Transcripts For BLOOMBERG Bloomberg Surveillance 20150408

Capability of supply to them, we simply saw a whole lot more value in that combination than the market. Brendan the combined company would surpass chevron as the worlds secondlargest oil and gas producer. In china, the shanghai composite index burst through the 4000 level for the First Time Since 2008. Investors are betting that chinas government will increase stimulus to keep the economy growing. In japan, they will keep record stimulus in place. In North Charleston, South Carolina, a white Police Officer has been charged with murder after shooting a black man in the back. A bystander recorded video of the killing, which is graphic. An officer shot 50yearold walter scott as he was running away. He is being held without bond. I think that all of these Police Officers on these force on this force, you tell me how a father would react to seeing a child do something. Olivia rand paul is spending his first full day as a president ial candidate. He is running. He will travel to South Carolina, iowa, and nevada. Voters gave rahm emanuel four more years in chicago. He won 56 of the vote. He has admitted that his management style turned off many in chicago. He needs to fix the worst Pension System in the country. There is a report that Russian Hackers were able to gain access to white house computers. They stole information on president obamas schedule and phone calls. It involved an unclassified computer network. When i saw that headline, i thought it was a joke. Apparently this took place over the course of a year. A severe attack. The white house is insisting that no classified information was stolen. Brendan it looks like what happened is that the state department has had a problem with infections on their systems for months. It looks like somebody hook who had access to the state department did something called pure fishing pure fishing spear fishing. These attacks are endemic. They are all over the federal government. It is a real problem. People who are trying to get your attention over email will research you on social media so that they can pretend they are a friend of yours. It is hard to defend against. Olivia yikes. This is the Biggest Energy deal in a story in a decade. Shell will buy bg. At hammond covers mergers and acquisitions for bloomberg news. Ed lets start with you. Why now . Ed this is one of the deals there has been talk about a big merger in this space. This is the first piece of it. The oil price being depressed is a big factor. Shell has struggled. They have gone through a difficult period. They have struggled with reserves. Bg has done phenomenally well. They have a wonderful portfolio. The other thing is that we know and we have talked about it on the show is that m a is strong at the moment. You have cheap cash and a market susceptible to deals. Brendan every deal promises sales savings through redundancy. Is that going to happen . Ed i suspect so. It is interesting to see how the sales will play out. I think they will deliver. Brendan how does to plus to make five . How does 2 2 make 5 . Ed you look at what has been going on with deals this year and every time we have seen the share price pop the market is looking at this and saying, this is a really poor price. Are you going to be able to relies the synergy . Olivia it is quite striking that the shell share prices down about 5 in london. It is a deal proposed out of necessity, not out of strength. What is your reaction . Unfortunately, it looks like more of the same in the oil patch. All analysts think the price of oil is going to be higher in a year or two years. Shell is now making a bet that that is going to happen. They think they are buying cheap assets. Olivia you are buying against that betting against that . Usually when you get 100 , it tends to not do that. Brendan i am curious. Are we all just assuming revirgins to the mean . Revergence to the mean . In concept, that is true, it will eventually happen. Everybody has that happening in a compressed time frame by the end of the year. Olivia what everybody is trying to figure out is is this 1998 again . We had halliburton buying baker hughes. We saw Whiting Petroleum take itself off the chopping block. Is this going to be 1998 again . Ed what does this mean for exxon . What does it mean for the other super majors . Those were the first questions. I think it is probably too early to say if this is going to be the trigger for another round of major consolidations. Some of these companies are now so big so it is difficult to see what deals can be done. The conditions are good, but that does not necessarily mean we will see it. Brendan is there a specific logic to a gas acquisition right now . Ed they definitely want to increase their exposure to gas. The logic for doing it now is this favorable market condition. Now is the right moment to strike for a megadeal. It is a very full price they paid. 50 premium. It might be one of the biggest premiums outside of the pharmaceutical sectors. The market has reacted accordingly. Brendan part of what they get with this acquisition is the strikes in the salt pan off the coast of brazil. Evidently, shell can wait it out in a way that bg could not. Olivia is this a shell which you think of as a conservative dutchled Energy Producer cutting cost is this a step away from that strategy . Ed no, this is the shell that has been cutting cost, but also desperate potentially. It is a deal out of necessity. Shell has been struggling. They run production is down. How do they get it back up . They can justify the full price on that basis. For bg, they have moved from being in the lower cost business to the much higher cost business of getting this stuff out of the ground. Shell can come in and they can waited out and go into that. Olivia how do you play m and a m a . It is usually a variation of the Interest Rate. Financing is cheap. Olivia what a huge deal. 50 billion with a 50 premium. Thank you so much. As we head to the break, our twitter question of the day. Does this mean we are going to see a new round of oil mergers . We would love to hear from you. This is bloomberg surveillance. Brendan this is bloomberg surveillance. Tom keene is on vacation. It does not happen often. It is the biggest oil and gas deal in a decade. Royal dutch shell is buying bg group. 70 billion in cash and stock. The combined company would be the Worlds Largest secondlargest oil and gas company. A white Police Officer in South Carolina is facing a murder charge. He is accused of shooting a black man in the back. He shot 50yearold walter scott as he was running away from it routine from a routine traffic stop. The jury will deliberate for a second day in the trial of the accused Boston Marathon bomber. His lawyers admit he took part in the attack but say his dead brother was the mastermind. Massachusetts jurors in the air and hernandez murder trial are deliberating Aaron Hernandez murder trial are deliberating again for a second day. Two people are safe after being rescued from a fire in los angeles. The cause of the fire is being investigated. Mcdonalds is beefing up its menu literally. They will offer sore lawn sirloin burgers for 4. 99. Olivia sirloin burgers. Still to come, we talked to jim beyond go about the chicago jim bianco about the chicago elections. The most frustrating airport in the world well, if you live in the big apple, you probably know it is la guardia. Then we have big investors who think nigeria might be the worlds best emerging market to invest in. Brendan i would call you on spoiler alert for the most frustrating airport but i dont think it is a spoiler. Laguardia is the worst. The yield on the 2year note for the Czech Republic dipped below 0 . We are offering one more piece of evidence that Mario Draghis quantitative easing is not affected outside the eurozone. Negative yield on the check czexhch twoyear. Is it evidence of medicine working or contagion spreading . It is medicine working, but the question is, what are you trying to do . The objective was to lower Interest Rates and push people into riskier assets. The objective was to create a wealthy fact. We have wealth effect. We have lower Interest Rates. The next thing they want is higher asset prices. Will europeans feel more confident in their economy and spend more and get the economy moving . It has not largely happened in the u. S. And did not happen in japan. We will see if it happens in europe, but i have my doubts. Brendan you were arguing that we need a rebound from germany. We need them to spend more at home and that is not going to happen. I think so. This lowering of Interest Rates and forcing money into riskier moments markets is going to have a limited, if any, effect at all in getting their economy to move forward. Olivia are you worried about a grexit . I am worried that it will be a negative effect. I dont think they want to set the precedent. Five minutes ftc greece leave, we will turn our attention to span. Five minutes after you see greece leave, we will turn our attention to spain. Brendan serving at the pleasure of germany is a very interesting way to put it. Is germany doing enough to keep greece . The germans have to have a soulsearching type of thing. What is it that they want . They want everybody to behave in the euro. They want everybody to follow the agreements and not to spend too much money. The problem is that no one does that. The first country to break the deal was france in 2001. Brendan and germany shortly thereafter. Everyone is pointing at greece saying, you are the knotty one naughty one. The greeks are not ready to give up their sovereignty to germany. Olivia stocks are climbing above a record close right now as high as 405. Do you want to be in european equities . Sure if you are having money printing in the United States, it is good to be in equities here and in japan. Risk assets will continue to do well. Brendan go where the punch bowl is. Especially a spiked punch bowl. Brendan this is bloomberg surveillance. Streaming on your tablet, your phone, and bloomberg. Com. Brendan welcome back to surveillance. Tom keene is off today. You are looking south at the prospect of the state of new jersey waking up in the distance. It is time for my morning mustread. It comes from harold james, a historian of global finance. Jim, i picked this mustread because i keep hearing the words capital controls over the last six months and these were not words we used. We only use them in history and textbooks. Jim thats true. When you first brought that up, how do you do that other than capital controls . It is a worrisome trend. For decades, we believed in free markets. In the last period, we have gone from central bank to this kind of talk to capital controls, monetary policy, set by individuals as opposed to the marketplace producing more desirable results. Brendan lets stick with capital controls. They seem to have given iceland some form of protection for a while. There is some consensus that lifting capital controls quickly in latin america was damaging. Do you think there is a value . Jim if you pick them at a certain period. If you say capital controls temporarily you can may be make a case that you could find a time to do it properly and then get out. The problem is, you do it, it works, you never get out. Then you wind up with problems. A onetime shot might work. Usually, they dont turn out to be that way. Olivia it is not exactly a carry trade. Cocacola comes to mind. They did a euro denominated bond. Is that a bad idea . You said your biggest bet was that the euro is going to strengthen. Jim i dont think it is a bad idea. You go where you can get the cheapest financing. You dont want to we strict that for some reason because you are afraid that there might be a faster reversal when everybody changes their mind. That may or may not happen. It would be a bad idea. The euro has been around for 17 years. If you were to look at measures of speculation, it is the biggest short right now it is right now. More than it has ever been. Everybody hates it right now and i think it is overdone. Olivia coming up, we talk about how rahm emanuel got reelected. Olivia good morning. This is bloomberg surveillance. Tom keene is actually on holiday. Pictures. He is going to be somewhere. With a bow tie. Brendan we dont know where he is. Olivia he is probably watching. Lets be honest. Brendan definitely watching. [laughter] olivia a blockbuster deal is rocking the energy business. Royal dutch shell has agreed to buy bg group. Of the price, 70 billion in cash and stock. Shell is paying a 50 premium to bgs Closing Price yesterday. If you look in the sector, a premium of 50 is the middleoftheroad. If you look again at what it does for the key metrics of the company, you will see that it has immediately grown to be accretive. Olivia the combined company will be the worlds secondlargest oil and gas producer. It could set off more mergers. The worlds big guest stockmarket rally just passed another milestone. The shanghais composite index broke through the 4000 level since the first time for the First Time Since 2008. Meanwhile, japans central bank will keep its record stimulus in place. Inflation is sinking 20. A video has emerged showing a white Police Officer shooting a black man in the back. The officer has been charged with murder. It happened in North Charleston, South Carolina. The graphic video shows the officer shooting 50yearold walter scott as he was running away from a routine traffic stop. The officer is being held without bond. The North Charleston police chief got emotional. I think all of these Police Officers are like my children. You tell me how a father would react to see his child do something. Olivia the officer is described as a coast guard veteran who has been on the police force for five years. The fbi is also investigating. Brendan californians will be under orders to cut water usage by 25 . California is in the fourth year of a drought. A trip that begins today may set the stage between for closer ties between u. S. And cuba. President obama is headed to jamaica to meet with caribbean leaders. The white house may be close to removing cuba from the list of countries that sponsor terrorism. Connecticut has won the ncaa Womens Basketball championship again. It is their 10th title overall and their third in a row. Their coach is not tied with the late john wooden of ucla with 10 championships. Olivia rahm emanuel has won another term as the mayor of chicago. His city is reeling toward insolvency. They have 20 billion in unfunded pension obligations. What will it take to turn around . Jim bianco is a chicago resident. In my research, i did not realize that rahm emanuel was such a good ballet dancer . Jim he was on his way to have a professional career before he veered into politics. Olivia interesting transition. He has a big problem on his hands. Is he the guy to fix it . Jim he is among the people to fix it. The more sobering question is is it fixable . You are going to have to have very deep cuts, maybe some tax increases. What he just went through with the whole School System which was at the crux of what why he had such a tough Reelection Campaign it gives indication that it might be a bridge too far. Brendan is this a mandate of his combative stance toward unions . Jim for the time being, yes. There was a teachers strike in 2012. It was very contentious. The teachers got a big pay raise. That set off nothing short of a jihad in chicago. That is why he had such a tough reelection fight. He managed to squeeze through. Now that he has the mandate, is he go on to pensions . Probably. How much can he do . The pension problem is much bigger than the school problem. Brendan you have a lot of democratic mayors that are confronting the exact same problem. Perhaps not 20 billion in pension liability, but a comparable problem. There is no template for how to fix these. Jim you are right. They said they would give benefits as appeasement and now those benefits are coming home to roost and it is becoming an expensive problem. There is an obvious way to fix it and that is bankruptcy, but nobody wants to be detroit all over again. The less obvious way is that both sides have to give. There has to be a tax increase and a give back on the amount of benefits. The smallest giveback creates a firestorm, as we saw with the teachers. Olivia some of his critics have been calling him mayor 1 . We such a weaker see a chuey garcia say that they are given 1 million to help realize rahm emanuel reelect rahm emanuel. Is it true . Jim he has been seen with a lot of the big Business Community in chicago. I dont necessarily see that as a problem. Olivia is that a message that resonates in chicago . Jim i think it resonates conceptually, that you are settling up with the fat cats in the city especially at a time when you are closing underutilized schools. It worked for his opponents. Brendan there is another detail im hoping you can explain. Do you have to either be a daily or work for a daily to run chicago . Jim it seems like it has that feel for it. Brendan j are you keeping a daily watch . Jim we do in chicago. Olivia has he sent any more dead fish to pollsters . Has he changed his combative style . Jim he has had choice words for some of his political opponents. The head of the Teachers Union has had an earful for him. They cannot printed in the chicago suntimes. Olivia no dead fish. Jim ok, good. Brendan thank you for saying dead fish before i transition to our next segment. Which american airports do frequent fliers find the most frustrating . We will tell you after the bakeware after the break with our single best chart. This is bloomberg surveillance. Brendan this is bloomberg surveillance. Dawn breaks over new york city. We consider leaving, but we cant. Because we have to use one of the citys airports. Do you like that transition . Olivia i like it. Brendan 3000 fliers were surveyed. The frustration index. You will not be surprised. It measures what is called a frustration score of 1100 based on how long it takes to get there how easy it is to get there restrooms. The most frustrating airport is la guardia. Jim bianco is in space number four. Ohare. Jim that list is the list of the most congested airports in the largest cities and the other list is cities that are not as large. Olivia is there an easy way to get to la guardia. Jim no. Brendan i have taken Public Transit into chicago and it takes forever. I have more time on my hands. Jim it is the regular l train. One million stops. Brendan the most frustrating airports. The airports you use. [laughter] brendan i have never been to vancouver. Portland, the airport is so beloved people get tattoos of the pattern of the corporate on the Portland Airport floor. Olivia wow. This is something that tom friedman writes a lot about. This is a terrible welcome to the United States. The airports are terrible and then you are going to drive 10 miles of potholes. Brendan are we at a developmental disadvantage . Jim i think so. I would travel a lot more if the airport i know personally was a lot simpler. Trips get rethought because, i have to go to the airport. I used to date trip day trip all the time. Olivia got to go private, jim. [laughter] jim wish i could. Brendan olivia understands private jets deeply. Olivia this is a great time to move on. Time to talk about our top photos. Oprah winfrey was in d. C. Yesterday, giving a speech commemorating a new postage stamp. The room went dark. She went on speaking without a mic. The white house and the state department were also without power. Is this the starry sorry state of american infrastructure or because a squirrel jumped in . Brendan in theory, the power grid of maryland should be about to with stand a squirrel attack which by the way, is wild speculation. Olivia this comes from nasa. Nasa has been recording every single Lightning Strike around the world. This shows Lightning Strikes per kilometer. Which places have the most lightning . Venezuela and the drc. Both areas have high humidity and precipitation, which allows thunderstorms to form. Lightning is more common over land than water, and prefers tropics. Brendan this is a really interesting photo. It is a map of where the rain forests are in the world. That is where the thunder and lightning happens. Jim there is almost none in europe. Olivia interesting. Brendan interesting. Olivia our number one photo of the day is a video. It comes from a go pro in sweden. The camera was kicked off a skydivers helmet while they were freefalling. You see it as if it was in the middle of a washing machine. It is a little sickening. It is going to hit the ground finally. Brendan boom. Olivia it fell into the ground. Brendan by the way, and amazingly durable camera. Olivia the camera was still intact. It is not that heavy. Brendan this is an amazing video. There is a better one from a couple of months ago when i go pro camera fell out of the sky and it landed in a pigsty and you could see video with the pigs snuffling the camera. Olivia nice. Brendan im pretty sure that is the example of bad television. Me describing a video that we do not have. I apologize. Coming up why nigeria is where you want to put your money. This is bloomberg surveillance. Olivia good morning. This is bloomberg surveillance. It is slightly a soggy, foggy day in our nations capital. It is the biggest oil and gas deal in a decade. Royal dutch shell is buying bg group 470 billion in cash and stock for 70 billion in cash and stock. A white Police Officer in South Carolina is facing a murder charge accused of shooting a black man after a routine traffic stop. Video captured by a bystander shows the officer shooting 50yearold walter scott in the back as he was running away. Also crossing the bloomberg terminal, russia is not ruling out deals for debt ridden greece. Alexis tsipras is meeting with Vladimir Putin right now. European officials feel tsipras will promise greek assets to putin in response in exchange for aid. Iraqi bodies are being exhumed in tikrit. They were killed by isis militants. A proposed laws leading to street battle a proposed a proposed law leading to street battles in brazil. Apple hopes to shorten the lines when its smart watch hits stores. Staffers can tell customers they can order it online. Apple customers often wait for days in lines. Preorders for the watches start on friday. Brendan coming up at 7 00 a. M. , we will be joined by robert wolf. Then we will talk about europes debt problems. What should we blame for californias running out of water . Last week in nigeria, power was handed peacefully but now he has to run a country. There is good reason for confidence. Gavin is an editor at large covering emerging markets for bloomberg. His number one choice is nigeria. He joins us from london. Why did nigeria win . Gavin the book project started off with me asking the top for forming performing Fund Managers which country would be the emerging Market Growth story of the future . Then i traveled to the countries and then i went back to the group of Fund Managers to ask them to rank the choices of their peers and nigeria came out number one. Mostly, that is because of the demographics of the country. If you rewind 1015 years to the origin that was all about these being Large Population nations that could sustain a big consumer boom. The same thing is true for nigeria. In our lifetimes, it will overtake americas population to be the third biggest nation on the planet after india and china. There was a huge amount of momentum. It is also a young population. It has the highest proportions of under 15s. This is a country where there is a lot of subsistence living and not a lot of disposable income. The uplift potential is there. There are also the risks and we know about the collapse of the oil price. We also know about the violence that has incurred around the elections. Boko haram has killed lots of people. It is not devoid of risk certainly. Brendan one of the things that Development Economists say is that one of the most important factors is governance, not just demographics. What reasons do we have for hope that nigeria is going to get this right when nigeria considers to not desk continues to not get it right . Gavin corruption is what a lot of people still associate nigeria with. It is still ranked as one of the 14 or so worse countries worst countries. Most countries get a new leader and he is untested but this leader is tested. He was a military dictator in the 1980s. That is not a great record to look at with all of the human rights allegations, but he is somebody who is reputed to live a modest life by the standards of nigerian politicians. He has made corruption his number one agenda, along with fighting boko haram. This has to be seen. From the leadership down, they are making the right noises right now. Brendan speaking of boko haram olivia speaking of boko haram, does the military have the capacity and the will to defeat it . Gavin before the election, you saw a sixweek campaign to make the north clean enough for voting to happen to wipe out boko haram to the extent that people could get to the polling stations. That was a big success, in a way. People were very skeptical about why the election was being delayed for six weeks. They did not believe that after fighting boko haram for six years that anything substantial could be achieved for six weeks. We did see that rollback. We are seeing that the neighboring countries are coming together so the boko haram is not able to race against the border to escape when there is a military offensive. Brendan our editor at large for emerging markets picked nigeria as the place to put your money right now. Thank you very much. Olivia it is time for a quick forex report. The dollar is weaker across the board. It is softer against the euro. The fed minutes will be out later this morning. Looking for clues on the feds timing of its first Interest Rate hike. Brendan also the slope area the slope of assent. Olivia all clues we are looking for in the minutes. We are also watching u. S. Dollar, japanese yen. The dollar is a little bit weaker. With that, we will say thank you so much to jim bianco. Olivia going for gas shell jack shell nasa bg group making this the biggest deal in the industry for at least a decade. And Alexis Tsipras meets russias president in mexico. And the Drone Industry in the u. S. Is killing a fledgling industry. Good morning, this is bloomberg surveillance. We are live this wednesday april 8. I am Olivia Sterns here with Brendan Greeley. Tom keene is off today. Brendan we havent seen anything this big in at least a decade. Shell has a gripe has agreed to buy bg group. 70 billion deal and stock went up 50 on bg yesterday. If you look at the culmination of the two companies, what we could do with the asset, the fantastic asset that bg has with our capabilities applied to them we see a lot more value in combination than the market. Brendan the combined company would surpass chevron is the worlds second largest from secondlargest oil producer. In china, shanghai composite broke the level for the first time this year. It has doubled since 2014. Meanwhile in japan, the central bank will keep its record stimulus in place. The bank of japan is trying to boost inflation to a 2 annual rate. The boj latest numbers show in thinking to zero. A white Police Officers charged with murder after shooting a black man in the back. The recording is graphic. It took place after a routine stop earlier. The lawyer for the officer said he was trying to grab his clients stun gun. The Police Officers on this force, men and women, are like my children. So you tell me how i react to see this child do this. Brendan this veteran of the coast guard has been on the police force for five years. A republican senator from kentucky is campaigning in new hampshire, rand paul later this week will travel to softer your lannett, iowa, and nevada. Olivia and in chicago, rahm emanuel has won a second term. He was president obamas first chief of staff and he has admitted his brusque management style turned off many in chicago. Chicago is looking at the worst funded Pension System in the country. And Russian Hackers were able to break into a white house computer network, that is according to cnn who says russian cyber thieves who russian cyber thieves stole president obamas schedule. This was on an unclassified computer network. The white house is saying no classified information was actually accessed in the breach. The hacked it occur over the timeframe of the year, but it was not classified information. Tom its almost 8 brendan is almost a distinction without a difference. They are correct in that nothing was marked classified, but theres a lot of Sensitive Data that is administrative data that they got into an is a very elegant hack. And we do know for a while that Russian Hackers had infected computers at the state department and they had a really hard time getting rid of them. That hack enabled an email from the state farm into the white house to induce somebody to clicked on it. This is targeted email and its harder and harder to combat right now. Olivia speaking of spearfishing, you could say, we have a megadeal in the works. Shell has spearfishied another company for 70 billion. It is driving star higher on both sides of the pond as investors get another wave of ending day in the sector. Caroline joins us from the London Office with the details. Caroline a huge deal, as you say, 70 billion, the equivalent of 47 billion pounds. That is a premium of 50 . Usually in the sector you get about 40 pick up, and its a record deal in terms of the share price sending a bg group about 40 today. Cast your mind back to summer of last year. That is what where bg group was trading, 50 higher. Its all because of the Oil Price Crash that has made these assets more affordable. Weve seen these share prices tumble since the summer of last year. Bg group becoming not much more than an appetizing object for the likes of dutch shell. And interestingly, it makes it the number two player in the world. It leapfrogs over chevron, only number two to exxon mobil, and it becomes the Biggest Company in the ftse 100. Brendan caroline this is brendan. A 50 premium on the deal, what is the rationale for that much money . Caroline gas, gas and more gas. They are telling their investors we can give you synergies of two 1. 5 million a year. We can also buy back shares. A notably, its about the reserves, boosting michelle reserves by 28 the shelf reserves at 28 . They already have assets in a stronger they want to get out of the ground. By teaming up with bg group they can do that more easily using liquefied natural gas, lng. This is the expertise that bg group has. And this is what they are betting on, the emerging markets. They want cleaner will and they dont want cold so much anymore. Its all about gas and harnessing some of the reserves they already have in australia. Olivia whatever one wants to know now is whether this is 1998 again. Will this trigger a flurry in the sector . What are you hearing . Caroline we are expecting that this could potentially catalyze other deals. Plenty of investors are saying this is just the beginning. Look at bp group, already rising. Others are rising up to 10 this morning. People are excited, because this is the just the first real deal. Last quarter was the weakest in terms of and in the Energy Sector since 2009. People are just waiting and now it seems that price is right. We seen so many share prices plummet with the price of oil. Many are feeling this could be an interesting trend for the rest of the year. We have had many an end a m a experts m a experts saying this is just beginning. Olivia we will leave it there. Its interesting to see that bg is a 40 while shell is down 10 . Itll be interesting to see if this is dilutive for shell, or actually a dream combination, to use the words of raymond james. Brendan it will be interesting to see with the emergence of role and gas in the u. S. , which is common to longer you can wait out the price of oil, the vigor you can be. Olivia they see this as a deal proposed by shell out of necessity, not strength. Brendan we have on the deaths with us, robert wolf of 32 advisors. Youve done your time on wall street as the ceo of ubs america and youve also done your time in washington as adviser to the president. Heres what i want to ask you. We are seeing candidates for president a nasa candidacies, a run of them over the last month or so candidate for president , a run of candidacies over the last month or so. What is the debate we should be having . Robert right now bigger is better. The question is everything has been too big, too big. You have seen production the last few years, but now you need growth. You need acquisitions. Its not surprising what youve seen in the Energy Sector. Youve seen it in the pharmaceutical sector. And right now with all these companies being global in nature, the best way to get at assets is to buy them. Its too expensive to wait it out. Brendan when does organic growth happen and how . Robert i think it will be tough. You will see more opposition. To me, one of the things people are talking about is free trade. Some of the biggest things going on in d. C. Right now is the old debate over personal authority. Its incredibly important for us to break down the barriers and have free trade. Brendan should this be a freetrade election . Robert i think that will be part of the conversation. The others will be about middle income wages. Olivia have you bought your rand paul switcher yet . Robert not yet rand paul sweatshirt yet . Robert, not yet. Olivia do you think we will see a new round of oil mergers . Tweet us. Brendan this is bloomberg surveillance and im Brendan Greeley with Olivia Sterns. Tom keene is definitely on vacation. He may or may not be on a beach. We will know when he tweets us. Last month saw investmentgrade debt. 65 came outside the eurozone. We talked about this with lisa abramowicz. Do American Companies have any punch bowl in what is happening . Lisa absolutely. As much as janet yellen wants to raise rates right now, the control is shifting away from the u. S. And moving over to mario draghi in europe right now. Brendan i want to bring up a chart for those of you on radio. It shows the share for american investment, actually growing for the actually growing rapidly in the last four years. Why is our portion of the debt much larger . Lisa right now, our deals in europe are plummeting. And the risk is creeping up. U. S. Companies are saying, we can go overseas. We can sell debt to the yield start european investors which they really are, talking trillions of dollars of negative yield there. If you have a positive yielding u. S. Junkbond, it looks fabulous in europe. And even if these companies do buy cross currency swaps the differential is still cheaper for them right now. Its still cheaper for to sell debt in europe. Olivia and its Companies Including huntsmen that are still able to get a bargain. Actually, thinking of the big story in the news this morning 70 billion acquisition i shall of e. G. Group, shells corporate yield is close to you zero is close to zero. Robert you could argue the u. S. Is cheap compared to germany and everywhere else. Olivia from an investor standpoint. Robert yes and its not surprising to me that people are going overseas to invest money now. Brendan this is something weve seen in japan as well when the jet bank of japan when the bank of japan started selling these as well. Lisa it raises a couple of questions. First of all, how can the fed effectively raise rates . And can they do it when you have Central Banks around the world that are suppressing yields on a macro level locally . And we can see that tangibly for u. S. Companies. And also, what are european investors buying . Brendan lisa abramowicz, we got to leave it there. Olivia and there is worry that the fed could to the apple cart over if it moves too soon. Still to come on bloomberg surveillance, we will talk to robert wolf about americas infrastructure. It is crumbly, but theres little investment to rebuild. We will be right back. Brendan this is bloomberg surveillance. Im Brendan Greeley with olivia hands Olivia Sterns. Tom keene has been shackled and dragged off set onto vacation. The biggest oil purchase in more than a decade. Shell oil is buying bg group. It represents a 55 premium on bgs tuesday Closing Price. It makes the company the secondlargest behind exxon mobil. And a white Police Officer is facing murder charges, accused of shooting a black bystander in the back. A video shows him shooting the man as he tried to run away. And voters in ferguson missouri have elected two people to the city council. Two thirds of the citizens there are black. In the Boston Marathon bomber, conviction could be the death penalty. His lawyers say his dead brother was the mastermind. And in the massachusetts courtroom jurors against Aaron Hernandez are also deliberating again today. The victim was dating the sister of hernandez is the octave. And hernandezs fiance. And mcdonalds is offering a baking clubhouse berger for 4. 99. Olivia, offering a sirloin egg mcmuffin for 4. 99. Olivia, are you running there now . Olivia running there now. Former secretary of state kissinger has an interesting beast on a run this morning. And then playing poker with russia. And at 7 50 a. M. , is regulation killing drones . We will put that question to robert wolf. California needs 34 billion dollars to upgrade and improve its Drinking Water of drinking infrastructure, plus another 30 billion to upgrade its wastewater infrastructure. As to that 678 high hazard dams and it is clear that the water system in california is in a desperate situation. Our guest host robert wolf has been raising the alarm about infrastructure since his time working for president obama. Everybody agrees this is the right thing to do. Why is nothing being done . Robert its crazy that this is the most bipartisan thing in the country today. Republicans, democrats, unions private sector, public sector, are all for more infrastructure. And its clear to me that politics is right now putting everything on hiatus. Its crazy. We need an Infrastructure Bank in this country. Laura tyson and i wrote about it about five years ago. And then he thought leaders have been writing about it for decades. Olivia who in d. C. Is against it . Robert right now, you have well, the president has put forward and Infrastructure Authority proposal. It has kind of gone nowhere because congress is in this hiatus of not doing anything. And its clear you have the department of transportation still on hold with getting their funding. We are kind of at an impasse. This is the essence of publicprivate partnerships. We laugh, but obviously mayor bloomberg said this thing a few years back called build america with rendell and short negative. We were just given the highest grade we received in years, and then now we are at a d . If my kids got a d , do you know what would happen . Brendan economists agree that it makes sense to borrow cheaply and invest in step we need to invest in. But germany had same problem. Shockingly, germanys roads are in terrible condition, which is a problem for their companies. Robert i testified before the Senate Finance and Banking Committee a few years back. Whatever you bring up Infrastructure Bank or infrastructure financing authority, they think of it as a gse. They think of fannie and freddie and the government involvement but nothing could be further from the truth. This is the essence of privatepublic partnerships. We have a project for france we are announcing next week to along with the other a project for finance that we are announcing next week to go along with the other things we are doing. But this is a multiplier. For every 1 billion spent, it has over 25,000 jobs. This is a joke that we have not moved forward with this. Olivia and again, it seems to be a consensus. One in 10 bridges are deemed structurally deficient. We came into the segment talking about california. Is it that much worse than the rest of the country . Robert california, with the drought going on in their dependency on the agriculture and everything else, yes they are in a difficult situation. But we have Water Treatment centers around the globe that are in need. This is not just a u. S. Phenomenon. Its everywhere on the globe. People dont want to your climate change, but obviously we are seeing things changing in our climate that we have to start dealing with. Brendan i feel like we should talk about it more often as a thing we know is happening. It is affecting so much of the world. That is the issue, they dare not speak its name. That is the problem in california, resources. Robert and we talk about infrastructure its not just roads and bridges. Its the National Electric grid gps at airports, putting in fiber. Five years ago we had big one dig 1. When you are digging the fiber, when you are putting in the road, dig fiber. Brendan looking back at the news of the day are we going to see a new round of oil mergers . Tweet us. Olivia good morning, this is bloomberg surveillance and im Olivia Sterns here with Brendan Greeley. The morning mustread comes from the wall street journal from two former secretaries of state writing about the iran conflict. A very interesting take, a lengthy take. I would encourage everyone to go to the journal to read that. With us is robert will, robert wolf, former advisor to the president. My take away is that essentially, iran played the u. S. , that they got a better deal that we did and there is no certainty. What is your take . Robert my take is that right now theres no deal. You have a framework. Getting the feet the p5 plus one to Work Together in itself is an amazing thing. You have to let the framework take place and see where the agreement leaves us. As the president said, we can always walk away if it doesnt make sense for the u. S. Its too premature for us to walk away from anything. And diplomacy is always more important than war. Olivia in part of the perception for the u. S. Is that the deal will extract or induce engagement in the region. But kissinger argued that we will need a more coherent u. S. Regional strategy. Brendan and i read that and i think of the two men, George Schultz and henry kissinger, who ran policy 1980s and the 19 70s, i think of i think it is hard for washington to get used to the fact that we dont have the power we used to. Robert thats why i think whatever one starts talking about well, we should reduce. There is no way to end sanctions. You have u. S. Sanctions and then separate sanctions. If we were to end it, you still have five countries that have to come along and play ball with us or not. The sanctions themselves, we do not know what the end game is going to be. We are right now and then with china, russia, germany, u. K. , and france negotiating with iran. Our biggest strength is were all together is when were altogether negotiating not just bilaterally. Our sanctions dont mean as much. Olivia and its true that its difficult to get the p5 plus one at the table agreeing on anything. Time for the top headlines. Its a deal that will create the worlds secondlargest energy company. Royal dutch shell has agreed to by the Energy Producer bg group. The price tag is about 70 billion in cash and stock. Its the biggest transaction and the Energy Industry in at least a decade. Shell is paying a 50 premium to bgs Closing Price yesterday. Shell told bloomberg this morning is still a bargain. If you look at the sector, a premium of 50 is pretty much middleoftheroad. But again, what it does for the key metrics of the company, you will see it is immediately good for operating cash per share. Olivia is a deal is approved, it will become the secondlargest Oil Producing company in the world and it could be looking for ways to and there could be more mergers to offset the falling price of oil. The China Shanghai composite index broke through the 4000 level for the First Time Since 2008 overnight. The index is up 23 so far this year. Investors are betting that china will increase stimulus to keep the economy growing, meanwhile japans central bank will keep it stimulus in place. It is trying to boost to a 2 annual rate, but the bojs latest report shows inflation shrinking to zero. And a video has emerged showing a white Police Officer shooting a black man in the back. The officer has now been charged with. It happened charged with murder. It happened in charleston, north carolina. The video is graphic. It shows the officer shooting 50yearold walter scott as he was running away. The officer is being held without bond. The altercation began over a traffic stop. The traffic stop. The police chief became emotional. All of my officers, men and women, are like my children. So you tell me how i react to this child is Something Like that stop like that. Olivia the officer is a veteran of the coast guard and has been on the police force for five years. Brendan californians were told to cut back on water usage because of a record drought. They dont appear to be paying attention. They were reducing by less than 3 , the least since the state began tracking it last year. Governor jerry brown is seeking a manager at 25 cut. Those of the top headlines. Olivia lets get a check of u. S. Futures. Ahead of the market, a little unchanged. The s p futures are up by 1. 6 points. The 10 year yield will also change down by one basis point. Almost low also a little softness and u. S. Dollar. Nymex crude, down another 2 today, trading at 52. 78 on speculation that u. S. Inventories are growing. Im Olivia Sterns here with Brendan Greeley. Brendan greece is due to pay the imf nearly 500 million tomorrow. Where is Prime Minister Alexis Tsipras at this moment . He is in moscow of all places. Hans nichols halfinch has been following this story for 15 years now. What is going on . Is the first Alexis Tsipras trolling germany . Hans he is celebrating and honoring those in moscow who stood up to fascism. His position on sanctions is unchanged. In an interview last night he claimed they were a road to nowhere. That is what everyone in brussels and berlin is wondering, has the greek government position changed on russia . And if so, what do they get in return . Brendan that is a negotiating tip that they are offering negotiating chip that they are offering. Germans have officially calculated they the debt they are owed for war representation the debt they are owed for war reparations. Hans it is 278 million. They did a variety of calculations to arrive at that number. That is what Alexis Tsipras the same. The german spokesman said it was a dumb distraction to be talking about this in this context. And we have a more recent tweet from Alexis Tsipras showing an affinity with the russian people against fascism. Taken in the aggregate, it seems as though for his domestic audience in greece, he is looking to pick fights with the germans. Olivia what does greece want in return . The russian economy is reeling at the price of oil is collapsing and the economy is in recession. Does Alexis Tsipras think hes going to get debt relief from Vladimir Putin . Hans will he not debt relief, but something more like fruit. There is been quite a bit signaling heading into this meeting that russia may allow a lifting of sanctions just against greece to export their fruit strawberries, cotto olive oil. Avocado, olive oil. When you tease it out of the way, greece is paying above the western european rate. The question is, what is given in return . In berlin, the attitude seems to be we will let Alexis Tsipras go there and take him at his word, but until something concrete comes out of that meeting, we are giving him the benefit of the doubt. Remember, he was in a fivehour meeting with angela merkel. Olivia the fruit sounds. The gas deal sounds more interesting. What everyone is worried about particularly in berlin is whether or not there could be an asset swap. Hans moscow pour cold water on this yesterday. There are some that believe they could make swaps in natural gas. The kremlin sort of fort goldwater on that. We will see what comes out of the meeting. Brendan different of years, robert wolf of 32 advisors, and a former a friend of yours, robert will of 32 advisors, and a former adviser to the president has a question for you. Robert nice to see you. Your member the death of the crisis in greece, a lot of people you remember at the depth of the crisis in greece, a lot of people talked about russian money with the oligarchs there. Its not surprising there is a lot of stuff that could be going on with the two countries. Cons there are historical ties they some religion, a little bit on culture. And on the banking industry. Its hard to trace where all of the outflows are going and where the inflows will be coming out. But at least with the cypress banks, there was a lot of money there. And in part, what with a doing . They were chasing yield. You are getting much more of an Interest Rate if you are in a cypress bank in 2012 than elsewhere. I know robert would never chase yield. He plays basketball with the president. And he never passes. Hes a goner. Brendan thank you hans nichols. Olivia to our twitter question of the day. Shell is buying bg group. Is this a new round the beginning of a new round of megamergers . Brendan you are looking at live pictures of new york city. Im Brendan Greeley with Olivia Sterns. Tom keene is on vacation, if you can believe it. We have matt miller sitting in for betty liu today. Matt i feel like he may not be on vacation. I feel like tom has just finally tapped out. I may be wrong. Brendan matt miller has read every word of capital in the 21st century. He carries around the paperback everywhere he goes. What is new . Matt the problem is, i read it in french and i dont speak french, so i did not get much from it. Apparently, i have not read capital as has nobody, except you and tom. Brendan did you read capital . Olivia i read the review. Robert i have to admit i downloaded it to say i had it. Brendan you downloaded it, but Amazon Kindle said the it is the most unread hook. Robert i made it to page 70. Matt he didnt take it down but he challenges some of the giddy Thomas Pikettys key concepts. He brings down the ratio of capital to labor. Everyone was blown away by the fact that capital was so much greater than labor. And also pointing out that the biggest share of the wealthiest wealth is housing. I dont think that the shocker. If you have of a house in vail and a vacation place in the hamptons and a great condo on fifth avenue, you will be a wealthy person. Brendan even the takedown attempt is about a very ancient form of capital, land. Its the most basic form of capital we have. Robert we used to always have a debate, what percent of your net worth should be in real estate . Brendan was the answer . Robert some guys to say is five to 10 and others say 40 to 50 . Matt i havent, 100 . There you go. I have an answer, 100 . There you go. Brendan we have the author coming on of unintended consequences. I did not think it was debate anymore. I thought everybody agreed that there was horrible inequality. But not everyone agrees. Robert we talked earlier. One of the bookends is foreign policy. The other is inequality. Brendan no matter how you feel about the book, is it fair to say that Thomas Piketty forced the conversation . Robert i thought this came out before matt i thought this came out before then. We will also have a review of the apple watch. Brendan one of the 16 reasons to watch in the loop today. We will join that with matt miller. This is bloomberg surveillance. Olivia good morning. Im Olivia Sterns here Brendan Greeley and tom keene is off today. Lets get to the headlines. Its the biggest oil and gas in at least a decade. Royal dutch shell buying Energy Producer bg group at a price tag of about 70 billion dollars in cash and stock. It represents a 50 premium on bee gees tuesday Closing Price. It will become the on bg tuesday Closing Price. Its will become the secondlargest oil and gas company in the industry. And a white officer is accused of murdering a black man in charleston, north america for after lana. Charleston, South Carolina. A cell phone video shows in shooting him in the back as he try to run away. A meeting between afghan leaders and the u. S. Embassy in jalalabad, a gunman attack. He was shot dead by soldiers. His Second Attack on the embassy this year. Workers are protesting a plan that would let companies outsource labor in brazil. And groupon appears to be finding and wanted buyers appear to be finding their stride. Bill gross was ousted from pimco last fall. And apple is hoping to shorten the lines when it smart watch his stores. It is urging staffers to tell customers they can order it online. Apple customers often wait in line four days to buy new products. Preorders for the launch start this friday. Brendan coming up at 8 00 a. M. , shall strikes the Biggest Energy deal in a decade. We will be talking about that all day. Rahm emanuel is reelected. Can he fixed chicagos dash cam nyfix chicagos growing problems . Can he fix chicagos growing problems . And we look at irans impact on oil markets. Jeff bezos is waiting for approval of his drones, but while he waits he is testing out drones in canada close to the border at a secret facility. With us is our is 32 advisor ceo robert will. You have drones, too and like jeff bezos, you are frustrated with the pace of approval from the faa. Robert yes, 32 advisors is an advisory company. We dont actually own drones. We work with Disaster Recovery and will be happy to announce something with the American Red Cross soon. And we are doing things around the globe in energy. With respect to the faa, one they just approved a whole slew of applications for Insurance Companies and other things. There is a difference between commercial and industrial use where you are doing things not near airports and urban areas versus what amazon is trying to do. Its very different. Brendan what is the frustration . What is wrong with the pace of the faa approval . Or is there anything wrong . Robert they just about a month ago put out their Regulatory Approval process. It is now in the common timeframe. We and others will give our comments. The truth is, we are the ones manufacturing the best drones around the globe, and people want to use them for industrial and commercial use, and even private joystick use. So many are using it for the joystick use, and its taking away for from how to use it for commercial and industrial. Olivia were those of you on radio, we are showing this video of drums carrying boxes drones carrying boxes through the streets of suburban america. And that is the promise, you could get a pizza delivered on your doorstep. But what youre saying is the commercial and industrial applications are far greater. Robert we are looking at things for refineries and pipelines and utilities and farms. We are not looking at how to necessarily use it for delivery, except for where working with ups and with Disaster Recovery. There are all these Large Companies that want to use it for efficiencies. From a productivity and efficiency use, its an incredible tool. Brendan five years, how big is this market . Robert monster. There are over 1000 manufacturers. Happy to say that we are the only turnkey advisor that i know of. Brendan shameless plug, we need one right now. [bell] olivia who are your founders . Robert there is Brandon Detlef and justin overman. And our advisor is homeland security. We have a pretty deep dive into it. Look at our website. Brendan shameless plug. [bell] robert i didnt even know we were talking about it. [laughter] brendan is there a real risk federal development could go abroad . Olivia its happening. Robert we are doing business in africa looking at utilities. Brendan so what is happening. Robert we are behind the ball. Brendan are there companies that are driving this . Robert just the opposite. This is used from the manufacturing and tech aside. It is really a data play. It is imaging, data, and that is really what you are looking at. Brendan it is fascinating, to olivias point, to hear how much could potentially be done. Because we really do focus on peace and packages. Robert and the joystick application is not where the debate is. That is the nervousness on privacy and security. You know, someone flying a drone near airports or buildings. Olivia near the white house. Robert yes, that as well. Brendan and that is why we are still restricted to line of sight. Robert 400 feet away. There are a bunch of restriction zone of privacy site. Olivia huge applications for the Energy Industry. That resistor or twitter question of the day. The 70 billion acquisition of bg group by Royal Dutch Shell do you think this is going to kick off some a new round of oil mergers . Here are some of the answers. Robert wolf, what do you think . Is this 1998 again . Robert bigger is not badder. Bigger is better. Brendan put that on a Bumper Sticker and sell it. Robert i should. This is not surprising. Olivia shares of shell in london are down 5 . A lot of people are saying it is dilutive. Robert it is an asset price. My gut tells me that over time this will be a positive for shell. Olivia right now, we look at the stories shaping the day. On my agenda at 2 00 p. M. Allies on the fed. I felt like tom keene, but its a big deal. These will be the minutes from the march 17 meeting. The dollar trading a little weaker ahead of those minutes. Brendan im watching Alexis Tsiprass trip to moscow im watching Alexis Tsiprass trip to moscow. It seems to be a bargaining sure chip with germany. It seems to be a way to negotiate with europe. Olivia and again, hes talking about world war ii. Brendan i dont see how this is going to work out well for him. This is the easiest way to anger the entire germination. And also president obama is traveling to jamaica, and more important, to canada panama for the summit of the americas. Do we have the cuban policy right this time . Robert it clear to me that the United States cannot act like we have a moat around us. We have to open up the barriers of trade and business. Yes, it makes sense that we start some sort of diplomatic relationship with cuba and do business in a way that makes sense for both sides. Brendan does it make sense that this will make cuba change . Robert nothing happens overnight, but you have to believe that over time, hopefully theres change. Olivia you were saying that in your time at ubs you did a lot of business with russia. What is your current take on the situation they are . Robert i think sanctions have been crippling them. And obviously, the ukraine situation continues to be quite severe. And i think that russia needs to figure out how to make their own economy work better. You cannot have the ruble plunging and investment be shut off and think there is a business proposition there. I would be incredibly nervous to do business there. Olivia this is fun. Thank you so much, robert will ceo and founder of 32 advisors. Brendan we got to talk about drones. Olivia and about the fed. Tom keene is probably watching. Theres a rumor he is going on vacation. Robert the red sox. Olivia and the yankees. Matt good morning. It is wednesday, april 8. We are live in midtown manhattan. I matt miller, infra betty liu. In four betty liu. We have a great show for you today. A lot of news. Also, ed conard joins me to discuss income inequality and whether a 26yearold m. I. T. Grad student just took town Thomas Pikettys theory. Oil prices could tumble next year if sanctions are lifted following a final nuclear deal with iran. We will take into the oil markets. Why more automakers are moving their headquarters to the big apple. Ed niedermayer joins in the next hour to talk about my favorite subject, cars. A new deal creates an oil and gas mega giant. Royal dutch shell is brining is buying the bg group. The deal is worth 70