Transcripts For BLOOMBERG Bloomberg Surveillance 20140602

Manufacturing slowed more than anticipated. Lowest inields are more than a year. That boosts the case of the ecb to simulate the economy. The huge deal, the press conference history making. And potentially taking rates effectively into negative territory. It is real simple. When mario draghi stared down german bund to spec Economic Data in the u. S. , this is what we have. Pmi,arketing manufacturing we found a little bit of acceleration in china. Slowing in europe. We will find out what we did. At 10 00, ims construction spending. President note the , his european trip will culminate friday at the 70th dday anniversary in normandy. Commodities once again slipping higher on friday. S p500 continues on track, 2. 50. On to our next screen, the volume really shows at all. 11. 40. There is the dow. Michael holland will join us. Shows stronger on the yen. Adam. S not the vix, up we go crisis. This is the quiet in the Foreign Exchange market. Volatilitynk, fx index. Absolutely stunning chart. I never thought i would see that. You understand why so many banks are saying the earnings this year are going to be bad fixed income, commodities, volume way down. That sets us up for the week ahead in economics, finance, and investment. All fixatings and on reports of an Insider Trading investigation involving carl icahn, Phil Mickelson, and Billy Walters. This was reported before and during the weekend. Investigators are looking into whether carl icahn told walters about an investment he was going to make in his fund and that walters may have told Phil Mickelson. Investigators are looking specifically into clorox trades because carl icahn tried to take over, which temporarily boosted the price of the stock but he did not go through with it. This was back in 2011. Yes. Phil mickelson said he has done nothing wrong. Carl icahn told trish regan he does not know of any investigation. He also said that he does know of Phil Mickelson but does not actually know him. I am stunned that Bloomberg News has nothing on this today. This is discrete to the New York Times. This is a very different way this has rolled out in many of these stories. And it seems kind of messy, doesnt it . What else do we have . President plans to propose cuts in Greenhouse Gas emissions. Some u. S. Power plants, the cut would be 30 from 2005 levels. The epa will announce the plan in washington today. You have the left and the right arguing about what it means. Republicans say it will hurt the economy and drive up the price of electricity. Democrats say it will be minimal Cost Increases for consumers in couldreas, and families save money due to efficiency gains. I remember when you could not see in los angeles. Within the frame of my lifetime. Any time somebody says they want clear skies and people go yeah, yeah, i am like, i remember when you could not breathe in l. A. How about the hudson river . Did you swim the goal on us can now once . You could now. There is a salmon run that goes through there. Keep going, i have to look at the map. Are frontpage story, apples conference the gains in San Francisco, speculation about what apple is showing off. This sets the tone for the second half of the year when they are expected to announce the next big thing. We know tim cook, eddy cue, upior management have hyped this event. Not just a Software Update but a Health Tracking app. Ticket item, and tickets cost 16 hundred dollars. You have to pay to get in . Oh, yeah. Really . My gosh, it is difficult to get it. They live cast it, right . They live cast it, but people want to be there. It is like going to the super bowl. I love the samsung conference as well. Lets get started on the week. Is simply,y week, it a weak case, that from our guest host, douglas burns, a former federal prosecutor. Egregious then Phil Mickelson and carl icahn being investigated, it was leaked. You are more upset about the leak than the allegations . I really am. A lot of us had relationships with the media in the u. S. Attorneys office, and a heads up would be given and we charged, arrested, and that was in the normal bounds. There leak the fact that is an investigation just is not right. When you have a formal injury and i will not going to every aspect grand jury monday. Anyone whosays that discloses any information about an ongoing grand jury investigation, that is a felony offense. The reality is you have people like they cannot disclose it. Theres always wiggle room on that. Say, wait a, you minute, and fbi approached Phil Mickelson on the green. Guess what, somebody saw that, so maybe they leak it. We will show this a couple of times. Then we will come back to it tomorrow and the next day. Instituteom the cfa full disclosure, i am a member of the institute this is their boring 220page standards of practice. Adam reads this when he is out skeet shooting. Just read,dea what i but that describes Insider Trading, right . It is a double whammy because when you get past the fact it was a leak, the reality is any professor or Securities Law expert will tell you the following. Material nonPublic Information is Important Information earnings, activation statistics and it is not available to the average investor. A ninerl icahn took percent stake in clorox and may have told this guy walters about that. It is not clear at all that that is a breach of a fiduciary duty, which would lead to Insider Trading liability. If i walked down the street and the memorandum blows out of a law Office Window about a secret hell, about a secret deal, that is not Insider Trading. However, the company from which the memo came would be guilty because it had a fire name it had a fiduciary us possibility . Gov know, because it blew out the window. It hurt or help the governments case to put in effort together . That is a great question. I think somebody in the government got angry and did this as a payback retribution. To see Phil Mickelsons demeanor, he he did nothing wrong, he made 60 million last year. He is not a wall street person, he is an athlete. Take us back to another famous case like this. Is there a parallel between what Martha Stewart went through and what you are observing now . No, and i will tell you why. Because Martha Stewart, and then head of the fbi, went through and said we never would have charged her with the securities climb a securities crime, but she lied. That team is correct, and the fact is that somebody is lying about it . Possibly, but the point is, carl icahn did not go through with the clorox deal. They have a problematic legal theory to start with. Second of all, the investigation has been going on for two years, which is interesting, so why leak it now . I dont have a crystal ball, but but i amtesting good at guessing the past 23 years. He did not look like a deer in the headlights am a Phil Mickelson, so i dont think the case is there. What happens next . It becomes somewhat of a nineday media wonder, but then it dies down. Nothing will happen. As we raced through the informationitems of that may be construed as material. This is not like three or four things. Law. Is incredibly complex they had an article in the New York Times. Unbelievable. You are taking a tennis lesson, a procomes up to you at the net and says my cousin works at a company. Is not thatthe law clear. That is a surveillance exclusive. Insider trading . He has got his priorities. Thank you, greatly appreciated. That was great. Here is our twitter question for the day. Do the rich guys like carl icahn and Phil Mickelson have an unfair advantage over the average investor . That is a fair question. Mr. Mickelson, and mr. Walters . Monday morning. We are starting with walmart. It is a winner in the fight between amazon and a publisher. Online book sales for walmart are online book sales for amazon are in a fight for book prices. Of the biopioneers business is one step closer to winning down. The price tag about 1. 9 billion. Employees have been holding off on Holding Since the founder died two years ago. The condolences going after your lunch money. They will start selling a grilled chicken flatbread today. Testing sevented new sandwiches. Glazed chicken flatbread. With the pink sprinkles. Are you kidding me . They are selling chicken at Dunkin Donuts . That is unamerican. But is healthy. We will take a very quick break. When we come back, investors searching for growth. Our guest host says they should looking at sustainable, not speculative growth. We will be right back on , onberg surveillance television, streaming on your tablet, your phone, and bloomberg. Com. A welltimes discussion, thanks to your comments on our clyde cook interview last week. Of the controversial and acclaimed capital will be on street smart at 4 00 p. M. Fox eu with a terrific response piketty to the allegations. This is bloomberg surveillance. Tom keene with scarlet fu and adam johnson. Scarlet go up and up. Whatever the case is, investigators enriches our speaking unsustainable are speaking on sustainable, not speculative. Grobart of Bloomberg Businessweek joins us. Sarah is laser focused. Ecb is already discounting what they will do in terms of rates. The markets have a kneejerk reaction defending on what they think the rates will be. But if you look at where we are in the u. S. , we definitely have less volatility, gross. Companies that have really Sustainable Growth not just momentum growth, i think the opportunity to invest in the next few weeks will be much better down the road. Is this like the fiveyear average growth rate versus one year growth. That dont know, more on the price of sales where youre not paying 30 times sales, companies that are deploying capital that might potentially pay a dividend and have grown over the last three to five years, so you are trying to separate tesla and versusof that world google and ebay. A quick followup are you , and so it is top down and you find individual names . A fundamental screen, so it is something that you want to hear you want to hold five years, but i actually think they have a business where the barriers are a little higher and the opportunity for capital to tow in this company and reward shareholders is better as opposed to if the market goes up 10, the stock will go up 20. We look for the alpha plays. The single greatness here for the crew has been use of cash. Do you just presume he continues . Yes. You have got to look at where companies are looking to deploy companieshether it is deploying capital back into the business or returning to shareholders. , when youbart interviewed the three leaders of apple, did they even once cash . N finance and use of they would never talk about that with me because my eyes would glaze over. But with a talk about that with carl icahn . Yes. This era of use of cash is profound. It is interesting because there are a couple of Different Things. First of all, theres so much cash overseas. All these companies do not know what to do with it because they bring it back, they get taxed. Now you have this period where the cache is not earning anything, so it is accretive to do something with the cash you but though you may not be making a lot of money, but it is making more money than. 01 . You tell them, i am going to split my shares, well, guess what, the Retail Investor loves that. That is certainly the cfos dilemma. We are in the Second Quarter and we will see what happens. Up in the next hour, former sec chairman harvey pitt in on theus to weigh possible Insider Trading investigation of carl icahn and Phil Mickelson. This is bloomberg surveillance. Good morning, everyone. This is bloomberg surveillance. Investigators are trying to figure out what caused the plane crash that killed the new owner of the philadelphia inquirer. He and six others were killed in a plane crash in bedford, massachusetts. Of thehe former owner New Jersey Nets and the new jersey devils. Juan carlos is advocating in favor of his son. Oversaw spains transition from dictatorship to democracy. He is 70 years old 78 years old and has Health Problems. He will be succeeded by crown prince felipe. In hockey, it will be new york versus los angeles finals in the stanley cup. They la kings defeated the Chicago Blackhawks 54 in overtime. First nhl teamhe to win three Decisive Game sevens on the road. Games, gameto seven one and game seven will both be played in l. A. . That is what i am holding onto. Let hope it does not go to game seven. I am sure the network wanted. Juan carlos never got enough credit for staring down franco in 1975. He stared him down, 24 months, at great risk to his physical presence. Must get to our morning reads from scarlet fu. This is from the New York Times, and they talk about you know you are lucky if you have a job, but the way they work is not working. Work, by tony schwartz. Needement knows employees to feel more energized, valued, focus, and purposeful, but they do not do anything about it. You said seats behind the rangers then she echoed that would help. Is one of thelogy stresses we cannot get away from. Thats right. If you think about the offices we work in, whether it is ourselves or our colleagues, there is stress to keep up with andthe different stresses technologies that are throw a bash that are flowing in, and you see people get left behind, and that can contribute to ones dissatisfaction on the job, which is as opposed to people who are more conservative more converses. Coming up, apples worldwide helpers conference will kick off today. Will we see any new product kickoff . Is the land of the new york rangers. It is in there somewhere. Very exciting. What is it, 20 years . For those of you worldwide who do not follow ice hockey, it is a huge deal. Dream come true in new yorklos angeles. Seven games, it will be crazy. Make a go ofngers it. I think the kings favorite and i hope you rangers make a go of it. I am tom keene. Here with me scarlet lundquist. E go into a busy week up, up we go. Up 2. 5 on the 10 year. Gold gets my attention. Ounce. R when theyre down one third of a percent . They finish up. We have sorted out and then it is like this. It does, indeed. It is just amazing. Fitness, home improvement, i should say home automation. Those are the big themes. Sam grobart is a writer at bloomberg business. What is the new here . The big rumor surrounding wwdc is health book, which is isilar to past book, which already on ios 7. The idea is that this would tight together different devices and accessories that would be capturing data about your body, health, movement, and pull it together in an organized sense seat can quickly and easily see what you are up to. I understand that conceptually, but why do i care what my pulse is on a given moment or my Blood Pressure is as i walked on the street, etc. . This is about creating a new market. Tot as when people used think, why do i need a camera in my phone, i am not a photographer, i am not taking pictures, all the sudden we all of aotographers sudden we became photographers. The same here. You become more health conscious. Is apple the first to break open this market . Set theook for apple to tone for the year at the Developers Conference. Apple is staking a claim in the ground, planting a flag and saying, we see opportunities here. Apple fans anded writers of code for apps that work on their ecosystem. Theyre going to want to follow the lodestar. Who is in the audience . Who are these people . Lets understand something. This is not a press event. This is not a media only event. This is the diehard Apple Developers who write apps for ios, they write code for the mac. Everything that is on your phone right now, people from those companies will be at this conference. We will be seeing a keynote later today, but the bulk of the conference continues for days after and consists of many Breakout Sessions breakup sections. Learning more about the operating system and the new changes. Other looking for any more partners in this . So much of apple is building the ecosystem. This makes the ecosystem Even Stronger and the barriers to entry are even harder. To the one more partners . They certainly did when they bought beets. They are looking at that and other things. Apple is very intent on the apple experience. This is one way, whether it is health book or whatever else they will announce to keep that going. Sam, there a theory here, that because we are getting an iphone six according to people like or genius at boy genius. Com , there is going to be some sort of preface to what is coming next on the hardware side . This is primarily a software event. Expecting, im not any big hardware announcement until later today. Well see things like updates to. Os, the mac os the second half of this year will be the big hardware moment for apple. Ne and dr. Dre are now part of management. Are you expecting something on stage echo at the conference . Is west coast, so dray will be very comfortable there. So dr. Dre will be very comfortable there. If you back to the old west coast east coast hiphop battle, dr. Dre would not feel as comfortable doing something in the south bronx as he might out in california, which is his home territory. You amaze me with a scale of your knowledge. Samsung was going to try to hook up with a daddy kane and ll cool j, but we will have to see. Im speechless. This goes back to article for bloomberg. What is the state at this meeting of the Apple Ecosystem . From where i sit, just doing a photo on instagram of sam grobart, to me, the ecosystem rocks. Am i the only one that thinks the ecosystem as ray strong for them. They have a million different apps that are available, which is the lesson android hurdler was android apps are not necessarily up to the same level of quality as the ios apps. Apple feels very strongly that the ecosystem is a business. That and the sale of devices which work on it ecosystem. Growthe hasnt been a stock for a while. People call it a value stock. At what what would you consider looking at it again . Is an interesting Inflection Point here. To bext big step is going the iphone six whenever it comes out. If this ecosystem, which i like, is stronger, people will say i will just replace my phone. That is when the consumer gets to that point. More devices are sold, you will see that curve come back. You have grossed a value to confused. The stock rises reflecting a combination of both. It is not in the fours and is not in the sevens. Apple has artie made some of these things public, it is just not spoken about them. Things like eye beacon, which is going to come out over the next coming months and year as far as locationbased services and retail there. That is another place. There may be a mobile payment system, as well. All of these things to lock people into the system. Lets lock you into the Apple Developers conference. A special edition of market makers. His will be tim cook his keynote at 1 p. M. As well. It is a double barrel. Dam johnson at 12 noon we be here at 12 noon . Of course. It is a hat trick. Coming up, if you actually want to attend this conference in San Francisco, is neither cheap nor easy. That is our single best chart here on surveillance. Our twitter question of the day, we go to those rogues. Two rich guys like carl icahn, Phil Mickelson and mr. Williams, do they have an unfair advantage over the average investor . Guys have an unfair advantage over the average investor . That is our twitter question of the day. This is bloomberg surveillance. Lets get right to top headlines. Heres adam johnson. Obama administration is opening a new chapter in the fight against climate change. Republicans say the move will hurt the economy by driving up electricity prices. A break onng ukraine its natural gas bill. They have been given in next week to take has to pay in advance for junes bill. Disney has put a new twist on the classic sleeping beauty. It took in 70 million this weekend which was higher than estimates. The top headlines. I dont think there is an else address. The songs are good. Artists are trying to teach people how to get the same effect. Those are your top headlines. Before we get there, we have some breaking news. T is m a American Realty Capital Health for twobeing bought point 6 billion in cash and stock. To theal will add normalized earnings immediately. Ventas will add immediately to sfo shares. Is sfo. Shares him operations. They have really done well. Great ceo. This must be and accretive transaction. What a great name for hours. Like,6 billion and we are eh. I miss introduced it earlier. Can we do single best chart . This is for apples app developers. It is a hot ticket in town. Take a look at how quickly the tickets have gone. In 2008 it took two months to sell out. In 2009, one month. Can you get into the hours. This is that 1600 a pop. This year they have gone to a lottery system. First of all, why are you here, sam grobart . Because i wanted to the review. You didnt get a Lottery Ticket . I said give me a pick for and i didnt get the right numbers. Can you explain this at the white is it so desperate to be there when it is wet . The keynote is live cast. That was not always the case. But people are going for is not just the keynote, theyre going for the week. Theyre going to hang and meet with people from apple, people from other companies, people from other technology companies. This is a major confab. Conventiona plumbers in detroit in january. It is a little different than that. As an opportunity to network heard ushered things theyre doing there that you just cant see. Amazing i begins for certain applications. This is a wakeup handson experience. Also be samsung will doing it as well. Why arent we there . We could take the whole surveillance team. Well talk about the Apple App Developers conference. Samsung has one. Why dont we talk about it . The Samsung Developers conference is to develop a new ison. Lled t well talk about the galaxy, but we dont talk about the s. Is android ecosystem sometimes wild and woolly place. You have a lot of the same apps that are available on ios, but can include tons of other things that you download and open them up and never use them again. It uses rates on android are far lower than they are on ios. Its newest phone is going on sale using this new system. It will go on sale in russia initially. Y z is the name of the phone. Were going to continue to supply systems on the phone. Sam, this is a quote from september of last year there is always a large chunk part of the market. We are not in the junk business. That was the key quote in your wonderful story on Bloomberg Businessweek. Business . In the junk they want to be everywhere there might be an opportunity. They would show up. If it doesnt turn up they will allow. You amazon has its own software. It is a foundation of android, but then they make their own. What amazon is doing is forking it. None of the data goes back to google. Option on google part is that you will want to use Android Google puts out and who will can collect that data. It has no Google Android under it . No. It was developed under intel. It is its own separate ecosystem. It is not ever expected to be a major player, but. Rexam, we got iphone six. You take credence that people take credence in the whole number upgrade and not the five s . When the camera with the ipad, they didnt have a number. I think they would like to get off the expectations game. Is it a new number . I know that frustrates that them to some degree. Since to follow a pattern of new , modify, s, newer phone. It is a twostep process to advance. We will see how that plays out. Tom has been juicing. You tried it to, right . Lets be clear, juice is not a substitution, it is something you do in addition. It,hatever you want to call how he is riding that wave to the bank. This is bloomberg surveillance. Is going to be 80 something degrees this afternoon. We are all talking about a game that is played on ice. The rangers will be facing the kings on ice. The finals begin on wednesday. I am impressed l. A. I am worried about l. A. As well. With tomlet fu here keene and adam johnson. It is june. Douglas lain as one pocket of a diversified portfolio. There should be a bet on organic. Joining us again. Explain this. It is more healthy eating. As world has become more focused better, getting fitter, we are trying to put better inputs into our body. This goes from childhood all the way to adulthood. People have allergies and are going glutenfree. It is really getting the. Ngredients are you out front on this or do you see evidence of a trend right now . There is evidence of this trend. Walmart is getting into organic foods. To be in a you want couple of different places. Have done ake hain great job, whether it is teaser baby foods. Juices and now rice. Putting them in front of consumers to say you choose what you like. What we will do is find the best product for you. Easter west coast phenomenon, people want to eat healthier. West is not an east or coast than ammann. Phenomenon. Whole foods is struggling. They are an interesting story. That is become a value stock. Are getting crushed by over 20 . I would rather invest in Something Like that. An experience as well. It was up at whole foods like to go there because they trust the brand. Lets bring in sam grobart. Organic, right . Lock me down an aisle in an average supermarket. Everything is significant price difference between an organic product and a nonorganic product in the same category echo the organic food is definitely going to be higher in the krogers of the world. Ingredients and easy 45 Different Things and you cant read 95 of them. Whole foods has said they are not just buying expensive stuff from other producers, theyre doing their own private label. Making it at as cheaper price point. Seeing theu are experience. Experience for their family. This is something theyre doing for their own health. An experience, Growth Opportunity and a margin opportunity. Is that opportunity overseas . They are expanding in the u. K. Europeans eat better than we do. There are only two countries in the world that allow gtmo. Were finally getting that whole experience here. Here,h the time we have lets go back to the general market. Are you fully invested . I would say we are a little cautious in the nearterm. Youre going to get this pullback. Longerterm, more bullish, but shorterterm youre in a perfect scenario. Was the catalyst for some would saybt . I bond dislocation or something happen exogenous that makes people rethink in the shortterm. Longerterm we are in a much better place than we were three or four years ago. We are much more focused on large cap or growth companies. Sarat, thank you so much. Sam grobart, enjoy your flight to seven cisco. You won the lottery. A forex report as a good to the critical meeting . Eurodollar 1. 3609. The euro dollar shows its strength. Hour,ing up in the next former sec chairman joins us to weigh on the Insider Trading charges. Is a tempest in the clorox teapot. Harvey pitt with us in this hour. What will we know friday after critical ecb meeting and the jobs report . There is anticipation in cupertino. Apple presents their worldwide Developers Conference. This is bloomberg surveillance. , june 2. Day joining me, scarlet lundquist and adam johnson. Michael new york rangers ho wland is joining us. Here is why chinas manufacturing expanded at the fastest pace in five months. Europe slowed initially due to weakness in france. Rose. Government bonds data indicating slower inflation. That meeting happens on thursday. Economic data here in the u. S. Purchasingey managers index. Earnings after the bell, we have quicksilver. President obama is leaving today for europe. Friday is the 70th anniversary of dday in normandy. Lets get to going. Boeing. Get to theyre now talking to emirates about the 747 ee. Only four airlines have agreed to buy it. Wants to Department Keep managing pension funds. Needs adit suisse waiver from regulators to maintain its status as a professional asset manager in the u. S. The publisher of time in Sports Illustrated becomes a stand alone company on friday. Print media is getting hammered by following advertising sales. Time has put small ads on the covers of its flagship magazine. Wow, that is different. I used website some it is great. Imagine an ad on the cover. Is a new wave of print media. Billionaire carl icahn, golfer are underlson suspicion of Insider Trading. Actually spoke with carl icahn. He hasnt been making any comments. What did you learn from him . What did he say . He was surprised by this. He learned of it in the wall street journal. That may share with you some excerpts from that conversation. He said to me, we do not know of any investigation. We believe that making inflammatory statements is completely irresponsible on the part of the wall street journal. He went on to say, i am very proud of my 50 years with an unblemished record and have never given out inside information. It is not like he and mickelson went golfing together. Walters, butilly he said he had never spoken to Phil Mickelson. That brings up a lot of questions. What about the investigation and his public image. It cant be for his image. Kara . Gosh, this is a last thing anybody wants. This is hardly a headline that you want to pick up the paper and see, especially if you are carl was someone who is very proud of having 50 years with an unblemished record. To have beenthem in violation of security rules, he wouldve needed to have violated a rule called 14 e3. This says youre going to notify someone of a planned tender offer. In this case, the question is, did he possibly tell billy of a planned tender offer that he was going to do this for clorox . It is not as though he actually made a tender offer, right . All he did was send a public letter that said im thinking of buying you guys, right . That is the nail on the head. That will be his saving grace. I spoke to the banker that banked carl in the clorox deal, that wrote the financing letter. What . D, you know it never actually went through. This is Public Information. Carl put a letter forward to the board saying he would like to buy the company. He proposed a potential merger is aen himself and it little like dell. It was never an actual tender offer. Little bit like all talk, right . Is, how istion now that interpreted as Insider Trading . I spoke to someone you said it is not. Think about what we learned u. S. Doug ernst, former prosecuting attorney, who said this is a very sloppy case at best. Go back to being flabbergasted on a monday morning at oath the ft and Bloomberg News not picking up on this story. The way they write about it this morning is that it is not clear. Trish reagan, thanks for bringing us up to speed on this. Great job. Michael holland has seen all this before. His material and very Public Information is out there. Mr. Holland can parse some mercury. He is not a lawyer, but he has run into this time and time again. Is just, i say this with good cheer to all the regulators, this is the goofiest audio law. Trish had a great intro to where this is not going to go, which is anything bad for carl icahn. Isn coffee is as good as it in telling us where we are with the law. Mark cuban is someone who can tell us how they cant win at the sec. Tradingory of insider convictions is really abysmal for the prosecutors. The question of the day is, do the smart guys always have an angle . Guycarl icahn is a tough from Queens Committee good being smart and doing deals. Is it a crime to be smart and get out front of clorox . When i came into the business i was told by smart lawyers that the way to stay out of any problems is if you have some information that other people if they had it would change the price of the stock for them, if you have an act on it and they sell a stock to you or by stock from you and you have an advantage, that is wrong and you will be in trouble. It is no longer the case. It is much different. You have all kinds of rules and regulations as make it almost impossible for the people with the advantage if they want to use it to get caught. To most people in the business do it . Most people do it. Burns made it clear to us. If that been any wrongdoing, it wouldve been carl potentially having a fiduciary responsibility to his shareholders. Tellinged to in theory Phil Mickelson. Here is a number of the day. 13 is the number of the day. This goes to material information. There are 13 items of information that may be construed as material. This is a widebody, almost a catch. How is a regulator or lawyers how does a regulator or lawyers search through 13 . They dont. The idea was that people were supposed to do this for regulation. Once they introduced this, they started getting really messy. Put an incredible burden on the prosecutors. Michael, very quickly. Are you going to be reluctant to carlt in a company that icahn is talking about . That is a really good question. Care. T really i do my own work as most people do. If i find something i really is, i the quick answer met him for the first time in the 1980s. He has had a storied career. He is never been accused of Insider Trading. He is made billions of dollars without doing it. Why would he do it now . Michael holland with this for the rest of the hour. How about a data check . In a busy economic week. Are 20 question of the day our twitter question of the day, to the wealthy have an unfair advantage over the average investor . Im tom keene. Our guest host is Michael Holland of holland and company. What is the disconnect between bonds and stocks . If and when one is new . What you do at market tops if i look back at them . Hope that there is another market top if you fully invested, which not too many people are. Your phrase the gloom cruise isnt interesting one. At these high prices relative to where we were five years ago, the pervasive emotion right now continues to be negative. , bondstheme of the week and stocks are disconnected. Have your seen this before . Not to this extreme, but absolutely. Both are explainable. When you have the bond market, any rational person who is not in this thing trying to figure out every 12 steps of why these things are where they are, the economy in europe and in the interest and inflation down, big deal. B farrells rule quoted are you investing inequities just assuming we will see a correction or even something v likee a bear market to clean out any optimism . We have internal corrections going on right now. The social media stocks got recently creamed. That is what happens in a bull market. Extreme pessimism and fear five years ago. Not of theg out is hubris and arrogance of a bull market at its top, but rather, were still cleaning out the negative emotions. It is still there. The thing you and i see every day that we didnt see 10, 20, 30 years ago is this religious use of cash. Cash is one of the great and unappreciated weapons in our 401 k s. It is a leavening device. It helps balance an individual investors portfolio. To have some cash from the market is going down. In fact, it is a nice thing to have. 10 seconds, kings arrangers . Ranges. Rangers. And theg up, will apple officerecutive delivery . Good morning, everyone. 10 year yield, 2. 49 . We are here to help you through the week. Ecb meeting, jobs report on friday. Look for that this friday. Busy, busy week. Lets get to our top headlines. Here is adam johnson. The Obama Administration is opening a new chapter on climate change. Onir imposing a 30 cut Greenhouse Gases from power plants. Spains juan carlos is advocating in favor of his son. King has had Health Problems in recent years. His family has been dragged into a corruption scandal. He will be seceded by crown prince felipe. In hockey, new york versus los angeles in the stanley cup finals. Daily kings defeated the Chicago Blackhawks 54 in overtime. Los angeles is the first team to win three game sevens on the road. It is great. In the cheap seats, you can afford the expensive ones. You just want to see the rangers play. And l. A. You have to have a facelift to get into the game. We are all going to watch it at home on hd. Michael holland with us here with scarlet fu. Tell our worldwide audience the allure of the new york rangers. Why do i care about the new york rangers . This team has come together. They were brought together to get to where they are now. This is a wonderful story. You have mr. Moore from kid his who as a young wife dies of cancer. This cinderella story, it is in 20 years since that come to the finals. That sentimental angle as well. The coaches really come together and pulled the strings of the different players. What is it like to get cory johnson up 2 00 a. M. . I can imagine. Hes on the west coast. Look, cory johnson, youre right there. You are at the Apple Developers conference in seven cisco. I know there is Wearable Technology that will find its way into apps. Theres a stuff like nest, but that is google, we try to figure out what is happening in your home with an app. What is the new this year . That is a good question. Theres never been a device is successful in the entire history of can eating and the entire history of computing at the iphone. Gets get out of its own way with the demand for something new. Jobs,the passing of steve the company has not introduced anything really big. The company that came up with the ipod and iphone and the ipad, yet we want more of this company. We understand from the people who work of this company, the people that left the company, is it is harder to get projects approved in the tim cook era. They want Business Plans and spreadsheets. You dont just want a great idea. It is ratcheting up the pressure on the company to innovate even further. Pressure toot of get into the place. It is to take a couple of months to sell the tickets. Now there is so much demand it is a lottery. Why are so many people trying to get into this thing . About working at apple is that everybody wants to be inside apple because the people inside apple want to get out. It is a company that is very insular in a hopper the way. So many devices have been sold in so many people uses operating system, it is changed to weigh competing works. Computer is no longer driven by the desktop. It started on the notion of mobile first, and apple is key to all that. Kleiner perkins has a hundred 64 pages. I looked at every single slide and i underestimate the International Expansion of these toys. How is apple doing internationally as a go into this new product cycle . Interestingly, as it relates appleernational growth, has done fairly well. The iphone sales growth, you can watch it expand over the last few years as they added countries. China has a much more difficult a much more difficult place for apple to enter. There are a lot of different competitors, principally. China has its own homegrown smartphone business. It has been interesting to watch the way apple has toyed with and really not had a lot of success at lower price points, even in 5c. Theire fiv lowercost model didnt do as well as they wanted. When they finally do get around to announcing an iphone six, which probably wont happen today, but certainly is on the table, is what they will do with a lower price point of the older phones. Will the older phones effectively become the subsidized, lower cost version of the iphone . You have a share buyback. That buy enough time for investors like you and others were more skeptical to get on board and find out what is happening at this wdc . I didnt have to buy any time. I was on Bloomberg Radio with cory on the day they did that. I was simply delighted that they did it. Believe there is going to be a surprise and they come out with a larger size iphone. Both in china and the u. S. , it will be a really big surprise. Michael holland, youre with us. To betteron, go back get some coffee, whatever you do out there in california. We dont sleep. From essie chairman harvey pitt will be joining us to weigh on the popular weigh in on the investigation of carl icahn and Phil Mickelson. Good morning, everyone. Good june to you. The empire state building. Well. Tlife building as it is a perfect early summers day as it was a perfect early summers weekend here in new york. We say good morning to all of you. This is bloomberg surveillance. With me, scarlet fu and adam johnson as well. Would you be more successful if you were born in a third world country and moved to the u. S. And if you are actually born and raised in the poor parts of america . Is very distinct immigrant dvantage . What did you find in your reporting . What advantages do immigrants have over native americans . One thing we have known for a long time is that naturalized citizens, were not talking about all immigrants, were talking about those who make it to american citizenship, if you compare them with american citizens born in america, naturalized citizens have always had a slight advantage on a variety of things from income, educational attainment, likelihood of being married and not been divorced, etc. What we have found that was new was that this advantage is not evenly distributed over the country. The parts of the country that are doing ok, where we are right now, although it way up the east and west coast, this advantage is minimal. It is in heartland america, in red state america, walmart have anwhere immigrants enormous advantage over nativeborn americans in terms of how far the study, how stable their lives are and how much money theyre able to make. What is the distinction of american poverty versus poverty in third world countries like engler come a which was the subject of your book true american. . After being shot in the face, he rebuilt his life and eventually forgave his white supremacist attacker in large part because he understood that that man had not had the same chance that he had as an immigrant. What he can to understand about third world poverty versus american poverty is in the third world when you are poor, what you have us back up his other people. In america, the poorer you are statistically, the less likely you are to have family and community. It is a perverse thing. There is solitude and isolation that becomes this regressive tax. It is something we dont understand in debates in this country. It makes our poverty extremely different from poverty in most places in the world. I am stunned because you actually used census data. This is not just opinion, this is real data. I want to quote one item. The median household of native forms earned . 84 for every one dollar and any household of naturalized citizens. That is in, the 10 poorest states. You earn 16 less than people who have come to this country and gotten american citizenship. Lets look at the expense of the divide. In massachusetts, for every dollar earned by naturalized citizens, new forms earned a dollar 13. 1. 13. In West Virginia, for every naturalizedd by a citizen, nativeborns earned . 61, which makes the immigrant cap wider than the gender pay gap. I understand your parsing people that work at the olive garden versus people of an entrepreneurial spirit in cambridge working at m. I. T. That is a stereotype that is out there. Within this, what youre really talking about is a study of social cohesion. Many of these immigrants come from a structure of family and on aion that has been lost growing part of disaffected america. That is what this is really about, isnt it . Yes. There wouldnt be much of the story if this were just about immigrants being special. Was interesting is how different certain parts of the country are in the parts of america where immigrants have this advantage of those places where, as you point out, social cohesion is really hurting. One of the things that the character is a raises when he was working at all of garden, was that he, as an immigrant, was surrounded by a bunch of nativeborn americans, and he was amazed at how little support they had in their communities. They couldnt lease cars because no one would cosign a loan for them. They couldnt get rides home so 22yearold women would be walking home at night on the street. The American Dream works only if you had the prerequisites of other people. Author of true american. Lets do a data check now. Manufacturing out at 10 00 a. M. Construction spending. Yielding 2. 489 . Still weaker versus the dollar. Good morning, everyone. All of our interviews out on digital media, including Bloomberg Radio plus and bloomberg tv plus. On this busy monday morning, holland. S is michael he is founder of holland and company. Our top story this morning, carl icahn in the crosshairs of a u. S. Insider investigation according to the wall street journal and the new york. We welcome harvey pitt. He is a former chairman of the securities and Exchange Commission to join us this morning. By thisyoure troubled probe, and particularly the leak of information related to it. What is the most problematic . It can cause a huge amount of damage to individual reputations and traditionally, government investigations are supposed to be confidential. It is unlikely that Phil Mickelson or Billy Walters or carl icahn leak this information. The only two sources are either somebody in the government or someone who received a subpoena or an information request. It is very problematic. Hard to imagine someone would have an advantage by leaking. Is this just a fascination that we have a very famous and loved whowho is somehow somehow got caught up in this or other or didnt. You have this famous, you ine a noteworthy investor carl icahn and you have a bigtime las vegas gambler. Is a perfect storm. Harvey, the wall street may have done something wrong in their reporting is that possible . We shouldnt be hearing about all of this to begin with, but i think the publicity is going to make this a lot more difficult if there ever was a case. A few commissioner of sec, what is your to do list this monday morning . Abusiveere was an confidential or proprietary information, that has to be ferreted out. Secondly, although i dont think this would have come from the sec, one has to make certain thateveryone understands disclosure of this kind of investigative material can literally ruin lives and is improper. Is the latest example of the governments increased focus on Insider Trading. Prosecutorss in manhattan have charged about 90 people, none have been acquitted. About 85 of those have resulted in convictions and guilty pleas. What does that tell you . It does tell you that the Southern District is being hit very smartly for cases. Theres is the possibility that the Second Circuit may reverse one of the steinberg conviction because of concerns about how close to the confidential information you have to be. They have an incredible track record. Harvey, youre the former sec chairman. Mr. Icon had said, im thinking about making a tender offer or making an open letter to clorox shareholders, and he allegedly told Phil Mickelson about that, is that Insider Trading . It is not really Insider Trading, but it could violate the law. Actualsomebody makes an tender offer or is going to make one, you are prohibited from divulging that information in advance. Posit ahat, one could theory where if someone were andmulating stock of clorox i tip you so that my filings dont show all the shares i o, that is a separate violation of law. He is a former chairman of for the of securities sec. At princess to the twitter question of the day. Two rich guys have an unfair advantage over the average investor. Bsurveillance. We welcome all of you worldwide. I am tom keene and with me are scarlet fu and adam johnson. Here are our top headlines. An american soldier freed after five years in captivity in afghanistan is now in a Military Hospital in germany. He is released in exchange for five taliban prisoners held at guantanamo bay. Investigators are trying to figure out what caused the plane crash which killed the new owner of the philadelphia inquirer. Louis katz and six others were killed on friday. Former owner of the New Jersey Nets and new jersey devils. Last week, humid partner one control of the philadelphia inquirer. At the box office was maleficent, which took in 70 million in america this weekend. It was more than twice as much as secondplace movie, xmen, days of future past. I cant get my hands around. Ngelina jolie going, let it go it was not quite like that. The else address on ebay. Joining us right now is that you. Liu. Betty we are holding a courtroom battle of sorts, you could say, on in the loop. On the one side of the fence you have ira sorkin. He has defended ernie made off as well as jordan belford. About why to talk sometimes these cases are just so difficult to prosecute because Insider Trading law is so narrow, that definition is so narrow. Mike is nodding his head. On the other side, we have sean coffey who is a former candidate for attorney general in new york. Billionsas extracted of dollars in fines and settlements, including 6 billion out of the worldcom case. He will come on to talk about the difficulties for the prosecution. Onsounds good, a debate in the loop. Mike holland, youre nodding your head is that he was talking about how squishy this is. It, we as she was saying talked offcamera about the different cases. We talked about Martha Stewart. She didnt go to jail for Insider Trading, shall any to jail for telling people that it actually happened. It was a very difficult thing for prosecutors. Her was just thinking about saying enough. We just keep on going. It is all most like a law show. You know it is also curious about this one, this goes back to 2011. I havent been able to do i would go by what mr. Pitt said, which is that this is a leak. Theyre not sure who did it. It is not in their interest to do it. We have much more coming up on surveillance. Inequality in the u. S. , is it increasing . On television and radio. Morning, everyone. Tomorrow on the program, one of our favorite guests. He gets a traffic response, Robert Nardelli joins us. Former chief executive officer of home depot and chrysler. Tomorrowand television. Worldwide, you cant go wrong. 7 00 a. M. On bloomberg surveillance. Our guest host for the hour is Michael Holland, founder of holland and company. Lets get to our company news from the files of bloomberg west. According to the washington journal, google will spend more than a billion dollars on satellites to get access to places that dont have it. The meantime, apple is in the spotlight with its Developers Conference getting underway in San Francisco today. No major product announcements are expected, but the New York Times says apple is expected to introduce a new Health Tracking app. Samsung phones will use a system zen. Theyre trying to boost customer demand as sales go down. There is no greater evidence than the recent indian election. Has been ruled and burdened by a caste system. And ahave a present growing caste system within the United States of america . Has written a book that talks about this in america. They say tom, compare and contrast the rigidity of the to theystem within india caste system and inequality that you see here. Inequality is just a current state of divides between peoples lives. A caste system is really about hereditary inequality, people sticking in the same roles. You may be the brightest most talented person in society, but if youre the son of a bricklayer, you must be a bricklayer. That is a caste system. Historically, that was indias reality. In the last 1020 years, india finally started to break that down. I spent 4. 5 years there and wrote a book about it and try to understand in a way that come is Something Like the American Dream. And people believing that an individual makes her destiny. When i came back here in 2009 and started reporting on this country, what are founded on the communities that i was reporting on was something in the caste system direction was coming to this country, a loss of a believe in peoples power to change their fate. Real data showing mobility as being the lowest in the rich industrialized world. It is really where you dont want to be. The best map of the weekend, thank you so much at the Washington Post retweeting it. The Washington Post with a 30 year study of the decline in trust in america. You were born in cleveland, you went to school in michigan, oxford and harvard. Talk about the inequality that you see in the u. S. Versus in the u. K. And in france. I think generally in the u. K. And france it is different even within them. In general, the u. S. Is a pretty outlying society in terms of saying higher risk high reward. We want people to jump higher than people tend to jump in europe, and we are willing to tolerate a lot more people falling on their face in this country. You can argue about whether that is a better or worse model. I spent some time in norway a couple years ago and everybody admired the social system and you dont have people lying on the street in norway the way you have all over new york city, the richest city in the world heard you also dont have a lot of greatness. It is painful to acknowledge that when you pull up the floor, a kind of it is society where you mean mediocrity . Think what is very interesting in the model of this is ais, america the poacher at the best. It approaches the best people from everywhere and the world and convinces them to do their best stuff here rather than bear. As long as that goes on and the desire of those people to come here goes on and those people have reasonable hospitality, i think you will be able to sustain a lot of advantage. If those people are being brought into a system where everybody born here is struggling to change their fate in the same way, you will have real cohesion problems. As we look forward to the election, what is the mission gas what is them message . What is the message . The idea that immigrants are changing our society and ruining our culture, it doesnt necessarily bear out if you look at their success. It is also the case that from a cohesion point of view, bringing in a bunch of people who are these ambitious strivers into low mobility communities is difficult. This how to call are you going to deal with the response to send them all back to where they came from . I think we have tried to demonstrate what actual role people play than his actual communities. A lot of what i found is you have immigrants willing to go the doctors and engineers in West Virginia where you and i might not be willing to go do the same jobs in West Virginia. Recording a book on texas is that you have this environment dallas is not the most glamorous place onerous to me, but you planeload after planeload of immigrants who keep arriving in dallas, drawn by low taxes and this blank slate of opportunity and willing to make something extraordinary. I am begging you to come back and talk to us about the india election. I will do it. To talk about the revolution is going on in india. We go to a busy week. Thursday and friday, the ecb meeting. , draghiing in new york will speak on his ecb and on his bundestag. You have to be focused on that. Then you have the jobs report on friday. Will be a big week. How are we doing . U. S. , we found at the china ticked up, which is good here but the euro ticked down. It is a mixed read, but this week is especially important for 2014. My agenda is apple. Tim cook takes the stage at 1 p. M. Eastern time. Senior manager has been promising great things for the second half of this year. It sets the tone for the rest of the year. We just have former sec right herervey saying this whole mickelson icahn issue looks like a leak. It is very disturbing. Im waiting to hear something from the government. I would like to hear from. Tradereet Journal Program it snagged. Have no idea what that means. The justification of the good reporting, we need to hear more from the journal about the background of this. Trish has artie spoken with carl icahn over the weekend. Never met with Phil Mickelson or even talked to him. Know this is even happening. This is the greatest headline in the history of bloomberg. Chris thompson, our opening line hngment for bloomberg i ca insider case might perhaps the nothing, maybe. Much ado about nothing, in other words. Nonetheless, it does strike a certain nerve. We asked everyone if rich guys like carl icahn and Phil Mickelson have an unfair advantage over the average investor. Are the answers. If they have an opportunity to based in beingy connected, then yes. This situation does not. He wrote it public letter to shareholders. Perhaps he said he might do that. That is not Insider Trading. Unfair maybe, but not necessarily illegal. That goes back to what were talking about. Theres a very narrow definition of Insider Trading. Maybe it doesnt look quite right, but it doesnt is a surly it is illegal. I would go . Back to a famed regulator, carly me maybe . . Call that is what this is really about. Carly rae jepsen sounds off on Insider Trading. Surveillance on the radio, in the loop is next. Good morning. Monday, june 2. Can you believe it is june already . Were live from bloomberg world headquarters. You are in the loop. I am betty liu. We will address reports that u. S. Authorities are investigating carl icahn and Phil Mickelson regarding trades made in clorox. This is according to the wall street journal and New York Times. Icahn says the reports are completely irresponsible. And the moment, we will have an expert on Insider Trading who has defended multiple whitecollar criminals, including bernie madoff. Also joining us is a man described as wall streets nemesis, former federal prosecutor and former candidate for new York State Attorney general. Sean coffey will be joining me. And the Apple Developers conference is getting underway in San Francisco. Apple is expected to unveil a new version of the operating system for the ipad and iphone. Theident obama proposing boldest step yet in the fight against global warming, calling her power plants to cut Greenhouse Gas emissions by 30 . We are a