Transcripts For BLOOMBERG Bloomberg Surveillance 20140811

Companies. They are based in austin and virginia. Talkingught tom was about priceline. He refuses to take a vacation. John kerry is not taking a vacation. He is the worlds busiest man right now. Mobilebout to have for Telecom Operators in the United States. One is becoming the new ceo of sprint. Not buying tmobile. In sydney. Y kerry, lets get a data check for you. Esocks, bonds, commoditi bouncing around. Oil is amazingly resilient. We will talk about that. On to the vix i would guess it would be above 16. Most of you show pretty resilient markets to end the week. There is the dow. Nicely under 17,000. Recapitulate, at 79. What an interesting weekend of international relations. Here are the newspapers. Chaos in iraq. Another political crisis. Maliki has now sent troops into the green zone. He has troops deployed. Call. Restisting the it is a hunk of baghdad. Be used to call it the seed of the empire. There was a subway and american contracts. It is the most westernized it is where the u. S. Embassy is. Is showing who has power here, he does. Now, he says he will sue the Prime Minister. Maliki is sunni, right . No. The whole criticism is that he has failed to form an inclusive government to bring in the sunnis and kurds. At vacuum has created the Islamic State. It has been his job to try to bring the three parts of iraq together. He has failed. When you look at this, the cacophony this morning. Ukraine it does seem that the world is unraveling. That is a question we will give to our guest host. [audio deleted] what is the next tory . Prime minister wins the president ial election. Not a landslide, but a key victory. He is likely to hit back at political foes, promising to build a new turkey. He has been Prime Minister for 11 years. A lot of analysts say this is a turning point. Is he a followon from attaturk . No, i think of huey long. He is very popular, slightly autocratic. He used to be semi pro. He is very popular. When he does things like ban twitter, he is popular and popularly elected. He has a real electoral base in the country. Ataturk was a secularist. Party, whiche ak has islamist backing. He has talked about a new turkey. Hans nichols is in istanbul. Front page is big changes that candor more than. The empire run by richard kander. Acquire a partnership in a deal worth 44 billion that will make it the second biggest deal ever in the energy sector. That will allow them to grow in the midst of the drilling boom, that is counter to the industry trend. Is a taxadvantaged partnership. Everyone can do the math on that. Got was first blush i pretty constructive on this deal. It needs some crunching of numbers. Three companies into one. That needs to be studied. 44 billion is a big deal. It is all about the need for infrastructure. The general rule has been popular. There we are. America uses technology and military protection from a distance. Ronts asident caonf war weary congress on how he should conduct a response to baghdad. And west of kurdistan many of our politicians could not find them on a map this monrrning. Phil can do that. Is andw where kurdistan you know where syria is. Do we know where baghdad is this morning . What is the state of affairs . It is in a bad place. Theyre just trying to wake up. The issue is, they are involved in such a roller coaster. Yesterday was a very positive day up north. They made gains. The u. S. Feels very vindicated, if there is any question that the airstrikes have been extraordinarily helpful. The political resolution is the most important thing the president said over and over. It took a major step back. There will be no longterm solution if there is not some type of resolution in baghdad. What is going on with maliki now its concerning. Do we support mr. Maliki . No. U. S. Officials have always been very careful. We are speaking two months ago behind the scenes about something we made clear. They would like a new Prime Minister. Even the president announced a potential airstrike last week. He noted that they won a new Prime Minister. Last night, 15 minutes after he gave a short statement on tv, the Top State Department official in iraq quickly went on to twitter and said plain and simple, the u. S. Supports the president , they have no support for maliki. They are just going all out now. In addition to everything that is going on a park, we actually do not know who is in charge of iraq now. It is difficult, right . I think year. Yeah. I am trying to figure out a way to make this sound logical, and there just is not. Iki has lost the vast majority of support. The main individual that the shiites listen to has criticized politicians and clung to power. He took a direct shot at almaliki. Maliki has control over special forces. As long as that exists, that is a dangerous game being played. The most interesting thing is the overlay of the religion and the different sects of islam, with where the United States is now. We are beholden to centuries of history here. It seems like only foreigners want to redraw the lines that were put down. It is incredible we are talking about that. If president obama says there is no military solution, what is we heard senator mccain and senator graham going on the airwaves, saying that airstrike should be the next part of the equation. Is this inevitable here . I think the statements about having no timeline here has certainly spooked democrats. I said the president has not gotten any major blowback, but that changed this weekend. There is no firm deadline. Y, every official i have talked to has said that airstrikes in syria are not on the stable. You will hear pressure from republicans to do more. Youre starting to see democrats move away from the president on this. Theres a former guideline in place on how long this will last and how my strikes there will be. Youre going to lose top people. Whiff of anlso a American Power struggle too. Hillary told the atlantic that she would have done things completely different in syria. Theres also a new reality within the beltway. The interesting thing is, we have all been expecting Hillary Clinton to start breaking away from the administration at some point. She has to, if you just look at the numbers that president obama is bringing to the table. On Foreign Policy come issue is more of a hawk on syria than the president was. There was a fantastic interview with Jeffrey Goldberg. She was so sharp with her criticism. The statement that the president keeps bring to the table is do not do stupid stuff. That is one of the key forms of his foreignpolicy doctrine. She not only repeated it and criticized it, but you took a big step away from him today. That just does not help the scenario. Phil, thank you for making us smarter on a monday morning. Brandon . She did not just step away, she dropped the match on her way out the door. This is the twitter question, is hillary right . Should we have done more in syria . Discuss, absolutely. Will talkback, we about assessing the risk in Eastern Ukraine and why the markets are unconcerned. This is bloomberg surveillance. Good morning. Futures up seven. Coming up, roger mcnamee, tech genius at 1 00 on bloomberg west. Always interesting to catch up with him. Look for that. Good morning everyone. With me, it is Olivia Sterns at Brendan Greeley. Scarlet fu and adam johnson boycotted this morning. Just tragic, but were here with Olivia Sterns and Brendan Greeley. We are very happy to be here. Theres a lot of news. Vladimir putin is praising axon is an old unreliable partner. They began drilling in the ar ctic this weekend, unaffected by stricter sanctions. Retalix ory measures are affecting europe. We have a global strategist from jpmorgan who joins us now. So, the question is, to what extent wind lease will these sanctions work . That is highly unlikely. I was looking at a Financial Times on friday that showed the huge surge in russias food imports. Pretty much when president clinton took office in 2000. President putin took office in 2000. If you look at it before that point, it was absolutely anemic. There they are light years beyond where they were. It is bringing up the harsh realities about russia in the 1990s. Also, we are light years beyond that. Because russians are so used to the hoarding behavior and wages if you look over the weekend, cottage cheese is gone. Parmesan cheese is gone. It is adapting to whatever the reality is. It will not be permanent. It is a temporary state. In the european union, you have countries on the eastern periphery finland and the baltic states. 1015 ofl exporting their Dairy Products to russia. They are gone, halted at the border. So, you have these markets that are looking to european internal markets. There is a crisis for food goods. Theres a problem there as well, right . Theres a good and bad part. Those products may not be gone. They may be marketed to other parts of the european union. And, this should mean lower inflation and not necessarily a bad thing. T, can we dons poin want key economics . I am the economy is diminished before the inflation effects. Poland wants to sell apples to germany. Russia will not take them. Russians are used to this. The difference for me is the syrians. If we do sanctions against south africa, that is one nation. We are doing it to six, seven, eight countries. The flipside is it will have an Economic Impact. Behind the inflation, it will have Economic Impact on trade. How much is the russian economy going to slow . Exxon is now drilling in the arctic. The sanctions are against oil, but not gas. They do not have existing contracts. They do have teeth for new business. I think that is the headwind that markets are reacting to. It is all driven by expectations. Not only what oil and gas is produced today, but what is going to be produced two years from now. The sanctions are hampering that. To come back to trade issues for Second European exports was a strong point, in the midst of an anemic recovery. That has propelled them. Will jpmorgan say we are going back to recession . No, but it does create Downside Risk that they will need to address of the policymakers do not. Thank you so much. We will be back with you throughout the show. Haas, the richard president on the council of foreign relations. He will join us as guest host. This is bloomberg surveillance. Good morning everyone. A view of gaza, injures the smart grid i believe it is the third truce. Were are in a quiet this morning. We see that in the headlines as well. We will keep you abreast of any developments here. Secretary is in sydney, australia. Lets get right to the top headlines. The violence in Eastern Ukraine leads to a jailbreak. Are than 100 inmates fled highsecurity prison when it was shelled. They are pounding the city of donestk with artillery fire. Went into effect last night after egypt intervened. Israel wants the gaza strip the demilitarized while hamas once a sevenyear blockade stopped. Is ebola fight widening. Soldiers are patrolling streets in my. And sierra leone to control quarantined patients. The disease has now killed over a thousand people. It worsened over the weekend. Just as the headline item, wow. It is a Public Health crisis, not a disease crisis. The problem is inadequate infrastructure, no money for surgical gear none of the stuff that they need. An outbreak like this could be controlled in the u. S. Very inadequate. In the papers, it was in discussion all weekend. Lets go to the morning mustread. A later light er note. Economics heavy. I spent the weekend looking at the decision in the obannon case. This is a group of athletes that suit the ncaa. Quoted james heckman, the a nobel prize winner. Heres a quote from dr. Roger knoll, an economist at stanford d1the athletes are offered a scholarship, they take it. They do not go anywhere else. He was pointing out that they do have monopoly power. It is the only buyer for athletics. It makes me flutter. I did it just for you. This is like a classic case. A rubber plantation in singapore. There is one buyer of your services. Tes, theymany athler are selling to one plantation owner. The owner is the ncaa be careful when you say plantation owner and ncaa. Decision is aat look at the last three years of antitrust law. The ncaa is arguing a consumer benefit. If they do not have to pay athletes, they can provide Something Better to consumers, which is a standard that has been applied to Companies Since the beginning of the reagan administration. How much money can they earn . 5,000 a year. That is barely europe each a budget your pizza budget. They make millions of dollars off these events. Coming up turkey elects a new president. We discussed the political and Economic Impact coming up next. This is bloomberg surveillance. Good morning. Of the seven on s p 500 futures. We also begin with twitter question of the day. This was secretary clinton. Is hillary right . Should we have done more in syria . Send us your many opinions. Hillary, bashing, hillary cheering. I saw an ad, get your hillary for president , by a storage company. In chelsea. A billboard in chelsea. And barrymy lbj goldwater pins. I voted for george w. Bush the year i turned 18. If there is 18 and conservative, theres something to be worried about. Lets go to something turkeys Prime Minister for more than 10 years is now the president. Fair election and expected results. He has been looking increasingly autocratic and humorous less. Nichols is there to explain what is happening. He took it in a walk. It was a walk. He avoided a runoff. 52 . One thing that is worrying is that there is only 75 turnout. 95 is what they got in local elections. This is not a strong mandate. What is he trying to do . President ial system here in turkey. Explain his popularity there. The best i can come up with is ong, a democrat and also genuinely popular. The economy you have an average of 5 growth throughout his term. You see more cranes then minerets. Yes, the economy is humming. It is expected to be 3 in the coming years. The question is, can he maintain the popularity . Also, the situation in russia is eating away at trade. I will have an effect. Growth will get down to 2 2. 5. Tourism and transport costs are coming in from the middle east. Just to build on the point, this man has banned a twitter and youtube. He has taken a lot of flak. You would have thought he would have for the mine disaster back in may. Why is there so much support . What about this message ru esonates . In southern turkey, his isla mic fundamentalism. His message of islam is resonating. This idea that turkey can be both modern and islamic. Question, yes, he has been out of touch. It has not heard him given where he is standing in the poll. As long as the economy stays in growth, he is in a decent position. If it slows, there will be elections iny june 2015. Look at bond yields, what happens with the fed. In some ways, what will happen in jackson hole says more about the future than their own political and economic leaders. Turkey is always stuck in the middle. Ber withnato mem close ties to the regions. Plan for the future within the region . What will he be doing in syria and iraq . He clearly wants to be a more Regional Power player. He is aligning himself more closely with palestinians, pouring cold water on the relationship israel. Wisteria, they have a refugee problem. With iraq, there is annot a lot her can do. Internationally, he wants to play a bigger role. Theres old ottoman pride. But, the world is a very complicated place now. Hans nichols in istanbul, looking into ottoman pride. Thanks. Swimming the bosporus is 90 miles long. And theyre building a new bridge. I had no idea. It is a narrow point. 2,450 feet. It is 15 laps of an olympic whole. Pool. Why do you think lord byron pulled it off . You are a font of knowledge. Up, one effect of Climate Change is higher sea levels. The greater odds of regular flooding. We will tell you which cities have the worst in my Brendan Greeley is so worked up. You are watching bloomberg tv. We are streaming live on your phone, tablet, and bloomberg. Com. Good morning everyone. Olivia sterns and Brendan Greeley with me this morning. Mr. Johnson will return at some point. Olivia sterns has the top headlines. A big break for american drivers, right in the middle of vacation season. The average price for a gallon of gas has dropped six cents in the last week. The typical is 3. 50. The price for a gallon of regular has fallen . 19 since late june. A candlelight vigil for a man who was fatally shot by police turns violent. Cars were vandalized and businesses looted in ferguson, missouri. This was for michael brown, an africanamerican teen who was shot and a scuffle with a police officer. And rory mcelroy writes a page in the gulf history book. Mcilroy is the third jets player to win three tournaments. Great to see Phil Mickelson make a comeback. Everyone who sells golf gear it was just hoping that rory mcilroy could pull the tiger level one more time. I thought it was great. It should always be 46 people. No big deal. You can just barely see the ball. The super moon. The super moon helped out. You have a single best chart. We have a new report from citiesat shows many u. S. Are becoming more susceptible to regular flooding, much to Brendan Greeleys dismay. Many u. S. Cities have potential roads, rails and tunnels at risk. A rise in lowgrade flooding has tosed persistent problems government and has major tax applications. I know you are one of these cici ties. Annapolis, maryland. I still own a house there. Flooding is an issue. One of the things is that we know we need to spend a lot of money there to shorten the seawall. The money is not there. That complicates the discussion because we have to bring and developers to figure out if they can pay for it. Then, we have to give the downtown to developers. Were talking about regular there is an annual average of 40 days. 925 increase. What is the why . Is this Global Warming . It is. We keep wondering what is going to happen. What are the longterm effects. I think we are seeing them now. Nuisance flooding is a cute title. It is an economic problem. Seeing that we do not have the money to pay for the consequences. Problem all around the world. Think of the maldives. The sea coral can we make up news here . Is annapolis thinking . Annapolis is not sinking. If you built a house on the edge of annapolis i would not build a house on the water grid anywhere, actually. We have some pictures. This is the love of from the stromboli volcano. One of the most active volcanoes in sicily, off of italy. I have seen this in hawaii at night. There is that hiss and steam. There we go. As it hits the water. We also have a picture from turkey today. These are supporters of the Prime Minister. He will be president and try to turn it into super president. Theyre celebrating his victory. Anastasia is with us. A member of nato, not the eu. Is it a place to invest . It is not the most emerging market. It is good to have that continuity of leadership, but there are economic problems to solve. The current deficit is wider than other places. Interest rates are not were there need to be. Something hansel said earlier the most important event may be what happens in jacksonville and beyodn. Towhy do you link turkey what central bankers do in wyoming . Toas we get closer tightening wallets, it becomes more attractive to invest here in the United States. We do have positive rates. That is not the case in some of those places. In turkey, there is a two Interest Rate regime. There is a domestic rate and an outside rate as well. That is not sustainable, is it . They do need to attract the foreign capital. That is what theyre trying to do. That could trickle into recruiting, which would help them. Things are going against the economy. Another thing that struck they was that there were more cranes thatn minarets. Wheres the money coming from for that investment . A lot of it has been foreign investment. As easy as it came by, it can trickle out. Cranes,aking of those the Property Market is in a bubble. It is hard to say. It is economic potential. It could get to they have a russian influence . We saw the huge russian full of money there. To the russians have a normal or dominant investment in turkey . They do have some investment influence. I think some of the bigger issues will be the blue spring b pipeline, which is being built to funnel they gas. Fascinating. Great briefing. And a photo this morning is something that tom cannot stop talking about. The super moon. This is in orlando . Of course rio. A church in here is how early tom get separate he took a picture of 4 00 this morning and put it on twitter. There it is. A super moon. L. It was beautiful coming up, we will continue this conversation about iraq and the Islamic State. One expert called it a gathering storm. More criticism for the handling of Foreign Policy. Is Hillary Clinton right . Should we have done more in serious . Tweet us. Good monday morning. It is august 11. With me, Olivia Sterns and Brendan Greeley. Scarlet fu and adam johnson are off today. We need to get to some company news. Are not alarmed by the latest softbank results. Merrill lynchs has softbank is taking alibaba. The wireless carriers also being wheezed by a rival. Feed has newfound cash to fuel its expansion plans. It is getting 50 million from a Venture Capital firm. The Parent Company has a stake in that firm. They are expected to unveil new content and build a Motion Picture unit. And new trouble for the site that Everybody Loves to hate, facebook. Theres a furor about the new messenger app. Installing it can compromise privacy information. Facebook says google is to blame. That is the latest company had eadline. But his feet, and might make. Zz feed ran but hi that is my perception. Shouldnt we be shouldnt they be making enough money to fund these things . I am fascinated that they needed that money. This is a classic Silicon Valley problem. We know that they are really doing well in terms of actual numbers. Are they making money . The article of the week was four or five weeks ago. It was about the telegraph. And the idea that the telegraph says we do not want to be buzz feed. They say that with respect. They are going to do the antibuzz feed, which is fewer and more mature stories. Im going to tell you about the future of america. We have Business Units such as contain newspapers being spun off. They all hold a lot of debt. Then we have buzz feed. That, i find terrifying. There it is. Tech news for the weekend. Lets go back to the lead story. Earlier this summer, the modern use of the word caliphate sullivan used it to describe the shock and awe of the islamic incursion into iraq. The Prime Minister demanded a new term and placed forces within the green zone. Paul is joining us. I give you credit for being out front on this event. How far is the caliphate . It is not near to what it was in the time of the empire, but it was an actual caliphate. Otes for this qu group. It is way out of bounds. Within your studies, what should be the u. S. Response . Do you agree with the present prescription or should there be a different response . It is interesting that Hillary Clinton said that we should have done more in syria. I agree. What should we have done . The president is doing what he is doing now. That may just be a first step. This may stopped him a little bit. The idea of u. S. Ground troops would not be politically feasible. It is not just what the u. S. Should do, it is with the world should do o nthis. We should not be the only ones out there. The name suggests grand plans. How coherent is the leadership . And who, if anyone, has influence . Baghdadi isy, mr. Running things with an iron fist. The people behind him seem to be well disciplined. However, lots of people are ask prisoners and throwaways from al qaeda. That could be problematic if they have things coming up in the future. This is not a coherent group. This is a gathering storm because if it becomes a coherent group, it becomes far more dangerous. They can expand its territory and influence. You use gathering storm. That is kind of a loaded term historically. Usually it is used to refer to germany. Is that the comparison you would make . Not yet. Being someone who spent a lot of time in the ocean, you have to keep yourself aware of your surroundings and the gathering dark clouds. I was not exactly looking for a church analogy here. However, there are dark clouds growing. They could be a threat to us, europe, and others, if they are not contained in push back. What should be the u. S. Effort to link shiite with sunni and baghdad . That is a difficult one after the events with mr. Maliki getting a court ruling, saying the president was mistaken in not deciding to put him in power. I think it will be a difficult situation to get sunni and shiite together. Ckedmalik he has wre those relationships. What is happening in the northwest is wrecking relationships. Iraq is in the point now it may just. Mr. Malik he is not the person at this moment. It will be something that has to be decided by the iraqis themselves. Thank you so much. So valuable to have that perspective. The authorityy behind this new idea of modern caliphate. Bring in ours guest host from jpmorgan. Anastasia, markets rallied on news that obama authorized airstrikes. The Islamic State seems to have control of the dm and most will. Yet, west texas is below. Still markets for now are determined to make the conclusion that the southern iraqi production will not be the spot. The production of syria is not full, and libya is just coming back online slowly. Immediateseeing an reaction to oil. If you couple with what is going on with russia and ukraine, because supply and demand is pretty wellbalanced now, any actual destruction or expectations could meet outside prices which impact europe. Of course, that is not the case of corporate thank you. Lets look at the four x report. Litmus. Ar yen is a we reversed. 102. 13 on yen. Weaker ruble, but not as weak as it was earlier this week. Olivia . Coming up on this monday, richard haas, from the council on foreign relations, will join us as a guest host. This is bloomberg surveillance. Maliki demands a new term in baghdad. Ukraine attacked separatists in donetsk. A truce holds in gaza. President ial election in turkey. And the price of oil, unchanged, as iraq slows. Good morning everyone. We are live from our World Headquarters in new york. I am tom keene. Joining me, Olivia Sterns. Our guest host is richard haas from the council on foreign relations. Yourberg news barely got running over a flood of people. Lets get the morning mustread. Germany is probably underperforming spain. The survey shows that the engine of europe sputtered in the second quarter. No Major Economic data. Dean foods and cisco out before the bell. We have hosting when you need a website to be hosted. News, john kerry is in sydney after a weekend in myanmar. The busiest and most stressedout man in the world. And a man leaves a bright start to become the ceo at sprint. There it is on monday. Now to company news. Richard kinder is expanding his empire. He is buying up three companies for 44 billion. This creates the fourth biggest u. S. Energy company. They say they are looking for growth amid the shale drilling industry. Amazon is blocking a preorders of captain america. They have experienced this with warner bros. Authorities have ordered mcdonalds to reveal their product sources. A shanghai supplier was caught labeling old meet as fresh. Brands is also being required to list supplier information. Lets go to the geopolitics of the moment. We absolutely stand behind iraq massoon, so says john kerry. Richard haas is with the council on foreign relations. If i can have you walk through the president of iraq, does that mean we are not standing by the Prime Minister . It does. The problem is, we cannot insist or install who we want. This is an american vote of noconfidence. Who will make that decision . In terms of the new Prime Minister, maliki will do everything he can to stay on. His backers have a lot of power. Let me go to the money. That is south and east away from this turmoil. Shiiteliki control the people to the south . Iran is the most internal asset. At the end of the day, you have somebody that theyre comfortable with. I still am not completely sure. We do not know who is in charge now . That sounds like an awful problem to have. It is iraq. To say someone in charge has a suggested degree of organization, this is now not a governing country. The kurds are independent. They parts of the northwest are out of control. And you have the center and south. To rip up the script a vote that you are more up to speed on than i am. Is there an independent kurdistan . He can live with their. What he does not want to have is a greater kurdistan. As long as they are kept within the iraqi borders, he can live with that. Should we be talking about a three state solution . Foreigners are the only ones interested. Horse has left the barn. Kurds are the best partner of the United States. Should we focus on giving them their own absolutely. Iraq is already history. What we really need to do is strengthen the kurds and find a way to claw back the parts that are being controlled by the group. As we know from yugoslavia, one estates with soft, it splits off more minorities. So, you can say that we should have a three state iraq. What does that do to kurds in turkey . Welcome to the new middle east. The old middle east is over. There is less and less reality in terms of daytoday politics in organizations. This will be a messy part of the world. I recently compared what is going on in the middle east to europe in the 17th century. This is the 30 years war of the middle east. Political struggles that will go on for decades. This goes back to your public service. The nation is giving the military jets up high and bombs. Moving forward, we can do this from a distance. Is there any example about being successful . So long as you have partners on the ground. Own localare the partner or we have to find a partner. Will will be the response when there are 8000 dead people on that hill to the south . Lets get really cold. There will be that many people. It is a nightmare. If you have 150,000 dead people in syria the world will look the other way. We will do what we can. The humanitarian situation will not drive it. The local media brings up front and center. That makes the difference. If this is the 30 years war, then the lesson for us is that we cannot fix this. So, what is your policy . You are right. Not everything is a solution ready to resolve. Some are conditions to be managed. I would say you want to strengthen the kurds. Isis. O attack and we caaken not just in iraq, but in syria. You want to protect jordan. Sometimes, it is not what you can solve, it is also way you can prevent. You and to keep a bad situation from becoming worse. Lets go to syria. Mccain called for air strikes in syria. Is that right . Absolutely. Is there an army left . The question is whether one can gradually be rebuilt. I do not know the answer. We should not give them a sanctuary. We want to go after them on both sides. Does that make us an ally of assad . No, but there are things worse. It might be with diplomacy. Sometimes in Foreign Policy, you have to make terrible choices. I would say that they are less evil and less of a threat to u. S. Interests than isis. Heres the morning mustread. I am sure it humored Richard Haass. This is from the washington post. My guess is that problems caused by lameduck affects are much less than those caused by a toxic domination of hubris and exhaustion after the effort that the president must exert to achieve reelection. You have lived this. Would one sixyear term be better . No, not going to happen. Lets not think about it. The president still has 900 days left. Barack obama has almost as much time left as john kennedy had in his entire presidency. He is not a lame duck. He has a lot he can do. He was chosen lameduck. You have to focus on what you can accomplish. I think that the Administration Even when he talked about iraq, he cannot focus on what he wants to avoid. The United States needs a positive agenda in this part of the world beyond. How does the standoff with russia change power in the region . Does that make it more difficult to change what is left of the regime . The short answer is no. The russians also want to have a degree of stability. They have 10 or more of their own population. They dont necessarily want it that way. We need to think about strange bedfellows here. Theres an image from the end of george w. Bushs term where he has no one to talk to except the bill clinton, who called him. Is hillary right . Should we have done more in syria . Tweet us. Coming back, we talk about the Political Risk with the ceo of the eurasia group, robert johnson. You are watching bloomberg tv. We are streaming live on your phone, tablet, and bloomberg. Com. Good morning everyone. I am tom keene. Scarlet fu in adam johnson are off today. She is lisa, from bloomberg news. She talks about wall street. The talk of the town is the upset. High yield bonds, price down. Investors are redeeming. What is the level of panic . You make it sound so much more dramatic. Actually, one thing i was hearing about was the sell off. The declines were not as big as you would imagine, given that 7. 1 billion was left. That is a record number. Compared to 4. 6 billion, the secondhighest amount. A very big week of outflows. The debt declined. Here is why. Funds built up huge cash reserves. P almost 10 of their portfolios in cash. Generally, in taxable bond funds. They were preparing for withdrawals that they could meet with cash, so they did not have to the critical question to our viewers, is this mom and pop or hedge funds . Did they make a tactical exit . It seems like this is retailbased. If you think about it, janet yellen came out and said this is a potential danger area. So, if you have people in the market who are retirees and are isking at this, even the fed telling them this could be an area of concern. Is this the beginning of the end . Another indicator is that some funds are growing short credit funds. Is this the end . Just because people want this market to fall does not mean that it will. I have been looking around. Everyone wants banks to rise. Just because they want it does not mean it will happen. You look at how much cash has been created around the world. There is a natural pressure that will lower yields. You have to start thinking. Have record low yields in germany. There will be natural buyers at some point. Unless there is some fundamental weakness. Richard haas has never seen someone this fired up about high yield bonds. Thank you. The summer of geopolitical discontent. Stay with us. Good morning. Olivia sterns and Brendan Greeley are with me. Johnsone rumors that will enter the World Headquarters at some point before labor day. Our guest host is richard hass, joining us on the abruptness of the highyield market. Lets get to the top headlines. The Prime Minister of turkey is reaching out to critics after the first direct president ial vote. He took nearly 52 of the vote and plan to widen the powers of the presidency over the next five years. The role has been largely ceremonial. U. S. Airstrikes helps fighters to push back against militants in northern iraq. The Kurdish News Agency says two towns were recaptured. Theres still a huge territory. Iraqs u. S. Is urging government to seal unity. John kerry is in australia on a pacific rim trip and had this to say about the fighting. There will be Little International support of any kind, whatsoever, for anything that deviates from the legitimate constitutional process in place and being worked on now. They need to finish that and given new government an opportunity to be voted on and move forward. There is chaos in iraq as oil markets have barely blinked. They are trading below 100 even as the Islamic State sets its sights on the kurds. There are valuable shale supplies that have made the market known to geoPolitical Risk. Robert johnson is the ceo of the eurasia group. He is joining us now from our washington, d. C. Studios. Thank you for joining us. We are talking about a potential caliphate in iraq. Thatrd haass has said libya is a selfcreated failed state. Why have they not reacted better to this . We have not seen yet is a major disruption in supply. We have had disruptions in iraq over the last several years that have kept the supply offline. The markets are still debating how much upside iraq will have as far as supply over the next five years, rather than how much downside there could be. Until now, the conventional wisdom has been that the huge boom we are seeing will compensate for any supply from east. 00 the middle why is that misguided . The growth of u. S. Oil production had an impact on the natural markets. What i am interested in is the fact that Production Companies are really setting their assets around a lot of these emerging markets and moving back into the u. S. That is driving this production growth. They are not completely moving away from Political Risk and her cases taking on risk in north america. Help me understand what those risks are. We are a pretty stable state. Most of the focus has been on the belowground risk and managing unconventional wells. Certainly, i think we are not talking about risk and nationalizations. That does not mean that there are not some risks that they should Pay Attention to. This includes fracking, natural gas exports. These emergent u. S. As well. Let me bring in Richard Haass. Oil supplies have not been affected. The question is, when does that happen . At some point, the saudi arabia they have helped create a group like isis. This is blowback on them. I think that that specific scenario is why we probably do not a lot more downside in oil prices. I think the market is comfortable with a shortterm anduption in iraqi supply, the larger questions about the sunni and shiite split. We do not know if they will use this to offset disruptions in the region. We do not know about isis going forward. Im interested about that point about saudi arabia. They have been handed money for the things we are seeing in iraq. What will it take for saudi arabia to actually take on a leadership role and take some ownership of the middle east . They are heavily involved now. They have often hedged their bets. What they will do now is isis against syria as part of their proxy war. They did it in a shortsighted way. Are they reliable . They have their own independent Foreign Policy that diverges from us. They have always depended on their own largess for domestic peace. One of these days, that will run out. I do think it is a medium or long term question. The markets are not pricing it. That day will arrive. Saudi arabia is a more prominent proposition. Just a final question. This is from eurasia groupi in d. C. Exxonis a headline that has started drilling in the arctic. As a has praised them reliable partner. They say this is a sign. How much potential is there in the arctic . When we think about the russian oil, it is the most Important Oil province. The next 10 years are really about the western siberia recovery. I think the decade after that is when we start to see the impact of that energy, as you described it. It is important to get the development now. Theres a 10 year lead time to get that going. Robert johnson, thank you so much. Ceo and president of the eurasia group. Coming up, turkey elects a new president and we will discuss the impact grade were just Getting Started this morning. Good morning. This is bloomberg surveillance. I am here with tom keene and Brendan Greeley. Lets get straight to the top headlines this morning. Violence in Eastern Ukraine leads to a jailbreak. More than 100 inmates fled a highsecurity prison when it was shelled. They have surrounded the last stronghold of prorussian rebels and their shelling the city of donetsk. A man who was fatally shot by police his funeral turns violent. The vigil was for michael brown, who was shot during a full with the police officer. Thrill is back for roller coaster riders in maryland. They were stuck on a roller coaster called the jokers jinx. That is terrifying. Time now for this matters. Thank you. It is the summer of our geopolitical discontent. Ny is a diplomacy on too ma fronts. How does the Obama Administration get us out of chaos . Our Foreign Policy must engage and join the limits of our influence. Richard haass has many spheres of influence. There is no important book dovetailing our domestic policy with foreign policies. How do we test the limits of our engagement . It is almost the alice in wonderland thing. You want to avoid too much or too little. With the previous administration, we went too far. Under this administration, in places like syria and libya and the rest, we avoided doing the things. Andwe have to be involved understand we cannot do everything everywhere. You served under republican officials. There was a big writeup in the post. What is the distinction between a clinton and kerry . I would say that secretary clinton, when she was describing was more active Foreign Policy, which points to what we did not do in syria and how that had consequences. She is positioning herself almost to the Foreign Policy of her previous republican president , george bush, the father. Very much involved in the world, american leadership. Quite a strategic approach the world. I thought what she said have a lot of force. There are multiple fronts iraq, israel, gaza, ukraine. There are many things going on. How do we deal with it . There are all of those things nization where the secretary is now. That is where the military power is. If the 21st century turns out badly, it will happen in asia, most likely. The United States needs to stabilize things and find a way to wind down the ukraine crisis. And in the middle east, we cannot be that creative. We try to keep that situation from getting worse. On your book, the idea that america we talk about this. Were not engaged with them. Purcell many americans, for so many americans, talk about the struggles we have now. We have to do better at home. We are growing at twice the rate we should be growing at. We do need comprehensive immigration reform. We still have this tremendous Health Threat out there called entitlements. We have not done anything to deal with that. Has got toted states prepare the foundation for its power with the foreignpolicy debates. Do you take it to another institution . Is the president and the administration and also congress. Dysfunction right now is arguably a bigger threat to the United States than any other foreignpolicy question. Is rand paul a solution to this . I worry that by doing too little, your reducing the role of government, reducing the role of america in the world. I do not think that leads to solutions. I think it leads to vacuums. Vacuums tend to be filled by dysfunctional forces. Thank you so much. It is time now for a data check. We have to show you what is happening on the markets. Futures are a little bit higher. This is after russia called for an end to military drills. Euro a little bit weaker against the u. S. Dollar. 10 year yield is trading at 2. 3 . I am looking at the 10 year yield and thinking the same thing. Every time i hear where our investors going to get that . Where do treasuries go up . Good morning. This is bloomberg surveillance. I am Olivia Sterns, with tom keene and Brendan Greeley. Our guest host is Richard Haass. Bromwich of bloomberg news. Lactone group is looking to buy an interest in the louisiana shale gas field. They say they are close to a deal with royal dutch shell. They would pay 15 billion for a steak. There is a bidding war for the secondlargest winemaker. Billionsal is spending of dollars for treasury wine of australia. That matches a bit from kkr. Treasury makes tenfold and other popular brands. And what a difference a few days of trading can make. The market line lambda jeff bezos and other tech executives. He lost 4 billion as stocks holdingom their highest, larry page and sergey brin. That is your company news. Futures are up nine. May be up 59. People are happy about what is happening in turkey. We will take a look. He has been the Prime Minister for more than 10 years and he will be the president. He wants to make it a stronger role. With a Fair Election and expected result, he has been looking extremely humorist and humorless. Win, thised erdogan to is not a surprise. It is not a surprise. He was not forced into a runoff. He gets 52 . The challenge for him is how to take the ceremonial role of president turn it into a nonaquatic one. It is an authoritative one. The centrality and independence of the central bank in turkey is very much at risk. Erdogan wants to control them. He does not want to see Interest Rate hikes. I will throw it over to tom keene. Is that smart economics . It is a challenge, to say the least. Hans, he can do this only because he has a popular mandate. Help me understand what it is about him that is really he is a genuinely appealing figure. He is. Figure. Sourchistorical right behind me is the hagia sophia. Originally, it was a christian church. That was a mosque. Now it is a museum. It will become a mosque, yet again. It shows how he has used religious fervor here. But ata negative sense, least religiosity, to consolidate his power. He has the working behind him and he has a humming economy. 5 growth is remarkable. With us, Richard Haass. Nato there is not abiding modern tension. There always has been. Turkey has always been divided. What ataturk tried to do he wanted to move turkey more in the direction of the west. What is so interesting is that he is trying to reposition turkey and make it more of an islamic country. What is he going to do with his unchecked power . He is the most capable politician in turkey. He wants to expand the power of the presidency and weaken the Prime Ministership. The real question is, to what end . What is fiscal . Is he a friend or a frien emy . There are powerful tendencies that he is doing. The only adjectives that i can say is the adjective of submissive. He is a highly controversial leader at home. Does he have the power to do the things he wants to do . Does he have enough of a mandate to pull them off . He has the personality, right . On the divisiveness businessinfluential group called and him not to be polarizing. We will leave you there to figure it out. Speaking of fuller is a figures, our twitter question of the day is hillary right . Should we have done more in syria . Good morning. Me. Ns and greeley are with fu and johnson are out. You need a scorecard. Right now, a special guest. We have betty liu. Betty, what can we expect . That is like orange is the new black. They all call each other by last names. Are you watching . I am. You look just like taylor schilling. Back to some serious news mike turner is a Senior Member of the Armed Services committee. He will be joining us. Richard haas is joining us well. I want to focus on congressional support, how much the president has for the airstrike. Believe thathey there will be no Ground Troops committed to this campaign. We will talk with congressman turner in just a few moments. Looking forward to it. Thank you so much. I do not know what you were doing this weekend were you in the hamptons . Well, next time you go, take an uber. They going to where the money is. That means the beach towns, 100 miles from the city. One driver says he can make 1000 in the hamptons and half the time in new york city. There are a market that cooper refers to as a popup. They operate their only in high periods. The average trip is a must to three times the distance. Brandon, go to your cell phone. The price is four times. Imagine that, from the crows nest all the way back to bridgehampton 200. Uber also offers a chopper system. That is just to get out there. What does it mean . Were their taxes before hand . Are they as upset as taxis in new york city . Have you done highyield research on the hamptons . I have not. It is a pretty competitive market. The trouble is, you call several and they dont always show up. If you call uber, you can track where they are. You are out there doing paddle boarding. That is for the record. Full disclosure, i am a member of the council of 12. Do you feelaass, pressure to go to the hamptons . Do you have to go out and make a president ial appearance . I think they are relieved not to see me. Yes. Ure, no, attraction, would you take an uber . With the former president and secretary clinton, they rented it. It was jaw dropping. I dont know they were poor when they left the white house. They have come a long way. It is the lyme disease around it. It was in the middle of nowhere. Acres of lyme disease. [laughter] coming up, we will keep talking about iraq. More support for maliki. We have the latest. Good morning everyone. Breaking news, the ceo of in and out gary rodkin of conagra foods, the huge agricultural combine, was set to retire. Some news on a slow monday morning. That is not the case. Will move back over to politics and your technology. Particularly the chaos in the advertising business. Is the best i know on linking the advertising world into facebook and twitter. Look for that on the 6 00 hour of Bloomberg Television tomorrow. Lets get to some company news. International bookings are boosting priceline. They have just released results analyst estimates. Theyre now expanding overseas. They have grown up 20 for seven straight years. New troubles for the site that Everybody Loves to hate. Facebook, there is a furor about the new messenger app. Installing it compromises privacy information. Facebook says google is to blame. D has newfound cash to power its expansion. Theyre getting millions from an Investment Capital company. Bloomberg has a stake in the company. New contentl unveil and build up its Motion Picture branch. The top 10 places to get lyme disease during the summer. Millbrook buzzfeed, i dont get. I tried to look at it three or four times. They do great work. They try so hard to go legit. They sound like the mafia. You are better at this than i am. Are they done with cat videos . No. That gets them all the eyeballs and revenue. Should they be trying to get out of that business . I do not know if they can. It is a real question. I need to brush up on my cat videos. Withll, with Richard Haass us. What have you learned from your website . I have been a big supporter of cfrs ability to have a clear aggregation in international relations. What is the lesson over three years of your website . Theres a real hunger for authoritative news without too much opinion. People also like interactions. They do not just want to be stop the show. Name, butmember her she did a graphic of sunni and shiite islam that was awesome. In less than half an hour there is an online, interactive primer about the nature of the sunni and shiite split on cf r. Org. It is something that we are trying to do more and more. You e interactive that do takes a lot of time. There are beautiful timelines. Site that is reliable and funded by donations. It says a lot about what people want to read. It does not say much about what people are willing to pay for it. I would say, in defense of the list i know people make fun of the k that on theo thin web, people have less time and so much more information to go through. It can be helpful to have what you need to know right now and not just digressing into flowery language. I am writing a blog post right now in my brain. You will not believe what we said said about lists. Every day, you have to put stuff. We are also overwhelmed by information. If you get something out there and say here are the five stories that matter most today and why, people want that. Otherwise, you have to navigate the internet yourself. Theres something too much out there. Tom keenes favorite word im going to get back to what you were talking about earlier, debate brewing over what Hillary Clinton had to say about president obamas policy in syria. This is my morning mustread. It comes from the interview with Jeffrey Goldberg in the atlantic. The failure to build up the fighting force of the people who were originators of the protest against assad that left behind a big vacuum which the jihadists have now filled. The president initially said there was no into arm here, no coherent force. The Free Syrian Army is not something we can arm, theyre made up of carpenters and architect and butchers. Is this 2020 . Enough, youit long can say there are no good options. There were moments and things we couldve done. In particular, one year ago. There was the disagreement wisteria using chemical weapons. The United States could have used military force in that moment. I believe we had the potential to change the dynamic, including the dan amick of the opposition. I do think that there were opportunities. We keep talking as though there are not foreign domestic and strains. Nobody wanted that at the time. It does not matter. The president has tremendous latitude. History shows that if you succeed, you bit domestic support. What hurts you or longterm domestic ventures that fail. President has discretion under our constitution to do what he wants and Foreign Policy. Is there enough of a Free Syrian Army left to arm . Now, no. This gets us to our twitter question of the day. It hillary right . But isst response, yes, it too late to solve . It looks as if the options are lesser of the evils. The second response, yes, but no economic interests to go there. Final answer, no. Hillary is merely practicing the family art form known as triangulation. What is that . We need to get you in trouble this morning. Are there any isolationists left . Good question. How many people are actually saying . I think there is real in turban and fatigue. People like rand paul are tapping into that. The left and the Democratic Party are tapping into that. A lot of americans do not see between whatn is happening there and what is happening here. Our schools and our teachers, our media does not cover it. What happens out there does matter. What i am worried about is that of american withdrawal, we will pay the price for it and we will have to ramp up. What is the most logical extension of how things play into your daily life . The most worrisome one is terrorism. There are characters running around iraq and syria with european passport to will not be content to stay there. Also, economics. We are 4 of the worlds people. We are 25 of the world economy. What happens there will affect us. The european media touches on this all the time. The jihadists who are going to the area. It is time now for todays agenda. Tom, you have to rent a radio. This is a large transaction. An mlp investors get less of a dividend. This will be worth watching. This is a sidecar industry. But it is a big deal. Are they going to pay up to keep investors . Consolidation of an empire. Thank you so much. Rendon . I am looking at the Eastern European economy, which is all well and good for europe to decide on sanctions. Those paying the price are finland, the baltics, poland. We do not know what will happen to all of those who are no longer being sold to russia. How do they solve that internally . And can they live without that philadelphia cream cheese in their sushi . Or that latvian milk . On my agenda, it is iraq. I has released troops on the streets of baghdad. He has ignored calls for a more inclusive government. It really looks like a show of force to put iraq he troops right around the u. S. Green zone and show obama who is in control. Meanwhile, the Islamic State is controlling mosul, which is an existential threat. I feel it there was so much bad news today. The best thing that can be read about were those four people trapped on top of the richard haas, you feel like the world is unraveling. Must you were a sports fan die, the pga champions tour was as good as it gets. Mcilroy could save the day. That does it for us. In the loop is next. Good morning. We are live from bloombergs World Headquarters. We have a great show ahead for you this morning. Mehael turner, he will join as u. S. Airstrikes in iraq continue. Does the president hassle congressional support . That leads us to the heart to the top headline. Resisting president obamas push for a more inclusive government. Malachi tokers want drop his first bid. In a deal valued at 44 billion. It will make it easier for the company to grow. An ongoing fight over online pricing. It is blocking preorders of disney movies. Amazon is against the book for