Transcripts For BLOOMBERG Bloomberg Surveillance 20150506

Discussions on may 11 that will confirm the progress that has been achieved. And will being yet another move yet another step in the direction of the final agreement. Germanys finance minister is still skeptical that a deal on greek economic reform can be reached by the may 11 meeting. Bond yields, meanwhile, im resuming their rise. The yield on the two year has risen two percentage points. It is now yielding 22 . Raising one of the issues behind the global bond selloff. Investors are now pondering the end of a sixyear rally that said yields to record lows. The price of oil is rising. Up over 61 a barrel this morning. There is speculation that the oil glut may be easy. U. S. Companies have reduced the number of active oil rigs to the fewest in five years. We will see whether inventories are rising when the government makes its report at 10 00 30 eastern time. And at 10 43 easter time0 10 30 eastern time. Salesforce has a market value of 50 billion. Microsoft has not made any other offer for salesforce and no deal is imminent. Brendan Manny Pacquiaos next fight may be in court. Two las vegas have sued him over last weekss fight. Manny pacquiao did not tell anyone about his injured shoulder. Tom we look at equities bonds currencies, commodities, getting into the job warp. Futures up six. The euro on a tear. At 1. 1216. Brent crude on a tear. Well over 60. That is american oil. 61. 91. Where brent was a few weeks ago. The fix elevated the vix elevated. Stocks a little soggy. German bund higher, higher. Euroyen showing stronger euro and weaker yen. I want to go to the bloomberg terminal. This is a tease. This is the Unemployment Rate for fossils over 55. What i love about it, back to world war ii in the 1960s and 1970s, this is cyclical. Really cool. You see the session, what happened in the crisis is stunning. Brendan ive never heard that were before the man session. But you can tell lots of stories by figuring out how far back you are in the timeseries. You go back to 1920, you see a different picture. Tom but there is a lot of noise. Why are people over 55 men, rather, well below the National Average . Olivia maybe just baby boomers retiring earlier. Brendan that is part of that. Women are not entering the workforce at the same rate they were for 40 years. Tom that is a cool chart. We will get you the friday chart. We will have complete coverage of job day of jobs day across bloomberg. Greece. In the United Kingdom, election tomorrow or complete coverage this morning. There is an american jobs are afford on friday. Across all these events spans a bond rout. Yields are abruptly higher in germany. A chief executive of kbw, a. Lisa abramowicz is the chief executive officer of the bond desk at bloomberg. Lisa let me start with attention idea. Are you using the word tantrum in your stores . Lisa no not unless im talking about my children. The first question you have is why. Why have global bonds lost 340 billion . People are not sure. One analyst called this the wrong kind of rout. This is not driven by Inflation Expectations coming up in the u. S. And the u. S. Leading the rest of the world. This is led by europe, which does not make sense. Tom i will go with a pick Brendan Brendan is it led by oil . Lisa you saw the u. S. Selloff followed directly by after the worst route in euro area bonds. Tom is this about a better america, or is the bond market getting out ahead of better gdp . I think it is macro issues. I think quantitative easing causes these disruptions to happen. When you have an opinion that the government is going to head in one direction with policy, you have a chance to get overly confident in a particular direction. I think it is mac you issues. Lisa i think it is up for debate. Some people say it is fundamental issues. Maybe we are seeing the green shoots of unemployment. Wti is back above 60 to the employment cost revision. The revisions from the european commission. That we might see more than 1 inflation in europe next year. Lisa i would argue that the thing has people most distressed about the selloff as that there is not a whole lot of cohesive logic behind it. You are not seeing moves that are normally correlated moving in the same direction. You see good jobs data. Good Economic Data coming out of the u. S. And you see the 10year falling or the 10year tom is it a squeeze . Everyone was betting the other way. Euro parity is one example. Tom when you break it apart and you look at the area we specialize in, the Banking Industry, except for the Energy Sector pretty much it was business as usual with the banks and this quarter. Talking about improving market conditions. I was surprised by how weak the gdp data was on the u. S. In the first quarter. Tom two negative prints from houses yesterday. Brendan why should this be a bad thing . I feel like we spent the last six months wondering why it is that yields are so low, why it is we cannot create inflation. Now we traded possibly a little bit of inflation in europe. Yields are going up. Isnt this the thing we want . Lisa it is not happening in the people the way the people wanted to happen. People are very picky about the way Central Banks are going to exit their q. E. Brendan i want a pony. Lisa part of the issue is it is led by longerterm yields, the feeling inflation will get away from central bankers. They will not be able to curb it and move quickly enough to avoid a rapid rise in rates later on. In the u. S. , the selloff has been yelled but led by 30 year bonds. This has been the concern people have. Olivia spain. It is incredible to see the move in the spanish yield. This gets me thinking about 20122013. This is what the greek debt crisis was, the story of contagion. The movement of the spanish 10year has been breathtaking. It is still training below the u. S. 10year. If 1 4 of sovereign debt in the eurozone is trading negative territory, maybe it is healthy for the spanish 10year to be back at 1. 7 . Tom i think we have been having some very historic things happening in the global bond markets. I think it is when you have Government Intervention like you have had, prices go to unusual levels. They should not be surprised when they start to unwind some. We are going to a period we have never seen tom one of the most important conversations on oil. He is adamant with this recovery to 60 that oil could go the other way and go back down under 40. Brendan oil bets are made by fools. That is one thing we learned. Tom, did european q. E. Work . Tom i think we are still in the middle of the story. We have seen more positive Economic Data out of your which i think is the reason behind it all, but i think we are still in the story. Olivia what is big money saying about u. S. Treasury markets . We heard warren puppet saying if he could he would short the 30year. Lisa you have got bill ackman saying coming saysing he saying he hates anothe says he sees yields creeping higher. That said, a lot of people are saying this is technically driven. This is a short squeeze, a hiccup in the market and yields will come back down. Because on a global basis treasury is yielding a lot. Tom 2. 18 of the 10year yield, that is a long way from where we were five days ago. Lisa, thank you so much. Olivia still to come on bloomberg surveillance much to talk about including bank of america Shareholders Meeting. They are heading to charlotte, north carolina, the day before the annual meeting. Should we expect fireworks . We will take a look at the big issues facing the bank and brian moran had after the break. This is bloomberg surveillance. Good morning. Tom green on the screen. Futures up 7. Morning, everyone. League in three days of labor coverage. Our top headlines. Brendan the pilot who question airliner in the else may have practiced a rapid descent. A german newspapers say that they think he flew downward for no apparent reason. It killed all 150 people on board. John kerry says the u. S. Was to renew ties with somalia. The secretary of state matt with government leaders to support their fight against terrorists linked to al qaeda. Kerry says it is time to join forces against isis. Secretary kerry more than 20 years, the United States was forced to pull back from this country. Now we are returning in collaboration with our International Community and with high hopes mixed, obviously, with ongoing concerns. Brendan kerrys some all you visit is the first ever by a u. S. Secretary of state. A pricey picture. A van gogh sells for 66 million. It went to a private buyer from asia. Those are the top headlines. Tom we have a busy, busy show. Richard haas joining us in the next hour. In this hour francine look off from london on this extremely unique United Kingdom election. We need to get up to speed on that. Much more for the coming weeks ahead of debate in parliament. The state of maine. George mitchell of maine will talk about maine and baseball. On ted williams and some of his experience is in baseball. Olivia Brian Moynihan has some explaining to do. Later today the bank of america ceo meets with investors at his Shareholders Meeting in charlotte. At issue the stoxx underperformance and perhaps more sensitively his dual role as chairman and ceo. He spent time at a Boutique Bank that focuses on financial services. Tom we will get to the issue of the dual role of chairman and ceo, but first the underperformance. Bank of america missed firstquarter results that a lot of big banks knocked it out of the park. What is Brian Moynihan doing wrong that jamie dimon is getting right . Tom it is hard to measure companies of this size and one quarter. Period. I think you have to look at what are these Companies Going to do in the new environment, being a global city with all the new restrictions and laws, what is their strategy from here . When you look at Companies Like wells fargo, jpmorgan, and bank of america, they will head in different directions. I think wells fargos is wellfe defined. I think bank of america is under construction construction. Olivia jpmorgan is doing trading. What should bank of america be doing . Tom they will have to look hard and investigate each one of their businesses and decide. It is not all about size, being a big company. I think they will have to focus more on return and from and profitability. Focus on profitability, which is where i think a lot of these global sifpphies are going to go. Brendan would you rather be running a big company right now, Jim Jamie Dimon or Brian Moynihan, or run a regional . Tom i like the Regional Bank space. I think they will grow faster. It does not mean these other companies do not do very good things for their clients. They can go on and do good things for their shareholders but i think what we have been through, the policy now is smaller simpler, safer. Which means they focus on having a new business model. If you read the speeches from the fed governors, they will tie you what it is going to be. That is what they are saying. They will tell you what it is going to be. If you look at the share prices the profitability the sweet spot is maybe 5 billion to 50 billion. Tom you are Senior Vice President egos when you talk to small and big banks. That is what kbw has done for years. Sam oneill the same kind of ideas. Those egos want to be chairman and ceos. Mike mayo was on the show yesterday saying this trend has showed. Is a combined chairman ceo not a good idea . Tom it depends on the company. It needs to be performance driven. That is why you do not have a single rule. If there is a company that has been successful with a good leader that has been able to deliver for shareholders, i think that person tom how can you affect chairman duties at the same time on a given wednesday that you are doing ceo duties . Tom i think it is bored by board dependent. It is hard to say that wells fargo would have done better if they have done better if they had had a separate chairman and cdo. Olivia according to mike mayo only 44 of the 100 biggest banks in the country actually have separate roles. Tom, earlier this week was a big deal. It looked like the bank bowed to shareholders and said they would put the combined role up to a vote. Does that mean that his job at all . Tom i think it is more of a statement of how the board elected to make changes. I read the proxy statement before the reversal. And basically, it looked to me like in that proxy the board was saying, that was a different time. We have a new board. We are going to have a strong lead director. So, theyre very, its fine to make those arguments but after your shareholders have voted the other way, to not even ask them again to go back the other way it is very aggressive. Could not be the advice i wouldve given. Tom keene we have got a special treat. Richard haas will join us from the council on Foreign Relations on the election in england. And an editor of Bloomberg News with a unique knowledge of outside of london. Were trying to get outside of london today on bloomberg surveillance as we look at the British Elections. Tom keene it is gorgeous, it is new york. 74 is one of the highs i saw today. It is beautiful. I am going to boston, to the next to last place boston. I am depressed. Good morning. Bloomberg surveillance. George mitchell will join us in this hour, the former senator from maine. Thomas joad with us from kbw. This is simon johnson. I loved his book out in the financial crisis. Johnson of mit. The regulators believe there is nothing wrong with the behavior because they have been persuaded by lobbyists or big or because they themselves used to work in the Banking Industry and could go work there soon. Simon johnson of the securities nature between the banking world and regulations. The circuitous nature between banking and regulations. Tom i do not think the relationship is to loveydovey. Tom keene how much has it added to your costs . Tom for the whole industry, a lot of attention and effort and cost is being spent. Tom keene 100 basis points 1 point tom if you look at roa, you could see five to 10 basis points. It depends where you are. Brendan you want to be below that barrier. Because one of the things we have heard is that much Smaller Banks have a much higher percentage of cost related to doddfrank than larger banks. If you look at the scale in terms of assets its farther down on the scale is where it is hardest. Tom even the regulators are arguing to raise the limits. Fed speakers have come out and said you have to raise the limits. What you are saying is banks are slowing the growth around 10 billion. They charge through it. I not sure if that is great Economic Policy for the country. Same thing happens at 50 billion. What we have seen is those banks are not his stomach, and you could put these threshold higher. Tom keene thank you so much for seeing here. The 10year yield is higher yield by 10 basis points. You have to get to work or how about our twitter question of the day. Francinae lacqua wrote this question. What should the unit tieded kingdomss role in the world be . Futures up six. Dow futures up. Stay with us. Bloomberg surveillance. Terns and Brendan Greeley with us this morning. Our top headlines. Olivia the ecb may pull the noose tighter on greek banks. The ecb is the only thing keeping greek lenders a float. Next monday, both sides be cannot will discuss Economic Reforms at a meeting of European Finance ministers. Lenders cannot release more money in till there is an agreement. The greek finance minister sounded caution. It is important that the progress we made is solidified. And it yields very quick successive moves in a direction of bridging the remaining part of the gap. Olivia germanys finance minister is playing down expectations. Says hes skeptical an agreement can be reached by mondays meeting. In the uk, it is the final day of campaigning before tomorrows elections. David cameron is trying to hammer home his message its risky to have a Minority Labour Party government with help from the scottish party. Ed miliband is the train conservatives as the party of the rich. The latest polls that night shows that neither will win a majority. And for the first time, the state of california is ordering mandatory water cuts to deal with a record drop. Water suppliers might cut use by 8 to 36 . Some of the biggest cuts will be imposed on wealthy communities. The California Drought is now in its fourth year. Brendan antitrust regulators are looking into apple over a new version of the beats music streaming service. The fcc wants to know whether apple uses its position to put rivals likes pot of fire disadvantage. This has to do with apples efforts to line up deals with record labels. Baseball players can never forget the first game in the majors. Perez of the angels had amore memorable debut than most her he hit a walkoff home run. He is only the fourth player to do that in his first game in 115 years. That is more than a century. Perez had been playing in the minor lace since 2008 before he got called up. Those are the top headlines. Tom keene what an interesting bloomberg surveillance. Lets turn to the election in england. It is a fractious Great Britain with a tough negotiation on friday. There is even talk of a second election before christmas. Disneys translation. We go to Francine Lacqua in l this needs translation. For americans, this is flatout bizarre. What happens friday, the morning after this election . Francine the simple answer to that is we do not know, because usually in this country you have three main parties. This time it is so fractured that the possible coalition, the possible alliances means until we count every single vote to understand how any seats mps have it is difficult to see how this will work. What we are preparing for is a Hung Parliament which means no clear majority. And it will be the main parties trying to scramble to put some sort of either alliance or proper coalition like we had the last five years together. What we know, we aer certain that are certain that the possible Prime Minister will either be ed miliband or David Cameron. Olivia for those viewers who might just be waking up in the u. S. , we want to bring up the latest polls. It shows that David Camerons conservative party has 33 . And ed milibands labour party at 32 . Both parties would be forced to form a Coalition Government. David cameron would team up with the blilib dems. And the labour party would team up with the Scottish National party. Brendan i wanted to talk to about this because last night i was digging into this. And i ended up on a document that is called the cabinet man u. So far as i understand, it is what the uk has in stead of a constitution the cabinet manual. Francine it was a paper that was drafted in 2010. This is a Coalition Government we have had the last five years. So, this country was not used to a Hung Parliament. What they do not want, of course, is to get the queen involved. I know this is going to be strange for some of the u. S. Viewers, but the queen is part of the process. Actually, they dropped this so the rules are clear of who stays in power and who goes to see the queen once they are sure they have a coalition because people may say they have a coalition to get a majority in the house of commons, but they may not. This is basically something that protects the queen. Brendan i love this document because it has a beautiful dry title. A guide to laws, conventions, and rules on the operation of government. Olivia our twitter question of the day. For business, what does business in england won britains world to be of the world . At does business want britains role in the world today . What does British Business want britains role to be in the world . Francine you have hit the nail on the head. The problem is we do not know what British Business wants. A lot of them say they want the coalition heads off for a referendum on an eu exit. That is something that businesses dont want. Tom thank you so much. We will continue this discussion over the coming days. There may be two britains. There are two americas. Think john edwards. The debate to 2016 will center on a polarized america. George mitchell is a former senator from maine. He wrote a memoir, the negotiated. Or. Senator, wonderful to have you with us today. You have a wonderful part of your book, where shes got a o poll out. There was a time and place where Olympia Snowe and George Mitchell got along. Can we get back to that . Senator mitchell our country is divided and that is reflected in our congress. Our hope is that there can be a modest return to bipartisanship and the lowering of the temperature and the rhetoric in the next year. Tom where did the grace go . I think of the movie lincoln. Daniel daylewis. They are in congress, and it is ugly, and mean and nasty. Is that the norm or is your age the norm . Senator mitchell there is no norm. I just read the summary of john adams and Thomas Jefferson went at it in a way brendan we hear a lot of people Wax Nostalgic about the days of tip and the gipper. You and bob dole. Was it much rougher than we remember it . Senator mitchell it was very tough. We had a lot of disagreement but it is tougher now. We did Work Together quite a lot on many issues. That does not seem to be the case now. There may be a few issues on which there will be some cooperation. Olivia one of the important decisions and we were talking about the possibility of a Hung Parliament in britain. Either way it has to go to the queen for approval because in england they separate the head of state and head of government. Here it is more divisive because we combine both. We want the president to be the head of state and there is no cohesive figure that unites the whole country. Tom this is classic George Mitchell. Page 351. It is called the negotiator. I had no formal education in the art of negotiation. How did you learn to do it . Senator mitchell trial and error. A lot of air. I do not mention too many errors. Tom we will come back with George Mitchell. Brendan we will stay with senator George Mitchell we know that maine has lots of fishing and lakes but one thing it seems to be missing a large percentage of High School Grads that go on to college. That is a problem nationwide. We will discuss senator mitchells maine after the break. This is bloomberg surveillance on Bloomberg Television. Tom the price of lobster is a scandal. Tom good morning. Bloomberg surveillance futures up five. Bonds, prices lower, yields higher worldwide. Lets get right to maine. Brendan yes, senator George Mitchells home state of maine. One of th issues ise the disconnect between High School Graduates and college enrollment. Here we are looking at this is the College Going rate of High School Graduates in 2010. It is not changed a lot since then. Mississippi, very high average. Maine lower than average. 56 of High School Graduates go on to college. Senator two questions. One should we assume that when you graduate from high school you go on to college . Should that be a goal . Senator mitchell yes. Brendan how do we fix this . Senator mitchell im trying. I established a Scholarship Program in maine, where we give out a scholarship for graduate from every high school in the state every year. The figures are worse than that chart because that shows enrollment in college. Graduation from college is much worse than that. Lastly, the average is only 50 of those who Enter College actually graduate. We have a high rate in our Scholarship Program. But we have got to do a lot better. Brendan there are two maines. South of 95 where there is industry, and then there is north, which is the entire state. Now that the mills are gone, what do you do for the rest of the state, for north of 95 . Senator mitchell that is a microcosm of the challenge facing america. The loss of what i call middle class working class jobs. When i was a boy growing up in waterville, there were two textile mills, and a Large Railroad repair shop. Not one exists anymore. We have not figured out how to replace them with those jobs that people who just graduated from high school can succeed and raise a family. That is true all over america. It is one of the great challenges we face in our society. Olivia youre talking about the dearth of working class and manufacturing, but a lot of people would say you not need to get a Fouryear College degree to get a workingclass jobs are maybe we need to look at twoyear colleges and apprenticeships. Senator mitchell i look at it just the opposite here because those jobs are gone and not coming back the new jobs require higher levels of education and skill so we have to dramatically increase the rates at which our young people get your education to enable them to be equipped to succeed in technological world. Tom this book is fabulous. The beginning of it is stunning. On a George Mitchell you do not know. Lets go to our top photos. Olivia nassau coliseum got answering dismantled. After the new York Islanders played their final game there. They lost to the capitals 12. Tom keene is still licking his wounds. Tom the university of maine will take them. Brendan ice ripped up by a bulldozer. That makes tom cry. Tom nassau is a terrible coliseum. A terrible place to watch a hockey game. Olivia they are going to berkeley center. The number two photo. At Grand Central station u2 made a surprise performance. Jimmy fallon join them. U2 is doing this to hype up the north american tour which begins on may 14. This is so cool to you have got to love this. Tom i did not like when they forced me to take their album on itunes. It showed up one day. Olivia but you did not pay for it. Brendan are you trying to make the point that they are forcing s riders tom come on. Olivia i love it. Brendan i was waiting for you to make the beatles,. Olivia i am going to take a longer look at every subway performance. If you go to an islanders game at the berkeley center, do you know who you might sit next to . Jayz and beyonce. This is from last night. Their attire. Look a little from the repaired it is close to what eddie murphy war in the 1988 film coming to america. Brendan this is why love the internet. There is a been diagram of people who watch the met ball and people who remember coming to america. Those overlap are five people and one of them put this. Olivia Olivia Sterns. If you are beyonce, this is a knockoff. Tom is that appropriate to wear to the met . Brendan anytime you can mention the movie coming to america its appropriate. That is an amazing movie that holds up. Olivia it is a beautiful dress. Tom it raises a lot of money. Go see the indian exhibition. It is the final week. Extraordinary. Brendan from maine to the senate negotiating in Northern Ireland island and middle east and then baseball. We will talk about all the people he talked to in his book the negotiator after the break. I am negotiating with tom right now about something i cannot share with you. Tom good morning. Richard haas in our next hour. 47 things to talk about including a change of the guard for americas military. Richard haas, ambassador hoss on the council on Foreign Relations. Lets get to our top headlines. Olivia crossing the terminal, a baltimore officer charged in the death of freddie gray consist the knife gray had was illegal. Gray died in Police Custody after being charged with having an illegal knife. The Maryland Attorney said that it was a false arrest because the knife was legal. And shares of herbalife are up sharply. The Company Posted betterthanexpected earnings yesterday. Herbalife is in a battle with investor bill ackman. And the california Tech Industry pauses to remember a popular executive. A Memorial Service honor david goldberg, the 47yearold survey monkey ceo died last week while vacationing in mexico. He was the husband of facebooks chief operating officer sheryl sandberg. Tom coming up on bloomberg surveillance, ambassador haas will be with us. And the editorinchief of Bloomberg News. We will look at the u. K. Election. A wonderful morning mustread on the back story with mr. Putin. We go further onto the United Kingdom and the overall in the world after a most fractious election. I will be blunt. This is a fabulous book. Somehow, he has got Elizabeth Taylor in it. George mitchell, the negotiator has become a parking lot but it is no surprise that bounded by railroad tracks, it was another kind of place. Falls was a welldressed slum. George mitchell came out of that slum on to bowdoin and the rest. A wonderful history. Herbie this is a great story. Senator mitchell he was the supervisor of a division tom you are not going to college. Senator mitchell my father was laid out. It looks like i would not be able to go to college but he arranged for me to go to bowdoin. My parents had no money but they said if i worked they would let me in. I worked fulltime going to college in a number of jobs. The rest is history. Brendan what i love about the book is it is not just a biography, but it is a manual on how to handle people, how to get something out of them. Teach us. What do you need to do to negotiate . What are the three cardinal rules . Senator mitchell if you are the negotiator a mediator in my case, the most important thing is to submerge your own ego and make sure the people who have something at stake have ownership of the process. That any outcome is their outcome, so they will feel good about it on both sides. Secondly, of course, it takes a lot of patience and perseverance when you have ancient conflicts Like Northern island or the middle east. Brendan do you have to draw separation between the leader and the negotiator . The leader cannot get rid of his or her own ego. Senator mitchell that is right. Very much so. I had been a politician when i went to Northern Ireland. All of the negotiators were politicians. So i understood that i had the role of absorbing and deflecting some of the criticism that they were receiving. It was very important to them to be able to meet the needs of their constituencies which differed sharply. We were able to do that in the end. In the middle east, we are not successful. I hope very much that there will come soon a time when israelis and palestinians will recognize their selfinterest is greater tom brenton grew up near baltimore. Your comments on what we observed in ferguson and in baltimore. It harkens back to what i clearly remember 1963. If we have to get a handle on this, i see only a polarized and fractious washington. How do we move forward . Senator mitchell i make the point in my book that while many of these conflicts around the world have religious, territorial, National Identities , there is an undercurrent of economics and all of them. People everywhere need hope and opportunity. Instability disruption comes from the absence of hope and opportunity. That is what leads people down what i think are violent paths. So we have to create a circumstance going back to what we said earlier in which every Single Person in america, every child has a chance. One of the reasons i wrote that book was to make the point that you can, if you have a chance succeed. Tom ina distinction. You growing up near baltimore. When senator mitchell grew up, that hope was there, even if the opportunity was not. Brendan im carries the ball. I grew up in annapolis which is to baltimore as westchester is to the bronx. We have to be careful there. Interactions between police and citizens. You have three entities citizens police, local government. How do you make everyone own the result . Senator mitchell obviously, it is not mathematically possible for everyone to do that and you are going to have conflicts because you do have people in our society who do not observe the law. You have evil people everywhere and you have to have a mechanism for protecting people in society. How you do that consistent with our rights is the challenge. I do think that what these series of events have done is alert us to the need for Trained Police and a more forthcoming attitude. Tom senator mitchell thank you so much. The book is the negotiator. This is bloomberg surveillance. Good morning. Tom not tantrum to be seen but this year yields are higher and bond prices are higher. Never give up. Not winston churchill. It is a deeply colorized United Kingdom polarized United Kingdom. Good morning everyone, this is bloomberg surveillance. Live from our World Headquarters in new york. I am tom keene. Joining me, Olivia Sterns and Brendan Greeley. Olivia , it is one day before the British Election and the race appears to be a tossup. Prime minister David Cameron warns that it is risky putting it in with the support of the national party. The polls show that Neither Party is likely to win a majority and parliament which means after friday they will start negotiating minor parties to form a Coalition Government. The pilot who crashed his plane into the outs may have practiced a rapid dissent. Investigators checked his previous flights and say he flew downward for a minute for no apparent reason. The germanwings jet crash in march killed all 150 people on board. There is only one thing keeping greek banks a float right now. Today the ecb may decide whether to make the terms of those loans tougher. That is a move that would underscore just how fragile the greek Financial System is. Greek Prime Minister tsipras has dodged another bullet. They will be able to make the payment to the imf. The greek finance minister is upbeat about next weeks meeting. We are going to have some discussions on may 11 that will confirm the great progress that has been achieved. It will be yet another step in the direction of the final agreement. Olivia germanys finance ministers says he is skeptical that a deal can be reached by the may 11 meeting. Brendan stay with greece, we always do. Greek yields resuming their climb today. Greece is just one of the issues behind the global bond selloff. Bond investors have lost about 370 billion dollars. West texas intermediate trading over 60 a barrel. There is speculation it may be easing. Manny pacquiaos next opponent may be a bunch of lawyers. Two nevada residents sued the boxer and the promoter. They say everyone who not a ticket was ripped off because pacquiao did not tell anyone he injured his shoulder and cotraining. He lost to Floyd Mayweather in the richest fight in boxing history. His promoter calls the suit frivolous. Tom futures are ever higher earlier in the euro 1. 1238. The 10 year yield right now, off the bloomberg terminal. There will be an election in United Kingdom tomorrow. Friday negotiations will begin to try to form a government. Nick clegg is the leader of the minority liberal democrats. On the other side, ideological cuts. Is britain as polarized as america . Joining us this morning is the editor and chief of Bloomberg News. I want to go to where you went to school. It is a london vocus. You went to school in a benedictine abbey . How will this election play out in reads, hampton and of toward new york . That is a bizarre question. [laughter] how are we going to play out . Brendan its worth the price of admission. Guest it is a completely is our election. You look at this thing and we are stuck. Boring old britain is stuck in i situation where you can and with ed miliband getting to downing street but losing scotland which is the equivalent of jed bush losing the white house and not winning a single state in the south. Scotland is the labour heartland. The scots will win their. Cameron will win in brinton. Tom london, london, london. Take us away from that. Guest i would love to talk about yorkshire, but the heart of it at the moment is scotland. Scotland once the labour stronghold. Tom this is a fractious europe. We have a france and extremist ideas and scotland as part of that debate. Guest this is bad news. At best youre going to have a divided britain. You will have a Coalition Government which will beat rickety. And it will be a distracted government. If the tories win or the conservatives win you will have in 2017 the vote about europe. This will be written looking inward and from the United States point of view, we are not going to have a partner for the next couple years. Britain will shrink. Olivia that brings us to our twitter question of the day. For viewers and listeners just with no want to bring your attention to a poll that shows the David Camerons conservative party has 33 of respective votes. Labour party has 32 suggesting that Neither Party would win the outright majority. Why cant David Cameron win on his record . Guest what ed miliband has done cleverly is to turn the debate away from the economy and leadership were cameron is strongest. Cameron is surrounded for better or worse, by people who talk and speak like me. I find this odd but that is not always as popular as you might imagine. Ed miliband has run such a negative campaign. He has been hammering the tories for who they are and they have been hammering him back as being someone who will take written down a bad economic route. There is just a little bit of momentum behind cameron at the moment. There is some thought that you cant, a lot of people saying they will vote ukip. When they get into the booth, the only way they are likely to get a referendum is by voting for cameron. Haass it might be even worse because i think you are likely to get the conservatives forming a plurality. Their Natural Partners are few. You could have a situation where the queen has to go to mr. Miliband. He then forms a minority government with the fact oh rather than explicit relation with a de facto rather than explicit relationship. Brendan they would have to consult the cap met men, my new favorite cabinet man, my new favorite document. You have if you nine constituencies in scotland. 59 constituencies in scotland. Where does that leave the u. K. Going forward . Guest the issue which everyone thought a year or so ago is put to bed, it has come ripping out again. You either end up with cameron governing with no seats in scotland or else you end up with ed miliband relying on scottish mps to back him. Who the english know they cannot do anything about scotland. That is causing a huge amount of anger and resentment. The net result is you could go back to the polls. The issue at the union, britain is an old country. The americans are amazed that this country could come apart quite quickly. Tom that is a bold statement. What is the likelihood of a second election near christmas . Guest if what richard just said happens, where cameron ends up with a small lead, miliband ends up forming the government because he has a better chance of forming a coalition. But i think you drifted toward a second election quickly. Olivia how is ed milibands labour party different from the relatively promarket labour party from under tony blair. Guest throughout europe a lot of people have got angry. It is not necessarily a brilliant politician. Obama played fairness very heavily against romney and in the same way i think miliband has played that extremely well against cameron. Haass this is a warning. It shows you what happens with prolonged Economic Growth and the extent for you even have it or you do not have rod and deep precipitation broad and deep participation, what you get are increasingly polarized and increasing populist politics. Britain is not even as bad as some of its neighbors. In greece, a leftwing politics and right wing politics. What is happening throughout europe is the weakening of the center. Guest tom is actually right to ask about places outside london. You see a very hospiras place and you go to the midlands and the north and it is very different you see a very prosperous place, and you go to the midlands and the north and it is very different. Tom a 10 year yield, we are within a 3 30 year bond. Olivia my morning mustard comes from nina, a descendent from nikita khrushchev. She is writing about putins parade. He may try to portray his actions in ukraine about a fight against fascism but it is really a fight for relevance. The matter how grand the parade he cannot hide the truth. Russias days as a superpower are in the past and his patriotism is a can to that of the vanquished. So the idea is this saturday will be the 70th anniversary of russia celebrating the victory over nazi germany. Vladimir putin will have a major celebration in st. Petersburg and european leaders are not going to turn up. How deep is the rift between russia and western europe right now . Haass the rift is deep for good reason. Russia has violated the central norm which is you do not apply for territory through the use of force. People are also alienated, the political concentration of power and we ought to be concerned. Russia still has military ability and is an Energy Powerhouse and the thing that makes the most uneasy is that putin operates without constraint. If he wakes up tomorrow morning and says i want to use force in a different way, there will not be institutional constraints stopping him. He has more freedom arguably than any russian leader since stalin. Brendan he operates on a fertile bed of resentment within russia. A russian poll of european said 13 believe that russia beat the nazis sorry only 13 believe that is a very small number given that it was the Eastern Front that beat the nazis. That legitimately bothers russia. Haass he is a politician and he taps into the politics of resentment. They feel humiliated losing the cold war and the expansion of nato. It is the policy of disrespect. That is what they feel motivated by. Olivia you think the borders in 20 years will look the same as today . Haass if anything no. I think they will look smaller. There is still the tendency tom it is wednesday then thursday and friday is jobs day. William lida will get us started. Futures up five, down futures up 49. Stay with us. Tom bloomberg surveillance. Brendan greeley and Olivia Sterns today. Olivia crossing the historic terminal, the u. S. Wants to renew ties with somalia. State met with somalian leaders. Somalia was the scene of the 1993 black hawk down tragedy but john kerry says it is time to join forces once again. Secretary kerry as everyone knows more than 40 years ago 20 years ago United States was forced to pull back from this country. Now we are returning in collaboration with the International Community, mixed with ongoing concerns. Olivia kerrys somalia visit is the first ever by a u. S. Secretary of state. Microsoft is deciding whether or not to bid for salesforce. Com. The company has a market value of almost 50 billion. The accused flash trader is asking for lower bail. He is currently fighting extradition to the United States. Prosecutors say he played a key role in the market punch in may of 2010. Tom looking forward now to loom surveillance in the next hour. This will be important on wage growth. We look at showtimes future over in media and the changing of the guard at the pentagon has real budget challenges . We look at that with ambassador haass later on. Brendan we are moving back to the u. K. As the country prepares for an election. U. S. Officials said whitehall is not the International Partner it used to be that the u. K. Is pulling back from the world. Mr. Haass is still with us. Also with us is john. Is that true . Guest it has a bit. You look at things like defense spending. There is a sense that it has become very fixated like many other countries have to be fair. Trying to get that right. He tried libya and that was an element of Foreign Investment and he messed up doing things with syria and that is what got obama into trouble. The interesting thing is that miliband is likely to be even less friendly toward america. It is worth numbering that cameron at least tried to intervene in syria. On the other side miliband was flatly opposed from the start. Brendan David Cameron and barack obama have a famously special relationship but is it less special than it used to be . Haass it is for structural reasons. Britain is distracted by scotland and has much less defense capacity to bring to the table. I dont think you have had a british leader since Margaret Thatcher or tony blair. I think what we are probably seeing is adrift toward britain. The euro in which the atlantic relationship with europe has been the centerpiece of american foreignpolicy, set to say but that era is over. That is where most of the capacity is. Europe is just going to play a smaller role. Europe will be more focused on internal questions rather than global. Olivia it seems the threat is that if labor wins we could end up with is a diminished role for britain in the world the inevitable outcome . Guest most people would be heading that direction. There is the possibility of a good scenario. Maybe cameron does win and has the referendum with europe and once and for all sorts out the problem and the British State in europe. In the plus points begin to play out. There are so many variables which could go wrong. Tom a comment from john mikel for weight john micklethwait. He would stand up to america. Im fascinated by what that means. In Foreign Affairs magazine when britain stands up to america, what does that mean. In some ways, maybe john will correct me. This is ed miliband saying i am not tony blair. Brendan he said that explicitly. I look at the one Foreign Policy speech he gave. He said just as we should learn from the mistakes of this government, so to should we learn from our own past, too. Including the 2003 iraq war. His feeling is with his own hangover 10 years in the past. Guest it very much the devils labo bedevils labours Foreign Policy. Brendan you guys have more of a special relationship. Guest we share a computer. [laughter] haass he doesnt have the capacity to be a Major International player so the best way to have outside influence is by associating himself with the United States. Not always agreeing but working closely with us. An independent britain will not have any kind of the weight it historically has. Tom where is ohio britain ohio in britain . Guest it is in the midlands. Tom who will win their . Re . Guest my instinct is that it will be shared. Tom john micklethwait, thank you so much. Haass will continue with us. Lets look at the twitter question of the day. What should the u. K. s role in the world be . Tom lets go right to the mac monitor. Richard haas this morning with the account on Foreign Relations because he and i are the fossils onset. Unemployment of men in america over age 55 wildly cyclical for 40 years. Here is that man session of 2008 and it is amazing how it has come back better than that National Average. Old guys finally getting jobs. Haass it surprises me because their education is old. Psychologically its hard to enter the workforce after you have been out. That to me is a positive and surprising statistic. Tom we will talk about this later but it is simply just about getting people back to work to what about the old people . Guest it shows having Work Experience really does matter. Tom keep talking. Brendan we are talking about age but back to 1980 we have seen this slow decline that tom has helpfully illustrated here. It is a much longer structural change. Guest men over 55 is a prime age group that many want to have. Tom what should be the retirement age . Guest whenever you want but right now it will be much later because people do not have the wealth they had before. The stock market crashes that taken people down way below. Tom do we get to 72 . Guest im not sure you should have a retirement age. It should be discretionary. You should have it prorated that there are incentives, but if you want to work longer there are incentives to do that. Millenials would not like that because we are holding the jobs that they want. Tom you think there is a real statement of old people blocking out millenials . Guest one of the things that is true is that the older generations are staying on longer. Haass is it time for our nap . Tom lets get to our top headlines. Olivia no more man session. It is still too close to call David Cameron trying to hammer home his message that it is risky to have a minority labor Party Government in power with help from the Scottish National arctic. Meanwhile ed miliband is trying to portray the conservatives as the party of the rich. The latest polls show that neither labor nor conservatives will win a majority. I knew paul says Hillary Clinton is surviving a run of bad publicity. A new poll says Hillary Clinton is surviving a run of bad publicity. She had been hit my news of private email and questions about her familys foundation. A republican candidate took a few shots at clinton on his First Official day of campaigning. Mike huckabee said he does not have a Global Foundation and he fought the clinton machine. Brendan the u. S. May get more help in its fight against the islamic state. They spoke about the Islamic Terror Group in an interview. From where i sit, i see a lot of countries finally getting past some of the free writing they are used to doing and being willing to step up in a coalition against isis because of the particular gravity and horror of this movement. Brendan you can watch all of that interview with Samantha Power on charlie rose tonight at 7 00 est. California taking unprecedented steps to fight a recordsetting drought. Mellon california ordering mandatory water supply cuts. Some of the biggest cutbacks will be imposed on wealthy communities that have not reduced consumption enough. California drought in its fourth year. Tom in sports, Baseball Players can never forget their first game in the majors. Carlos perez had a more than memorable debut. He hit a walkoff home run to give the angels a 54 win over the seattle mariners. He is only the fourth player to do that in his first game in 115 years. In more than one century. He has them playing in the Minor Leagues since 2008. Seven years later, called up. That was very close statistics. Futures up four. The twoyear yield unchanged but that does not show anything of the tensions we have seen. The german 10 year,. 548 . That is amazing in german yields. Nymex crude 61. 780 dollars per barrel. On to the American Labor economy. Quietly after portray data they posted their first gdp numbers negative. Not in a recession but dramatically subpar. January, february and march. The consensus call is for better times ahead. William lee is the head of north american economics and is here to brief us. We are not in recession. Guest we are not even close but we are not recovering the weight we used to. What we are struggling with is employment only growing at 2 . How can we expect so much more in the way of gdp growth . Tom you do wonderfully acute research memos. Sinker demaio, cinco de mayo, im having a margarita. We are not in recession but for the large majority they feel like recession. Guest they are not seeing the salaries that will bring them into the middle class. The aspirations of the entire American Population has been frustrated. Why is that . Most of the job gains and growth has been in the long wage lowwage sectors. When you think about where the wages are, the median wage is about 1000 a week. Most of the job growth is below 1000. Where is the manufacturing . It is not recovering at the pace that we want. Brendan in your note you say the committee is on hold and ready for action. When the sleeping dragon awakes. What is the sleeping dragon . Guest we have been told by the fed, expect a benign environment. When we start to take off it will be slow. But listen to this, the foreign did on u. S. Assets this is the only growth economy in the world means there will be a lid on longterm rates. When a conley starts to take off and they raise rates, they will not be able to raise rates as quickly as they used to. They will be more aggressive on the short end. Tom how does bill lees economy fuld into your book . We need a strong america. That is not a 2 run rate. Haass it will not give us the capacity we need to lead or an example the rest will and the late but there are things we can and should do. The fact we are growing at 2 we are underachieving. Why dont we have a more intelligent strategic immigration system why arent we changing Corporate Tax reform or passing new trade deals . We are underachieving and it is our own fault. We should be growing at the current rate. Olivia there is a total gridlock in washington. Brendan the small green shoots that you see are on the issues you list. Maybe there will be Corporate Tax reform but there is strong progress toward an infrastructure bill. So we might get there. Haass might but i dont see any progress on serious immigration reform. We will see where we end up on infrastructure. Whether we get authority or olivia the president agrees with the republicans. Haass what he needs to do is convince the 80 of democrats and the 20 of republicans who are not there that this is good for america. Guest not only is washington vulcanized, it is polarized. Olivia this past week 300 40 billion in fixed income wiped away. Has the penny finally dropped . Have we seen green shoots of inflation . Haass you wish. What we are seeing is the lack of conviction about where the economy is going. We have been jolted from one and to the other. Suddenly we are in an recovery and we will lose in june. Those forces are pushing the market so much. Tom what is your working number on payroll . Guest we are expecting above 200. Tom somewhere around 275. It is a real jumble. Brendan all month long we have been looking at the u. K. Elections. We are asking, what should the u. K. s role in the world be. They accuse David Camerons. U. K. Of pulling back from the world. Tweet us. Good morning. Tom the gorge eos city goregeosity of new york city. A beautiful may we are having. Olivia chairman matt lank will join in the loop just days after raking in the dough from the most lucrative night of boxing ever. Mayweather winning against manny pacquiao. Betty liu joins us ahead of her interview. Betty my first question to him is whether nick is off of his christmas list. Right after the fight, he tweeted this. He said and the winner is that got tons of retweets. The reason i say this is matt blank and his counterpart raked in almost 400 million. In paper view revenue. The next time around, periscope we are all discovering what this is. That was the big fight after the fight. So periscope is this new app that twitter bot that lets you live stream things. Anyone who was lucky enough to be at las vegas could hold up the phone and you could tune into what they were watching instead of paying 99. Betty which is double what you would normally pay. Brendan you streamed an internal meeting yesterday . Betty that is right. Brendan cornerstone of the television, it is irreplaceable. But programming, the stuff we thought was dead. Paying lots of money to actors running scripts and shooting things with cameras. Is showtime keeping up . Betty they are indeed. They are premium content. There is speculation that cbs, which owns showtime they are going over the top. Like showtimes programs. Masters of sex. Homeland. Whether they might start looking at these over the top platforms. They are looking at that. Hbo launched, 14. 99 per month. That is the price point, much higher than what netflix is. That is what everyone is experimenting with. Any homeland fans . Olivia huge. Betty matt blank has been killing it with programming on showtime. They are all starting to seem the same. Game of thrones is somewhere. Brendan you are treading on very thin ice when you Say Something about game of thrones. Betty it is all premium, curated content. Olivia tom feels a deep personal connection with khaleesi. Tom i cannot keep up with it. Olivia content is king. If you can get a great script or cartoon franchise, you can kill it. Looking for to that interview be sure to tune in as she fakes to the former espn chairman speaks to the former espn chairman. Tom futures improve up seven. Dow futures up 63. Brendan crossing the terminal right now, Benjamin Netanyahu was racing against time to form a government coalition. He was talking with the conservative party to get a coalition. If he does not do it by today israels president must pick someone else to form a coalition. A Nutritional Supplement Company Posted betterthanexpected earnings. Herbalife is in a running battle with bill ackman. He says it is a pyramid scheme. The california Tech Industry posits to remember a popular positives to her pauses to remember a popular executive. He died while vacationing in mexico. Tom lets move forward into the next hour. Really looking forward to talking to Michael Mckeen about the adp report. Microsoft, going after salesforce. A very controversial company. Im starting to talk like star wars. Short sellers wage more on twitter as well over the future of linkedin, twitter and the rest. Olivia president obama has nominated the marine general as the joint chairman of the joint chiefs of staff. President obama we have to keep Training Afghan forces and remain relentless against al qaeda. We have to push back against isil and strengthen forces in syria and build modern opposition. We have to stand united with our allies in europe. We have to keep investing in new capabilities to meet growing threats including cyber attacks. Olivia still with Us Ambassador richard haas. That was quite a laundry list that president obama outlined. What will be the most pressing issue for general dunford . Haass the most dressing issue will be the middle east. Getting pressing issue will be the middle east. Getting more forces into iraq. What to do about the continuing awful situation in syria. Yemen. How much support and what kind of support does United States provide . The challenge will be not to just focus on that but not to only focus on that. He has to think about personnel issues and the military budget is always misaligned. It is an enormous set of challenges. Olivia how does the u. S. Reassure allies, leaving aside the question of whether or not we should be, we heard the president say he was going to have a summit next week. What does he say to them . To convince them an iran deal is ok . Haass part of it is to make the case in detail. That the inspections are adequate and the constraints are significant. He will have to provide them with all sorts of new hardware. The most interesting thing is beyond that. What kind of assurances does the United States start saying we will be there for you in certain types of situations. Brendan in the Financial Times this morning, David Gardner wrote that the real problem in the u. S. Middle east is a talker see autocracy. He says almost all of his recruits need remedial forces in math, arabic and english. That is just indication. In the op ed he linked everything to the basic problem of lack of real civil society. What should autocracy be . Haass in some cases that is the only choice you have. He is right but it is extraordinarily difficult. How do you change the dna of these societies. Brendan can the next institution do anything to help them grow . Haass we can help it from the outside. This is a longterm thing. This is the work of generations. In the meantime the middle east has unraveled. Olivia what is the u. S. Doing in the persian gulf . Amb. Haass the iranians went after a ship. It is sending a message in pushing back against iranians. It says more broadly it is a signal to the sunni and arab countries that United States is there physically as well as every other way. Tom general dunford, every american would say is perfectly trained and has a fabulous track record. Just to pick on the republican party, many of their candidates have no experience whatsoever in politics. Its like the military with exquisitely trained people and our modern politics is to be polite, less so. Amb. Haass i dont know of any other institution which so invests in it people. Throughout the course of their career, they will go to staff schools, colleges and training courses. The military is the Gold Standard of how to invest in your own people and prepare them for larger positions of responsibility. On the civilian side you do not do that. You might be a journalist and suddenly find yourself on young editor. You may be a professor and find yourself the dean without administrative training. This is something profoundly different from the military sector. Tom i would suggest we had politicians with experience. Amb. Haass you also had politicians with military experience. You still have in the bureaucracy people who know about the world. It comes back to the conversation before about europe and in more populist times you see people from a broader set of backgrounds getting involved. Guest the middle east shows you that demographics is not destiny. You have a lot of young people but do not have the things that will bring them into the economy. You cannot just focus on the military but trade and commerce as well. Olivia richard says it is the Gold Standard, does the private sector invest adequately . Guest we are not incentivized enough to do so. What we have to find some way to incorporate these gains into the profits. Brendan that is something that the military accepts. You will train officers and send them to an incredibly expensive fouryear con college and then they can walk. Guest the taxpayer pays for that. Here youre asking for stockholders to pay for that and that is a different story. Amb. Haass it is a case that you have to make. Corporate america is probably secondbest. They actually do some of it. What is weak is the rest of society. Tom lets get to twitter. We had a huge response. Olivia apropos of the u. K. General election we asked what do you think the role of the u. K. Should be . It should be economic leadership, political restraint and as much humanitarian omnipresence as possible. Tom that is a great thing. Olivia the one thing David Cameron did do was protect. Third and final answer, the u. K. , the u. K. Is gone. It is time to become the wise grandfather on the world stage. Brendan the u. K. Has come to terms with the loss of its empire. Olivia that was my take away from coming watching the opening games of the elevator ceremony. Olympic ceremony. Amb. Haass europe itself and the politics and values are changing. It is much more pacifist and much more parochial. One of the reasons we should hope that britain stays in europe. That is an important voice. One of the few chances we have is by britain staying in. Tom marco rubio will visit your council on war and relations in a number of days, what will you listen for . Amb. Haass it is the first of the serious candidates to really be out there. We welcome his foreignpolicy views across the board, but also his sense of the relationship between domestic, political and economic reform. Guest he fears the u. S. Will become withdrawn as well. Tom thank you so much, richard haas him a thank you for joining us. We continue on Bloomberg Television and bloomberg radio. Betty good morning. Im betty liu. You are in the loop. Were still talking about the boxing fight. Matt shows us on the new fight between hollywood and twitter. How do you keep viewers paying for content is a simple app on your phone will put it on for free. And in after reporting theyre getting hit on all fronts. The dollar is hitting exports. How does he keep growing the companys . Plus, how to play the slump in oil, investor david barse is making one big that we will tell you about in a moment