for the United States . I think finally she is a realist. The imf has always played according to u. S. Rules in the past. And i watch them in the latin american debt crisis in the 1980s, russia in 1998. They have been a handmaiden of the u. S. Treasury because of the hold the United States has on the imf. The difference is not only that the u. S. Would like europe to behave differently, but the imf realizes that the european position is simply untenable and this is going to have global implications. Tom what does untenable become . The greek situation continues to worsen, and i am surprised to find myself in the same camp as mr. Schauble, that the grexit that he says will be better i think it will be better for greece as well. Tom what about german exit . It has been talked about moving the other way. I do not think that will work too well for germany, because as you showed in your chart and i have done analysis and when we do that going back to the 1980s, we use the Deutsche Mark as a deutsche as a proxy for the euro. If you use the german mark as the proxy, that will not do well at all for exports. Tom we will continue this discussion particularly his view on the new mediocre. What we will be looking at this weekend, should germany lead the eurozone . Stay with us. Bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Lets get to top headlines with vonnie quinn. Vonnie a somber anniversary today in eastern ukraine. It has been one year since a Malaysian Airlines jet was shot down there, killing all 298 people on board. Petro poroshenko blamed vladimir putin, calling it a ruthless terrorist attack by prorussian separatists. Russia denies any involvement. The family that controls samsung is the winner today over a u. S. Hedge fund. Shareholders narrowly approved any lien dollar merger. That gives more power to the lee family. The funds, led by singer one of googles self driving prototypes was involved in an injury accident for the first time. It was rearended in googles home city of Mountain View california, where more than 20 prototypes are on the road. Three google employees complained of minor whiplash. Tom it is a train wreck waiting to happen. I rarely give my opinion. It is like ai was 30 years ago. Brendan oh, my god, you give your opinion every morning. Tom it reminds me so much of Artificial Intelligence a good 30 years ago. Brendan tom, ge a firm spun out of schenectady to make power generators, is due to report Quarterly Results in a few minutes. Nick came in the joins us on the phone. What are you working for today . Nick we are looking for . 29. When you exclude or adjust for the vast majority of ge capital now in discontinued operations, we think you should see earnings up very strong. The single vote doubledigit for the businesses. Brendan specifically looking at gd and gen not broader industrials, how long are they looking at integrating from industrials . Nick they had to submit a proposed list of amendments and concessions last night, and i think they remain relatively optimistic that they can get this sorted out and completed by the second half of this year. Or by the end of third quarter. Tom give me the report card on jeff immelt. You have been following him and other illustrious types for years. What is the nick heymann report card on jeff immelt . Nick i have said that jeff has had a reincarnation. The idea of acquiring alston really set in place the idea that ge should really make a big shift over to being a premier provider of global base infrastructure, and then the accommodation of very high liquidity levels in Global Financial markets give him the opportunity to pull the stick and exit one of the largest 10 banks in the u. S. Tom nick heymann with us. Thank you very much. I am amazed by this. Very quickly here they argue banking they are deep banking they are debanking ge. Brendan the one take away from Bloomberg Intelligence on this is what is left to do. In our next hour, drew matus will join us stay with us from new york city this morning. Bloomberg surveillance. Futures flat on this friday. Tom good morning, everyone. Bloomberg surveillance. My morning mustread we had a fist fight over this. Brendan greeley wanted to do it as well. Perhaps the greatest game would be political if germany left the euro. Tom mody now carrying on from got themselves at pimco. Brendan as we sit here in the german bundestag, some buddy from the left was quoting adam smith, saying there are two ways somebody from the left was quoting adam smith, saying there are two ways tom a shoko modi for joining us this morning. If we have a richer Deutsche Mark because germany leaves the euro ahshoka germany get so much out of the euro. Germans become richer instantly because the Deutsche Mark would then buy a lot abroad. It makes it cheaper to sell abroad. It does not allow germans to increase productivity domestically. In the long run, germans will adapt and do well. Tom on the other side of the equation is what the Deutsche Mark would do for peripheral europe. Where with the socalled peripheral euro settle. Where would the socalled peripheral euro settle . A weaker currency does not assist in the long run. What it will do in the short run is jumpstart those economies. The reason the euro does not become weaker is that germany runs a very large current account surplus, which means germany sells a lot more than it buys. So therefore germany is a prized in a way, creating a dominant effect, which keeps the euro strong. By weakening the euro, italians and portuguese and the greeks have some prospect of jumpstarting. Essentially the reason for proposing this is that if germany exits in a sense the foundation of the euro begins to weaken. And at some point therefore because the political tempo has not been broken by the germans . Tom i am so sorry, we have to leave that for the moment. Stay with us. Bloomberg surveillance. Tom good friday morning, everyone. Bloomberg surveillance. Lets get to top headlines with vonnie quinn. Vonnie as germanys Parliament Debates the bailout of greece, the greek Prime Minister awaits the vote. 38 members of his own party dissented, including two cabinet members. Angela merkels party has a majority in parliament, and the chancellor backs the plan. Angela merkel the dramatic events of the past days in europe can hardly be overestimated, not only because of the sheer endless confrontations of the eurogroup and finance ministers. These days are dramatic first and foremost for the country that is the subject of our thoughts and consultations greece three lets imagine for a moment what it would mean if at home in germany pensioners would be desperately cueing in front of closed banks to wait for their weekly pension of 120 euros. Vonnie greek Officials Say the countrys banks will real on monday. They were closed 20 days ago. We just got numbers on ge. Ge coming in at 32. 8 billion. We also got the earningspershare for the First Quarter, . 31 operating earnings. The fullyear forecast raised tom. Tom major credit to ge, who made the reported earnings clearer than any other company i know. When it comes out they deliver a pdf that has the headlines in english and this is a great and beautiful thing. We saw organic growth, a 5 unit there. We came in at 28. I do not see any discussion of dividend yet. Did you see that vonnie . Vonnie we did not get to it earlier. Ge was one of the industrials that would not lower its forecast for the year. Not only did it not lower it, it raised its forecast for the year. Lets look at how it is doing premarket. It was up. 4 of 1 now. Tom ge there as they become truly an industrial company. Nick heymann talking about restructuring the company away from capital. Our guest has made consistent headlines calling for a begrudging recovery. He now calls it a frustration. He is the founder of shri komar global strategies. People worry about slowdown in the recession. Did you hear the worries that you have in the janet yellen testimony the last few days . She seemed to hold back from the optimism that a lot of glasshavefull you will have. Shri there was a consistent trend not only yesterday but in recent weeks that the situation is getting somewhat better. She has a job to do. At the same time trying to tell you that she is not going to increase rates imminently. Secondly, i am going to raise Interest Rates sometime soon. All three go together. Which one of them is the most significant or the dominant one . I come out saying that, as you call it, a begrudging economic recovery. Third quarter of 2011, Fourth Quarter 2012, we were almost at zero growth. This is not been a great recovery. Tom which part of the economy gives you caution . Is it consumption . Investment . Export dynamics . Komal one is you have sticks he prevent to 70 you have 60 to 70 we saw the amount of pessimism among consumers. About 14 of gdp one reason i keep saying the fed is not going to increase Interest Rates tom global affairs. Komal you have a natural protection of somewhat like 1. 3 on the euro. It was 1. 04 or 1. 05 a few months ago. I think that is what keeps the euro in check the fear of economic growth, the fear that export stagnation could once again come under economic growth. Brendan she pointed out that the fed itself still does not really know with the natural rate of unemployment is. Do you have a guess . Komal i would say that there is a lot of slack, so in that sense i am more in the yellen cap relevant rather than in the alan krueger camp. Brendan how do you major how do you measure slack . Komal it is not a onetoone relationship but it gives you some indication that there is slack in the market. Second, you look at the u six unemployment rate. It is still hovering at 10 of the workforce. Despite the fact that we have had so many years of recession. Third, you look at the number of people who want fulltime jobs and we are still stuck in and are still stuck and parttime occupations. They will tell you that the job market is not very strong. Vonnie where is the 10 year going . Where is the 30 year going . Komal we have seen the 10year grow to about we heard we saw the 30 year go below 3 . My forecast is that we are still seeing the 30year at 250 and the at 2. 50. In the 10year goes much lower. Vonnie what kind of timeframe . Come all co it could be the next few months. The timing is hard to pick because it depends on when there is this push to lower yield. But i think it is coming. Tom what does it do to fed policy . Forget about 1. 60, which makes headlines . If we get a Komal Srikumar 100 1. 80, almost mechanically they cannot raise rates. Komal you are probably talking about core inflation taking a further dip from 1. 3 , 1. 4 to below 1 . Tom i tell you, you make a a lot of headlines. Komal the only way to change that is to be up to say i am going to take the hit. An increase in Interest Rate is not going to be good, but i will do it. The markets may correct massively, but tom if we see a rate rise in september, you are going to say that is going to push this nation into recession . Komal yes, i will. The definition is not only two quarters in a row, but wide economic malaise. Tom shri komar with things very important state. Brendan paypal is expected to price its ipo after the close of the day. There have been a lot of spinoffs recently. They may not be tracking as well as expected. We come back with our single best chart. Good morning. This is bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Tom keene with Brendan Greeley and vonnie quinn. It is an auction chart. Brendan spinoffs are the subject of todays single best chart. Here is what were looking at. The yellow is the smallcap index. The white is beacon spin off index. We had an argument about the chart this morning. Tom says not enough are squared. That is a fancy way of saying not enough movement not enough diversions. But there is some divergence there. Tom there is. Brendan we will go to a clip of ebay ceo john donahoe. Mr. Donahoe i think paypal will continue to gain to be an independent covenant, but who knows how the markets will turn up. Brendan there is a great quote from Warren Buffett this year where he describes spinoffs and reacquisitions as the cycle that is designed not to create shareholder value but fees for bankers that do this in offs and then the ipo. Tom i think there can be beneficial spinoffs. What i will say is everybody gets on board. One industry will go through this. What i will say is this has been requested for years. I literally cannot remember when people were begging ebay to spin off paypal. It has always been there from day one. Brendan most recently, pressure from carl icahn. Tom should apple spin off apple music or beats . Vonnie not yet, i would say, tom. Tom there is always a reason to spin something off, and i get the idea i would not be that negative on it. I remember the specialty chemical era where every single Chemical Company had to spin all specialties. There was some value created by that. Brendan do you see sound management spinning things off . Co. Komal i see it from a macro perspective. In specific instances, it is pumped of these purchases to take place. People want to do it when Interest Rates are still very low. That is part of the bubble that we see in the market. Tom it is not out there, nominal gdp, is it . Komal not unless you generated in this fashion. It encourages you to go find such transactions. Brendan we would argue from the perspective of the company and shareholders as an investor one thing a spinoff does it allows you to more accurately value exactly what is going on inside the company. How do you value dupont, for example . Tom it is one example of a Chemical Company, or somewhat of a Product Company to have cheap money. We will see continued cheap money in c srikumars world. Vonnie mourners in ts leave flowers at the Dutch Embassy of those who died in the malaysian flight that was shot down over rebel held east ukraine. Memorial tshirts say h17 one year in the skies. Brendan it seems like that was the event that would change everything and looking back at what is going on eastern ukraine, i do not know if anything has changed. Tom it is certainly a global day of remembrance in the netherlands but as well in australia. They lost an entire group. There was a group of hiv aids researchers. Komal what it did do immediately it led to the toughening of sanctions talking on Global Financials on the part of the western powers against russia. Talking to the officials in the russian government since then, it is very clear they see that the increase in sanctions is a major roadblock in terms of their economic growth, the ruble Exchange Rates and development. It did not change much because the russians are not going to give in. Vonnie were looking at pictures from outside parliament. There were 38 australian victims. Lets move on to president barack obama, walking through an institution in a federal Corrections Institution in oklahoma yesterday. He talked about the push to reform one of the most crowded prison systems in the world. Tom i do not care what anybodys politics is. I am thunderstruck that he was the first person the first president to ever visit a prison. Brendan having somebody say that we should focus on prisons. In five years it has become a movement that has been picked up by both parties, particularly the republican party. Tom a great image on the cover of the New York Times this morning, of the visit. Vonnie average winter temperatures usually hover around 50 degrees fahrenheit but temperatures dropped to subzero last night in queensland. The snow is due to a low pressure system that moves a cold air mass there. Brendan most dramatically, the mother of our line producer who lives in australia had to cancel her cliffside walks the cousin is too cold in australia. Because it is too cold and australia. Tom amazing. Pluto, and snow and australia. Coming up this book has a terrific buzz been we are going to look at the Los Angeles Dodgers and the money it takes to keep mr. Kershaw on the Pitchers Mound for the doctors. Good morning. Tom good morning everyone. I cannot concentrate. We are going to talk about the l. A. Doctors. First, though, top headlines. Here is vonnie quinn. Vonnie the broken bone in the neck of george h. W. Bush will be allowed to heal on its own. He was hurt in a fall at his summer home in maine. He is hospitalized in fair condition and is wearing in the brace. A spokesman said he never lost consciousness and suffered no mental impairment. He is 91. Criticism of Deutsche Bank by german regulators. They say management failed to address or stop the attempted rigging of key Interest Rates. The regulator also doubted that two key lieutenants of former coceo andrew jane did not know about the rate rigging. Who live in is reportedly considering an adfree option. The wall street journal says the streaming video provider is trying to become a competitor to netflix. Those are your top headlines. Tom this is going to be fun folks. I have been really looking forward to this. It is beginning of the second half of baseball season. The dodgers are in first place. The giants are close behind. This is a good thing, close enough to make a lastplace red sox fan stay up late at night, watching west coast baseball. Clayton kershaw as a franchise is no san diego facts. He may be better actually, than the franchise. Mr. Koufax did pretty well. It is the best team that money can buy. Molly knight has been getting a huge major buzz off of this, and she joins us. You bleed dodger blue full disclosure. Does Vince Skelley approve of your book . Nothing else matters, does it . Molly molly yes, i hope so. Tom it is a nasty little book as well. What is the theme, when you have that much money as they do, what is the theme in the locker room . What does all that money due to the daily cadence of a long schedule . Molly they had to bring in a bunch of stars who other teams did not want anymore, so there was a little bit of friction egos taking over. Now they are doing it from the ground up, investing in international findings, and they are calling guys up, so they will be a little more functional going forward. Brendan they tried to rebuild without having a building year. That is something that the knicks have been doing every year. Molly it is pretty awesome for dodger fans that their owners were willing to overpay to get these stars to come in so that they would not have those rebuilding years. In the next with their court nap. They had to do that as the same time at the same time is trying to fix their system. It is incredible that they did that for fans. Tom what is the overall money seen here . Does money make for winning teams . Molly you have to be smart. It is not about how much money you spend, it is about how wisely you spend it. Now they are investing in a smart front office. Tom have you talked to billy bean about this . Molly i am sure he would love to have this kind of money to spend. You have to be smart in building a franchise, but then you can have that money to throw at a nice free agent. Brendan you said that orange is the new black is your favorite show. How is the clubhouse like that . How do you get that culture right . Molly you are thrown in with these people it is every day for nine months, long hours, and they sort of segregate based on language they speak. Cultures in baseball are different than in football and basketball. There are so many different language speakers. They are clustered together. Love these guys, you would never go have a beer with. Vonnie give us the 10year lookout. Is it going to go foreign or at least partially foreign . Molly yes, these owners are great. They want to win. The owners have not spent the money that they have, so i think the fans can be really excited about this. It is a dream ownership samaria it is a dream ownership scenario. Tom what is cool is Magic Johnson lived it. He knows stupidity in sports. Does the johnson humility come in . Is there an advantage to have a legit hall of fame pro as part of the ownership . Vonnie yes, he wants to win. He is really competitive. He understands that there is a lot about baseball that he does not know, so he wants the smartest minds in their to make a deal. He does not want the dodgers to go the way the lakers have gone recently. Tom the lady that was 91 years old who throughout the baseball the other day are you going to throw out the baseball at the stadium . Brendan are they going to let you in the gate . Molly Frank Mccourt the previous owner, ran the team into the ground bankrupted it. The city really rallies around this team now. The new ownership is fantastic, and i do not think they are mad at me, but i do not think that players are happy that i know all this stuff. Tom molly knight on the l. A. Doctors. How about a forex report . Very clear the euro 1. 0876. Announcer this is bloomberg surveillance. Tom the adults in the room speak. Merkel speaks this morning, and the parliament will vote in moments in germany. On the future of greece, and the banks opening. Oil, live cattle, and even copper rollover in a commodities implosion. Janet yellen and the fed will ask repeatedly very soon. Good morning, everyone. This is bloomberg surveillance , live from our World Headquarters in new york. It is friday, july 17. Im tom keene. With Angela Merkel speaking, the image in the morning was schauble. I do not know the words. I was taken aback. Brendan he takes this responsibility very seriously. He made a compelling case in his speech that he has no option, that the only just course is the course that he took. He has been frustrating many people in europe by talking about a plan b, a grexit, and people in parliament were saying that plan a is the only plan and we will stick to plan a. Tom why wont the germans restructured . Brendan i have been reading reader letters to a tabloid, and they had the latest they believe so strongly that the creditor does not bear any moral hazard. Tom as germany begins to vote, here is vonnie quinn. Vonnie germanys parliament preparing to vote on a bailout for greece moments from now. The greek Prime Minister is awaiting the results in athens. Alexis tsipras is expected to reshuffle his cabinet as early as today. His party is splintered. 38 members of his own party dissented on a greek bailout. Finance minister Wolfgang Schauble is among those who backed the plan. Mr. Schauble we today discuss a proposition by the finance ministry to negotiate a third a lot package for greece. That is the basis and i urge everyone to agree to this mandate. Vonnie greek Officials Say the countrys banks will reopen monday. They were closed 20 days ago. Federal authorities are not get into pointing a motive in the attacks that killed four marines in texas. Investigators are checking social media and questioning friends of a suspected shooter, Mohammed Yousuf out of aziz Mohammed Yousuf abdulla zs. Agents entered his home in a suburb of hixson, and two women were led away in handcuffs. The suspects name was not listed on any federal watchlist. President obama asked americans to pray for the victims families. President obama as we have more information, we will let the public know. But in the meantime, i ask all americans to pray for the families who are grief stricken at this point and i want everybody to understand that we will be thorough and prompt in figuring out exactly what happened. Vonnie the attacks also left a Police Officer and another u. S. Military member wounded. The shooter attacked a pair of military targets a recruiting office and a training center. The suspect has no caps on history. The u. S. Dollar is going for its best the suspect has no criminal history. The u. S. Dollar is going for its best rates have not been raised in decades, so janet yellen wants to ease back into tightening gradually. Investors are focusing on Interest Rates with worries about recent china easings. It has been the best performer against her from the nine other developed nations. Googles shares are on the rise after the Company Reported secondquarter profit in sales that topped estimates. Operating expenses rose at the close of 2013. The ceo plans to bring more spending restraints. The copy has been looking for ways to boost Revenue Growth and ceo larry page has invested in new and sometimes expensive objects, like Driverless Cars and highspeed internet service. They are back out on the course right now at the british open. Players are tiptoeing around puddles, heavy rain. Maintenance workers used squeegees and pumps to get rid of the water. U. S. Open Twitter Jordan spieth tiger woods is hoping for bad conditions so that he can play. Tom that is challenging. You almost want to watch so that do a data check. On friday, it is actually a very quiet data check, showing the focus on germany as we speak. Really doing nothing. We need to get your perspective to get to the weekend. Hans nichols is in berlin this morning. The divide between lagarde and the imf and trouble and schauble and merkel. Hans the only way i see them coming together is schauble goes back on this idea of extending maturities for the debt does not amount to a right down. He said clearly that an actual rightdown is not allowed. The imf wants to have debt relief. Whether or not the imf will accept maturities is the open question. Germany won the battle with greece. Greece has capitulated and has done everything germany has wanted. The next battle will be between germany and the imf. Brendan i know youve have been watching this debate at the bundestag. You find a gripping. As germany having a conversation with itself about its role in europe or is this just about a bailout . Hans there is a little bit about that partially because there has been so much criticism that germans have become a little defensive on this. There is a Big Conversation in germany, on the political side one of the most interesting aspects of the debate Thomas Alderman is sort of the opposition leader, even though they are in government he just came to Wolfgang Schaubles defense, saying it was absolutely right to have a plan b and to be preparing for a greek exit. There is this consensus in german politics right now. Vonnie are people in the streets still interested in this question yak of what is their take on everything at this point . Hans the germans are posed to bail out. 90 think there will be more money down the line for greece. There is a small protest right behind me at the bundesbank third most germans are opposed to more money for greece. There is no way Angela Merkel can get around that. Tom hans nichols, thank you so much. Folks, we will keep you abreast of the vote in germany. Our guests with us for this hour has been with us many times, with an optimistic view and a fabulous bowtie. He has on his official surveillance bowtie. He is with ups with ubs. The bloomberg surveillance bowtie . Brendan that exists . I am going to keep coming back. Brendan drew matus know that there was a surveillance bowtie before i did. Nobody told me. Drewtom you are steadfast that this will not derail a u. S. Recovery. But you spoke of a strange word, uncertainty. What is the flavor of Janet Yellens uncertainty. Drew she is not sure how much slack there is in the labor market. She is therefore not sure what inflation is going to do. And she is not sure what the impact of europe and china are on the United States. She has thoughts on all these topics and one of the things were trying to get across is that in some cases she is right to be cautious. In other cases such as the labor market, we think maybe she is grasping at straws to prove there is more slack than there is. Ubss view on the labor market is that we are tight now, and that is why we are seeing things like the eci pick up. That will translate into inflation by the end of the year. Brendan we just had srikumar on. He said there is lots of slack. He still sees plenty of room. What leads you to believe that there that they are running out of slack . Drew there are a number of structural reasons that can be occurring. The number one that immediately leaps to mind is the Affordable Care act. That 30th hour of employment becomes very expensive, so you employ people for 29 hours. That will bump up the involuntary parttime. It has to. We are not running high on that number anyway relative to a longerterm history. On things like participation rates, if you look at the chart that janet yellen cited, it is saying we should be at 63 right now. The average over the first seven years is 62. 8 . That is not a large amount of slack you should bet the u. S. Recovery on. Tom drew matus will continue with us through the hour. Let me give you the twitter question of the morning. This goes to the drama we are seeing in germany right now. Should germany leave the eurozone . Ashokan modi ashokan modi hugely controversial. We need to hear you bsurveillance. Stay with us on this friday. Bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. The real world of the greek economy. This is outside athens, the crash of a small firefighting plane. Brendan, this goes to the idea that greece goes on every day away from financial and economics. They have an economy to run. Brendan we talked with Caroline Hyde about that this morning. She said they will be glad when the capital controls are lifted and they can get more than 60 euros out per day. We are always trying to figure out what the important and urgent is. In the background there is Something Else that is important, which is china. That is what i was looking at this morning, the top story on the terminal. This is from willy pesek at bloomberg view. Chinas Housing Slowdown is a major deflationary event. Real estate is chinas biggest Growth Engine since 2008. Now it is a negative inflationary. The fading of chinas credit super cycle, in which people and businesses trying to borrow their way out of debt problems. We have drew matus with us from ubs, wearing a surveillance bowtie. Lets talk about china and its effect on the u. S. When china gets a cold, do we get the flu . Drew we do not. We are on a big trade deficit with china, so we are not exporting to china things that are subject to the whims of the consumer in china. We are exporting to China Capital and things like that. If construction weakens in china, the u. S. Has to worry about construction exports potentially. A lot of companies have moved production overseas for moke for Global Market demand. The exports out of the u. S. Equation is much smaller than people generally would perceive. Brendan janet yellin is watching china. Should she be . Drew yes, she should be. We certainly are. We spent a lot of time and effort making sure that we have a good understanding of what is going on in china and for its influence on the u. S. What we have found is that historically speaking the direct effect tends to be much smaller. You have to worry about the Financial Market effects. Confidence affects confidence in fact are the things that drive things home. I mean, certainly janet yellen is talking about the effect of the dollar on inflation. We kind of got away with something with the first 10 decline in the dollar because the first 10 gets absorbed in different things. The next 10 , if there is a next 10 , is the worrisome 10 . We are paying close attention to the dollar like janet yellen is. Tom stay with us. Tom bloomberg surveillance good morning, everyone. Vonnie a somber anniversary in eastern ukraine. It is one year since the jet was shot down there, killing 198 people aboard. Petro poroshenko blamed vladimir putin. Russia denies involvement. The victims, all 298 included 198 dutch citizens and 38 australians. The family that controls samsung is the winner over a u. S. Hedge fund. Shareholders narrowly approved any billiondollar merger of two affiliates. That gives more power to the lee family. The fund, led by activist investor paul singer defaults the plant. It could soon be challenged in court. Alexis suv, the lexus suv was outfitted with cameras. Three employees had whiplash. Tom an outlier call not the yellen, that yellen will wait until 2016 crew. They get the headlines. While the Federal Reserve chair gave their cause more weight while speaking to the Senate Banking the Senate Finance committee yesterday. Ms. Yellen there are many reasons why we would like to be able to do that. I agree that there are certainly risks to the recovery and to the labor market of tightening too soon, but there are risks on the other side as well. Tom perfect example of the vacillation of the back and forth, the uncertainty that we live now. It is suggested the fed will go the other way from the headline making crew. I am thrilled to have you here, particularly with drew matus of ubs, who hardly agrees with your tendency here. Let me start with the opposite. What does the gloom crew get ron . What does the gloom crew get wrong . The gloom crew is always gloomy. It is not a bad economy, as far as i can tell. We have 3 growth in the second half, retail sales bouncing back. China stabilizes greece, we will have a pretty decent global recovery. Do you see them moving to an actual restrictive policy a year or three years out . John gradual, but we got actually three hikes this year september, october, december. We made this call in the middle of june when the situation was not as scary as it has been recently but essentially it is what the fed always does, 25 basis points. It is surprising it is so out of consensus. Tom drew matus, do three rate hikes put us into recession or slowdown . Drew you have had two ifs. If china stabilizes, if greek is resolved, if the cubs win the pennant those are huge ifs. John it does seem like greece is kicking the can down the road. We will see if the bundestag passes and additional aid and passes the road with the imf. Brendan no new nasty surprises from europe. John that was part of the scenario. Vonnie when do we see inflation coming above 2 . John if you are talking about the cpi, it is per to close. We are taking were talking about 1. 8 encore. It will probably take longer to get to 2 , probably next year. Vonnie do you see the fed raising several times before we ever get to 2 . John yes, and we saw janet yellen say that yesterday. Tom what does it do to dampen a 3 gdp . John drew the bigger risk is that it causes acceleration in the economy. And zero rates there is no time value to money, and without time value to money, people cannot constantly push off making decisions. There are fewer decisions being made because you are not being forced to make them. Ubss view has been when you see the first couple of rate hikes you could see an acceleration. I think johns point is well taken in that if that happens, you have to think what would the feds response function be then. Neither one of us are getting a knockdown drag out fight. Tom you are a stellar student of the japan experiment. There it is on the cover of the New York Times, that mr. Abe is expecting some form of military force in japan that will not be known in our lifetime. Is expecting some form of military force in japan that will not be known in a lifetime. Is that a sea change for japan . John yes, it is a bit of the seachange. The u. S. Is suggesting strongly that japan follow this course so they will have a bigger and better ally in asia. Tom john vale, thank you very much. Really what economists are 1 2, 3 for janet yellen as we go into the next year. Our twitter question of the day should germany leave the eurozone . This is front and center. They moved in a bit here, in an hour or so, to a vote, on greece. Stay with us in new york city. Bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. A busy morning. Lets get right to top headlines. Here is vonnie quinn. Vonnie we begin with germany voting on a third aol plan for greece. Alexis tsipras is expected to reshuffle his cabinet as early as today. His party is splintered after this week both the vote on severe cutbacks sought by greeces creditors. Lawmakers are expected to pass the 94 billion bailout. Chancellor Angela Merkel and finance minister Wolfgang Schaeuble are among those who support it. Meanwhile, greek banks will open monday. Jurors have 12 hours to decide the fate of the colorado movie killer. Verdict form count one murder in the first degree, jonathan blanche, we the jury find the defendant james holmes guilty of murder in the first degree after deliberation. Vonnie james holmes killed 12 people and wounded 70 in the attacks three years ago this month. The defense claimed he was insane when he opened fire in the panel. Now the jury must decide whether he will die for his crimes. The only options lie ahead for holmes life in prison without the possibility of parole or the death penalty. Firstorder Business Today when president obama since down with saudi arabias foreign minister. The saudis are unhappy about the agreement with iran. They question whether irans shiite leaders will live up to the deal. If the plan calls for easing sanctions on iran if it thomas is not to build nuclear weapons. If it promises not to build nuclear weapons. Ebay and paypal are splitting. Even is facing stiff competition from amazon and other online retailers and are dealing with the effects of a major data breach. Paypal will face off with mobile walklet and android pay. Icahn is among those who lobby for the move. It already looks like hbo will be a big winner while the Big Three Networks are losers. Hbos game of thrones tops this years emmy nominations with 24. The awards show will air sitomer 20th. Those september 20. Those are your top headlines. Tom germany will vote, the expectation in germany will approve some salvation for greece. We look for that shortly. The battle is over debt restructuring. Carl weinberg of High Frequency economics has advocated reconstruction, Christine Lagarde this morning catches up with dr. Weinberg. Carl won rejoins us right now. How do we get germany to restructure . Carl good morning, tom. Good morning, brandon. The germans do not have a deal to come to the table. Restructuring a summing that is imposed by borrowers on creditors, and it usually is involuntary on the part of the creditors, so i think mr. Wolfgang schaeubles position is what i would say, no way we are going to do it give me my money, but i the end of the day, i think the greeks enforce the issue, and i believe they will. Tom within this, Christine Lagarde has been most vocal. What does she need to do to increase the pressure . Tom she is carl she is doing the right thing the first step to get anybody agree that they need to fix it. I think she is doing what her role is, which at the ims information, the sort source of analysis, her analysis says this is the way it will go, and eventually people will catch up with it because i think it is good enough. Brendan the way Wolfgang Schaeuble wants to handle it, which is out of the eurozone. Carl no, no, absolutely not. Greeces best places to stay within europe, and europes best strategy for getting any money from greece is to keep it in the eurozone. First of all, they are good customers, and they will buy more in the eurozone. Secondly, the dramachma will float away, the local equivalent will be completely wiped out. Third, they have invested so much money in germany through all of this financial support. The payback is to keep them inside europe, keep them as good customers. Everybody is better off if greece stays in. Tom carl thank you so much, Carl Weinberg with highfrequency economic. We look at equities, bonds currencies, commodities, hr and as we await the german vote. 1. 0892, still below the 1. 09 level. Oil is off. 50. 84 gets your attention. If commodity soggy this morning . Brendan this is bloomberg surveillance. I am Brendan Greeley with tom keene. Yesterday goldman sachs, were looking back at a week of bangor earnings. We have bloombergs Michael Moore to sort this out for us. What do we know about banks that we did not know on monday . Michael the banks are still waiting for higher rates, still waiting for activity so the ones that did well are the ones who showed cost control. Brendan basically treating the bank like a widget manufacturer. Michael pretty much. Tom within the conference call, are they waiting for drew mattisus economy . With us, drew matus of ubs. If we just get a better economy, things will work out. Michael yes, and there was some optimism on sides of that especially on the consumer side, Consumer Spending picked up, mortgages held in, lung growth better than expected, so there are some signs of that, but until we get higher rates, there is not that tom within your research and you are good going across the banks, if we get the rate rise drew says this will clearly benefit confidence, which will benefit the economy. Do bankers, are they desperate for a yellen rate increase . Michael they are because they spend the last few weeks trying to lure customers vonnie will they continue to do best by trading revenue, will it continue to decline . Michael we had hope in the First Quarter, the First Quarter was actually better, but that did not continue to spread it has just beens topping and starting for the last couple of years equities, bonds, currencies, commodities will become vonnie will become less prevalent . Michael you can project most of the other businesses. Trading usually of the one that moves the needle, even if it becomes a smaller piece of the pie. Brendan so were not expecting a move away from fixedincome trading. That will not be a part of anybodys restructuring. Michael we have seen some in europe but so far the banks are taking a wait and see approach. They are tweaking around the edges. If we see another six months to 12 months of this lackluster environment, you might see some more and dramatic changes. Brendan Lloyd Blankfein is a billionaire. I was trying to figure out whether that was asked ordinary and an indicator of his success in the banks or whether that was a duh moment. Ok, it is a successful bank, he has equity. Michael he has a huge amount of equity, just like jamie dimon. It is not respectabl it is not unexpected, but it is notable, and it is rare especially staying with one public firm for so long. Brendan drew matus, does that Say Something about the economy . Drew i do not think so. People who can run Large Organizations are getting paid for it. Tom the five lawyers at ubs listening to drew matus [laughter] brendan i am sorry how are they doing drew . Drew they are good, and when they get a chief economist, they can do even better. Tom the statement of the recovery of american banking, i go back to senator shelby out on the white house driveway shaking the papers in the panic and sweat there. How much are mr. Dimon mr. Blank fine, and others how many banks are equityriskbased than the salary demanded day today . Half of one . Drew half of his net worth is tied up and goldman shares. On a yeartoyear basis, most of his pay is in equity, so a lot of it is tied up tom you assume he is paying taxes on all of this, right . Michael yes, we assume the highest tax rate, but he has had a big stake at the ipo when they went public in 1939, and it has built from there. Shares have doubled in the last three years. Tom Michael Moore on the banks. In germany, a very important to vote on the mandate to allow a greek move forward. You just heard a call weinberg say debt restructuring is where they are going to end up. Our twitter question of the day should germany leave the eurozone . Stay with us. Tom good morning, everyone. A quiet friday is what it is the intermarried the International Monetary Fund Director Christine Lagarde, debt restructuring is needed. She meant no words about it to french radio overnight. She said it is categorically not viable. Will greeces creditors budge . We continue the conversation on radio and television and a bit. Matthew miller has a special interview this morning, and he joins us. You have a Double Barrel interview. This is what i would act of matt miller. You have got lipton and then cochran. Matt they may focus on slightly different things. Lipton has great experience going way back, he worked with jeff sachs to advise russia poland slovenia on their transition to capitalism, but obviously he has been in the private sector as well. He worked for citi for a wild, and then he worked under clinton at the treasury and then under obama a special advisory. Now he replaces lipsky as Christine Lagardes first deputy. Is it Debt Reduction that greece needs . Is it debt relief . How should it go down . Tom then you go to mr. Cochran. Matt from the booth school and senior fellow from the Hoover Institution over at stanford study made a really interesting on his log, he has his blog the grumpy economist and also has his book called the grumpy economist. He said look, the minute the greek banks open, there will be a instant run because everyone will take all of their money out that they wish they had already, and the assets in the greek banks are just debts, loans that are not being repaid, so if you are a greek citizen who has to pay a loan back, why would you if you know it is going out of business anyway . Brendan from the history of capital controls, we know it is much easier to put them in place than it is to gradually lift them. Iceland is trying to figure and how to slowly back off of them without causing exactly what you are talking about. When the banks open on monday there will be that 60euro limit grade matt maybe i will ask both, david lipton and john cochrane, how would you do this . Alexis tsipras has called that success. Is that too small to be an example . He is working very closely on ukraine. I probably will not have time to talk to him about that, but he worked in kiev very early, and it will be great to hear him talking about it. Tom matt miller, see why much, with market makers, with lipton and cochrane as well. I look forward to the conversation with david lipton replacing john lipsky at the imf, the first deputy managing director with importing comments as well. A look at our twitter question again, we have a great response thank you for that. Should germany leave the eurozone . I first saw this idea ages ago. Stay with us on bloomberg surveillance. Good morning. Tom good friday morning, everyone. Bloomberg surveillance. Lets get to our top headlines. Vonnie the broken bone in the neck of george h. W. Bush will be able to heal on its own. Dr. Say that could take up to four months. The president had a fall at his summer home in maine. He is wearing a neck brace. A spokesman said he never lost consciousness and suffered no mental impairments. He is 91 years old. Criticism of the Deutsche Bank by german regulators. Senior executives were singled out in may by regulators. They said management failed to address the attempted rigging of key Interest Rates. It also indicted two former lieutenants. The questionable practices happens during james tenure. Hulu is considering an adfree option for service according to to the wall street journal, hulus current contract requires advertising breaks, and adding an adfree option may make it 14 a month. Just another thing to subscribe to. Tom exactly. I cannot say it better. In greece and the rest commodities implode, iron ore has a recent bid, but copper is flat out grim. Even live cattle has riled over. I have not seen and the price of stake yet. And there is oil. All of this must affect the economy feared drew matus is deputy chief u. S. Economist at ubs. He is considering buying a home or h a hummer h3x. It is sexy, and it gets 14 miles to the gallon. Oil comes down, stays down it is a benefit, and we all go out and buy fancy cars again. Drew we have not seen that to the degree we are used to seeing. Tom agreed. Drew if you are 45, 50 years old, you are figuring out who to pay for retirement with a zerorate environment. Most americans do not own stock directly, so they do not see the kind of bounce we have seen in wealth. It is not evident to everyone. They are looking at cd rates, and they are saying how will i do it for 40 years . Tom math at 40, 50 even 60 is a lot different than 100 a barrel. Drew absolutely. If you had told me before for that when we went from 30 a barrel to 100 that we would be in a massive recession, i probably would have laughed at you. People have adapted. U. S. Consumers are much more resilient than anyone has given them credit for. My first boss on wall street told me the best way to lose your job as an economist was to bet against the u. S. Consumer appeared i think he was understating things. The u. S. Consumer is a machine. If they are not getting laid off, they will spend that money eventually. Brendan when the oil price was starting to drop, what we are really looking for is all this activity out west in various shale deposits. That, according to your research, we have sort of seen the end of the decline. Drew it is still pulling us down a little bit, but if you look at terms of Employment Energy employment has been up for the last couple of months, not down, so it is a very curious world we live in. The main thing for me, the main data point, the easiest to understand claims. If there is any sort of weakness in the u. S. Economy, it will strike in claims first. Firms are not out for a stick. They do not pay people to produce nothing. If they are not firing people, there is nothing wrong. Vonnie it is not all about creating actual jobs drew that is true, but if we think about parttime employment, that has been down 900,000 over the last year and total employment is up 3 million, so we are making that adjustment. There are lower wage jobs being created, but if we have an economy where a lot of people who are looking for work are not highly skilled, there is no point in creeping jobs at a Nuclear Power plant because we are not going to put Homer Simpson in that job, right . You need a lot of training. Vonnie just briefly, how much do you place on corporate earnings . Drew earnings are important margins are important, revenues are important, but our strategists have been very clear that just because you have higher wages does not mean you will have a pullback in the equity market. Higher wages are usually associated with higher activity. Tom drew matus of ubs. Commodity charts are something we will be spending a lot of july into august on. We have a modest Twitter Response today of our twitter question. Vonnie that is one word for it. Should germany leave the eurozone . Thanks for tweaking in. Germany will not leave the eurozone as the benefit of being the strongest member. Tom this is true. Well said. Brendan you want the cheapest house in the most expensive neighborhood. Completely wrong. Vonnie germany is a strong competitor that causes an imbalance that is taking it to the extreme. Brendan predator is a little extreme. Vonnie the banks deadline and all the money. Brendan whoa vonnie. Tom this is not an original idea, but it is certainly a timely idea. Brendan you need to figure how germany negotiates in its own selfinterest. Vonnie the problem is not leaving or joining, it is an Economic Situation and governance. That is the most balanced answer. Brendan absolutely right. The same person tweeted to me and said i need to stop reading german tabloids and then tweeting german assessment from them. Maybe i need to move on from bilk. The real problems are the governance in the eurozone. Vonnie mario draghi said yesterday, the ecb president. Brendan i am looking at germany, our hans nichols sitting right now, watching that vote happen. It started at 34 past the hour. Hans, you are in berlin, what are we seeing . Hans we saw Angela Merkel get flowers. It is actually her birthday. This will pass nobody really doubts that, but what we see is a clear prestaging of just how difficult these negotiations are going to be, and what you see is almost the builtin excuses. Negotiations over the 86 fail, then the bundesbank has plenty of i told you so moments, starting with mr. Wolfgang schaeuble. Ebitdabrendan are there any tea leaves from him about restructuring without calling it a restructuring . Hans the closest weve come to that is yesterday has top spokesman said that a ending the maturities for 30 years sounds like a backdoor haircut. If you cannot do a backdoor haircut, you are in big trouble because as madame lagarde said it is editorially not viable to have his land out there with out any sort of greek debt relief. It is categorically not viable to have this plan out there without any sort of greek debt relief. Tom hans what do you see in the german newspapers this friday as a print for saturday and sunday . Brendan unlike brendan, i do not read the tabloids i just look at the pictures. [laughter] there will be some big think pieces over the weekend on just what it means for german society. Guys you always have to wait around. Around 4 00, 5 00 der spiegel could have some great scoop on what went down behind the scenes. Tom hans, a great week. Thank you so much, hans nichols. Vonnie 439119 in favor of a greek aid package. Hans, do you get that headline . Hans i have not seen that. 119 is much higher i was expecting something in the 50s and 60s. Lets make sure that number we are flashing is not the overall total vote. Brendan hans, the number we are looking at the terminal is 439 for, 1919 against. What does that say to you . Hans lets look at the 119 against. If Angela Merkel is under 50, that is fine. Also look to see how many sp ds she lost. If that is five or six, her coalition is strong. That looks like a good number to me. Tom hans nichols, thank you again as we see this historic vote within germany and the story drives forward. He the cursor is lagardes th e precursor is lagardes blistering comments. Coming up, a piercing set of questions and answers up with david lipton of the internationa live from bloomberg headquarters in new york, this is market makers, with Erik Schatzker and stephanie ruhle. Erik good morning, everybody. Happy friday. It is market makers. I am Erik Schatzker. Matt and i am matt miller in for stephanie ruhle. Erik the imfs david lipton Christine Lagarde, his boss, said greece needs that were debt releifief more than what has been considered. Matt did she say relief or reduction . I am pretty sure she said reduction, although the spirit is the same. Erik a distinction with a difference. Greece is at the top of our headlines this morning. Lawmakers and germanys lower house, the bundestag, approved a bailout the plan passed easily and fact. The Parliament Debated this plan and heard a strong endorsement of it from chancellor Angela Merkel