Manufacturing activity earnings will be up before the bell. It is starting to taper off. We have charter this morning and then a Buffalo Wild Wings and herbalife. And commodities futures advance. Some of this as at global being discussed. It was a difficult friday. The euro strengthens a little bit. Crude is going nowhere. Fix vix. The ruble is stronger. If headlines are out of manila i would noteour. That the 30 year bond is lower yield and higher bond price. The difference between the tenure in the 30 year yield is getting compressed. It is showing that curve. Lets get to the front page. We dont know where to start. Giant deal. Pfizer is proposing to build for 99 billion dollars. They offered this back in january but they rejected it. The price moves. Lets go to the terminal. Here with astrazeneca. You can see the mediocrity for three or four years, going nowhere. This is the popup. My question is, is this because of mediocrity at pfizer and astrazeneca . They are showing no sales growth. They want to secure a pipeline. They have cash held overseas by pfizer. Astrazeneca has no comment. That stock price, you cant ignore it. I am thunderstruck by the difference of opinion among analysts. That astrazeneca has a very strong cash flow for the next six years. They have a patent issue. His pfizer look at the next six years . This looks very strong. Therein lies the rub. Greatigroup is setting up optimism. This is all about generics. Astrazeneca has a pile of revenue and a big hunk of it goes away. That is what happened with Bristol Meyer and merck and pfizer about a few years ago. Are we going to end up with one drug company . It feels that way. One more item. , 100 billion, how big is that . That is bigger than mcdonalds and boeing. Is meeting with the french president. He went to finalize the purchase of alstom. France intervened. Looking at a rival offer from siemens of germany. They stepped in. They want to create a deal that creates to european japanese instead of ge taking over. Audience withe an the french president. Is he going to wear dartmouth green tights . An audience . With a president whose Approval Rating is similar to that of our own president. I think it is bizarre. There is breaking news. Will take on it more customers. This a top headline. They will divest almost 4 million customers. Charter reap reports earnings later. No more headlines this morning. What else do we have . The yankees won. Moving onto politics, war sanctions against russia over the crisis in ukraine. President obama says the u. S. And the eu will announce them later today. He spoke after arriving in manila as part of his asia trip. Forwarde going to move with an expanded list of individuals and companies that will be affected by sanctions. They remain targeted. Areas ofocus on some high tech defense exports to russia. We dont think they are appropriate to be exporting in this kind of climate. Military has started exercises on the ukraine border. They will remain targeted sanctions. , germany warns of more sanctions if russia does not go operate. The next up is financials. We are not. The front page stories. We need to look at the big deal. And astrazeneca deal would be the biggest in the united kingdom. He joins us by telephone. Good morning to you. What will be the response of astrazeneca to this second offer by pfizer . Good morning. We will see. It is going to be edited to see what astrazeneca will say about that. In the short term, they have declining sales growth. Oncology pipeline with some of the most exciting targets. It that is why pfizer is so interested. There is a more efficient structure. They made note of the lack of revenue growth. Let me be blunt. I will use an american phrase, are these dinosaurs mating . Is veryzeneca interesting. Both in the short term, these companies have declining sales growth. Way, that does not make it so attractive at first view. Obviously, what you want is growth and profit going forward. Hader is a company that has a lot of acquisitions. They gave some good return to shareholders. Geneva. E also joined by you can read his article on bloomberg. Com. There were originally negotiations in january and fell apart. Now it is april and it is back of the table. What changed . That is hard to figure out at this point. Pfizer seemed to have walked away. When word leaked about that approach last week, astrazeneca went up. Pfizer light the feedback that they got from the Market Reaction about this with the time to come back. Investors are warming to the 46, it isnorth of unclear what it would take to get the deal done. Pfizer saw that it had an opportunity. This is a massive number. It is like going out and paying cash for all of boeing or all of mcdonalds. How will they pay for this . One thing they said as theyre going to pay with cash and stock. They are going to headquarter the company in the u k. That will bring tax benefits to them. It is unclear how the u. S. Government would react to that. Pfizer has a ton of cash overseas. They can argue that they will get tax benefits from this deal down the road. It will be a situation where the headquarters will be based in the u k but the headquarters will be in new york. Give us the last word from geneva. When we look this morning and another pharmaceutical deal, it does this say about the entire industry . 200 billioneing plus of potential mergers . What we see is that Companies Want to bolster their business attractiveey have Business Models and they want to seek other businesses. It is a we have seen with other companies. Lets leave it there. Thank you so much. For reporting from the paris news bureau this morning. Jonathan. St host is woke up this morning, what does that say about the market . The most important thing we have been missing is ceo confidence. That is reflected in m a activity. I am looking at this is a big positive. In health care, there are different dynamics. You talked about the lack of a pipeline and squeezing costs and creating growth, in general this is a good thing. Is a fear of missing out . I think it is confidence. If you look at m a, it moves together. It is confidence in the future that makes you want to do more. This is very important. Get this up if you could. Do you buy this . I smiled. We put out a piece this morning that challenged exactly that. Not get tired, they just and when you have your next recession. Most investors in the economy think that this is going to go on much longer. Will we get a 30 return this year . No. But we will get a doubledigit return. For thewill be with us hour. Stay with us as a look at ge, pfizer, and 18 other stories. All of these deals and so many of them are brought u. S. Country Companies Going overseas. We will talk about that ge deal when we come back. Audiences having an with the french president. An audience. Day,witter question of the does an entrepreneur need a College Degree . Tweet this. Provocative. Good morning, everyone. Bloomberg surveillance is on bloomberg television. Andie ruhle arden Erik Schatzker will join us. They are in los angeles. The ceo of blackstone will be with them. This is bloomberg surveillance. We have an incredibly busy monday morning. Dow futures are up 59. We have a lot to do this morning. Ge thought that he would a victory lap when he arrived in france. It turns out he has to do some damage control. , theproposed to buy alstom power in transportation company. France is intervened. Look at a competing offer from siemens that would involve less of an outright purchase. This has to do with jobs. France was to make sure that alstom does not result in job losses. Siemens has promised job guarantees. We saw that with comcast. This is one of the issues at stake. We want to bring in hans nichols. In berlin. What are you hearing from the german side . Anis being touted as interest rather than a binding offer. This is informal. From the german side they havent gotten this far. I want to Say Something about this meeting. It concluded. He did something in high school that tom and i did not do, he practiced his french. He walked into that meeting and are theout, the reports french government is now neutral. That is a remarkable win for ge. He industry minister when you are at the london school, you studied this. It was a great course. Give us the back story. Why is the french government turned to one of the industrial giants of germany. As scarlet mentioned, is about jobs . Is about jobs. It is about national security. There is a panic european feel to all this. Siemens try to make a similar bid where they. Ent after alstom when it looks like ge comes in theacquire most of it, french state goes to germany and says we would like siemens bid. You see this counteroffer from siemens. It is been a remarkable weekend. As it stands, it looks like the u. S. Bid is equal. If the french government is is inclined alstom to go with the ge bid. Considersgovernment Alstom A Crown jewel. What did they not bailout . What did we not bailout . , on. What can you tell us about him. To buy a french internet site and yahoo dropped the plan. Not bailout . France they have a lot of healthy industries. They do have some trouble. Is, alstom is ahead of germany. We think of siemens as this great manufacturing company. They have a lot of egg on their face because they have not delivered trains on time. Who makes better trains . It may be the french. Much fromou so berlin. This ferment is great. It is fun for us. We have 18 stories to cover, which we dont normally have. It screams of a bull market where there is a panic. This has got to be all good for a guy like you. It is great. Stories. Two the woman one adam was talking about, we are going to do foreign acquisitions. We are going to reincorporate elsewhere. This is about taxation, which is important. Animal spirits loves this. I havent s p target of 2075. It is about 13 up from here. When het feel better shows up on mondays. There is a made in the usa look. We will discuss with the whole crew. This is bloomberg surveillance. Futures are up five. With me is scarlet fu and adam johnson. Adam has our headlines. Midwestrneau struck the a tornado struck the midwest and killed 17. The National WeatherService Warns her maybe severe storms today. That will be throughout the southeast. Be careful out there. Thatlayers are demanding the league come down very hard on donald sterling. Forice said to be sterling making racist comments on a tape. Adam silver is investigating. Those are the top headlines. A wide selection of things this weekend. This jumped out at the new york times. A professor at the university of South CarolinaSouthern California. How much do americans understand about finance . If we are going to have a debate about accountability, we need to learn the nuts and bolts. You have young kids. Do you tell them to go to learn about all of the stuff so we can have an intelligent dialogue . Middlent know if my school kids would listen to me. Those two columns on the front page of the journal tell you what you need to know every day. It that keeps you more informed than anything else. Does it give you the financial vocabulary to become literate . I think it does. Accounting, focus on the income statement and Balance Sheet before cash flow. In general, the book is against the gods. , thatting to the journal help to get there. The professor is dead on about the cluelessness. Paypal ceo is paying students 100,000 to forgo college and begin a start up. This is bloomberg surveillance. It is a busy washington, d. C. From washed into manila, where the sun is rising on the capital. The president will return tomorrow from the philippines after his fifth trip to asia. Good morning, everyone. Surveillancerg with adam johnson and scarlet fu. The president announces that the United States will place new sanctions on people and Companies Close to Vladimir Putin. Mattingly is traveling with the president , he joins us from the other side of the world. What is the single mood and emotion in manila, as the president announces these sanctions . Officials,te house they are hoping that this second round of targeted sanctions will work. The other thing to point out is there also realistic about this. Even the president himself in multiple press conferences is clear that he is not sure this will have any impact on what Vladimir Putin does. We can see across the bloomberg terminal, many others speaking, including in germany and osborne of the united kingdom. How unified is the west, and how unified is the view from manila. Very. This is what the Obama Administration officials point to as the clear victory about this process, you have the g7 countries in complete agreement on targeted sanctions. What you need to look out for, if they dont work, the next step, particularly if Russian Troops massed on the eastern border and moving to the ukraine, are these sectorial sanctions the president was talking about. That is where you may see a break above where the countries currently stand. The u. S. Will not be hit as hard as some countries like germany would if they start these sanctions. How successful is the strip . He has moved from japan to korea to malaysia to the philippines. Has this been successful . Trip,s is a dual track you sure your alliances and i feel that they have been successful on this front. But this entire trip was somewhat about beijing as well. They have made strong statements about china and you have not seen china react all that negatively. Very goodals feel about this but missing is a trade deal, they did not make any major trade deal and that may be of concern. Traveling with the president in the philippines, adam . Bill gates and Mark Zuckerberg had two things in common. Change the world and dropped out of harvard. Harvard is saying no more. You spirit a lot of early are looking you for the one percent of the one percent. What sets those people apart . It has to do with their talent. The record of harvard speaks for itself. We have eight u. S. President s and 16 nobel laureates, and the birth of the Venture Capital industry as a whole. It started as research and development in the 1960s. Field creates this fund, leave harvard and we will give you 100,000, go to talk about the harvard student who says i want to set harvard and i have this great idea. You should stay at harvard and after you graduate, you will get amazing support to do what you want to do. With all due respect, every Single Company that made him wealthy came from the college campus. Facebook was here, say nothing of google or yahoo . These are all people who met on campus and formed their initial ideas here. We are talking about the elit e, the 1 of the 1 , who all got 900s on their sats. What does this do for those at cornell with the Rochester Institute of technology, for the kids who will not get in 2 or 3 schools. You have to make the argument that he would make. These kids are already going to drop out, why not help to support them . The argument is if you stay just a little bit longer, you have a bigger chance of meeting that essential team that may formulate that idea. Your theory is that you can still do what you want to do . X of course, and do it with better people. You have been walking at working at wall street banks for many years. Silicon valley, it has morphed to towards candidates with not natural without College Degrees. As washington done that at all . The biggest challenge i have when looking for candidates is finding people with the skills we are looking for. The ability to write, the ability to do many things through problems i wish i had stronger students coming off of the College Campuses and even the better schools have candidates. With all the synthesis, especially from Silicon Valley on science and technology, and math, there is a need for humanities. In the new york times, nicholas writes about patrick chung, when you look at the guys coming out of harvard, trying to get into Silicon Valley, is there something that they dont have enough of the humanities aspect, the understanding of the broader world around them . A liberal Arts Education means that they produce more lasting and more durable companies. It is a very interesting contrast. When you go into the toilet stall at google, you close the door and there are math problems and algorithm problems. Wallsou walk through the of facebook, there are quotes of figaro. There are two things the trusted machines and algorithms, the other is the trusting humans. My father had equations on the side of the wall at the house we used to live that. They had math equations. Googly person, we did not quote dickens or cisero. At all speaks to the math. Did they have this installed at the Capital Markets . [laughter] they had Research Reports canadians the royal bank of canada. Firm,i read about the there are two ds, deep pockets and decisionmaking. You have a lot of money, and decisionmaking, what is your process . We have 13 billion to imagine, and the separate entities, and collaboration with harvard, we have a stage fund that helps Small Companies and small ideas become great. And so, how we do this is we have an Investment Committee of five people, myself and another guy at harvard name hugo van buren, and three representatives. Are you looking at some distinguishing characteristic point that someone is giving you, ultimately ultimately, we are looking at great people targeting huge markets. We help them to say, that idea is phenomenal, but lets try to think marginally. So you are working with harvard . If they have a good idea patrick, thank you. Patrick chung, thank you for joining us. The twitter question of the day, that is an entrepreneur need a College Degree . Tweet us at surveillance. Ofthe changing demographics College Campuses and how Chinese Students may be displacing their asian counterparts. This is bloomberg surveillance, on your tablet, mobile device, or smartphone. We will be righ tback. Right back. Good morning. Bloomberg surveillance. I am tom keene we are file followinga we are pfizer and astra seneca. Adam johnson is with us this morning. The u. S. Is beefing up its military options when it comes to china. Considering is various responses to any future chinese provocation in the south and east china sea. Among them Aircraft Carrier exercises near china. The u. S. In the philippines have signed a Defense Agreement just hours before president obama arrives in manila. Handle territorial disputes as more u. S. Troops will be filed in and out but there will not be a permanent u. S. Presence, just rotated in and out. A romantic comedy beat the superhero at the box office. Cameron diazs the other woman won at the box office, the soldier came in second after three weeks at the top. You a fan of this . I have been to three or four movies, they have lost me. But you have been watching game of thrones. Movies are laughable now. Scarlet has a wonderful chart. Is all year long. Chinese students are invading u. S. Universities. If you look at the numbers. They may be displacing the asianamerican students. What this chart shows is that overseas Chinese Students are still small in terms of numbers with asianamerican students are trending higher. Beginamerican students about 2010 and have been coming down a little bit. Certainly this is a big issue because Chinese Students tend to pay the full tuition price. They pay for the full ride. Asian students lets go to the Harvard Business degree. He does that is all that he did is go to school. Patrick, you do a lot of work for harvard. This is something that rings true on harvard campuses as well. One of his countrys finest products is Higher Education. One of the central pillars of why this is so good is american products. This is another piece of evidence that makes it a level playing field. When you have the online platforms, those professors are giving the same examination for the broad, outside world. The difference between the scores are miniscule. When you look at this the globalization of american universities. This is leveling the playing field. For my kids at some point, two. My boys will be between that white line. Overall this will strength in the country more competitive, our children have to compete on the world stage. If they dont compete in college they will have to compete after college. Is points to how Higher Education is one of the nations biggest exports. You wonder how long that will last with other countries start to make a progress. Universities like harvard took almost 400 years to build. They need some time. Lets consider that concept for a moment. Higher education is one of americas greatest exports, it may also be one of our greatest weaknesses. That we export incident leaving it here. I give a speech to any number of universities, i just did one of them at rutgers. Most of the audience is foreign. University of indiana and rutgers, this foreign impact is fabulous on upgrading all of these schools. It is not just about harvard on the brain. This brings us back to the sessions exactly. What is your device to a kid coming out of harvard . What is on your to do list . If you have a passion to start a business or do anything, it is not just about wall street. It is not just about the well trod path. Do you agree this is not just about wall street . This is something you are passionate about. Jobink i have the greatest in the whole world but if he wants to do something different, he will not be bad at it. We go international for our conversation. Rips downian activist the blue and yellow banners, the colors of the ukrainian flag. Many of these have been occupying the government buildings throughout the eastern ukraine. That is number three. Moving up to number two, the south korean Prime Minister departs from the Central Government complex in seoul, south korea, who offered his resignation over the south korean ferry disaster. Job isPrime Minister much more symbolic than you may think. The president s job is what you want to watch for. On friday, aced a terrific perspective. And from left to right, the king and queen of belgium jet with the king and queen of spain before the double canonization of john paul the third this is amazing. This is a fabulous photo. It is really for everyone. This gets a lot of play this weekend. Tookis the basic thing i away. Thank you so much, patrick chung, for joining us. C. Veteran. We will be back with more on what defines value at the u. S. Stock market. The chief Market Strategist will weigh in. This is bloomberg surveillance. We are on your television and streaming on your smart phone, and we are also on apple tv. Good morning, everyone, and incredibly busy morning here at bloomberg television. This is bloomberg surveillance. Makers, on market Erik Schatzker and Stephanie Ruhle are at the milken ideas and action conference. We will join them for live coverage and we will go on to rabini in the second hour. I am scarlet fu here with tom keene and adam johnson. Giant alibabace is expected to file for an ipo. They are being nudged away from the state led Industries Like steel and defense. Market technologies are picking up the scene. Are wrappingsung up and will sum up their case tomorrow in san jose, california. Apple says many smartphone functions infringe on apple patents. And comcast is making more steps to get that big takeover with Time Warner Cable approved. In the last hour we learned that Charter Communications had almost 4 million customers from the companies and with antitrust regulators support, they were concerned that this would give comcast too much of a power market share. That is the latest from bloomberg west. Again in thence global group, they got it wrong. At rbc Capital Markets, he has sed over 206 companies they are simply buying back more stock than expected. They areat sentence, simply doing what they do in buying back stock. They are buying back stock in the companies are beating by a much wider margin. This is all on the margin line and everyone is looking at revenue, and margins and revenues are the real topline story. This is going down because prices are going up . It may be some Pricing Power but really it is the companies that do a great job of maintaining cost. It is the lack of optimism that has companies not investing in the future. That means they are squeezing higher margins. This is the comment over the weekend at rbc Capital Markets. We would be more likely to change our optimism if we saw a fundamental deterioration in the economy or indications that fed policy was negatively impacting numbers. Neither are present. There is no indication that the fed is looking to take this punch bowl away. The fed has to stay in this game and there is no indication of this in the sessions. This has to keep going. Do you think that the fed is looking at all of these transnational deals and worried a bit about it . 100 million with pfizer and astrazeneca . The fed is focused on, why are jobs being created the way they want to see and number two, with all this money printing, there is no inflation . Isnt there a link . As they buy business outside the u. S. , they will not be increasing jobs in the u. S. Revenue growth will come from overseas. And you have said in the past they can only do so much. They build the bent the Printing Press but not government policy, and other things we do like tax policy. They cant control it. Where are we on monday as we go into monday . Adam johnson, the fix is very simple. We wereot quite where in 2005 or 2006. The fix has come down, and growth is going up. Did you have someone on surveillance on friday with pimco changing they no longer have the old logo tom mather said that they have more optimism here, away from the gloom. When you look at the buzz out there and the mood of rbc Capital Markets, do they believe in the bull market, or is there some residents about it they are buying into the longterm bull story. People are asking, why is a 10 year bond yield as long as it is and is this telling us something that we should Pay Attention to . And the organization has also been something people are worried about. We will ask you about pharmaceuticals i like health care. Even more than pharmaceuticals, a lot of these companies are beaten up when you look at the growth rate that is behind them, they look very attractive. You are optimistic. Does this mean the whole seasonal pattern will go away and persist for this year, and we will not look at markets again until september. I cannot find an Investment Strategy based on a rhyme, but i dont put much into this the question is at the end of the year, will the market be 10 higher . Yes. What about midterm elections . Going back to 1950 in years with midterm elections, you are statistically flat until november. I am a big fan of staying away from these kind of technicals. What are the fundamentals . Inflation is low and corporate earnings are coming in better than you would think, running on a trend on corporate earnings and theyll you agents are good. I am not paying a lot of attention. We both know, with jon golub, the stork announcement with apple. Like lemmings off of a cliff. Every other company has to decide the issued stock and the payment for it, that trend, that was a historic moment. It is great that we have companies sitting on cash youre not using it to give it back but i would really rather see them say, here are a whole bunch of great ideas i am investing in. Is that what pfizer is doing right now . Maybe. They have overseas cash and they have to do something with it. They may return it and there may be a story there, but i like the optimism. From rbc Capital Markets. Thank you so much. Let soak a Capital Markets. The the report forex report. It was a twoday rise over the ruble and in china, the president does not meet in beijing. We will be back with more from enola. Manila. Good morning, everyone. Proposals and 100 deals for astrazeneca, sharply divided on the value for shareholders. And jeff andande melt discuss general electric. Will siemens of germany push inm aside . The crisis ukraine escalates. The crisis in manila says that new sanctions are in order. Good morning, everyone. We are live from our World Headquarters in new york. I am tom keene. Joining me is scarlet fu and adam johnson. Our guest host for the hour, the partner at sky Bridge Capital joining us this morning on the hedge fund industry. Overnight retail sales rose six point two percent, exceeding estimates. This is happening ahead of the april tax increase in japan. Meanwhile, Economic Data in the dallast 10 30 in fed, manufacturing. Earnings before the bell, only one of note, charter, losing . 35, more than expected. It looks like charter is going to get 3. 9 million subscribers out of that comcast deal. Deal we have a herbalife and Buffalo Wild Wings. Could be a down component. Not evenbe. Close. Lets start with general electric. Jeff and melt, going to the top in the offer for the french company. He met with Francois Hollande this morning, who made a counter offer to him. The french government was concerned that it would lead to job cuts. Hans nichols said that the french government came out of that meeting being really neutral on whether ge or siemens takes over. Onwill keep you up to date that one. Elon musk and spacex plans to sue the pentagon over what they call a satellite launch monopoly. There is talk to another big deal in big pharma. Back in january there was a deal to buy astrazeneca for 99 billion. They rejected the offer. Pfizer said that they are still interested in coming up with a number that they can recommend to shareholders. And absolutely fascinating story. I thought that fill out of the paris and her paris news bureau did a fascinating job of giving the background to astrazeneca and pfizer. He joins us from geneva right now. I was stunned at the divide over this transaction. Set up the division between optimists and pessimists on pfizer. Isi think the word disbelief. A lot of analysts said that this does not make sense, given what pfizer has been saying over the last few years. They have been putting in place a system where down the road pfizer could split the company into a couple of pieces. They have also sold their Animal Health business. So, everything that pfizer has been talking about is pointing to a smaller, more focused company. And then this comes along and analysts and investors retching their heads. Others are saying look at the numbers. If you added up it will be a good deal. I think that the pharma world has been scarred by the megamergers of the past few years or so. A lot of them caused a lot of difficulty. A lot of people on that side just dont believe this is actually happening. They are not quite sure what the strategy of pfizer is. What do we know about astrazenecas strategy . Committedy they are to an independent future, that they have a pipeline of promising drugs that will pay off down the road, but they have a tremendous patent cliff in front of them. Their drugs are in the process of losing patent protection. Their sales will go down for the next three or four years, guaranteed. They are saying look, we will turn it around by bringing these great drugs to our research pipeline. The question is whether shareholders will let them do that. Phil, you have worked both sides of the atlantic. You did a cushy job in paris with lattes and threehour lunches. Explain to me the difference for a big European Pharmaceutical Company and pfizer over on 3rd avenue in new york city. What is the difference in culture . I think the differences are less than you might expect. One of the things i have been struck by in this industry is one of is how incredibly global it is. In pfizer you have a ceo who is european, a u. K. Drugmaker run by a french guy these Companies Operate around the world, are incredibly multinational if you look at the executive and research ranks, the Corporate Culture is not tied to specific countries. Or it is much less than you would think. Group, very wisely following, ranked number one by Institutional Investors covering politics, they have noted that this is a credo but that six years from now a lot of the astrazeneca drugs will come off patent. Is there any sense for what this means longerterm . You know, i mean i think that pfizer is optimistic that they can make his work on the longterm. The thing with the Pharma Industry is that it is always a bit of a crapshoot. The pipelinef in that always looks like a great drug and it is always a gamble as to whether it will pay off. Pfizer seems to be making the bet that based on what is in the pipeline, it will pay off. You have an audience with Francois Hollande . What is just and melt doing in paris . Doing iny immelt paris . That is one of the things, it will be interesting to see the u. K. Reaction. The u. K. Has been scarred by pfizer cutting jobs in one of their big operations in the u. K. Make the trip to france to talk to the president and pfizer has reached out to the u. K. Government as well. Like you used to work with phil, right . Back in new york. Now he looks parisian with his facial hair. He has the edge in assay quas. Ju nu se hour, guest host for the troy, we want to get your thoughts on this explosion of m a. Up 16 from one year ago, 1. 3 trillion of global deals . It is nice to see an betterent piece play out than expected. Since the crisis we have had slow and steady m a. There was a pickup in 2010, 2011 , a lot of the dysfunction in washington held back spirits. Several years on, companies are cash rich. You are a hedge fund guy. Are those Hedge Fund Players in this game . Or is this removed . Hedge funds focused on corporate activity and equity structure are very much looking at companies and industries where there could be consolidation, pharmaceuticals, biotech, trying to anticipate these companies, it makes sense to merge, the deal is announced, this cycle is different from the one in the past in that the cycle they are acquiring, that is another thing theyre looking at carefully. Typically when you get a companies coming together, it suggests you are more mature in the cycle. Definitely. It depends on the pace, right . It might only last for 12 months to 18 months. If it slows down a bit, maybe another few years. The thing that is important within this conversation is everyone is up to their eyeballs in catch cash. Everything we talk about, everyonethe yankees is up to their eyeballs. Particularly multinationals. This astrazeneca pfizer deal we are potentially talking again talking about, a deal with numbers that big does not usually work out. Historically m a and where you are in the cycle, it makes sense, thinking of time warner, aol, that was out brained. This one is in an industry that is consolidating where everyone has trouble with Pricing Power. That has been the big push from acquisitions, taking out costs, becoming so big that someone else acquires you. You have a full page ad for the salt conference with a bunch of beauty boys. What do you want to hear from Lawrence Summers . I think it will be interesting to hear his view on whether keynesian politics here are working. He is of the camp that they helped out in the recession, but we are skeptical of that. Defending some of this stimulus that was spent. In general people want to get his take on whether the u. S. And other companies and countries are in secular stagnation. Was that a good enough shameless plug . It was good. [laughter] the 10 year yield is going really nowhere. Declining, mobile is weaker, 36 on the ruble, showing tension in the ukraine. Coming up on surveillance, activist investors are becoming more and more powerful. We will take a look at the good and the bad of all of this activism. Good morning, everyone. This matters now to our guest host the allocation shortening and what to do in the hedge fund arena. We all know it has gotten ugly, but how ugly . What to do, or queer or critically, what to avoid. People are fascinated by this right now. First of all, what is your to do list when managing money . To have the best outside with as little fundamental risk as possible, hopefully not correlated to other assets and to use diversification benefits. Where is that right now . Is it in the fancy bonds . In terms of greed and upside potential . It is still a question of equity tied to the m a we are discussing. Clearly that is where we have the most upside. Concerned about even more volatility coming to the markets. Away from that it is back in the mortgage markets. Interest rates have gone up dramatically. Kerry streams have gone up dramatically. That is the best noncorrelated riskadjusted and. For viewers who want to make 12 the last of the market was justify the approach to make less money than the bull market. If you can tie together every market of every cycle, good luck to you. The whole thing of what we try to do is generate returns over a whole market cycle. That will compare favorably to every other asset class. It will compete with equities with much less volatility and Downside Risk if something goes wrong. To the people that you talk to and the sweat of allocating dead is the official frontier . Deadquity, 40 bond, how is that class . Surprisingly not as dead as you would think, it has had a very good run. One hedge fund criticism over the last few years is that it has done better and we think that that has a lot to do with the fed. Bonds have done relatively well. That is certainly very alive and well. The argument is 10 to 20 in alternatives can give you better returns. So that you can keep doing your favorite your famous party in dollars. Those fees have been coming down since the third quarter. Where are they . 1. 4, 17. 5, somewhere around there. Sky Bridge Capital, 1. 4 of the gross7 amount in gains there. Coming up, president obama announces more sanctions from manila. Much more on bloomberg surveillance, good morning. Good morning, everyone. Bloomberg, surveillance, we need a twitter question that matters to you. This great debate about kids leaving college. Does an entrepreneur need a College Degree . I would not even ask the question, but there it is. We will look for your answers. Does an entrepreneur need a College Degree . Upis monday, futures are six. With me, scarlet fu and adam johnson. Our guest host this hour, senior post at sky ridge, lets get to some of these 59 highlights in this busy morning. Tornadoes killed at least 16 people in arkansas and oklahoma. Hardest hit, the suburbs near little rock. There may be severe storms once then today throughout southeast. The u. S. And European Union will impose or sanctions over the crisis in the ukraine. Sanctions will be announced later today, focusing on companies and individuals identified as having close ties to let where prudent. In pro basketball, nba players are demanding that the league come down hard on darn donald sterling. You may recall that he made racist remarks on the tape that was released over the weekend. Adam silver is investigating. We have some breaking news from general electric. Jeff him else met with francois ministry the minister of industry. He said that dialogue has been open, friendly, and productive. Hans nichols was telling us that prior to this meeting, the french government was leaning towards siemens, they wanted to bring them in for an asset swap, but now it is fairly neutral on the deal . The ge board has signed a letter of intent and has already interior arranged financing. They have done their due diligence. And ge shares are trading higher in the premarket right now. A threeyear good threeyear growth rate for ge and europe. They are hoping to reverse that. Reverse it and bring it back. We will continue to monitor those headlines for you. Activist investing has ever been quite this active. Bill ackland ticket to a new level when he became the largest shareholder conspiring with the new company, valiant pharmaceuticals. That deal set off a firestorm of criticism. Our next guest says that activism is a good thing for investors. Ken, the conventional wisdom here is that activists are looking at shortterm gains while mutual funds and other funds have longterm interests. Why is that wrong . That is something that bankers and lawyers say, but when you talk to the community with active and passive, they dont buy into that. The active it the average holding career is just over two years. If you look at morningstar, they will tell you the average mutualr of long on a equity fund is one year. I am not saying they are not that that there are not long activists, the survey are. Had you know when ambitions have grown too large . Herbalife reported later today. Bill ackman, you could have said this about mba mbia a long time ago. For most of that time he was underwater, which wound up being great. I dont know how herbalife will end, but it is a one ilya dollar investment for him. Help us to understand what is happening behind the scenes . It seems as though activist investing is becoming the norm. Right . Every week we hear about something from mr. Icon, etc. What has changed . It has become a swore respected amongst Institutional Investors and has been shown to , whichccessful strategy is making it an even bigger strategy, and more people want to be activists for that reason. Would say the Boston Consulting Group and others are driving this dialog. When you see an apple transaction and a followon bond theds for buyback, what are consultants like you telling your larger institutional science . Well, we dont really advise clients in that sense. We advise them as to what the activist situation is and what is going on there. You know, we are not really advising but you are talking about cash, dividends, share buybacks, you are cap counseling on that, are you not . Activists are the ones coming in to get the best rate. We are counseling our advisors on the activists and what they are doing. A lot of people say the rise investing has to do you has to do with the zero Interest Rate environment. Will it taper off once we have a riskier environment . Growing, thereis are lots of transactions for them to target. Deterioration will come once you get late in the cycle, where people start doing silly transactions. Not at silly yet . We dont think so, not yet. Is 98 billion dollars . 99. Excuse me, i was off by 1 billion. Going back to what you and i talked about earlier, it is just money up to their eyeballs. Especially overseas. Thank you so much. Coming up, a new Study Released by the Boston Consulting Group will make you question everything you think you know about global manufacturing. Bloomberg surveillance. We will talk about the latest from ecg. There, a beautiful shot of midtown, manhattan. Isnt that the pfizer building . That they are mulling over 99 billion dollar offer for astrazeneca . Sinceave been there january, in fact. That is where they first made the offer. Good morning. Adamscarlet fu, with johnson and tom keene. Toyota, moving a big chunk of its operations from Southern California to texas. Toyota has been trying to reduce costs in its u. S. Sales unit. Rick perry has been trying to lure business away from Southern California. The big General Motors recall over a faulty ignition switch may doom the antiquated car key. The company may make the pushbutton start standard in all its vehicles. Now an option and almost three fourths of all cars and trucks in the u. S. And a sonic, advertising profits below estimates, japanese consumers are not expected to buy as many panasonic itronix devices because of the sales hike up that went into effect in april. Very good, scarlet. Of course, the president is on asia,fth tour of announcing this morning that the United States will impose new sanctions on people, companies, plus Vladimir Putin. Phil mattingly is traveling with the president and joins us from manila. The president will fly back. Is he going to fly back and look at this as a successful trip . The way they are looking at it right now, yes. Big tradeot give the deal, but they did not expect to. Instead they got the ability to reassure for countries in the are gettingmaybe we nervous postukraine, post serial. The administration feels very good about their efforts over the past eight days. How much support will he have from democrats and republicans on this next tranche of sanctions . Think it will be acrosstheboard support, for sure. Republicans want him to do more. John mccain said this weekend that he thinks the Obama Administration should be arming the ukrainians, giving them better weapons. There is always going to be a lot of questions on the republican side about how the president is handling this. The administration points to the fact that they have a unified g7 and eu. The ability to do that and move forward, while it might not immediately be enough to push black gram pushback Vladimir Putin, it is something they feel comfortable with. As you sit on the back of air force one and talk off the record to the officials, how confident are they that sanctions are ultimately have an impact on russia . Obviously if they were off the record i would not tell you exactly what we were talking about. But more broadly, officials and the president himself has said are note record, they sure if sanctions will be effective here. They are not sure what to do to shift the calculus. There will obviously be targeted sanctions. This is the big hangar hanging over the head of the russians right now. I think there is an assumption that this will not be enough to push them back. More importantly, they gives the question. What do you make of this sanction talk . If push comes to shove and the u. S. Needs to do something more stringent, the european economy should suffer. The question is how much. You are talking about the unwinding of postcold war norms , where the u. S. Was a superpower, everything was safe. Now you see russia coaching more aggressively. How much should equities selloff . One percent . Two percent . There should be a negative reaction. I guess we should talk about the philippines. What was the president s number one goal in visiting manila . He wanted to sign a Defense Agreement with the country. From their perspective there has always been local nervousness about u. S. Military forces. They signed an agreement that the administration was very happy with. It is a big victory for them. Phil mattingly, safe travels you are pivoting. I still dont know have been trying to pivot for years. They were actually focused on asia. It kept getting overshadowed by all of these crises that kept popping up all over the world. This is a longdelayed asia trip finally took place. Fascinating. Around china . Yes, did not go to china, but managed to effectively offend the china. Right. Lets talk about futures right now, pending home Sales Numbers up, theut, futures are 10 year, 6. 85 is monday morning. Morning, everyone. This is bloomberg surveillance. We are with you through all of our Digital Media, including me trying on some light blue glasses on friday out there. All of the Digital Media out ,here, bloomberg tv plus Bloomberg Radio plus, black glasses for those of you on radio is what i have. Troy guy ascii joins us, senior Portfolio Manager at sky capital. Despite of you not changing your glasses, the world itself has changed. China is no longer the cheapest source of labor, nor is the mom or brazil. Hascircuit in consulting run the numbers. Suddenly, made in the usa looks viable . Why . In the usa looks viable because we have seen rates rising in countries that we used to think of as being very lowcost. That is causing fundamental economic shifts. Conventional wisdom said that europe and the u. S. Were highcost and that asia and south america were nocost low cost. That no longer holds, it means manufacturers had to change what theyre thinking and figure out where to go over the next decade. As i look through your report , a world map and you highlighted only the u. S. And mexico as countries where that competitiveness has improved. How much of this also has to do, frankly, with the fact that we have a lot of oil and our energy cost are a lot cheaper than elsewhere . Energy is important, but it is only one factor. The other thing we are seeing in the United States is relatively stable wages with productivity increasing, which is making a big defense. Contrast that with a country like brazil, 25 higher than the u. S. , a shocking number, where they have seen virtually no productivity gains. They are therefore at a balance. How do you define manufacturing renaissance . As a return of manufacturing to the United States, very simply. What we are seeing now is more and more companies that we can identify have taken what were jobs, primarily from asia, and brought them back to the United States. This is really only the beginning phase of this economic world change. As we talk about chinas competitiveness working against it, the fact of the matter is that emerging markets consuming emerging market Consumer Spending patterns are still overseas. That is right. A lot of the goods and services being brought back here, in this case manufacturing, the enduser could wind up in china or brazil. Something to keep in mind as you look at the rising cost of shipping. Im curious, how long does this labor advantage that the u. S. Seems to have, how long does that last before our own wages . Want higher it is difficult to know. Our best guess is something around five years. Say that again, please . You said five years . Yes, five years. That is right. If you think about it, that gives ceos a lot of runway to adjust Capital Expenditures among which we have seen recently. Meanwhile we have more optimism in this recovery. The timelineey saw pull in rather five year strategy became a three year strategy. We have breaking news right now, we will come back to this question. Newmontmine mining has terminated merger talks with barrick gold. They had agreed to a merger deal last week before they suspended talks over minor disagreements. The word until now was that they were still interested, but now they have terminated discussions. Newmont says that they are best served by staying independent. Amazing to compare and contrast this with the pharmaceutical business. Very different. By the way, this is the second time you have had these away from eachng other. The first time was back in 2000. Thank you so much. Greatly appreciated. We will continue to keep an eye on these headlines, looking for share price reactions, newmont is just below 25 in the premarket. Last week they closed at 2645. , newg up, new deals details on sanctions in russia. Will they do anything to deter Vladimir Putin . Good morning, everyone, on one of the busiest mornings we have seen in 12 months. Makers,p, market Stephanie Ruhle, Erik Schatzker at the milken conference all day. They have a nice lineup or you. Mr. Schwartzman will join them in the 10 00 hour. Nouriel roubini, nyu. Coming up at 10 a. M. , bloomberg surveillance, lets get to some morning movers. It is a frenzy of dealmaking out there. Apart as deals falling well. Newmont mining has ended its merger talks with barrick gold in canada. The two had agreed to a merger and had planned to announce the before the plans broke off. Newmont is now ship now saying that shareholder interests are best served by staying independent. In the past they attempted to get together. Back in 2000. And it did not work. Explain this transaction, please. So, that was the gold there was another one that just came out, forest labs agrees to buy furious for up to 1. 4 6 billion in cash. What is curious about this, recall, activists are buying forest labs for about 20 million. Forest labs is the target being acquired, now that target went out to buy someone else. By the way, f rx has activists support on the purchase deal. So, the people buying forest approval of the merger . Orthe fifth pharmaceutical bio for the deal we have had in the past several days. Good morning, mooresville, north carolina. 24 employees. A crack surveillance team. One point one billion . We are. It is a billiondollar enterprise. It is our earnings edge after the bell. Herbalife after the bell, and then tomorrow, merck, twitter, ebay, with earnings starting to taper. Cold will get left in the here. No one is making a bid or looking to make a bed. I was thunderstruck at lily and how small it was. It is a consolidation and the concentration. In terms of the industry . No doubt about it. It is by or be bought. Making sure your help or pipeline is as healthy as possible. When does the government step in . You do wonder. The government has already stepped in in the case of france. Is amazing how concentrated so many Different Industries are. And lines, cable, on and on. Did we talk about the rangers . What do you want to say . I dont know, scarlet was all pumped up about it. My kids were pumped up about it. Entrepreneur needed College Degree . A raging debate these days. We will be right back. This is bloomberg surveillance. Our guest host for the hour, partner and Portfolio Manager at scott bush capital. Lets get you some more from bloomberg west. Alibaba, expected to fall in the ipo for the next few days. China is being nudged away from heavy industries, like steel and cement, with marketdriven business is picking up steam. Uple and samsung, wrapping their case tomorrow in san jose, california. Supporting functions that infringe on apple patents. Comcast, taking more steps for that takeover in Time Warner Cable to be approved. They will get almost 4 million customers from each company. The deal has antitrust regulators support, they are concerned it will give comcast too much power, too much market share. An incredibly busy monday. We need to get you up to speed right now on this monday morning on where we are in the transaction frenzy. Pfizer, proposing a near 100 billiondollar transaction with the united kingdom. Immelt else jeffrey is in paris, speaking with Francois Hollande. Jeffrey mccracken, the adult in the room, managing editor of mergers and acquisitions and Public Offerings for bloomberg world news worldwide and we are honored he could take 10 minutes out of his busy schedule this morning. Have you ever seen at this silly . No, the animal spirits are really back. A lot of this is pentup demand. We have always had tons of cash sitting in Balance Sheets offshore or in the United States. He have had investor support for deals. Guy doing thehe deal, the one spending the billions, you have got that combination and it seems like the c suite, they are not as nervous as they were. They were always eyeing deals, they now seem more willing to go ahead. My sense of the value this weekend is that if you do not do your math, you will not get lemon sure. You talk about contingent value rights. What is that . Basically a payment based upon future performance targets. If you hit certain elements of the fda approval process, you usually see it in drug deals, pharmaceutical deals. Here are a bunch of money will not get paid to shareholders unless or until. You take that over to all the other deals . How different will this error be . Regarding one particular deal where you now have help me again, forest labs is by if your ex, where they are the same target. Have you ever seen Something Like this before . Toms question, right . This idea that a company that is being acquired is doing a deal of its own . I think we want to step back and look at something that is kind of boring but interesting, u. S. Tax policy. Basically the tax policy right now, store as much cash as you can. That is why pfizer is doing this. Is washington a good guy or a bad guy . Writes i would say that washington is sitting by, letting this occur, not acting. Necessarily a good guy. Not even involved at this point. The pharmaceutical industry is obviously being targeted this morning. What is the next industry that is ripe for consolidation . Probably the industrial space. We have seen two of the largest cement deals ever in the last couple of months. Martin married to a large deal before that. You are going to see more Big Industrial deals. I dont mean to interrupt, but let me bring troy and. To me this is completely removed from your world, and adult world as opposed to the quick quick world of hedge funds. Motion most hedge funds are in six to 18 months. Ammonite m a cycle send to be six months to 18 years. Deals are not silly yet because they are accruing. It becomes silly when it is all about Financial Transactions taking on more leverage. In other words, when the privately private equity guys are coming in. Right wing go. Not to pick on private equity guys. Decree should be the creed should be the cash flow of teenagers . To earning. Diluted. Spending a lot of money. Without much financial engineering. Offset, you are looking at me like i am nuts. Pfizer potentially spends 100 billion, which is like buying mcdonalds or boeing. How can they go out and buy a mcdonalds and the boeing on day one. Right now the tax rate is 27 . This is critical, they domicile and pick up 20 16 Percentage Points . Gaining and moving to a cheaper tax region . If you are a u. S. Company you want to do it in one of these transactions. Something that is one third of your size or bigger. Brilliant. Here is the thing, it is smart and good for shareholders, but guess what, not for the average american, who effectively has to shoulder more tax burden. Any pushback from washington . Not yet. I keep wondering if the pfizer deal will tip the balance. Is ato last week, valiant tax deal. Said, it will keep going forward. Right now he said he wanted to close the loophole unpacks inversions, but not much is being done on issues like this. Are you going to write an article specifically on this tax stuff . These do it, i want to tweak it out. Have a lot of this on bloomberg view. We can. You are asking what washington was doing, which leads us to our agenda, where he look at the stories making news for the day. My agenda item is ukraine. The president is set to announce fresh sanctions against russian individuals and companies. Once again, targeted sanctions, the president made it clear that these would be announced later today presumably out of washington. Quickly on the agenda, looking to friday and the jobs report, look at the bloomberg terminal. These are optimistic numbers. You put together three quarters, like they were looking after april. This is that Deutsche Bank optimism. I am looking at jobs on friday. We have got the pending home sales coming out with weak housing data last week, the fourth intentionally. Our monday twitter question, our team spent the entire weekend. Does an entrepreneur need a College Degree . We have some answers as you wonder about everyone else, i would go to the debt, the cost is skyrocketed. Be 100,000kids go to dollars per year. It is terrible. Inflation in College Education has outstripped Everything Else by far and what do you get for it . A degree in the arts . Nothing wrong with that, but 100,000 in debt . You cant find a job anyways. A small start up. Chemical engineering, thermodynamics. What did you study . Journalism. I did Aerospace Engineering and then biology. I was a history major. Economics. You have got to take a real major to get this done. Chemical engineering, what are you, nuts . [laughter] [applause] organic chemistry. Good times, good times. Maybe next time around. Thank you, gentlemen. Coming up, Stephanie Ruhle and eric shift will be joining us. They will be live at the milken conference in los angeles. Meantime, surveillance continues on radio. Good morning, everyone. Were live. You are in the loop. I am trish regan in for betty liu this morning. We will get the take on new russian sanctions to be announced this morning. Plus, department of agriculture ak will betom vills on later in the program. Lets get a look at our top headlines. The talk of a big merger and the pharmaceutical industry. Pfizer offers to buy astrazeneca. More sanctions against russia are on the way. Sanctions will target people and businesses close to russian president Vladimir Putin. Imlet met with the french president. For