Kathmandu, the capital. First report said there were no damages to kathmandu, but it may take some time to determine impact. John kerry is in russia meeting with Vladimir Putin. He arrived this morning in sochi, the black sea resort for last years winter olympics. Relations with the u. S. And russia had been strained over a variety of conflicts. Kerry wants prorussian rebels in the ukraine to honor a ceasefire. The National Football league is coming down on the new England Patriots for the fleet gate for deflategate. The patriots have been fined 1 million the most in sports history for the nfl. They also lose a couple of valuable draft picks. Brady was aware that the football that was used in the afc championship game was partially deflated. He plans to appeal. There is no breakout republican candidate in New Hampshire yet. The poll shows rand paul, marco rubio, and jeff push all have failed and jeb bush all have between 59 and 62 . But scott walker and ted cruz are right behind at 54 . Voters are waiting for jeb bush to take charge. They are discontent with the field their discontent with the field has nothing to do with their position on anything. They have not seen anyone willing to say i can crush a democrat in a general election. That is what they are waiting to see. I think the opportunity is to see how aggressive he can be in taking on a democrat. Vonnie no one has ever paid this much for an artwork at auction. A painting by Pablo Picasso went for a world record 179 million last night at christies in new york. The painting called women in algiers, was bought by an anonymous collector. Christies took in more than 700 million last night and expects as much as 1. 3 billion worth of art this week. The christies, about 20 million, 12 . Tom you wonder about the commission, and you also wonder we do not know who bought it do we echo brendan i bought it. Very likely, like other great works of art, an unidentified asian buyer. We are going to take a look at Small Business optimism in the u. S. At 9 00 a. M. At 2 00 p. M. , americas Monthly Budget statement. Tom a busy day all in all. Retail sales tomorrow across america. Lets do a data check. Futures, 15, dow futures, 127. The euro puts on to the next screen. If you would. The big showing some of the angst we saw yesterday, the vix out at 13. 85. This is a really cool chart. Sometimes folks, i do not know what i am doing when i make charts. You just do them for the doing of them read this is the doing of them. This is m2 in china. I did not notice this is massive m2 shrinkage in china. Four standard deviations down. This is desperation. Brendan but coming off yesterdays rate cut, i took a look at our own predictions. Our economist in beijing said expect quasistimulus. More money being spent on projects in china. Tom thank you. We thank Ruchir Sharma for his appearance yesterday. Russia 13, the u. S. Nine. That is the number of gold medals earned at the olympics today. We will find out the tone right now. Peter, why does he have to go to sochi to meet with Vladimir Putin . Was that expected or dictated . Peter the reality of this meeting is that it was a surprise in the first place. John kerry the highestranking u. S. Official to meet with Vladimir Putin in russia in more than two years. He was the last to do it in 2013 just before the Edward Snowden situation blew up and snowden landed in russia. This is a test, if you will, to see if the lines of the medication between the u. S. And russia can be improved amid continuing tensions particularly over ukraine. Whether or not there can be some way to foster a more sustainable peace in ukraine, and maybe the sleeper issue is syria, to see if there is the possibility of greater cooperation between the u. S. And russia, trying to end the syrian civil war, and particularly, Russian Support for Bashar Alassad. Brendan so the meeting is happening because it has been a while and it is awkward if we wait longer . Peter that is about right. Russia has said it is to normalize relations. The u. S. Is not going that far. The state Department Says it is a chance to keep open the line of communications so a distinction there. It was not a very conciliatory message in their own statement announcing that the meeting was happening, much of it blaming tensions between the two countries on the united states. They would not confirm the meeting was happening until today. But it is happening. He is also meeting with his counterpart, Sergei Lavrov. He talks to Sergei Lavrov all the time, but it is Vladimir Putin who is going to be at center stage today. Perhaps it can ease the chill in the air. Brendan in the u. S. We have taken a much more aggressive stance in syria. What can be done with russia right now on syria . Peter well, u. S. Officials say this is an opportunity to test how far Vladimir Putin is prepared to go to standby Bashar Alassad. There are concerns raised about the syrians once again using chlorine gas on their own citizens. You realize you recall that the u. S. And russia did agree in syria with regards to serious to syrias chemical weapons. There are questions about whether a side is sustainable about whether Bashar Alassad is sustainable and if the russians could be prepared to talk to the u. S. About ways to move syria forward to at least improve the civil war in that country. Tom peter cook, thank you so much for getting us started on international relations. Rates on the move again. Equity move equity markets, new lows on futures. The theater of cheap money empties with higher rates. What will real estate dealmakers actually do . They have to think long and big. They have to encourage at all moments, and even worse now as rates move. We will speak with william ruden, chief executive officer of ruden management. What do you actually do when you see rates move like we are seeing . William we try to take it manage of these low historic rates and if they move up a little bit so be it. They seem to be bouncing back and forth and tied into other world events. Tom do you believe that higher rates are a symbol of a better American Economy . Bill we were at low Interest Rates for a long period of time and as the economy gets better and jobs get more creative, we will start seeing rates normalize. Tom i will translate. We could not afford it last month, we really cannot afford it three months from now. Brendan looking just above the full on the wall street journal, home prices start to heat up. They give a brief list of cities. 13 jump in raleigh, north carolina. What do those cities having colin . Bill i think there are cities where people want to live they are cities were people want to live. I probably have a significant amount of Technology Particularly in raleigh, north carolina. In new york city we talked before about people moving from westchester to new york city. They want to be in urban areas. People want to live in urban areas. The millennialss want that culture, that open space. All those things that an urban setting provides. Brendan are we seeing a move from places like new york city to places like columbus, ohio please is that are urban but affordable . Bill the mayor has put forward a plan for more Affordable Housing, but you are also seeing totally new areas of new york getting reinvested in. And moving in those areas, which are affordable. 25 or 30 years ago, tribeca was the area. Then it was soho. Now you are seeing it in brooklyn. Now it is back to the upper east side, the best value play in new york city. Tom is it lemmings off a cliff that when rates start to go, every cfo says we have to act now . Everybody jumping in before janet yellen really moves . Bill obviously there is a difference between shortterm and longterm rates. She does not control longterm rates in the market makes those determinations, but i think the economy has been moving at a steady pace with job creation. Particularly with new york we have seen significant job increase. But unless there is a world event that really changes the dynamics, we will see a slow, steady increase in longterm rates. Shortterm rates i do not think we will see people jumping off the edge. Brendan tom i have this for you what is a story that you that will never end, but you hope ends well . Greece is the answer. Will the actions of jan us verify chris of Yanis Varoufakis by his country more time . Tom good morning, everyone. Bloomberg surveillance. Brendan greeley and tom keene. Lets go to top headlines with vonnie quinn. Vonnie the tornado that struck a small texas town destroyed almost 120 homes. Two people were killed when the twister hit in van, texas, 75 miles southeast of dallas. Four dozen others were injured. President obama is making it official. In a video released minutes ago, he confirmed that his library will be built in the city where he began his political career. The barack obama president ial center will be located on the southside of chicago. His foundation will move to a site Near Columbia University in new york city. Mcdonalds is revamping its drivethrough menu in a move to end the sales slump in the u. S. The wall street journal says the liberals largest restaurant train restaurant chain will only sell its topselling items at the drivethrough. Tom very good. Thank you so much. Coming up, lets look forward hear to the next hour. Tom brady you know the story he gets suspended four games. We will look at construction as well. Building in america. We have Something Special for you, someone who changed the design of america. Thomas obrien will join us on why your living room looks like garbage. He is really good at fixing that. He will be with us. He changed american design. Right now we need to change a tack and move across the atlantic. We are making faster progress no, not the united kingdoms labour party. Greece keeps on giving every day. Francine lacqua is in london. Give us an update this morning of brussels versus athens. Francine there are those go different trends to the story. First of all, finance ministers, including the greek finance ministers, are in brussels, and talks have been going better. It does not mean we have a deal. They still have to reach an agreement so that creditors, including the European Finance ministers, unlock aid to greece. But because it is getting better, people are more optimistic because, remember just four weeks ago it was a disaster. They slammed the door. Tom translate for me to impatient americans why somebody does not just sit down with greece and say no. Brendan that is what they have been doing for weeks. Francine which is what a lot of people inside Angela Merkels party are saying note to greece. Then they have no money and they have to default, which no one wants. I know it feels like we are talking about it every day but every day, negotiations are coming closer to bringing the parties together. Brendan let me get be on the specifics of this deadline that we have approaching. Is it right to look at athens and think that maybe they had a cometojesus moment and are changing the way they are negotiating. That we are seeing a slightly chastened Yanis Varoufakis . Francine i do not want to be too optimistic, but the tone is a little bit better. What finance ministers were angry about is the greek finance ministers giving them lessons in economy. So the tone is better. The tone can be better and they still do not have an agreement. What the European Finance ministers want very quick we have the tone of talks getting better, but we also had the deadline today of greece having to repay the imf. We understand they have done that, but it is by using money from the imf itself. They are buying themselves more time. Tom francine lacqua, thank you so much. Coming up in the next hour, we will look at the equity market. A chief u. S. Strategist at citigroup. Looking forward to that. So stay with us. Bloomberg surveillance. Good morning. Tom good morning, everyone. Bloomberg surveillance. Summer is here, at least for a few days. As we look south everything in site is owned by bill rudin. He joins us this morning. The development of real estate on his island of manhattan. Wall street falls within the spirit of investment across america. In tokyo rates could be cut faster and on bigger increments. The pboc could start taking loans that are destined to default off the books of the big banks and municipalities. Until now zhou has only initiated baby steps. Are you seeing any change in foreign flows in the u. S. Institutional real estate . Bill i think you are seeing tremendous demand for u. S. Real estate on all levels, from condos to Office Buildings to multifamily literally from around the world. Our buyers are mostly local buyers. 70 are local buyers. But other parts of the city are still seeing tremendous demand. Tom and oblivious to currency dynamics are net value . Bill obviously currency has an impact, but in some markets where currency has a hit, other players step into the market. It is a very robust market throughout the whole city and the country, particularly east coast and west coast in terms of foreign buyers. Tom within your world, if brendan or i are looking at a property, are we crowded out by an allcash foreign buyer . Bill you are not. There is diversity of product. In brooklyn, you want to be downtown. In our project, you want to be in Lower Manhattan or on the lower west side. 57th street, you have a lot of alternatives. Tom i think you got two shameless plugs in there in one minute. Double that puppy. Continue. [bell rings] brendan i want to take foreign buyers back to foreign locations. Two mistakes that japan made 20 years ago one is more fiscal stimulus. The other is they actually need to get toxic assets off balance sheets. China is not doing that. Tom it sounds like greece almost. Maybe that is the restructured maybe restructure is the word of the day here. Boko and we see a lot of chinese developments coming in to new york. Tom you think you have problems . Brendan you think you have problems . Tom brady has problems. Our twitter question of the day is tom bradys legacy tarnished . 127. Here is vonnie quinn with top headlines. Vonnie it was less than three weeks ago that an earthquake killed 3000 people in nepal, at now another earthquake has hit. First reports say at least four people were killed, and there are reports of some buildings falling down. Both sides are setting low expectations for todays talks between secretary of state john kerry and rush upon president Vladimir Putin. Rush upon john kerry Vladimir Putin a meeting 19 minutes from now. He wanted to persuade prorussian rebels to follow the terms of a ceasefire. John kerry also wants to see if russia can force a political solution to the fighting in syria. The eu is saying that there will be tens of talks on greece in the next few days. Greece assured European Finance ministers that the country is trying to strike a bargain on foreign bailout aid. But the process needs to be speeded up, and may take a few more the government of Prime MinisterAlexis Tsipras said it will pay the imf the money it owes them today, but pretty soon the country will feel the cash crunch. The liquidity issue is an incredibly urgent issue. Lets not beat about the bush and pretend otherwise. It seems to me that from the perspective of the time frame we are facing we are talking about the next couple of weeks. Vonnie greece is expected to there is a test vote of the senate on the controversial asian train deal. The senate is hosting a procedural vote on whether to give president obama fasttrack authority to negotiate agreements. The president finds himself at odds with his own party. Some democrats argue that the trade deal will hurt american jobs and wages. One of those is senator elizabeth warren. And the president has made it clear he disagrees with her. President obama elizabeth is a politician like everybody else and she has a voice that she wants to get out. I understand that. On most issues, we deeply agree. On this argument, her argument is not test does not stand the test of fact and scrutiny. Vonnie and call it a hangover from the soaring popularity of bourbon. Bourbon sales are up 35 over the past few years. Barrel makers themselves cannot find enough white oak lender because the lumber industry has not recovered from the crash of the housing industry. Smaller distilleries a and up making less bourbon. Brendan, i know you like a little bourbon. Brendan this is a bigger problem. I actually prefer whiskey. It is a big problem because the whiskey distillers in ireland and scotland use the used bourbon barrels. Tom is it a new barrel or old barrel shortage . Brendan both. They get disassembled pack in crates, packed in crates, and shipped to ireland and scotland. So a bourbon barrel shortage now is a whiskey barrel shortage in a year. Tom i love doing this show. I wake up i have no idea where i am going. Thomas brady sits above the fold of each and every new york paper this morning. It is not a very good morning for mr. Brady. Brendan not only is it on the front page of the New York Post it is on the back page as well. Roger that. What are the new york papers going to do when this is over . Tom they will talk about arod. Help me out here. The Indianapolis Colts got to play with a deflated football too. No teams control the football that teams play with. In some cases joe flacco of the ravens, for example prefers a deflated football. Tom were you surprised by this announcement . Away from all the fandom in boston in the business of sports . Was this good for football . Ray i think it is great for football if everybody can move on and there is no protest of the penalty doled out by the commissioner, which i think is spot on. Brendan every time i see tom brady i dont know anything about this something might have happened but i cannot really tell behind him, there are sponsors gillette and covert in. What happens to those two companies right now . Ray i do not think the sponsors will be threatening to pull the plug on the patriots. I also do not think this is notable enough in terms of a morals clause for Companies Like uggs to pull the plug on tom brady. The question is, when they renew the contract depending on whether or not he is still playing. Brendan what is his legacy . Ray i think it will knock him down a peg or two. Brendan for people who do not follow football clearly not our audience but for the small part of our audience that does not explain how people feel about tom brady. Ray i think hes very polarizing. Some people love tom brady. Mostly people in new england. And some of his fans perhaps slightly more skewing female. There are a lot of people who hate tom brady which is sort of a perfect spokesperson for a brand that does not have universal appeal. Tom you guys are pros at following the business. For somebody not following this is it odd that he did not get a day in court . Ray i think he did not help by turning over any of his texts or emails. His attorney was going to reserve the right to edit and review them before turning them over to investigators. Tom can he sue somebody . Is this over now, or is there a hole drawn out process. Ray allegedly, the Players Association will be hearing an appeal from tom brady. I do not recommend that. I would say the best thing to do would be to put this behind as soon as possible. Brendan the back of the New York Post the back of the New York Post says roger that. Roger goodell. How do we understand in a league that comes down so forcefully on this, but has been stonewalling you might say, about traumatic head injury. Ray this is a more finite situation. Traumatic head injury is horrible. It is also part of the brain. It is also part of the game. When they improved helmets, they have been used as weapons and not protective devices. In this case, they were significantly outside the approved range, which is brought to begin with. It is about a 7 range. Tom ray katz, thank you. Our twitter question of the day gets to this uproar in boston in new york. Across the country. Is tom bradys legacy tarnished . We need your opinions on that bsurveillance. It is bloomberg surveillance. Good morning. Tom good morning, everyone. Bloomberg surveillance. Lets get to our single best chart with brendan. Brendan home prices are rising all over the country, but Home Construction is more efficient. Here is what we are looking at. This is workers per housing per home built. We saw it rise to we got less efficient as the economy plummeted. We are getting more efficient now. Bill rudin, this is what you do. You look at this chart. What does he say to you . Bill well, i think it is good, but unfortunately for new york city, our chart does not show that way. We show Construction Costs continue to rise because of Union Regulations so that is very concerning. We are seeing inflation in terms of cost per building here, and that is an impediment to solve the footer will housing issue that we talked about before. Brendan more broadly across the country, is homebuilding becoming more efficient . Have there been more innovations that allow fewer workers per home . Bill i think it does reflect that. Using Technology Helps make things more efficient. You can do things off site now that you could not do before. So you bring them in and plug and play in terms of construction. Tom i saw a chart three months ago that showed boston and new yorks total outliers of expense in building stuff. New york is in its own orbit of labor expense regulations come as you mentioned. How does new york address that . Is there any urgency to building highways, building bill rudin buildings, more affordable in new york . Bill no question that the mayor has a more aggressive plan to create more Affordable Housing. Tom how can you do that if it is 400 to put in a light socket . Bill that is part of the issue. You have to come up with innovative ways to deal with the Construction Cost and make it more costeffective. Brendan is Construction Cost preventing more Affordable Housing in new york . Bill it is a driving factor of it. There is obviously land costs Interest Rates, which are low at the moment. But those are the main factors in terms of Affordable Housing. Tom i am so honored to have these backdrops, these photographs that john johnson and john neuhaus made for the set. Are you involved in the development of any of these 90story buildings . Bill we are not. Tom do you like them . Bill some of them i do like. Some of them are questionable in terms of design. But that is part of the city that creates diversity of appeal. Some people like tall buildings. It also helps with the Construction Cost. Tom Construction Cost comes down if you build them that tall . Bill there is a point of diminishing return. Brendan i think that blight is something tall that you do not have anything to do with. People have been complaining about towers for decades. These towers feel alienating and blighting to us because we cannot afford to live there. Elco you going to bill you going to brooklyn and you see tall buildings, and it is a changed world. Tom bill rudin on 90 story buildings. Brendan outside new york the ceo of chinas conglomerate took his employees on a vacation. 50 million were spent. 84 planes, 140 hotels. Tom most of it was getting from the train station to downtown paris. Brendan i think that is the guy who bought the picasso. In the streets, just blew dressed in blue and white. Some of these mummies were c. T. Scan. Much of them are partial remains. It was a moneyummy bubble, and mummy quality tom you have been waiting all morning to say that. Brendan in dubai, does copilots two pilots jumped out of helicopters using jet packs. This is the future of television. Amazing stunts with dramatic music. Tom ok, there it is. Brendan that is due by below them. That is dubai below them. That is me on the left, tom is on the right. Tom his career started with ralph. He has changed american design. We are thrilled to bring you Thomas Obrien of aero. Tom obrien and bill rudin together on bloomberg surveillance. Stay with us. Tom good morning, everyone. Bloomberg surveillance. Lets get to top headlines with vonnie quinn. Vonnie Closing Argument will be heard tomorrow in the Boston Marathon bombing trial. The jury will decide whether Dzhokhar Tsarnaev should be jailed for life or executed. The last of 44 defense witnesses is a Death Penalty opponent. Royal dutch shell is getting approval to drill off the coast of alaska. The ok was given days before a scheduled protest in seattle. Shell needs approval for other from other federal and state agencies. A Watchdog Group says new Jersey Governor Chris Christie has spent 300,000 on meals, drinks and desserts while in office. He has been in office five years. New jersey watchdog says his grocery bills have fallen since he had latin band surgery two years ago. My grocery bills would fall too, if i spend that much on meals. Tom here is what we are looking for coming up on bloomberg surveillance. At the top of the hour secretary kerry meets with president putin. And we will link bonds into stock valuations as well. Ok. This is a real pleasure. It is the bane of one bedrooms in brooklyn, the walkup in chelsea. After the pain, the carpet, the furniture, the redo it aint happening. The solution is light, a really artful and big science. For decades, Thomas Obrien has led by example in american design. His designs start and end with the use of light. Brendan wants to talk about cooper union as well. How did you get into light . Did ralph turn to you one day and say fix the lamps . Thomas i have always loved designing metal things and bits and pieces kind of drawn to new york, vintage modern new york and ideas of the era of the midcentury, and out of that comes a lot of my interest in lights and all. I have been in my store, and honestly we have done a great deal of innovation creating all kinds of creative light. Tom i have seen total sterility, the antiThomas Obrien world. How many lamps should be in the living room of one of bill rudins project . 5, 6, 7 . Thomas i prefer lamplight over recessed light because it is more human. Bill we were talking to many different designers, and you stepped out understanding the balance that tom talked about before, meeting the old avenue. Why did you take on this project . Thomas i love old things and new things. I love new york. I love the aspect of the size of it in Downtown Manhattan and the story of it. Making a story. Bill adapting five buildings and having thomas i went to school in Greenwich Village and cooper union, and it has a wonderful legacy. Brendan it is great to hear your nostalgia for new york. New york is always changing. What is the best relic that is left of that . Where do you go to feel that it is still 1962 . Thomas it becomes harder and harder. Some of the smartest people are saving bits and pieces of them. Bill greenwich lane, of course. Brendan we need to date him for a shameless plug. [bell rings] tom i want to have you explain to the audience why you have people spend 300 extra on your breast joy. On your brass joy. Thomas it is a thing you put yourself in. You should have it be better quality. Take your time. The best homes and the best things come over time. Brendan i want to drag this back to the stuff that we talk about every day, meritocracy and income inequality. You went to cooper union. It is a beloved education in part because it is it was free. Should it be free . Thomas it is really challenging what is happening with it all. It is a wonderful institution. The size alone, the size of the classes it is only about 50 or 60 in each class. It is fantastic. Tom i want a Thomas Obrien explanation. Ring up the image right now. This is lap lust lamp lust folks. When you look at this gorgeous table lamp, where did that idea come from . Thomas there is a sort of a french idea, and an american one, too. Kind of merging International Ideas and things that happen over time. For me, american ideas also stem from where brendan i have to say, tom does not do this for every guest. He had the bit in his teeth. Tom i got the money question right now. Do you like the new light bulbs . Thomas actually, i do not. Tom ok. Where do i get old light bulbs . Thomas i sort of heart Grocery Stores and everywhere that still has the i sort of haunt Grocery Stores and everywhere oh that still has them. Tom thank you for coming in. Lets do a foreignexchange look right now. Im looking at the the euro, stronger today. Sterling, 156. 94. Futures at 15. Stay with us. Tobias levkovich of citigroup is with us in the next hour. Good morning. Mail activists used taxpayers money to pay the imf. Kerry whoputin, they meet in sochi. Stay in the stock market, good morning, everybody. This is bloomberg surveillance. We are live from our World Headquarters in new york, im tom keene. Joining me is Brendan Greeley. What are you reading this morning . Brendan i saw something on twitter, Goldman Sachs releases a note, these are the best stocks for investing millenial parents target, hasbro disney, netflix, starbucks, whole foods tom oh, forget it. They are cute. There does come a target hasbro brendan new tom rullee no cut e notes. Tom there is a modest headline coming across the terminal never boring verizon to buy the house of armstrong, taken out for 50 a share. Were going to rip up the script and bring in Tobias Levkovich. I know you cant talk about this deal, but it shows the courage and the effervescent that is out there right now. Tobias i think one of the things we have asked investors to tell us when we survey them is what are you hearing from companies . We have seen it clearly in a distinctive trend is toward using the cash for m a, so less of their own buyback buy somebody elses stock. Tom i look at verizon. Give me an aol chart to show me the success of Tim Armstrong over the price consistency of aol. When rates go higher, tobias, is this when the big guys like verizon act . Tobias it is interestingly have low funding costs and the fact that will stay low for a period of time, there is no motivation to do the deal today. When you hear the governor and president saying things like do we want to tighten, do we want to normalize Companies Move a little faster. Tom i am surprised with how small the deal is. Brendan what is aol . 15 years ago, 20 years ago, this would have been the merger of two Infrastructure Companies. Aol is no longer an Infrastructure Company. Tim armstrong has turned it into a content company. 50 a share is the Purchase Price for aol. This is a new move by verizon. You see the Infrastructure Companies constantly dipping a toe in content. It never really works, and then they pop back out. Tom should they be touching up with Brian Roberts . The idea is the machinery of verizon with the high dividend, huge, predictable i will call it with respect Old Technology and there is a panic do something. What are they buying . Brendan i dont know. Why verizon does is it sells access. I do not understand why they are getting in the business of buying content. We have proof this with the time warneraol merger back when it was an Infrastructure Company it was not a good merger. Content there are no inefficiencies if you own content as an infrastructure. Tom if you are joining us, the bombshell moments ago, verizon to buy America Online aol. Tobias levkovich is with us with citigroup. I guess it speaks, tobias where we are enable market. This would not have occurred in march of 2009. Where are we in the bull market that allows the leadership of verizon to make a Bold Decision like this . Tobias i will answer in three different ways. One, what we were talking about before the funding cost if rates go higher, it will be better to fund today. Number two this notion of ceo confidence, it really is strikingly aggressive at this point. They are kind of middling data, again, looking at the surveys. The third point is, this goes back to brendans comment, it has been going on for at least 15 years, the debate about the pipe or the contents, which is more important . Because of technology today, because people are doing their own streaming product, new companies or new entrants creating a factor. You see this merging of piping and contents, too. Tom there it is, on a huge scale 43 million in you but ibata, America Online really a blip for verizon but never the less history made. Our alex sherman with Bloomberg News has done much to move the story forward. A number of quarters ago, he talked about this meeting as being a possibility. Mr. Sherman joins us. Alex, where is the surprise here . Alex the surprise was when we broke it in january i think, and no one was really talking about this at the time. The idea here is that people look at aol and they do not think about aol as what it is today. They remember it for what it was 10 years ago, but aol is a Programmatic Technology company these days, and that is what verizon is interested in. If you go back and read our stories from january when the first to Company Started talking about a potential merger, that is what we say. Look verizon wants aol for its programmatic ads technology, which it can pair with its mobile video projects. On the flipside, what a a well needs is data, so it is a good merger because verizon has all of this user data and it pairs up well with the programmatic ad technology, so the two sort of go handinhand there. Verizon downplayed at the time and said well, you know, we are looking for a partnership rather than an acquisition, and i think that is true. I think there will be a both but obviously today they finally came to an agreement where they reached an acceptable price. Now we will have to see what happens with Tim Armstrong moving forward because he wants to be the ceo of a large company. Tom brandon, you look at the scale, ale wealthy butols is 1 of verizons. Brendan verizon is not buying in aol a content company, it is buying the intelligence that aol has developed in selling that content, do i have that right . Alex my sources back in january said that content aol has is almost indifferent to it Huffington Post other websites that aol owns, we take it or leave it. The real heart of this is the programmatic ad technology. Brendan how is this going to help them on mobile . This is one of my own bugbears i do not understand why verizon is not just trying to share more capacity, build it out, selig be sell it better. I do not understand why it is not spending more cash on his infrastructure. Alex thi s ias an infrastructure play. Ale well gives you a platform on which you can sell advertising so it is a new world of advertising right now. Brendan doesnt verizon need to get into the business of making and selling video . Alex it is going to the second half of this year. It is going to launch a mobile video product similar to what dish and sony have already launched. They bought something from intel , which is a mobile video platform, so now expect for you to have your mobile video package bundled in with your Wireless Service so that it is all on the same bill. Tom alex are you surprised at the 50 premium over a close of about 42 . To me it is a little narrow premium. Alex a little bit tom, there is a little surprise, but aol in Tim Armstrong probably solid business is one that only has a high ceiling as is. In fact, one of the people i spoke to back in january told me that if aol was not going to sell they were actually thinking about other ways of generating value, including splitting the company. So i think aol reached the conclusion that they do not have all that much to go unless they did a fairly drastic hustle of money. They are really a one trick pony with 2 million subscribers that are so giving money to them. Tom alex sherman, thank you so much with Bloomberg News here. I find amazing, folks, the value that mr. Armstrong has created. I do not have an opinion on what he has done or has not done and the different products and all that, but the Value Creation this is way different, Tobias Levkovich, than what we see with the deterioration with twitter linkedin, and others. This guy is a standout, not in the individual stocks, but the group right now is under threat, is that, like the bio techs . Tobias you have to think about where stocks are trading in terms of multiples, if you miss a thing, the stocks get creamed. High expectations high multiple. Tom Tobias Levkovich as we see history from another time, verizon to take on aol for 50 a share. Will have much more on this on Bloomberg Radio and Bloomberg Television drop the morning. Stay with us. Bloomberg surveillance. Tom good morning, everyone. We are following the aol merger with verizon. Right now, we need to look to russia. Kerry will meet putin in sochi. It has been two icy and snowy years of the duration of u. S. Russia relations. Ryan chilcote has followed this front and center, including important conversations with lavrov of russia. How uncomfortable will the room be in sochi . Ryan ryan itll be awkward, but this is important not only to the russians but also to the u. S. Secretary of state. They want to talk about ukraine but they want to talk about syria, iran as well, places where they really need the russians to be on board to make a difference. Tom ok they are going to state their sites. You expect any kind of agreement , understanding, shared believed to come out of this meeting, or is it a photo on with some tough language . Ryan you know, i do not think we will get all of the detail out of the meeting. I think there will not be in agreement on the ukraine. The u. S. Remains even now concerned that we are not at the end of the story in ukraine. That the russianbacked rebels could be planning a new offensive, they carry out a new offensive. The hope is they can make some progress with iran and maybe syria. You know, the russians being assads biggest allies. That is really important because your member the s300 sales that the russian president announced after they got the tentative deal with the iranians a month ago . That caught the u. S. And the allies offguard, and they want to make sure that they want to play ball on this deal. Brendan ryan, if you are a russian citizen and your only source of north has been the ve Day Celebrations in moscow how is your perspective different from ours . Brian look you are probably be a bit miffed that president obama or secretary kerry did not show up. It has been wall to wall coverage of the ve Day Celebrations. This is all russians have been exposed to for the past several weeks. It is a look back at the past, it is nostalgic, but it is more than that. Part of the message is that the west is after us again, and they did not even show up for the ve Day Celebrations. I guess you would be curious i guess he would be proud of the fact that your president is getting some respect finally but not much more than that. Tom ryan chilcote, thank you so much, in london on of the meeting of mr. Kerry and mr. Putin. Coming up, we will continue our coverage of the acquisition of aol i verizon. A much smaller company, about 1 ebitda of verizon. That is an amazing idea. Stay with us. Bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Here is a banner headline you need to know Tim Armstrong is a genius. Aol sale by verizon. We need to catch in with vonnie quinn with our top headlines. Vonnie thanks tom, aol up at 50, so the author is 50 a share. That would be 12. 4 billion was up much more on this major deal coming up here on bloomberg surveillance. In a video released this morning, president obama confirms his hometown will get his library. The barack obama president ial center will be located on the southside of chicago. And mcdonalds drivethrough customers will soon have fewer choices. Outdoor menus will be simplified. The Company Wants to speed up the ordering process. Mcdonalds also found to offer more items in the 1. 50 to 3 price range. Tom what took so long . You wonder what happened there over the last five years, six years of complexity. What we have to look for two on bloomberg surveillance this morning, interesting transaction, the giant verizon buying aol, again about 1 ebitda. Stunning disparity between those two companies. Bill gross, some thoughts on what mr. Gross is doing, and brendan will bring his prodigious authorities on brazil, and we will look at an august story an odd story in brazil. Brendan on the desk with us, we have the director of research and a Portfolio Manager at janice capital. At janus capital. We will get a broader perspective from her but we have to look at verizons purchase of a well. Under Tim Armstrong, this is been the company that has refused to die. Guest [laughs] so refusing to die. When i look at this transaction, i am struggling to find the benefit for verizon. Brendan we have our alex sherman, who made a very basic point, he has been breaking the he of the breaking news on this for several months, what they are not requiring is the content but the ability to have the content. Tobias levkovich leaves us with an internal problem which you can have eternal content but you have to come up with the video that its sold. You have to have the video that gets streamed. Tobias true, but in the world of go pro cameras, look, im am shocked by what people actually watch ok, im pretty easy, just give me sports, but other people are willing to watch everybody trying to be the jackass 3 the movie. Tom you are at janus, carmel on the buy side, and i would suggest looking at the chart that this is a verizon and aol the got two very different paths. Verizon is a boring, dividend grower, they pay a boring cash flow and dividends. Aol is the antithesis of that. How does management get along . The kids he faced they will be Tim Armstrong, loveydovey, he will run aol, you will be as cynical as anybody i know on this. What happens three weeks later . Tom carmel you have to believe that verizon will take over the operations and they will integrate it, and i would not be surprised if there are other acquisitions down the line. Tom tom brandon was cynical on this, but do the mergers work . Tobias and not end up working. Tom thank you. A surveillance brea ksclusive. Brendan i would argue against looking at the issue of verizon being a boring dividend grower. I think that is right, but they are struggling with what they do. For so long, it was relatively easy to make money if you owned the wires going into peoples homes. That has been challenged. The fcc has grown a cynical as i am. They are trying to figure out what they are is not just a company that gets into your house. Tom what does this say about this bull market in cheap money that we have . Is this the price of centralbank free money . Carmel yes. [laughter] and it is going to continue. We expect rates to go up in the u. S. , but they will all make go up a not an enormous amount. Tom if you are janet yellen, do you collect stamps now . Carmel bill has increased the dialogue, he has a different view on every issue, and we can sit there and discuss issues in a way we ever have. Tom and debate and argue as well. Carmel yeah, he is at it a lot. Tom this is exciting. We will have other guests through the hour on this transaction. Brendan we talk about cheap money, but you are also looking abroad. Where are you looking abroad to grow . Carmel where we will see upgrades to earnings, one place that seems obvious is japan. It is already cheap especially ebitda and they have got this Corporate Governance the company is being forced to create value with their capital, and you can pull the ceo out and fire him on the spot if he is not achieving his cost of capital. You are getting big changes, and they are using the cash on their balance sheet, increasing their dividend payouts. I still think it is a cheap market with great opportunity. Brendan all right, you heard it here. Japan is a growth opportunity. That is extraordinary. This is not what we have been saying, so it is great to hear that. Coming up, brazils economy is great for telecom. We will hear from the ceo of one of the countrys largest Telecoms Operators about 4g. It is a story about a family that has owned a corporation that has now turned into a real or parisian. We will take a look at brazil coming up next on bloomberg surveillance. Tom good morning, everyone. Bloomberg surveillance. Brendan greeley and tom keene. The best tweet on verizon and aol lets her memory aol spent 160 billion plus for timewarner long ago. The 2009 advent of the restructured aol the white line is a restructured aol, the red line is verizon much more study and much less volatile. To get to the same point, again Tobias Levkovich with citigroup, this is about two Different Companies and two different qualities of cash flow. Tobias the critical question has been for the telecom companies, a lot of lessons which requires him to put more cash flow into the business, and cost structure they have to maintain. It has been a challenging area. I would like to see that again with the s p 500. The s p has done a whole lot better. Tom not that it is dinosaurs mating because aol is not a dinosaur, i think of Craig Moffett adamant that the stronger now is the struggle now is changing technology. The technology is getting out in front of aol and also verizon. Tobias technology is always evolving. People are so nervous about automation and how that will change manual labor jobs even today in general. We go back to the day of inventing the wheel. Im sure they had the same type of discussion. Tom if you are not enthused with telecoms, where are you . Tobias we see Capital Spending continue to grow. Think of it this way we have got more jobs we have got to get people to do the jobs, which today requires technology. You need upgrades and businesses moving from pc and mainframe based systems to mobilitybased platforms. And cyber security. Tom for verizon, aol, that is a good thing. Here is vonnie quinn on the earthquake in nepal. Vonnie tom, nepals hit by another deadly earthquake, 19 people are reported killed by the quake. Nearly 1000 people are injured. It hit 50 miles from the capital of kathmandu. It registered 7. 2. Tremors were felt in india, 500 miles away. This is three weeks after a quick that killed more than 3000 people. It triggered landslides. Rescue helicopters are on their way to the hardest hit areas. Both sides are setting low expectations between todays talks between secretary of state john kerry and russias pride president Vladimir Putin. The u. S. Wants putin to persuade prorussian rebels in ukraine to follow the terms of a ceasefire. Kerry wants to see if putin will support a political solution to the fighting in syria. And there is the controversial asian trade deal. The senate is hosting a procedural vote on whether to give president Obama Fast Track Authority to proceed with the agreement. Some democrats argued that the trade deal will hurt american jobs and wages. One of those is senator elizabeth warren. The president has made it clear he disagrees with her. President obama elizabeth is a politician, like every up, she has a voice that she wants to get out there. I understand that. On most issues, she and i deeply agree. On this one, though, her arguments do not stand the test of fact and scrutiny. Vonnie warren has argued that giving the president the fast track would also help wall street. The Investor Group is raising its offer for the new bid is worth about 2 billion. In an exclusive interview with john elkin he says he believes there bit will eventually succeed. John it is a much superior offer. We are proposing them all cash with certainty, which is by far superior for all shareholders, of which we are today delighted having applied more than 9 of partnerre for its employees and its clients. Vonnie exor an Italian Holding of it, controls fiatchrysler. Lots of deals this morning, tom. Tom vonnie quinn, thank you so much. How betty dake which how about a data check . Yields are higher, 3. 11 , but aol up 18 our alex sherman of Bloomberg News feeling the Tim Armstrong looking at a fully valued company. I would also note euro, a 1. 1243. A stronger euro this morning. Brendan this is bloomberg surveillance. I am Brendan Greeley with tom keene. Brazil is going 4g according to a report. 4g is available to only 38 of 2020 of brazil, by 2020, that will be 72 . If you excuse the cliche, this is a telenovella. You have carlos slim in there. In fourth place, oi has no cash, owned by families, you might call greedy. Ois ceo was in new york yesterday to tell his story to investors for stop i got a second with him, and i asked him where is he going to get the money to expand. This money will come from the turning around we do any business, transforming the business. We designed the First Quarter of this year, we grew our, the operational from the business. Brendan but these are quarter by quarter, you are not expecting big capital anytime soon . Bayard no we are not. We are into the big new ways to raise money at this moment. Brendan luckily, we have our very own christian with us who has cover this and knows everything about this company. When i heard that quote, i thought it was almost cute that he is working so hard to turn this company around that he says he is going to expand based on shortterm improvements and cash flow. Reporter everybody has been trying to turn this company around for years for stuff he is the third ceo in two years full is a different but he came from inside where the last several have come from outside the company. Executives are now much more invested. They are getting rid of the controlling families hopefully in the next few months they will be gone. Brendan the reason i was excited about doing this story is is it possible to look at this company and see a broader metaphor for brazil . You have families who have pulled so much cash out of his company, and now you have a relatively professional manager, ceo trying to turn us into a Real Corporation with Real Investment and a real plan for the future. Is this a transformation that a lot of companies in brazil are going through . Christiana i hope so. We have the scandal at petrobras putting in fear so hopefully that will end this corruption. You have the Younger Generation of executives across the board who are much more professional. You have executives from 3g capital who are running american companies, so hopefully yes. It will be a different world in brazil for companies. Brendan we sit up here and we look down of brazil not metaphorically literally, we look down geographically to brazil and try to figure it out. The you have hope for the future . Is it going to get better . Christiana do i have hope for the future . Uyyes i have hope for the future. Brendan do you have realistic hope for the future . Christiana yes, things are changing, it is a deeply ingrained issue, but you have some people there who are doing everything like cutting out air conditioning to save money, they are trying to sell the buildings in one of the best neighborhoods in brazil to make cash. They are cutting out inefficiencies. And there are a lot of inefficiencies to be cut. Brendan is there tremendous growth . The gross with all the growth we saw in telecom in brazil, who will win . You have carlos slim in there with a company, you have telefonica, who will not win if not oi . Christiana it is a good question. You have Companies Like carlos slims, who have invested heavily in 40 and in 4g, and t. I. M. As well, who is invested in 4g, and we will have a clear winner through that consolidation. Brendan all right, the story about one ceo who is trying to figure familyowned Company Internet professional. Tom we will continue our verizonaol. Rates are higher, 3. 21 on the 30year bond the german 10year as well,. 74 push aside by the drama of verizon and aol. Stay with us. Tom good morning, everyone. Bloomberg surveillance. Cory johnson will join us in a bit. The clouds of new york shrouding the empire state building, like the clouds of verizon bureaucracy coming down no, excuse me, we will save that for later as well. 8 00 this morning, Erik Schatzker, Stephanie RuhleMarket Makers. Where did you go, denver or newport . Erik Newport Beach tom. Tom what did you learn from mr. Gross, his stamp collection . Erik no much of that is in the smithsonian. What i learned was many things i did not know before, one of which was his commitment to philanthropy. Anybody who is followed bill gross knows that he gives some of his money away, but i had no idea the scale to wes bill gross has been giving the dough away. He is a billionaire, he has got a fortune, 700 million of which he has already given away. Tom who has a given it to . Erik hospitals, medical research an enormous grant to duke. What i really wanted to know more than anything else was why bill gross is doing what he is doing . He left pimco, we know it was an acrimonious departure, and shocks the financial world by joining janus. Why he is . 71 why . He is 71 years old. Here he is. Bill one of the reasons is to provide still got it, a 38yearold quarterback who can still take a stand at the super bowl. Erik who would that 38yearold quarterback be . Probably john elway. Brendan i thought we were talking about tom brady. He is 37. Erik it is a denverbased company. If you compare brendan im curious about this. You says on the one hand, i still got it, but on the other hand, am i a great investor . Well i dont really know yet. This is an intensely personal journey for bill gross. He says he admits he is obsessed with performance. Erik he wants to prove himself that as he said, i still got it, what made him the best investment director of alltime. Tom i talked to bill erik equity arbitrage. Bill gross is exploring right . The unconstrained world, dabbling in bets on german bunds, for example. We know he called it the short of a lifetime. Brendan he called it, but he did not make it. Erik that story has yet to play out. Tobias why would you want to go into things you do not know about, that you do not have the experience . I would have gone Courtney Howell anyway, a little older than 38. [laughter] brendan eriks full interview begins tonight at 8 00 p. M. Eastern on a special bloomberg encore. This is bloomberg surveillance. It is may 12. Good morning. Tom good morning, everyone. Bloomberg surveillance. Futures 16 dow futures 7. Our Veronica Quinn is checking out the market moves. What do you have . Vonnie in the premarket, it is up more than the app price, 50 up 18 . Yahoo was down as much as 1. 8 . Now it is higher by about. 1 , so looking good for both groups of investors right now. Tom there we have a, vonnie quinn, thank you so much. Cory johnson with us from bloomberg west, and 10 00 in the morning with the lovely carol. One does it start a bidding war for mr. Armstrong and his oppose it a revenued and his oppose supposed ad revenue juggernaut . Anybody can get a loan right now do anything. Cory i think the strategic issue, we talked about that with alex sherman earlier the hour, or very interesting because there are a lot of pieces of this puzzle coming together. Verizons acquisition of intels mobile business looked really where the time, and people were like, what . Tom how does Silicon Valley look at Tim Armstrong and aol . Are they a bunch of east coast people dreaming . Cory Tim Armstrong has been very quietly putting together the pieces of this ad content platform that they stitched together. Tom what is an ad content platform . Tobias i have been thinking of a will as a content company. Brendan alex sherman tells me that is wrong. It has a very sophisticated ad platform. What is that mean . Cory if i were alex sherman, i would say you are wrong. Brendan thank you. Cory when you see ads, if you are on your phone, you see an ad pop up. How does that get to you . It creates a copy distribute ads, finds you with all the attributes you display, and pops that ad up. There are a number of technologies that move the ad, there is wrote in bidding for the ad and then it gives it to you to find out who you are. Tom i do not understand it apple has got a 28 income margin, aol has surpassed that. Is this like we know uber makes money, we know ebay makes money, does aol prints money . Cory the free clash full the Free Cash Flow has allowed them to. Tom this is to me the heart of the matter. Brendan it sounds to me that we should start thinking of aol as a startup. It had cash flow, it had investors, and was basically a hedge fund. Tom Tobias Levkovich, is a a well just the new smoke and mirrors that is out there . On the outbreak mr. Levkovich got an email from citigroup, and he has put a cork in his mouth. Tobias i have no ideas. [laughter] brendan is aol a plucky startup . Cory they see themselves that way and run themselves that way. Tim armstrong, as much as he is an oldtime publishing guy, a guy you could have seen in the magazine business 20 years ago and get right in, he has in fact very much tom am i right that mr. Costolo of twitter would kill for the performance of aol . Cory he brought the expectations to twitter, there were low expectations on aol when Tim Armstrong tom is Tim Armstrong executive of the year . Cory i think he does a great job. There are a couple apple facebook, he has done a great job building this business. Tom does it really make any money . I find it fascinating. Tobias, it feels like a 1999. That is the last time the canadiens won. Tobias 1993. Cory within the first year, for example, when most google searches were done on mobile devices. Tom is Tim Armstrong a threat to Mark Zuckerberg . Cory i think it is a different kind of business, but when you look across apple, amazon, and other us verizon aol these businesses are looking at advertising businesses and publishing businesses. Amazon, for example, has an advertising business that is doing 200 million in Topline Revenue over the year, but we do not notice because they do not disclose it very well, but they have a very big advertising business. Aol has a lot chance to do a lot of big thing. Brendan one of the praises you view from both verizon and Tim Armstrong are multiscreen. They will be selling ads against city on a bunch of screens. What is the video . Content matters. What are they going to be selling . Cory they can be agnostic for stop it and i have to get a very Huffington Post video. With this form approach, anyone any stupid youtube cap videos any drunken hockey escapades tom what . brendan as you well know video has to be better than drunk hockey and stupid cats to make money. This business is really hard. Cory but it does not. Tom it does not have to make money . Cory it can be big, it bb10 poll it can do the tentpole thing, the great sporting events, that is the history of media, but the Current Media are these tiny things that draw a couple of views that once you use programmatic revenue, you can attach a little revenue to a little thing. Tom cory johnson, thank you so much. Brendan we got someone from the west coast to explain this to us. Tom i need a lot of explaining. Brendan the more onset not wearing ties we want to go to our agenda. Tong, you are looking at aol. Tom 43 billion, ebitda a well has, like, 430 trailing ebitda. This is a speck on the map for verizon. Right away, Tim Armstrong because my executive of the year. I have no clue how he has done this, 15 to 50 on the start. You heard cory tell us about the mystery of probability at the new aol. I think it is amazing, what he has pulled off, just the highest regard of Tim Armstrong. Amazing what yes pulled off. Brendan vonnie, what are you looking at . Vonnie global bond yields. We have Mohamed Elerian writing in the financial times. Today. It is a round robin. We will see the surging in treasury. Tom tobias, do you care about yields . Tobias of course i do. Tom is it a stability changer . Tobias i do not think so. The fed wants to normalize, they do not even call it tightening they want to normalize rates. You start getting signs from owners of equivalent rents moving higher, what that will do to inflation numbers. Is that going to the shields pto push yields higher. Breaksclusive Tobias Levkovich tom Tobias Levkovich of citigroup. Brendan it is the perfect story nobody died. Ball busted, says the New York Post. What are the poor headline writers of the post and New York Daily News going to do after this . Tom we did a couple of times. Brendan lets go to twitter. What is going on . Vonnie great answers on twitter. This is an amazingly popular topic. If i can look at some of what we received, we had i need my number one answer. I need the graph pic. Tom tom has for years been breaking the rules and finally got caught. Vonnie they will be most. Brendan we have got a couple of more on the screenful stop what is the next reveal . Why would any business in their right mind promote a liar to promote their products . This is what is the perfect story because you have a hero or a heel. Tom Tobias Levkovich, if montreal slows down the ice for the speedy tampa bay team, is that like deflategate . Tobias yes, but member, tom goes home to gisele every day. [laughter] brendan he will still be a hall of famer. The real problem is how long the nfl has been covering up. I think that is important context for sup you have the nfl coming down so hard on this with an investigation and a fine. Tom what a show. Angst to our great team on verizon in a you well. Not forget, cory johnson and carol massar on Bloomberg Radio antenna clock a. M. Tobias levkovich, thank you always. Market makers up next here on Bloomberg Radio. Live from bloomberg headquarters in new york, this is Market Makers with Erik Schatzker and Stephanie Ruhle. Stephanie good morning. Are you surprised to see us . I hope not. This is our new time every morning from 8 00 to 10 00 eastern. Erik you can see betty liu at 10 00 a. M. Stephanie verizon agreeing to buy aol for 4. 4 billion dollars. I bet you were not thinking about that when you went to bed last night. The deal gives verizon access to new Digital Content and advertising platforms. A lot more on that coming up. Erik blackstone ceo Steve Schwarzman on many things, including his latest deal. 150 million gift to his on the modern, yell